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Our company, GARAY REALTY & CONSULTING, is organized primarily to deliver efficient and effective results since we opened in the year 1992. We popularized the slogan before when selling housing projects which states “Why rent when you can own a home.” We are very methodical in our approaches to clients. Our goal is to provide both precise and detailed superior customer experience and tremendous value for our customers. Owner name has over 25 years of experience in real estate marketing, property appraisal, auditing of company financial statements, project feasibility studies, Securities and Exchange Commission/Cooperative Development Authority registrations, business permit processing, local government Comprehensive Land-Use Plan(CLUP) studies, business, livelihood and environmental advocacies and urban/regional consulting. We can also help you in preparing Traffic Impact Assessments and Environmental Impact Assessments for Department of Environment and Natural Resources and any LGU client requirements and is passionate about exceeding your expectations.

We love our customers and welcome your feedback and suggestions. Use our Contact Us page to tell us what we’re doing right or what we can improve on.

BASIC FACTS ABOUT BUSINESS AND REAL ESTATE IN THE PHILIPPINES –

Philippines Land Ownership and Acquisition

In general, only Filipino citizens and corporations or partnerships with least 60% of the shares are owned by Filipinos are entitled to own or acquire land in the Philippines. Foreigners or non-Philippine nationals may however purchase condominiums, buildings, and enter into a long term land lease.

Our firm assists foreigners, non-Philippine nationals, Filipinos, OFW, Balikbayans, and corporations purchasing and acquiring real property in the Philippines and can provide relevant information on Philippine laws and regulations regarding property purchase and acquisition, review general contracts, asset protection contracts, deeds of sale, taxes, and handle entire estate planning. In addition, K&C can introduce you to local real estate brokers to assist you in finding the property you are looking for in the Philippines.

Foreign Ownership of Land in the Philippines

Ownership of land in the Philippines is highly-regulated with land ownership reserved for persons or entities considered Philippine nationals or Filipino citizens. For this purpose, a corporation owned 60% by Filipino citizens is treated as a Philippine national. Foreigners interested in acquiring land or real property through aggressive ownership structures must consider the provisions of the Philippines’ Anti-Dummy Law to determine how to proceed. A major restriction in the law is the restriction on the number of alien members on the Board of Directors of a landholding company which is limited to 40% alien participation. Another concern is the possible forfeiture of the property if the provisions of the law is breached.

Exceptions to the restriction on foreigners acquisition of land in the Philippines are the following:

Acquisition before the 1935 constitution
Acquisition through hereditary succession if the foreigner is a legal or natural heir
Purchase of not more than 40% interest in a condominium project
Purchase by a former natural-born Filipino citizen subject to the limitations prescribed by law. (Natural-born Filipinos who acquired foreign citizenship is entitled to own up to 1,000 sq.m. of residential land, and 1 hectare of agricultural or farm land)
Filipinos who are married to aliens who retain their Filipino citizenship, unless by their act or omission they have renounced their Filipino citizenship

Foreigner Ownership as a Philippine Corporation

Foreign nationals or corporations may completely own a condominium or townhouse in the Philippines. To take ownership of a private land, residential house and lot, and commercial building and lot, foreigners may set up a Philippine corporation in the Philippines. This means that the corporation owning the land has less than or up to 40% foreign equity and is formed by 5-15 natural persons of legal age as incorporators, majority of whom are Philippine residents.

Foreigners Leasing of Philippine Real Estate Property

Leasing land in the Philippines on a long term basis is an option for foreigners or foreign corporations with more than 40% foreign equity. Under the Investor’s Lease Act of the Philippines, a foreign national and/or corporation may enter into a lease agreement with Filipino landowners for an initial period of up to 50 years renewable once for an additional 25 years.

Foreigners Owning Houses in the Philippines

Foreigners owning a house or building in the Philippines is legal as long as the foreigner does not own the land on which the house is build.

Foreigners Owning Condominiums & Townhouses in the Philippines

The Condominium Act of the Philippines, R.A. 4726, expressly allows foreigners to acquire condominium units and shares in condominium corporations up to not more than 40% of the total and outstanding capital stock of a Filipino-owned or controlled condominium corporation. However, there are a very few single-detached homes or townhouses in the Philippines with condominium titles. Most condominiums are high rise buildings.

Foreigners Married to a Filipino Citizen

If holding a title as an individual, a typical situation would be that a foreigner married to a Filipino citizen would hold title in the Filipino spouse’s name. The foreign spouse’s name cannot be on the Title but can be on the contract to buy the property. In the event of death of the Filipino spouse, the foreign spouse is allowed a reasonable amount of time to dispose of the property and collect the proceeds or the property will pass to any Filipino heirs and/or relatives.

Former Natural-born Philippine Citizen now Naturalized American Citizen

Any natural-born Philippine citizen who has lost his Philippine citizenship may still own private land in the Philippines up to a maximum area of 5,000 square meters in the case of rural land. In the case of married couples, the total area that both couples are allowed to purchase should not exceed the maximum area mentioned above.

Filipinos & Former Filipino Citizens, Balikbayans & OFW

Former natural-born Filipinos who are now naturalized citizens of another country can buy and register, under their own name, land in the Philippines but limited in land area. However, those who avail of the Dual Citizenship Law in the Philippines can buy as much as any other Filipino citizen. Under Republic Act 9225 (Philippines Dual Citizenship Law of 2003), former Filipinos who became naturalized citizens of foreign countries are deemed not to have lost their Philippine citizenship, thus enabling them to enjoy all the rights and privileges of a Filipino regarding land ownership in the Philippines.

Steps to Gain Dual Citizenship:

If you are in the Philippines, file a “Petition for Dual Citizenship and Issuance of Identification Certificate (IC) pursuant to RA 9225” at the Bureau of Immigration (BI) and for the cancellation of your alien certificate of registration.
Those who are not BI-registered and overseas should file the petition at the nearest embassy or consulate.

Requirements:

Birth certificate authenticated by the Philippines National Statistics Office (NSO)
Accomplish and submit a “Petition for Dual Citizenship and Issuance of Identification Certificate (IC) pursuant to RA 9225” to a Philippine embassy, consulate, or the Bureau of Immigration
Pay a $50.00 processing fee, schedule, and take an “Oath of Allegiance” before a consular officer
The Bureau of Immigration in Manila receives the petition from the embassy or consular office. The BI issues and sends an Identification Certificate of citizenship to the embassy or consular office.

If a former Filipino who is now a naturalized citizen of a foreign country does not want to avail of the Dual Citizen Law in the Philippines, he or she can still acquire land based on BP (Batas Pambansa) 185 & RA (Republic Act) 8179 but limited to the following:

For Residential Use (BP 185 – enacted in March 1982):

Up to 1,000 square meters of residential land
Up to one (1) hectare of agricultural of farm land

For Business/Commercial Use (RA 8179 – amended the Foreign Investment Act of 1991):

Up to 5,000 square meters of urban land
Up to three (3) hectares of rural land

Real Estate Transaction Costs in the Philippines

Purchases from Individuals:

Philippines Capital gains tax – 6% of actual sale price. This is paid by the seller but in some cases it might be expected that the buyer pays. This percentage could differ if the property assessed is being used by a business or is a title owned by a corporation, in this case the percentage is 7.5%
Philippines Document stamp tax – 1.5% of the actual sale price. This is paid by whether the buyer or the seller upon agreement. Normally however, it is the buyer who shoulders the cost.
Philippines Transfer tax – 0.5% of the actual sale price
Philippines Registration fee – 0.25% of the actual sale price

Purchases from Developers:

Philippines Capital gains tax – 10% of actual sale price. This value might be expressed as part of the sale price.
Philippines Document stamp tax – 1.5% of the actual sale price
Philippines Transfer tax – 0.5% of the actual sale price
Philippines Registration fee – 0.25% of the actual sale price

Life, Liberty, and Land: Restrictions on Foreign Ownership of Land in Philippines

It’s said that “a true free market economy is an economy in which all resources are owned by individuals, and in which decisions about the allocation of those resources are made by individuals without government intervention”. The laissez-faire doctrine maintains that “private initiative and production are best allowed to roam free, opposing economic interventionism and taxation by the state beyond that which is perceived to be necessary to maintain individual liberty, peace, security, and property rights”. The success of capitalism in the former Soviet Union and China are examples of this. Many nations have adopted doctrines which promote economic freedom and property rights. Whether this can be said of the Philippines is debatable, especially when you take the issue of land ownership into consideration.

While property rights are the linchpin of a free market economy, many developing nations like the Philippines regulate or outwardly prohibit property rights of foreigners. Protectionist policy in the Philippines has several possible explanations: the consequence of 400 years of colonization, concentration of ownership with landed elite, or the promotion of local enterprise and industry. It is surprising, in this day and age to find the following paragraph in Article XII of the Philippine Constitution with regard to National Economy and Patrimony:

“The state shall promote industrialization and full employment based on sound agricultural development and agrarian reform through industries that make full and efficient use of human and natural resources, and which are competitive in domestic and foreign markets. However, the state shall protect Filipino enterprises against unfair foreign competition and trade practices”

Personally, this seems to be an anti competitive backwards policy which promotes inefficiency. For whatever the reason, the bitter consequence is that foreigners are not allowed to own land in the Philippines.

If the Philippines recognizes that inviting and encouraging foreign direct investment is a key factor in economic growth then foreign land ownership is a huge issue which must be addressed for the Philippines development. Real estate ownership is a key property right which allows investors flexibility and the ability to take more risks i.e., make bigger investments.

So, what exactly are foreigners faced with when they want to purchase or use land for their homes or businesses?

Ownership of land in the Philippines is restricted to persons or entities considered Philippine nationals or Filipino citizens. For this purpose, a corporation owned 60% by Filipino citizens is treated as a Philippine national. Acquiring land through aggressive ownership structures forces investors to with the Philippines’ Anti-Dummy Law which restricts the number of alien members on the Board of Directors of a landholding company to 40% alien participation. The property faces forfeiture if the law is breached.

Some of the exceptions to the restriction on foreigners acquisition of land in the Philippines are the following:

Ownership through a 60/40 company
Acquisition through hereditary succession if the foreigner is a legal or natural heir
Purchase of not more than 40% interest in a condominium project
Purchase by a former natural-born Filipino citizen subject to the limitations prescribed by law. (natural born Filipinos who acquired foreign citizenship is entitled to own up to 1,000 sq.m. of residential land, and 1 hectare of agricultural or farm land)
Ownership through Filipinos who are married to aliens who retain their Filipino citizenship

Leasing land in the Philippines on a long term basis is an option for foreigners or foreign corporations with more than 40 percent foreign equity. Under the Investor’s Lease Act of the Philippines a foreign national and or corporation may enter into a lease agreement with Filipino landowners for an initial period of up to 50 years renewable once for an additional 25 years.

Foreigners are forced to lease and while it may seem the most viable and realistic option but the plain fact of the matter is that by nature lease is a very complex and hairy contract. This is exacerbated by the fact that most lease agreements in the Philippines are pro-landlord forcing alien lessees to accept commercial practices on advance rental, security deposits, escalation clauses, forfeiture, automatic ejectment that would be looked down upon if not prohibited in most countries. Where the lessor is at fault redress in the Philippine court system is a time consuming and unattractive solution-or not a solution at all.

Foreign ownership of land is a controversial issue nevertheless foreigners have options under the law that they can make use of. More important than what the law says is how it is actually enforced especially in case of conflict. No one should be forced to take the law into their own hands when it comes their property. The legal system should be there to protect property rights. Too often however, foreign investors are faced with an uphill battle when it comes to these issues.

What can a foreign investor or prospective property owner do when faced with these obstacles? My recommendation is first to be aware of your rights and obligations. This will give you an idea of the real risks involved. Second, negotiate to protect your interests in lease contracts/agreements. It is important to thresh out potential issues from the beginning. The law alone often does not offer adequate protection. Finally, establish a good relationship with your lessor. More than anything, a lease is a business relationship which both parties must be committed to. Until the law changes, it must be carefully navigated.

Expat Travel & Lifestyle Magazine – Vol. 1 No. 4 2008

ABOUT CEBU AND THE PHILIPPINES:

Cebu and many Philippine islands are now becoming tourist and investment destinations not only in the ASEAN region but globally. To all investors and buyers, we provide you with prompt and reliable information inquiry assistance, over- the-phone inquiry assistance, property recommendations and real estate advice, actual viewing tour on the properties you prefer, representation, negotiation assistance, processing the legal documents and other requirements on your behalf. Other services include joint ventures and global marketing.

Cebu is one of the most developed provinces in the Philippines, with Cebu City as the main center of commerce, trade, education, and industry in the central, and southern islands of the Visayas. It has five-star hotels, casinos, white sand beaches, world-class golf courses, convention centers, and shopping malls. The UK-based Condé Nast Traveler Magazine named Cebu the seventh best island destination in the Indian Ocean-Asia region in 2007, eighth best Asian-Pacific island destination in 2005, and seventh in 2004.

CEBU VOTED AS 2nd BEST ISLAND ON EARTH

CEBU, Philippines — Cebu placed second in the “Top 30 Best Islands in the World,” based on a survey conducted by an international travel magazine.

And as if that was not enough, the top three islands on the list were all from the Philippines – Boracay, Cebu, and Palawan, respectively.

The results were based on a survey conducted by Conde Nast Traveler (CNT), a luxury and lifestyle travel magazine which won twenty-five National Magazine Awards.

“More than 300,000 travellers took part in our 30th annual Readers’ Choice Awards survey — setting yet another new record — submitting millions of ratings and more than 100,000 comments to help us create a list of winning favorites,” read CNT’s review on its website.

Cebu was hailed for being famous for its beaches on the mainland as well as across many of its surrounding islands.

Last year, Cebu landed 5th place.

Cebu ranks second in World’s Friendliest Islands list

Readers of New York City-based travel magazine, Travel + Leisure (T+L), have named Cebu as the second friendliest island in the world next to Palawan, which was recognized as the world’s friendliest island.

All of Luzon as well Boracay were also ranked third and fourth place, respectively.

“While the politics of the nation have grown ever-more volatile, the people of the islands remain friendly to visitors exploring their scenic home. For many travelers, it’s especially helpful that English is one of the official languages of the Philippines, and that islanders are so welcoming of tourists,” Jess McHugh of T+L wrote in an article published last April.

Fundamentally, our firm, GARAY VENTURES & CONSULTING has a People Platform, used to drive business priorities at case level, driving client value, while giving our partners, employees and associates a sense of control and accomplishment. This program recognizes that a satisfying, sustainable career at GARAY VENTURES & CONSULTING is about more than minimizing hours – it is also when you have personal control, purpose and accomplishment.

The firm strives to provide a lasting social contribution to the world. Its social impact practice network, which functions like one of the firm’s formal practice areas, works with clients on socially conscious issues, including public health, education, community and economic development, environmental preservation, hunger, and arts and culture. We however refrain from discussing formally about religion and politics.

Looking for real estate marketer, appraiser and consultants?

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About Us – Top-Notch Services & Consulting