The Philippines has a lot of wonderful things to offer, especially if you have the money to enjoy them. Great beaches, resorts, restaurants, romantic getaways, adventure and more. But the daily reality for many, about 40%, of local Filipinos is a day to day struggle to make ends meet. Really it’s more like 55-65% when you factor in that there is a very narrow ‘rich’ upper-class and not much of a middle-class as you see in a 1st-world country. Now, my experience has been that despite poverty, the majority of Filipinos I know are honourable, religious, hard-working people. Times are tough for them but they don’t let hard times compromise their spiritual values for the most part as a society.
But if I had to ball-park a figure. I’d say there is an element that comprises about 4% of people here (or anywhere else for that matter) who simply are not to be trusted. These are the ones I want to discuss. Whether you ever plan to come to the Philippines or not, these shady characters exist in your home town as well. You might even be related to them. The difference is that with a larger middle-class you may not cross paths with them quite so often. But they are out there and you will eventually meet them at a street-corner, workplace or even knocking at your front door someday. These people I label as straight out Con Artists. And they are in every country, every community no matter how rich or how poor or how in-between.. There are con artists looking to separate you from your money.
So.. you’re a foreigner in a new country here. Fresh off the plane with pockets of cash and not a clue where to go, what to do and you could sure use a friendly face to guide you around. The first thing you got to realize is that the local con artists spot you right away. You stick out like a hillbilly at a wine tasting function. Just like sharks can smell blood in the water these con artists see you coming from a block away, make no mistake about it. They don’t just bump into you or start conversation
Desperate people do desperate things
So knowing that you are going to be a target of a scam at most points during the building of your home in the Philippines, where do you start?
Foreigners cannot own land, but can own condominium units or apartments in high-rise buildings as long as the foreign proportion does not exceed 40%. They can also buy a house but not the land on which it is built. Leases on land up to 50 years, renewable for another 25 years, are available.
If a foreigner is keen on acquiring land, there are several options. One, if married to a Filipino citizen, is to have the ownership of the land under the Filipino’s name. However, in the event of death or separation, the land cannot be transferred to the foreigner. Another option is to acquire land through a corporation. Corporations can only be, at the maximum, 40% foreign-owned.
The maximum area that may be acquired for residential purposes is 1,000 square meters of urban land or one hectare of rural land.
When buying new property, it is important to look for properties backed by established developers and licensed real estate agents/ brokers, especially in cases of off-plan or pre-selling (the property is at the planning stages and non-existent during the time of the sale).
In general, property can be acquired by simple agreement. After deciding what property to buy as well as inspecting the premises and documents, the buyer usually signs a binding notarized Deed of Sale. Employing the services of a reputable sales agent is convenient because they not only provide vital information regarding the transaction and property, but also assist the buyer in getting mortgage loans.
A down payment of 10%-30% is usually required. Ownership of condominium units is evidenced by the Condominium Certificate of Title (CCT) but the transfer of title is usually not executed until the property is fully paid. Foreigners can only own up to 40% of a condominium project.
Holders of Special Resident Retiree’s Visa (SRRV), a non-immigrant resident visa, can get additional benefits aside from being allowed to buy a condo unit or lease a parcel of land or a house and lot. The SRRV holders can reside in the Philippines permanently, with multiple-entry privileges and zero travel taxes. Other benefits and information about the SRRVisa is available on the Philippine Retirement Authority Website.
The process of buying land in the Philippines is cumbersome and tedious. Aside from the fact that foreigners are not allowed to buy land, the system of land registration and classification should make any investor think twice. The farther you are from the capital the more caution one must take.
However, serious land problems also exist in the NCR. There are 11 laws directly related to land registration and nine others indirectly related to land disposition and administration. Aside from the Department of Environment and Natural Resources and the Bureau of Lands, there are several agencies that have direct and indirect control over land. The courts also have the authority to award land ownership.
Legal Procedures in transfer of title (land and apartments)
Owner and Buyer agree on sale of a piece of land. Through a lawyer, a Deed of Absolute Sale (DOAS) is created and notarized.
A Land Tax Declaration is secured from the Bureau of Internal Revenue (BIR) and submitted to the city or municipal Assessor’s office.
Buyer pays real estate tax to the City Treasurer’s Office.
The Assessor’s office assesses the market value of the property.
Transfer taxes are paid by the buyer to the Assessor’s Office.
Capital Gains Tax and Documentary Stamp tax are paid to BIR.
The Registry of Deeds (RD) cancels old title and issues a new one in the name of the buyer.
The buyer, now the new owner, obtains a photocopy of the new title and requests tax declaration from the Assessor’s office.
Ownership is evidenced by the Transfer Certificate of Title (TCT) in the case of single houses and raw land, and The Land Registration Act requires the owners of property to register titles with the Registry of Deeds. The titles must be registered in the same province as the property. However, the records are inaccurate in such that overlapping might exist. There is a proliferation of fake and double titles. The completion of survey of all the lands in the country, mandated by the 1903 Public Land Law, is nowhere in sight.
The whole process of registering property may take around 39 days to complete eight procedures.
Value Added Tax
According to RA 9337, the following sales of property are VAT-Exempt
Sale of real properties not primarily held for sale to customers or held for lease in the ordinary course of trade or business;
Sale of real properties utilized for low-cost housing as defined by R.A. No. 7279, otherwise known as the “Urban Development Housing Act of 1992” and other related laws, such as R.A. No. 7835 and R.A. No. 8763 wherein the price ceiling per unit is P750,000.00 or as may from time to time be determined by the Housing and Urban Development Coordinating Council (HUDCC) and the National Economic Development Authority (NEDA);
Sale of real properties utilized for socialized housing as defined under R.A. No. 8763, wherein the price ceiling per unit is PHP225,000.00 or as may from time to time be determined by the HUDCC and the NEDA and other related laws;
Residential lot valued at one million five hundred thousand pesos (PHP1,500,000) and below, house and lot, and other residential dwellings valued at two million five hundred thousand pesos (PHP2,500,000) and below: provided, that not later than January 31, 2009 and every three (3) years thereafter, the amounts herein stated shall be adjusted to their present values using the Consumer Price Index, as published by the National Statistics Office (NSO).
It takes around 36 days to go through the eight procedures needed to register a property in the Philippines.