Dear Attorney,

I hope this letter finds you well. I am writing to seek clarification and guidance regarding the possibility of transferring the title of real property to a married couple where one spouse is a Filipino citizen and the other is a foreign national. Specifically, I would like to understand whether such a transfer is permissible under Philippine law, and if so, what legal restrictions, procedures, and documentation are involved.

As this matter involves a unique set of circumstances, your expertise would be greatly appreciated. Thank you for your time, and I look forward to your professional advice on the matter.

Sincerely,
A Concerned Client

Comprehensive Guide to Transferring Property Title to Spouses (One Filipino, One Foreigner) in the Philippines

The question of whether real property in the Philippines may be titled in the names of spouses where one is a Filipino and the other a foreign national involves a nuanced understanding of Philippine property and constitutional law. Below is a detailed discussion on this matter:

Constitutional Basis: Ownership of Real Property

The 1987 Philippine Constitution governs property ownership in the country, particularly Article XII, Section 7, which states:
“Save in cases of hereditary succession, no private lands shall be transferred or conveyed except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain.”

This provision restricts land ownership to Filipino citizens and corporations or associations with at least 60% Filipino ownership. Foreign nationals are generally prohibited from owning land in the Philippines.

Legal Framework for Mixed-Nationality Spouses

In marriages where one spouse is a Filipino citizen and the other is a foreigner, the following points are critical in determining property ownership and the transfer of title:

1. Sole Ownership by the Filipino Spouse

If the Filipino spouse acquires land, the title may be registered solely in their name. The foreign spouse cannot own or hold an interest in the property directly due to constitutional restrictions. In this scenario:

The Filipino spouse is the sole owner of the property.
The foreign spouse may still enjoy the use and benefits of the property as part of the conjugal partnership or absolute community of property, depending on the marital property regime.

2. Conjugal Property or Absolute Community of Property

Under the Family Code of the Philippines, spouses may own property together depending on the property regime governing their marriage:

Absolute Community of Property (ACP): Under the ACP regime, all properties acquired before and during the marriage (except for exclusive properties) are co-owned by both spouses. However, for land, this co-ownership applies only to the beneficial interest, not the legal title, as the Constitution still restricts foreign ownership.
Conjugal Partnership of Gains (CPG): Properties acquired during the marriage (except for those acquired by inheritance or donation) form part of the conjugal partnership. Similarly, the foreign spouse may share in the proceeds or benefits but not the title to land.

3. Hereditary Succession

In cases of hereditary succession, a foreign spouse may inherit land from their Filipino spouse. While this may seem to conflict with the constitutional restriction, it is explicitly allowed under the same constitutional provision. Titles transferred in this manner are deemed valid.

4. Titles in Both Names

Some couples may attempt to register titles in both names (Filipino and foreigner). Such arrangements are problematic because they could lead to:

Invalidity of the title: The registration of the foreign spouse as a co-owner may be considered void.
Legal challenges: Government agencies or private parties may contest the registration.

Practical and Legal Considerations

A. Trust Arrangements

Although illegal under Philippine law, some couples resort to trust agreements where the Filipino spouse holds the land “in trust” for the foreign spouse. This arrangement is risky and unenforceable in court due to its violation of constitutional provisions.

B. Acquisition of Condominium Units

The Condominium Act (Republic Act No. 4726) allows foreign nationals to own up to 40% of the total units in a condominium project. This is a viable option for mixed-nationality couples who wish to secure real estate interests in the Philippines without violating ownership restrictions.

C. Special Circumstances: Judicial Decisions

Philippine courts have addressed scenarios involving mixed-nationality marriages and land ownership. Case law reinforces the principle that land may not be titled in the name of a foreign spouse, even when acquired during the marriage or through joint funds.

Procedure for Title Transfer

Documentation Requirements
- Proof of Filipino citizenship (e.g., Philippine passport or dual citizenship documents) of the Filipino spouse.
- Marriage certificate.
- Deed of Sale or Donation (if applicable).
- Transfer Certificate of Title (TCT) or Condominium Certificate of Title (CCT).
- Tax Declaration and clearance.
- BIR clearance and payment of applicable taxes.
Tax Implications
- Capital Gains Tax: 6% of the selling price or fair market value, whichever is higher.
- Documentary Stamp Tax: 1.5% of the selling price or fair market value, whichever is higher.
- Transfer Tax: Varies by local government unit.
- Registration Fee: Based on the property’s assessed value.
Submission and Processing
- Submit all requirements to the Register of Deeds for title transfer.
- Ensure compliance with constitutional limitations by indicating only the Filipino spouse’s name on the title.
Registration of Foreign-Spouse Interests
- The foreign spouse’s interests (e.g., rights under the property regime) may be noted in ancillary agreements but not reflected in the title.

Penalties for Non-Compliance

Improperly titling property in the name of a foreign national may result in:

Nullification of the transaction.
Fines and penalties.
Criminal liability for falsification or misrepresentation.

Recommendations

Consult a qualified real estate lawyer to ensure compliance with all legal requirements.
If the foreign spouse wishes to invest in real estate, consider alternatives like condominium ownership or entering into a lease agreement.
Avoid informal arrangements (e.g., trust agreements) that could result in legal disputes or nullified transactions.

By adhering to these legal principles and guidelines, mixed-nationality couples can secure property ownership within the bounds of Philippine law.