Foreigner Needs Advice

Hi - I'm originally from the UK but have lived in the Philippines for the past five years and love it. The past 4 years I have lived in Bacolod where I own my own house.

My full story is quite complicated and involved so I won't bore you too much with the details (unless you need them to enable you to help with my specific problems/questions).

I have two problems that are actually related so I'll put them both here in the hope that someone can give me advice.

As a foreigner I cannot own the land my house is on which I understood and accepted from the beginning. What I and my friend, who told me she owned the land, therefore did was to lease the land to me for a minimal rent for a period of 25 years. Now the problem occurred a year later when I found out my friend didnt' actually own the land but was still paying off the loan to the property developer. Please don't tell me how stupid and trusting I was, I know I hear it constantly from my girlfriend.

The problem is that my friend is having trouble paying off the loan and the property developer just keeps adding on interest. The net result is she's paid over twice what the principal is. She pays and most of it is interest and only a tiny amount goes to the principal.

I suggested she just pay the principal in full and be done with it but the developer seems to be being unreasonable. They say that not only do they want the principal but they also want the interest she would owe for the next 5 years!!! They want her to pay interest on a loan she no longer has????

This not only sounds immoral but also illegal. Can they really just extort money like that or does the justice system protect against such activity?

The other matter is that they keep threatening that if she does not pay they will reposes the land. If they were to do that what would happen to me and my house? I own the house 100% so I would think that I am entitled to some consideration and protection but obviously I don't know for sure.

If any qualified person can offer me advice I would be very grateful.

Thanks

Steve

PS: I just came across this and wonder if it's relevant to my situation.

Section 6 of RA 6552 states:

“SECTION 6. The buyer shall have the right to pay in advance any installments or the full unpaid balance of the purchase price any time without interest and to have such full payment of the purchase price annotated in the certificate of title covering the property.”

Specifically "The buyer shall have the right to pay...the full unpaid balance of the purchase price any time without interest"

your research is correct. it is not required you pay interest if penalties under the contract have already been paid or waived and you want pay more than the installments.

but you have to pay or tender payment. make sure you do so in writing so you have proof of it. they cannot force you out of the property, but will have to file a legal case to do it, and you can use your payments a defense.

to force them to accept payment, you can file a court complaint for consignment.

Hi Atty

Thanks for your responses.

The payments are not actually mine as I mentioned above. It's my friend who is making the payments and sometimes falling behind etc. which is why they keep threatening that they will foreclose on the land.

My house is a completely separate entity and I built and paid for that in full so I am the owner of it and it has nothing to do with the developers.

I guess that was really my question.

Can they force me out of my house, which I own 100%? I would have thought they would want to try to negotiate a deal with me separately if they did foreclose on my friend.

Thanks again for your help and advice.

Lux

PS: I've just noticed an exclusion in RA6552 that may mean it doesn't apply.

The lot my house is built on is described as 'commercial'. The act excludes 'industrial lots'. Are these two things the same and if so does this mean that RA6552 does not apply?

Again I think I've answered my own question...

The Maceda Law, RA 6552, is the real estate equivalent of the Recto Law. Like the Recto Law, it also covers financing of sales of real property (which is why mortgages also come in.) It doesn't apply,however, to the following sales:

1.) Industrial lots

2.) Commercial buildings and lots

3.) Lands under the CARP Law

Source: Link

Upon re-reading RA 6552 again and specifically it's exclusions it does NOT explicitly state it excludes commercial lots but only 'commercial buildings and INDUSTRIAL lots' so I wonder if the above quote is correct? Can you clarify for me please?

Also I wonder whether the exclusions are only for section 3 of RA 6552 and not the whole document? On re-reading it a few times I'm inclined to think the exclusions are only for section 3 but am not sure so would appreciate your opinion.

So if RA 6552 doesn't protect commercial lots my original question still stands. Is the property developer (land owner) obliged to accept payment of the principal in full or can they extort the projected interest for the next five years too?

Interesting question, the question to my mind is whether your ownership of the house can be recognized considering you are a foreigner. If this went to court, my money will be on that it will not be recognized because it will be seen as a circumvention of our laws.

now, going back, the developer will be entitled to what is owed to it plus accrued interest and penalties. if there is an acceleration clause, then the entire amount is payable. but I do not see any legal basis to ask for 5 years advance interest.

now, commercial does not necessarily mean it cannot be used for residential. if the property is located in the roadside of a residential subdivision, then i would argue that it is still covered by the maceda law.

are you and/or your friend willing and able to pay for the property? if so, the remedy is still the same; to offer payment and if refused, to consign it in court.

Thanks again for your response.

A foreigner is allowed to own a house (bricks and mortar) source source 2 just not land so I don't believe there is any problem with me owning the house at all. I think the interesting thing might come when/if somebody ever tried to 'pull the rug from under me'.

The wording of RA6552 seems quite clear and it doesn't exclude commercial lots just commercial buildings so I think you're right that it would still apply.

My friend is actually up to date with payment and penalties. Well she was up until October which is when the offer was made to them in writing to pay the principal in full which they declined and demanded payment of the principal plus the projected five years worth of interest. I/we sent them a letter asking them to kindly clarify their reasoning behind the decision and they didn't respond.

The thing is though because they refused to accept the payment of the principal and we are technically still in negotiations no payments have been made between October and now. Seems to me that their procrastination is not only illegal but also designed to keep extorting money.

I think the next step should be to send another letter offering to pay them the principal again and referring them to section 6 and taking it from there.

Thanks for your help.

Steve