House rules: Understanding property ownership and more

The pandemic is no excuse to be stuck in a pit of ignorance. The adventurous in us will explore the unknown and may manifest the need to know more. Recognizing the need of the adventurous spirit that yearns for liberating knowledge, the Philippine Daily Inquirer and Ortigas Land hosted earlier this month a webinar on the basic rules on condominium acquisition.

As early as 1916, the High Court issued a pronouncement that resonates with truth even today:

All men are presumed to be sane and normal and subject to be moved by substantially the same motives. When of age and sane, they must take care of themselves. In their relation with others in the business of life, wits, sense, intelligence, training, ability and judgment meet and clash and contest, sometimes with gain and advantage to all, sometimes to a few only, with loss and injury to others. In these contests men must depend upon themselves—upon their own abilities, talents, training, sense, acumen, judgment.

The fact that one may be worsted by another, of itself, furnishes no cause of complaint. One man cannot complain because another is more able, or better trained, or has better sense of judgment than he has; and when the two meet on a fair field the inferior cannot murmur if the battle goes against him.

The law furnishes no protection to the inferior simply because he is inferior, any more than it protects the strong because he is strong. The law furnishes protection to both alike—to one or more or less than to the other. It makes no distinction between the wise and the foolish, the great and the small, the strong and the weak. The foolish may lose all they have to the wise; but that does not mean that the law will give it back to them again. Courts cannot follow one every step of his life and extricate him from bad bargains, protect him from unwise investments, relieve him from one-sided contracts, or annul the effects of foolish acts. (Vales vs. Villa, G.R. No. 10028 Dec. 16, 1916)

Q: Can a foreigner acquire real properties in the Philippines?

A: It depends what property the foreigner wants to acquire.

A foreigner cannot own private lands. Under Section 14, Article XIV of the 1987 Constitution provides that, save in cases of hereditary succession, no private land shall be transferred or conveyed except to individuals, corporations or associations qualified to acquire or hold lands in the public domain. Lands of the public domain, which include private lands, may be transferred or conveyed only to individuals or entities qualified to acquire or hold private lands or lands of the public domain. Aliens, whether individuals or corporations, have been disqualified from acquiring lands of the public domain.

Note, however, that under Batas Pambansa Blg. 185, the relevant provision of which provides: Sec. 2. Any natural-born citizen of the Philippines who has lost his Philippine citizenship and who has the legal capacity to enter into a contract under Philippine laws may be a transferee of a private land up to a maximum area of 1,000 sqm., in the case of urban land, or one hectare in the case of rural land, to be used by him as his residence. In the case of married couples, one of them may avail of the privilege herein granted; Provided, that if both shall avail of the same, the total area acquired shall not exceed the maximum herein fixed.

In case the transferee already owns urban or rural lands for residential purposes, he shall still be entitled to be a transferee of additional urban or rural lands for residential purposes which, when added to those already owned by him, shall not exceed the maximum areas herein authorized.

On the other hand, Republic Act (R.A.) No. 4726, otherwise known as the Condominium Act, allows foreign nationals to own Philippine real estate through the purchase of condominium units or townhouses constituted under the Condominium principle with Condominium Certificates of Title. The law provides that no condominium unit can be sold without at the same time selling the corresponding amount of rights, shares or other interests in the condominium management body, the Condominium Corporation; and no one can buy shares in a Condominium Corporation without at the same time buying a condominium unit. It expressly allows foreigners to acquire condominium units and shares in condominium corporations up to not more than 40 percent 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 percent of the members of this Condominium Corporation are Filipino, the remaining members can be foreigners. (Hulst vs. PR Builders, Inc. G.R. No. 156364, Sept. 25, 2008)

Q: What are the basic rules that a buyer needs to know before buying a condominium unit?

A: Before closing a deal, it is strongly suggested that real property buyers confirm the existence of the title and conduct an ocular inspection. Make sure that the property caters to your needs and wants, and deal only with the real owners. If owners are married, deal with the spouses. If a corporation, check its corporate existence and business history. Check if the annual real property tax is up to date. Check the commercial history of the developer; the broker, whether he is licensed or not; the fees you will be required to pay such as, but not limited to, the association dues, realty tax, membership fees, realty tax for shared common areas, and parking fees; and payment schedule. Review the contract.

Q: Are salespersons who are not duly registered and accredited with the Professional Regulatory Board of Real Estate Service entitled to receive compensation for work rendered?

A: No. Section 31 of 9646 (“Real Estate Service Act of the Philippines”) provides that no salesperson shall be entitled to receive or demand a fee, commission or compensation of any kind from any person, other than the duly licensed real estate broker who has direct control and supervision over him, for any service rendered or work done by such salesperson in any real estate transaction.

Q: What is the liability of the developer if it fails to deliver its advertised undertakings, if any?

A: Section 19 of PD 957 (“Subdivision and Condominium Buyer’s Protective Decree”) provides that “(a)dvertisements that may be made by the owner or developer through newspaper, radio, television, leaflets, circulars or any other form about the subdivision or the condominium or its operations or activities must reflect the real facts and must be presented in such manner that will not tend to mislead or deceive the public. The owner or developer shall [be] answerable and liable for the facilities, improvements, infrastructures or other forms of development represented or promised in brochures, advertisements and other sales propaganda disseminated by the owner or developer or his agents and the same shall form part of the sales warranties enforceable against said owner or developer, jointly and severally.

In conclusion, parting with your hard earned money for the purpose of buying a real estate must be a product of a discerned act, not of whim or impulse. It is always best to remember that a real estate buyer must exercise extraordinary care in buying real estate. (Pudadera vs. Magallanes (G.R. No. 170073 : Oct. 18, 2010)

Ma. Soledad Deriquito-Mawis is Dean, College of Law, Lyceum of the Philippines University; founder, Mawis Law Office; member of the Board of Trustees, Philippine Association of Law Schools