AGRARIAN LAW AND SOCIAL LEGISLATION

A Review of Philippine Laws or Policies Prohibiting Aliens to Own

Real Property in the Philippines

Submitted to:

Atty. Mark JhayzonMagpaleLeaño

Submitted by:

Gatchallan, Pierre Clement F.

Ramirez, Maria Hannah Kristen P.
JD-2C
 Table of Contents

Introduction………………………………………………………………………………………1
Definition of Terms………………………………………………………………………………5
Philippine Laws or Policies Governing Ownership of Real Properties. ……………………..6

Discussion ………………………………………………………………………………………19
Data Analysis…………………………………………………………………………………….21

Affirmative:
Practicality Aspect……………………………………………………………….21
Beneficiality Aspect……………………………………………………………...22
Necessity Aspect………………………………………………………………....23
Opposition:
Practicality Aspect……………………………………………………………….24
Beneficiality Aspect…………………………………………………………….24
Necessity Aspect………………………………………………………………..25

Conclusion………………………………………………………………………………………27
Reference…….…..……………………………………………………………………………...28

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INTRODUCTION:
Generally, under the concept of jura regalia, private title to land must be traced to some
grant, express or implied, from the Spanish Crown or its successors, the American Colonial
government, and thereafter, the Philippine Republic. The belief that the Spanish Crown is the
origin of all land titles in the Philippines has persisted because title to land must emanate from
some source for it cannot issue forth from nowhere. In its broad sense, the term “jura regalia”
refers to royal rights, or those rights which the King has by virtue of his prerogatives. In Spanish
law, it refers to a right which the sovereign has over anything in which a subject has a right of
property or propriedad. These were rights enjoyed during feudal times by the King as the
sovereign.

The 1987 Constitution, like the 1935 and 1973 Constitutions, embodies the principle of
State ownership of lands and all other natural resources in Section 2 of Article XII on “National
Economy and Patrimony,” to wit:

“SEC. 2. All lands of the public domain, waters, minerals, coal, petroleum, and other
mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna,
and other natural resources are owned by the State. With the exception of agricultural lands, all
other natural resources shall not be alienated. The exploration, development and utilization of
natural resources shall be under the full control and supervision of the State. The State may
directly undertake such activities or it may enter into co-production, joint venture, or production-
sharing agreements with Filipino citizens, or corporations or associations at least sixty per
centum of whose capital is owned by such citizens. Such agreements may be for a period not
exceeding twenty-five years, renewable for not more than twenty-five years, and under such
terms and conditions as may be provided by law. In cases of water rights for irrigation, water
supply, fisheries, or industrial uses other than the development of water power, beneficial use
may be the measure and limit of the grant.”

The principle had its roots in the 1935 Constitution which expressed the overwhelming
sentiment in the Convention in favor of the principle of State ownership of natural resources and
the adoption of the Regalian doctrine as articulated in Section 1 of Article XIII on “Conservation
and Utilization of Natural Resources” as follows:

“SEC. 1. All agricultural, timber, and mineral lands of the public domain, waters,
minerals, coal, petroleum, and other mineral oils, all-forces of potential energy, and other natural
resources of the Philippines belong to the State, and their disposition, exploitation, development,

1
or utilization shall be limited to citizens of the Philippines, or to corporations or associations at
least sixty per centum of the capital of which is owned by such citizens, subject to any existing
right, grant, lease, or concession at the time of the inauguration of the Government established
under this Constitution. Natural resources, with the exception of public agricultural land, shall
not be alienated, and no license, concession, or lease for the exploitation, development, or
utilization of any of the natural resources shall be granted for a period exceeding twenty-five
years, except as to water rights for irrigation, water supply, fisheries, or industrial uses other than
the development of water power, in which cases beneficial use may be the measure and the limit
of the grant.”

Thus, after expressly declaring that all lands of the public domain, waters, minerals, all
forces of energy and other natural resources belonged to the State, the Commonwealth absolutely
prohibited the alienation of these natural resources. Their disposition, exploitation, development
and utilization were further restricted only to Filipino citizens and entities that were 60 percent
Filipino-owned.

The 1973 Constitution reiterated the Regalian doctrine in Section 8, Article XIV on the
“National Economy and the Patrimony of the Nation,” to wit:

“SEC. 8. All lands of the public domain, waters, minerals, coal, petroleum and other
mineral oils, all forces of potential energy, fisheries, wildlife, and other natural resources of the
Philippines belong to the State. With the exception of agricultural, industrial or commercial,
residential, and resettlement lands of the public domain, natural resources shall not be alienated,
and no license, concession, or lease for the exploration, development, exploitation, or utilization
of any of the natural resources shall be granted for a period exceeding twenty-five years,
renewable for not more than twenty-five years, except as to water rights for irrigation, water
supply, fisheries, or industrial uses other than the development of water power, in which cases
beneficial use may be the measure and the limit of the grant.”

The present Constitution provides that, except for agricultural lands of the public domain
which alone may be alienated, forest or timber, and mineral lands, as well as all other natural
resources must remain with the State, the exploration, development and utilization of which shall
be subject to its full control and supervision albeit allowing it to enter into co-production, joint
venture or production sharing agreements, or into agreements with foreign-owned corporations
involving technical or financial assistance for large-scale exploration, development and
utilization.

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 In general Philippine real estate law prohibits the foreign ownership of land. The
prohibition on foreigners owning Philippine lands is embodied in no less than the Philippine
Constitution. This, in fact, is one of the usual reason cited by those who want to revise or amend
the Constitution.  The Constitution provides:

“Save in cases of hereditary succession, no private lands shall be transferred or

conveyed except to individuals, corporations, or associations qualified to acquire or hold lands
of the public domain.” (Article XII, Section 7)

It’s clear from this provision that private land may be transferred only to persons or
entitles who/which has the capacity “to acquire or hold lands of the public domain.” Those who
are qualified to acquire or hold lands of the public domain are as follows:

1. Filipino citizens.
2. Corporations at least 60% of the capital of which is owned by Filipinos.

In other words, the Constitution explicitly prohibits non-Filipinos from acquiring or

holding title to private lands. Among the exceptions are as follows: (1) transfer to an alien by
way of legal succession; or (2) if the acquisition was made by a former natural-born citizen. The
1987 Constitution provides that:

“Notwithstanding the provisions of Section 7 of this Article, a natural-born citizen of the

Philippines who has lost his Philippine citizenship may be a transferee of private lands, subject
to limitations provided by law.” (Art. XII, Sec. 8)

The Supreme Court reiterated this general rule in a recent case (Borromeo vs. Descallar,
G.R. No. 159310, 24 February 2009). The Court also reiterated the consistent ruling that if land
is invalidly transferred to an alien who subsequently becomes a Filipino citizen or transfers it to a
Filipino, the flaw in the original transaction is considered cured and the title of the transferee is
rendered valid.

Former Filipinos and corporations of Philippine nationality may own land, buildings,
condominiums and townhouses provided that the corporation is at least 60% owned by Filipino
citizens.
It should also be noted that foreign nationals may buy condominiums units in Philippine
condos (shares in condominium corporations) as long as not more than 40% of the units in a

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project are acquired by foreigners (Republic Act No. 4726, otherwise known as the
Condominium Act).

However there are certain exceptions to the 40% Foreign Ownership of Philippine Real
Property, such as granting foreigners land and ownership of such provided they are considered
Filipino citizens before the enactment of the 1935 Constitution.

It was followed by the Batas Pambansa Bilang 185 an Act to Implement Section Fifteen
of Article XIV of the Constitution and for other purposes which was approved and took effect on
March 16, 1982.

Then the enactment of Republic Act No. 7042 “Foreign Investments Act of 1991” which
was approved on June 13, 1991 and was later amended on March 28, 1996 by Republic Act No.
8179 - An Act To Further Liberalize Foreign Investments, Amending For The Purpose Republic
Act No. 7042, And For Other Purposes.

However, Foreign Individuals, corporations or associations may lease land for a period of
25 years renewable for another 25 years through Presidential Decree No. 471 which was
approved on May 24, 1974.

In addition, Companies or individuals investing in the Philippines may receive

government permission to lease land for up to 50 years renewable for another 25 years under
Republic Act Number 7652 or the “Investors’ Lease Act”.

Having been known of this exceptions that an alien may acquire real property in the
Philippines subject to conditions, this study explores whether the acquisition of an alien of real
properties is deemed practicable, necessary and beneficial as to its effects in the Philippine
economy, by showing a discursive framing to distinguish the advantages and disadvantages of
the coverage of the different laws and policies which leaves the readers with its primary
objectives. Secondary objectives are to give the readers additional knowledge about the impact in
allowing aliens in acquiring real property in the Philippines.

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DEFINITION OF TERMS:

“Alien” means a foreigner, especially one who is not a naturalized citizen of the country
where they are living.

“Common areas” means the entire project excepting all units separately granted, held or
reserved.

“Disparate” means essentially different in kind or various

“National Patrimony” means National patrimony is the store of wealth or accumulated

reserves of a national economy. In addition to monetary reserves and other financial
holdings, national patrimony also encompasses a nation's non-monetary wealth or
reserves, such as its national monuments, cuisine, and artistic heritage.

“Naturalized” means is one who is citizen of the Philippines who have performed any
act to acquire or perfect his Philippine citizenship.

“Project” means the entire parcel of real property divided or to be divided in

condominiums, including all structure thereon.

“Real property” means a property which is firmly fixed, settled or fastened.

“Skyrocket” means increase very steeply or rapidly.

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PHILIPPINE LAWS OR POLICIES GOVERNING OWNERSHIP OF REAL
PROPERTIES

THE 1935 PHILIPPINE CONSTITUTION

It is recognized in the 1935 Philippine Constitution under the ARTICLE IV, SECTION 1.

The following are citizens of the Philippines:

(1)  Those who are citizens of the Philippine Islands at the time of the adoption of this
Constitution.

(2) Those born in the Philippine Islands of foreign parents who, before the adoption of
this Constitution, had been elected to public office in the Philippine Islands.

(3) Those whose fathers are citizens of the Philippines.

(4) Those whose mothers are citizens of the Philippines and, upon reaching the age of
majority, elect Philippine citizenship.

(5) Those who are naturalized in accordance with law.

Given the above provisions in the 1935 Constitution, if foreigners or aliens do acquire
their citizenship in the above mentioned enumeration, therefore they can acquire the lands that
they owned with the same rights given and exercised by natural Filipino Citizens of the
Philippines in respect with acquiring lands and other real estate properties up to present

THE 1987 PHILIPPINE CONSTITUTION

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 Our latest Constitution is that of the 1987 Philippine Constitution, it was mentioned in
ARTICLE IV – Citizenship, Section 1 to Section 4 who are deemed to be a Filipino Citizen.

Under SECTION 1. The following are citizens of the Philippines:

(1) Those who are citizens of the Philippines at the time of the adoption of this
Constitution;

(2) Those whose fathers or mothers are citizens of the Philippines;

(3) Those born before January 17, 1973, of Filipino mothers, who elect
Philippine citizenship upon reaching the age of majority; and

(4) Those who are naturalized in accordance with law.

SECTION 2. Natural-born citizens are those who are citizens of the Philippines from
birth without having to perform any act to acquire or perfect their Philippine citizenship.
Those who elect Philippine citizenship in accordance with paragraph (3), Section 1
hereof shall be deemed natural-born citizens.

SECTION 3. Philippine citizenship may be lost or reacquired in the manner provided by

law.

SECTION 4. Citizens of the Philippines who marry aliens shall retain their citizenship,
unless by their act or omission they are deemed, under the law, to have renounced it.

It is clear in the 1987 Constitution that all Filipino citizens of the Philippines at the time
of the adoption of 1987 Constitution are deemed to be Filipino, thus it does not excludes those
foreigners granted Filipino Citizenship by the 1935 Constitution to acquire lands as Filipinos.
Given this provisions they are qualified in terms of the exercise of transfer and succession of
intestate in the Philippines for they are deemed Filipino Citizens.

REPUBLIC ACT No. 4726

THE CONDOMINIUM LAW

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 Housing is one of the basic necessities for human beings. For long time, however, it remains
a critical problem which millions of poor people of developing counties lack (Adamu, 2012). In
the Philippines, according to (Angara, 2018), There is a “huge and continuously growing
housing crisis in the country, where decent homes are becoming too expensive but affordable
options are being built farther and farther away from economic centers—ultimately adding to the
misery of working people” and “No less than the Constitution mandates the State to ensure
housing as one of the basic human rights, especially for “underprivileged and homeless citizens
in urban centers and resettlement areas.”  But as UP School of Economics Professor Emeritus
Gerry Sicat noted in a recent column, the State hasn’t been able to fulfill this role given the fact
that construction of affordable housing has been left mainly to the private sector”. Having the
private sectors to afford the construction of housing projects, it opened an opportunity for themto
build, particularly condominiums in urban areas of the country which gives an individual an
option in acquiring real properties.

A condominium, according to Republic Act No. 4726 also known as “An Act to Define
Condominium, Establish Requirements for its Creation, and Govern its Incidents”, “is an interest
in real property consisting of a separate interest in a unit in a residential, industrial or commercial
building and an undivided interest in common directly or indirectly, in the land on which it is
located and in other common areas of the building. A condominium may include, in addition, a
separate interest in other portions of such real property. Title to the common areas, including the
land, or the appurtenant interests in such areas, may be held by a corporation specially formed
for the purpose (hereinafter known as the “condominium corporation”) in which the holders of
separate interests shall automatically be members or shareholders, to the exclusion of others, in
proportion to the appurtenant interest of their respective units in the common areas”, In addition,
“the interests in condominium may be ownership or any other real right in real property
recognized by the law of property in the Civil Code and other pertinent laws”. In connection with
the construction of condominiums in the country and the acquisition of such, the law also
provides that foreign ownership of a house or building in the Philippines is legal as long as
foreigner or expat does not own the land on which the house was built, and the Condominium

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Act of the Philippines expressly allows foreigners to acquire condominium units and shares in
condominium corporations up to forty percent (40%) of the total and outstanding capital stock of
a Filipino-owned or controlled condominium corporation (Kittelson&Carpo Consulting, 2019).

BATAS PAMBANSA BILANG 185

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 In implementation of Section fifteen of Article XIV of the Constitution, a natural-born
citizen of the Philippines who has lost his Philippine citizenship may be a transferee of private
land, for use by him as his residence (Section 1).

Under Section 2 it was stated that: Any natural-born citizen of the Philippines who has
lost his Philippine citizenship and who has the legal capacity to enter into a contract under
Philippine laws may be a transferee of a private land up to a maximum area of one thousand
square meters, in the case of urban land, or one hectare in the case of rural land, to be used by
him as his residence. In the case of married couples, one of them may avail of the privilege
herein granted; Provided, That if both shall avail of the same, the total area acquired shall not
exceed the maximum herein fixed. 

In case the transferee already owns urban or rural lands for residential purposes, he shall
still be entitled to be a transferee of additional urban or rural lands for residential purposes
which, when added to those already owned by him, shall not exceed the maximum areas herein
authorized.

A transferee under this Act may acquire not more than two lots which should be situated
in different municipalities or cities anywhere in the Philippines; Provided, That the total area
thereof shall not exceed one thousand square meters in the case of urban lands or one hectare in
the case of rural lands for use by him as urban land shall be disqualified from acquiring rural
land, and vice versa (Section 3). 

Urban areas shall include:

(1)  In their entirety, all municipal jurisdictions which, whether designated as
chartered cities, provincial capitals or not, have a population density of at least 1,000
persons per square kilometer; 
(2)  Poblaciones or central districts of municipalities and cities which have a
population density of at least 500 persons per square kilometer;  
(3)  Poblaciones or central districts (not included in 1 and 2) regardless of
population size which have the following: 

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 (a)  Street pattern, i.e., network of streets in either at parallel or right angle
orientation; 
(b)  At least six establishments (commercial, manufacturing, recreational
and/or personal services);
(c)  At least three of the following:
1.  A town hall, church or chapel with religious services at least
once a month; 
2.  A public plaza, park or cemetery; 
3.  A market place or building where trading activities are carried
on at least once a week; and  
4.  A public building like a school, hospital, puericulture and health center
or library. 
(4)  Barangays having at least 1,000 inhabitants which meet the conditions set
forth in sub-paragraph (3) of paragraph (b) above, and in which the occupation of the
inhabitants is predominantly other than farming or fishing.
(5)  All other areas of the Philippines which do not meet the conditions in the
preceding definition of urban areas shall be considered as rural areas.
natural-born citizen - is one who is a citizen of the Philippines from birth without having
to perform any act to acquire or perfect his Philippine citizenship. 

Republic Act No. 7042 as amended by Republic Act No. 8179

Under Sec. 10 of RA No. 8179. Any natural born citizen who has the legal capacity to
enter into a contract under Philippine laws may be a transferee of a private land up to a

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maximum area of five thousand (5,000) square meters in the case of urban land or three (3)
hectares in the case of rural land to be used by him for business or other purposes. In the case of
married couples, one of them may avail of the privilege herein granted: provided that if both
shall avail of the same, the total area acquired shall not exceed the maximum herein fixed.

"In case the transferee already owns urban or rural land for business or other purposes, he
shall still be entitled to be a transferee of additional urban or rural land for business or other
purposes which when added to those already owned by him shall not exceed the maximum areas
herein authorized.

"A transferee under this Act may acquire not more than two (2) lots which should be
situated in different municipalities or cities anywhere in the Philippines: provided, that the total
land area thereof shall not exceed five thousand (5,000) hectares in the case of rural land for use
by him for business or other purposes. A transferee who has already acquired urban land shall be
disqualified from acquiring rural land area and vice versa."

Particulars Provision under BP 185 Provisions under RA 7042

as amended by RA 8179

Size/Area of Coverage • maximum of 1,000 sq. meters for • maximum of 5,000 sq.
urban land meters for urban land
• maximum of one (1) hectare for • maximum of three (3)
rural land hectares for rural land

Land Acquisition for • either of the spouses may avail of
Both Spouses the privilege
• in case both spouses wish to
acquire lands for this purpose, the
total area acquired should not
exceed the maximum allowed
• either of the spouses may
avail of the privilege
• in case both spouses wish to
acquire lands for this
purpose, the total area
acquired should not exceed
the maximum allowed

In case he/she already owns urban or

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 rural lands for residential purposes,
Additional Land he/she may acquire additional urban
Acquisition or rural lands, which when added to
those he/she presently owns shall not
exceed the authorized maximum area
Limits to Acquisition A person may acquire not more
of Land than two (2) lots which should be
situated in different municipalities
or cities anywhere in the
Philippines, provided that the total
area of these lots do not exceed
1,000 sq. meters for urban land or
one (1) hectare for rural land for
use as residence.
An individual who has already
acquired urban land shall be
disqualified from acquiring rural
land and vice versa.
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In case he/she already owns
urban or rural lands for
business purposes, he/she may
acquire additional urban or
rural lands, which when added
to those he/she presently owns
shall not exceed the authorized
maximum
A person may acquire not
more than two (2) lots which
should be situated in different
municipalities or cities
anywhere in the Philippines,
provided that the total area of
these lots do not exceed 5,000
sq. meters for urban land or
three (3) hectares for rural land
for business purposes.
Under Section 4 of Rule XII of
the Implementing Rules and
Regulations of RA 7042 as
amended by RA 8179, a
transferee who has already
acquired urban land shall be
disqualified from acquiring
rural land and vice versa.
However, if the transferee has
disposed of his/her urban land,
he/she may still acquire rural
land and vice versa, provided
that this will be used for
business.
A transferee of residential
land acquired under Batas
Pambansa Blg. 185 may still
avail of the privilege granted
under this law.
Section 5 of Rule XII
 Use of Land The acquired land should not be
used for any purpose other than for
residence.
Special Requirements In addition to the requirements
provided for in other laws for the
registration of titles to lands, the
transferee should submit to the
Register of Deeds of the province
or city where the property is
located a sworn statement stating
the following :
date and place of birth;
names and addresses of his/her
parents, spouse, and children, if any;
area, location, and mode of
acquisition of landholdings in the
Philippines, if any
his/her intention to reside
permanently in the Philippines;
date he/she lost his/her Philippine
citizenship and the country of which
he/she is presently a citizen
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specifically states that “the
land should be primarily,
directly, and actually used in
the performance or conduct of
the owner’s business or
commercial activities in the
broad areas of agriculture,
industry and services including
the lease of land, but
excluding the buying and
selling thereof”.
In addition to the usual
registration requirements
pertinent to the conveyance of
real estate, the transfer
contemplated shall not be
recorded unless the transferee
submits to the Registry of
Deeds of the province or city
where the land is situated, the
following:
certification of business
registration issued by the
Bureau of Trade Regulation
and Consumer Protection of
the DTI;
sworn statement stating
information required under
Batas Pambansa 185;
certification from assessor of
municipality or province
where the property is situated
that the subject land for
transfer is an urban or rural
area;
if an agricultural land is
acquired, a certification from
the Department of Agrarian
Reform that the land is a
retained area of the transferor
and an affidavit of the
transferee attesting that his/her
total landholding inclusive of
the land to be acquired does
not exceed the 5-hectare limit
 provided under R.A. 6657, is
required

Violations through: •
misrepresentation in the sworn
Violations and statement • acquisition of land
Penalties through fraudulent means • failure to
reside permanently in the land
acquired within two (2) years from
its acquisition, except when such
failure is caused by force majeure
shall be penalized by the following:

 liability to prosecution under the

applicable provisions of the
Revised Penal Code and subject
to deportation in appropriate
cases
 forfeiture of such lands and their
improvements to theNational
Government through escheat
proceedings by the representative
of the Solicitor General
 - permanent disqualification
from availment of the privilege
under this Act

PRESIDENTIAL DECREE No. 471

FIXING A MAXIMUM PERIOD FOR THE DURATION OF LEASES OF PRIVATE LANDS

TO ALIENS

Under Section 1, the maximum period allowable for the duration of leases of private
lands to aliens or alien-owned corporations, associations, or entities not qualified to acquire

15
private lands in the Philippines shall be twenty-five years, renewable for another period of
twenty-five years upon mutual agreement of both lessor and lessee.

Any contract or agreement made or executed in violation of this degree shall be null and
void ab initio, and both parties to the agreement shall be punished by a fine of not less than five
hundred nor more than one thousand pesos, or by imprisonment of from six months to one year,
or both in the discretion of the court, Provided, that the president or managers and directors or
trustees of corporations, associations or partnerships violating this decree shall be criminally
liable in lieu thereof (Section 2).

REPUBLIC ACT NO. 7652

AN ACT ALLOWING THE LONG-TERM LEASE OF PRIVATE LANDS BY FOREIGN

INVESTORS

SEC. 4. Coverage. – Any foreign investor investing in the Philippines shall be allowed to lease
private lands in accordance with the laws of the Republic of the Philippines subject to the
following conditions:

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(1) No lease contract shall be for a period exceeding fifty (50) years, renewable once for a period
of not more than twenty- five (25) years;

(2) The leased area shall be used solely for the purpose of the investment upon the mutual
agreement of the parties;

(3) The leased premises shall comprise such area as may reasonably be required for the purpose
of the investment subject however to the Comprehensive Agrarian Reform Law and the Local
Government Code.

The leasehold right acquired under long-term lease contracts entered into pursuant to this Act
may be sold, transferred, or assigned: Provided, That when the buyer, transferee, or assignee is a
foreigner or a foreign-owned enterprise, the conditions and limitations in respect to the use of the
leased property as provided for under this Act shall continue to apply.

SEC. 5. Limitations. – (1) Foreign individuals, corporations, associations, or partnerships not

otherwise investing in the Philippines as defined herein shall continue to be covered by
Presidential Decree No. 471 and other existing laws in lease of lands to foreigners.

(2) Withdrawal of the approved investment in the Philippines within the period of the lease
agreement entered into under this Act, or use of the leased area for the purpose other than that
authorized, shall warrant the ipso facto termination of the lease agreement without prejudice to
the right of the lessor to be compensated for the damages he may have suffered thereby.

(3) Any lease agreement under this Act which is renewable at the option of the lessee subject to
the same terms and conditions of the original contract shall be interpreted to mean as renewable
upon the mutual agreement of the parties.

(4) In addition to the conditions for the renewal of a lease agreement after the period of fifty (50)
years as provided herein, the foreign lease shall show that it has made social and economic
contributions to the country.

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(5) In the case of tourism projects, lease of private lands by foreign investors qualified herein
shall be limited to projects with an investment of not less than five million (5M) US dollars,
seventy percent (70%) of which shall be infused in said project within three years from the
signing of the lease contract.

SEC. 6. Termination of Lease Contract. – The Secretary of Trade and Industry shall terminate
any lease contract entered into under the provisions of this Act, if the investment project is not
initiated within three (3) years from the signing of the lease contract.

DISCUSSION

There has been a long-standing debate whether Philippine laws should be changed to
accommodate and expand foreign ownership in the country. Most of the advocates of the proposal are
arguing that lifting restrictions on foreign ownership would eventually result in more investments from
overseas. However, those who are against it would dispute such claims stating that business ventures
from foreign investors are not dependent on property ownership and invoke the importance of national
patrimony (Tajar, 2015). Given the mentioned restrictions on foreign ownership of land, is it practical,
beneficial, and necessary on the part of the country to allow aliens to acquire real properties? The

18
following table provides the pros and cons as to whether the acquisition of real property by aliens in the
Philippines is practical, beneficial of necessary.

Pros Cons
Argument

1. There will be more

Is the acquisition of
real properties by
an alien practical?
foreign investments 1. It may cause property prices to
from overseas. skyrocket.
2. A real property may be
sold to an alien who can 2. It may spur speculative
use such property more purchases
productively and can
contribute more to the
state economy than a
Filipino citizen who are
less inclined to use their
real properties
productively.

1. Foreign investment in real 1. Real properties acquired by

estate will boost the market;
2. The country may benefit
from more substantial
Is the acquisition of investment;
real properties by
an alien beneficial?
3. Benefits will spill over to
other sectors;
foreigners may be converted for
another purpose.
2. Foreign ownership could give
more opportunities in terms of
business favourable to foreigners
than the State’s citizen.
3. Foreign nationals who are
capable of acquiring real
properties may create dominance
over the citizens of the State.

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 1. With the country’s economic 1. Business ventures
situation, allowing foreign from foreign investors
Is the acquisition of ownership is necessary. are not dependent on
real properties by property ownership.
an alien necessary? 2. It creates good relationship
and partnership with other 2. National patrimony
countries. should be given more
importance.

DATA ANALYSIS

Affirmative

1. Practicability Aspect:

More and more foreigners are now becoming interested in buying properties in
the Philippines because of many factors like: our tropical climate, the warmth of the
Filipinos and great opportunities for investments (Tajar, 2015). The Philippines has been
one of the tourist destinations that foreigners visit due to its tropical climate and its
wonders. Foreigners can be seen, enjoying their stay, in different parts of the country

20
 nowadays and some decided to settle permanently within the country, hence, there is a
need for them to acquire real properties that may serve them as a place of residence.
Although laws in the Philippines provide that a foreigner may acquire real
properties, it is subjected to restrictions. In the above-mentioned arguments, it asserts that
there will be more foreign investments from overseas if foreign ownership of real
properties will be allowed by the Philippine laws. This means that more foreign
investments in the country could give more opportunities for its Filipino citizens in many
aspect such as business related opportunities and employment opportunities. It
significantly expand livelihood and employment opportunities for Filipinos, enhance
economic value and promote for their welfare.
In addition, it is also argued that it can be an advantage to sell real properties to an
alien who could use such property more productively and that could contribute more to
the state economy. Filipino citizens owning real properties may be less inclined to utilize
such properties that the country may benefit from, thus, in a practical sense, an alien must
be allowed to acquire real properties absolutely, who is more capable in making practical
and effective use of such properties.

2. Beneficiality Aspect:

To say that Philippine real estate is fast becoming a favourite among buyers
abroad is quite an understatement. In fact, an article published in ABS-CBNnews.com
reported that Asian investors—from Malaysia to Japan—are snapping up condo units in
bulk. These buyers are favouring the Philippines over Hong Kong and Singapore, where
the authorities have put in place cooling measures to rein in property prices (Lamudi
Philippines, 2019). Since the Philippines is more favoured by the foreign buyers of real
properties over other countries, the more established property markets attract
investments and create more wealth. As argued on the table, foreign investment in real

21
 estate will boost the market. According to David Leechiu, JLL Philippines Managing
Director and Country Manager, the residential real estate market will get a boost if some
of the restrictions imposed on foreigners are lifted. Although the Philippines’
macroeconomic are sound, Leechiu said it could do so much better if it were less
restrained. (Lamudi Philippines, 2019). This shows that the Philippines’ condition as
regards residential real estate is becoming in demand, and by lessening its restrictions
among foreigners as to their acquisition of real properties, it attracts more investments
which is more beneficial to the State economy.
In addition, according to Charlie Gorayeb, Chairman of Chairman of the Chamber
of Real Estate & Builders’ Association (CREBA), foreign investment into real estate will
attract much-needed capital, which will unleash the multiplier effect of construction and
real estate sectors into other industries. This multiplier effect will impact sectors closely
related to real estate, and will provide additional opportunities for local businesses and
employment (Lamudi Philippines, 2019). Developed countries always look into the
possibility of investing in some developing countries like the Philippines. By allowing
foreign investments related to real estate, it gives more opportunities for local businesses
and employment which is beneficial to the State and its people.
Furthermore, the benefits of allowing foreigners to acquire real properties will
spill over to other sectors. Allowing foreigners to own real properties for industrial and
commercial purposes will benefit the manufacturing sector, which will again boost
employment opportunities for many Filipinos.

3. Necessity Aspect:

In overall competitiveness, the Philippines is only better than Cambodia, Laos,

and Myanmar today. We have been overtaken by Vietnam and Indonesia in most
competitive indicators in the last two years. This is not to say that the Philippines did not

22
 improve. We did, especially between the years 2010 to 2015. In the last two years,
however, the rest of the region accelerated their reforms while the Philippines remained
static given the disruption of the national elections and the period of adjustment of the
new administration (Masigan, 2018). This reveals that the economic status of the
Philippines, although has improved between the years 2010 to 2015, in the last two years,
the country remained static. With the country’s economic situation, allowing foreign
ownership of real properties is necessary. By lessening its restrictions in the modes of
acquiring real properties by aliens, there could be more possibilities of a growing number
of foreign investments which is necessary for the economic growth of the country.
Moreover, allowing foreign nationals or aliens to own real properties and without
restrictions, a good relationship between foreign countries may be established, creating
more opportunities that is favourable to the country.

Opposition:

1. Practicability Aspect:
In certain cases, allowing foreign money to come in freely is not entirely a good
thing. For example, London has become too attractive to rich property buyers from
Russia and the Middle East, which has driven prices too high and pushed locals out of the
housing market. At the moment, prices of houses and condos in Metro Manila are already
beyond the
reach of many Filipinos, so allowing foreigners to freely purchase may push prices even
higher(Lamudi Philippines, 2019). Allowing aliens or foreigners in acquiring real
properties absolutely and without restrictions may be beneficial to the State economy as it

23
 can attract more buyers outside the country, however, this can lead to the increase of
price of real properties, and locals in the country may have less opportunities to acquire
real properties in their own country. In addition, speculative purchase of property—the
kind that take large risks in the hope of making quick, huge gains—could be intensified
when the gates are opened to foreign property buyers. This could pose danger to the real
estate market, which could go through a period of irrational exuberance, fueling the
formation of a real estate bubble. There will be no certainty that, in allowing foreign
nationals to acquire real properties, profit coming from them will be immediate, which
might be a risk in real estate market.

2. Beneficiality Aspect:

There are certain property types that, if they get sold and converted into another
use, may do more harm than good to the local economy. According to Gorayeb, there
should be some mechanisms of control to protect local interest. Agricultural land, for
example, should remain as such even when purchased by foreigners, and, in order to
protect our natural resources, foreigners should only be allowed to purchase disposable or
alienable land (Lamudi Philippines, 2019).In this sense, absolute ownership of foreign
nationals in terms of acquiring real properties could give more opportunities to them
related to business but will lead to the prejudice of the citizen’s interests in their own
country. The possibility of converting real properties into another purpose when
restrictions in acquiring real properties by the aliens are abolished may only create an
adverse impact including the environment. In addition, aliens who are capable of owning
real properties may create dominance over the citizens of the State. It was mentioned
above that there is a “huge and continuously growing housing crisis in the country, where
decent homes are becoming too expensive” (Angara, 2018). In this case, enabling aliens
to acquire ownership of real properties in the country can dominate the locals in a sense

24
 that, having a growing housing crisis in the country, only the foreign nationals are mostly
the ones capable of buying such properties, hence, could dominate local citizens, giving
the former more opportunities to enjoy possessions owned by the State.

3. Necessity Aspect:

In the above-mentioned argument as to the necessity of the State in allowing

aliens in acquiring real properties, it contends that business ventures from foreign
investors are not dependent on property ownership. It shows that it is not necessary that
foreigners or aliens need to own a real property to engage business in the Philippines that
could be beneficial to the State economy.
Furthermore, it is also argued that national patrimony should be given more
importance. The 1987 Constitution of the Philippines, Article XII of Section 1, provides
that, “the goals of the national economy are a more equitable distribution of
opportunities, income, and wealth; a sustained increase in the amount of goods and
services produced by the nation for the benefit of the people; and an expanding
productivity as the key to raising the quality of life for all, especially the
underprivileged”. It is construed that the welfare of its citizens should be given more
importance by making them the top priority in providing equitable distribution of
opportunities, income, and wealth. Restricting aliens in owning real properties in the
country by the State or imposing restrictions thereof is only a manifestation of its
compliance with the Constitution as a fundamental principle of the State.

25
CONCLUSION:

Public judgment and awareness play an important role in determining the nature and
extent of the restrictions imposed in the acquisition of real properties by aliens in the Philippines.
Once a decision is made to regulate foreign ownership of real properties, the first issue to be
addressed is, whether such decision could favor public interest within the country or it could
prejudice the rights of its citizens. It can be seen that a variety of methods are made available by
legislatures as regards the Philippine laws to regulate the acquisition of real properties and its
prohibition to aliens in acquiring real properties absolutely. In this regard, the State is only being
scrupulous in implementing its laws in compliance to the Constitution of the State, being it the
fundamental law of the State.

26
 Given the disparate range of arguments stated above in relation to foreign nationals
acquiring real properties, perhaps the conclusion one may draw is that, aliens acquiring real
properties in the Philippines is not practical, beneficial and necessary as legal restrictions on
ownership and use of land by foreigners are designed to achieve a variety of policy objectives,
unique to the circumstances of the State. Notwithstanding the implications of allowing aliens to
own real properties, wherein the establishment of housing projects by these private sectors
significantly contributed an advantage to the economy of the country, it is an issue that strikes at
the heart of the State, as it can question the importance of the national patrimony of the State,
that it may be disregarded by lessening its restrictions favorable to aliens wanting to acquire real
properties in the country. It can also bring nationalists to make some actions to address the
matter in the country.

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