Property Types and Classifications
Understand the different types of real property in the Philippines. residential, commercial, industrial, and agricultural. Learn how classification affects transactions, taxes, and zoning.
What is Real Property Under Philippine Law?
“The following are immovable property: (1) Land, buildings, roads and constructions of all kinds adhered to the soil; (2) Trees, plants, and growing fruits, while they are attached to the land or form an integral part of an immovable; (3) Everything attached to an immovable in a fixed manner, in such a way that it cannot be separated therefrom without breaking the material or deterioration of the object; (4) Statues, reliefs, paintings or other objects for use or ornamentation, placed in buildings or on lands by the owner of the immovable.”
What This Means
Real property (also called "immovable property" or "real estate") includes land and everything permanently attached to it. buildings, trees, and fixtures. This is distinct from personal property (movables) like furniture, vehicles, and equipment. Understanding this distinction matters because: real property requires formal written contracts for sale (Statute of Frauds), must be registered with the Registry of Deeds, and is subject to real property tax. As a real estate professional, you deal exclusively with immovable property and the rights attached to it.
- Real property = land + everything permanently attached to it
- Includes: buildings, trees, fixtures, roads, improvements
- Personal property (movables) = furniture, vehicles, equipment. NOT real property
- Real property sales MUST be in writing (Statute of Frauds, Article 1403)
- Real property must be registered for legal protection (Torrens system)
Real-World Scenario
A buyer purchases a house and lot. The seller removes the air conditioning units, kitchen cabinets (built-in), and the ornamental gate before turnover, claiming these are "personal property" she can take with her.
Can the seller legally remove these items?
Property Classification: Residential, Commercial, Industrial, Agricultural
“For purposes of assessment, the following classification of real property shall be adopted: (a) Residential; (b) Agricultural; (c) Commercial; (d) Industrial; (e) Mineral; (f) Timberland; and (g) Special. Real property shall be classified, valued, and assessed on the basis of its actual use regardless of where located, whoever owns it, and whoever uses it.”
What This Means
Properties are classified by ACTUAL USE, which determines tax rates, zoning rules, and transaction requirements. Residential: houses, condos, apartments, vacant residential lots. Commercial: offices, retail stores, malls, hotels. Industrial: factories, warehouses, manufacturing plants. Agricultural: farms, fishponds, orchards, timberlands. Classification matters because: (1) tax assessment levels differ (residential 20%, commercial 50%), (2) zoning must match the use, (3) agricultural land has conversion restrictions (DAR approval), and (4) foreigners have different ownership restrictions per classification.
- Classification is based on ACTUAL USE. not the owner's declaration
- Residential (20% assessment): homes, condos, apartment buildings
- Commercial (50% assessment): offices, stores, hotels, mixed-use
- Industrial (50% assessment): factories, warehouses
- Agricultural (40% assessment): farms, fishponds. restricted conversion
Real-World Scenario
A property owner has a house in a residential zone. She converts the ground floor into a small store (sari-sari store) without changing the zoning or the tax declaration. The Assessor's Office discovers this during a routine inspection.
What are the potential consequences?
Forms of Property Ownership
“Ownership may be exercised over things or rights. Ownership is the independent right of a person to the exclusive enjoyment and control of a thing, including the right to dispose of it, subject only to the limitations established by law. Two or more persons may own the same thing pro indiviso, in which case the provisions on co-ownership shall apply.”
What This Means
Real property in the Philippines can be owned in several ways: (1) Sole ownership. one person or entity owns 100%. (2) Co-ownership. two or more persons own undivided shares (common in inherited properties). (3) Conjugal/community property. owned jointly by married spouses. (4) Condominium ownership. individual unit + proportionate share of common areas. (5) Corporate ownership. a corporation holds title. Each form has different rules for selling: sole owners can sell freely, co-owners need all co-owners' consent (or can only sell their share), and conjugal property requires both spouses' signatures.
- Sole ownership: one person, can sell freely
- Co-ownership: undivided shares, need all co-owners' consent to sell the whole
- Conjugal: both spouses must sign. sale without consent is VOID
- Condominium: unit + proportionate common area (governed by Master Deed)
- Corporate: requires Board Resolution + Secretary's Certificate to sell
Real-World Scenario
Three siblings inherited a 1,000 sqm lot from their parents. The title shows all three names as co-owners. The eldest sibling wants to sell the entire property, but the youngest sibling refuses to sell.
Can the eldest sibling sell the property without the youngest's consent?
Frequently Asked Questions
Can foreigners own real property in the Philippines?
Generally no. the 1987 Constitution prohibits foreign ownership of land. However, foreigners CAN own: (1) condominium units (up to 40% of a project's total units), (2) buildings/improvements (not the land), and (3) property through a Philippine corporation where they own up to 40% equity. Foreigners can also lease land for up to 50 years (renewable for 25 more years). These rules make condo sales to foreigners a significant market segment for brokers.
What is the difference between a lot, a house and lot, and a condominium?
A lot is land only. the buyer builds their own structure. A house and lot is a complete package (land + building). A condominium is a unit in a multi-unit building where you own the unit's airspace and a proportionate share of common areas (land, hallways, amenities). Key differences: lots appreciate most (land value), houses depreciate over time (building ages), and condos have monthly association dues for common area maintenance.
What does "titled" vs. "untitled" property mean?
A "titled" property has a registered Torrens title (TCT or CCT) at the Registry of Deeds. this is the gold standard of ownership proof in the Philippines. An "untitled" property may be evidenced by tax declarations only, indicating possessory rights but not registered ownership. Untitled land is riskier: it can have overlapping claims, is harder to sell/mortgage, and requires a lengthy judicial or administrative titling process. Brokers should always verify title status before listing.