Legal Requirements for Land Purchase in the Philippines
(Comprehensive guide as of 21 June 2025; for educational purposes only—always consult a Philippine lawyer or licensed real-estate professional for advice on a specific transaction.)
1. Constitutional & Statutory Framework
| Instrument | Key Provisions Relevant to Land Purchase |
|---|---|
| 1987 Constitution, Art. XII | • Land of the public domain is State-owned. • Only Filipino citizens or Philippine companies ≥ 60 % Filipino-owned may own land. • Congress may allow former natural-born citizens to acquire limited land. |
| Public Land Act (C.A. 141) | Classification of public lands; only alienable & disposable (A&D) agricultural lands can become private and be titled. |
| Property Registration Decree (P.D. 1529) | Torrens system—creates indefeasible titles (OCT/TCT). |
| Civil Code, Book II | Rules on contracts, co-ownership, easements. |
| Agrarian Reform Laws (R.A. 6657, 9700) | Restrictions on agricultural land sale & conversion; DAR clearances. |
| Condominium Act (R.A. 4726) | Permits foreign ownership up to 40 % of a condominium project. |
| Subdivision & Condominium Buyer’s Protection Decree (P.D. 957) | Seller licensing, disclosure, and buyers’ remedies. |
| RESA Law (R.A. 9646) | Only licensed brokers may render professional brokerage services. |
| Anti-Dummy Law (C.A. 108, as amended) | Penalizes schemes that mask foreign control. |
2. Who May Own—or Not Own—Land
| Category | Land Ownership Rights |
|---|---|
| Filipino citizens | Full ownership of private land. |
| Philippine corporations/partnerships | May own land if ≥ 60 % of capital is Filipino-owned. |
| Former natural-born Filipinos | Up to 1 000 m² urban OR 1 ha rural for residential use; larger areas for farmland governed by special rules and DAR approval. |
| Foreigners | No direct land ownership. Options: (a) own ≤ 40 % of a condo; (b) long-term lease of private land (25 yrs + 25 yrs renewal, R.A. 7652); (c) hereditary succession; (d) buy shares in a land-owning company within the 40 % cap. |
| Indigenous Cultural Communities | Collective ownership under IPRA (R.A. 8371) via Certificates of Ancestral Domain Title (CADT). |
3. Classes of Land & Why They Matter
Public Domain (constitutional categories) Agricultural → A&D land may be titled and alienated. Forest, Mineral, National Parks → Inalienable; may only be used under special tenure instruments.
Private Land Land that has passed from the public domain via title issuance or long-continued possession under C.A. 141.
4. Due-Diligence Checklist (Before You Sign Anything)
| Item | What to Look For | Where/How |
|---|---|---|
| Certified true copy of title (OCT/TCT) | Correct owner name, lot & plan numbers, area, no overlaps, “alienable & disposable” if public-land origin. | Registry of Deeds (RD) or LRA e-Title kiosks. |
| Encumbrances page | Mortgages, liens, adverse claims, Sec. 4 Rule 74 (heir settlement), lessees, court notices. | Last page of title. |
| Lot plan & relocation/verification survey | Matches technical description; no encroachments or road widening. | DENR-LMB-accredited geodetic engineer. |
| Tax Declaration & Real-Property-Tax (RPT) clearances | No unpaid RPT; land/use classification; improvements assessed. | Local Assessor & Treasurer. |
| BIR Zonal Value & FMV | Basis for taxes—compare with contract price. | Bureau of Internal Revenue. |
| Agricultural Land Conversion or DAR clearance | Needed if land is (or was) agricultural. | DAR Provincial Office. |
| Environmental or heritage clearances | If ≥ 1 ha, near water bodies, or in protected areas. | DENR-EMB, LGU, NHCP as applicable. |
| Seller’s capacity | SPA validity, corporate board resolution, marital consent. | Verify IDs, SEC docs, PSA CENOMAR/Marriage Cert. |
| Broker/Agent license | Must hold PRC/HLURB IDs under RESA. | PRC online registry. |
5. Core Transaction Documents
- Letter of Intent / Offer to Purchase (optional).
- Contract to Sell – commits seller to convey upon fulfillment of conditions (often full payment).
- Deed of Absolute Sale (DOAS) – transfers ownership; must be in a public instrument (notarized).
- Acknowledgment Page & Notarial Register – instrument number, page, book, series year.
- BIR Forms & Receipts – CGT (Form 1706) or Creditable Withholding Tax, DST (Form 2000), eCAR.
- LGU Transfer-Tax Receipt.
- Registry of Deeds documents – Owner’s duplicate title, tax clearances, IDs.
6. Taxes & Fees (payable by traditional practice*)
| Tax/Fee | Rate / Basis | Usual Payor* | Deadline |
|---|---|---|---|
| Capital Gains Tax (CGT) | 6 % of higher of Gross Selling Price (GSP) or Fair-Market/Zonal Value. | Seller | Within 30 days of notarization. |
| Documentary Stamp Tax (DST) | 1.5 % of higher of GSP or FMV. | Buyer | On or before the 5th day of the month following notarization. |
| Withholding Tax (if seller is corp. engaged in real estate) | Graduated 1.5 %-6 %. | Buyer | Same as CGT deadline. |
| Transfer Tax (LGU) | 0.5 % (province) or 0.75 % (city) of GSP or FMV. | Buyer | Within 60 days of DOAS. |
| Registration Fee (RD) | About 0.25 % of property value, per LRA schedule. | Buyer | Upon title transfer. |
| Notarial Fee | 1 %-2 % of GSP or as agreed. | Usually Buyer. |
* Parties may re-allocate liability by contract, but BIR/LGU will still collect—so escrow or price-gross-up is common.
7. Step-by-Step Transfer Process
Pre-contract
- Conduct full due diligence (sec. 4).
- Agree on price, earnest money, and which party pays which taxes.
Execution & Notarization
- Sign DOAS (all owners/spouses/corp reps).
- Notary public confirms ID, tax TIN, CTC, etc.
Tax Payment & BIR eCAR
- File CGT/DST returns and pay at BIR RDO where property is located.
- Secure Electronic Certificate Authorizing Registration (eCAR) and tax clearance.
LGU Transfer Tax
- Pay at City/Municipal Treasurer; get receipt & Tax Clearance.
Registration at Registry of Deeds
- Submit: DOAS, eCAR, Transfer-Tax receipt, original & owner’s duplicate title, IDs.
- RD cancels old title and issues new TCT (or Condominium Certificate of Title, CCT) in buyer’s name + certified true copy.
Post-registration
- Present new title to Assessor to obtain new Tax Declaration.
- Update Real-Property-Tax records; secure “No Improvement” or building tax declaration if vacant.
- If condo/subdivision, inform HOA and pay dues.
8. Special Situations & Additional Requirements
| Scenario | Extra Steps / Rules |
|---|---|
| Agricultural land (< 5 ha) | Check retention limits; DAR Clearance (Mem. Cir. 01-2019). Land > 5 ha needs DARVOS & conversion permit for non-agri use. |
| Unregistered (Untitled) Land | Seller must show perfect title (Spanish Title, Free Patent, judicial confirmation) before any sale; otherwise buyer buys only possessory rights. |
| Condominium Purchase | Verify project’s License to Sell & Clearance to Mortgage (DHSUD). Condo titles are CCT; check Master Deed & Condo Corp. bylaws. |
| Estate Sale | Require (a) Extrajudicial Settlement or court-approved Partition, (b) Estate-Tax eCAR, (c) Sec. 4 Rule 74 annotation. |
| Foreigner Lease | Lease Contract up to 25 yrs renewable once; register lease with RD and annotate on title. |
| PEZA or SBMA zones | Long-term lease, not ownership, except through 60-40 corporation. |
| Indigenous Ancestral Domains | Consent of Indigenous Cultural Community and NCIP certification required; sale restricted. |
| Right-of-Way or Road Lots | Check DENR and DPWH clearances; easements are imprescriptible. |
9. Prohibitions & Penalties
- Anti-Dummy Law: Dummy arrangements void; up to 15 years’ imprisonment & ₱10 M fine.
- Fake or “Reconstituted” Titles: Absolute nullity; criminal liability under Art. 316 RPC & P.D. 1529.
- Tax Evasion / Late Filing: 25 %-50 % surcharge + 20 % p.a. interest (NIRC).
- Unlicensed Brokerage: Up to ₱200 000 fine and/or jail (RESA).
10. Role of Licensed Professionals
| Professional | Why You Need Them |
|---|---|
| Real-Estate Broker (PRC-licensed) | Market valuation, documentation assistance, legally required for a fee-based sale. |
| Philippine Lawyer | Drafting & review of contracts; due-diligence opinion; representation before courts & agencies. |
| Geodetic Engineer | Verification survey, subdivision plan, relocation of boundaries. |
| Tax Advisor/CPA | CGT/DST computations; tax planning for corporate transfers. |
11. Common Pitfalls
- Mistaking a Tax Declaration for a Title. A Tax Dec. only shows property assessment, not ownership.
- Skipping Title Verification. Encumbrances or pending agrarian disputes can void your investment.
- Relying on Unlicensed Agents. No liability insurance; no recourse under RESA.
- Ignoring Agricultural-Conversion Rules. Using agricultural land for non-farm purposes without DAR approval can lead to cancellation.
- Using Side Agreements to Evade Taxes. Under-declaring price invites BIR audit and hefty penalties.
12. Practical Tips for Buyers
- Always deal with the registered owner appearing on the title.
- Get a certified true copy of the TCT/CCT issued the same week you will notarize the sale.
- Pay through escrow or manager’s check issued to the seller, released only upon submission of signed DOAS.
- Use official BIR zonal valuations to budget taxes early.
- Keep multiple original sets of notarized documents for BIR, LGU, RD, financing bank, and your files.
- Check the notary’s commission and book/page number immediately after notarization.
13. Conclusion
Buying land in the Philippines demands careful navigation of constitutional restrictions, statutory rules, multiple tax filings, and exacting documentary formalities. The Torrens system gives strong ownership security only if every prerequisite—due diligence, tax payment, and formal registration—is faithfully observed. Foreign nationals must remember that direct land ownership is constitutionally barred, with few narrowly-drawn exceptions. Engage licensed professionals, insist on certified documents, pay the correct taxes on time, and register promptly with the Registry of Deeds; those steps transform a piece of paper into an indefeasible title—and protect a lifetime investment.
Disclaimer: This article is a general overview and does not create an attorney-client relationship nor substitute for individualized legal advice. Laws and administrative issuances change; verify current regulations and rates before acting.