PHILIPPINE BANKING CORPORATION v.
LUI SHE MULLER vs MULLER
FACTS: Justina Santos executed on a contract of lease in favor of Wong,
covering the portion then already leased to him and another portion
fronting Florentino Torres street. The lease was for 50 years, although the
lessee was given the right to withdraw at any time from the agreement.
On December 21 she executed another contract giving Wong the option to
buy the leased premises for P120,000, payable within ten years at a
monthly installment of P1,000. The option, written in Tagalog, imposed on
him the obligation to pay for the food of the dogs and the salaries of the
maids in her household, the charge not to exceed P1,800 a month. The
option was conditioned on his obtaining Philippine citizenship, a petition
for which was then pending in the Court of First Instance of Rizal.
It appears, however, that this application for naturalization was withdrawn
when it was discovered that he was not a resident of Rizal. On October
28, 1958 she filed a petition to adopt him and his children on the
erroneous belief that adoption would confer on them Philippine citizenship.
The error was discovered and the proceedings were abandoned.
In two wills executed on August 24 and 29, 1959, she bade her legatees to
respect the contracts she had entered into with Wong, but in a codicil of a
later date (November 4, 1959) she appears to have a change of heart.
Claiming that the various contracts were made by her because of
machinations and inducements practiced by him, she now directed her
executor to secure the annulment of the contracts.
ISSUE: Whether the contracts involving Wong were valid
HELD: No, the contracts show nothing that is necessarily illegal, but
considered collectively, they reveal an insidious pattern to subvert by
indirection what the Constitution directly prohibits. To be sure, a lease to
an alien for a reasonable period is valid. So is an option giving an alien the
right to buy real property on condition that he is granted Philippine
citizenship.
But if an alien is given not only a lease of, but also an option to buy, a
piece of land, by virtue of which the Filipino owner cannot sell or otherwise
dispose of his property, this to last for 50 years, then it becomes clear that
the arrangement is a virtual transfer of ownership whereby the owner
divests himself in stages not only of the right to enjoy the land but also of
the right to dispose of it— rights the sum total of which make up
ownership. If this can be done, then the Constitutional ban against alien
landholding in the Philippines, is indeed in grave peril.
Ramirez v. Vda. de Ramirez
FACTS: Jose Eugenio Ramirez, a Filipino national, died in Spain with only
his widow as compulsory heir. His will was admitted to probate by the
Court of First Instance of Manila, Branch X. The administratrix of the
estate submitted a project of partition giving one part of the estate to the
widow “en pleno dominio” in satisfaction of her legitime while the other part
of the “free portion” to his two grandnephews Roberto and Jorge Ramirez.
Furthermore, one third of the free portion is charged with the widow’s
usufruct and the remaining two thirds (2/3) with a usufruct in favor of
Wanda Wrobleski.
Jorge and Roberto Ramirez opposed the project of partition, as well as the
substitutions provided by the testator as to the usufructs of the widow and
of Wanda. Nonetheless, the lower court approved the project of partition in
its order dated May 1967. Jorge and Roberto appealed before the
Supreme Court.
ISSUE: Whether or not the usufruct over real property in favor of Wanda
violates the Constitutional prohibition against ownership of lands by alien.
RULING: The Court upheld the validity of the usufruct given to Wanda on
the ground that the Constitution covers not only succession by operation of
law, but also testamentary succession. Any alien would be able to
circumvent the prohibition by paying money to a Philippine landowner in
exchange for a devise of a piece of land. In the present case, the usufruct
in favor of Wanda, although a real right, does not vest title to the land in the
usufructuary. It is the vesting of title in favor of aliens which is proscribed by
the Constitution.
Facts: Petitioner Elena Buenaventura Muller and respondent Helmut
Muller were married in Hamburg, Germany on September 22, 1989. The
couple resided in Germany at a house owned by respondent’s parents but
decided to move and reside permanently in the Philippines in 1992. By this
time, respondent had inherited the house in Germany from his parents
which he sold and used the proceeds for the purchase of a parcel of land
in Antipolo, Rizal at the cost of P528,000.00 and the construction of a
house amounting to P2,300,000.00. The Antipolo property was registered
in the name of petitioner, Elena Buenaventura Muller.
Due to incompatibilities and respondents alleged womanizing, drinking,
and maltreatment, the spouses eventually separated.
On September 26, 1994, respondent filed a petition for separation of
properties before the Regional Trial Court of Quezon City. The court
granted said petition. It also decreed the separation of properties between
them and ordered the equal partition of personal properties located within
the country, excluding those acquired by gratuitous title during the
marriage. With regard to the Antipolo property, the court held that it was
acquired using paraphernal funds of the respondent. However, it ruled that
respondent cannot recover his funds because the property was purchased
in violation of Section 7, Article XII of the Constitution.
The respondent elevated the case to the Court of Appeals, which reversed
the decision of the RTC. It held that respondent merely prayed for
reimbursement for the purchase of the Antipolo property, and not
acquisition or transfer of ownership to him. It ordered the respondent to
REIMBURSE the petitioner the amount of P528,000.00 for the acquisition
of the land and the amount of P2,300,000.00 for the construction of the
house situated in Antipolo, Rizal.
Elena Muller then filed a petition for review on certiorari.
Issue: Whether or not respondent Helmut Muller is entitled to
reimbursement.
Ruling: No, respondent Helmut Muller is not entitled to reimbursement.
Ting Ho vs Teng Gui
Facts: Felix Ting Ho, Jr., Merla Ting Ho Braden, Juana Ting Ho and Lydia
Ting Ho Belenzo against their brother, respondent Vicente Teng Gui. The
controversy revolves around a parcel of land, and the improvements which
should form part of the estate of their deceased father, Felix Ting Ho, and
should be partitioned equally among each of the siblings. Petitioners
alleged that their father Felix Ting Ho died intestate on June 26, 1970, and
left upon his death an estate. According to petitioners, the said lot and
properties were titled and tax declared under trust in the name of
respondent Vicente Teng Gui for the benefit of the deceased Felix Ting Ho
who, being a Chinese citizen, was then disqualified to own public lands in
the Philippines; and that upon the death of Felix Ting Ho, the respondent
took possession of the same for his own exclusive use and benefit to their
exclusion and prejudice.
Issue: Whether or not the sale was void
Ruling: No, the sale was not void. Article 1471 of the Civil Code has
provided that if the price is simulated, the sale is void, but the act may be
shown to have been in reality a donation, or some other act or contract.
The sale in this case, was however valid because the sale was in fact a
donation. The law requires positive proof of the simulation of the price of
the sale. But since the finding was based on a mere assumption, the price
has not been proven to be a simulation.

Register of Deeds vs Ung Siu Si Temple
Facts: Jesus Dy, a Filipino citizen donated a parcel of land in favour of Ung
Sui Si Temple, a religious organization whose trustees are all of Chinese
nationality.- The donation was accepted by the trustees however, the register
of deeds refused to record the said deed of donation.- The trial court ruled
that in view of the provisions of sections 1 and 5 of Article XIII of the
Constitution limiting the acquisition of land in the Philippines to its citizens, or
to corporations or associations at least 60% of the capital stock of which is
owned by such citizens adopted after Act. No. 271, the deed of donation
should not be admitted for registration.- On appeal, Ung Sui Si Temple
claimed that the acquisition of the land, for religious purposes, is authorized
and permitted by Act 271 and that the refusal violates the freedom of
religious clause of the Constitution.
Issue: Whether or not a deed of donation of a parcel of land executed in
favour of a religious organization whose founder, trustees and administrator
are Chinese citizens be registered or not.
Ruling: No. The provisions of Act 271 are deemed repealed by the absolute
terms of section 5, Title XIII of the Constitution. The Constitution makes no
exception in favour of religious associations. The purpose of the sixty per
centum requirement is obviously to ensure that corporations or associations
allowed to acquire agricultural land or to exploit natural resources shall be
controlled by Filipinos; and the spirit of the Constitution demands that in the
absence of capital stock, the controlling membership should be composed of
Filipino citizens.
JG Summit Holdings Inc. vs. CA
FACTS: The National Investment and Development Corporation (NIDC), a
government corporation, entered into a Joint Venture Agreement (JVA)
with Kawasaki Heavy Industries, Ltd. for the construction, operation and
management of the Subic National Shipyard, Inc., later became the
Philippine Shipyard and Engineering Corporation (PHILSECO). Under the
JVA, NIDC and Kawasaki would maintain a shareholding proportion of
60%-40% and that the parties have the right of first refusal in case of a
sale.
Through a series of transfers, NIDC’s rights, title and interest in
PHILSECO eventually went to the National Government. In the interest of
national economy, it was decided that PHILSECO should be privatized by
selling 87.67% of its total outstanding capital stock to private entities. After
negotiations, it was agreed that Kawasaki’s right of first refusal under the
JVA be “exchanged” for the right to top by five percent the highest bid for
said shares. Kawasaki that Philyards Holdings, Inc. (PHI), in which it was
a stockholder, would exercise this right in its stead.
During bidding, Kawasaki/PHI Consortium is the losing bidder. Even so,
because of the right to top by 5% percent the highest bid, it was able to
top JG Summit’s bid. JG Summit protested, contending that PHILSECO,
as a shipyard is a public utility and, hence, must observe the 60%-40%
Filipino-foreign capitalization. By buying 87.67% of PHILSECO’s capital
stock at bidding, Kawasaki/PHI in effect now owns more than 40% of the
stock.
ISSUE: * Whether or not PHILSECO is a public utility.
* Whether or not Kawasaki/PHI can purchase beyond 40% of
PHILSECO’s stocks
HELD: In arguing that PHILSECO, as a shipyard, was a public utility, JG
Summit relied on sec. 13, CA No. 146. On the other hand, Kawasaki/PHI
argued that PD No. 666 explicitly stated that a “shipyard” was not a “public
utility.” But the SC stated that sec. 1 of PD No. 666 was expressly
repealed by sec. 20, BP Blg. 391 and when BP Blg. 391 was subsequently
repealed by EO 226, the latter law did not revive sec. 1 of PD No. 666.
Therefore, the law that states that a shipyard is a public utility still stands.
A shipyard such as PHILSECO being a public utility as provided by law is
therefore required to comply with the 60%-40% capitalization under the
Constitution. Likewise, the JVA between NIDC and Kawasaki manifests an
intention of the parties to abide by this constitutional mandate. Thus, under
the JVA, should the NIDC opt to sell its shares of stock to a third party,
Kawasaki could only exercise its right of first refusal to the extent that its
total shares of stock would not exceed 40% of the entire shares of stock.
The NIDC, on the other hand, may purchase even beyond 60% of the total
shares. As a government corporation and necessarily a 100% Filipino-
owned corporation, there is nothing to prevent its purchase of stocks even
beyond 60% of the capitalization as the Constitution clearly limits only
foreign capitalization.
Kawasaki was bound by its contractual obligation under the JVA that limits
its right of first refusal to 40% of the total capitalization of PHILSECO.
Thus, Kawasaki cannot purchase beyond 40% of the capitalization of the
joint venture on account of both constitutional and contractual
proscriptions.
Strategic Alliance vs. Radstock
Facts: Construction Development Corporation of the Philippines (CDCP)
was incorporated in 1966. It was granted a franchise to construct, operate
and maintain toll facilities in the North and South Luzon Tollways and
Metro Manila Expressway.
CDCP Mining Corporation (CDCP Mining), an affiliate of CDCP, obtained
loans from Marubeni Corporation of Japan (Marubeni). A CDCP official
issued letters of guarantee for the loans although there was no CDCP
Board Resolution authorizing the issuance of such letters of guarantee.
CDCP Mining secured the Marubeni loans when CDCP and CDCP Mining
were still privately owned and managed.
In 1983, CDCP’s name was changed to Philippine National Construction
Corporation (PNCC) in order to reflect that the Government already owned
90.3% of PNCC and only 9.70% is under private ownership. Meanwhile,
the Marubeni loans to CDCP Mining remained unpaid.
On 20 October 2000 and 22 November 2000, the PNCC Board of
Directors (PNCC Board) passed Board Resolutions admitting PNCC’s
liability to Marubeni. Previously, for two decades the PNCC Board
consistently refused to admit any liability for the Marubeni loans.
In January 2001, Marubeni assigned its entire credit to Radstock
Securities Limited (Radstock), a foreign corporation. Radstock
immediately sent a notice and demand letter to PNCC.
PNCC and Radstock entered into a Compromise Agreement. Under this
agreement, PNCC shall pay Radstock the reduced amount of
P6,185,000,000.00 in full settlement of PNCC’s guarantee of CDCP
Mining’s debt allegedly totaling P17,040,843,968.00 (judgment debt as of
31 July 2006). To satisfy its reduced obligation, PNCC undertakes to (1)
"assign to a third party assignee to be designated by Radstock all its rights
and interests" to the listed real properties of PNCC; (2) issue to Radstock
or its assignee common shares of the capital stock of PNCC issued at par
value which shall comprise 20% of the outstanding capital stock of PNCC;
and (3) assign to Radstock or its assignee 50% of PNCC’s 6% share, for
the next 27 years, in the gross toll revenues of the Manila North Tollways
Corporation.
Strategic Alliance Development Corporation (STRADEC) moved for
reconsideration. STRADEC alleged that it has a claim against PNCC as a
bidder of the National Government’s shares, receivables, securities and
interests in PNCC.
Issue: Whether or not the Compromise Agreement between PNCC and
Radstock is valid in relation to the Constitution, existing laws, and public
policy
Held: The Compromise Agreement is contrary to the Constitution, existing
laws and public policy.
PNCC’s toll fees are public funds. PNCC cannot use public funds like toll
fees that indisputably form part of the General Fund, to pay a private debt
of CDCP Mining to Radstock. Such payment cannot qualify as expenditure
for a public purpose. The toll fees are merely held in trust by PNCC for the
National Government, which is the owner of the toll fees. Considering that
there is no appropriation law passed by Congress for the compromise
amount, the Compromise Agreement is void for being contrary to law,
specifically Section 29(1), Article VI of the Constitution. And since the
payment pertains to CDCP Mining’s private debt to Radstock, the
Compromise Agreement is also void for being contrary to the fundamental
public policy that government funds or property shall be spent or used
solely for public purposes.
Radstock is not qualified to own land in the Philippines. Consequently,
Radstock is also disqualified to own the rights to ownership of lands in the
Philippines. Radstock cannot own the rights to ownership of any land in
the Philippines because Radstock cannot lawfully own the land itself.
Otherwise, there will be a blatant circumvention of the Constitution, which
prohibits a foreign private corporation from owning land in the Philippines.
In addition, Radstock cannot transfer the rights to ownership of land in the
Philippines if it cannot own the land itself. It is basic that an assignor or
seller cannot assign or sell something he does not own at the time the
ownership, or the rights to the ownership, are to be transferred to the
assignee or buyer. The third party assignee under the Compromise
Agreement who will be designated by Radstock can only acquire rights
duplicating those which its assignor is entitled by law to exercise. Thus,
the assignee can acquire ownership of the land only if its assignor owns
the land. Clearly, the assignment by PNCC of the real properties to a
nominee to be designated by Radstock is a circumvention of the
Constitutional prohibition against a private foreign corporation owning
lands in the Philippines. The said circumvention renders the Compromise
Agreement void.
Secretary of DENR vs Yap
FACTS: This petition is for a review on certiorari of the decision of the
Court of Appeals (CA) affirming that of the Regional Trial Court (RTC) in
Kalibo Aklan, which granted the petition for declaratory relief filed by
respondents-claimants Mayor Jose Yap et al, and ordered the survey of
Boracay for titling purposes.
On Nov. 10, 1978, President Marcos issued Proclamation No. 1801
declaring Boracay Island as a tourist zone and marine reserve. Claiming
that Proc. No. 1801 precluded them from filing an application for a judicial
confirmation of imperfect title or survey of land for titling purposes,
respondents-claimants filed a petition for declaratory relief with the RTC in
Kalibo, Aklan.
The Republic, through the Office of the Solicitor General (OSG) opposed
the petition countering that Boracay Island was an unclassified land of the
public domain. It formed part of the mass of lands classified as “public
forest,” which was not available for disposition pursuant to section 3(a) of
PD No. 705 or the Revised Forestry Code.
ISSUE: Whether unclassified lands of the public domain are automatically
deemed agricultural land, therefore making these lands alienable.
HELD: No. To prove that the land subject of an application for registration
is alienable, the applicant must establish the existence of a positive act of
the government such as a presidential proclamation or an executive order,
an administrative action, investigative reports of the Bureau of Lands
investigators, and a legislative act or statute.
A positive act declaring land as alienable and disposable is required. In
keeping with the presumption of state ownership, the Court has time and
again emphasized that there must be a positive act of the government,
such as an official proclamation, declassifying inalienable public land into
disposable land for agricultural or other purposes.
The Regalian Doctrine dictates that all lands of the public domain belong
to the State, that the State is the source of any asserted right to ownership
of land and charged with the conservation of such patrimony.
All lands not otherwise appearing to be clearly within private ownership
are presumed to belong to the State. Thus, all lands that have not been
acquired from the government, either by purchase or by grant, belong to
the State as part of the inalienable public domain.
Martinez vs CA
FACTS: Private respondents Godofredo De la Paz and his sister Manuela
De la Paz entered into an oral contract with petitioner Rev. Fr. Dante
Martinez, then Assistant parish priest of Cabanatuan City, for the sale of
Lot No. 1337-A-3 at the Villa Fe Subdivision in Cabanatuan City for the
sum of P15,000.00. At the time of the sale, the lot was still registered in
the name of Claudia De la Paz, mother of private respondents, although
the latter had already sold it to private respondent Manuela de la Paz by
virtue of a Deed of Absolute Sale dated. He was assured by them that the
lot belonged to Manuela De la Paz. It was agreed that petitioner would
give a downpayment of P3,000.00 to private respondents De la Paz and
that the balance would be payable by installment. After giving the
P3,000.00 downpayment, petitioner started the construction of a house on
the lot and began paying the real estate taxes on said property.
In the meantime, in a Deed of. Absolute Sale with Right to Repurchase,
private respondents De la Paz sold three lots with right to repurchase the
same within one year to private respondents spouses Reynaldo and
Susan Veneracion for the sum of P150,000.00. One of the lots sold was
the lot previously sold to petitioner. Petitioner discovered that the lot he
was occupying with his family had been sold to the spouses Veneracion
after receiving a letter from private respondent Reynaldo Veneracion
claiming ownership of the land and demanding that they vacate the
property and remove their improvements thereon. Petitioner, in turn,
demanded through counsel the execution of the deed of sale from private
respondents De la Paz and informed Reynaldo Veneracion that he was
the owner of the property as he had previously purchased the same from
private respondents De la Paz.
ISSUE: Can the second purchaser in a case of double sales of immovable
property (under Article 1544 of the New Civil Code) claim the presence of
good faith despite the fact that he had previously seen the construction of
a house on the same lot?
HELD: NO. A purchaser who is aware of facts which should put a
reasonable man upon his guard cannot turn a blind eye and later claim
that he acted in good faith. The fact that there are persons, other than the
vendors, in actual possession of the disputed lot should have put the
purchaser on inquiry as to the nature of the builder’s right over the
property. Mere reliance on the assurance of a third person regarding the
assertion that the lot had not been previously sold to another purchaser
does not meet the standard of good faith required under Article 1544.
Heirs of Malabanan vs. Republic Applying to the case at bar:

Facts: 1. On February 20, 1998, Mario Malabanan filed an application for
original registration of title covering a parcel of land in Silang, Cavite which
he purchased from Eduardo Velazco and that he and his predecessors in
interest had been in open, notorious, exclusive and continuous possession
of the said land for more than 30 years.
2.Velazco, the vendor, alleges that this land was originally owned by his
great-grandfather which passed down to his four sons. By 1966, one of the
sons became the administrator of the properties which the son of the latter
succeeded his parents. One of the properties therein was the one sold by
the Velazco.
3.They also presented an evidence on the classification of land to be
alienable and disposable by the DENR on March 15, 1982.
4.The RTC ruled in favor with them, but the CA reversed citing the case of
Republic v Hebierto.
1. Sec. 14 (1) is unsatisfied as the earliest tax declarations
presented was 1948. No other substantive evidence was
presented.
2. Sec. 14 (2) is also unsatisfied as the subject property was
declared as alienable or disposable in 1982, there is no
competent evidence that is no longer intended for public use
service or for the development of the national evidence,
conformably with Article 422 of the Civil Code. The
classification of the subject property as alienable and
disposable land of the public domain does not change its status
as property of the public dominion under Article 420(2) of the
Civil Code. Thus, it is insusceptible to acquisition by
prescription.

Issue: Whether or not the registration of the property should be allowed

Held: No. Given the length discussions of questions of law, we would

need to dissect them. The case settles down the correct interpretation of
Sec. 14 (1) and (2) of PD 1529 along with CA 141

1. It should be noted here first that CA 141, particularly Section 48

(b) vests the right to ownership to those who satisfy its
prerequisites, while PD 1529 Sec 14 (1) recognizes such rights.
One did not repeal the other.
2. It is also recognized that the change of the term “alienable and
disposable” from “agricultural” by PD 1073 did limit the lands to
be registered, as we may take a look at Sec. 9 of CA 141.

The Court holds that the correct interpretation for Section 14 (1) is Naguit,
not Herbierto, the latter being only an orbiter dicta to a case where the
MTC did not acquire jurisdiction to settle the original registration. Thus:

1. The requirement of bona fide ownership since June 12, 1945 is

satisfied when at the time of the application, the land is already
classified as alienable and disposable. Ad proximum
antecedents fiat relation nisi impediatur sentencia.
2. A contrary ruling with result to absurdity rendering the
presumption of the right nugatory and the provision inoperative,
aggravated by the fact that at the time the Philippine is still not
an independent state.
3. The correct interpretation then is that if the State, at the time
the application is made, has not yet deemed it proper to
release the property for alienation or disposition, the
presumption is that the government is still reserving the right to
utilize the property; hence, the need to preserve its ownership
in the State irrespective of the length of adverse possession
even if in good faith. If the reverse is true, then there is already
an intention on the part of the State to abdicate its exclusive
prerogative over the property.

The Court rules that the interpretation for Sec 14 (2) requires a mix of
interpretation of Art. 1113, Art. 1137, and Art. 420-422 of the New Civil
Code.

1. It is well settled, per Art. 1113, that only objects within the
commerce of men and the patrimonial property of the State can
be subject to acquisitive or extraordinary acquisitive
prescription.
2. It is also clear that in Arts. 420-422, the property of public
dominion when no longer in use, is converted into patrimonial
property, if and only if, as held in Ignacio vs. Director of Lands
or Laurel vs. Garcia, there is a positive act of the executive or
legislative declaring lands to be such.
3. Hence, combining both rulings, it is clear that only when there
is a positive act, regardless if the land was classified as
alienable and disposable, that the land sought to be registered,
can be acquired through prescription.
Philippine Constitution - ARTICLE 12
NATIONAL ECONOMY AND PATRIMONY

SEC. 2.

All lands of the public domain, waters, minerals, coal, petroleum, and other
mineral oils, all forces of potential energy, fisheries, forests or timber,
wildlife, flora and fauna, and other natural resources are owned by the
State. With the exception of agricultural lands, all other natural resources
shall not be alienated. The exploration, development, and utilization of
natural resources shall be under the full control and supervision of the
State. The State may directly undertake such activities, or it may enter into
co-production, joint venture, or production-sharing agreements with
Filipino citizens, or corporations or associations at least sixty per centum
of whose capital is owned by such citizens. Such agreements may be for a
period not exceeding twenty-five years, renewable for not more than
twenty-five years, and under such terms and conditions as may be
provided by law. In cases of water rights for irrigation, water supply,
fisheries, or industrial uses other than the development of water power,
beneficial use may be the measure and limit of the grant.

The State shall protect the nation's marine wealth in its archipelagic
waters, territorial sea, and exclusive economic zone, and reserve its use
and enjoyment exclusively to Filipino citizens.

The Congress may, by law, allow small-scale utilization of natural

resources by Filipino citizens, as well as cooperative fish farming, with
priority to subsistence fishermen and fish workers in rivers, lakes, bays,
and lagoons.

The President may enter into agreements with foreign-owned corporations

involving either technical of financial assistance for large-scale exploration,
development, and utilization of minerals, petroleum, and other mineral oils
according to the general terms and conditions provided by law, based on
real contributions to the economic growth and general welfare of the
country. In such agreements, the State shall promote the development
and use of local scientific and technical resources.

The President shall notify the Congress of every contract entered into in
accordance with this provision, within thirty days from its execution.

SEC. 3.

Lands of the public domain are classified into agricultural, forest or timber,
mineral lands, and national parks. Agricultural lands of the public domain
may be further classified by law according to the uses which they may be
devoted. Alienable lands of the public domain shall be limited to
agricultural lands. Private corporations or associations may not hold such
alienable lands of the public domain except by lease, for a period not
exceeding twenty-five years, renewable for not more than twenty-five
years, and not to exceed one thousand hectares in area. Citizens of the
Philippines may lease not more than five hundred hectares, or acquire not
more than twelve hectares thereof by purchase, homestead, or grant.
Taking into account the requirements of conservation, ecology, and
development, and subject to the requirements of agrarian reform, the
Congress shall determine, by law, the size of lands of the public domain
which may be acquired, developed, held, or leased and the conditions
therefore.
SEC. 7.

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.

SEC. 8.

Notwithstanding the provisions of Section 7 of this Article, a natural-born

citizen of the Philippines who has lost its Philippine citizenship may be a
transferee of private lands, subject to limitations provided by law.
Foreign Investments Act
Section 3. Definitions. - As used in this Act:
a) The term "Philippine national" shall mean a citizen of the Philippines or
a domestic partnership or association wholly owned by citizens of the
Philippines; or a corporation organized under the laws of the Philippines of
which at least sixty percent (60%) of the capital stock outstanding and
entitled to vote is owned and held by citizens of the Philippines; or a
trustee of funds for pension or other employee retirement or separation
benefits, where the trustee is a Philippine national and at least sixty (60%)
of the fund will accrue to the benefit of the Philippine nationals: Provided,
That where a corporation and its non-Filipino stockholders own stocks in a
Securities and Exchange Commission (SEC) registered enterprise, at
least sixty percent (60%) of the capital stocks outstanding and entitled to
vote of both corporations must be owned and held by citizens of the
Philippines and at least sixty percent (60%) of the members of the Board
of Directors of both corporations must be citizens of the Philippines, in
order that the corporations shall be considered a Philippine national;
b) The term "investment" shall mean equity participation in any enterprise
organized or existing under the laws of the Philippines;
c) The term "foreign investment" shall mean as equity investment made by
a non-Philippine national in the form of foreign exchange and/or other
assets actually transferred to the Philippines and duly registered with the
Central Bank which shall assess and appraise the value of such assets
other than foreign exchange;
d) The praise "doing business" shall include soliciting orders, service
contracts, opening offices, whether called "liaison" offices or branches;
appointing representatives or distributors domiciled in the Philippines or
who in any calendar year stay in the country for a period or periods
totalling one hundred eighty (180) days or more; participating in the
management, supervision or control of any domestic business, firm, entity
or corporation in the Philippines; and any other act or acts that imply a
continuity of commercial dealings or arrangements, and contemplate to
that extent the performance of acts or works, or the exercise of some of
the functions normally incident to, and in progressive prosecution of,
commercial gain or of the purpose and object of the business organization:
Provided, however, That the phrase "doing business: shall not be deemed
to include mere investment as a shareholder by a foreign entity in
domestic corporations duly registered to do business, and/or the exercise
of rights as such investor; nor having a nominee director or officer to
represent its interests in such corporation; nor appointing a representative
or distributor domiciled in the Philippines which transacts business in its
own name and for its own account;
e) The term "export enterprise" shall mean an enterprise which produces
goods for sale, or renders services to the domestic market entirely or if
exporting a portion of its output fails to consistently export at least sixty
percent (60%) thereof; and
g) The term "Foreign Investments Negative List" or "Negative List" shall
mean a list of areas of economic activity whose foreign ownership is
limited to a maximum of forty ownership is limited to a maximum of forty
percent (40%) of the equity capital of the enterprise engaged therein.
Section 10. Strategic Industries. - Within eighteen (18) months after the
effectivity of this Act, the NEDA Board shall formulate and publish a list of
industries strategic to the development of the economy. The list shall
specify, as a matter of policy and not as a legal requirement, the desired
equity participation by Government and/or private Filipino investors in
each strategic industry. Said list of strategic industries, as well as the
corresponding desired equity participation of government and/or private
Filipino investors, may be amended by NEDA to reflect changes in
economic needs and policy directions of Government. The amended list of
strategic industries shall be published concurrently with publication of the
Foreign Investment Negative List.
The term "strategic industries" shall mean industries that are characterized
by all of the following:
a) Crucial to the accelerated industrialization of the country,
b) Require massive capital investments to achieve economies of scale for
efficient operations;
c) Require highly specialized or advanced technology which necessitates
technology transfer and proven production techniques in operations;
d) Characterized by strong backward and forward linkages with most
industries existing in the country, and
e) Generate substantial foreign exchange savings through import
substitution and collateral foreign exchange earnings through export of
part of the output that will result with the establishment, expansion or
development of the industry.
IMPLEMENTING RULES & REGULATIONS OF RA 7042
RULE I
DEFINITIONS
SECTION 1. Definition of Terms. - For the purpose of these Rules and
Regulations:
a. "Act" shall refer to Republic Act 7042 entitled "An Act to Promote
Foreign Investments, Prescribe the Procedures for Registering Enterprises
Doing Business in the Philippines, and for Other Purposes", also known as
the Foreign Investments Act of 1991, as amended.
b. "Philippine national" shall mean a citizen of the Philippines or a
domestic partnership or association wholly owned by the citizens of the
Philippines; or a corporation organized under the laws of the Philippines of
which at least sixty percent [60%] of the capital stock outstanding and
entitled to vote is owned and held by citizens of the Philippines; or a
trustee of funds for pension or other employee retirement or separation
benefits, where the trustee is a Philippine national and at least sixty
percent [60%] of the fund will accrue to the benefit of the Philippine
nationals; Provided, that where a corporation its non-Filipino stockholders
own stocks in a Securities and Exchange Commission [SEC] registered
enterprise, at least sixty percent [60%] of the capital stock outstanding and
entitled to vote of both corporations must be owned and held by citizens of
the Philippines and at least sixty percent [60%] of the members of the
Board of Directors of each of both corporation must be citizens of the
Philippines, in order that the corporation shall be considered a Philippine
national. The control test shall be applied for this purpose.
Compliance with the required Filipino ownership of a corporation shall be
determined on the basis of outstanding capital stock whether fully paid or
not, but only such stocks which are generally entitled to vote are
considered.
For stocks to be deemed owned and held by Philippine citizens or
Philippine nationals, mere legal title is not enough to meet the required
Filipino equity. Full beneficial ownership of the stocks, coupled with
appropriate voting rights is essential. Thus, stocks, the voting rights of
which have been assigned or transferred to aliens cannot be considered
held by Philippine citizens or Philippine nationals.
Individuals or juridical entities not meeting the aforementioned
qualifications are considered as non-Philippine nationals.
c. "Foreign corporation" shall mean one which is formed, organized or
existing under laws other than those of the Philippines.
Branch office of a foreign company carries out the business activities of
the head office and derives income from the host country.
Representative or liaison office deals directly, with the clients of the parent
company but does not derive income from the host country and is fully
subsidized by its head office. It undertakes activities such as but not
limited to information dissemination and promotion of the company's
products as well as quality control of products.
d. Investment shall mean equity participation in any enterprise organized
or existing under the laws of the Philippines. It includes both original and
additional investments, whether made directly as in stock subscription, or
indirectly through the transfer of equity from one investor to another as in
stock purchase. Ownership of bonds [including income bonds],
debentures, notes or other evidences of indebtedness does not qualify as
investments.cralaw

The purchase of stock options or stock warrants is not an investment until
the holder thereof exercises his option and actually acquires stock from
the corporation.cralaw
e. "Foreign investment" shall mean an equity investment made by a non-
Philippine national; Provided, however, That for purposes of determining
foreign ownership, peso investments made by non-Philippine nationals
shall be considered; Provided, further, That only foreign investments in the
form of foreign exchange and/or other assets actually transferred to the
Philippines and duly registered with the Central Bank (CB) and profits
derived therefrom can be repatriated; and Provided, finally, That, for
purposes of Section 8 of the Act, and Rule VIII, Section 6 of these Rules
and Regulations, "Existing Foreign Investments" shall mean an equity
investments made by a non-Philippine national duly registered with the
SEC or the Bureau of Trade Regulation and Consumer Protection
(BTRCP) in the form of foreign exchange and/or other assets transferred
to the Philippines.
f. "Doing business" shall include soliciting orders, service contracts,
opening offices, whether liaison offices or branches; appointing
representatives or distributors, operating under full control of the foreign
corporation, domiciled in the Philippines or who in any calendar year stay
in the country for a period totaling one hundred eighty [180] days or more;
participating in the management, supervision or control of any domestic
business, firm, entity or corporation in the Philippines; and any other act or
acts that imply a continuity of commercial dealings or arrangements, and
contemplate to that extent the performance of acts or works, or the
exercise of some of the functions normally incident to and in progressive
prosecution of commercial gain or of the purpose and object of the
business organization.
The following acts shall not be deemed "doing business" in the
Philippines:
1. Mere investment as a shareholder by a foreign entity in domestic
corporations duly registered to do business, and/or the exercise of rights
as such investor;
2. Having a nominee director or officer to represent its interest in such
corporation;
3. Appointing a representative or distributor domiciled in the Philippines
which transacts business in the representative's or distributor's own name
and account;
4. The publication of a general advertisement through any print or
broadcast media;
5. Maintaining a stock of goods in the Philippines solely for the purpose of
having the same processed by another entity in the Philippines;
6. Consignment by a foreign entity of equipment with a local company to
be used in the processing of products for export;
7. Collecting information in the Philippines; and
8. Performing services auxiliary to an existing isolated contract of sale
which are not on a continuing basis, such as installing in the Philippines
machinery it has manufactured or exported to the Philippines, servicing
the same, training domestic workers to operate it, and similar incidental
services.
g. "Export enterprise" shall mean an enterprise wherein a manufacturer,
processor or service [including tourism] enterprise exports sixty percent
[60%] or more of its output, or wherein a trader purchases products
domestically and exports sixty percent [60%] or more of such purchases.
h. "Exports" shall mean the volume of the Philippine port F. O. B. peso
value, determined from invoices, bills of lading, inward letters of credit,
loading certificates, and other commercial documents, of products
exported directly by an export enterprise or the value of services including
tourism sold by service-oriented enterprises to non-resident foreigners or
the net selling price of export products sold by an export enterprise to
another export enterprise that subsequently exports the same; Provided,
That sales of export products to another export enterprise shall only be
deemed exports when actually exported by the latter, as evidenced by
loading certificates or similar commercial documents; and Provided, finally,
That without actual exportation, the following shall be considered
constructively exported for purposes of the Act: [1] sales of products to
bonded manufacturing warehouses of export enterprises; [2] sales of
products to export processing zone enterprises; [3] sales of products to
export enterprises operating bonded trading warehouses supplying raw
materials used in the manufacture of export products; and [4] sales of
products to foreign military bases, diplomatic missions and other agencies
and/or instrumentalities granted tax immunities of locally manufactured,
assembled or repacked products whether paid for in foreign currency or
pesos funded from inwardly remitted foreign currency.cralaw
Sales of locally manufactured or assembled goods for household and
personal use to Filipinos abroad and other non-residents of the Philippines
as well as returning overseas Filipinos under the Internal Export Program
of the Government and paid for in convertible foreign currency inwardly
remitted through the Philippine banking system shall also be considered
exports.
i. "Output" shall refer to the export enterprise's total sales in a taxable
year. The term sales shall refer to the value in case of heterogeneous
products and volume in case of homogeneous products.
Heterogeneous products shall refer to products of different kinds and
characteristics as well as to those of the same kind but with various
categories using different units of measurement.
Homogeneous products shall refer to products of the same kind or
category using a common unit of measurement.
j. "Export ratio" shall refer to:
1. the percentage share of the volume or peso value of goods exported to
the total volume or value of goods sold in any taxable year if the export
enterprise is engaged in manufacturing or processing;
2. the percentage share of the peso value of services sold to foreigners to
total earnings or receipts from the sale of its services from all sources in
any taxable year if the export enterprise is service-oriented; Value of
services sold shall refer to the peso value of all services rendered by an
export enterprise to foreigners that are paid for in foreign currency and/or
pesos funded from inwardly remitted foreign currency as properly
documented by the export enterprise; or
3. the percentage share of the volume or peso value of goods exported to
the total volume or value of goods purchased domestically in any taxable
year if the export enterprise is engaged in merchandise trading.
k. "Domestic market enterprise" shall mean an enterprise which produces
goods for sale, or renders service or otherwise engages in any business in
the Philippines.
l. "Joint venture" shall mean two or more entities, whether natural or
juridical, one of which must be a Philippine national, combining their
property, money, efforts, skills or knowledge to carry out a single business
enterprise for profit, which is duly registered with the SEC as a corporation
or partnership.
m. "Substantial partner" shall mean an individual or a firm who owns
enough shares to be entitled to at least one [1] seat on the Board of
Directors of a corporation, or in the case of a partnership, any partner.
n. "Dangerous drug" as defined under Republic Act 6425 or the
Dangerous Drugs Act, as amended, refers to either:
1. "Prohibited drug" which includes opium and its active components and
derivatives, such as heroin and morphine; coca leaf and its derivatives,
principally cocaine; alpha and bet eucaine; hallucinogenic drugs, such as
mescaline, lysergic and dicthlylamide [LSD] and other substances
producing similar effects; Indian hemp and its derivatives; all preparations
made from any of the foregoing; and other drugs and chemical
preparations whether natural or synthetic, with the physiological effects of
a narcotic or hallucinogenic drug; or
2. "Regulated drug" which includes, unless authorized by the Department
of Health [DOH] and in accordance with the Dangerous Drugs Board, self-
inducing sedatives, such as secobarbital, phenobarbital, pentobarbital,
barbital, amobarbital or any other drug which contains a salt or a derivative
of salt of barbituric acid; any salt, isomer, or salt of an isomer, of
amphetamine such as benzedrine or dexedrine, or any drug which
produces a physiological action similar to amphetamine; and hypnotic
drugs, such as methaqualone, nitrazepam or any other compound
producing similar physiological effects.
o. "Advanced technology" refers to a higher degree or form of technology
than what is domestically available and needed for the development of
certain industries as subject to guidelines of the Department of Science
and Technology [DOST]. Its introduction into the country through foreign
investments under the terms and conditions of the Act must be linked to its
appropriateness and adaptability to local conditions with a view towards
eventual transfer and applicability including the upgrading of the
indigenous technology available.
p. "Paid-in equity capital" shall mean the total investment in a business
that has been paid-in in a corporation or partnership or invested in a single
proprietorship, which may be in cash or in property. It shall also refer to
inward remittance or assigned capital in the case of foreign corporations.
q. "Foreign Investment Negative List [FINL]" or "Negative List" shall mean
a list of areas of economic activity whose foreign ownership is limited to a
maximum of forty percent [40%] of the outstanding capital stock in the
case of a corporation, or capital in the case of a partnership.
r. "NEDA Board" shall refer to the body constituted as such under
Executive Order No. 230 entitled "Reorganizing the National Economic
and Development Authority" and in which reside the powers and functions
of the Authority.
s. "NEDA" shall refer to the NEDA Secretariat, which is the body
constituted as such under Executive Order No. 230 and which serves as
the research and technical support arm and the Secretariat of the NEDA
Board.
t. "SEC" shall refer to the Securities and Exchange Commission.cralaw
u. "BTRCP" shall refer to the Bureau of Trade Regulation and Consumer
Protection as represented by the provincial offices of the Department of
Trade and Industry [DTI].
v. "BOI" shall refer to the Board of Investments.
w. "Technology Transfer Board" shall refer to the Bureau of Patents,
Trademarks and Technology Transfer (BPTTT).
x. "Former natural born Filipino" shall mean those who have lost
Philippine citizenship but were previously citizens of the Philippines falling
in either of the following categories: [a] from birth without having to
perform any act to acquire or perfect their Philippine citizenship; or [b] by
having elected Philippine citizenship upon reaching the age of majority, if
born before January 17, 1973, of Filipino mothers.
y. "Transferee of private land" shall mean a person to whom the
ownership rights of private land is transferred through either voluntary or
involuntary sale, devise or donation or involuntary executions of judgment.
z. "Direct employees" shall mean Filipino personnel hired and engaged
under the control and supervision of the applicant investor/employer in the
production of goods or performance of services. Excluded from this
definition are personnel hired as casual, seasonal, learner, apprentice or
any employee of subcontractor or those under fixed term employment.
aa. "Start of commercial operation" shall mean the date when a particular
enterprise actually begins production of the product for commercial
purposes or commercial harvest in the case of agricultural activities. In the
case of export traders and service exporters, the date when the initial
export shipment in commercial quantity has been made or initial
performance of service as borne out by the appropriate supporting
documents.
Condominium Act

Sec. 5. Any transfer or conveyance of a unit or an apartment, office or

store or other space therein, shall include the transfer or conveyance of
the undivided interests in the common areas or, in a proper case, the
membership or shareholdings in the condominium
corporation: Provided, however, That where the common areas in the
condominium project are owned by the owners of separate units as co-
owners thereof, no condominium unit therein shall be conveyed or
transferred to persons other than Filipino citizens, or corporations at least
sixty percent of the capital stock of which belong to Filipino citizens,
except in cases of hereditary succession. Where the common areas in a
condominium project are held by a corporation, no transfer or conveyance
of a unit shall be valid if the concomitant transfer of the appurtenant
membership or stockholding in the corporation will cause the alien interest
in such corporation to exceed the limits imposed by existing laws.
CA 141

Section47. The persons specified in the next following section are hereby
granted time, not to extend beyond December 31, 1987 within which to
take advantage of the benefit of this chapter: Provided, That this extension
shall apply only where the area applied for does not exceed 144 hectares.
Provided, further, That the several periods of time designated by the
President in accordance with section forty-five of this Act shall apply also
to the lands comprised in the provisions of this chapter, but this section
shall not be construed as prohibiting any of said persons from acting under
this chapter at any time prior to the period fixed by the President.

Section48. The following-described citizens of the Philippines, occupying

lands of the public domain or claiming to own any such lands or an interest
therein, but whose titles have not been perfected or completed, may apply
to the Court of First Instance of the province where the land is located for
confirmation of their claims and the issuance of a certificate of title
therefor, under the Land Registration Act, to wit:

(a) Those who prior to the transfer of sovereignty from Spain to the prior
United States have applied for the purchase, composition or other form of
grant of lands of the public domain under the laws and royal decrees then
in force and have instituted and prosecuted the proceedings in connection
therewith, but have with or without default upon their part, or for any other
cause, not received title therefor, if such applicants or grantees and their
heirs have occupied and cultivated said lands continuously since the filing
of their applications.

(b) Those who by themselves or through their predecessors in interest

have been in open, continuous, exclusive, and notorious possession and
occupation of agricultural lands of the public domain, under a bona fide
claim of acquisition or ownership, for at least thirty years immediately
preceding the filing of the application for confirmation of title except when
prevented by war or force majeure. These shall be conclusively presumed
to have performed all the conditions essential to a Government grant and
shall be entitled to a certificate of title under the provisions of this chapter.

(c) Members of the national cultural minorities who by themselves or

through their predecessors-in-interest have been in open, continuous,
exclusive and notorious possession and occupation of lands of the public
domain suitable to agriculture, whether disposable or not, under a bona
fide claim of ownership for at least 30 years shall be entitled to the rights
granted in sub-section (b) hereof.
Section 14. Who may apply. The following persons may file in the proper
Court of First Instance an application for registration of title to land,
whether personally or through their duly authorized representatives:

(1) Those who by themselves or through their predecessors-in-interest

have been in open, continuous, exclusive and notorious possession and
occupation of alienable and disposable lands of the public domain under a
bona fide claim of ownership since June 12, 1945, or earlier.