A.

METHODOLOGY

The research methodology used is the empirical

approach that gives effective and intrinsic explanation of the
subject and gives room for qualitative and theoretical analysis.
Data are obtained from legislative offices such as the Archives
Section and Library of the House of Representatives,
Malacañang Records Office, and other sources from the
internet. This research explains the nature of the subject law,
its amendments, reasons for its enactment and of its
amendments, its applicability in the past and how it changed
in the present time.

The assigned law is the Republic Act No. 4726: An Act

to Define Condominium, Establish Requirements for its
Creation, and Govern its Incidents otherwise known as The
Condominium Act.

This research is conducted to better understand the

nature of the subject law, the reasons for its enactment, how
it needed to be amended to find its applicability in the present
time, and how issues involving the same were resolved
through the subject law.

Information and materials such as certified true copies

of the laws and deliberation during the enactment of the law
are obtained by visiting personally the Archives Section and
Library of the House of Representatives; certified true copy of
Presidential Decree, and other related documents were
obtained from the Malacañang Records Office; previously
decided cases from the Supreme Court were obtained from
the Supreme Court website; and other references from the
internet.

Considering that it was back on the year 1966, by the 6th

Congress, when subject law was enacted, due diligence have
been exercised to obtain the required documents. The group
members, considering their work schedules, school
schedules, and other time constraints, have divided
themselves to go to different offices while jointly searching for
other references which may be obtained from the internet. Mr.
Lester Sicalag went to the House of Representatives while

1
 Ms. Rose Teresa Ronquillo and Ms. April Elenor Juco went to
the Malacañang to divide the work, thus, overcoming
inconvenience from respective schedules.

This research aims to discuss the purpose of the

enactment of the law, going through the amendatory laws, and
its applicability in the past and present time. Other issuances
and concerns not of much essence to the subject law are
intentionally not included to confine the research on the issues
material to the purpose of this research.

B. ABSTRACT

In view of the growing population in the urban areas,

especially in the City of Manila and in the Greater Manila Area,
due to the continuous “pandarayuhan” system of the Filipinos
from the provinces, parallel ownership of properties has
become difficult and nearly impossible. People from the
provinces, in seek of fortune in the major city, move to Manila
and are primary contributing factor in the continuing human
congestion in the city.

The need for the efficient utilization of the available real

estate was realized. The Legislative Department has, on April
15, 19661, through Congressmen Laurel, Jr., Roces, Balite,
Agbayani, Teves, Ilarde, Briones, Dumon, Imperial, Castillo,
Santiago, and Congresswoman Tabia, introduced House Bill
No. 5030: An Act defining condominium, establishing
requirements for its creation, and governing its incidents.

On June 18, 1966, Republic Act No. 4726 otherwise

known as The Condominium Act was approved and enacted.
This gave rise to a new concept of ownership which was
adapted from the US and in other European countries.

Condominium is an “interest in a real property consisting

of a 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

1
H No. 5030 (1966), J.B. p. 352

2
 other common areas of the building.”2 It is a unique
acquisition of real estate interest making a unit owner the
absolute owner within the unit parameter and a shareholder
of the common areas such as but not limited to the pool area,
lobby, drainage system, and others.

In a different wise, the concept of separate ownership of

individual units, coupled with undivided common ownership
of the areas and facilities of common use is called
condominium or condominium ownership.3

Considering the present situation, and in view of the

fast-emerging condominium business, the need for
regulation, specification, and other related function for the
supervision and regulation, RA 4726 was enacted. It defined
extensively what condominiums are and provided for the
implementing regulations, specifications, guidelines, and
concerns as to ownership and disposition. Said RA, in
conjunction with the government’s effort to provide accessible
and suitable homestead, gave the public the comfort,
security, and opportunity to own a stead. In such a congested
and expected-to-be-more-congested city, the rise of
condominiums during the 1960’s was popularized and have
continued to be popularized in the modern times, the RA have
been amended to suit the need of the changing Filipino
communities.

Problem now arises in the emergence of high-rising

condominiums. Present situation dictates that there are some
concerns in the oversupply of condominium units. The
sharing economy model as popularized by AirBNB, which is
perceived profitable in the real estate industry has become
prevalent. It is undeniable that units are now owned not for
primary dwelling (which in reality, is what the laws are for),
but for investment opportunities for lease in the short/long-
term. Rights of primary owner-buyer may be the subject of
limitations and stipulations covered in the master deed. And
restrictions and rules already legislated might not suffice.

2
Rep. Act No. 4726 (1966), sec. 2
3
H No. 5030 (1966), R.B. p. 4

3
 Moreover, in the Philippines, foreigners, most likely are
not permitted to own land. Generally, foreigners cannot
simply own land in our country. Exceptions to this, such as
owning condominiums is resolved and considered in The
Condominium Act.

The ownership principle in the Civil Code and the

Corporation Code limits the power of foreign investors in
acquiring rights over real properties. The prohibition in the
alien ownership provides that the alien ownership in a
condominium unit is allowed but in the event that the
ownership of the common areas of the project will be owned
by the separate unit owners, it cannot be done so except to
Filipino citizens or corporations at least 60% of the capital
stock of which belong to Filipino citizens, except in cases of
hereditary succession, as in one case4 ruled by the Supreme
Court.

However, the attempt on flexing the prohibition did not

overcome the reservation of the Philippines of the alienability
of the real properties to the Filipinos. Worthy to say, the need
of the country to attract investments for economic growth did
not, and apparently would not, defeat the protection of the
real rights to be reserved for the enjoyment of the Filipino
people.

Republic Act No. 4726

In this act, the law recognized the ownership of a real

property (unit and the common areas) while allowing the
corporation to reserve ownership of the land or any part of the
project (condominium). In this wise, the unit owners become
co-owners of the common areas of the project.

The unit owner, as in a regular real property, has the

absolute right to sell, mortgage, or dispose his unit, unless
the master deed (title) requires that it has to be offered to the
condominium owners before the same is offered to outside
parties.

4
Hulst vs. PR Builders, Inc., G.R. No. 156364, September 25, 2008

4
 Without such act, the laws in the Philippines, including
the Cadastral Act and provisions of the Civil Code, would
make the most pressing issue of actions for the demand for
partition of co-owned real properties. It is vital for the
continued use of the individual units that they be freed from
any liability acquired by one of the unit owner as one of the
co-owners of common areas in the project. This is one of the
very purpose of the Act.

Republic Act No. 65525

As protection to a condominium unit owner/buyer,

commonly through installment basis, this Act provided: grace
period in case of delay in payment; refund of installment
payments in case of cancellation of the contract; and right to
pay in advance, among others.

Presidential Decree No. 957: Regulating the sale of

subdivision lots and condominiums, providing penalties
for violations thereof 6

Considering the rampant manipulation, abusive

conduct, and fraudulent activities, and non-compliance to
proper sanitary measures, drainage systems, lighting
systems, and the like, as reported to authorities, the close
monitoring, regulating, and supervising of the conduct and
compliance of the subdivision and condominium businesses
was decreed by the then President Ferdinand E. Marcos. The
conduct of business was made safe for buyers by providing
penalties for those who violates such decree.

Republic Act No. 78997:

Amending Section 4 of RA 4726, explicitly changed the

manner to which amendment and revocation of the master

5
Rep. Act No. 6552 (1972)
6
Pres. Decree No. 957 (1976)
7
Rep. Act No. 7899 (1995)

5
 deed thus requiring an instrument executed by simple
majority of the registered owners of the property be registered
to the Housing and Land Use Regulatory Board (HLURB),
and Section 16 of the same Act, prohibiting the condominium
corporation from selling, exchanging, leasing, and disposing
of common areas of the project unless by vote of the simple
majority of the owners and upon approval of the HLURB,
basically for the protection of the interest of the individual
owners.

Senate Bill 213: An Act modifying the definition of a

condominium unit, amending for the purpose Republic
Act No. 4726, otherwise known as the condominium law,
to apply to industrial estates and for other purposes8

This Bill which have not yet been effected in to law,

proposed for the amendment of RA 4726, specifically and
most significantly on Section 2 of said Act to include in the
definition of a condominium the industrial estate, which then
was limited to residential, industrial or commercial building. It
aimed to attract foreign investors to invest on condominiums
thus flexing the prohibition on foreign ownership on properties
within the Philippines and letting them acquire ownership
rights over the condominium. It is to cope up with other
countries which offer the same.

Senate Bill 1366: An Act modifying the definition of a

condominium unit, amending for the purpose Republic
Act Numbered Four Thousand Seven Hundred Twenty-
Six, as amended, otherwise known as the Condominium
Act, to apply to industrial estates and for other purposes9

Just the same, the bill sought to amend Republic Act No.
4726, otherwise known as the Condominium Act as amended
by R.A. 7899, to include the industrial estates in the definition
of the condominium, It essentially expands the definition of a
condominium to include multiple units in a horizontal building
such as pre-built standard factory buildings and community
8
S. No. 213, 13th Cong. 1st Sess. (2004)
9
S. No. 1366, 13th Cong. 1st Sess. (2004), Explanatory Note par. 4

6
 facilities within the industrial estates and economic zones,
and consequently allows foreign investors to hold
condominium certificates of title in their name.

Under R.A. 4726 as amended, ownership over the

common areas of a condominium project, including the land
where the condominium building is constructed may be
vested in a corporation which shall be called the
condominium corporation. As such, a buyer of a unit in the
condominium project automatically becomes a member or
shareholder of the condominium corporation. With this
provision of the Condominium Act, a non-Filipino, who is
generally prohibited from owning real estate/properties in the
Philippines unless by heredity succession, may purchase and
own a condominium provided the total shareholdings of non-
Filipinos in the condominium corporation does not exceed
forty percent (40%). Foreigners can own these
condominiums in their own names through a Condominium
Certificate of Title (CCT). But they are legally prohibited from
directly owning any form of land property with an Original
Certificate of Title (OCT) and/or Transfer Certificate of Title
(TCT). 10

Senate Bill 787: An Act modifying the definition of a

condominium unit, amending for the purpose Republic
Act Numbered Four Thousand Seven Hundred Twenty-
Six, as amended by, otherwise known as the
Condominium Act, to apply to industrial estates, and for
other purposes11

This time through Senator Ramon Bong Revilla, Jr., it

was once again proposed that Industrial Estates be included
in RA 4726. The amendment aims to include in such
“Industrial Estate” a tract of land that could be used for staff
housing and recreational facilities provided with roads, water
supply facilities, communication facilities, sewerage and
drainage systems, and others. The bill is yet to be effected
into law.

10
S. No. 1366, 13th Cong. 1st Sess. (2004), Explanatory Note par. 5
11
S. No. 787, 14th Cong. 1st Sess. (2007)

7
 Senate Bill 1025: An Act modifying the definition of a
condominium unit, amending for the purpose Republic
Act Numbered Four Thousand Seven Hundred Twenty-
Six, as amended by, otherwise known as the
Condominium Act, to apply to industrial estates, and for
other purposes12

Introduced by Senator Manuel “Lito” M. Lapid, was an

insistence of the proposal of Senator Revilla. However, the
same, just like the others, failed.

C. SUMMARY

Republic Act 4726 or The Condominium Act defines a

condominium, establishes requirements for its creation, and
governs its incidents. The act specifically delineates
“condominium” as 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. Condominium unit, on
the other hand, is a part of the condominium project intended
for any type of independent use or ownership, including one
or more rooms or spaces located in one or more floors (or
part or parts of floors) in a building or buildings and such
accessories as may be appended thereto. A condominium
project is the entire parcel of real property divided or to be
divided in condominiums, including all structures thereon,
and common areas are the entire project excepting all units
separately granted or held or reserved.

Ownership over a condominium unit is acquired by the

buyer only after he had fully paid the purchase price.13
Furthermore, it expressly allows foreigners to acquire
12
S. No. 1025, 15th Cong. 1st Sess. (2010)
13
Sunset View Condominium Corp. vs. Campos, Jr., G.R. No. 52361 & 52524, April 27, 1981, 104 SCRA
295 (1981)

8
 condominium units and shares in condominium corporations
up to not more than 40% of the total and outstanding capital
stock of a Filipino-owned or controlled corporation. Under this
set up, the ownership of the land is legally separated from the
unit itself. The land is owned by a Condominium Corporation
and the unit owner is simply a member in this Condominium
Corporation. As long as 60% of the members of this
Condominium Corporation are Filipino, the remaining
members can be foreigners.14 As to corporations, 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
stock holding in the corporation will cause the alien interest in
such corporation to exceed the limits imposed by existing
laws.

In essence, a unit owner is a co-owner of the

condominium who is entitled to privileges and bound also by
restrictions that may follow the title.

Everything that falls within the boundaries of a specified

unit forms part of the same. In accordance to the law, the
interior surfaces of the perimeter walls, floors, ceilings,
windows, and doors form the boundary of the condominium
unit, unless the master deed or the declaration of restrictions
prescribed by the condominium corporation or the
administration stipulate otherwise. But generally, alteration to
the unit are not allowed, except if the rules or the contract
allows and does not prohibit the same.

The law grants that each condominium owner shall

have the exclusive right to mortgage, pledge or encumber his
condominium and to have the same appraised independently
of the other condominiums but any obligation incurred by
such condominium owner is personal to him. Furthermore,
each condominium owner has also the absolute right to sell
or dispose of his condominium property unless the master
deed contains a requirement that the property be first offered

14
Hulst vs. PR Builders, Inc., G.R. No. 156364, September 25, 2008, available at
http://sc.judiciary.gov.ph/jurisprudence/2008/september2008/156364.htm (last accessed 28
February 2018)

9
 to the condominium owners within a reasonable period of
time before the same is offered to outside parties.

Where several persons own condominiums in a

condominium project, an action may be brought by one or
more such persons for partition thereof by sale of the entire
project, as if the owners of all of the condominiums in such
project were co-owners of the entire project in the same
proportion as their interests in the common areas: Provided,
however, that a partition shall be made only upon a showing:
(a) That three years after damage or destruction to the project
which renders material part thereof unit for its use prior
thereto, the project has not been rebuilt or repaired
substantially to its state prior to its damage or destruction, or
(b) That damage or destruction to the project has rendered
one-half or more of the units therein untenantable and that
condominium owners holding in aggregate more than thirty
percent interest in the common areas are opposed to repair
or restoration of the project; (c) that the project has been in
existence in excess of fifty years, that it is obsolete and
uneconomic, and that condominium owners holding in
aggregate more than fifty percent interest in the common
areas are opposed to repair or restoration or remodelling or
modernizing of the project; or (d) that the project or a material
part thereof has been condemned or expropriated and that
the project is no longer viable, or that the condominium
owners holding in aggregate more than seventy percent
interest in the common areas are opposed to continuation of
the condominium regime after expropriation or condemnation
of a material portion thereof; or (e) that the conditions for such
partition by sale set forth in the declaration of restrictions, duly
registered in accordance with the terms of this Act, have been
met.

Roughly thirty years after its promulgation, a new

republic act15 amended certain provisions of the original.

One restriction, as modified, provides that the master

deed may be amended or revoked upon registration of an
instrument executed by a simple majority of the registered

15
Rep. Act No. 7899, (1995)

10
owners of the property with an exception that in a
condominium project exclusively for either residential or
commercial use, simple majority shall be on per unit of
ownership basis and that in the case of mixed use, simple
majority shall be on floor area of ownership basis, provided
further, that prior notifications to all registered owners are
done, and that any amendment or revocation already decided
by a simple majority of all registered owners shall be
submitted to the Housing and Land Use Regulatory Board
and the city/municipal engineer for approval before it can be
registered.

Another limitation, however, is that a condominium

corporation shall not, during its existence, sell, exchange,
lease or otherwise dispose of the common areas owned or
held by it in the condominium project unless authorized by
the affirmative vote of a simple majority of the registered
owners with an exemption that prior notifications to all
registered owners are done and that the condominium
corporation may expand or integrate the project with another
upon the affirmative vote of a simple majority of the registered
owners, subject only to the final approval of the Housing and
Land Use Regulatory Board.

11
D. BIBLIOGRAPHY

BOOKS
Feliciano, Myrna. Philippine Manual of Legal Citations, 9th
ed., U.P. Law Complex, 2017
Republic of the Philippines Congressional Record, House of
Representatives, Congress of the Philippines, 1966

PUBLIC DOCUMENTS
H No. 5030 (1966), J.B. p. 352
H No. 5030 (1966), R.B. p. 4
Rep. Act No. 4726 (1966), sec. 2
Rep. Act No. 6552 (1972)
Rep. Act No. 7899 (1995)
Pres. Decree No. 957 (1976)
S. No. 213, 13th Cong. 1st Sess. (2004)
S. No. 1366, 13th Cong. 1st Sess. (2004), Explanatory notes
par.4-5
S. No. 787, 14th Cong. 1st Sess. (2007)
S. No. 1025, 15th Cong. 1st Sess. (2010)

WEB SOURCES
Hulst vs. PR Builders, Inc., G.R. No. 156364, September 25,
2008,
http://sc.judiciary.gov.ph/jurisprudence/2008/september2008/
156364.htm (accessed last February 28, 2018)
Republic of the Philippines Housing and Land Use Regulatory
Board, http://hlurb.gov.ph/ (accessed last February 26, 2018)

12
Sunset View Condominium Corp. vs. Campos, Jr., G.R. No.
52361 & 52524, April 27, 1981, 104 SCRA 295 (1981)

13