A practical legal article on the documentation, government filings, registry requirements, taxes, and common pitfalls when land or buildings are contributed to a business as capital.

1) What “contribution of real property as business capital” means

A capital contribution is property placed into a business to form or increase its capital. In Philippine practice, real property may be contributed to:

a corporation (in exchange for shares, or as additional paid-in capital);
a partnership (as a partner’s contribution); or
less commonly, a sole proprietorship (where the owner “sets aside” property for business use—often without transferring title, because the business is not a separate juridical person).

Key point: Whether you must “register” the contribution at the Registry of Deeds (RD) depends on whether ownership is being transferred from the contributor to a separate juridical person (corporation/partnership) or to another person/entity. If ownership is transferred, registration is essential to bind third persons and to update the certificate of title.

2) The legal framework you’re operating under

While requirements vary by location and by transaction details, the typical legal anchors are:

A. Property and conveyancing rules

Civil Code rules on contracts, sales/exchanges, obligations, and property transfers.
Land Registration laws and RD practice: registration is the operative act for land titled under Torrens to affect third persons; RD issues a new TCT/CCT in the transferee’s name.

B. Business entity law

Revised Corporation Code (RCC) for corporations: subscription, consideration for shares, corporate approvals, and SEC filings.
Civil Code provisions on partnership: partner contributions, partnership property, and formalities.

C. Tax law and local government rules

National Internal Revenue Code (NIRC): capital gains tax / income tax regimes for real property transfers, documentary stamp tax, and potential “tax-free exchange” in certain corporate transfers.
Local government ordinances: local transfer tax, assessment, and business tax implications.
BIR administrative requirements: eCAR (electronic Certificate Authorizing Registration) or equivalent clearance required before RD will transfer title.

3) First decision: is there a transfer of ownership or only “use” by the business?

This question drives almost everything.

Scenario 1: Contribution to a corporation or partnership (separate juridical person)

If a person contributes land/building to a corporation or partnership, it is normally intended to become property of that entity. That requires:

a valid conveyance instrument (deed),
tax compliance (BIR + LGU), and
registration at RD (issuance of a new TCT/CCT in the entity’s name).

Scenario 2: “Contribution” to a sole proprietorship

A sole proprietorship is not separate from the owner. Commonly:

title stays in the individual’s name; the owner may simply record it in accounting as part of business assets, or
the owner may lease it to the business, or designate it for business use.

There is typically no RD transfer because there is no new owner. The “registration” is more of accounting/tax and business permitting issue than a land title issue.

Practical note: Many owners later incorporate and then transfer property into the corporation—only then does RD transfer become necessary.

4) Choose the correct transaction “legal form” (because taxes and documents follow it)

A capital contribution of real property can be structured as:

A. Transfer in exchange for shares (corporation)

A contributor conveys property to the corporation as consideration for issuance of shares (property-for-shares).

B. Contribution to partnership capital

A partner conveys property to the partnership as capital contribution.

C. Sale to the entity (not a contribution in the strict sense)

Sometimes parties call it “contribution,” but legally it’s a sale by the individual to the corporation/partnership for a price, with the money later treated as capital. This changes tax treatment and documentation.

D. Tax-free exchange (corporation, if qualified)

Certain transfers of property to a corporation solely in exchange for stock may be eligible for tax deferral (commonly called “tax-free exchange”), subject to strict conditions (notably “control” requirements and BIR compliance). This can materially change the income tax/capital gains consequences, but it does not eliminate the need for RD registration.

5) Pre-transfer due diligence: what to check before you draft anything

Before preparing deeds and SEC papers, verify:

A. Title status and technical descriptions

Get a certified true copy of the TCT/CCT and check annotations (mortgage, lis pendens, adverse claims, encumbrances).
Confirm the technical description and lot identification are consistent with surveys and tax declaration.

B. Ownership capacity and consents

If the owner is married and property is conjugal/community, typically spousal consent/signature is necessary.
If the owner is a corporation/estate, ensure proper authority (board resolution / SPA / settlement).
If property is co-owned, all co-owners must participate or legally authorize.

C. Restrictions and special clearances

Some properties need extra steps, for example:

Agricultural land may require compliance with agrarian laws and, in some cases, clearances depending on circumstances.
Condominium units: confirm condominium corporation/HOA requirements, unpaid dues, and the CCT status.
Mortgaged property: mortgagee consent may be needed if the deed violates loan covenants; RD transfer will also carry annotations.

D. Corporate nationality limits (especially for land)

If the transferee is a corporation, confirm it is qualified to own land (generally requiring Philippine nationality thresholds). Missteps here can void or complicate the transfer.

6) Core documents: what you typically need

The usual document set falls into four buckets: (1) entity approvals, (2) conveyance deed, (3) tax clearances, (4) RD/assessor requirements.

A. Corporate / partnership approvals and formation papers

For a corporation (new or existing)

Typical requirements include:

Board resolution approving acceptance of the property as capital contribution and authorizing signatories.
If newly forming: articles and subscription details must reflect the non-cash contribution (property).
Valuation support: appraisal and/or valuation documents as required by SEC practice, internal governance, and audit needs.
Deed of assignment / deed of transfer / deed of exchange (see below).

For a partnership

Partnership agreement stating the contribution, valuation, and ownership.
Authorization for who signs and receives the property.
Deed of transfer to the partnership (or to the partners in their capacity as partners, depending on how structured—best practice is partnership as transferee).

B. The conveyance instrument (the “Deed”)

For transferring titled real property, you generally execute one of these:

Deed of Assignment/Contribution (property contributed as capital)
Deed of Exchange (property exchanged for shares)
Deed of Absolute Sale (if structured as sale)

Minimum content usually includes:

complete description of the property (title number, technical description, location),
consideration (e.g., number/class of shares and issue price, or contribution value),
warranties/undertakings,
corporate/partnership acceptance,
signatures with proper notarization.

Notarization matters. RD will require a notarized deed, and notarization drives evidentiary admissibility and registry acceptance.

C. Tax and government clearances

Most RD transfers require:

BIR eCAR (or equivalent certificate authorizing registration)
proof of payment of applicable taxes (DST, CGT or income tax withholding regime depending on case)
Local transfer tax payment
updated real property tax (RPT) clearance / tax clearance from the LGU (often required by RD)
other local certificates depending on city/municipality

D. Registry of Deeds submission set

Often includes:

owner’s duplicate title (TCT/CCT)
notarized deed
eCAR and tax payment proofs
transfer tax payment proof
IDs, TINs, corporate/partnership documents, Secretary’s Certificate/board resolution
RD forms and payment of registration fees

7) Valuation: why it is legally and practically critical

Valuation affects:

how many shares are issued (corporation),
capital account credit (partnership),
taxes (especially if BIR challenges declared value),
SEC acceptance and auditability.

Best practice is an independent appraisal plus internal documentation approving the valuation (board/partners). If the property is encumbered, clarify whether the transferee assumes the debt and how that affects net contribution value.

8) SEC considerations for corporations (practical compliance)

When property is contributed to a corporation, the SEC generally expects the corporation’s capitalization and paid-up capital representations to be truthful and supported.

Common SEC-sensitive points

The Articles/Bylaws and subscription instruments should clearly identify non-cash contributions.
Treasurer’s affidavits and capitalization schedules must align with what was actually contributed.
Where shares are issued for property, the corporation must be able to substantiate the fair value and the legality of the consideration.

Operational reality: Even if SEC registration is approved, title is not transferred until BIR + RD steps are completed.

9) BIR and tax treatment: the usual taxes and where people get trapped

This is often the most time-consuming part because RD will not transfer without BIR clearance.

A. Documentary Stamp Tax (DST)

Transfers of real property and issuances/transfers of shares can trigger DST depending on structure. The DST base, rate, and forms depend on transaction characterization.

B. Capital Gains Tax (CGT) vs income tax/withholding regime

For transfers of real property, whether CGT applies often depends on:

classification of property (capital asset vs ordinary asset),
whether the transfer is treated as sale/exchange,
the taxpayer type (individual/corporation) and business.

Very common pitfall: People assume “capital contribution” means “no tax.” Not necessarily. A transfer for shares is typically an exchange, and taxes may apply unless a specific deferral rule applies and is properly complied with.

C. Potential “tax-free exchange” (corporation)

A properly structured transfer of property to a corporation solely in exchange for stock may qualify for tax deferral if statutory conditions are met (commonly including control conditions and procedural compliance). In practice, this often involves:

careful structuring at incorporation or capital increase,
documentation proving the exchange,
and BIR processing (which can be exacting).

Important: Even with deferral, DST and other fees may still apply, and RD still requires BIR clearance.

D. Local transfer tax

LGUs commonly impose a transfer tax payable before RD will process. Rates vary by locality.

E. Registration fees and incidental costs

Expect RD fees, notarial fees, and other administrative charges.

10) Step-by-step: the typical workflow to register the contribution (corporation/partnership)

Below is a practical sequence most transactions follow.

Step 1: Prepare internal approvals

Corporation: board resolution approving acceptance of property as capital, authorizing signatories; update capital structure if needed.
Partnership: partners’ resolution/consent per partnership agreement.

Step 2: Obtain appraisal and finalize valuation

Independent appraisal (recommended).
Agree on contribution value, number of shares (if applicable), treatment of any mortgage.

Step 3: Draft and sign the deed

Choose the correct deed form (contribution/exchange/sale).
Ensure proper party names (exact corporate name), TINs, addresses.
Notarize.

Step 4: Secure tax clearances and pay taxes

File BIR returns as required (DST, CGT or withholding/income tax regime, and others depending on structure).
Apply for eCAR/certificate authorizing registration.
Pay LGU transfer tax and secure local clearances.
Secure RPT clearance.

Step 5: Register with the Registry of Deeds

Submit RD requirements, pay registration fees, and surrender the owner’s duplicate title. RD will:

cancel the old title (in the contributor’s name),
issue a new TCT/CCT in the name of the corporation/partnership,
carry over valid annotations (e.g., mortgages) to the new title.

Step 6: Update local tax declaration (Assessor’s Office)

After RD issuance, update the tax declaration to reflect the new owner. This is separate from title registration but essential for RPT billing and compliance.

Step 7: Corporate books / accounting / disclosures

Record the capital contribution in the entity’s books.
For corporations, ensure stock issuance records and subscriptions are properly reflected; issue share certificates if appropriate.

11) Special situations you should plan for

A. Property with an existing mortgage

Options:

transfer subject to mortgage (annotation continues),
assumption of debt by entity (may require lender approval),
release/refinance prior to transfer.

Spell out in the deed whether the entity assumes obligations and how it affects contribution value.

B. Contributing only “usufruct” or the right to use (not ownership)

If what you intend is only to let the business use the property (e.g., as office/warehouse) without transferring ownership, consider:

lease, usufruct, or right-of-use agreement These can be registered in some cases as an annotation, depending on the nature and form, but they do not produce a new title in the business’s name.

C. Condominium units (CCT)

Check condo corp/HOA requirements, restrictions on transfers, unpaid dues, and documentary requirements.

D. Property is under estate settlement or co-ownership disputes

You generally must resolve ownership first (settlement, partition, cancellation of adverse claims, etc.) before a clean capital contribution transfer is feasible.

E. Foreign participation and land ownership limits

If the transferee is a corporation with foreign shareholders, confirm it remains qualified to own land. Otherwise, consider alternate structures (e.g., long-term lease for use) rather than title transfer.

12) Common mistakes that delay or derail registration

Using the wrong deed (calling it a “contribution” but drafting it like a sale, or vice versa).
Mismatch of names/TINs between deed, SEC documents, and BIR filings.
Skipping valuation support, leading to BIR challenge or audit flags.
Assuming “no tax” because it’s capital—then failing to secure eCAR.
Not addressing spousal consent or co-owner participation.
Ignoring annotations (mortgage, adverse claim) that prevent clean transfer.
For corporations: issuing shares inconsistently with SEC filings or without proper corporate approvals.

13) Practical checklist (quick reference)

If contributing to a corporation/partnership and transferring ownership

Certified true copy of title (TCT/CCT) + check annotations
RPT receipts + LGU tax clearance
Appraisal / valuation documents
Board/partners’ resolution and authority to sign
Correct notarized deed (contribution/exchange/sale)
BIR filings and tax payments (DST + CGT/withholding/income tax as applicable)
eCAR/certificate authorizing registration
LGU transfer tax payment
RD submission: owner’s duplicate title + complete attachments
New title issued in entity’s name
Update tax declaration (Assessor)
Record in books (capital account / shares issued)

If “contributing” to a sole proprietorship (no ownership transfer)

Decide: keep title in owner’s name (common)
Consider lease/right-of-use documentation for clarity
Align accounting treatment and tax reporting with actual legal ownership
Update permits/business address records if needed

14) Bottom line

To “register” real property contributed as business capital in the Philippines, you typically need to treat it as a real property conveyance (not just an accounting entry) when the recipient is a corporation or partnership. The practical path is:

entity approvals → notarized deed → BIR compliance/eCAR → LGU transfer tax and clearances → Registry of Deeds transfer → Assessor update → corporate/partnership books.

The biggest determinants of complexity are (1) transaction structure (exchange vs sale vs qualified tax-free exchange), (2) property status (clean title vs encumbered), and (3) the transferee’s legal capacity to own the property (especially land).