Right of Informal Settler

There are two (2) kind of informal settlers or squatters. 

Professional squatters are those who have sufficient income for legitimate housing, non-bonafide occupants and intruders of lands reserved for socialized housing. In this case you can have them legally evicted. 

However, the squatters are underprivileged and homeless citizens, it’s more difficult. You need court order and it takes long time. In many cases, it involves both legal and humane (relocation fee) method to evacuate the land. The government is trying to relocate those people but there still a lot of squatter areas especially in Metro Manila.

Notes: Understandable but if you are a landowner, it's really disturbing since you cannot exercise your rights properly. Almost nobody will buy your land if there are informal settlers. There are too many issues with land in the Philippines (ownership, title, zone, tax, etc).

Right of Way (ROW)

Article 649 of the Civil Code provides that “the owner, or any person who by virtue of a real right may cultivate or use any immovable, which is surrounded by other immovables pertaining to other persons and without adequate outlet to a public highway, is entitled to demand a right of way through the neighboring estates, after payment of the proper indemnity.”

Government has right of eminent domain, which means if a piece of property is required for a road, railroad or any other public infrastructure, government can get that property, but must pay the owner just compensation. Many times, this ends up in court over the computation of compensation. For private companies it’s more difficult to resolve. Some cell sites of telecommunication companies or infrastructure projects couldn’t proceed because of this problem.

Capital Assets vs. Ordinary Assets

Why should we distinguish if it's capital or ordinary? Tax.

1. Capital Assets are defined in Tax Code
The term “capital assets” means property held by the taxpayer (whether or not connected with his trade or business), but does not include the following: stock in trade of the taxpayer or other property of a kind which would properly be included in the inventory of the taxpayer if on hand at the close of the taxable year; property held by the taxpayer primarily for sale to customers in the ordinary course of his trade or business; property used in the trade or business, of a character which is subject to the allowance for depreciation ; and real property used in trade or business of the taxpayer.

It means capital assets are properties that are not used in trade or business. So the opposite will be the ordinary assets.

Notes: The sale of capital assets (land and/ or building) is subject to capital gains tax at the rate of six percent based on the gross selling price or fair market value at the time of sale, whichever is higher and the corresponding documentary stamp tax (DST). Conversely, sale of ordinary assets is subject to the creditable withholding tax at a rate ranging from 1.5 percent- 6 percent and consequently to ordinary income tax, corresponding DST and likewise to the 12 percent VAT.

Notes: Capital Gain tax is not imposed on gains. Even you sell a property at a loss, you should pay 6%. It's rather a transaction tax. Same as stock transaction tax.

2. Idle Assets

Condominium Act - RA 4726

1. What is a condominium?
The law defined a condominium as an “interest in a 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 in which it is located and in other common areas of the building.

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, condominium corporation, in which the holders of separate interest 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.

Notes: "Common areas" means the entire project excepting all units separately granted or held or reserved.

Notes: Any transfer or conveyance of a unit or an apartment, office or store or other space therein, shall include the transfer or conveyance of the undivided interests in the common areas.

2. Who can own condominiums and/or condominium units?

Condominiums include the land, so the constitution of the Philippines is applied. Means, the maximum foreign ownership is 40% of the capital stocks.

In terms of condominium units, it depends on who owns the land.

a) When the condominium corporation leased the land from Filipino.
In this case, the condominium company and units can be wholly-owned by foreigners.

Foreign ownership in real estate - Land Part II

The following story is what happened to a foreign husband.

This summary is the Supreme Court Decision dated June 22, 2009.
(The names below are not their real name.)

1. Foreign Husband : Benz
2. Filipino Wife : Rose
3. Married : June 30, 1988

4. Petitioner : Lessee
5. Situation
They bought/improved a parcel of land in Boracay Island in 1989 under the name of Rose using Benz's money. It eventually became a resort and get all the business permit using Rose's sister's name. In June, 1992, Rose executed a Special Power of Attorney (SPA) in favor of Benz authorizing the latter to maintain, sell, lease, and sub-lease and otherwise enter into contract with third parties with respect to their Boracay property. In July, 1992, Rose leased out the property for a period of 25 years. It was duly notarized. Therefore, the lessee started the resort businesses. Rose ran away with another guy.

Benz claimed against Rose and Lessee that the lease agreement is void and null since there was no consent from him.

6. Regional Trial Court (RTC) declared the agreement null and void in 1994 since lessee didn't answer to the court. However, Court Appeal (CA) ordered RTC to allow lessee to file his answer. He said that it's owned by Rose, so he thought there was no problem with the contract. Besides, there was a signature of Benz on the Witness portion.

Foreign ownership in real estate - Land Part I

NO! THERE ARE NO WAYS FOREIGNER CAN LEGALLY, ACTUALLY, FULLY, PRACTICALLY, PERMANENTLY OWN LAND IN THE PHILIPPINES.

Exceptions
1. Acquisition by hereditary succession being the legal heir.

2. Acquisition of not more than 40% interest in a condominium project pursuant to R.A. 4726;

3. Former natural born citizen of the Philippines who became a citizen of another country but is now returning to the Philippines to reside permanently, subject to limitations;

4. Filipina who marries a foreigner but retains her Philippine citizenship can acquire and own land;

Notes: Former natural born citizen can re-acquire citizenship. Just be the citizen again. 

5. PD 713 (May 27, 1975) Allows Americans who were formerly Filipino citizens, Americans who became permanent residents of the Philippines and Americans who have resided in the Philippines continuously for at least 20 years and are in good faith had acquired private residential lands for
family dwelling purposes in the Philippines prior to July 3, 1974 to continue holding such lands and transfer ownership over the same to qualified persons or entities.

The same right is hereby granted to those citizens of the United States who become permanent residents of the Philippines and who acquired private residential lands in the Philippines of not more than five thousand (5,000) square meters for a family dwelling.

First of all, land and the building on it is a separate issue. Foreigners can own the building but not the land. Technically, it still can be regarded as a long term lease which you can sell. So, wanna buy a 2~3 story commercial/residential building?

Public Domain Land of the Philippines

I saw some beach resorts fenced out even to the shores. Do they own the shores or leased out? How about village roads? It's gated. We cannot pass through even though it's a short cut. I guess the village or subdivision has also great role in the terrible Manila traffic. TT

Property is either of public dominion or of private ownership.

Public Dominion
Public dominion or property owned by the State (or its political subdivisions) in its public or sovereign capacity and intended for public use and not for the use of the State as a juridical person.

The following things are property of public dominion:
1. Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, banks, shores, road steads, and others of similar character;

2. Those which belong to the State, without being for public use, and are intended for some public service or for the development of the national wealth;

3. Property for public use, in the provinces, cities, and municipalities, consist of the provincial roads, city streets, municipal streets, the squares, fountains, public waters, promenades, and public works for public service paid for by said provinces, cities, or municipalities.

Notes: Subdivision, as a whole, is privately owned land. It means even the roads inside is held privately. 

Notes: shores are belong to the state. No private person can own them.

Land Use reclassification and Land Use Conversion in the Philippines: Inter-agency functions

Reclassification of agricultural land refers to the act of specifying how agricultural lands shall be utilized for non-agricultural uses such as residential, industrial, commercial, as embodied in the land use plan.

Land Use Conversion is the ac or process of changing the current physical use of a piece of agricultural land into some other use or for another agricultural use other than the cultivation of the soil, planting of crops, growing of trees, including harvesting of produce therefrom.

RA 6657 or the Comprehensive Agririan Reform Law, allows the conversion of awarded lands under the Comprehensive Agrarian Reform Program (CARP) after the lapse of five (5) years from the granting of the award, if they are no longer economically feasible and sound for agricultural purpose, or the locality has become urbanized giving the subject lands greater economic value for residential, commercial or industrial purposese.

RA 7916 or Special Economic Zone Act identifies areas for economic zone development and prescribe the manner of identifying such areas.

Certificates Stewardship Contract (CSC) of Forestland

There was a fraud case where some group of people tried to sell forestland under Certificates of Stewardship Contracts (CSCs) by means of "transfer of right".

Notes: stewardship is not a ownership, so they have no rights to transfer or sell the land.

Pursuant to Executive Order 192, LOI 1260 implementing the Integrated Social Forestry (ISF) Program, and the Comprehensive Agrarian Reform Law, DENR issued IRR covering CSC.

To achieve the national objectives of economic and social development, it is the government policy to democratize the use of public forest land and to promote more equitable distribution of the forest bounty. In line with this policy, the government shall provide security of tenure and assist kaingineros and other deserving forest occupants dependent on forest lands for their livelihood.

Notes: kaingineros means "slash-and-burn farmers". Farmers cut the trees to develop or cultivate crops.

1. Participants
a) Individuals or heads of families who occupied forest lands prior to January 1, 1982; and
b) National Minorities or tribal communities.