G.R. No. 156364 - Hulst vs. PR Builders, Inc.

On September 3, 2007, the Court rendered a Decision in the case involving petitioner Jacobus Bernhard Hulst and respondent PR Builders, Inc.
The earlier Decision mandated several orders, including reversing a Court of Appeals decision dated October 30, 2002, and setting aside an HLURB order issued on August 28, 2000, involving certificates of sale for the winning bidder, Holly Properties Realty Corporation.
The Judgment also ordered the petitioner to return to the respondent the sum of P2,125,540.00, which was the excess amount over the proceeds from the auction sale, with subsequent interest provisions accruing at 6% after finality of the judgment.

Petitioner filed a Motion for Partial Reconsideration challenging the order requiring the return of P2,125,540.00 in excess of the auction sale proceeds.
In his motion, the petitioner contended that the underlying Contract to Sell between him and the respondent pertained to a condominium unit.
He argued that such a contract does not trigger the constitutional restriction against alien ownership of land because the title to the land would not be transferred to the buyer, but rather only a Condominium Certificate of Title would be issued as evidence of ownership.

The contract provided that upon full payment by the buyer, the seller would deliver a Deed of Absolute Sale conveying its rights, interests, and title to the unit and the common areas.
It specifically noted that the condominium unit's title would be evidenced by the corresponding Condominium Certificate of Title in the seller’s name and that the title, rights, and equities would be subject to various condominium restrictions and regulations.
The contract included references to Republic Act No. 4726 (The Condominium Act) and Presidential Decree No. 957, highlighting the compliance with the legal framework governing the sale of condominium units.

Under Republic Act No. 4726, foreign nationals are allowed to acquire condominium units provided that the conveyance includes both the unit and the corresponding interests in the common areas or the condominium corporation.
Section 5 of R.A. No. 4726 elaborates that no condominium unit may be transferred if it causes ownership or stockholding in the condominium corporation to exceed the statutory limits on alien ownership (i.e., foreigners are limited to acquiring up to 40% of the total and outstanding capital stock of a Filipino-controlled entity).
The Court referenced earlier jurisprudence, including City Treasurer of Makati v. BA Lepanto Condominium Corporation, to support the interpretation that the sale of a condominium unit does not equate to a violation of the constitutional prohibition on alien ownership of land.

The petitioner maintained that, as a unit owner, he would only be entitled to the rights, interest, and title to the unit and common areas, not an outright title to the land.
He emphasized that under the scheme provided by the Condominium Act, the land would remain under the ownership of the condominium corporation (or respondent), with the buyer merely a member therein.
Consequently, the petitioner argued that the constitutional prohibition against aliens owning land did not apply, and the order to return P2,125,540.00 should be deleted.

Despite the resolution issued on February 6, 2008, respondent did not file any comment or opposition to the motion filed by petitioner.
The Motion for Partial Reconsideration was noted to be “impressed with merit” by the Court, paving the way for reconsideration of part of the earlier decision.

Whether the Contract to Sell, being for a condominium unit, falls within the ambit of the constitutional prohibition against foreign ownership of land.
Whether the mode of conveyance stipulated in the contract circumvents the prohibition by transferring only a Condominium Certificate of Title and not the title to the land.

Whether the contractual arrangement, which subjects the transfer of rights and interests to the provisions of the Condominium Act and related restrictions, effectively shields the transaction from being deemed a circumvention of the constitutional mandate.

Whether the order directing the petitioner to return P2,125,540.00 in excess of the auction proceeds should be deleted in view of the contractual structure and the applicable legal provisions.