US slaps higher tariff on Philippines

US president Donald J. Trump is imposing a bigger-than-expected tariff on Philippine exports to the United States, as part of a broader reciprocal tariff plan that will apply to all its trading partners.

However, Philippine government officials downplayed its impact, saying this was still lower than tariffs imposed on the rest of Southeast Asia.

Finance Secretary Ralph G. Recto said on Thursday that the Philippine economy, which is mainly driven by domestic demand, is “relatively resilient” against trade wars.

“However, as with all countries, we are not spared from the impact of the expected decline in international trade and possible slowdown of global growth due to supply-chain disruptions, higher interest rates, and higher inflation,” Mr. Recto said in a statement.

Trade Secretary Cristina A. Roque said the reciprocal tariffs can provide opportunities for the Philippines as regional competitors will be subjected to higher tariffs.

“We view with guarded optimism that the recent US imposition of reciprocal tariffs will provide strategic opportunities for the Philippines to improve its economic relationship with the US,” she said in a statement.

Ms. Roque said she will request a meeting with her US counterpart to discuss “strengthening” trade relations between the two countries.

On Wednesday, Mr. Trump announced a 10% tariff on all its trading partners, which will take effect on April 5.

The US will also slap individualized higher reciprocal tariffs on major trading partners including the European Union, China, Japan, South Korea and the Philippines, starting April 9.

“Foreign nations will finally be asked to pay for the privilege of access to our market — the biggest market in the world,” Mr. Trump said.

According to an infographic posted by the White House on X, the Philippines will be slapped with a 17% “discounted reciprocal tariff” as the Philippines charges a 34% tariff on the US.

However, an annex document to the executive order on reciprocal tariffs showed the adjusted reciprocal tariff for the Philippines is at 18%.

It was not immediately clear why there was a discrepancy in the tariff rates in the infographic posted on X and the annex document posted on The White House website.

Nonetheless, Philippine officials cited the 17% tariff rate in their press statements.

Among Southeast Asian countries, Cambodia faces the steepest tariff at 49%, followed by Laos (48%), Vietnam (46%), Myanmar (45%), Thailand (37%), Indonesia (32%), Malaysia (24%) and Brunei (24%). Singapore will be imposed a baseline tariff of 10%.

“The imposition of the 17% tariff, which is the second lowest, is not so bad in our opinion. We still see it as somewhat favorable,” Presidential Communications Office Undersecretary Clarissa A. Castro said at a Palace briefing in mixed English and Filipino.

Agriculture Secretary Francisco P. Tiu Laurel, Jr. said the Philippines could take advantage of the relatively lower tariff rate compared with its neighbors to “push for more sales to the US of our products.”

“The new tariffs also put the Philippines in a more advantageous position, more specifically for certain export products like coconuts. With lower tariffs than Thailand, Philippine coconut exports can be more competitive,” Ms. Roque said.

Ms. Roque noted that there are Philippine products that will be exempted from reciprocal tariffs, including copper ores and concentrates and integrated circuits.

According to a White House fact sheet, the reciprocal tariffs will not apply to certain goods, such as semiconductors, copper, pharmaceuticals, gold, and “certain minerals that are not available in the US.”

However, agri-based products, particularly food exports, are not exempted from reciprocal tariffs.

“The recent US measure has made US imports more expensive so that their domestic manufacturers can compete. Equally important for the US is to improve its access to rapidly growing economies such as the Philippines,” Ms. Roque said.

“In this regard, the Philippines aims to actively engage the US in a discussion to facilitate enhanced market access for its key export interests, such as automobiles, dairy products, frozen meat, and soybeans, within the framework of a bilateral free trade agreement.”

Special Assistant to the President for Investment and Economic Affairs Frederick D. Go said some investors may relocate and set up manufacturing facilities in the Philippines, given the relatively lower tariffs on Philippine exports to the US.

Trade Undersecretary Allan B. Gepty said it is important to maintain “good relations” with the US. “It would be good to see how we can seize opportunities from the possible trade diversion and recalibration of some investments in the region,” he said.

‘GAME CHANGER’

Fitch Ratings Head of US Economic Research Olu Sonola said Mr. Trump’s aggressive tariffs are a “game changer, not only for the US economy but for the global economy.”

“Many countries will likely end up in a recession. You can throw most forecasts out the door, if this tariff rate stays on for an extended period of time,” Mr. Sonola said.

Higher tariffs may also drive up prices and hurt demand for Philippine-made goods in the US.

“The US is the biggest export market of the Philippines, so this will have a drag on Philippine growth,” former commissioner of the Philippines Tariff Commission George N. Manzano said in a Viber message.

In 2024, the US was the top destination for Philippine exports, accounting for 17% of the total.

“US importers will put on all these additional tariffs to the selling price in the US,” Foreign Buyers Association of the Philippines  President Robert M. Young said.

“The end result of this is that the Philippines will have difficulties in getting export orders due to lesser or no demand,” he added.

Asked if the Philippines could benefit from the higher tariffs imposed on other countries, Mr. Young pointed out that Philippines has higher costs.

“To start with, the Philippines was selling at a higher price than Vietnam, India, and Cambodia. Meaning, Philippine goods will be the last to be picked up from the shelves,” he said. “Also, Vietnam acted swiftly by reducing their tariff on US goods coming into Vietnam.”

The Philippines exported $12.14 billion worth of commodities to the US in 2024. Of the total, 53% or $6.43 billion were electronic products.

“Electronics and semiconductors, which comprise the bulk of Philippine exports to the US will be vulnerable. Apparel, footwear, and textile products, which rely on preferential trade agreements, may also face competitiveness issues,” Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera said.

“Agricultural exports, such as coconut oil, processed fruits, and seafood, could see a decline in demand due to price sensitivity in the US market,” Mr. Rivera said.

Mr. Rivera noted the direct impact on Philippine gross domestic product (GDP) may not be “immediately severe.”

“It’s a prolonged tariff war could dampen investment sentiment and export growth. If businesses pass on higher costs to consumers, inflation may spike,” he said.

The Development Budget Coordination Committee is targeting 6-8% GDP growth this year. It is also projecting 6% and 5% growth in exports and imports, respectively, this year.

In a report, ANZ Research said it estimated that the reciprocal tariffs could have a “milder impact” on the Philippines, along with Indonesia and India, due to their lower reliance on exports.

“Our understanding is that these tariffs are not final and can be negotiated lower, depending on the extent of reduction in the bilateral trade surplus with the US,” ANZ said.

Data from the Office of the US Trade Representative showed that bilateral trade between the Philippines and the US reached $23.5 billion in 2024 — comprising $9.3 billion in US exports and $14.2 billion in imports.

The US goods trade deficit with the Philippines was $4.9 billion in 2024, up 21.8% from last year.

To mitigate the negative effects of the tariffs, Mr. Young said that “there should be a joint best effort from the Philippine government and private sector to turn their heads to other potential export markets.”

Department of Trade and Industry-Export Marketing Bureau Director Bianca Pearl R. Sykimte said that the department is already looking at new export markets such as in the Middle East and Africa.

Confederation of Wearables Exporters of the Philippines Executive Director Ma. Teresita Jocson-Agoncillo said that the reciprocal tariffs will be imposed on top of the most favored nation (MFN) apparel rates.

“It’s better for us to wait for the US side to publish guidelines. As it looks the reciprocal tariff will be MFN rates plus 17%,” she said in a Viber message. “There is still an advantage, as the Philippines has the lowest (tariff) now, against ASEAN (Association of Southeast Asian Nations) counterparts but note that in the end it can still impact global sourcing and supply chain movement.”

Source: Business World

Real estate lending to require closer monitoring amid rising risks

Lending to the real estate sector will need tighter supervision amid emerging risks that could impact the financial system, a Philippine central bank report showed.

“Real estate loan (REL) exposures need closer monitoring amid evolving market conditions,” the Bangko Sentral ng Pilipinas (BSP) said in its latest financial stability report.

“The high-interest rate environment, shifting consumer preferences, remote work arrangements and recent government pronouncements banning Philippine offshore gaming operators (POGO) have implications on the sector’s loan quality.”

Latest data from the BSP showed Philippine banks and trust entities’ real estate exposure ratio rose to 19.75% as of end-December from 19.55% at end-September.

The central bank monitors lenders’ exposure to the real estate industry as part of its mandate to maintain financial stability.

Broken down, real estate loans increased by 7.9% year on year to P2.95 trillion at end-December. This as residential real estate loans climbed by an annual 9.6% to P1.1 trillion, while commercial real estate loans went up by 6.9% to P1.85 trillion.

The BSP also noted the rise in nonperforming loans in the real estate sector. Data showed the bulk or 62.5% of the NPL portfolio consists of commercial real estate.

“However, majority of the nonperforming RELs are residential RELs at 65.2% against commercial RELs at 34.8% as of September 2024,” it added.

The BSP also said that the rise in bad loans was driven by the mid- and low-cost housing segments as they account for a large share in residential loans.

“What does not show up as higher NPLs for commercial real estate are likely to be seen in the financial statements of real estate developers,” it added.

Joey Roi H. Bondoc, director and head of research at Colliers Philippines, said consumers could be struggling to pay back their loans, which is why developers are finding ways to offer more flexible payment terms.

“Based on anecdotes that we have been getting, a lot of buyers right now are scouting and looking for the most attractive payment terms or incentives, especially in the ready-for-occupancy (RFO) market,” he said in a phone call.

Mr. Bondoc said there is a “pretty substantial” number of unsold RFO units in the market, especially in the mid-income segment, which covers nearly 60% of unsold RFO units.

“Essentially, six out of 10 unsold RFO (units) are from the mid-income segment, which is heavily dependent on bank mortgages,” he added.

He noted some developers are extending downpayment terms among other measures to make financing more accessible.

“Banks should also be more cautious moving forward because the ready-for-occupancy (RFO) promos are getting sweeter, they’re getting extended, but you don’t want to see the market falling into that trap again,” Mr. Bondoc said.

The BSP noted the oversupply in the property market, especially in the condominium segment. It noted it would take 34 months for the current condominium supply to be sold.

“Despite recovery in prices, vacancies remain elevated amid the increase in residential real estate supply,” the central bank said.

The rise in new units is outpacing net take-ups in the secondary market, it added.

“It will be very interesting this first quarter because we’re seeing tepid launches. Developers are almost not launching new projects at this point,” Mr. Bondoc said.

OTHER RISKS

Meanwhile, the BSP also flagged other risks to the real estate sector.

“A potential risk is the buildup of in-house financing as reflected in the installment contract receivables of real estate developers. These contribute to revenues but also expose developers to credit risk.”

“Past due and impaired receivables remain elevated including in real estate developers exposed to POGOs,” it added.

While property developers are seeking ways to provide more enticing payment terms, Mr. Bondoc noted it is unlikely that there will be significant price reductions.

However, he noted that once the central bank continues cutting interest rates, this would result in lower mortgage rates.

“Probably that’s when we might start seeing low interest rates having a positive impact, kicking in and resulting in lower mortgage rates. Therefore, perhaps chipping in to greater take-up in the pre-selling sector.”

Housing prices rose by 6.7% year on year in the fourth quarter, according to the latest Residential Real Estate Price Index. This was a turnaround from the 2.3% decline in the previous quarter.

The Monetary Board cut the key rate by a total of 75 basis points last year.

While the central bank delivered a pause at its first meeting in 2025, BSP Governor Eli M. Remolona, Jr. has said it is still on an easing trajectory and has signaled further rate cuts this year.

Apart from lower interest rates, real estate loan demand could also be impacted by remittance flows, Mr. Bondoc said.

“I think that will be crucial because data from the central bank would also show that more remittance-receiving households are in fact allocating money for real estate requirements,” he said.

The BSP’s latest Consumer Expectations Survey also showed that 5% of households plan to buy or acquire real property in the next 12 months, up from 4.8% a year ago.

Source: Business World

Third-Party Adverse Possessor in Philippine Law

In Philippine property law, adverse possession refers to a legal principle where a person (the possessor) who is not the owner of a property may eventually acquire ownership through continuous, open, and exclusive possession of the land for a prescribed period.

This is based on the legal doctrine of "prescription" under the Civil Code of the Philippines.

Third-Party Adverse Possessor Defined

A third-party adverse possessor is a person who possesses a property without the consent of the owner and without any valid legal title, claiming ownership in a way that is:

• Public – Openly using the land as if they were the owner

• Notorious – Known to the community or the original owner

• Exclusive – No other party is using the land

• Continuous and Uninterrupted – Possession must last for the legally required period

This third-party possessor is different from someone who originally had permission to use the land (e.g., a lessee or tenant).

Legal Period for Adverse Possession in the Philippines

Under Article 1137 of the Civil Code:

• If the land is private property, adverse possession must be for 30 years, regardless of whether the owner was aware.

• If the land was previously public property but became private through possession, the period is 10 years if the possessor has a "just title" and in good faith.

Example Scenario of Third-Party Adverse Possession

Case: Juan and Maria’s Disputed Lot

1. Original Ownership – Maria owns a 1,000 sqm lot in Pangasinan but has not visited or used it for 40 years.

2. Adverse Possession Begins – In 1984, Juan, a farmer with no legal claim to the land, starts living on and cultivating it, believing it is abandoned.

3. Notorious and Continuous Possession – Juan builds a house, plants crops, and pays real property taxes, openly treating it as his own for 30+ years.

4. Ownership Claim – In 2024, Maria’s heirs try to reclaim the land, but Juan argues that he now owns it through acquisitive prescription.

Legal Outcome: Since Juan has adversely possessed the land for more than 30 years, he can file for ownership under extraordinary prescription, even though he had no title when he took possession.

To conclude:

A third-party adverse possessor is someone with no legal right or title to a property but who occupies it as an owner for the required period. If the possession meets the legal requirements, ownership can be transferred through acquisitive prescription.

The rightful owner must assert their rights within the prescriptive period, or risk losing ownership.

Source: Ziggurat Real Estate