REPUBLIC ACT NO.

4726

AN ACT TO DEFINE CONDOMINIUM, ESTABLISH REQUIREMENTS FOR ITS CREATION, AND GOVERN ITS
INCIDENTS

||| (The Condominium Act, Republic Act No. 4726, [June 18, 1966])

SECTION 2. A condominium is an interest in real property consisting of separate interest in a unit in a

residential, industrial or commercial building and an undivided interest in common, directly or indirectly, in the land on
which it is located and in other common areas of the building. A condominium may include, in addition, a separate
interest in other portions of such real property. Title to the common areas, including the land, or the appurtenant
interests in such areas, may be held by a corporation specially formed for the purpose (hereinafter known as the
"condominium corporation") in which the holders of separate interest shall automatically be members or shareholders, to
the exclusion of others, in proportion to the appurtenant interest of their respective units in the common areas.
The real right in condominium may be ownership or any other interest in real property recognized by law, on
property in the Civil Code and other pertinent laws.
SECTION 5. Any transfer or conveyance of a unit or an apartment, office or store or other space therein, shall
include the transfer or conveyance of the undivided interests in the common areas or, in a proper case, the membership
or shareholdings in the condominium corporation: Provided, however, That where the common areas in the condominium
project are owned by the owners of separate units as co-owners thereof, no condominium unit therein shall be conveyed
or transferred to persons other than Filipino citizens, or corporations at least sixty percent of the capital stock of which
belong to Filipino citizens, except in cases of hereditary succession. Where the common areas in a condominium project
are held by a corporation, no transfer or conveyance of a unit shall be valid if the concomitant transfer of the appurtenant
membership or stockholding in the corporation will cause the alien interest in such corporation to exceed the limits
imposed by existing laws. cdtai
|||
(The Condominium Act, Republic Act No. 4726, [June 18, 1966])

.D. OPINION NO. 180

Series of 1973
RE FOREIGN INVESTMENT IN LAND AND/OR BUILDINGS
December 21, 1973
The Acting Secretary of Trade
Quezon City

Sir:
This is with reference to your request for opinion on the following questions regarding foreign investment in lands
and/or buildings:
"1. Can foreign investors or multinational corporations own building or units thereof (as in
condominium)? Apartments?

"2. Can there be joint-ownership at 60 percent-40 percent of land and building between foreign investors
and their Filipino counterparts?"

I have considered a similar question in opinion No. 175, current series — a copy of which I am herewith enclosing
for your information and guidance. On the basis of the opinion, foreigners or multinational corporation may own building
provided they are constructed on rental land, the lease not to exceed ten years.
Regarding the ownership of condominium units by foreign investors or multinational corporation, as reasoned
out in Opinion No. 175, current series, supra, the same may be allowed but subject to the qualifications mentioned in
the proviso of Section 5 of R.A. No. 4726 which needs:
 ". . . Provided, however, That where the common areas in the condominium project are owned
by the owners of separate units as co-owners thereof, no condominium unit herein shall be conveyed
or transferred to persons other than Filipino citizens, or corporations at least 60% of the capital stock of
which belong to Filipino citizens, except in cases of hereditary succession. Where the common areas in
a condominium project are held by a corporation, no transfer or conveyance of a unit shall be valid if the
concomitant transfer of the appurtenant membership or stockholding in the corporation will cause the
alien interest in such corporation to exceed the limits imposed by existing laws."
As to the ownership by foreign investors or multinational corporations of apartments which do not fall within the
purview of the Condominium Act(R.A. No. 4726) suffice it to state that I am not aware of any law which prohibits aliens or
foreign corporations from owning apartment buildings, so long, of course, as they will merely lease the land on which the
building will be constructed, for a period not exceeding ten years.
Anent your second query, the following provisions of Article XIV of the new Constitution are pertinent:
"Section 9.The disposition, exploration, development, exploitation, or utilization of any of the
natural resources of the Philippines shall be limited to citizens of the Philippines, or to corporations or
associations at least sixty per centum of the capital of which is owned by such citizens, . . .
"Section 10.. . . No private corporations or association may hold alienable lands of the public
domain except by lease not to exceed one thousand hectares in area; nor may any citizen hold such
lands by lease in excess of five hundred hectares or acquire by purchase or homestead in excess of
twenty-four hectares . . .
SECTION 14.Save in cases of hereditary succession, no private land shall be transferred or
conveyed except to individuals, corporations or associations qualified to acquired or hold lands of the
public domain."
Upon the basis of these provisions, the following conclusions may be made your second query:
1. Only citizens of the Philippines, as individuals, may acquire both private lands and lands of the public domain.
Therefore, there can be nojoint ownership of such lands between Filipinos and foreign investors are
individuals.
2. However, corporations or associations at least 60 percent of the capital stock of which is owned by Filipinos,
and the remainder by foreigners, may own private lands.
3. Corporations or associations — whether of citizens or of citizens and aliens — may not own, but may only hold
by lease lands of public domain.
4. As to the "joint-ownership at 60 percent-40 percent of lands and buildings foreign investors and Filipinos, this
may be legally feasible as long as the ownership of the land building is by corporations or associations
at least 60% of the capital stock of which is owned by Filipino citizens and only the remainder by the
foreign investors.
Very truly yours,
(SGD) VICENTE ABAD SANTOS
Secretary of Justice

J.D. OPINION NO. 175

Series of 1973

RE FOREIGN INVESTMENT IN CONDOMINIUMS IN THE PHILIPPINES

December 12, 1973
The Secretary of Tourism
Manila

Sir:
This has reference to your request for opinion on the following questions regarding foreign investment in
condominium in the Philippines.
 a) May 100% owned and controlled foreign firms set up condominiums corporations under RA 4726, if the land is
leased?
b) If the answer in the affirmative, would a lease for a period of ninety-nine (99) years be allowable?
c) Would a lease of the land for a period of fifty (50) years renewable for another period of fifty (50) years, be
legally tenable?
I have carefully examined Republic Act No. 4726 ("The Condominium Act") and I have found no provision therein
which, expressly or by necessary implication, prohibits a corporation whose capital stock is wholly owned by aliens from
establishing a condominium corporation and setting up a condominium project on leased land. For this reason I'm
answering the first query in the affirmative.
Regarding the second and third questions on the allowable duration of leases of lands to aliens, this Office has
had occasion to rule in Opinion No. 216, series of 1952, that a lease of urban land to a foreign corporation for a period of 10
years, renewable for additional period of 10 and 5 years, or a total period of 25 years, is not unreasonable. In other instances,
25 years was fixed as the maximum allowable period. (See Ops. No. 58, s. 1949; No. 155; No. 235, s. 1952). But in subsequent
opinion (no. 290, S. 1954) the then Secretary of Justice Pedro Tuason remarked:
"In the opinions cited of this Department . . ., 25 years was fixed as the maximum allowable
period. Even this period may be to long, so long as virtually to amount to a transfer or ownership of the
property purportedly leased. Pending determination of the reasonable period by the courts, and in the
absence of legislation on the subject, 10 years would, in my opinion, be more in consonance with the
spirit of the Organic Law."
I share this later view of my predecessor in office and I hereby adopt the same.
You also profound, on the case where the condominium corporation is a Filipino corporation which owns the land
on which the condominium is located, the question of whether interests in units in the condominium together with an
undivided interest in the common areas thereof may be transferred to foreigners.
The Condominium Act does not forbid the transfer to aliens of an interest in a unit and the undivided interest in
common areas in a condominium. It should be noted that only a "separate interest" in a unit and an undivided interest in
the common areas are what are transferred as a matter of a course to the grantee by virtue of condominium grant. (Sec. 2
and 5.) Moreover, paragraph (b) of section 3 defines "unit for purposes of the Act as "a part of condominium project intended
for any type of independent use for ownership, "and paragraph (e) of the same section in defining the term "to divide real
property" in the condominium project speaks of dividing the ownership thereof or other interest therein."
But in this connection it should be stressed that section 5 of the Act contains a pertinent prohibition. Said section
reads:
"Any transfer or conveyance of a unit, or an apartment office or store or other space therein,
shall include the transfer or conveyance of the undivided interests in the common areas or, in a proper
case, the membership or shareholdings in the condominium corporation; Provided, however, that there
were the common areas in the condominium project are owned by the owners of separate units as co-
owners thereof, nocondominium unit therein shall be conveyed or transferred to persons other than
Filipino citizens, or corporations at least sixty percent of the capital stock which belong to Filipino
citizens, except in cases of hereditary succession. Where the common areas in a condominium project
are held by a corporation, no transfer or conveyance of a unit shall be valid if the concomitant transfer
of the appurtenant membership or stockholding in the corporation will caused the alien interest in such
corporation to exceed the limits imposed by existing laws."
Applying the proviso in this section to the present case, the result would be so that should it be a case covered by
the first sentence of the proviso, no unit in the condominium may be transferred to aliens or to corporation more than 40%
of the capital stock of which is owned by aliens; and should it be case covered by the second sentence, the transfer to aliens
of units in the project may be made only up to the point where the concomitant transfer for membership or stockholding
in the condominium corporation would not cause the alien interest in such corporation to exceed 40% of its entire capital
stock.
In resume and by way of emphasis, my conclusions on your queries are as follows:
1. Any corporation which is owned 100% by a foreign firm may establish a "condominium corporation" under R.A.
4726 and set up a condominium project on land leased for a period not to exceed 10 years.
 2. Where the condominium corporation is a Filipino corporation which owns the land on which the condominium
project is situated, R.A. 4726allows the transfer to an alien of an "interest" in a "unit" in the said
condominium, and of an "undivided interest" in the common areas thereof, subject to the qualifications
mentioned in the proviso of section 5 of said Act.
Very truly yours,
(SGD) VICENTE ABAD SANTOS
Secretary of Justice

||| (Revised Rules and Regulations Implementing the Subdivision and Condominium Buyer's Protective Decree, HLURB Resolution
No. R. 699-01, [August 20, 2001])