Professor Jack Lynch believes that the law is outdated with regard to the ownership of…
No doubt the country is experiencing a construction boom for commercial and residential projects.
The skyline in the business districts of Metro Manila and other urban centers has undergone major changes in the past two years.
Several old structures in the metropolis have been demolished to make way for environmentally friendly buildings in the words of their promoters. “Green” is now part of the national real estate jargon.
In the process, wide-format newspapers benefit from full-page ads for high-rise buildings that are about to be built, have been completed, inaugurated, or ready to be occupied by interested buyers.
Underutilized or unused land in prime locations suitable for commercial, residential or mixed-use purposes is in the sights of enterprising construction companies.
The construction frenzy has spread to the housing sector. The country’s iconic real estate developers have moved from traditional high-end residences to middle-class and mass housing projects.
The surge in construction indicates a strong demand for commercial housing and housing that needs to be filled, a challenge on which property developers with generous pockets are willing to risk their money.
The question of who can buy or acquire real estate was the subject of a recent application to the Securities and Exchange Commission by a company behind some of Metro Manila’s biggest construction projects. .
The company wanted to know if a private company, whose shares are 99.95% owned by foreigners, can legally buy real estate in the country.
The question calls for an interpretation of the constitutional provision which states that “except in the case of hereditary succession, no private land may be transferred or ceded, except to individuals, companies or associations qualified to acquire or hold land in the public domain. “.
Read in connection with Commonwealth Act 141, which uses the percentage of Filipino ownership in a company as a criterion to determine its nationality, the SEC has stated that in order for a company to buy, acquire or own land in our country, it is essential that “at least 60 percent of the total share capital of the company must be wholly owned by Filipino citizens.”
Thus, if more than 40 percent of the share capital of this company is held by foreigners, it is prohibited from acquiring land in the country.
The SEC noted, however, that for other forms of real estate, outside of land, such as houses or buildings, foreigners can, as a rule, purchase it unless a law expressly prohibits them from doing so. do.
To illustrate this point, the SEC cited the rules applicable to the ownership of an interest in a building or condominium project by persons other than Filipino citizens.
Such an interest can be “in the form of property, lease or any other real right”.
A foreign person or a non-Filipino corporation – that is, foreigners own more than 40 percent of its share capital – can hold an interest in a condominium project depending on the nationality of the person or the company. entity that owns the land on which it is built.
If the condominium, whether commercial or residential, is built on leased land, “the corresponding condominium corporation may be incorporated by a corporation wholly owned by a foreign enterprise”.
If the land is owned by a Philippine condominium company, no interest in the condominium can be transferred to foreigners or companies with more than 40% share capital owned by foreigners or non-Filipino citizens.
Likewise, if the common portions of a condominium project are owned or held by a Philippine condominium company, the transfer of units in the project can only be made “until such time as the concurrent transfer of interests in the property. condominium company ”would not cause foreign ownership in the company to exceed 40 percent of its share capital.
While the SEC has not indicated the consequences of violating nationality rules on the ownership of real estate in the country, it should be mentioned that under existing laws such violation could result in forfeiture of the property. illegally acquired without the benefit of restitution of any sum that could have been paid and, worse, of prosecution against the parties who participated in the commission of the prohibited act.
(For comments, write to [email protected])
To subscribe to REQUEST MORE to access The Philippine Daily Inquirer and over 70 other titles, share up to 5 gadgets, listen to the news, download at 4 a.m. and share articles on social media. Call 896 6000.