Originally Posted by
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
Retirement in the Philippines - Major Concerns
