There are a few legal options to owning and managing a resort in the Philippines.
Because of the restrictions on foreign ownership of land which is in Article XII of the
1987 Philippine Constitution, one solution is to lease/rent the land needed for the resort.
Foreign individuals and business entities may lease land for a period of 25 years
renewable for another 25 years. (P.D. No 471, Fixing a Maximum Period for the
Duration of Leases or Private Lands to Aliens). Tourism projects with a minimum
investment of USD five million may be able to qualify for a lease of 50 years renewable
for another 25 years (Republic Act No. 7652, otherwise know as the Investors’ Lease
Act).
To ensure the rights of the lessee it is good practice to have the lease annotated on the
land title.
For those who wish to own the land on which the resort will operate, a corporation which
is 60% Filipino owned and 40% Foreign may be incorporated to purchase the property.
This corporation may then lease the land to another 100% Foreign Owned Corporation
which may own the buildings and other infrastructure and manage the resort.
Foreigners married to Filipinos: this is controversial, as a foreigner may not own land
many think that buying property (land) in their spouse’s name is a solution; this is far
from being true. Any contract or side deal for control of the land will most probably be
considered a circumvention of the law. Even a long term lease contract may or may not
be held valid by the courts.
There is a Supreme Court decision pertaining to the rights of foreign spouses land
ownership and the equal partition of conjugal property.
http://sc.judiciary.gov.ph/jurisprudence/2006/august2006/G.R.%20No.%20149615.htm
In this case the Supreme Court declared that the foreign spouse had the property titled in
his Filipino spouse’s name knowing the Constitutional prohibition of foreign ownership
of land and can not claim reimbursement of the funds used to purchase neither the land
nor the house built on it.
Foreigners should not use nominees to purchase land on their behalf or use nominee
shareholders and directors in a corporation that will own real property. Doing so, is
a circumvention of the laws that prohibits land from being 100% foreign owned and
would be a violation of the Anti Dummy Law.
About David Elefant
Philippines business consultant specializing in assisting companies setup their operations in the Philippines.
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