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

FACTS

Petitioner Jacobus Bernhard Hulst filed a Motion for Partial Reconsideration of the Supreme Court’s Decision dated September 3, 2007. The dispositive portion of that Decision ordered, among other things, that petitioner return to respondent PR Builders, Inc. the amount of P2,125,540.00, which was in excess of the proceeds of an auction sale delivered to petitioner. Petitioner contends that the Contract to Sell between him and respondent, involving a condominium unit, does not violate the constitutional prohibition against alien ownership of land. He argues that the contract will not transfer ownership of the land, only the unit and appurtenant common areas, evidenced by a Condominium Certificate of Title. The contract specifies that upon full payment, the seller shall convey its “rights, interests and title to the UNIT and to the common areas” and the corresponding Condominium Certificate of Title. Respondent failed to file a comment on the motion.

ISSUE

Whether the Contract to Sell for a condominium unit between petitioner (an alien) and respondent violates the constitutional proscription against alien ownership of land, thereby justifying the order for petitioner to return the excess proceeds from the auction sale.

RULING

The Motion for Partial Reconsideration is GRANTED. The Supreme Court modified its September 3, 2007 Decision by deleting the order for petitioner to return the amount of P2,125,540.00 to respondent. The Court held that the Contract to Sell is governed by Republic Act No. 4726 (The Condominium Act), which allows foreign nationals to own condominium units. Under the Condominium Act, the ownership of the land is legally separated from the unit; the land is owned by a Condominium Corporation, and the unit owner is a member of that corporation. Section 5 of the law permits the transfer of a unit to aliens, provided that where common areas are held by a corporation, the concomitant transfer of appurtenant membership or stockholding does not cause the alien interest in the corporation to exceed limits imposed by law (i.e., not more than 40%). Since the land remained owned by the respondent (or the Condominium Corporation) and petitioner, as a unit owner, would merely be a member of the Condominium Corporation, the constitutional prohibition does not apply. There was no circumvention of the constitutional prohibition, and the prior pronouncement on the invalidity of the Contract to Sell was set aside.