The condominium Act in the Philippines, as provided in Republic Act No. 4726 lays down the rule and requirements for the creation of condominiums. As defined by law, a condominium is an interest in real property consisting of a separate interest in a unit in 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, additionally, 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.
Since ownership of land in the Philippines is highly regulated, it is important to know the law on condominiums because in general, only Filipino citizens and corporations or partnerships with at least 60% of the shares owned by Filipinos are entitled to own or acquire land in the Philippines. The only exceptions to the prohibition against foreign ownership of land in the Philippines are those who would inherit land through intestate succession and former natural born Filipino citizens subject to the limitations provided for by law. Foreign nationals may however purchase condominiums, buildings, and enter into a long-term land lease. Foreigners interested in acquiring land or real property through aggressive ownership structures must consider the provisions of the Philippines’ Anti-Dummy Law to determine how to proceed. A major restriction in the law is the number of foreign nationals as members of the Board of Directors of a company which is limited to 40% alien participation.