Q. I am a fan of yours and a frequent reader of your regular column in Balita. The “legal advice” you provide and have provided to your readers under your Batas Pinoy Corner are very informative , interesting and, indeed are helpful to many of our kababayans. Bless you. With liberty, I am writing to request for your advice and comments regarding my future plan . My wife and I are intending to visit the Philippines in order to transfer ownership of our house and 650-sq.m. lot in Mandaluyong City to our 6 adult children–all-living in the USA and Canada. We would like to do this as we are now in our “twilight years”.
For a brief backgrounder : My wife and I are both retirees– she is 67 years old and myself , is 63. We immigrated to Canada more than 24 years ago and both, are now Canadian citizens. All our 6 children ( three boys & 3 daughters) were born in the Philippines and, except one( the USA resident – son), are all Canadian citizens too. All our 3 boys and two daughter are married and have their own families. The other adult daughter is still unmarried.
Since our planned visit to Manila would be a short one( not more than 2 months), we would to take advantage of the time to work towards transferring our titled property ( with Transfer of Certificate Title under my name and legally married to– my wife, and no property tax payment arrears, since 1979 ) to our 6 children , hopefully, in the most “convenient and faster processing time” possible.
In this regard, I would like to solicit your comments and suggestions on how best to work on this property transfer task successfully. In particular : 1) I would be grateful for any information as regards the legal procedures and the required documents in effecting the transfer of the property. 2) the appropriate government agencies that we have to deal with , including the kinds and amount of taxes and fees that may be incurred in the process. 3) Whether the required documents can be prepared in Canada; and 4) We wish that all the legal documents are in order before we will proceed to the Philippines, as we would like to avoid unexpected events and “surprises” in dealing with government agencies in the Philippines.
I will greatly appreciate for your attention and consideration on this special request. Itago na lang po ninyo ako sa pangalang Felipe. Maraming salamat po ulit sa inyo.
Ans:
Hi Ginoong Felipe , thank you po ! for writing and for being a regular habitué of our Batas Pinoy Corner. As to your queries and issues, kindly take note of the following:
1. Transferring your house and lot :
1. There are two(2) ways of transferring your house and lot to your children during your lot time. First. If you intend to transfer the ownership of your properties without any consideration or payment thereto other than your love and liberality to your children then the mode of transfer can be done by means of Donation Inter Vivos. This mode implies that the donation takes place during the lifetime of the donor and there must be an acceptance in writing by the donee(s) of the said donation . As to the direct tax consequence, the donor as a rule is under obligation to pay the so-called Donor’s tax or gift tax. The tax rate varies according to the market or zonal valuation of the property whichever is higher.
Transfer tax and other incidental fees will also be assessed and paid prior to the registration of the transfer and the issuance of the new title in name(s) of the new owner(s). The amount of transfer tax varies according the location of the property. Usually the transfer tax is in the range of 1% to 1.5% of the market value or zonal valuation whichever is higher.
2. The other is Donation mortis causa. This donation takes effect after the death of the Donor. Considering that you want to effect the transfer during your lifetime, the other practical mode is through straight sale. Simply simply executing a Deed of Absolute Sale in favor of your children can do this. However, this mode implies that there is payment or consideration in the transfer and sale of the property in question. Of course, of course this is only on paper. There are also tax incidents that will have to addressed. Foremost is the payment of Capital Gains Tax , if gain was made, which is about 6% of the zonal valuation or market value or selling price appearing on the deed of sale which ever is higher. In addition, documentary stamp and transfer taxes will also be assessed based on the consideration or payment appearing on the Deed of Sale or the zonal value of the property whichever is higher.
Incidental issues:
1. Considering that your children are already Canadian citizens(except one) and unless they have applied for dual Filipino citizenship, kindly take note that there is a limitation imposed by law in land ownership in the Philippines for foreigners. In the case of your children , as former natural born Filipino citizens , each is entitled to own not to exceed 1,000 square meter lot in urban centers and not more than 10,000 square meters in rural areas. And provided further that ownership of this land is limited for residential use only. However, for business and investment purposes, a former natural-born Filipino citizen, is allowed to own 5,000 sq.m. of urban land and 3 hectares of rural land. ( R.A. 8762).
For this purpose, your non-Filipino children must execute an affidavit of Land Ownership attesting that their aggregate and respective land ownerships in the Philippines does not exceed the limits set forth by law.
The Register of Deeds for registration purposes and the issuance of new land title in favor of your children will require this document.
Restriction on land ownership does NOT apply to former natural born Filipino citizen who have applied for Dual Citizenship under RA 9225.
2. Co-Ownership Issue:
The transfer of ownership of your property in the names of all your children means that the new title of the land will be under their names as co-owners. There is no problem with that as law allows this.
However, looking from the practical side, it is submitted it is wiser to subdivide the lot into five(5) so that each of your children will have their specific portion of the property. You see in co-ownership, all are considered to own a portion of the whole. The situation could pose a problem later on, if one or two of the co-owners for example , desire to dispose or use the property according to his or her preference or for whatever reason, and the other co-owner(s) defer to such preference.
In addition, you have to consider also the additional expenses in terms of taxes and other incidental fees every time there is a change of ownership or title of the land .
Thus, by subdividing the lot in question prior to its transfer can save your family a huge sum of money and hassle in the long run. Then, there is also an issue of maintenance cost and expense. , Co-owners or their heirs or successors-in-interest may disagree on certain issue or even in the preference of the use or disposal of the whole or part of the property. In this kind of situation, could trigger conflict amongst the co-owners or their heirs, assigns and successor –in-interest . In the end the co-owners may find themselves in such predicament, where one or more co-owners cannot simply in the manner of partition and disposal of the subject property.
To subdivide your lot, you will have to hire a geodetic engineer land surveyor. It will not cost you much considering that your property is situated in Metro Manila and not in the far flung barrio in the Philippines.
C. Proper and appropriate documentation:
Before leaving for the Philippines, it is strongly recommended that you have all your documents( Deed of Absolute Sale or Donation inter vivos/mortis causa) duly executed in Canada. This means that all the parties to the instrument must signed the same at the Philippine Consulate and has the document notarized. To mitigate the hassle, you have get yourself a Special Power of Attorney(SPA) authorizing you to deal on behalf of your children with the appropriate agencies or offices of the government relative to the transfer and registration of the subject property.
For the above purpose, it is strongly suggested that you engage a lawyer who is familiar and with expertise in drafting and documentation practices in the Philippines and have such documents notarized by our Philippine Consulate here in Canada.
If I may add, avoid the mistakes of a lot of our kababayans who ended up disappointed when they found out that the documents that were prepared by lawyers overseas, turn out to be inadequate in meeting with the documentation formalities in the Philippines . This corner have assisted quite a number of our kababayans on this matter and thus averted potential troubles, disappointment, frustrations and unnecessary expense in their travel to the Philippines.
D. Legwork and representation in the Philippines:
It is also suggested that while in the Philippines, avail of the services of professionals in dealing with the Register of Deeds, Assessor’s Office and the BIR, among others. The money spent for their services is worth the trouble and hassles that you will encounter in dealing with government offices and bureaucracy . You will do yourself a favor by not stressing yourself out and instead enjoy your stay in the Philippines and let the professionals do the job for you. By Canadian standard, it will not cost you a lot, in letting professionals do the job for you.
Anyway should you have further issues , be assured that our Batas Pinoy Corner is only a click away for kababayans in need of assistance . Be assured that this corner protects your privacy. Thanks again for making this corner your favorite reading material .
Disclaimer: Batas Pinoy Corner Not Legal opinion:
Material placed on this corner is for the purpose of providing information only. It is not intended as practice of law or legal services. Although the writer believes this information to be accurate at the time it is first provided or as relayed by the person asking or soliciting the information from the writer. Such circumstances or understanding of the facts as conveyed to the writer by the sender may not actually reflect the ultimate facts or circumstances earlier represented and as understood by the writer.
This writer makes no representation, express or implied, as to the accuracy, completeness or timeliness of the information provided in this writing. The content provided by Batas Pinoy Corner is not meant to be a substitute for legal opinion. Always consult your lawyer or other legal professional for legal advice as regards to the information obtained in this column.
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