RA 4726 Explained: How the 40% Condominium Foreign Ownership Cap Works in 2026

The 1987 Philippine Constitution prohibits foreigners from owning land in the Philippines. Article XII, Section 7 reserves land ownership to Filipino citizens and to corporations at least 60% owned by Filipinos. That has been the rule since 1935 under the Commonwealth Constitution and was reaffirmed in 1987.

Foreigners can, however, own a condominium unit outright through the structure created by Republic Act No. 4726, the Condominium Act of 1966. The mechanism works by separating ownership of the airspace (the unit itself) from ownership of the underlying land. A condominium corporation holds the land. Individual unit buyers hold their units as freehold property and hold shares in the condominium corporation. Foreign nationals may collectively hold no more than 40% of those shares — which means no more than 40% of the saleable area in the building.

This article walks through how the 40% cap actually works in practice in 2026, how compliance is verified, what happens when the cap is hit, and the structures that do and do not work for foreign buyers.

The constitutional ceiling

Article XII, Section 7 of the 1987 Constitution restricts ownership of private lands to "Filipino citizens" and to "corporations or associations at least sixty per centum of whose capital is owned by such citizens." Section 8 carves out a narrow exception allowing former natural-born Filipino citizens (now naturalized abroad) to own limited urban or rural land for residential use.

Foreign individuals do not fall into either category. They cannot own land directly. The Supreme Court has consistently upheld this — most notably in Krivenko v. Register of Deeds (1947), and reaffirmed in cases including Borromeo v. Descallar (2009) and Matthews v. Taylor (2009), both of which struck down attempts to use Filipino spouses or local nominees to circumvent the constitutional prohibition.

This is the legal context in which RA 4726 operates.

How RA 4726 separates units from land

RA 4726 (the Condominium Act, enacted June 18, 1966) creates a parallel ownership structure for buildings with multiple units. Under Section 2 of the Act, a condominium is defined as "an interest in real property consisting of separate interest in a unit in a 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."

The condominium corporation, formed under the Corporation Code, holds title to the land. Unit owners own their units as freehold property and hold shares in the corporation proportional to their unit area. When you "buy a condo" in the Philippines as a foreigner, you are buying both: the unit itself (a freehold airspace right with a Condominium Certificate of Title, or CCT) and shares in the condominium corporation that holds the land.

Section 5 of RA 4726 imposes the foreign ownership cap: "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... and no one shall acquire or own, directly or indirectly, more than the maximum percentage allowed by law, of such stock or interests."

The maximum percentage, set to align with the constitutional 60-40 rule, is 40% foreign.

How the 40% cap is calculated and enforced

The 40% cap is measured against the total saleable area of the project, not the number of units. A developer with a 100-unit building could allocate any combination of units to foreign buyers as long as the foreign-owned floor area stays at or below 40% of total saleable area.

Compliance is verified at the level of the condominium corporation, not the building permit office. The corporation's shareholder registry must reflect the 60-40 ratio at all times. Sales that would push foreign ownership above 40% are legally void under Section 5 — the buyer does not acquire valid title, regardless of whether they paid in full.

In practice, three checkpoints enforce the cap:

The developer's reservation desk is the first check. Large developers (Ayala Land, SMDC, Megaworld, DMCI, Robinsons Land) maintain real-time foreign ownership counts per building and stop selling to foreign buyers once the project approaches 40%. Smaller developers do this less rigorously.

The condominium corporation's corporate secretary is the second check. When the unit is turned over and the buyer is issued shares in the corporation, the corporate secretary must verify that the issuance does not breach 40%.

The Register of Deeds is the third check, when the Condominium Certificate of Title is issued in the buyer's name. The Register requires a certification from the condominium corporation that the transfer complies with the foreign ownership ceiling.

A title issued in breach of the 40% cap is void ab initio. The buyer can recover their purchase price from the developer (and frequently does, through Housing and Land Use Regulatory Board, now the Department of Human Settlements and Urban Development, complaints), but cannot enforce ownership of the unit.

What ownership inside the 40% cap gives you

A foreign buyer inside the cap holds a Condominium Certificate of Title (CCT) issued by the Register of Deeds. The CCT is freehold, indefinite-term, transferable, mortgageable, and inheritable. The buyer is a shareholder in the condominium corporation and votes their share on building matters.

This is genuine ownership. It is not a lease, not a beneficial interest, not a usage right. It is the only structure under Philippine law that gives a foreign individual freehold real property without restriction on duration.

What does not work

Filipino-spouse ownership of land. A foreign national married to a Filipino citizen cannot acquire land in their own name even with consent. The Supreme Court ruled in Matthews v. Taylor (2009) that any attempt to do so — even through funds contributed by the foreign spouse — results in the land being held entirely by the Filipino spouse, with no recoverable interest for the foreign spouse on divorce or death of the Filipino spouse. The foreign spouse can be reimbursed for funds contributed under unjust enrichment principles in some cases, but cannot claim the land itself.

60-40 corporations holding residential land. A corporation incorporated in the Philippines with at least 60% Filipino shareholders can own land. However, using such a corporation as a nominee structure for a foreigner — where Filipino "shareholders" are paid placeholders who do not actually exercise control or contribute capital — is illegal under the Anti-Dummy Law (Commonwealth Act 108, as amended). The Securities and Exchange Commission and the Department of Justice have increased Anti-Dummy enforcement since 2023, particularly against corporations holding residential property for foreign principals. Penalties include forced divestment and criminal liability for both the foreign principal and the Filipino dummies.

Long-term leases instead of ownership. The Investor's Lease Act (Republic Act 7652, 1993) permits foreign investors to lease private land for up to 50 years renewable for 25 years (75 years total) for specific investment-grade purposes. This is not available for personal residential use by a foreign individual. The standard Civil Code lease maximum is 99 years for residential property, but the practical limit is shorter and unregistered leases beyond a few years are difficult to enforce against successor owners.

Townhouse and house-and-lot purchases. Townhouses and house-and-lot packages cannot be sold to foreigners because they involve land ownership. Some developments market townhouses under condominium corporation structures (where the townhouse units are treated as condominium units and the land is held by the corporation), which can comply with RA 4726, but the structure must be properly registered and the 40% cap still applies.

Practical buyer checks

Before signing a reservation agreement with a Philippine developer, verify:

The project is registered under RA 4726 with the Department of Human Settlements and Urban Development (DHSUD), with a valid License to Sell.

The condominium corporation has been formed and registered with the Securities and Exchange Commission (SEC).

The current foreign ownership percentage in the project is below 40%, in writing from the developer or corporate secretary. Get this in writing — verbal assurances do not protect you when the title application is denied.

The developer has a clean delivery track record. Pre-selling condominiums in the Philippines is a regulated activity, but project delays of 2 to 5 years past the original turnover date are common, and a small number of developers have collapsed entirely with foreign buyer deposits still outstanding. Bektu (https://bektu.com) tracks completion timelines and project delivery for Philippine developers, including which projects have hit foreign quota.

Bottom line

RA 4726 gives foreigners a real, freehold path into Philippine residential property, but the path is narrow and constitutional. Forty percent of any condominium project is the ceiling. The mechanism is well-enforced through the title registration process. Workarounds using Filipino spouses, nominee corporations, or long-term leases either do not function legally or have been actively prosecuted in recent years. Buy inside the cap, in a properly registered project, from a developer with a verified delivery history.