Presumed guilty
Philippine law prohibits foreigners from owning land locally, and, in some way, this has been argued to be among the deterrents to the entry of more substantial foreign investments. However, aliens, whether residents or otherwise, can own condominium units. The same rule applies to foreign-owned companies or businesses.
If a company is at least 60% Filipino-owned, it can own property, whether land or condominium. The company’s foreign ownership is immaterial as long as it does not exceed 40%. This accommodation, to an extent, is what has allowed several partly foreign-owned businesses to purchase large tracts of agricultural land in recent years.
There are also allegations that numerous foreigners have managed to acquire Philippine citizenship through dubious means, often in collusion with local officials, enabling them to pass themselves off as Filipinos. This has allowed them to illegally acquire farmlands and convert these into commercial use.
Earlier this month, several congressmen filed House Bill (HB) No. 11043, proposing rules for the civil forfeiture of land owned by foreigners. The bill is a direct response to ongoing congressional investigations, particularly into Chinese nationals who have allegedly gained Philippine citizenship illegally and acquired land in various parts of the country.
On Oct. 21, a House joint committee endorsed to the Office of the Solicitor General (OSG) documents “related to cases involving Chinese nationals who have allegedly acquired fraudulent Filipino citizenship for the purpose of securing landholdings and establishing businesses in the Philippines.”
The endorsement requested the OSG to initiate a preliminary investigation into criminal and civil cases, particularly against Chinese nationals whose “activities,” the committee claimed, were “in clear violation of our laws and [thus] require immediate executive action.” Some links were also established between land purchases and illegal drug and gambling operations.
The House joint committee advised the OSG that “given the severe national security implications and the clear violations of legal processes, we strongly recommend that your office expedite the review of these [companies] and initiate all necessary legal actions, including civil forfeiture proceedings, in coordination with the relevant agencies.”
On Oct. 22, the Office of the Executive Secretary complemented the House endorsement by issuing a memorandum to the Secretariat of the Anti-Money Laundering Council, asking it to apply to the appropriate courts for the issuance of freeze orders and provisional asset preservation orders on companies allegedly Chinese-owned or controlled.
Other than the freeze orders, legal actions against these companies and their owners may include criminal cases, possibly for fraud and graft and corruption, as well as civil forfeiture or the rescission of their property purchases.
HB No. 11043, if passed, could make it easier for authorities to file cases against these companies and seize their properties. Of course, this all depends on how quickly the House — and the Senate for a counterpart bill — can move on the proposed legislation. Soon, lawmakers will be too preoccupied with the May 2025 elections.
While I appreciate the bill’s intent, I am uncertain whether it is necessary. I am inclined to think we already have enough statutes and rules on forfeiture of property. Moreover, given how it is worded, I believe HB 11043 opens itself up to legal challenges before the Supreme Court if enacted.
Section 3 of the bill states that “any real estate property transferred or conveyed to an unqualified foreign national, natural or juridical, in violation of the Constitutional prohibition is null and void and vests no rights and creates no obligations,” and that the Solicitor General will “institute the civil forfeiture proceedings” to recover these properties.
For ease of filing suit, the bill presumes that any property owned by a foreigner was illegally purchased. Section 4 provides that “any real estate property acquired by any foreign national in the Philippines shall be presumed prima facie to have been unlawfully acquired.”
This implies that if a property is listed under a foreign national or a foreign-sounding name, it is presumed to have been purchased illegally, and a complaint may already be filed. This presumption of guilt, rather than innocence, is a controversial feature of the proposed law. Also considering that is a civil, and not a criminal, complaint.
In this sense, it also shifts the burden of proof onto the buyer or owner, requiring them to demonstrate their qualification to buy and own the property in question. Additionally, under Section 5 of the bill, “any taxpayer may file a complaint before the city or provincial prosecutor, who shall conduct a preliminary investigation and certify to the Solicitor General that there is a reasonable ground to believe that a violation of the prohibition on foreign land ownership was committed and the respondent foreign national is probably guilty thereof.”
The “complainant” does not have to be an aggrieved party or a state agent. It could be anyone, including someone with a personal or family grudge or even a business competitor or political opponent. However, the Solicitor General, not the complaining taxpayer, will ultimately file the petition for civil forfeiture after an investigation.
If this bill becomes law, what safeguards will prevent individuals with malicious intent from filing baseless complaints against their enemies or opponents? Moreover, the subjects of these complaints may lack recourse under the same law to seek damages for malicious or nuisance complaints.
For “ease” of filing, the bill requires only the following details: the name and address of the respondent foreign national; a description with reasonable particularity of the real estate property; and any other information that may help the court determine whether the acquisition was unlawful.
The respondent foreign national has only 15 days from receipt to respond to the complaint. Meanwhile, the Solicitor General may “grant immunity from criminal prosecution to any person who testifies to the unlawful manner by which an unqualified foreign national has acquired the real estate property in question in cases where such testimony is necessary to prove that the subject real estate property was unlawfully acquired.”
The bill also directs the Land Registration Authority to “strictly monitor any transfer or conveyance of lands and immediately report to the Solicitor General any suspicious transfer or conveyance to any foreign national.” This provision is expected to impose complications and additional burdens on legitimate property buyers with foreign-sounding names, who may need to produce extra documents to prove their citizenship and qualification.
The same mandate applies to local government units, which are required to “monitor any transfer of real estate properties within their territorial jurisdiction and immediately report to the Solicitor General any suspicious transfer to any foreign national.” In effect, the bill makes the OSG the de facto clearinghouse for real estate transactions.
As for lands eventually forfeited in favor of the government, agricultural land will be distributed to qualified farmers through the Department of Agrarian Reform. Non-agricultural land will be allocated for schools, hospitals, or other socialized services. Alternatively, the land may be donated to local government units for social services facilities or turned over to the Privatization and Management Office of the Department of Finance for disposal, with proceeds going to the National Government.
HB 11043 appears to be a direct response to the ongoing investigations into Chinese nationals engaged in illegal activities — an issue likely exacerbated by corrupt officials. However, despite its good intentions, the bill seems to have been hastily crafted, leaving it vulnerable to constitutional challenges and unintended consequences.
Marvin Tort is a former managing editor of BusinessWorld, and a former chairman of the Philippine Press Council
