Philippine Real Estate Laws
Basic Principles of Property Ownership
Definition of Ownership Right
Ownership is the independent right of a person to enjoy and control the property to the exclusion of others which includes its conveyance and recovery or vindication when ownership rights oppressed subject to the limitations established by law and the rights of others.
Inclusion of Ownership Rights
Fee simple – bundle of rights which are inherent to ownership of property includes the following:
a. Right to vindicate or recover in the courts of law
b. Right to convey or sell
c. Right to the fruits, products or proceeds such as civil fruits or rentals, natural fruits of trees or shrubs or animal offspring, and industrial fruits produce through cultivation or labor.
d. Right to use and enjoy
e. Right to posses
f. Right to abuse
Limitations on Right of Ownership
a. Those enforced by the owner such as mortgage, lease and voluntary easement.
b. Those enforced by the grantor such as usufruct, will, and donation.
c. Those prescribed by the law such as escheat, subdivision regulations, urban and agrarian reform law, rent control act, the building code, zoning ordinance, requirement of legitime succession, and legal easements and servitudes.
d. Those prescribed by Philippine Constitution by the State in the exercise of the power of eminent domain, police power and taxation.
Surface, Subsurface and Air Right
Land ownership extends from the surface underneath to the center of the earth and upward toward the skies.
The surface and subsurface rights of an owner entitle him to construct thereon any improvements, plantations and excavations without detriment to rights of the adjacent owner for sufficient lateral and subjacent support.
Air right is the right of an owner to use and control the air space of his land subject to the limitations of aerial navigation laws.
Right to own Philippine Real Estate
Generally, only Filipinos and Qualified Filipinos or Corporations at least 60 % capital of which are owned by Filipinos are entitled to acquire and own lands in the Philippines.
Exception, Foreigner acquisition is allowed in the following:
1. Purchase of a former natural born Filipino subject to the limitation in accordance with BP 185 and RA 8179.
2. Purchase of not more than 40% interest in a Condominium project.
3. Acquisition through hereditary succession if such person is a legal heir.
4. Acquisition before the 1935 Constitution.
Acquisition by Former Natural Born Filipino Citizens
Maximum area that may be acquired for residential purpose is one thousand square meters of urban land or one hectare of rural land; while for business purpose is Five thousand square meters of urban land or 3 hectares of rural land.
Business purpose refers to the use of land actually, directly and exclusively in the conduct of commercial activities in the areas of industry, agriculture, and service including lease but not the buying and selling thereof.
Foreign Ownership of Condominium Unit
Absolute ownership by a foreigner is allowed but not exceeding 40% interest in the condominium project.
Rights of a Condominium unit owner
a. Right to participate and vote in the condominium corporation meetings.
b. Right to decorate, paint and repair the interior surface of his/her unit.
c. Right to mortgage, sell and lease his/her unit.
d. Right to non-exclusive easement to common areas for ingress and egress.
e. Right to exclusive easement of the space of his unit.
f. Right to Co-ownership of land and common areas.
g. Right to absolute ownership of his/her unit.
Obligations of a Condominium Unit Owner
1. To comply with the use restrictions
2. To pay the shared monthly condominium dues for the maintenance of common areas, amenities and garbage disposal.
3. To pay insurance on his/her unit.
4. To pay realty tax on his/her unit.
PD 957 (Philippine law of sale of subdivision and condominium)
When the developer fails to complete the development of the project within the time specified in the contract the refund is 100 percent of the total payments less penalty interest plus legal interest.
(An act to provide protection on buyers of real estate on instalment payment )
Applies to sale of residential estate on instalment payment covered by contract to sell.
Rights of buyers who has paid less than 2 years of instalment:
1. Grace period to pay without additional interest on any instalment due is fixed at sixty days. Not automatic cancellation.
2. For contract cancellation due to non-payment of balance due, the buyer is entitled to 30 day notarial notice of cancellation but without the right to receive the cash surrender value of his total payments.
Rights of buyers who has paid at least 2 years of
1. Grace period: 1 month per year of
installment payments made. BUT buyer
may only avail of it only once in every 5
2. Refund of Cash Surrender Value (CSV):
50% of total amount paid + 5% for every
year after the 1st 5 years of instalments BUT not greater than 90% of total
3. Notice of cancellation of demand for
rescission by notarial act is effective 30
days from the buyer’s receipt thereof and
upon full payment of CSV
Down payments, deposits, or options on the
contract shall be included in the total number
of installments made
DOES not apply to:
Industrial lots, Commercial buildings and Sale to tenants under Agricultural Reform Code [RA 3844]