THREE MAIN PRINCIPLES
The insurance principle may however purchase condominiums, buildings, and
A. The mirror principle
The basis of this principle is that the register
of title is a mirror which reflects accurately and
completely the current facts that are material to title.
With certain inevitable exceptions (ie exceptions to
indefeasibility) the title is free from all adverse
burdens, rights and qualifications unless they are
mentioned in the register.3 The “mirror” ideal, that the
register should reflect all facts and matters relevant to
the title to a parcel of land has not been fulfilled in any
Torrens jurisdiction.
One is the mirror principle, which means the
register correctly mirrors the information on the
property's title; if the property is sold, the mirror
principle ensures that the only information that is
changed in the register is the landowner's name.
B. The curtain principle
The principle requires that the register is the sole
source of information for intending purchasers. As the
Privy Council has put it, the main object of the Act:
is to save persons dealing with registered
proprietors from the trouble and expense of
going behind the register, in order to
investigate the history of their author’s title,
and to satisfy themselves of its validity.4
The curtain principle is usually expressed in
individual Torrens statutes in terms that no notice of
trusts is to be entered in the register book, thereby
implying that they are of no concern to a disponee and
it is everywhere expressly stipulated that a purchaser
is not to be affected by notice of any trust. This does
not mean that a fiduciary is allowed to escape from his
obligations for, after registration, he holds the land
upon the trusts and for the purposes for which the
same is applicable by law although these equities are
behind the impenetrable curtain of the register book.
curtain principle, the certificate of title serves
as the main proof of ownership, eradicating the need
for lengthy documentation
C.
This principle provides that, if through human
frailty (in the Registry), the mirror fails to give an
absolutely correct reflection of the title and a flaw
appears,
anyone who thereby suffers loss must be put
in the same position, so far as money can do
it, as if the reflection were a true one.5
The insurance principle also involves a
curative process. Since it is the State rather than the
parties which effects the transaction, registration
“sometimes confers a better title than the transferor
possessed” so that a purchaser can “acquire an
indefeasible right, notwithstanding the infirmity of his
author’s title”. Thus the insurance principle, properly
understood and fully carried out, involves far more
than that the owner’s title is guaranteed by the State.
It means:
not only that registration will be carried on
literally as an insurance undertaking but also
that it is the privilege of the Registrar, or the
Commissioner, or other responsible officer,
on bringing land under the Act, to cure the
title of known defects so far as he possibly
can. It implies that the whole business of
registration ought to be conducted with such
an economy of public manpower, public time
and public money that the saving which is
achieved far outweighs any payment of
compensation for errors or omissions which
may become necessary from time to time.
insurance principle, which financially protects the
landowner against loss should the registrar make any
mistakes in the proper registration of the property.
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
enter into a long term land lease.
K&C 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 it 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 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 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 my 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 wither
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