OPC Real Estate Lease & Ownership Requirements in the Philippines
A practical legal guide under the Revised Corporation Code (R.A. 11232)
1. What is an OPC?
A One Person Corporation (OPC) is a domestic stock corporation with a single stockholder who is automatically the sole director and president. It was introduced by the Revised Corporation Code of 2019 (RCC, R.A. 11232, secs. 115-131) to give entrepreneurs—Filipino or qualified foreign nationals—a faster, liability-shielded vehicle that sits between a sole proprietorship and a regular corporation.
2. Constitutional & Statutory Land Rules That Bind Every OPC
| Rule | Key Source | Effect on an OPC |
|---|---|---|
| Land ownership is limited to Filipinos or Philippine corporations with ≥ 60 % Filipino equity. | 1987 Constitution, Art. XII §7 | A 100 % Filipino-owned OPC may own land. A foreign-owned OPC (≥ 40 % foreign equity) cannot own land but may own buildings and improvements. |
| Investors’ Lease Act allows long-term land leases to foreigners. | R.A. 7652 (Investors’ Lease Act) | A foreign-owned OPC may lease private land for up to 25 years, renewable once for another 25 years (25 + 25 rule). |
| Foreign investors may lease land for tourism projects. | Tourism Act, R.A. 9593 | Qualified tourism-project OPCs may enjoy leases up to 50 + 25 years. |
| Industrial & commercial condominiums. | Condominium Act, R.A. 4726 | Any OPC—foreign or Filipino—may buy condominium units (land interest is by “condominium certificate of title”), as long as total foreign ownership in the condo corporation does not exceed 40 %. |
3. Real-Estate Documents Required at SEC Registration
When the OPC’s principal office is located on property it does not own, the SEC checklist requires:
- Notarized lease contract (or authority to use space) covering at least the current year.
- Tax Declaration or Transfer Certificate of Title (TCT) of the lessor (photocopy).
- Barangay clearance or LGU certification that the address is zoned for commercial use.
- Locational sketch or vicinity map.
Tip: These papers must be uploaded to the SEC Electronic Simplified Processing System (eSPARC) together with the OPC’s Articles of Incorporation-By-Laws (the “AIBL”).
4. How an OPC May Acquire Real Property After Incorporation
| Step | Filipino-Owned OPC | Foreign-Owned OPC |
|---|---|---|
| Board/Shareholder action | The sole stockholder signs a written resolution approving the purchase or mortgage. | Same (sole shareholder). |
| Appraisal & fairness | Not mandatory, but advisable if the property is injected as payment-in-kind for additional shares (RCC §61). | Foreign-owned OPC may only buy condominium units or non-land realty (e.g., machinery, buildings on leased land). |
| Deed execution | Deed of Sale in OPC name, signed by President. Attach BIR Form 2303 (Certificate of Registration) showing TIN. | Same. |
| Tax clearance | Pay 6 % Capital Gains Tax (seller) or 15 %/30 % Creditable Withholding Tax if seller is a corporation; plus 1.5 % Doc Stamp Tax on deed, 0.5 % DST on issuance of shares (if property for shares). | Same. |
| Registration | File deed with Registry of Deeds: TCT transferred to OPC. | Only possible where land-ownership rule allows (i.e., > 60 % Filipino). |
5. How an OPC May Lease Real Property
5.1 Ordinary Commercial or Office Lease
Signatory: President signs lease. No board resolution needed because there is no board; SEC practice allows a simple Secretary’s Certificate signed by the President affirming authority.
Term: Unlimited for Filipino OPC; 25 + 25 for foreign-owned OPC per R.A. 7652 (or 50 + 25 for tourism).
LGU requirements:
- Mayor’s/Business Permit with Occupancy Permit (for newly built offices).
- Real Property Tax (RPT) clearance of lessor.
5.2 Leasing Land to the OPC’s Customers (Sub-Leasing)
If land is leased by a Filipino OPC and sub-leased to third parties:
- Requires LGU zoning approval and may trigger real estate lessor VAT (12 % VAT once annual gross receipts exceed ₱3 M).
- If foreign nationals will occupy, the OPC must observe Anti-Dummy Law limits on management and control.
6. Taxation Cheat-Sheet
| Transaction | VAT | DST | Income Tax |
|---|---|---|---|
| Lease of residential unit ≤ ₱15,000/month | VAT-exempt | DST-exempt | Rental income taxed as regular income |
| Lease of commercial space | 12 % VAT if gross receipts > ₱3 M/yr | 0.5 % DST on docs | Regular income |
| Sale of land to Filipino OPC | 12 % VAT only if seller is VAT-registered and land is ordinary asset | 1.5 % DST on deed | 6 % CGT if seller is individual; 30 % corporate income tax if land is capital asset of seller corp |
| Assignment of lease rights | 12 % VAT (if VAT entity) | 0.5 % DST | Ordinary income |
7. Reportorial & Compliance Duties
Property Acquisitions/Disposals Outside Ordinary Course
- RCC §119: Sole shareholder must notify the SEC within 15 days of the transaction.
Annual Report
- OPC files an Audited Financial Statement (AFS) and a short-form GIS (General Information Sheet) where it states any real property owned or leased.
Real Property Taxes
- OPC is liable for RPT on owned land/buildings, payable to the LGU on or before 31 January annually.
Transfer Pricing Documentation
- If the shareholder is a foreign parent and the OPC leases land/buildings from a related party, BIR may require TP study.
8. Special Regimes That Modify the Rules
| Regime | Perk | Real-Estate Twist |
|---|---|---|
| PEZA-registered OPC | 5 % gross income tax / now optional 1 %+ | Must locate in PEZA zone; lease contract is endorsed by PEZA & DTI; foreign-owned OPC may lease raw land inside zone via PEZA master lease. |
| Ecozone Logistics Service Enterprise (ELSE) | VAT zero-rating | Warehouses may be on leased land; 25 + 25 rule still applies if land is private. |
| Philippine Renewable Energy Act (R.A. 9513) | Renewable projects may lease public/agricultural land up to 25 + 25 + 25 (75 yrs total). | Foreign-owned OPC may hold Renewable Energy Service/Operating Contract but land still leased (not owned). |
9. Penalties for Non-Compliance
| Violation | Penalty |
|---|---|
| Falsely declaring Filipino ownership to hold land | Cancellation of TCT; land escheats to State; criminal fines up to ₱100,000 &/or 5 yrs prison under Anti-Dummy Law. |
| Failure to register long-term lease (>1 year) | Lease un-enforceable against third parties; cannot bind successors. |
| Late SEC notification of property sale/disposal | SEC may impose administrative fine (₱1,000 per day; RCC §170). |
| Failure to pay RPT | 2 % monthly interest; tax lien; auction sale after 1 year of delinquency. |
10. Practical Tips & Common Pitfalls
Check the shareholder’s nationality early—a single-shareholder swap from Filipino to foreign after formation can force divestment of land.
For start-ups that expect foreign capital, house the operating office in a leased space, not owned land, to avoid share-transfer hassles.
Use a condominium purchase when you need fee-simple-like ownership yet foresee foreign investors.
Always annotate “For OPC principal office use” on lease contracts; BIR examiners often disallow rent as expense if the space appears to be for personal use of the shareholder.
Register a chattel mortgage over leasehold improvements when the OPC borrows; banks treat long-term leases as quasi-real-property collateral.
If injecting land as capital:
- Have the land appraised by two SEC-accredited valuers.
- File an Affidavit of Non-Assignment if no shares will be issued for the property (common in 100 % wholly-owned OPCs).
11. Frequently Asked Questions
| Question | Short Answer |
|---|---|
| Can a foreign sole shareholder make the OPC landholding by adding Filipino nominees? | No. Nominee shares are disregarded under Anti-Dummy Law. The controlling interest is what counts. |
| May an OPC hold agricultural land? | Yes, but only if 100 % Filipino-owned and it secures DAR clearance; foreign-owned OPCs cannot. |
| Is a lease longer than 25 years automatically void? | No, but the portion beyond 25 years is unenforceable unless renewed with new SEC registration & BIR taxes. |
| Does the OPC need a separate Treasurer-In-Trust (TIT) for property acquisitions? | The sole shareholder usually doubles as Treasurer. A TIT is only required at incorporation for paid-in capital. |
12. Conclusion
The OPC is a flexible tool, but its power to own or lease Philippine real estate hinges on constitutional nationality limits, sector-specific lease statutes, and a web of SEC, LGU, and BIR filings. A Filipino-owned OPC may purchase land outright; a foreign-owned OPC must rely on long-term leasing or condominium purchases. Observing the 25 + 25 lease cap, filing timely SEC notices, and paying the correct transfer taxes will keep the single shareholder’s limited-liability shield intact and the enterprise running smoothly.
Disclaimer: This article summarizes Philippine laws and prevailing SEC practice as of July 7 2025. It is not legal advice. Consult Philippine counsel for project-specific guidance.