Retirement in the Philippines - Major Concerns

[22pilgrim]

My Filipina wife and I are considering retiring to the Philippines. The intention is that we would buy a house (in my wife's name), spend 8 months @ year in the Philippines and the rest in the UK and France, and that I'd probably use a Balikbayan visa travelling. We do however have several major concerns:

* if my wife dies first, our understanding is that under Filipino law, my wife's assets are divided between the spouse (me) and our children;
* we also understand that because self and the kids are not Filipino
citizens we would be forced to sell the house asap;
* we've no idea what my legal position regarding staying in the Philippines would be.

In summary it appears that if wife died first, I could be say in my mid
seventies and forced to leave our home of a decade or more and all that
soon after her death.

Just wondered if anyone else had considered these issues?

Nigel

[22pilgrim]

Just wondered if one of the Moderators / Administrators could move this post to the "Legal Information" section? Thanks Nigel

[keithAngel]

Yes I have both in the Phillis and Thailand my suggestion would be to look at your wife having the freehold and you holding a long lease that way in the event she predeceases you should be secure if the lawers dont like that consider another legal entity holding the freehold Company, wifes relative ect and ditto you get a very long lease 30 years plus 30 years then your kids will inherit that on your death

Find a good lawer and of course see what they say

[Piamed]

Sorry 22pilgrim, is that a Kuvasz in the pic with your cat?

[David House]

I am also buying a new house in Cebu and face exactly the same problem. I have investigated various solutions and have talked to the developer's attorney and now to another who will represent me in the Philippines.
Lease back is not an option as it is not legal under Philippine law to lease from a spouse.
The advice I got from my attorney was this:-

1. Our Constitution strictly forbids ownership of land by foreigners or non-citizens. Hence, the ownership of the land you purchased shall be placed in the name of your wife as her exclusive paraphernal property.

2. Your name will appear in the title of the lot only as her spouse, not as a co-purchaser. Hence, she can exercise acts of dominion over the property, even without your consent.

3. In case your wife predeceases you, you are considered a mere heir together with her relatives. Your share as heir is limited however to its proportionate value in case the property is disposed for a consideration. Otherwise, you cannot own a portion of the inherited property under our laws on succession.

4. If you have children with your wife, no problem exists. The relatives of your wife are excluded from the inheritance.

5. Your suggested loan agreement with your wife is not possible under our laws, unless you had executed a pre-nuptial or pre-marital agreement with your spouse to govern the property relations during the marriage.

6. There are risks involved in acquisitions of real property in the Philippines by foreigners with Filipino spouses. My advice is limited to minimizing such risks under the following possible and feasible strategies:

1. Place the name of the property under a Philippine corporation with 60% Filipino and 40% foreign capital. The 40% capital can be owned by you exclusively. Your wife cannot exercise acts of dominion over the land unless approved by the corporation.

2. Secure a loan with any local entity and have the property mortgaged as security. Such loan will prevent your wife from disposing the property without the consent of the creditor or mortgagee.

We don't have kids but I understand that they can inherit provided they too hold Philippine citizenship. In your case it might be sensible for them to take a dual citizenship of both the UK and the Philippines, just to cover all bases.

In my own case I am going for the "corporation" option. We are setting up a holding company, incorporated in the Philippines. It will have 5 shareholders, me with 40% the other 4 with 15% each, although I will provide all the capital. The other 4 shareholders have to be Philippine residents, but not necessarily Philippine nationals, so I have found a local Brit and his wife to sign up. This is a paper company and the role of the shareholders starts and ends when they sign the paperwork. The clever part is that along with the share owning paperwork they also sign an assignment of their voting rights to me which is written in such a way as to be unchangeable. The company will own the land and the house standing on it. I will control the company and this is legal in the Philippines. I will then have to make a will passing on the company to my wife so that she is also protected if I die first.

As I have heard horror stories of relatives doing their best to get their hands on property after the death of a wife it is definately worth taking seriously. I am told that the authorities do allow a "reasonable" time for a disposal of her assets, with "reasonable" being open to interpretation, but that a disposal has to take place in some way, and not to the husband!

I hope this helps,

Regards

David

[22pilgrim]

Sorry 22pilgrim, is that a Kuvasz in the pic with your cat?

She's an Irish Wolfhound (Cats the boss though!).
Cheers,
Nigel

[22pilgrim]

I am also buying a new house in Cebu and face exactly the same problem. I have investigated various solutions and have talked to the developer's attorney and now to another who will represent me in the Philippines.
Lease back is not an option as it is not legal under Philippine law to lease from a spouse.
The advice I got from my attorney was this:-

1. Our Constitution strictly forbids ownership of land by foreigners or non-citizens. Hence, the ownership of the land you purchased shall be placed in the name of your wife as her exclusive paraphernal property.

2. Your name will appear in the title of the lot only as her spouse, not as a co-purchaser. Hence, she can exercise acts of dominion over the property, even without your consent.

3. In case your wife predeceases you, you are considered a mere heir together with her relatives. Your share as heir is limited however to its proportionate value in case the property is disposed for a consideration. Otherwise, you cannot own a portion of the inherited property under our laws on succession.

4. If you have children with your wife, no problem exists. The relatives of your wife are excluded from the inheritance.

5. Your suggested loan agreement with your wife is not possible under our laws, unless you had executed a pre-nuptial or pre-marital agreement with your spouse to govern the property relations during the marriage.

6. There are risks involved in acquisitions of real property in the Philippines by foreigners with Filipino spouses. My advice is limited to minimizing such risks under the following possible and feasible strategies:

1. Place the name of the property under a Philippine corporation with 60% Filipino and 40% foreign capital. The 40% capital can be owned by you exclusively. Your wife cannot exercise acts of dominion over the land unless approved by the corporation.

2. Secure a loan with any local entity and have the property mortgaged as security. Such loan will prevent your wife from disposing the property without the consent of the creditor or mortgagee.

We don't have kids but I understand that they can inherit provided they too hold Philippine citizenship. In your case it might be sensible for them to take a dual citizenship of both the UK and the Philippines, just to cover all bases.

In my own case I am going for the "corporation" option. We are setting up a holding company, incorporated in the Philippines. It will have 5 shareholders, me with 40% the other 4 with 15% each, although I will provide all the capital. The other 4 shareholders have to be Philippine residents, but not necessarily Philippine nationals, so I have found a local Brit and his wife to sign up. This is a paper company and the role of the shareholders starts and ends when they sign the paperwork. The clever part is that along with the share owning paperwork they also sign an assignment of their voting rights to me which is written in such a way as to be unchangeable. The company will own the land and the house standing on it. I will control the company and this is legal in the Philippines. I will then have to make a will passing on the company to my wife so that she is also protected if I die first.

As I have heard horror stories of relatives doing their best to get their hands on property after the death of a wife it is definately worth taking seriously. I am told that the authorities do allow a "reasonable" time for a disposal of her assets, with "reasonable" being open to interpretation, but that a disposal has to take place in some way, and not to the husband!

I hope this helps,

Regards

David

David - many thanks for your input. The only drawback I can see is that eventually - in this scenario - on my death - presumably the 60% of the property owning corporation will still be in the hands of the (4) Filipino residents and unavailable to pass onto the kids.

The only twist that I might put on such an arrangement is for the 40% foreign owned to be owned by an offshore company rather than directly by myself (with UK dominciliation) thereby possibly minimising any UK inheritance tax liability.

regards,

Nigel

[andypaul]

Blimey worthing sounds so much easier.

Is a Condo still possible to be owned outright(well its lease) by an alien?

[Piamed]

She's an Irish Wolfhound (Cats the boss though!).
Cheers,
Nigel

Ah, I see it now! Kuvaszok are still petty rare in the UK. I am a huge fan of dogs and previously had a Beauceron, Karabash, Rottweiler, Ridgeback, Canaan and a Kuvaszok. Never more than 2 at a time.

[jimeve]

Blimey worthing sounds so much easier.

Is a Condo still possible to be owned outright(well its lease) by an alien?

yes aliens can own a condo, but not over 40% of the tower.

[David House]

I am sure that the attorney will write something into my will that upon my death the company transfers ownership to my wife and is then wound up. The other shareholders will all sign an irrevocable deed of assignment of their voting rights and I assume something will be incorporated into that. Good point though and I will check with him. I don't think you will be liable to UK inheritance tax on this, but you will be subject to Philippine taxes which seem, on the face of it, to be pretty expensive although I believe all sorts of tricks are pulled with under valuations being given, for a "fee" to the relevant authorities!

[ginapeterb]

The above information is correct, the foreign spouse has little or no rights in the Philippines, sadly and rather predictably the Philippines has on reflection and due to its protectionist constitution some fo the most unfavourable and downright prejudicial laws regarding property ownership.

For example, forget that the foreign spouse has probably worked his a... off to buy a property in the Philippines for the comfort of himself and his wife, I know of many cases over the years, where foreign spouses, many of them British nationals who have been led a merry song and dance over Filipino constitutional matters regarding the ownership of real estate, the stories too numerous to mention here, that all lead to unhappy and rather expensive endings.

The problem of relatives who lets face it have never owned anything in their life, and the thought and prospect of getting a nice property left from the unfortunate demise of their female relative is just too much to pass by, especially if they are advised that a foreigner who has slaved to build the property, has no rights whatsoever.

Remember, the Philippines does not conform to any form of decent Western style free market with regards to real estate and property, if the situation was reversed, Filipinos in the UK are quite able to buy land, have a mortgage be joint owners of their husbands properties, and indeed to buy such property jointly and severally liable for such holdings, and receive in any divorce matter their own substancial share of any proceeds, they are fact treated under UK law as equal partners.

In the UK market forces of supply and demand and the right to own and acquire land by foreigners is not restricted by UK law, nor do we have such a constitution in the UK to prevent foreigners from acquiring land and property.

British nationals especially and specifically those members of this forum who are comtemplating buying or building property in the Philippines should take sharp note of the Filipino constitution and investigate very thoroughly their position when they part with their hard earned life savings or income towards such a purchase, because they have actually no rights whatsoever, the only saving measure for them is if they have children via the said marriage, which will act as heirs and successors of any property purchase, if their are no heirs, then the property can be divided between any surviving Filipino relatives, this will in most cases create divisions and resentment, especially if the poor British national is living in the house at the time.

There has been a case recently in Thailand, where a British national had spent over £50,000 building a house onto a lot he had purchased, when the said relationship with the Thai girl got into trouble and she left him to go back to Pattaya, the British national found himself subject to the will of the relatives who demanded money for him to remain within the property, rather than leave it to them, he decided to arrange for a Bull dozer to flatten the house, all legal of course since all the bills for materials were shown to Thai Police, prior to arranging the house demolition.

Lets hope none of our members have to resort to this, just ensure you know exactly where you stand and are prepared to accept this.

[22pilgrim]

.......... the only saving measure for them is if they have children via the said marriage, which will act as heirs and successors of any property purchase, if their are no heirs, then the property can be divided between any surviving Filipino relatives, this will in most cases create divisions and resentment, especially if the poor British national is living in the house at the time.



My understanding - and I may be wrong on this - is that upon the death of my wife, my self & kids would inherit her estate (her share of the house). Even if my kids have dual citizenship, because they are not natural born Filipinos (and neither am I !), we would not be allowed to own the property and would be forced to dispose of the house. Its this scenario that makes the company ownership option preferable.

The other concern would be my immigration / visa status following my wife's death - would I be allowed to remain there on a long-term basis?

Regards,

Nigel

[ginapeterb]

I think you will find that any children born to a Filipina regardless of nationality are considered Filipino under the constitution, you need to check that out, because its a long time since I read it.

My advice is to get your wife to make a will with a professional attorney in the Philippines to the effect that on her death she wishes for the said property to be disposed of in such a way that allows you and your children to remain the sole occupants, you can also arrange to have the property sold to a natural born Filipino in the family for 1 peso on the basis that you are still the sole occupant, that might do the trick.

[pennybarry]

Blimey worthing sounds so much easier.

Is a Condo still possible to be owned outright(well its lease) by an alien?


Hi Andy,

YOU CAN OWN A CONDO BY YOUR OWN NAME. ALL ALIEN CAN BUY A CONDO UNDER THEIR NAME THAT'S why MY FRIEND AND A FORMER BOSS URGes ME TO sell CONDO properties.

There are Lovely Condo's in Tagaytay and Punta Fuego in Batangas.

[ginapeterb]

ALL ALIEN CAN BUY A CONDO

I see we are still living in a world of descriptive labels, Alien ! its good to kinow residents of Mars, Venus, Jupiter and Pluto can own a condo in Manila, but where do British nationals stand ?

[pennybarry]

Sorry I may use the wrong term. It might be all foreigners. Andy use ALIEN word, I thought he is referring to foreigner. This is quoted for Andy, and sorry if I quoted wrong?

[stuartfarm]

I'm very confused about this whole thing , from the many web sites that I have searched I always seem to see the same two following statements

"If holding 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"

Then

"Acquisition through hereditary succession if the foreign acquire is a legal or natural heir. This simply means that when the non-Filipino is married to a Filipino citizen and the spouse dies, the non-Filipino as the natural heir will become the legal owner of the property. The same is true for the children. Every natural child (legitimate or illegitimate) can inherit the property of his/her Filipino father/mother even if he/she does not any Filipino citizenship."

I am stupid or do these two statements seem to contradict each other ???

One says you have to dispose of the property , other says you become legal owner

One a brighter note , I also found this lately but I think it may limit your ownership of land to only 1000 square metres

New Dual Citizenship Laws Affecting Property Ownership

Dual citizenship means having two citizenships and passports from two different countries. Dual citizenship is now available for the following:

* Former Filipino citizens born in the Philippines, but have immigrated to another country and obtained citizenship of that country.

* A foreign spouse married to a Filipino citizen.

Dual citizenship allows the citizenship holder full rights of possession of Philippine real property. This is a new law and it is still unclear as to the procedures involved to implement it.

[David House]

I agree it appears confusing but it seems that they make a distinction between the "land" and the property build upon it. I think we can inherit the property but cannot own "land" so must dispose of it (and clearly the building as well), decide the relevent respective values of the "land" and the structure, pay the taxes, distribute the value of the "land" to her other relatives and get out of the country!

However the following is really interesting! Where did you learn this? If true many of our problems are going to be solved by simply taking a dual citizenship. I see no downside to that at all, unless you are still of military age, which I most certainly am not!

Regards

David

One a brighter note , I also found this lately but I think it may limit your ownership of land to only 1000 square metres

New Dual Citizenship Laws Affecting Property Ownership

Dual citizenship means having two citizenships and passports from two different countries. Dual citizenship is now available for the following:

* Former Filipino citizens born in the Philippines, but have immigrated to another country and obtained citizenship of that country.

* A foreign spouse married to a Filipino citizen.

Dual citizenship allows the citizenship holder full rights of possession of Philippine real property. This is a new law and it is still unclear as to the procedures involved to implement it.[/QUOTE]

[stuartfarm]

Try googling "New Dual Citizenship Laws Affecting Property Ownership" - You will find several websites that are posting this - dont want to upset the admins by posting links !!

[22pilgrim]

A contact has just advised me:
"Nigel,
When you are in the Phils go to National Bookstore and buy these books:

1. Transfer and Business Taxation by Valencia & Roxas [see section
starting @ pg 24]

2. The Family Code of the Philippines (various editions are around).

Also, there is a good online legal resource at:

CHAN ROBLES AND ASSOCIATES LAW FIRM http://www.chanrobles.com/legal8.htm

Various legal information can be found within the site here:

http://www.chanrobles.com/index1.htm

such as the full text of the Civil Code of the Philippines and other
pertinent laws. Also, there are texts of Supreme Court decisions that
amplify upon the basic laws."

[Sangoma]

I have an idea that although you can not own the land, you can own the building.

[22pilgrim]

I think you will find that any children born to a Filipina regardless of nationality are considered Filipino under the constitution, you need to check that out, because its a long time since I read it.

My advice is to get your wife to make a will with a professional attorney in the Philippines to the effect that on her death she wishes for the said property to be disposed of in such a way that allows you and your children to remain the sole occupants, you can also arrange to have the property sold to a natural born Filipino in the family for 1 peso on the basis that you are still the sole occupant, that might do the trick.

Just been advised by another contact:

"....a former natural-born citizen of the Philippines, who was born abroad,
shall submit the original copy of the Report of Birth issued by the
Philippine Foreign Post and in applicable cases, the Birth Certificate
issued by competent foreign authorities.

These documents shall be sufficient to establish that the applicant is
a natural-born citizen of the Philippines for purposes of these Rules.

I TAKE THIS TO MEAN A CHILD BORN TO A FILIPINA ANYWHERE IN THE WORLD
NO MATTER THE CITIZENSHIP OF THE FATHER IS CONSIDERED A NATURAL BORN
CITIZEN OF THE PHILIPPINES WITH ALL RIGHTS AND PRIVILEGES."

I've checked out the (UK) Philippine Embassy and the "Report of Birth" form is downloadable there. A remaining issue to investigate is any negative implications of the kids being dual citizens (i.e. Commitment to Filipino military service, etc)

Regards,

Nigel

[andypaul]

I see we are still living in a world of descriptive labels, Alien ! its good to kinow residents of Mars, Venus, Jupiter and Pluto can own a condo in Manila, but where do British nationals stand ?

dont like the word but thats what i always see in any phill paperwork when mentioning non phills.

So charming a word hey:D

[Union Jack]

Hello everyone, for what I've understood, dual citizenship only applies to a Filipino citizen (or former) and her/his children (even if born abroad) but not their spouse.
As a foreigner national, one can only apply for a "Non quota Immigrant Visa".
This allows to permanently live and work in the Philippines (but not to own any land).
Later on, a foreigner national can apply for Naturalization.
The Commonwealth Act No.473 (June 17, 1939) dictates the conditions.
Among others, it appears that if married to a filipino citizen, a foreigner national has to have a continuous residence of 5 years (10 years if not married to a filipino citizen), he/she is required to speak and write English or Spanish and one of the Philippine principal languages and most importantly, surrender any other citizenship.
Only then, land ownership will be granted.
Setting up a fiction Filipino Company to acquire a 40% ownership of land is not a viable alternative. This scheme was adopted by many foreigners in Thailand, till the Thai Government changed the rules and demanded proof of Company's receipts and activities. The goal posts can be changed by any incoming government, hence no guarantees.
An idea......what about buying a houseboat? :Brick::ARsurrender:

[Union Jack]

Hello there, right, as if the matter of land ownership was not confusing enough already, I've read from a website something which may be of interest.......
I quote...
"With regards to a foreign citizen inheriting land in the Philippines, I can confirm it's true. This is the "saving grace" for many Foreigner/Filipino couples who want to buy property together in the Philippines and have an assurance that the foreigner's half of the couple can continue living in the Filipino citizen's property (as the Foreign citizen never owned the property to start with)."
This website then goes on to say....." Wills are much less common in the Philippines than in many developed countries. But they certainly are used. But when real property is involved, there is a basic underlying law which takes precedence over any language in a will. Philippine law stipulates a reserved portion of all estates for compulsory heirs, hence the irrelevance of the wording in a will when it comes to distribution.
The “compulsory heirs” are classified as:

* Primary - legitimate children and/or descendants
* Secondary - legitimate parents and/or ascendants; illegitimate parents
* Concurring - surviving spouse; illegitimate children and/or descendants

Note, in the three levels of "compulsory heirs" the surviving spouse comes, at best, on the third level of heirs to be endowed. The legitimate children of the marriage, the legitimate parents, illegitimate parents (a common occurrence), all come first and the surviving spouse has to battle it out on level three with illegitimate children who may show up. A foreigner can inherit from a Filipino spouse, so long as he or she inherits from an intestate estate,that is, one with no will. Non-Filipino citizens, can inherit land by hereditary or intestate succession (without a will) but not by testamentary succession (with a will).....
… the foreigner who inherits in this way is legally the owner under Philippine law, but he/she can not sell or bequeath to another foreigner. In other words the foreign ownership can not be in a chain. The property does belong to the surviving foreign spouse but he/she can’t dispose of it at will. It can only be sold or bequeathed to a natural born Filipino".

Confused? I certainly am. Any feedback from anyone?
Best regards.