LAND TITLES and DEEDS (Atty. Jeffrey Jefferson Coronel) 1: Prelim Exam Coverage - Cases

LAND TITLES and DEEDS (Atty.
Jeffrey Jefferson Coronel) 1

PRELIM EXAM COVERAGE - CASES
CITIZENSHIP REQUIREMENT
For Individuals
RAMIREZ v. VDA. DE RAMIREZ

Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-27952
February 15, 1982
TESTATE ESTATE OF JOSE EUGENIO RAMIREZ,

MARIA LUISA PALACIOS, Administratrix, petitionerappellee,
vs.
MARCELLE D. VDA. DE RAMIREZ, ET AL.,
oppositors, JORGE and ROBERTO
RAMIREZ, legatees, oppositors- appellants.
ABAD SANTOS, J.:

The main issue in this appeal is the manner of
partitioning the testate estate of Jose Eugenio Ramirez
among the principal beneficiaries, namely: his widow
Marcelle Demoron de Ramirez; his two grandnephews
Roberto and Jorge Ramirez; and his companion
Wanda de Wrobleski.
The task is not trouble-free because the widow
Marcelle is a French who lives in Paris, while the
companion Wanda is an Austrian who lives in Spain.
Moreover, the testator provided for substitutions.
Jose Eugenio Ramirez, a Filipino national, died in
Spain on December 11, 1964, with only his widow as
compulsory heir. His will was admitted to probate by
the Court of First Instance of Manila, Branch X, on July
27, 1965. Maria Luisa Palacios was appointed
administratrix of the estate. In due time she submitted
an inventory of the estate as follows:
XXX
XXX
XXX
On June 23, 1966, the administratrix submitted a

project of partition as follows: the property of the
deceased is to be divided into two parts. One part shall
go to the widow 'en pleno dominio" in satisfaction of
her legitime; the other part or "free portion" shall go to
Jorge and Roberto Ramirez "en nuda propriedad."

Furthermore, one third (1/3) of the free portion is
charged with the widow's usufruct and the remaining
two-thirds (2/3) with a usufruct in favor of Wanda.
Jorge and Roberto opposed the project of partition on
the grounds: (a) that the provisions for vulgar
substitution in favor of Wanda de Wrobleski with
respect to the widow's usufruct and in favor of Juan
Pablo Jankowski and Horacio V. Ramirez, with respect
to Wanda's usufruct are invalid because the first heirs
Marcelle and Wanda) survived the testator; (b) that the
provisions for fideicommissary substitutions are also
invalid because the first heirs are not related to the
second heirs or substitutes within the first degree, as
provided in Article 863 of the Civil Code; (c) that the
grant of a usufruct over real property in the Philippines
in favor of Wanda Wrobleski, who is an alien, violates
Section 5, Article III of the Philippine Constitution; and
that (d) the proposed partition of the testator's interest
in the Santa Cruz (Escolta) Building between the
widow Marcelle and the appellants, violates the
testator's express win to give this property to them
Nonetheless, the lower court approved the project of
partition in its order dated May 3, 1967. It is this order
which Jorge and Roberto have appealed to this Court.
1. The widow's legitime.
The appellant's do not question the legality of giving
Marcelle one-half of the estate in full ownership. They
admit that the testator's dispositions impaired his
widow's legitime. Indeed, under Art. 900 of the Civil
Code "If the only survivor is the widow or widower, she
or he shall be entitled to one-half of the hereditary
estate." And since Marcelle alone survived the
deceased, she is entitled to one-half of his estate over
which he could impose no burden, encumbrance,
condition or substitution of any kind whatsoever. (Art.
904, par. 2, Civil Code.)
It is the one-third usufruct over the free portion which
the appellants question and justifiably so. It appears
that the court a quo approved the usufruct in favor of
Marcelle because the testament provides for a usufruct
in her favor of one-third of the estate. The court a
quo erred for Marcelle who is entitled to one-half of the
estate "en pleno dominio" as her legitime and which is
more than what she is given under the will is not
entitled to have any additional share in the estate. To
give Marcelle more than her legitime will run counter to
the testator's intention for as stated above his
dispositions even impaired her legitime and tended to
favor Wanda.
LAND TITLES and DEEDS (Atty. Jeffrey Jefferson Coronel) 2

2. The substitutions.
It may be useful to recall that "Substitution is the
appoint- judgment of another heir so that he may enter
into the inheritance in default of the heir originally
instituted." (Art. 857, Civil Code. And that there are
several kinds of substitutions, namely: simple or
common, brief or compendious, reciprocal, and
fideicommissary (Art. 858, Civil Code.) According to
Tolentino, "Although the Code enumerates four
classes, there are really only two principal classes of
substitutions: the simple and the fideicommissary. The
others are merely variations of these two." (111 Civil
Code, p. 185 [1973].)
The simple or vulgar is that provided in Art. 859 of the
Civil Code which reads:
ART. 859. The testator may designate one or more
persons to substitute the heir or heirs instituted in case
such heir or heirs should die before him, or should not
wish, or should be incapacitated to accept the
inheritance.
A simple substitution, without a statement of the cases
to which it refers, shall comprise the three mentioned
in the preceding paragraph, unless the testator has
otherwise provided.
The fideicommissary substitution is described in the
Civil Code as follows:
ART. 863. A fideicommissary substitution by virtue of
which the fiduciary or first heir instituted is entrusted
with the obligation to preserve and to transmit to a
second heir the whole or part of inheritance, shall be
valid and shall take effect, provided such substitution
does not go beyond one degree from the heir originally
instituted, and provided further that the fiduciary or first
heir and the second heir are living at time of the death
of the testator.
It will be noted that the testator provided for a vulgar
substitution in respect of the legacies of Roberto and
Jorge Ramirez, the appellants, thus: con sustitucion
vulgar a favor de sus respectivos descendientes, y, en
su defecto, con substitution vulgar reciprocal entre
ambos.
The appellants do not question the legality of the
substitution so provided. The appellants question the
sustitucion vulgar y fideicomisaria a favor de Da.
Wanda de Wrobleski" in connection with the one-third
usufruct over the estate given to the widow Marcelle
However, this question has become moot because as
We have ruled above, the widow is not entitled to any

usufruct.
The appellants also question the sustitucion vulgar y
fideicomisaria in connection with Wanda's usufruct
over two thirds of the estate in favor of Juan Pablo
Jankowski and Horace v. Ramirez.
They allege that the substitution in its vulgar aspect as
void because Wanda survived the testator or stated
differently because she did not predecease the
testator. But dying before the testator is not the only
case for vulgar substitution for it also includes refusal
or incapacity to accept the inheritance as provided in
Art. 859 of the Civil Code, supra. Hence, the vulgar
substitution is valid.
As regards the substitution in its fideicommissary
aspect, the appellants are correct in their claim that it
is void for the following reasons:
(a) The substitutes (Juan Pablo Jankowski and Horace
V. Ramirez) are not related to Wanda, the heir
originally instituted. Art. 863 of the Civil Code validates
a fideicommissary substitution "provided such
substitution does not go beyond one degree from the
heir originally instituted."
What is meant by "one degree" from the first heir is
explained by Tolentino as follows:
Scaevola Maura, and Traviesas construe "degree" as
designation, substitution, or transmission. The
Supreme Court of Spain has decidedly adopted this
construction. From this point of view, there can be only
one tranmission or substitution, and the substitute
need not be related to the first heir. Manresa, Morell
and Sanchez Roman, however, construe the word
"degree" as generation, and the present Code has
obviously followed this interpretation. by providing that
the substitution shall not go beyond one degree "from
the heir originally instituted." The Code thus clearly
indicates that the second heir must be related to and
be one generation from the first heir.
From this, it follows that the fideicommissary can only
be either a child or a parent of the first heir. These are
the only relatives who are one generation or degree
from the fiduciary (Op. cit., pp. 193-194.)
(b) There is no absolute duty imposed on Wanda to
transmit the usufruct to the substitutes as required by
Arts. 865 and 867 of the Civil Code. In fact, the
appellee admits "that the testator contradicts the
establishment of a fideicommissary substitution when

he permits the properties subject of the usufruct to be
sold upon mutual agreement of the usufructuaries and
the naked owners." (Brief, p. 26.)
PHIL. BANKING v. LUI SHE

SUPREME COURT
Manila
3. The usufruct of Wanda.

The appellants claim that the usufruct over real
properties of the estate in favor of Wanda is void
because it violates the constitutional prohibition
against the acquisition of lands by aliens.
The 1935 Constitution which is controlling provides as
follows:
SEC. 5. Save in cases of hereditary succession, no
private agricultural land shall be transferred or
assigned except to individuals, corporations, or
associations qualified to acquire or hold lands of the
public domain in the Philippines. (Art. XIII.)
The court a quo upheld the validity of the usufruct
given to Wanda on the ground that the Constitution
covers not only succession by operation of law but
also testamentary succession. We are of the opinion
that the Constitutional provision which enables aliens
to acquire private lands does not extend to
testamentary succession for otherwise the prohibition
will be for naught and meaningless. Any alien would be
able to circumvent the prohibition by paying money to
a Philippine landowner in exchange for a devise of a
piece of land.
This opinion notwithstanding, We uphold the usufruct
in favor of Wanda because a usufruct, albeit a real
right, does not vest title to the land in the usufructuary
and it is the vesting of title to land in favor of aliens
which is proscribed by the Constitution.
IN VIEW OF THE FOREGOING, the estate of Jose
Eugenio Ramirez is hereby ordered distributed as
follows:
One-half (1/2) thereof to his widow as her legitime;
One-half (1/2) thereof which is the free portion to
Roberto and Jorge Ramirez in naked ownership and
the usufruct to Wanda de Wrobleski with a simple
substitution in favor of Juan Pablo Jankowski and
Horace V. Ramirez.
The distribution herein ordered supersedes that of the
court a quo. No special pronouncement as to costs.
SO ORDERED.
EN BANC
G.R. No. L-17587
September 12, 1967
PHILIPPINE BANKING CORPORATION,

representing the estate of JUSTINA SANTOS Y
CANON FAUSTINO, deceased, plaintiff-appellant,
vs.
LUI SHE in her own behalf and as administratrix of
the intestate estate of Wong Heng,
deceased,defendant-appellant.
Nicanor S. Sison for plaintiff-appellant.
Ozaeta, Gibbs & Ozaeta for defendant-appellant.
CASTRO, J.:
Justina Santos y Canon Faustino and her sister
Lorenzo were the owners in common of a piece of land
in Manila. This parcel, with an area of 2,582.30 square
meters, is located on Rizal Avenue and opens into
Florentino Torres street at the back and Katubusan
street on one side. In it are two residential houses with
entrance on Florentino Torres street and the Hen Wah
Restaurant with entrance on Rizal Avenue. The sisters
lived in one of the houses, while Wong Heng, a
Chinese, lived with his family in the restaurant. Wong
had been a long-time lessee of a portion of the
property, paying a monthly rental of P2,620.
On September 22, 1957 Justina Santos became the
owner of the entire property as her sister died with no
other heir. Then already well advanced in years, being
at the time 90 years old, blind, crippled and an invalid,
she was left with no other relative to live with. Her only
companions in the house were her 17 dogs and 8
maids. Her otherwise dreary existence was brightened
now and then by the visits of Wong's four children who
had become the joy of her life. Wong himself was the
trusted man to whom she delivered various amounts
for safekeeping, including rentals from her property at
the corner of Ongpin and Salazar streets and the
rentals which Wong himself paid as lessee of a part of
the Rizal Avenue property. Wong also took care of the
payment; in her behalf, of taxes, lawyers' fees, funeral
expenses, masses, salaries of maids and security
guard, and her household expenses.

"In grateful acknowledgment of the personal services
of the lessee to her," Justina Santos executed on
November 15, 1957 a contract of lease (Plff Exh. 3) in
favor of Wong, covering the portion then already
leased to him and another portion fronting Florentino
Torres street. The lease was for 50 years, although the
lessee was given the right to withdraw at any time from
the agreement; the monthly rental was P3,120. The
contract covered an area of 1,124 square meters. Ten
days later (November 25), the contract was amended
(Plff Exh. 4) so as to make it cover the entire property,
including the portion on which the house of Justina
Santos stood, at an additional monthly rental of P360.
For his part Wong undertook to pay, out of the rental
due from him, an amount not exceeding P1,000 a
month for the food of her dogs and the salaries of her
maids.
On December 21 she executed another contract (Plff
Exh. 7) giving Wong the option to buy the leased
premises for P120,000, payable within ten years at a
monthly installment of P1,000. The option, written in
Tagalog, imposed on him the obligation to pay for the
food of the dogs and the salaries of the maids in her
household, the charge not to exceed P1,800 a month.
The option was conditioned on his obtaining Philippine
citizenship, a petition for which was then pending in
the Court of First Instance of Rizal. It appears,
however, that this application for naturalization was
withdrawn when it was discovered that he was not a
resident of Rizal. On October 28, 1958 she filed a
petition to adopt him and his children on the erroneous
belief that adoption would confer on them Philippine
citizenship. The error was discovered and the
proceedings were abandoned.
On November 18, 1958 she executed two other
contracts, one (Plff Exh. 5) extending the term of the
lease to 99 years, and another (Plff Exh. 6) fixing the
term of the option of 50 years. Both contracts are
written in Tagalog.
In two wills executed on August 24 and 29, 1959 (Def
Exhs. 285 & 279), she bade her legatees to respect
the contracts she had entered into with Wong, but in a
codicil (Plff Exh. 17) of a later date (November 4,
1959) she appears to have a change of heart.
Claiming that the various contracts were made by her
because of machinations and inducements practiced
by him, she now directed her executor to secure the
annulment of the contracts.
On November 18 the present action was filed in the
Court of First Instance of Manila. The complaint
alleged that the contracts were obtained by Wong
"through fraud, misrepresentation, inequitable conduct,

undue influence and abuse of confidence and trust of
and (by) taking advantage of the helplessness of the
plaintiff and were made to circumvent the constitutional
provision prohibiting aliens from acquiring lands in the
Philippines and also of the Philippine Naturalization
Laws." The court was asked to direct the Register of
Deeds of Manila to cancel the registration of the
contracts and to order Wong to pay Justina Santos the
additional rent of P3,120 a month from November 15,
1957 on the allegation that the reasonable rental of the
leased premises was P6,240 a month.
In his answer, Wong admitted that he enjoyed her trust
and confidence as proof of which he volunteered the
information that, in addition to the sum of P3,000 which
he said she had delivered to him for safekeeping,
another sum of P22,000 had been deposited in a joint
account which he had with one of her maids. But he
denied having taken advantage of her trust in order to
secure the execution of the contracts in question. As
counterclaim he sought the recovery of P9,210.49
which he said she owed him for advances.
Wong's admission of the receipt of P22,000 and
P3,000 was the cue for the filing of an amended
complaint. Thus on June 9, 1960, aside from the nullity
of the contracts, the collection of various amounts
allegedly delivered on different occasions was sought.
These amounts and the dates of their delivery are
P33,724.27 (Nov. 4, 1957); P7,344.42 (Dec. 1, 1957);
P10,000 (Dec. 6, 1957); P22,000 and P3,000 (as
admitted in his answer). An accounting of the rentals
from the Ongpin and Rizal Avenue properties was also
demanded.
In the meantime as a result of a petition for
guardianship filed in the Juvenile and Domestic
Relations Court, the Security Bank & Trust Co. was
appointed guardian of the properties of Justina Santos,
while Ephraim G. Gochangco was appointed guardian
of her person.
In his answer, Wong insisted that the various contracts
were freely and voluntarily entered into by the parties.
He likewise disclaimed knowledge of the sum of
P33,724.27, admitted receipt of P7,344.42 and
P10,000, but contended that these amounts had been
spent in accordance with the instructions of Justina
Santos; he expressed readiness to comply with any
order that the court might make with respect to the
sums of P22,000 in the bank and P3,000 in his
possession.

The case was heard, after which the lower court
rendered judgment as follows:
[A]ll the documents mentioned in the first cause of
action, with the exception of the first which is the lease
contract of 15 November 1957, are declared null and
void; Wong Heng is condemned to pay unto plaintiff
thru guardian of her property the sum of P55,554.25
with legal interest from the date of the filing of the
amended complaint; he is also ordered to pay the sum
of P3,120.00 for every month of his occupation as
lessee under the document of lease herein sustained,
from 15 November 1959, and the moneys he has
consigned since then shall be imputed to that; costs
against Wong Heng.
From this judgment both parties appealed directly to
this Court. After the case was submitted for decision,
both parties died, Wong Heng on October 21, 1962
and Justina Santos on December 28, 1964. Wong was
substituted by his wife, Lui She, the other defendant in
this case, while Justina Santos was substituted by the
Philippine Banking Corporation.
Justina Santos maintained now reiterated by the
Philippine Banking Corporation that the lease
contract (Plff Exh. 3) should have been annulled along
with the four other contracts (Plff Exhs. 4-7) because it
lacks mutuality; because it included a portion which, at
the time, was in custodia legis; because the contract
was obtained in violation of the fiduciary relations of
the parties; because her consent was obtained through
undue influence, fraud and misrepresentation; and
because the lease contract, like the rest of the
contracts, is absolutely simulated.
Paragraph 5 of the lease contract states that "The
lessee may at any time withdraw from this agreement."
It is claimed that this stipulation offends article 1308 of
the Civil Code which provides that "the contract must
bind both contracting parties; its validity or compliance
cannot be left to the will of one of them."
We have had occasion to delineate the scope and
application of article 1308 in the early case of Taylor v.
Uy Tieng Piao.1 We said in that case:
Article 1256 [now art. 1308] of the Civil Code in our
opinion creates no impediment to the insertion in a
contract for personal service of a resolutory condition
permitting the cancellation of the contract by one of the
parties. Such a stipulation, as can be readily seen,
does not make either the validity or the fulfillment of
the contract dependent upon the will of the party to
whom is conceded the privilege of cancellation; for
where the contracting parties have agreed that such

option shall exist, the exercise of the option is as much
in the fulfillment of the contract as any other act which
may have been the subject of agreement. Indeed, the
cancellation of a contract in accordance with
conditions agreed upon beforehand is fulfillment.2
And so it was held in Melencio v. Dy Tiao Lay 3 that a
"provision in a lease contract that the lessee, at any
time before he erected any building on the land, might
rescind the lease, can hardly be regarded as a
violation of article 1256 [now art. 1308] of the Civil
Code."
The
case
of Singson
Encarnacion
v.
Baldomar 4 cannot be cited in support of the claim of
want of mutuality, because of a difference in factual
setting. In that case, the lessees argued that they
could occupy the premises as long as they paid the
rent. This is of course untenable, for as this Court said,
"If this defense were to be allowed, so long as
defendants elected to continue the lease by continuing
the payment of the rentals, the owner would never be
able to discontinue it; conversely, although the owner
should desire the lease to continue the lessees could
effectively thwart his purpose if they should prefer to
terminate the contract by the simple expedient of
stopping payment of the rentals." Here, in contrast, the
right of the lessee to continue the lease or to terminate
it is so circumscribed by the term of the contract that it
cannot be said that the continuance of the lease
depends upon his will. At any rate, even if no term had
been fixed in the agreement, this case would at most
justify the fixing of a period 5 but not the annulment of
the contract.
Nor is there merit in the claim that as the portion of the
property formerly owned by the sister of Justina
Santos was still in the process of settlement in the
probate court at the time it was leased, the lease is
invalid as to such portion. Justina Santos became the
owner of the entire property upon the death of her
sister Lorenzo on September 22, 1957 by force of
article 777 of the Civil Code. Hence, when she leased
the property on November 15, she did so already as
owner thereof. As this Court explained in upholding the
sale made by an heir of a property under judicial
administration:
That the land could not ordinarily be levied upon while
in custodia legis does not mean that one of the heirs
may not sell the right, interest or participation which he
has or might have in the lands under administration.
The ordinary execution of property in custodia legis is
prohibited in order to avoid interference with the

possession by the court. But the sale made by an heir
of his share in an inheritance, subject to the result of
the pending administration, in no wise stands in the
way of such administration.6
It is next contended that the lease contract was
obtained by Wong in violation of his fiduciary
relationship with Justina Santos, contrary to article
1646, in relation to article 1941 of the Civil Code,
which disqualifies "agents (from leasing) the property
whose administration or sale may have been entrusted
to them." But Wong was never an agent of Justina
Santos. The relationship of the parties, although
admittedly close and confidential, did not amount to an
agency so as to bring the case within the prohibition of
the law.
Just the same, it is argued that Wong so completely
dominated her life and affairs that the contracts
express not her will but only his. Counsel for Justina
Santos cites the testimony of Atty. Tomas S. Yumol
who said that he prepared the lease contract on the
basis of data given to him by Wong and that she told
him that "whatever Mr. Wong wants must be
followed."7
The testimony of Atty. Yumol cannot be read out of
context in order to warrant a finding that Wong
practically dictated the terms of the contract. What this
witness said was:
Q Did you explain carefully to your client, Doa
Justina, the contents of this document before she
signed it?
A I explained to her each and every one of these
conditions and I also told her these conditions were
quite onerous for her, I don't really know if I have
expressed my opinion, but I told her that we would
rather not execute any contract anymore, but to hold it
as it was before, on a verbal month to month contract
of lease.
xxx
xxx
xxx
Q So, as far as consent is concerned, you were

satisfied that this document was perfectly proper?
xxx
xxx
xxx
A Your Honor, if I have to express my personal opinion,

I would say she is not, because, as I said before, she
told me "Whatever Mr. Wong wants must be
followed."8
Wong might indeed have supplied the data which Atty.
Yumol embodied in the lease contract, but to say this
is not to detract from the binding force of the contract.
For the contract was fully explained to Justina Santos
by her own lawyer. One incident, related by the same
witness, makes clear that she voluntarily consented to
the lease contract. This witness said that the original
term fixed for the lease was 99 years but that as he
doubted the validity of a lease to an alien for that
length of time, he tried to persuade her to enter instead
into a lease on a month-to-month basis. She was,
however, firm and unyielding. Instead of heeding the
advice of the lawyer, she ordered him, "Just follow Mr.
Wong Heng."9 Recounting the incident, Atty. Yumol
declared on cross examination:
Considering her age, ninety (90) years old at the time
and her condition, she is a wealthy woman, it is just
natural when she said "This is what I want and this will
be done." In particular reference to this contract of
lease, when I said "This is not proper," she said
"You just go ahead, you prepare that, I am the owner,
and if there is any illegality, I am the only one that can
question the illegality."10
Q Agreed what?
Atty. Yumol further testified that she signed the lease

contract in the presence of her close friend,
Hermenegilda Lao, and her maid, Natividad Luna, who
was constantly by her side.11 Any of them could have
testified on the undue influence that Wong supposedly
wielded over Justina Santos, but neither of them was
presented as a witness. The truth is that even after
giving his client time to think the matter over, the
lawyer could not make her change her mind. This
persuaded the lower court to uphold the validity of the
lease contract against the claim that it was procured
through undue influence.
A Agreed with my objectives that it is really onerous

and that I was really right, but after that, I was called
again by her and she told me to follow the wishes of
Mr. Wong Heng.
Indeed, the charge of undue influence in this case

rests on a mere inference 12 drawn from the fact that
Justina Santos could not read (as she was blind) and
did not understand the English language in which the
Q But, she did not follow your advice, and she went
with the contract just the same?
A She agreed first . . .

contract is written, but that inference has been
overcome by her own evidence.
Nor is there merit in the claim that her consent to the
lease contract, as well as to the rest of the contracts in
question, was given out of a mistaken sense of
gratitude to Wong who, she was made to believe, had
saved her and her sister from a fire that destroyed their
house during the liberation of Manila. For while a
witness claimed that the sisters were saved by other
persons (the brothers Edilberto and Mariano Sta.
Ana)13 it was Justina Santos herself who, according to
her own witness, Benjamin C. Alonzo, said "very
emphatically" that she and her sister would have
perished in the fire had it not been for Wong. 14 Hence
the recital in the deed of conditional option (Plff Exh. 7)
that "[I]tong si Wong Heng ang siyang nagligtas sa
aming dalawang magkapatid sa halos ay tiyak na
kamatayan", and the equally emphatic avowal of
gratitude in the lease contract (Plff Exh. 3).
As it was with the lease contract (Plff Exh. 3), so it was
with the rest of the contracts (Plff Exhs. 4-7) the
consent of Justina Santos was given freely and
voluntarily. As Atty. Alonzo, testifying for her, said:
[I]n nearly all documents, it was either Mr. Wong Heng
or Judge Torres and/or both. When we had
conferences, they used to tell me what the documents
should contain. But, as I said, I would always ask the
old woman about them and invariably the old woman
used to tell me: "That's okay. It's all right."15
But the lower court set aside all the contracts, with the
exception of the lease contract of November 15, 1957,
on the ground that they are contrary to the expressed
wish of Justina Santos and that their considerations
are fictitious. Wong stated in his deposition that he did
not pay P360 a month for the additional premises
leased to him, because she did not want him to, but
the trial court did not believe him. Neither did it believe
his statement that he paid P1,000 as consideration for
each of the contracts (namely, the option to buy the
leased premises, the extension of the lease to 99
years, and the fixing of the term of the option at 50
years), but that the amount was returned to him by her
for safekeeping. Instead, the court relied on the
testimony of Atty. Alonzo in reaching the conclusion
that the contracts are void for want of consideration.
Atty. Alonzo declared that he saw no money paid at the
time of the execution of the documents, but his
negative testimony does not rule out the possibility that
the considerations were paid at some other time as the
contracts in fact recite. What is more, the consideration
need not pass from one party to the other at the time a
contract is executed because the promise of one is the
consideration for the other.16
With respect to the lower court's finding that in all
probability Justina Santos could not have intended to
part with her property while she was alive nor even to
lease it in its entirety as her house was built on it,
suffice it to quote the testimony of her own witness and
lawyer who prepared the contracts (Plff Exhs. 4-7) in
question, Atty. Alonzo:
The ambition of the old woman, before her death,
according to her revelation to me, was to see to it that
these properties be enjoyed, even to own them, by
Wong Heng because Doa Justina told me that she
did not have any relatives, near or far, and she
considered Wong Heng as a son and his children her
grandchildren; especially her consolation in life was
when she would hear the children reciting prayers in
Tagalog.17
She was very emphatic in the care of the seventeen
(17) dogs and of the maids who helped her much, and
she told me to see to it that no one could disturb Wong
Heng from those properties. That is why we thought of
the ninety-nine (99) years lease; we thought of
adoption, believing that thru adoption Wong Heng
might acquire Filipino citizenship; being the adopted
child of a Filipino citizen.18
This is not to say, however, that the contracts (Plff
Exhs. 3-7) are valid. For the testimony just quoted,
while dispelling doubt as to the intention of Justina
Santos, at the same time gives the clue to what we
view as a scheme to circumvent the Constitutional
prohibition against the transfer of lands to aliens. "The
illicit
purpose
then
becomes
the
19
illegal causa" rendering the contracts void.
Taken singly, the contracts show nothing that is
necessarily illegal, but considered collectively, they
reveal an insidious pattern to subvert by indirection
what the Constitution directly prohibits. To be sure, a
lease to an alien for a reasonable period is valid. So is
an option giving an alien the right to buy real property
on condition that he is granted Philippine citizenship.
As this Court said in Krivenko v. Register of Deeds:20
[A]liens are not completely excluded by the
Constitution from the use of lands for residential
purposes. Since their residence in the Philippines is
temporary, they may be granted temporary rights such
as a lease contract which is not forbidden by the
Constitution. Should they desire to remain here forever

and share our fortunes and misfortunes, Filipino
citizenship is not impossible to acquire.
But if an alien is given not only a lease of, but also an
option to buy, a piece of land, by virtue of which the
Filipino owner cannot sell or otherwise dispose of his
property,21 this to last for 50 years, then it becomes
clear that the arrangement is a virtual transfer of
ownership whereby the owner divests himself in
stages not only of the right to enjoy the land ( jus
possidendi, jus utendi, jus fruendi and jus abutendi)
but also of the right to dispose of it ( jus disponendi)
rights the sum total of which make up ownership. It is
just as if today the possession is transferred,
tomorrow, the use, the next day, the disposition, and
so on, until ultimately all the rights of which ownership
is made up are consolidated in an alien. And yet this is
just exactly what the parties in this case did within the
space of one year, with the result that Justina Santos'
ownership of her property was reduced to a hollow
concept. If this can be done, then the Constitutional
ban against alien landholding in the Philippines, as
announced in Krivenko v. Register of Deeds,22 is
indeed in grave peril.
It does not follow from what has been said, however,
that because the parties are in pari delicto they will be
left where they are, without relief. For one thing, the
original parties who were guilty of a violation of the
fundamental charter have died and have since been
substituted by their administrators to whom it would be
unjust to impute their guilt.23 For another thing, and this
is not only cogent but also important, article 1416 of
the Civil Code provides, as an exception to the rule
on pari delicto, that "When the agreement is not
illegal per se but is merely prohibited, and the
prohibition by law is designed for the protection of the
plaintiff, he may, if public policy is thereby enhanced,
recover what he has paid or delivered." The
Constitutional provision that "Save in cases of
hereditary succession, no private agricultural land shall
be transferred or assigned except to individuals,
corporations, or associations qualified to acquire or
hold lands of the public domain in the Philippines" 24 is
an expression of public policy to conserve lands for the
Filipinos. As this Court said in Krivenko:
It is well to note at this juncture that in the present case
we have no choice. We are construing the Constitution
as it is and not as we may desire it to be. Perhaps the
effect of our construction is to preclude aliens admitted
freely into the Philippines from owning sites where they
may build their homes. But if this is the solemn
mandate of the Constitution, we will not attempt to
compromise it even in the name of amity or equity . . . .
For all the foregoing, we hold that under the

Constitution aliens may not acquire private or public
agricultural lands, including residential lands, and,
accordingly, judgment is affirmed, without costs.25
That policy would be defeated and its continued
violation sanctioned if, instead of setting the contracts
aside and ordering the restoration of the land to the
estate of the deceased Justina Santos, this Court
should apply the general rule of pari delicto. To the
extent that our ruling in this case conflicts with that laid
down in Rellosa v. Gaw Chee Hun 26 and subsequent
similar cases, the latter must be considered as pro
tanto qualified.
The claim for increased rentals and attorney's fees,
made in behalf of Justina Santos, must be denied for
lack of merit.
And what of the various amounts which Wong received
in trust from her? It appears that he kept two classes of
accounts, one pertaining to amount which she
entrusted to him from time to time, and another
pertaining to rentals from the Ongpin property and
from the Rizal Avenue property, which he himself was
leasing.
With respect to the first account, the evidence shows
that he received P33,724.27 on November 8, 1957
(Plff Exh. 16); P7,354.42 on December 1, 1957 (Plff
Exh. 13); P10,000 on December 6, 1957 (Plff Exh.
14) ; and P18,928.50 on August 26, 1959 (Def. Exh.
246), or a total of P70,007.19. He claims, however,
that he settled his accounts and that the last amount of
P18,928.50 was in fact payment to him of what in the
liquidation was found to be due to him.
He made disbursements from this account to
discharge Justina Santos' obligations for taxes,
attorneys' fees, funeral services and security guard
services, but the checks (Def Exhs. 247-278) drawn by
him
for
this
purpose
amount
to
only
P38,442.84.27 Besides, if he had really settled his
accounts with her on August 26, 1959, we cannot
understand why he still had P22,000 in the bank and
P3,000 in his possession, or a total of P25,000. In his
answer, he offered to pay this amount if the court so
directed him. On these two grounds, therefore, his
claim of liquidation and settlement of accounts must be
rejected.
After subtracting P38,442.84 (expenditures) from
P70,007.19 (receipts), there is a difference of P31,564
which, added to the amount of P25,000, leaves a
balance of P56,564.3528 in favor of Justina Santos.

As to the second account, the evidence shows that the
monthly income from the Ongpin property until its sale
in Rizal Avenue July, 1959 was P1,000, and that from
the Rizal Avenue property, of which Wong was the
lessee, was P3,120. Against this account the
household expenses and disbursements for the care of
the 17 dogs and the salaries of the 8 maids of Justina
Santos were charged. This account is contained in a
notebook (Def. Exh. 6) which shows a balance of
P9,210.49 in favor of Wong. But it is claimed that the
rental from both the Ongpin and Rizal Avenue
properties was more than enough to pay for her
monthly expenses and that, as a matter of fact, there
should be a balance in her favor. The lower court did
not allow either party to recover against the other. Said
the court:
[T]he documents bear the earmarks of genuineness;
the trouble is that they were made only by Francisco
Wong and Antonia Matias, nick-named Toning,
which was the way she signed the loose sheets, and
there is no clear proof that Doa Justina had
authorized these two to act for her in such liquidation;
on the contrary if the result of that was a deficit as
alleged and sought to be there shown, of P9,210.49,
that was not what Doa Justina apparently understood
for as the Court understands her statement to the
Honorable Judge of the Juvenile Court . . . the reason
why she preferred to stay in her home was because
there she did not incur in any debts . . . this being the
case, . . . the Court will not adjudicate in favor of Wong
Heng on his counterclaim; on the other hand, while it is
claimed that the expenses were much less than the
rentals and there in fact should be a superavit, . . . this
Court must concede that daily expenses are not easy
to compute, for this reason, the Court faced with the
choice of the two alternatives will choose the middle
course which after all is permitted by the rules of proof,
Sec. 69, Rule 123 for in the ordinary course of things,
a person will live within his income so that the
conclusion of the Court will be that there is neither
deficit nor superavit and will let the matter rest here.
Both parties on appeal reiterate their respective claims
but we agree with the lower court that both claims
should be denied. Aside from the reasons given by the
court, we think that the claim of Justina Santos totalling
P37,235, as rentals due to her after deducting various
expenses, should be rejected as the evidence is none
too clear about the amounts spent by Wong for
food29 masses30 and salaries of her maids. 31 His claim
for P9,210.49 must likewise be rejected as his
averment of liquidation is belied by his own admission
that even as late as 1960 he still had P22,000 in the
bank and P3,000 in his possession.
ACCORDINGLY, the contracts in question (Plff Exhs.

3-7) are annulled and set aside; the land subjectmatter of the contracts is ordered returned to the
estate of Justina Santos as represented by the
Philippine Banking Corporation; Wong Heng (as
substituted by the defendant-appellant Lui She) is
ordered to pay the Philippine Banking Corporation the
sum of P56,564.35, with legal interest from the date of
the filing of the amended complaint; and the amounts
consigned in court by Wong Heng shall be applied to
the payment of rental from November 15, 1959 until
the premises shall have been vacated by his heirs.
Costs against the defendant-appellant.
REPUBLIC v. QUASHA
SUPREME COURT
Manila
EN BANC
G.R. No. L-30299
August 17, 1972
REPUBLIC OF THE PHILIPPINES and/or THE

SOLICITOR GENERAL petitioners,
vs.
WILLIAM H. QUASHA, respondent.
Office of the Solicitor General Estelito P. Mendoza for
petitioner.
Quasha, Asperilla Blanco, Zafra & Tayag for
respondent.
REYES J. B. L., J.:p

This case involves a judicial determination of the
scope and duration of the rights acquired by American
citizens and corporations controlled by them, under the
Ordinance appended to the Constitution as of 18
September 1946, or the so-called Parity Amendment.
The respondent, William H. Quasha, an American
citizen, had acquired by purchase on 26 November
1954 a parcel of land with the permanent
improvements thereon, situated at 22 Molave Place, in
Forbes Park, Municipality of Makati, Province of Rizal,
with an area of 2,616 sq. m. more or less, described in
and covered by T. C. T. 36862. On 19 March 1968, he
filed a petition in the Court of First Instance of Rizal,
docketed as its Civil Case No. 10732, wherein he

(Quasha) averred the acquisition of the real estate
aforesaid; that the Republic of the Philippines, through
its officials, claimed that upon expiration of the Parity
Amendment on 3 July 1974, rights acquired by citizens
of the United States of America shall cease and be of
no further force and effect; that such claims
necessarily affect the rights and interest of the plaintiff,
and that continued uncertainty as to the status of
plaintiff's property after 3 July 1974 reduces the value
thereof, and precludes further improvements being
introduced thereon, for which reason plaintiff Quasha
sought a declaration of his rights under the Parity
Amendment, said plaintiff contending that the
ownership of properties during the effectivity of the
Parity Amendment continues notwithstanding the
termination and effectivity of the Amendment.
The then Solicitor General Antonio P. Barredo (and
later on his successors in office, Felix V. Makasiar and
Felix Q. Antonio) contended that the land acquired by
plaintiff constituted private agricultural land and that
the acquisition violated section 5, Article XIII, of the
Constitution of the Philippines, which prohibits the
transfer of private agricultural land to non-Filipinos,
except by hereditary succession; and assuming,
without conceding, that Quasha's acquisition was valid,
any and all rights by him so acquired "will expire ipso
facto and ipso jure at the end of the day on 3 July
1974, if he continued to hold the property until then,
and will be subject to escheat or reversion
proceedings" by the Republic.
After hearing, the Court of First Instance of Rizal
(Judge Pedro A. Revilla presiding) rendered a
decision, dated 6 March 1969, in favor of plaintiff, with
the following dispositive portion:
WHEREFORE, judgment is hereby rendered declaring
that acquisition by the plaintiff on 26 November 1954
of, the private agricultural land described in and
covered by Transfer Certificate of Title No. 36862 in his
name was valid, and that plaintiff has a right to
continue in ownership of the said property even
beyond July 3, 1974.
Defendants appealed directly to this Court on
questions of law, pleading that the court below erred:
(1) In ruling that under the Parity Amendment
American citizens and American owned and/or
controlled business enterprises "are also qualified to
acquire private agricultural lands" in the Philippines;
and
(2) In ruling that when the Parity Amendment ceases to

be effective on 3 July 1974, "what must be considered
to end should be the right to acquire land, and not the
right to continue in ownership of land already acquired
prior to that time."
As a historical background, requisite to a proper
understanding of the issues being litigated, it should be
recalled that the Constitution as originally adopted,
contained the following provisions:
Article XIII CONSERVATION AND UTILIZATION
OF NATURAL RESOURCES
Section 1. All Agricultural, timber, and mineral lands of
the public domain, waters, minerals, coal, petroleum,
and other mineral oils, all forces of potential energy,
and other natural resources of the Philippines belong
to the State, and their disposition, exploitation,
development, or utilization shall be limited to citizens of
the Philippines, or to corporations or associations at
least sixty per centum of the capital of which is owned
by such citizens subject to any existing right, grant,
lease, or concession at the time of the inauguration of
the Government established under this Constitution.
Natural resources, with the exception of public
agricultural land, shall not be alienated, and no license,
concession, or lease for the resources shall be granted
for a period exceeding twenty-five years, renewable for
another twenty-five years, except as to water right for
irrigation, water supply, fisheries, or industrial uses
other than the development of water power, in which
cases beneficial use may be the measure and the limit
of the grant.
Section 2. No private corporation or association may
acquire, lease, or hold public agricultural lands in
excess of one thousand and twenty-four hectares, nor
may any individual acquire such lands by purchase in
excess of one hundred and forty-four hectares, or by
lease in excess of one thousand and twenty-four
hectares, or by homestead in excess of twenty-four
hectares. Lands adapted to grazing not exceeding two
thousand hectares, may be leased to an individual,
private corporation, or association.
xxx
xxx
xxx
Section 5. Save in cases of hereditary succession, no

private agricultural land shall be transferred or
assigned except to individuals, corporations, or
public domain in the Philippines.
Article XIV GENERAL PROVISIONS

Section 8. No franchise, certificate, or any other form
of authorization for the operation of a public utility shall
be granted except to citizens of the Philippines or to
corporations or other entities organized under the laws
of the Philippines, sixty per centum of the capital of
which is owned by citizens of the Philippines, nor shall
such franchise, certificate, or authorization be
exclusive in character or for a longer period than fifty
years. No franchise or right shall be granted to any
individual, firm, or corporation, except under the
condition that it shall be subject to amendment,
alteration, or repeal by the Congress when the public
interest so requires.
The nationalistic spirit that pervaded these and other
provisions of the Constitution are self-evident and
require no further emphasis.
From the Japanese occupation and the reconquest of
the Archipelago, the Philippine nation emerged with its
industries destroyed and its economy dislocated. It
was described in this Court's opinion in Commissioner
of Internal Revenue vs. Guerrero, et al.,
L-20942, 22 September 1967, 21 SCRA 181, 187,
penned by Justice Enrique M. Fernando, in the
following terms:
It was fortunate that the Japanese Occupation ended
when it did. Liberation was hailed by all, but the
problems faced by the legitimate government were
awesome in their immensity. The Philippine treasury
was bankrupt and her economy prostrate. There were
no dollar-earning export crops to speak of; commercial
operations were paralyzed; and her industries were
unable to produce with mills, factories and plants either
destroyed or their machineries obsolete or dismantled.
It was a desolate and tragic sight that greeted the
victorious American and Filipino troops. Manila,
particularly that portion south of the Pasig, lay in ruins,
its public edifices and business buildings lying in a
heap of rubble and numberless houses razed to the
ground. It was in fact, next to Warsaw, the most
devastated city in the expert opinion of the then
General Eisenhower. There was thus a clear need of
help from the United States. American aid was
forthcoming but on terms proposed by her government
and later on accepted by the Philippines.
The foregoing description is confirmed by the 1945
Report of the Committee on Territories and Insular
Affairs to the United States Congress:
When the Philippines do become independent next
July, they will start on the road to independence with a
country whose commerce, trade and political
institutions have been very, very seriously damaged.

Years of rebuilding are necessary before the former
physical conditions of the islands can be restored.
Factories, homes, government and commercial
buildings, roads, bridges, docks, harbors and the like
are in need of complete reconstruction or widespread
repairs. It will be quite some while before the Philippine
can produce sufficient food with which to sustain
themselves.
The internal revenues of the country have been greatly
diminished by war. Much of the assessable property
basis has been destroyed. Foreign trade has vanished.
Internal commerce is but a faction of what it used to
be. Machinery, farming implements, ships, bus and
truck
lines,
inter-island
transportation
and
communications have been wrecked.
Shortly thereafter, in 1946, the United States 79th
Congress enacted Public Law 3721, known as the
Philippine Trade Act, authorizing the President of the
United States to enter into an Executive Agreement
with the President of the Philippines, which should
contain a provision that
The disposition, exploitation, development, and
utilization of all agricultural, timber, and mineral lands
of the public domain, waters, minerals, coal,
petroleum, and other mineral oils,; all forces and
sources of potential energy, and other natural
resources of the Philippines, and the operation of
public utilities shall, if open to any person, be open to
citizens of the United States and to all forms of
business enterprise owned or controlled, directly or
indirectly, by United States citizens.
and that:
The President of the United States is not authorized ...
to enter into such executive agreement unless in the
agreement the Government of the Philippines ... will
promptly take such steps as are necessary to secure
the amendment of the Constitution of the Philippines
so as to permit the taking effect as laws of the
Philippines of such part of the provisions of section
1331 ... as is in conflict with such Constitution before
such amendment.
The Philippine Congress, by Commonwealth Act No.
733, authorized the President of the Philippines to
enter into the Executive Agreement. Said Act
provided, inter alia, the following:
ARTICLE VII

1. The disposition, exploitation, development, and
utilization of all agricultural, timber, and mineral lands
of the public domain, waters, mineral, coal, petroleum,
and other mineral oils, all forces and sources of
potential energy, and other natural resources of the
Philippines, and the operation of public utilities, shall, if
open to any person, be open to citizens of the United
States and to all forms of business enterprise owned
or controlled, directly or indirectly, by United States
citizens, except that (for the period prior to the
amendment of the Constitution of the Philippines
referred to in Paragraph 2 of this Article) the
Philippines shall not be required to comply with such
part of the foregoing provisions of this sentence as are
in conflict with such Constitution.
2. The Government of the Philippines will promptly
take such steps as are necessary to secure the
amendment of the constitution of the Philippines so as
to permit the taking effect as laws of the Philippines of
such part of the provisions of Paragraph 1 of this
Article as is in conflict with such Constitution before
such amendment.
Thus authorized, the Executive Agreement was signed
on 4 July 1946, and shortly thereafter the President of
the Philippines recommended to the Philippine
Congress the approval of a resolution proposing
amendments to the Philippine Constitution pursuant to
the Executive Agreement. Approved by the Congress
in joint session, the proposed amendment was
submitted to a plebiscite and was ratified in November
of 1946. Generally known as the Parity Amendment, it
was in the form of an Ordinance appended to the
Philippine Constitution, reading as follows:
Notwithstanding the provision of section one, Article
Thirteen, and section eight, Article Fourteen, of the
foregoing Constitution, during the effectivity of the
Executive Agreement entered into by the President of
the Philippines with the President of the United States
on the fourth of July, nineteen hundred and forty-six,
pursuant to the provisions of Commonwealth Act
Numbered Seven hundred and thirty-three, but in no
case to extend beyond the third of July, nineteen
hundred and seventy-four, the disposition, exploitation,
development, and utilization of all agricultural, timber,
and mineral lands of the public domain, waters,
minerals, coals, petroleum, and other mineral oils, all
forces and sources of potential energy, and other
natural resources of the Philippines, and the operation
of public utilities, shall, if OPEN to any person, be open
to citizens of the United States and to all forms of
indirectly, by citizens of the United States in the same
manner as to and under the same conditions imposed

upon, citizens of the Philippines or corporations or
associations owned or controlled by citizens of the
Philippines.
A revision of the 1946 Executive Agreement was
authorized by the Philippines by Republic Act 1355,
enacted in July 1955. The revision was duly negotiated
by representatives of the Philippines and the United
States, and a new agreement was concluded on 6
September 1955 to take effect on 1 January 1956,
becoming known as the Laurel-Langley Agreement.
This latter agreement, however, has no direct
application to the case at bar, since the purchase by
herein respondent Quasha of the property in question
was made in 1954, more than one year prior to the
effectivity of the Laurel-Langley Agreement..
I
Bearing in mind the legal provisions previously quoted
and their background, We turn to the first main issue
posed in this appeal: whether under or by virtue of the
so-called Parity Amendment to the Philippine
Constitution respondent Quasha could validly acquire
ownership of the private residential land in Forbes
Park, Makati, Rizal, which is concededly classified
private agricultural land.
Examination of the "Parity Amendment", as ratified,
reveals that it only establishes an express exception to
two (2) provisions of our Constitution, to wit: (a)
Section 1, Article XIII, re disposition, exploitation,
development and utilization of agricultural, timber and
mineral lands of the public domain and other natural
resources of the Philippines; and (b) Section 8, Article
XIV, regarding operation of public utilities. As originally
drafted by the framers of the Constitution, the privilege
to acquire and exploit agricultural lands of the public
domain, and other natural resources of the Philippines,
and to operate public utilities, were reserved to
Filipinos and entities owned or controlled by them: but
the "Parity Amendment" expressly extended the
privilege to citizens of the United States of America
and/or to business enterprises owned or controlled by
them.
No other provision of our Constitution was referred to
by the "Parity Amendment"; nor Section 2 of Article XIII
limiting the maximum area of public agricultural lands
that could be held by individuals or corporations or
associations; nor Section 5 restricting the transfer or
assignment of private agricultural lands to those
qualified to acquire or hold lands of the public domain

(which under the original Section 1 of Article XIII meant
Filipinos exclusively), save in cases of hereditary
succession. These sections 2 and 5 were therefore left
untouched and allowed to continue in operation as
originally intended by the Constitution's framers.
Respondent Quasha argues that since the amendment
permitted United States citizens or entities controlled
by them to acquire agricultural lands of the public
domain, then such citizens or entities became entitled
to acquire private agricultural land in the Philippines,
even without hereditary succession, since said section
5 of Article XIII only negates the transfer or assignment
of private agricultural land to individuals or entities not
qualified to acquire or hold lands of the public domain.
Clearly, this argument of respondent Quasha rests not
upon the text of the Constitutional Amendment but
upon a mere inference therefrom. If it was ever
intended to create also an exception to section 5 of
Article XIII, why was mention therein made only of
Section 1 of Article XIII and Section 8 of Article XIV
and of no other? When the text of the Amendment was
submitted for popular ratification, did the voters
understand that three sections of the Constitution were
to be modified, when only two sections were therein
mentioned?
A reading of Sections 1 and 4 of Article XIII, as
originally drafted by its farmers, leaves no doubt that
the policy of the Constitution was to reserve to
Filipinos the disposition, exploitation development or
utilization of agricultural lands, public (section 1) or
private (section 5), as well as all other natural
resources of the Philippines. The "Parity Amendment"
created exceptions to that Constitutional Policy and in
consequence to the sovereignty of the Philippines. By
all canons of construction, such exceptions must be
given strict interpretation; and this Court has already
so ruled in Commissioner of Internal Revenue vs.
Guerrero, et al., L-20942, 22 September 1967, 21
SCRA 181, per Justice Enrique M. Fernando:
While good faith, no less than adherence to the
categorical wording of the Ordinance, requires that all
the rights and privileges thus granted to Americans
and business enterprises owned and controlled by
them be respected, anything further would not be
warranted. Nothing less would suffice but anything
more is not justified.
The basis for the strict interpretation was given by
former President of the University of the Philippines,
Hon. Vicente G. Sinco (Congressional Record, House
of Representatives, Volume 1, No. 26, page 561):
It should be emphatically stated that the provisions of

our Constitution which limit to Filipinos the rights to
develop the natural resources and to operate the
public utilities of the Philippines is one of the bulwarks
of our national integrity. The Filipino people decided to
include it in our Constitution in order that it may have
the stability and permanency that its importance
requires. It is written in our Constitution so that it may
neither be the subject of barter nor be impaired in the
give and take of politics. With our natural resources,
our sources of power and energy, our public lands, and
our public utilities, the material basis of the nation's
existence, in the hands of aliens over whom the
Philippine Government does not have complete
control, the Filipinos may soon find themselves
deprived of their patrimony and living as it were, in a
house that no longer belongs to them.
The true extent of the Parity Amendment, as
understood by its proponents in the Philippine
Congress, was clearly expressed by one of its
advocates, Senator Lorenzo Sumulong:
It is a misconception to believe that under this
amendment Americans will be able to acquire all kinds
of natural resources of this country, and even after the
expiration of 28 years their acquired rights cannot be
divested from them. If we read carefully the language
of this amendment which is taken verbatim from the
Provision of the Bell Act, and, which in turn, is taken
also verbatim from certain sections of the Constitution,
you will find out that the equality of rights granted
under this amendment refers only to two subjects.
Firstly, it refers to exploitation of natural resources, and
secondly, it refers to the operation of public utilities.
Now, when it comes to exploitation of natural
resources, it must be pointed out here that, under our
Constitution and under this amendment, only public
agricultural land may be acquired, may be bought, so
that on the supposition that we give way to this
amendment and on the further supposition that it is
approved by our people, let not the mistaken belief be
entertained that all kinds of natural resources may be
acquired by Americans because under our Constitution
forest lands cannot be bought, mineral lands cannot be
bought, because by explicit provision of the
Constitution they belong to the State, they belong to
our Government, they belong to our people. That is
why we call them rightly the patrimony of our race.
Even if the Americans should so desire, they can have
no further privilege than to ask for a lease of
concession of forest lands and mineral lands because
it is so commanded in the Constitution. And under the
Constitution, such a concession is given only for a
limited period. It can be extended only for 25 years,

renewable for another 25. So that with respect to
mineral or forest lands, all they can do is to lease it for
25 years, and after the expiration of the original 25
years they will have to extend it, and I believe it can be
extended provided that it does not exceed 28 years
because this agreement is to be effected only as an
ordinance and for the express period of 28 years. So
that it is my humble belief that there is nothing to worry
about insofar as our forest and mineral lands are
concerned.
Now, coming to the operation of public utilities, as
every member of the Congress knows, it is also for a
limited period, under our Constitution, for a period not
exceeding 50 years. And since this amendment is
intended to endure only for 28 years, it is my humble
opinion that when Americans try to operate public
utilities they cannot take advantage of the maximum
provided in the Constitution but only the 28 years
which is expressly provided to be the life of this
amendment.
There remains for us to consider the case of our public
agricultural lands. To be sure, they may be bought, and
if we pass this amendment, Americans may buy our
public agricultural lands, but the very same
Constitution applying even to Filipinos, provides that
the sale of public agricultural lands to a corporation
can never exceed one thousand and twenty-four
hectares. That is to say, if an American corporation,
and American enterprise, should decide to invest its
money in public agricultural lands, it will be limited to
the amount of 1,024 hectares, no more than 1,024
hectares' (Emphasis supplied).
No views contrary to these were ever expressed in the
Philippine Legislature during the discussion of the
Proposed Amendment to our Constitution, nor was any
reference made to acquisition of private agricultural
lands by non-Filipinos except by hereditary
succession. On the American side, it is significant to
observe that the draft of the Philippine Trade Act
submitted to the House of Representatives by
Congressman Bell, provided in the first Portion of
Section 19 the following:
SEC. 19. Notwithstanding any existing provision of the
constitution and statutes of the Philippine Government,
citizens and corporations of the United States shall
enjoy in the Philippine Islands during the period of the
validity of this Act, or any extension thereof by statute
or treaty, the same rights as to property, residence,
and occupation as citizens of the Philippine Islands ...
But as finally approved by the United States Congress,

the equality as to " property residence and occupation"
provided in the bill was eliminated and Section 341 of
the Trade Act limited such parity to the disposition,
exploitation, development, and utilization of lands of
the public domain, and other natural resources of the
Philippines (V. ante, page 5 of this opinion).
Thus, whether from the Philippine or the American
side, the intention was to secure parity for United
States citizens, only in two matters: (1) exploitation,
development and utilization of public lands, and other
natural resources of the Philippines; and (2) the
operation of public utilities. That and nothing else.
Respondent Quasha avers that as of 1935 when the
Constitution was adopted, citizens of the United States
were already qualified to acquire public agricultural
lands, so that the literal text of section 5 must be
understood as permitting transfer or assignment of
private agricultural lands to Americans even without
hereditary succession. Such capacity of United States
citizens could exist only during the American
sovereignty over the Islands. For the Constitution of
the Philippines was designed to operate even beyond
the extinction of the United States sovereignty, when
the Philippines would become fully independent. That
is apparent from the provision of the original Ordinance
appended to the Constitution as originally approved
and ratified. Section 17 of said Ordinance provided
that:
(17) Citizens and corporations of the United States
shall enjoy in the Commonwealth of the Philippines all
the civil rights of the citizens and corporations,
respectively, thereof. (Emphasis supplied)
The import of paragraph (17) of the Ordinance was
confirmed and reenforced by Section 127 of
Commonwealth Act 141 (the Public Land Act of 1936)
that prescribes:
Sec. 127. During the existence and continuance of the
Commonwealth, and before the Republic of the
Philippines is established, citizens and corporations of
the United States shall enjoy the same rights granted
to citizens and corporations of the Philippines under
this Act.
thus clearly evidencing once more that equal rights of
citizens and corporations of the United States to
acquire agricultural lands of the Philippines vanished
with the advent of the Philippine Republic. Which
explains the need of introducing the "Parity
Amendment" of 1946.

It is then indubitable that the right of United States
citizens and corporations to acquire and exploit private
or public lands and other natural resources of the
Philippines was intended to expire when the
Commonwealth ended on 4 July 1946. Thereafter,
public and private agricultural lands and natural
resources of the Philippines were or became
exclusively reserved by our Constitution for Filipino
citizens. This situation lasted until the "Parity
Amendment", ratified in November, 1946, once more
reopened to United States citizens and business
enterprises owned or controlled by them the lands of
the public domain, the natural resources of the
Philippines, and the operation of the public utilities,
exclusively, but not the acquisition or exploitation of
private agricultural lands, about which not a word is
found in the Parity Amendment..Respondent Quasha's
pretenses can find no support in Article VI of the Trade
Agreement of 1955, known popularly as the LaurelLangley Agreement, establishing a sort of reciprocity
rights between citizens of the Philippines and those of
the United States, couched in the following terms:
ARTICLE VI
2. The rights provided for in Paragraph I may be
exercised, in the case of citizens of the Philippines with
respect to natural resources in the United States which
are subject to Federal control or regulations, only
through the medium of a corporation organized under
the laws of the United States or one of the States
hereof and likewise, in the case of citizens of the
United States with respect to natural resources in
the public domain in the Philippines only through the
medium of a corporation organized under the laws of
the Philippines and at least 60% of the capital stock of
which is owned or controlled by citizens of the United
States. This provision, however, does not affect the
right of citizens of the United States to acquire or own
private agricultural lands in the Philippines or citizens
of the Philippines to acquire or own land in the United
States which is subject to the jurisdiction of the United
States and not within the jurisdiction of any state and
which is not within the public domain. The Philippines
reserves the right to dispose of the public lands in
small quantities on especially favorable terms
exclusively to actual settlers or other users who are its
own citizens. The United States reserves the right to
dispose of its public lands in small quantities on
especially favorable terms exclusively to actual settlers
or other users who are its own citizens or aliens who
have declared their intention to become citizens. Each
party reserves the right to limit the extent to which
aliens may engage in fishing, or engage in enterprises
which furnish communications services and air or
water transport. The United States also reserves the

right to limit the extent to which aliens may own land in
its outlying territories and possessions, but the
Philippines will extend to American nationals who are
residents of any of those outlying territories and
possessions only the same rights, with respect to,
ownership of lands, which are granted therein to
citizens of the Philippines. The rights provided for in
this paragraph shall not, however, be exercised by
either party so as to derogate from the rights
previously acquired by citizens or corporations or
other party.
The words used in Article VI to the effect that
... This provision does not affect the right of citizen of
the United States to acquire or own private agricultural
lands in the Philippines, or citizens of the Philippines to
acquire or own land in the United States which is
subject to the jurisdiction of the United States ...
must be understood as referring to rights of United
States citizens to acquire or own private agricultural
lands before the independence of the Philippines since
the obvious purpose of the article was to establish
rights of United States and Filipino citizens on a basis
of reciprocity. For as already shown, no such right to
acquire or own private agricultural lands in the
Philippines has existed since the independent
Republic was established in 1946. The quoted
expressions of the Laurel-Langley Agreement could
not expand the rights of United States citizens as to
public agricultural lands of the Philippines to private
lands, when the Parity Amendment and the
Constitution authorize such United States citizens and
business
entities
only
to
acquire
and
exploit agricultural lands of the public domain. If the
reopening of only public lands to Americans required a
Constitutional Amendment, how could a mere Trade
Agreement, like the Laurel-Langley, by itself enable
United States citizens to acquire and exploit private
agricultural lands, a right that ceased to exist since the
independence of the Philippines by express
prescription of our Constitution?
We turn to the second issue involved in this appeal:
On the assumption that respondent Quasha's
purchase of the private agricultural land involved is
valid and constitutional, will or will not his rights expire
on 3 July 1974?
For the solution of this problem, We again turn to the
"Parity Amendment". Under it,

Notwithstanding the provision of section one, Article
Thirteen, and section eight, Article Fourteen, of the
foregoing Constitution, during the effectivity of the
Executive Agreement entered into by the President of
the Philippines with the President of the United
States on the fourth of July, nineteen hundred and
forty-six, pursuant to the provisions of Commonwealth
Act Numbered Seven hundred and thirty-three, but in
no case to extend beyond the third of July, nineteen
hundred and seventy-four, the disposition, exploitation,
development, and utilization of all agricultural, timber,
and mineral lands of the public domain, waters,
minerals, coals, petroleum, and other mineral oils, all
forces and sources of potential energy, and other
natural resources of the Philippines, and the operation
of public utilities, shall, if open to any person, be open
to citizens of the United states and to all forms of
indirectly, by citizens of the United States in the same
manner as to, and under the same conditions imposed
upon, citizens of the Philippines or corporations or
Philippines. (Emphasis supplied)
Respondent Quasha argues that the limitative period

set in the "Parity Amendment" should be understood
not to be applicable to the disposition, or correlative
acquisition, of alienable agricultural lands of the public
domain, since such lands can be acquired in full
ownership, in which event, under Article 428 of the
Civil Code of Philippines
It is easy to see that all exceptional rights conferred

upon United States citizens and business entities
owned or controlled by them, under the Amendment,
are subject to one and the same resolutory term or
period: they are to last "during the effectivity of the
Executive Agreement entered into on 4 July 1946",
"but in no case to extend beyond the, third of July,
1974". None of the privileges conferred by the "Parity
Amendment" are excepted from this resolutory period.
Strangely enough, this argument ignores the

provisions of the "Parity Amendment" prescribing that
the disposition and exploitation, etc. of agricultural
lands of the public domain are in no case to extend
beyond the third of July 1974. This limitation already
existed when Quasha in 1954 purchased the Forbes
Park property, and the acquisition was subject to it. If
the Philippine government can not dispose of its
alienable public agricultural lands beyond that date
under the "Parity Amendment", then, logically, the
Constitution, as modified by the Amendment, only
authorizes either of two things: (a) alienation or
transfer of rights less than ownership or (b) a resoluble
ownership that will be extinguished not later than the
specified period. For the Philippine government to
dispose of the public agricultural land for an indefinite
time would necessarily be in violation of the
Constitution. There is nothing in the Civil Law of this
country that is repugnant to the existence of ownership
for a limited duration; thus the title of a "reservista"
(ascendant inheriting from a descendant) in reserva
troncal, under Article 891 of the Civil Code of the
Philippines, is one such owner, holding title and
dominion, although under condition subsequent; he
can do anything that a genuine owner can do, until his
death supervenes with "reservataries surviving", i.e.,
relatives within the third degree (Edroso vs. Sablan, 25
Phil. 295; Lunsod vs. Ortega, 46 Phil. 661, 695). In
truth, respondent himself invokes Article 428 of the
Civil Code to the effect that "the owner has the right to
enjoy and dispose of a thing, without other limitations
This limitation of time is in conformity with Article X,

Section 2, of the Philippine Trade Act of 1946, as
embodied in Commonwealth Act No. 733. It says:
ARTICLE X
2. This Agreement shall have no effect after 3 July
1974. It may be terminated by either the United States
or the Philippines at any time, upon not less than five
years' written notice. It the President of the United
States or the President of the Philippines determines
and proclaims that the other Country has adopted or
applied measures or practices which would operate to
nullify or impair any right or obligation provided for in
this Agreement, then the Agreement may be
terminated upon not less than six months' written
notice.
ART, 428. The owner has the right to enjoy and

dispose of a thing, without other limitations than those
established by law.
The owner has also a right of action against the holder
and possessor of the thing in order to recover it.
and that since any period or condition which produces
the effect of loss or deprivation of valuable rights is in
derogation of due process of law, there must be "a law
which expressly and indubitably limits and
extinguishes the ownership of non-citizens over private
agricultural lands situated in the Philippines validly
acquired under the law existing at the time of
acquisition."

than those established by law". One such limitation is
the period fixed on the "Parity Amendment", which
forms part of the Constitution, the highest law of the
land. How then can he complain of deprivation of due
process?
That the legislature has not yet determined what is to
be done with the property when the respondent's rights
thereto terminate on 3 July 1974 is irrelevant to the
issues in this case. The law, making power has until
that date full power to adopt the apposite measures,
and it is expected to do so.
FOR THE FOREGOING REASONS, the appealed

decision of the Court of First Instance of Rizal is
hereby reversed and set aside; and judgment is
rendered declaring that, under the "Parity Amendment"
to our Constitution, citizens of the United States and
corporations and business enterprises owned or
controlled by them can not acquire and own, save in
cases of hereditary succession, private agricultural
lands in the Philippines and that all other rights
acquired by them under said amendment will expire on
3 July 1974
HULST v. RP BUILDERS, INC.
One last point: under the "Parity Amendment" the

disposition, exploitation, development and utilization of
lands of the public domain, and other natural
resources of the Philippines, and the operation of
public utilities are open

SUPREME COURT
Manila
THIRD DIVISION
to citizens of the United States and to all forms of

business enterprises owned or controlled, directly or
indirectly, by citizens of the United States
while under the Philippine Constitution (section 1,
Article XIII, and section 8, Article XIV) utilization of
such lands, natural resources and public utilities are
open to citizens of the Philippines or to
G.R. No. 156364
September 3, 2007
JACOBUS BERNHARD HULST, petitioner,

vs.
PR BUILDERS, INC., respondent.
corporations or associations at least sixty per centum

of the capital of which is owned by such citizens ...
DECISION
AUSTRIA-MARTINEZ, J.:
It is thus apparent that American business enterprises

are more favored than Philippine organization during
the period of parity in that, first, they need not be
owned by American citizens up to 60% of their capital;
all that is required is that they be controlled by United
States citizens, a control that is attained by ownership
of only 51% a of the capital stock; and second, that the
control by United States citizens may be direct
or indirect (voting trusts, pyramiding, etc.) which
indirect control is not allowed in the case of Philippine
nationals.
That Filipinos should be placed under the so-called
Parity in a more disadvantageous position than United
States citizens in the disposition, exploitation,
development and utilization of the public lands, forests,
mines, oils and other natural resources of their own
country is certainly rank injustice and inequity that
warrants a most strict interpretation of the "Parity
Amendment", in order that the dishonorable inferiority
in which Filipinos find themselves at present in the
land of their ancestors should not be prolonged more
than is absolutely necessary.
Before the Court is a Petition for Review

on Certiorari under Rule 45 of the Revised Rules of
Court assailing the Decision1 dated October 30, 2002
of the Court of Appeals (CA) in CA-G.R. SP No.
60981.
The facts:
Jacobus Bernhard Hulst (petitioner) and his spouse
Ida Johanna Hulst-Van Ijzeren (Ida), Dutch nationals,
entered into a Contract to Sell with PR Builders, Inc.
(respondent), for the purchase of a 210-sq m
residential unit in respondent's townhouse project
in Barangay Niyugan, Laurel, Batangas.
When respondent failed to comply with its verbal
promise to complete the project by June 1995, the
spouses Hulst filed before the Housing and Land Use
Regulatory Board (HLURB) a complaint for rescission
of contract with interest, damages and attorney's fees,
docketed as HLRB Case No. IV6-071196-0618.

On April 22, 1997, HLURB Arbiter Ma. Perpetua Y.
Aquino (HLURB Arbiter) rendered a Decision 2 in favor
of spouses Hulst, the dispositive portion of which
reads:
On March 23, 1999, the Sheriff levied on respondent's

15 parcels of land covered by 13 Transfer Certificates
of
Title
(TCT)9 in Barangay Niyugan,
Laurel,
10
Batangas.
WHEREFORE, premises considered, judgment is

hereby rendered in favor of the complainant,
rescinding the Contract to Sell and ordering
respondent to:
In a Notice of Sale dated March 27, 2000, the Sheriff

set the public auction of the levied properties on April
28, 2000 at 10:00 a.m..11
1) Reimburse complainant the sum of P3,187,500.00,

representing the purchase price paid by the
complainants to P.R. Builders, plus interest thereon at
the rate of twelve percent (12%) per annum from the
time complaint was filed;
2) Pay complainant the sum of P297,000.00 as actual
damages;
3) Pay complainant the sum of P100,000.00 by way of
moral damages;
4) Pay complainant the sum of P150,000.00 as
exemplary damages;
5) P50,000.00 as attorney's fees and for other litigation
expenses; and
6) Cost of suit.
SO ORDERED.3
Meanwhile, spouses Hulst divorced. Ida assigned her
rights over the purchased property to petitioner.4 From
then on, petitioner alone pursued the case.
On August 21, 1997, the HLURB Arbiter issued a Writ
of Execution addressed to the Ex-Officio Sheriff of the
Regional Trial Court of Tanauan, Batangas directing
the latter to execute its judgment.5
On April 13, 1998, the Ex-Officio Sheriff proceeded to
implement the Writ of Execution. However, upon
complaint of respondent with the CA on a Petition
for Certiorari and Prohibition, the levy made by the
Sheriff was set aside, requiring the Sheriff to levy first
on respondent's personal properties.6 Sheriff Jaime B.
Ozaeta (Sheriff) tried to implement the writ as directed
but the writ was returned unsatisfied.7
On January 26, 1999, upon petitioner's motion, the
HLURB Arbiter issued an Alias Writ of Execution.8
Two days before the scheduled public auction or on

April 26, 2000, respondent filed an Urgent Motion to
Quash Writ of Levy with the HLURB on the ground that
the Sheriff made an overlevy since the aggregate
appraised value of the levied properties at P6,500.00
per sq m is P83,616,000.00, based on the Appraisal
Report12 of Henry Hunter Bayne Co., Inc. dated
December 11, 1996, which is over and above the
judgment award.13
At 10:15 a.m. of the scheduled auction date of April 28,
2000, respondent's counsel objected to the conduct of
the public auction on the ground that respondent's
Urgent Motion to Quash Writ of Levy was pending
resolution. Absent any restraining order from the
HLURB, the Sheriff proceeded to sell the 15 parcels of
land. Holly Properties Realty Corporation was the
winning bidder for all 15 parcels of land for the total
amount ofP5,450,653.33. The sum of P5,313,040.00
was turned over to the petitioner in satisfaction of the
judgment award after deducting the legal fees.14
At 4:15 p.m. of the same day, while the Sheriff was at
the HLURB office to remit the legal fees relative to the
auction sale and to submit the Certificates of Sale 15 for
the signature of HLURB Director Belen G. Ceniza
(HLURB Director), he received the Order dated April
28, 2000 issued by the HLURB Arbiter to suspend the
proceedings on the matter.16
Four months later, or on August 28, 2000, the HLURB
Arbiter and HLURB Director issued an Order setting
aside the sheriff's levy on respondent's real
properties,17 reasoning as follows:
While we are not making a ruling that the fair market
value of the levied properties is PhP6,500.00 per
square meter (or an aggregate value of
PhP83,616,000.00) as indicated in the Hunter Baynes
Appraisal Report, we definitely cannot agree with the
position of the Complainants and the Sheriff that the
aggregate value of the 12,864.00-square meter levied
properties is only around PhP6,000,000.00. The
disparity between the two valuations are [sic] so
egregious that the Sheriff should have looked into the
matter first before proceeding with the execution sale

of the said properties, especially when the auction sale
proceedings
was
seasonably
objected
by
Respondent's counsel, Atty. Noel Mingoa. However,
instead of resolving first the objection timely posed by
Atty. Mingoa, Sheriff Ozaete totally disregarded the
objection raised and, posthaste, issued the
corresponding Certificate of Sale even prior to the
payment of the legal fees (pars. 7 & 8, Sheriff's
Return).
consideration not only the value of the properties as

indicated in their respective tax declarations, but also
all the other determinants at arriving at a fair market
value, namely: the cost of acquisition, the current value
of like properties, its actual or potential uses, and in
the particular case of lands, their size, shape or
location, and the tax declarations thereon.
While we agree with the Complainants that what is

material in an execution sale proceeding is the amount
for which the properties were bidded and sold during
the public auction and that, mere inadequacy of the
price is not a sufficient ground to annul the sale, the
court is justified to intervene where the inadequacy of
the price shocks the conscience (Barrozo vs.
Macaraeg, 83 Phil. 378). The difference between
PhP83,616,000.00
and
Php6,000,000.00
is
PhP77,616,000.00 and it definitely invites our attention
to look into the proceedings had especially so when
there was only one bidder, the HOLLY PROPERTIES
REALTY CORPORATION represented by Ma,
Chandra Cacho (par. 7, Sheriff's Return) and the
auction sale proceedings was timely objected by
Respondent's counsel (par. 6, Sheriff's Return) due to
the pendency of the Urgent Motion to Quash the Writ
of Levy which was filed prior to the execution sale.
A motion for reconsideration being a prohibited

pleading under Section 1(h), Rule IV of the 1996
HLURB Rules and Procedure, petitioner filed a Petition
for Certiorari and Prohibition with the CA on
September 27, 2000.
Besides, what is at issue is not the value of the

subject properties as determined during the
auction sale, but the determination of the value of
the properties levied upon by the Sheriff taking
into consideration Section 9(b) of the 1997 Rules
of Civil Procedure x x x.
xxxx
It is very clear from the foregoing that, even during
levy, the Sheriff has to consider the fair market value of
the properties levied upon to determine whether they
are sufficient to satisfy the judgment, and any levy in
excess of the judgment award is void (Buan v. Court of
Appeals, 235 SCRA 424).
x x x x18 (Emphasis supplied).
The dispositive portion of the Order reads:
WHEREFORE, the levy on the subject properties
made by the Ex-Officio Sheriff of the RTC of Tanauan,
Batangas, is hereby SET ASIDE and the said Sheriff is
hereby directed to levy instead Respondent's real
properties that are reasonably sufficient to enforce its
final and executory judgment, this time, taking into
SO ORDERED.19
On October 30, 2002, the CA rendered herein assailed

Decision20 dismissing the petition. The CA held that
petitioner's insistence that Barrozo v. Macaraeg21 does
not apply since said case stated that "when there is a
right to redeem inadequacy of price should not be
material" holds no water as what is obtaining in this
case is not "mere inadequacy," but an inadequacy that
shocks the senses; that Buan v. Court of
Appeals22 properly applies since the questioned levy
covered 15 parcels of land posited to have an
aggregate value of P83,616,000.00 which shockingly
exceeded
the
judgment
debt
of
only
around P6,000,000.00.
Without filing a motion for reconsideration, 23 petitioner
took the present recourse on the sole ground that:
THE HONORABLE COURT OF APPEALS GRAVELY
ERRED IN AFFIRMING THE ARBITER'S ORDER
SETTING ASIDE THE LEVY MADE BY THE SHERIFF
ON THE SUBJECT PROPERTIES.24
Before resolving the question whether the CA erred in
affirming the Order of the HLURB setting aside the
levy made by the sheriff, it behooves this Court to
address a matter of public and national importance
which completely escaped the attention of the HLURB
Arbiter and the CA: petitioner and his wife are foreign
nationals who are disqualified under the Constitution
from owning real property in their names.
Section 7 of Article XII of the 1987 Constitution
provides:
Sec. 7. Save in cases of hereditary succession, no
private lands shall be transferred or conveyed
except
to
individuals,
corporations,
or
associations qualified to acquire or hold lands of
the public domain. (Emphasis supplied).

The capacity to acquire private land is made
dependent upon the capacity to acquire or hold lands
of the public domain. Private land may be transferred
or conveyed only to individuals or entities "qualified to
acquire lands of the public domain." The 1987
Constitution reserved the right to participate in the
disposition, exploitation, development and utilization of
lands of the public domain for Filipino citizens 25 or
corporations at least 60 percent of the capital of which
is owned by Filipinos.26 Aliens, whether individuals or
corporations, have been disqualified from acquiring
public lands; hence, they have also been disqualified
from acquiring private lands.27
Since petitioner and his wife, being Dutch nationals,
are proscribed under the Constitution from acquiring
and owning real property, it is unequivocal that the
Contract to Sell entered into by petitioner together with
his wife and respondent is void. Under Article 1409 (1)
and (7) of the Civil Code, all contracts whose cause,
object or purpose is contrary to law or public policy and
those expressly prohibited or declared void by law are
inexistent and void from the beginning. Article 1410 of
the same Code provides that the action or defense for
the declaration of the inexistence of a contract does
not prescribe. A void contract is equivalent to nothing;
it produces no civil effect.28It does not create, modify or
extinguish a juridical relation.29
Generally, parties to a void agreement cannot expect
the aid of the law; the courts leave them as they are,
because they are deemed in pari delicto or "in equal
fault."30 In pari delicto is "a universal doctrine which
holds that no action arises, in equity or at law, from an
illegal contract; no suit can be maintained for its
specific performance, or to recover the property
agreed to be sold or delivered, or the money agreed to
be paid, or damages for its violation; and where the
parties are in pari delicto, no affirmative relief of any
kind will be given to one against the other."31
This rule, however, is subject to exceptions 32 that
permit the return of that which may have been given
under a void contract to: (a) the innocent party (Arts.
1411-1412, Civil Code);33 (b) the debtor who pays
usurious interest (Art. 1413, Civil Code); 34 (c) the
party repudiating the void contract before the
illegal purpose is accomplished or before damage
is caused to a third person and if public interest is
subserved by allowing recovery (Art. 1414, Civil
Code);35 (d) the incapacitated party if the interest of
justice so demands (Art. 1415, Civil Code); 36 (e) the
party for whose protection the prohibition by law is
intended if the agreement is not illegal per se but
merely prohibited and if public policy would be
enhanced by permitting recovery (Art. 1416, Civil

Code);37 and (f) the party for whose benefit the law has
been intended such as in price ceiling laws (Art. 1417,
Civil Code)38 and labor laws (Arts. 1418-1419, Civil
Code).39
It is significant to note that the agreement executed by
the parties in this case is a Contract to Sell and not a
contract of sale. A distinction between the two is
material in the determination of when ownership is
deemed to have been transferred to the buyer or
vendee and, ultimately, the resolution of the question
on whether the constitutional proscription has been
breached.
In a contract of sale, the title passes to the buyer upon
the delivery of the thing sold. The vendor has lost and
cannot recover the ownership of the property until and
unless the contract of sale is itself resolved and set
aside.40 On the other hand, a contract to sell is akin to
a conditional sale where the efficacy or obligatory force
of the vendor's obligation to transfer title is
subordinated to the happening of a future and
uncertain event, so that if the suspensive condition
does not take place, the parties would stand as if the
conditional obligation had never existed. 41 In other
words, in a contract to sell, the prospective seller
agrees to transfer ownership of the property to the
buyer upon the happening of an event, which normally
is the full payment of the purchase price. But even
upon the fulfillment of the suspensive condition,
ownership does not automatically transfer to the buyer.
The prospective seller still has to convey title to the
prospective buyer by executing a contract of absolute
sale.42
Since the contract involved here is a Contract to Sell,
ownership has not yet transferred to the petitioner
when he filed the suit for rescission. While the intent to
circumvent the constitutional proscription on aliens
owning real property was evident by virtue of the
execution of the Contract to Sell, such violation of the
law did not materialize because petitioner caused the
rescission of the contract before the execution of the
final deed transferring ownership.
Thus, exception (c) finds application in this case.
Under Article 1414, one who repudiates the agreement
and demands his money before the illegal act has
taken place is entitled to recover. Petitioner is therefore
entitled to recover what he has paid, although the
basis of his claim for rescission, which was granted by
the HLURB, was not the fact that he is not allowed to
acquire private land under the Philippine Constitution.
But petitioner is entitled to the recovery only of the

amount of P3,187,500.00, representing the purchase
price paid to respondent. No damages may be
recovered on the basis of a void contract; being
nonexistent, the agreement produces no juridical tie
between the parties involved.43 Further, petitioner is
not entitled to actual as well as interests
thereon,44 moral and exemplary damages and
attorney's fees.
The Court takes into consideration the fact that the
HLURB Decision dated April 22, 1997 has long been
final and executory. Nothing is more settled in the law
than that a decision that has acquired finality becomes
immutable and unalterable and may no longer be
modified in any respect even if the modification is
meant to correct erroneous conclusions of fact or law
and whether it was made by the court that rendered it
or by the highest court of the land. 45 The only
recognized exceptions to the general rule are the
correction of clerical errors, the so-called nunc pro
tunc entries which cause no prejudice to any party,
void judgments, and whenever circumstances
transpire after the finality of the decision rendering its
execution unjust and inequitable. 46 None of the
exceptions is present in this case. The HLURB
decision cannot be considered a void judgment, as it
was rendered by a tribunal with jurisdiction over the
subject matter of the complaint.47
Ineluctably, the HLURB Decision resulted in the unjust
enrichment of petitioner at the expense of respondent.
Petitioner received more than what he is entitled to
recover under the circumstances.
Article 22 of the Civil Code which embodies the
maxim, nemo
ex
alterius
incommode
debet
lecupletari (no man ought to be made rich out of
another's injury), states:
Art. 22. Every person who through an act of
performance by another, or any other means, acquires
or comes into possession of something at the expense
of the latter without just or legal ground, shall return
the same to him.
The above-quoted article is part of the chapter of the
Civil Code on Human Relations, the provisions of
which were formulated as basic principles to be
observed for the rightful relationship between human
beings and for the stability of the social order;
designed to indicate certain norms that spring from the
fountain of good conscience; guides for human
conduct that should run as golden threads through
society to the end that law may approach its supreme
ideal which is the sway and dominance of
justice.48 There is unjust enrichment when a person

unjustly retains a benefit at the loss of another, or
when a person retains money or property of another
against the fundamental principles of justice, equity
and good conscience.49
A sense of justice and fairness demands that petitioner
should not be allowed to benefit from his act of
entering into a contract to sell that violates the
constitutional proscription.
This is not a case of equity overruling or supplanting a
positive provision of law or judicial rule. Rather, equity
is exercised in this case "as the complement of legal
jurisdiction [that] seeks to reach and to complete
justice where courts of law, through the inflexibility of
their rules and want of power to adapt their judgments
to the special circumstances of cases, are incompetent
to do so."50
The purpose of the exercise of equity jurisdiction in this
case is to prevent unjust enrichment and to ensure
restitution. Equity jurisdiction aims to do complete
justice in cases where a court of law is unable to adapt
its judgments to the special circumstances of a case
because of the inflexibility of its statutory or legal
jurisdiction.51
The sheriff delivered to petitioner the amount
of P5,313,040.00 representing the net proceeds
(bidded amount isP5,450,653.33) of the auction sale
after deducting the legal fees in the amount
of P137,613.33.52 Petitioner
is
only
entitled
to P3,187,500.00, the amount of the purchase price of
the real property paid by petitioner to respondent
under the Contract to Sell. Thus, the Court in the
exercise of its equity jurisdiction may validly order
petitioner
to
return
the
excess
amount
of P2,125,540.00.
The Court shall now proceed to resolve the single
issue raised in the present petition: whether the CA
seriously erred in affirming the HLURB Order setting
aside the levy made by the Sheriff on the subject
properties.
Petitioner avers that the HLURB Arbiter and Director
had no factual basis for pegging the fair market value
of the levied properties at P6,500.00 per sq m
or P83,616,000.00; that reliance on the appraisal
report was misplaced since the appraisal was based
on the value of land in neighboring developed
subdivisions and on the assumption that the residential
unit appraised had already been built; that the Sheriff
need not determine the fair market value of the subject

properties before levying on the same since what is
material is the amount for which the properties were
bidded and sold during the public auction; that the
pendency of any motion is not a valid ground for the
Sheriff to suspend the execution proceedings and, by
itself, does not have the effect of restraining the Sheriff
from proceeding with the execution.
Respondent, on the other hand, contends that while it
is true that the HLURB Arbiter and Director did not
categorically state the exact value of the levied
properties, said properties cannot just amount
to P6,000,000.00; that the HLURB Arbiter and Director
correctly held that the value indicated in the tax
declaration is not the sole determinant of the value of
the property.
The petition is impressed with merit.
If the judgment is for money, the sheriff or other
authorized officer must execute the same pursuant to
the provisions of Section 9, Rule 39 of the Revised
Rules of Court, viz:
Sec. 9. Execution of judgments for money, how
enforced.
(a) Immediate payment on demand. - The officer shall
enforce an execution of a judgment for money by
demanding from the judgment obligor the immediate
payment of the full amount stated in the writ of
execution and all lawful fees. x x x
(b) Satisfaction by levy. - If the judgment obligor
cannot pay all or part of the obligation in cash, certified
bank check or other mode of payment acceptable to
the judgment obligee, the officer shall levy upon the
properties of the judgment obligor of every kind
and nature whatsoever which may be disposed of
for value and not otherwise exempt from
execution, giving the latter the option to immediately
choose which property or part thereof may be levied
upon, sufficient to satisfy the judgment. If the judgment
obligor does not exercise the option, the officer shall
first levy on the personal properties, if any, and then on
the real properties if the personal properties are
insufficient to answer for the judgment.
The sheriff shall sell only a sufficient portion of the
personal or real property of the judgment obligor
which has been levied upon.
When there is more property of the judgment
obligor than is sufficient to satisfy the judgment
and lawful fees, he must sell only so much of the
personal or real property as is sufficient to satisfy

the judgment and lawful fees.
Real property, stocks, shares, debts, credits, and
other personal property, or any interest in either real or
personal property, may be levied upon in like
manner and with like effect as under a writ of
attachment (Emphasis supplied).53
Thus, under Rule 39, in executing a money judgment
against the property of the judgment debtor, the sheriff
shall levy on all property belonging to the judgment
debtor as is amply sufficient to satisfy the judgment
and costs, and sell the same paying to the judgment
creditor so much of the proceeds as will satisfy the
amount of the judgment debt and costs. Any excess in
the proceeds shall be delivered to the judgment debtor
unless otherwise directed by the judgment or order of
the court.54
Clearly, there are two stages in the execution of money
judgments. First, the levy and then the execution sale.
Levy has been defined as the act or acts by which an
officer sets apart or appropriates a part or the whole of
a judgment debtor's property for the purpose of
satisfying the command of the writ of execution. 55 The
object of a levy is to take property into the custody of
the law, and thereby render it liable to the lien of the
execution, and put it out of the power of the judgment
debtor to divert it to any other use or purpose. 56
On the other hand, an execution sale is a sale by a
sheriff or other ministerial officer under the authority of
a writ of execution of the levied property of the
debtor.57
In the present case, the HLURB Arbiter and Director
gravely abused their discretion in setting aside the levy
conducted by the Sheriff for the reason that the auction
sale conducted by the sheriff rendered moot and
academic the motion to quash the levy. The HLURB
Arbiter lost jurisdiction to act on the motion to quash
the levy by virtue of the consummation of the auction
sale. Absent any order from the HLURB suspending
the auction sale, the sheriff rightfully proceeded with
the auction sale. The winning bidder had already paid
the winning bid. The legal fees had already been
remitted to the HLURB. The judgment award had
already been turned over to the judgment creditor.
What was left to be done was only the issuance of the
corresponding certificates of sale to the winning bidder.
In fact, only the signature of the HLURB Director for
that purpose was needed58 a purely ministerial act.

A purely ministerial act or duty is one which an officer
or tribunal performs in a given state of facts, in a
prescribed manner, in obedience to the mandate of a
legal authority, without regard for or the exercise of his
own judgment upon the propriety or impropriety of the
act done. If the law imposes a duty upon a public
officer and gives him the right to decide how or when
the duty shall be performed, such duty is discretionary
and not ministerial. The duty is ministerial only when
the discharge of the same requires neither the
exercise of official discretion nor judgment.59In the
present case, all the requirements of auction sale
under the Rules have been fully complied with to
warrant the issuance of the corresponding certificates
of sale.
And even if the Court should go into the merits of the
assailed Order, the petition is meritorious on the
following grounds:
Firstly, the reliance of the HLURB Arbiter and Director,
as well as the CA, on Barrozo v. Macaraeg60 and Buan
v. Court of Appeals61 is misplaced.
The HLURB and the CA misconstrued the Court's
pronouncements
in Barrozo. Barrozo involved
a
judgment debtor who wanted to repurchase properties
sold at execution beyond the one-year redemption
period. The statement of the Court in Barrozo, that
"only where such inadequacy shocks the conscience
the courts will intervene," is at best a mere obiter
dictum. This declaration should be taken in the context
of the other declarations of the Court in Barrozo, to wit:
Another point raised by appellant is that the price paid
at the auction sale was so inadequate as to shock the
conscience of the court. Supposing that this issue is
open even after the one-year period has expired and
after the properties have passed into the hands of third
persons who may have paid a price higher than the
auction sale money, the first thing to consider is that
the stipulation contains no statement of the reasonable
value of the properties; and although defendant'
answer avers that the assessed value wasP3,960 it
also avers that their real market value was P2,000
only. Anyway, mere inadequacy of price which
was the complaint' allegation is not sufficient
ground to annul the sale. It is only where such
inadequacy shocks the conscience that the courts
will intervene. x x x Another consideration is that the
assessed value being P3,960 and the purchase price
being in effect P1,864 (P464 sale price plusP1,400
mortgage lien which had to be discharged) the
conscience is not shocked upon examining the prices
paid in the sales in National Bank v. Gonzales, 45
Phil., 693 and Guerrero v. Guerrero, 57 Phil., 445,

sales which were left undisturbed by this Court.
Furthermore, where there is the right to redeem as
in this case inadequacy of price should not be
material because the judgment debtor may reacquire the property or else sell his right to
redeem and thus recover any loss he claims to
have suffered by reason of the price obtained at
the execution sale.
x x x x (Emphasis supplied).62
In other words, gross inadequacy of price does not
nullify an execution sale. In an ordinary sale, for
reason of equity, a transaction may be invalidated on
the ground of inadequacy of price, or when such
inadequacy shocks one's conscience as to justify the
courts to interfere; such does not follow when the law
gives the owner the right to redeem as when a sale is
made at public auction,63 upon the theory that the
lesser the price, the easier it is for the owner to effect
redemption.64 When there is a right to redeem,
inadequacy of price should not be material because
the judgment debtor may re-acquire the property or
else sell his right to redeem and thus recover any loss
he claims to have suffered by reason of the price
obtained at the execution sale. 65 Thus, respondent
stood to gain rather than be harmed by the low sale
value of the auctioned properties because it possesses
the right of redemption. More importantly, the subject
matter in Barrozo is the auction sale, not the levy
made by the Sheriff.
The Court does not sanction the piecemeal
interpretation of a decision. To get the true intent and
meaning of a decision, no specific portion thereof
should be isolated and resorted to, but the decision
must be considered in its entirety.66
As regards Buan, it is cast under an entirely different
factual milieu. It involved the levy on two parcels of
land owned by the judgment debtor; and the sale at
public auction of one was sufficient to fully satisfy the
judgment, such that the levy and attempted execution
of the second parcel of land was declared void for
being in excess of and beyond the original judgment
award granted in favor of the judgment creditor.
In the present case, the Sheriff complied with the
mandate of Section 9, Rule 39 of the Revised Rules of
Court, to "sell only a sufficient portion" of the levied
properties "as is sufficient to satisfy the judgment and
the lawful fees." Each of the 15 levied properties was
successively bidded upon and sold, one after the other

until the judgment debt and the lawful fees were fully
satisfied. Holly Properties Realty Corporation
successively bidded upon and bought each of the
levied properties for the total amount of P5,450,653.33
in full satisfaction of the judgment award and legal
fees.67
Secondly, the Rules of Court do not require that the
value of the property levied be exactly the same as the
judgment debt; it can be less or more than the amount
of debt. This is the contingency addressed by Section
9, Rule 39 of the Rules of Court. In the levy of
property, the Sheriff does not determine the exact
valuation of the levied property. Under Section 9, Rule
39, in conjunction with Section 7, Rule 57 of the Rules
of Court, the sheriff is required to do only two specific
things to effect a levy upon a realty: (a) file with the
register of deeds a copy of the order of execution,
together with the description of the levied property and
notice of execution; and (b) leave with the occupant of
the property copy of the same order, description and
notice.68 Records do not show that respondent alleged
non-compliance by the Sheriff of said requisites.
Thirdly, in determining what amount of property is
sufficient out of which to secure satisfaction of the
execution, the Sheriff is left to his own judgment. He
may exercise a reasonable discretion, and must
exercise the care which a reasonably prudent person
would
exercise
under
like
conditions
and
circumstances, endeavoring on the one hand to obtain
sufficient property to satisfy the purposes of the writ,
and on the other hand not to make an unreasonable
and unnecessary levy.69 Because it is impossible to
know the precise quantity of land or other property
necessary to satisfy an execution, the Sheriff should
be allowed a reasonable margin between the value of
the property levied upon and the amount of the
execution; the fact that the Sheriff levies upon a little
more than is necessary to satisfy the execution does
not render his actions improper.70 Section 9, Rule 39,
provides adequate safeguards against excessive
levying. The Sheriff is mandated to sell so much only
of such real property as is sufficient to satisfy the
judgment and lawful fees.
In the absence of a restraining order, no error, much
less abuse of discretion, can be imputed to the Sheriff
in proceeding with the auction sale despite the pending
motion to quash the levy filed by the respondents with
the HLURB. It is elementary that sheriffs, as officers
charged with the delicate task of the enforcement
and/or implementation of judgments, must, in the
absence of a restraining order, act with considerable
dispatch so as not to unduly delay the administration of
justice; otherwise, the decisions, orders, or other

processes of the courts of justice and the like would be
futile.71 It is not within the jurisdiction of the Sheriff to
consider, much less resolve, respondent's objection to
the continuation of the conduct of the auction sale. The
Sheriff has no authority, on his own, to suspend the
auction sale. His duty being ministerial, he has no
discretion to postpone the conduct of the auction sale.
Finally, one who attacks a levy on the ground of
excessiveness carries the burden of sustaining that
contention.72In the determination of whether a levy of
execution is excessive, it is proper to take into
consideration encumbrances upon the property, as
well as the fact that a forced sale usually results in a
sacrifice; that is, the price demanded for the property
upon a private sale is not the standard for determining
the excessiveness of the levy.73
Here, the HLURB Arbiter and Director had no sufficient
factual basis to determine the value of the levied
property. Respondent only submitted an Appraisal
Report, based merely on surmises. The Report was
based on the projected value of the townhouse project
after it shall have been fully developed, that is, on the
assumption that the residential units appraised had
already been built. The Appraiser in fact made this
qualification in its Appraisal Report: "[t]he property
subject of this appraisal has not been constructed. The
basis of the appraiser is on the existing model
units."74 Since it is undisputed that the townhouse
project did not push through, the projected value did
not become a reality. Thus, the appraisal value cannot
be equated with the fair market value. The Appraisal
Report is not the best proof to accurately show the
value of the levied properties as it is clearly selfserving.
Therefore, the Order dated August 28, 2000 of HLURB
Arbiter Aquino and Director Ceniza in HLRB Case No.
IV6-071196-0618 which set aside the sheriff's levy on
respondent's real properties, was clearly issued with
grave abuse of discretion. The CA erred in affirming
said Order.
WHEREFORE, the instant petition is GRANTED. The
Decision dated October 30, 2002 of the Court of
Appeals
in
CA-G.R.
SP
No.
60981
is REVERSED and SET ASIDE. The Order dated
August 28, 2000 of HLURB Arbiter Ma. Perpetua Y.
Aquino and Director Belen G. Ceniza in HLRB Case
No.
IV6-071196-0618
is
declared NULL and
VOID. HLURB Arbiter Aquino and Director Ceniza are
directed to issue the corresponding certificates of sale
in favor of the winning bidder, Holly Properties Realty

Corporation. Petitioner is ordered to return to
respondent the amount of P2,125,540.00, without
interest, in excess of the proceeds of the auction sale
delivered to petitioner. After the finality of herein
judgment, the amount of P2,125,540.00 shall earn 6%
interest until fully paid.
Eddie Tamondong for respondent Joaquin Teng

Queen Tan.
Carlos Buenviaje for respondent Tan Teng Bio.
Arnulfo L. Perete for respondent Ong Shi (To O. Hiap).
SO ORDERED.
PLANA, J.:
Review on certiorari of the order of the former Court of
First Instance of Sorsogon dismissing petitioner's
action for annulment of contract with damages.
In 1938, petitioner Filomena Gerona de Castro sold a
1,258 sq. m. residential lot in Bulan, Sorsogon to Tan
Tai, a Chinese. In 1956, Tan Tai died leaving herein
respondents his widow, To O. Hiap, and children
Joaquin Teng Queen Tan, Tan Teng Bio, Dolores Tan
and Rosario Tan Hua Ing.
Before the death of Tan Tai or on August 11, 1956, one
of his sons, Joaquin, became a naturalized Filipino. Six
years after Tan Tai's death, or on November 18, 1962,
his heirs executed an extra-judicial settlement of estate
with sale, whereby the disputed lot in its entirety was
alloted to Joaquin.
On July 15, 1968, petitioner commenced suit against
the heirs of Tan Tai for annulment of the sale for
alleged violation of the 1935 Constitution prohibiting
the sale of land to aliens.
DE CASTRO v. JOAQUIN TENG QUEEN TAN

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-31956
April 30, 1984
FILOMENA GERONA DE CASTRO, petitioner,

vs.
JOAQUIN TENG QUEEN TAN, TAN TENG BIO,
DOLORES TAN, ROSARIO TAN HUA ING, and TO
O. HIAP,respondents.
Pascual G. Mier for petitioner.
Except for respondent Tan Teng Bio who filed an

answer to the complaint, respondents moved to
dismiss the complaint on the grounds of (a) lack of
cause of action, the plaintiff being in pari delicto with
the vendee, and the land being already owned by a
Philippine citizen; (b) laches; and (c) acquisitive
prescription.
Over the opposition of petitioner, the court a
quo dismissed the complaint, sustaining the first two
grounds invoked by the movants. It is this order of
dismissal that is now the subject of this review.
The assailed order must be sustained.
Independently of the doctrine of pari delicto, the
petitioner cannot have the sale annulled and recover
the lot she herself has sold. While the vendee was an
alien at the time of the sale, the land has since
become the property, of respondent Joaquin Teng, a

naturalized Philippine citizen, who is constitutionally
qualified to own land.t.hqw
... The litigated property is now in the hands of a
naturalized Filipino. It is no longer owned by a
disqualified vendee. Respondent, as a naturalized
citizen, was constitutionally qualified to own the subject
property. There would be no more public policy to be
served in allowing petitioner Epifania to recover the
land as it is already in the hands of a qualified person.
Applying by analogy the ruling of this Court in Vasquez
vs. Giap and Li Seng Giap & Sons:t.hqw
... if the ban on aliens from acquiring not only
agricultural but also urban lands, as construed by this
Court in the Krivenko case, is to preserve the nation's
lands for future generations of Filipinos, that aim or
purpose would not be thwarted but achieved by
making lawful the acquisition of real estate by aliens
who became Filipino citizens by naturalization.
(Sarsosa Vda. de Barsobia vs. Cuenco, 113 SCRA
547, at 553.)
Laches also militates against petitioner's cause. She
sold the disputed lot in 1938. She instituted the action
to annul the sale only on July 15, 1968. What the Court
said in the cited Sarsosa case applies with equal force
to the petitioner.t.hqw
... it is likewise inescapable that petitioner Epifania had
slept on her rights for 26 years from 1936 to 1962. By
her long inaction of inexcusable neglect, she should be
held barred from asserting her claim to the litigated
property (Sotto vs. Teves, 86 SCRA 157 [1978]).t.
hqw
Laches has been defined as the failure or neglect, for
an unreasonable and unexplained length of time, to do
that which by exercising due diligence could or should
have been done earlier; it is negligence or omission to
assert a right within a reasonable time, warranting a
presumption that the party entitled to assert it either
has abandoned it or declined to assert it. (Tijam, et al.
vs. Sibonghanoy, et al., No. L-21450, April 15, 1968,
23 SCRA 29, 35). (cited in Sotto vs. Teves, 86 SCRA
154 [1978]).
Respondent, therefore, must be declared to be the
rightful owner of the property. (p. 553.)
WHEREFORE, the appealed order is affirmed. Costs
against petitioner.
SO ORDERED.1wph1.t
LEE v. REPUBLIC
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 128195
October 3, 2001
ELIZABETH LEE and PACITA YU LEE, HON. JUDGE

JOSE D. ALOVERA,* Presiding Judge, Regional
Trial Court, Branch 17, Roxas City, THE REGISTER
OF DEEDS OF ROXAS CITY, petitioners,
vs.
REPUBLIC OF THE PHILIPPINES, represented by
THE DIRECTOR OF LANDS AND THE
ADMINISTRATOR, LAND REGISTRATION
AUTHORITY and THE HON. COURT OF
APPEALS,* respondents.
PARDO, J.:
The case under consideration is a petition for review
on certiorari of the decision1 of the court of appeals
nullifying that of the Regional Trial Court, Roxas City,
in Reconstitution case No. R-1928,2 pertaining to lot
398, Capiz Cadastre, covered by Original Certificate of
Title No. 3389.
Sometime in March 1936, Carmen, Francisco, Jr.,
Ramon, Lourdes, Mercedes, Concepcion, Mariano,
Jose, Loreto, Manuel, Rizal, and Jimmy, alll surnamed
Dinglasan sold to Lee Liong, A Chinese citizen, a
parcel of land with an approximate area of 1,631
square meters, designed as lot 398 and covered by
Original Certificate of Title No. 3389, situated at the
corner of Roxas Avenue and Pavia Street, Roxas City.3
However, in 1948, the former owners filed with the
Court of First Instance, Capiz an action against the
heirs of Lee Liong for annulment of sale and recovery
of land.4 The plaintiffs assailed the validity of the sale
because of the constitutional prohibition against aliens
acquiring ownership of private agriculture land,
including residential, commercial or industrial land.
Rebuffed in the trial court and the Court of Appeals,
plaintiffs appealed to the Supreme Court. On June 27,
1956, the Supreme Court ruled thus:
"granting the sale to be null and void and can not give
title to the vendee, it does not necessarily follow

therefrom that title remained in the vendor, who had
also violated the constitutional prohibition, or that he
(vendor) has the right to recover the title of which he
has divested himself by his in ignoring the prohibition.
In such contingency another principle of law sets in to
bar the equally guilty vendor from recovering the title
which he had voluntarily conveyed for a consideration,
that of pari delicto."5
On July 1, 1968, the same former owners Rafael A.
Dinglasan, together with Francisco, Carmen, Ramon,
Lourdes, Mercedes, Concepcion, Mariano, Jose,
Loreto, Rizal, Jimmy, and Jesse Dinglasan filed with
the Court of First Instance, Capiz an action for
recovery of the same parcel of land. 6 Citing the case of
the Philippines Banking Corporation v. Lui She,7 they
submitted that the sale to Lee Liong was null and void
for being violative of the Constitution. On September
23, 1968, the heirs of Lee Liong filed with the trial court
a motion to dismiss the case on the ground of res
judicata.8 On October 10, 1968, and November 9,
1968, the trial court denied the motion. 9The heirs of
Lee Liong elevated the case to the Supreme Court by
petition for certiorari. On April 22, 1977, the Supreme
Court annulled the orders of the trial court and directed
it to dismiss the case, holding that the suit was barred
by res judicata.10
On September 7, 1993, Elizabeth Manuel-Lee and
Pacita Yu Lee filed with the regional Trial Court, Roxas
City a petition for reconstitution of title of Lot No. 398 of
the Capiz Cadastre, formerly covered by Original
Certificate of title No. 3389 of the register of Deeds of
Roxas City.11 Petitioners alleged that they were the
windows of the deceased Lee Bing Hoo and Lee Bun
Ting , who were the heirs of Lee Liong, The owner of
the lot. Lee Liong died intestate in February 1944. On
June 30, 1947, Lee Liong's widow, Ang Chia, and his
two sons, Lee Bun Ting and Lee Bing Ho, executed an
extra judicial settlement of the state of Lee Liong,
adjudicating to themselves the subject parcel of
land.12 Petitioner Elizabeth Lee acquired her share in
lot No. 398 through an extra-judicial settlement and
donation executed in her favor by her deceased
husband Lee Bong Hoo. Petitioner Pacita Yu Lee
acquired her share in the same lot by succession from
her deceased husband Lee Bun Ting, as evidenced by
a deed of extra-judicial settlement.13
Previously, on December 9, 1948, the Register of
Deeds, Capiz Salvador Villaluz, issued a certification
that a transfer certificate of title over the property was
issued in the name of Lee Liong. 14 However, the
records of the Register of Deeds, Roxas City were
burned during the war. Thus, as heretofore stated, on
September 7, 1968, petitioners filed a petition for

reconstitution of title.1wphi1.nt
On June 10, 1994, the Regional Trial Court, Roxas
City, Branch 17, ordered the reconstitution of the lost
or destroyed certificate of title in the name of Lee Liong
on the basis of an approved plan and technical
description.15 The dispositive portion of the trial Court's
decision reads thus:
"WHEREFORE, in reiteration the Register of Deeds for
the City of Roxas is ordered to reconstitute the lost or
destroyed certificate of title in the name Lee Liong,
deceased, of Roxas City, with all the conditions stated
in paragraph 2 of this decision. This decision shall
become final after the lapse of thirty (30) days from
receipt by the Register of Deeds and by the
Commissioner of LRA of a notice of such judgement
without any appeal having been filed by any of such
officials.
"SO ORDERED.
"Given at Roxas City, Philippines,
"June 10, 1994.
"JOSE O. ALOVERA
"Judge"16
On August 18, 1994, the Clerk of Court, Regional Trial

Court, Roxas City, Branch 17 issued an Entry of
Judgement.17
On January 25, 1995, the Solicitor General filed with
the Court of Appeals a petition for annulment of
judgement in Reconstitution Case No. 1928, alleging
that the Regional Trial Court, Roxas City had no
jurisdiction over the case.18 The Solicitor General
contended that the petitioners were not the proper
parties in the reconstitution of title, since their
predecessor-in-interest Lee Liong did not acquire title
to the lot because he was a Chinese citizen and was
constitutionally not qualified to own the subject land.
On April 30, 1996, the Court of Appeals promulgated
its decision declaring the judgement of reconstitution
void.19
On May 24, 1996, Elizabeth Manuel-Lee and Pacita Yu
Lee filed with the Court of Appeals a motion for

reconsideration of the decision. 20 On February 18,
19976, the Court of appeals denied the motion.21
all the evidence before it, ordered the reconstruction of

title in the name of Lee Liong.
Hence this petition.22
However, there is a question as to whether Lee Liong

as the qualification to own land in the Philippines.
Petitioners submitted that the Solicitor General was

estopped from seeking annulment of the judgement of
reconstitution after failing to object during the
reconstitution proceedings before the trial court,
despite due notice. Petitioners alleged that the Solicitor
General merely acted on the request of private and
politically powerful individuals who wished to capitalize
on the prime location of the subject land.
Petitioners emphasized that the ownership of the land
had been settled in two previous cases of the Supreme
Court, where the Court ruled in favor of their
predecessor-in-interest, Lee Liong. Petitioners also
pointed out that they acquired ownership of the land
through actual possession of the lot and their
consistent payment of taxes over the land for more
than sixty years.
On the other hand, the Solicitor General submitted that
the decision in the reconstitution case was void;
otherwise, it would amount to circumventing the
constitutional proscription against aliens acquiring
ownership of private or public agricultural lands.
We grant the petition.
The reconstitution of a certificate of title denotes
restoration in the original form and condition of a lost
or destroyed instrument attesting the title of a person
to a piece of land23. The purpose of the reconstruction
of title is to have, after observing the procedures
prescribed by law, the title reproduced in exactly the
same way it has been when the loss or destruction
occurred.24
In this case, petitioners sought a reconstitution of title
in the name of Lee Liong, alleging that the transfer of
certificate of title issued to him was lost or destroyed
during World War II. All the documents recorded and
issued by the Register of Deed, Capiz, which include
the transfer certificate of title issued in the name of Lee
Liong, were all destroyed during the war. The fact that
the original of the transfer certificate of title was not in
the files of the Office of the Register of Deeds did not
imply that a transfer certificate of title had not been
issued.25 In the trial court proceeding, petitioners
presented evidence proving the sale of the land from
the Dinglasans to Lee Liong and the latter's
subsequent possessions of the of the property in the
concept of owner. Thus, the trial court after examining
The sale of the land in question was consummated

sometime in March 1936, during the effectivity of the
1935
Constitution.
Under
the
1935
26
Constitution, aliens could not acquire private
agricultural lands, save in cases of hereditary
succession.27 Thus, Lee Liong, a chinese citizen, was
disqualified to acquire the land in question.28
The fact that the Court did not annul the sale of the
land to an alien did not validate the transaction, for it
was still contrary to the constitutional proscription
against aliens acquiring lands of the public or private
domain. However, the proper party to assail the
illegality of the transaction was not the parties to the
transaction.29 "In sales of real estate to aliens
incapable of holding title thereto by virtue of the
provisions of the Constitution both the vendor and the
vendee are deemed to have committed the
constitutional violation and being thus in pari
delicto the courts will not afford protection to either
party."30 The proper party to assail the sale is the
Solicitor General. This was what was done in this case
when the Solicitor General initiated an action for
annulment of judgment of reconstitution of title. While it
took the Republic more than sixty years to assert itself,
it is not barred from initiating such action. Prescription
never against the State.31
Although ownership of the land cannot revert to the
original sellers, because of the doctrine of pari delicto,
the Solicitor General may initiate an action for
reversion or escheat of the land to the State, subject to
other defenses, as hereafter set forth.32
In this case, subsequent circumstances militate
against escheat proceedings because the land is now
in the hands of Filipinos. The original vendee, Lee
Liong, has since died and the land has been inherited
by his heirs and subsequently their heirs, petitioners
herein. Petitioners are Filipino citizens, a fact the
Solicitor General does not dispute.
The constitutional proscription on alien ownership of
lands of the public or private domain was intended to
protect lands from falling in the hands of non-Filipinos.
In this case, however, there would be no more public
policy violated since the land is in the hands of
Filipinos qualified to acquire and own such land. "If
land is invalidly transferred to an alien who

subsequently becomes a citizen or transfers it to a
citizen, the flaw in the original transaction is
considered cured and the title of the transferee is
rendered valid.33 Thus, the subsequent transfer of the
property to qualified Filipinos may no longer be
impugned on the basis of the invalidity of the initial
transfer.34 The objective of the constitutional provision
to keep our lands in Filipino hands has been achieved.
Incidentally, it must be mentioned that reconstitution of
the original certificate of title must be based on an
owner's duplicate, secondary evidence thereof, or
other valid sources of the title be reconstituted. 35 In this
case, reconstitution was based on the plan and
technical description approved by the Land
Registration Authority.36This renders the order of
reconstitution void for lack of factual support.37 A
judgment with absolute nothing to support it is void. 38
As earlier mentioned, a reconstitution of the title is the
reissuance of a new certificate of title lost or destroyed
in its original form and condition.39 It does not pass
upon the ownership of the land covered by the lost or
destroyed title.40 Any change in the ownership of the
property must be the subject of a separate suit. 41 Thus,
although petitioners are in possession of the land, a
separate proceedings is necessary to thresh out the
issue of ownership of the land.
WHEREFORE,
the
Court REVERSES and SETS
ASIDE the decision of the Court of Appeals in CA-G.
R. SP No. 36274. In lieu thereof, the Court sets aside
the order of reconstitution of title in Reconstitution
Case No. R-1928, Regional Trial Court, Roxas City,
and
dismisses
the
petition,
without
prejudice.1wphi1.nt
No Cost.
SO ORDERED.
MATTHEWS v. TAYLOR
SUPREME COURT
Manila
DECISION
NACHURA, J.:
Assailed in this petition for review on certiorari are the
Court of Appeals (CA) December 19, 2003
Decision1 and July 14, 2004 Resolution 2 in CA-G.R.
CV No. 59573. The assailed decision affirmed and
upheld the June 30, 1997 Decision3 of the Regional
Trial Court (RTC), Branch 8, Kalibo, Aklan in Civil Case
No. 4632 for Declaration of Nullity of Agreement of
Lease with Damages.
On June 30, 1988, respondent Benjamin A. Taylor
(Benjamin), a British subject, married Joselyn C. Taylor
(Joselyn), a 17-year old Filipina.4 On June 9, 1989,
while their marriage was subsisting, Joselyn bought
from Diosa M. Martin a 1,294 square-meter lot
(Boracay property) situated at Manoc-Manoc, Boracay
Island, Malay, Aklan, for and in consideration
of P129,000.00.5 The sale was allegedly financed by
Benjamin.6 Joselyn and Benjamin, also using the
latters funds, constructed improvements thereon and
eventually converted the property to a vacation and
tourist resort known as the Admiral Ben Bow Inn. 7 All
required permits and licenses for the operation of the
resort were obtained in the name of Ginna Celestino,
Joselyns sister.8
However, Benjamin and Joselyn had a falling out, and
Joselyn ran away with Kim Philippsen. On June 8,
1992, Joselyn executed a Special Power of Attorney
(SPA) in favor of Benjamin, authorizing the latter to
maintain, sell, lease, and sub-lease and otherwise
enter into contract with third parties with respect to
their Boracay property.9
On July 20, 1992, Joselyn as lessor and petitioner
Philip Matthews as lessee, entered into an Agreement
of Lease10 (Agreement) involving the Boracay property
for a period of 25 years, with an annual rental
ofP12,000.00. The agreement was signed by the
parties and executed before a Notary Public. Petitioner
thereafter took possession of the property and
renamed the resort as Music Garden Resort.1avvphi1
THIRD DIVISION
G.R. No. 164584
June 22, 2009
PHILIP MATTHEWS, Petitioner,

vs.
BENJAMIN A. TAYLOR and JOSELYN C.
TAYLOR, Respondents.
Claiming that the Agreement was null and void since it

was entered into by Joselyn without his (Benjamins)
consent, Benjamin instituted an action for Declaration
of
Nullity
of
Agreement
of
Lease
with
Damages11 against Joselyn and the petitioner.
Benjamin claimed that his funds were used in the
acquisition and improvement of the Boracay property,

and coupled with the fact that he was Joselyns
husband, any transaction involving said property
required his consent.
No Answer was filed, hence, the RTC declared Joselyn
and the petitioner in defeault. On March 14, 1994, the
RTC rendered judgment by default declaring the
Agreement null and void.12 The decision was, however,
set aside by the CA in CA-G.R. SP No. 34054. 13 The
CA also ordered the RTC to allow the petitioner to file
his Answer, and to conduct further proceedings.
In his Answer,14 petitioner claimed good faith in
transacting with Joselyn. Since Joselyn appeared to be
the owner of the Boracay property, he found it
unnecessary to obtain the consent of Benjamin.
Moreover, as appearing in the Agreement, Benjamin
signed as a witness to the contract, indicating his
knowledge of the transaction and, impliedly, his
conformity to the agreement entered into by his wife.
Benjamin was, therefore, estopped from questioning
the validity of the Agreement.
There being no amicable settlement during the pretrial, trial on the merits ensued.
On June 30, 1997, the RTC disposed of the case in
this manner:
hereby rendered in favor of the plaintiff and against the
defendants as follows:
1. The Agreement of Lease dated July 20, 1992
consisting of eight (8) pages (Exhibits "T", "T-1", "T-2",
"T-3", "T-4", "T-5", "T-6" and "T-7") entered into by and
between Joselyn C. Taylor and Philip Matthews before
Notary Public Lenito T. Serrano under Doc. No. 390,
Page 79, Book I, Series of 1992 is hereby declared
NULL and VOID;
2. Defendants are hereby ordered, jointly and
severally, to pay plaintiff the sum of SIXTEEN
THOUSAND (P16,000.00) PESOS as damages
representing unrealized income for the residential
building and cottages computed monthly from July
1992 up to the time the property in question is restored
to plaintiff; and
3. Defendants are hereby ordered, jointly and
severally, to pay plaintiff the sum of TWENTY
THOUSAND
(P20,000.00)
PESOS,
Philippine
Currency, for attorneys fees and other incidental
expenses.
SO ORDERED.15
The RTC considered the Boracay property as
community property of Benjamin and Joselyn; thus, the
consent of the spouses was necessary to validate any
contract involving the property. Benjamins right over
the Boracay property was bolstered by the courts
findings that the property was purchased and improved
through funds provided by Benjamin. Although the
Agreement was evidenced by a public document, the
trial court refused to consider the alleged participation
of Benjamin in the questioned transaction primarily
because his signature appeared only on the last page
of the document and not on every page thereof.
On appeal to the CA, petitioner still failed to obtain a
favorable decision. In its December 19, 2003
Decision,16 the CA affirmed the conclusions made by
the RTC. The appellate court was of the view that if,
indeed, Benjamin was a willing participant in the
questioned transaction, the parties to the Agreement
should have used the phrase "with my consent"
instead of "signed in the presence of." The CA noted
that Joselyn already prepared an SPA in favor of
Benjamin involving the Boracay property; it was
therefore unnecessary for Joselyn to participate in the
execution of the Agreement. Taken together, these
circumstances yielded the inevitable conclusion that
the contract was null and void having been entered
into by Joselyn without the consent of Benjamin.
Aggrieved, petitioner now comes before this Court in
this petition for review on certiorari based on the
following grounds:
4.1. THE MARITAL CONSENT OF RESPONDENT
BENJAMIN TAYLOR IS NOT REQUIRED IN THE
AGREEMENT OF LEASE DATED 20 JULY 1992.
GRANTING ARGUENDO THAT HIS CONSENT IS
REQUIRED, BENJAMIN TAYLOR IS DEEMED TO
HAVE GIVEN HIS CONSENT WHEN HE AFFIXED
HIS SIGNATURE IN THE AGREEMENT OF LEASE
AS WITNESS IN THE LIGHT OF THE RULING OF
THE SUPREME COURT IN THE CASE OF SPOUSES
PELAYO VS. MELKI PEREZ, G.R. NO. 141323, JUNE
8, 2005.
4.2. THE PARCEL OF LAND SUBJECT OF THE
AGREEMENT OF LEASE IS THE EXCLUSIVE
PROPERTY OF JOCELYN C. TAYLOR, A FILIPINO
CITIZEN, IN THE LIGHT OF CHEESMAN VS. IAC,
G.R. NO. 74833, JANUARY 21, 1991.
4.3. THE COURTS A QUO ERRONEOUSLY APPLIED
ARTICLE 96 OF THE FAMILY CODE OF THE

PHILIPPINES WHICH IS A PROVISION REFERRING
TO THE ABSOLUTE COMMUNITY OF PROPERTY.
THE PROPERTY REGIME GOVERNING THE
PROPERTY RELATIONS OF BENJAMIN TAYLOR
AND JOSELYN TAYLOR IS THE CONJUGAL
PARTNERSHIP OF GAINS BECAUSE THEY WERE
MARRIED ON 30 JUNE 1988 WHICH IS PRIOR TO
THE EFFECTIVITY OF THE FAMILY CODE. ARTICLE
96 OF THE FAMILY CODE OF THE PHILIPPINES
FINDS NO APPLICATION IN THIS CASE.
4.4. THE HONORABLE COURT OF APPEALS
IGNORED THE PRESUMPTION OF REGULARITY IN
THE EXECUTION OF NOTARIAL DOCUMENTS.
4.5. THE HONORABLE COURT OF APPEALS
FAILED TO PASS UPON THE COUNTERCLAIM OF
PETITIONER DESPITE THE FACT THAT IT WAS
NOT
CONTESTED
AND
DESPITE
THE
PRESENTATION OF EVIDENCE ESTABLISHING
SAID CLAIM.17
The petition is impressed with merit.
In fine, we are called upon to determine the validity of
an Agreement of Lease of a parcel of land entered into
by a Filipino wife without the consent of her British
husband. In addressing the matter before us, we are
confronted not only with civil law or conflicts of law
issues, but more importantly, with a constitutional
question.
It is undisputed that Joselyn acquired the Boracay
property in 1989. Said acquisition was evidenced by a
Deed of Sale with Joselyn as the vendee. The property
was also declared for taxation purposes under her
name. When Joselyn leased the property to petitioner,
Benjamin sought the nullification of the contract on two
grounds: first, that he was the actual owner of the
property since he provided the funds used in
purchasing the same; and second, that Joselyn could
not enter into a valid contract involving the subject
property without his consent.
The trial and appellate courts both focused on the
property relations of petitioner and respondent in light
of the Civil Code and Family Code provisions. They,
however, failed to observe the applicable constitutional
principles, which, in fact, are the more decisive.
Section 7, Article XII of the 1987 Constitution states: 18
Section 7. Save in cases of hereditary succession, no
private lands shall be transferred or conveyed except
to individuals, corporations, or associations qualified to

acquire or hold lands of the public domain.1avvphi1
Aliens, whether individuals or corporations, have been
disqualified from acquiring lands of the public domain.
Hence, by virtue of the aforecited constitutional
provision, they are also disqualified from acquiring
private lands.19 The primary purpose of this
constitutional provision is the conservation of the
national patrimony.20 Our fundamental law cannot be
any clearer. The right to acquire lands of the public
domain is reserved only to Filipino citizens or
corporations at least sixty percent of the capital of
which is owned by Filipinos.21
In Krivenko v. Register of Deeds,22 cited in Muller v.
Muller,23 we had the occasion to explain the
constitutional prohibition:
Under Section 1 of Article XIII of the Constitution,
"natural resources, with the exception of public
agricultural land, shall not be alienated," and with
respect to public agricultural lands, their alienation is
limited to Filipino citizens. But this constitutional
purpose conserving agricultural resources in the hands
of Filipino citizens may easily be defeated by the
Filipino citizens themselves who may alienate their
agricultural lands in favor of aliens. It is partly to
prevent this result that Section 5 is included in Article
XIII, and it reads as follows:
"Section 5. Save in cases of hereditary succession, no
private agricultural land will be transferred or assigned
except to individuals, corporations, or associations
in the Philippines."
This constitutional provision closes the only remaining
avenue through which agricultural resources may leak
into aliens hands. It would certainly be futile to prohibit
the alienation of public agricultural lands to aliens if,
after all, they may be freely so alienated upon their
becoming private agricultural lands in the hands of
Filipino citizens. x x x
xxxx
If the term "private agricultural lands" is to be
construed as not including residential lots or lands not
strictly agricultural, the result would be that "aliens may
freely acquire and possess not only residential lots and
houses for themselves but entire subdivisions, and
whole towns and cities," and that "they may validly buy
and hold in their names lands of any area for building
homes,
factories,
industrial
plants,
fisheries,

hatcheries, schools, health and vacation resorts,
markets, golf courses, playgrounds, airfields, and a
host of other uses and purposes that are not, in
appellants words, strictly agricultural." (Solicitor
Generals Brief, p. 6) That this is obnoxious to the
conservative spirit of the Constitution is beyond
question.24
The rule is clear and inflexible: aliens are absolutely
not allowed to acquire public or private lands in the
Philippines, save only in constitutionally recognized
exceptions.25 There is no rule more settled than this
constitutional prohibition, as more and more aliens
attempt to circumvent the provision by trying to own
lands through another. In a long line of cases, we have
settled issues that directly or indirectly involve the
above constitutional provision. We had cases where
aliens wanted that a particular property be declared as
part of their fathers estate; 26 that they be reimbursed
the funds used in purchasing a property titled in the
name of another;27that an implied trust be declared in
their (aliens) favor;28 and that a contract of sale be
nullified for their lack of consent.29
In Ting Ho, Jr. v. Teng Gui, 30 Felix Ting Ho, a Chinese
citizen, acquired a parcel of land, together with the
improvements thereon. Upon his death, his heirs (the
petitioners therein) claimed the properties as part of
the estate of their deceased father, and sought the
partition of said properties among themselves. We,
however, excluded the land and improvements thereon
from the estate of Felix Ting Ho, precisely because he
never became the owner thereof in light of the abovementioned constitutional prohibition.
In Muller v. Muller,31 petitioner Elena Buenaventura
Muller and respondent Helmut Muller were married in
Germany. During the subsistence of their marriage,
respondent purchased a parcel of land in Antipolo City
and constructed a house thereon. The Antipolo
property was registered in the name of the petitioner.
They eventually separated, prompting the respondent
to file a petition for separation of property. Specifically,
respondent prayed for reimbursement of the funds he
paid for the acquisition of said property. In deciding the
case in favor of the petitioner, the Court held that
respondent was aware that as an alien, he was
prohibited from owning a parcel of land situated in the
Philippines. He had, in fact, declared that when the
spouses acquired the Antipolo property, he had it titled
in the name of the petitioner because of said
prohibition. Hence, we denied his attempt at
subsequently asserting a right to the said property in
the form of a claim for reimbursement. Neither did the
Court declare that an implied trust was created by
operation of law in view of petitioners marriage to

respondent. We said that to rule otherwise would
permit circumvention of the constitutional prohibition.
In Frenzel v. Catito,32 petitioner, an Australian citizen,
was married to Teresita Santos; while respondent, a
Filipina, was married to Klaus Muller. Petitioner and
respondent met and later cohabited in a common-law
relationship, during which petitioner acquired real
properties; and since he was disqualified from owning
lands in the Philippines, respondents name appeared
as the vendee in the deeds of sale. When their
relationship turned sour, petitioner filed an action for
the recovery of the real properties registered in the
name of respondent, claiming that he was the real
owner. Again, as in the other cases, the Court refused
to declare petitioner as the owner mainly because of
the constitutional prohibition. The Court added that
being a party to an illegal contract, he could not come
to court and ask to have his illegal objective carried
out. One who loses his money or property by
knowingly engaging in an illegal contract may not
maintain an action for his losses.
Finally, in Cheesman v. Intermediate Appellate
Court,33 petitioner (an American citizen) and Criselda
Cheesman acquired a parcel of land that was later
registered in the latters name. Criselda subsequently
sold the land to a third person without the knowledge
of the petitioner. The petitioner then sought the
nullification of the sale as he did not give his consent
thereto. The Court held that assuming that it was his
(petitioners) intention that the lot in question be
purchased by him and his wife, he acquired no right
whatever over the property by virtue of that purchase;
and in attempting to acquire a right or interest in land,
vicariously and clandestinely, he knowingly violated the
Constitution; thus, the sale as to him was null and void.
In light of the foregoing jurisprudence, we find and so
hold that Benjamin has no right to nullify the
Agreement of Lease between Joselyn and petitioner.
Benjamin, being an alien, is absolutely prohibited from
acquiring private and public lands in the Philippines.
Considering that Joselyn appeared to be the
designated "vendee" in the Deed of Sale of said
property, she acquired sole ownership thereto. This is
true even if we sustain Benjamins claim that he
provided the funds for such acquisition. By entering
into such contract knowing that it was illegal, no
implied trust was created in his favor; no
reimbursement for his expenses can be allowed; and
no declaration can be made that the subject property
was part of the conjugal/community property of the
spouses. In any event, he had and has no capacity or

personality to question the subsequent lease of the
Boracay property by his wife on the theory that in so
doing, he was merely exercising the prerogative of a
husband in respect of conjugal property. To sustain
such a theory would countenance indirect
controversion of the constitutional prohibition. If the
property were to be declared conjugal, this would
accord the alien husband a substantial interest and
right over the land, as he would then have a decisive
vote as to its transfer or disposition. This is a right that
the Constitution does not permit him to have.34
In fine, the Agreement of Lease entered into between
Joselyn and petitioner cannot be nullified on the
grounds advanced by Benjamin. Thus, we uphold its
validity.
With the foregoing disquisition, we find it unnecessary
to address the other issues raised by the petitioner.
WHEREFORE, premises considered, the December
19, 2003 Decision and July 14, 2004 Resolution of the
Court of Appeals in CA-G.R. CV No. 59573, are
REVERSED and SET ASIDE and a new one is
entered DISMISSING the complaint against petitioner
Philip Matthews.
SO ORDERED.
KRIVENKO v. ROD
SUPREME COURT
Manila
EN BANC
G.R. No. L-630
November 15, 1947
ALEXANDER A. KRIVENKO, petitioner-appellant,

vs.
THE REGISTER OF DEEDS, CITY OF
MANILA, respondent and appellee.
Gibbs, Gibbs, Chuidian and Quasha of petitionerappellant.
First Assistant Solicitor General Reyes and Solicitor
Carreon for respondent-appellee.
Marcelino Lontok appeared as amicus curies.
MORAN, C.J.:
Alenxander A. Kriventor alien, bought a residential lot

from the Magdalena Estate, Inc., in December of 1941,
the registration of which was interrupted by the war. In
May, 1945, he sought to accomplish said registration
but was denied by the register of deeds of Manila on
the ground that, being an alien, he cannot acquire land
in this jurisdiction. Krivenko then brought the case to
the fourth branch of the Court of First Instance of
Manila by means of a consulta, and that court
rendered judgment sustaining the refusal of the
register of deeds, from which Krivenko appealed to this
Court.
There is no dispute as to these facts. The real point in
issue is whether or not an alien under our Constitution
may acquire residential land.
It is said that the decision of the case on the merits is
unnecessary, there being a motion to withdraw the
appeal which should have been granted outright, and
reference is made to the ruling laid down by this Court
in another case to the effect that a court should not
pass upon a constitutional question if its judgment may
be made to rest upon other grounds. There is, we
believe, a confusion of ideas in this reasoning. It
cannot be denied that the constitutional question is
unavoidable if we choose to decide this case upon the
merits. Our judgment cannot to be made to rest upon
other grounds if we have to render any judgment at all.
And we cannot avoid our judgment simply because we
have to avoid a constitutional question. We cannot, for
instance, grant the motion withdrawing the appeal only
because we wish to evade the constitutional; issue.
Whether the motion should be, or should not be,
granted, is a question involving different considerations
now to be stated.
According to Rule 52, section 4, of the Rules of Court,
it is discretionary upon this Court to grant a withdrawal
of appeal after the briefs have been presented. At the
time the motion for withdrawal was filed in this case,
not only had the briefs been prensented, but the case
had already been voted and the majority decision was
being prepared. The motion for withdrawal stated no
reason whatsoever, and the Solicitor General was
agreeable to it. While the motion was pending in this
Court, came the new circular of the Department of
Justice, instructing all register of deeds to accept for
registration all transfers of residential lots to aliens.
The herein respondent-appellee was naturally one of
the registers of deeds to obey the new circular, as
against his own stand in this case which had been
maintained by the trial court and firmly defended in this
Court by the Solicitor General. If we grant the
withdrawal, the the result would be that petitioner-

appellant Alexander A. Krivenko wins his case, not by
a decision of this Court, but by the decision or circular
of the Department of Justice, issued while this case
was pending before this Court. Whether or not this is
the reason why appellant seeks the withdrawal of his
appeal and why the Solicitor General readily agrees to
that withdrawal, is now immaterial. What is material
and indeed very important, is whether or not we should
allow interference with the regular and complete
exercise by this Court of its constitutional functions,
and whether or not after having held long deliberations
and after having reached a clear and positive
conviction as to what the constitutional mandate is, we
may still allow our conviction to be silenced, and the
constitutional mandate to be ignored or misconceived,
with all the harmful consequences that might be
brought upon the national patromony. For it is but
natural that the new circular be taken full advantage of
by many, with the circumstance that perhaps the
constitutional question may never come up again
before this court, because both vendors and vendees
will have no interest but to uphold the validity of their
transactions, and very unlikely will the register of
deeds venture to disobey the orders of their superior.
Thus, the possibility for this court to voice its conviction
in a future case may be remote, with the result that our
indifference of today might signify a permanent offense
to the Constitution.
All thse circumstances were thoroughly considered
and weighted by this Court for a number of days and
the legal result of the last vote was a denial of the
motion withdrawing the appeal. We are thus
confronted, at this stage of the proceedings, with our
duty, the constitutional question becomes unavoidable.
We shall then proceed to decide that question.
Article XIII, section 1, of the Constitutional is as
follows:
Article XIII. Conservation and utilization of natural
resources.
SECTION 1. All agricultural, timber, and mineral lands
of the public domain, water, minerals, coal, petroleum,
and other mineral oils, all forces of potential energy,
and other natural resources of the Philippines belong
to the State, and their disposition, exploitation,
development, or utilization shall be limited to citizens of
the Philippines, or to corporations or associations at
least sixty per centum of the capital of which is owned
by such citizens, subject to any existing right, grant,
lease, or concession at the time of the inaguration of
the Government established uunder this Constitution.
Natural resources, with the exception of public
agricultural land, shall not be alienated, and no licence,

concession, or lease for the exploitation, development,
or utilization of any of the natural resources shall be
granted for a period exceeding twenty-five years,
renewable for another twenty-five years, except as to
water rights for irrigation, water supply, fisheries, or
industrial uses other than the development of water
"power" in which cases beneficial use may be the
measure and the limit of the grant.
The scope of this constitutional provision, according to
its heading and its language, embraces all lands of any
kind of the public domain, its purpose being to
establish a permanent and fundamental policy for the
conservation and utilization of all natural resources of
the Nation. When, therefore, this provision, with
reference to lands of the public domain, makes
mention of only agricultural, timber and mineral lands,
it means that all lands of the public domain are
classified into said three groups, namely, agricultural,
timber and mineral. And this classification finds
corroboration in the circumstance that at the time of
the adoption of the Constitution, that was the basic
classification existing in the public laws and judicial
decisions in the Philippines, and the term "public
agricultural lands" under said classification had then
acquired a technical meaning that was well-known to
the members of the Constitutional Convention who
were mostly members of the legal profession.
As early as 1908, in the case of Mapa vs. Insular
Government (10 Phil., 175, 182), this Court said that
the phrase "agricultural public lands" as defined in the
Act of Congress of July 1, 1902, which phrase is also
to be found in several sections of the Public Land Act
(No. 926), means "those public lands acquired from
Spain which are neither mineral for timber lands." This
definition has been followed in long line of decisions of
this Court. (SeeMontano vs. Insular Government, 12
Phil., 593; Ibaez de Aldecoa vs. Insular Government,
13 Phil., 159; Ramosvs. Director of Lands, 39 Phil.,
175; Jocson vs. Director of Forestry, 39 Phil., 560;
Ankron vs. Government of the Philippines, 40 Phil.,
10.) And with respect to residential lands, it has been
held that since they are neither mineral nor timber
lands, of necessity they must be classified as
agricultural. In Ibaez de Aldecoa vs. Insular
Government (13 Phil., 159, 163), this Court said:
Hence, any parcel of land or building lot is susceptible
of cultivation, and may be converted into a field, and
planted with all kinds of vegetation; for this reason,
where land is not mining or forestal in its nature, it
must necessarily be included within the classification
of agricultural land, not because it is actually used for

the purposes of agriculture, but because it was
originally agricultural and may again become so under
other circumstances; besides, the Act of Congress
contains only three classification, and makes no
special provision with respect to building lots or urban
lands that have ceased to be agricultural land.
In other words, the Court ruled that in determining
whether a parcel of land is agricultural, the test is not
only whether it is actually agricultural, but also its
susceptibility to cultivation for agricultural purposes.
But whatever the test might be, the fact remains that at
the time the Constitution was adopted, lands of the
public domain were classified in our laws and
jurisprudence into agricultural, mineral, and timber, and
that the term "public agricultural lands" was construed
as referring to those lands that were not timber or
mineral, and as including residential lands. It may
safely be presumed, therefore, that what the members
of the Constitutional Convention had in mind when
they drafted the Constitution was this well-known
classification and its technical meaning then prevailing.
Certain expressions which appear in Constitutions, . . .
are obviously technical; and where such words have
been in use prior to the adoption of a Constitution, it is
presumed that its framers and the people who ratified
it have used such expressions in accordance with their
technical meaning. (11 Am. Jur., sec. 66, p.
683.) Also Calder vs. Bull, 3 Dall. [U.S.], 386; 1 Law.
ed., 648; Bronson vs. Syverson, 88 Wash., 264; 152
P., 1039.)
It is a fundamental rule that, in construing
constitutions, terms employed therein shall be given
the meaning which had been put upon them, and
which they possessed, at the time of the framing and
adoption of the instrument. If a word has acquired a
fixed, technical meaning in legal and constitutional
history, it will be presumed to have been employed in
that
sense
in
a
written
Constitution.
(McKinney vs. Barker, 180 Ky., 526; 203 S.W., 303;
L.R.A., 1918 E, 581.)
Where words have been long used in a technical
sense and have been judicially construed to have a
certain meaning, and have been adopted by the
legislature as having a certain meaning prior to a
particular statute in which they are used, the rule of
construction requires that the words used in such
statute should be construed according to the sense in
which they have been so previously used, although the
sense may vary from strict literal meaning of the
words. (II Sutherland, Statutory Construction, p. 758.)
Therefore, the phrase "public agricultural lands"

appearing in section 1 of Article XIII of the Constitution
must be construed as including residential lands, and
this is in conformity with a legislative interpretation
given after the adoption of the Constitution. Well
known is the rule that "where the Legislature has
revised a statute after a Constitution has been
adopted, such a revision is to be regarded as a
legislative construction that the statute so revised
conforms to the Constitution." (59 C.J., 1102.) Soon
after the Constitution was adopted, the National
Assembly revised the Public Land Law and passed
Commonwealth Act No. 141, and sections 58, 59 and
60 thereof permit the sale of residential lots to Filipino
citizens or to associations or corporations controlled by
such citizens, which is equivalent to a solemn
declaration that residential lots are considered as
agricultural lands, for, under the Constitution, only
agricultural lands may be alienated.
It is true that in section 9 of said Commonwealth Act
No. 141, "alienable or disposable public lands" which
are the same "public agriculture lands" under the
Constitution, are classified into agricultural, residential,
commercial, industrial and for other puposes. This
simply means that the term "public agricultural lands"
has both a broad and a particular meaning. Under its
broad or general meaning, as used in the Constitution,
it embraces all lands that are neither timber nor
mineral. This broad meaning is particularized in
section 9 of Commonwealth Act No. 141 which
classifies "public agricultural lands" for purposes of
alienation or disposition, into lands that are stricly
agricultural or actually devoted to cultivation for
agricultural puposes; lands that are residential;
commercial; industrial; or lands for other purposes.
The fact that these lands are made alienable or
disposable under Commonwealth Act No. 141, in favor
of Filipino citizens, is a conclusive indication of their
character as public agricultural lands under said
statute and under the Constitution.
It must be observed, in this connection that prior to the
Constitution, under section 24 of Public Land Act No.
2874, aliens could acquire public agricultural lands
used for industrial or residential puposes, but after the
Constitution and under section 23 of Commonwealth
Act No. 141, the right of aliens to acquire such kind of
lands is completely stricken out, undoubtedly in
pursuance of the constitutional limitation. And, again,
prior to the Constitution, under section 57 of Public
Land Act No. 2874, land of the public domain suitable
for residence or industrial purposes could be sold or
leased to aliens, but after the Constitution and under
section 60 of Commonwealth Act No. 141, such land

may only be leased, but not sold, to aliens, and the
lease granted shall only be valid while the land is used
for the purposes referred to. The exclusion of sale in
the new Act is undoubtedly in pursuance of the
constitutional limitation, and this again is another
legislative construction that the term "public agricultural
land" includes land for residence purposes.
Such legislative interpretation is also in harmony with
the interpretation given by the Executive Department
of the Government. Way back in 1939, Secretary of
Justice Jose Abad Santos, in answer to a query as to
"whether or not the phrase 'public agricultural lands' in
section 1 of Article XII (now XIII) of the Constitution
may be interpreted to include residential, commercial,
and industrial lands for purposes of their disposition,"
rendered the following short, sharp and crystal-clear
opinion:
Section 1, Article XII (now XIII) of the Constitution
classifies lands of the public domain in the Philippines
into agricultural, timber and mineral. This is the basic
classification adopted since the enactment of the Act of
Congress of July 1, 1902, known as the Philippine Bill.
At the time of the adoption of the Constitution of the
Philippines, the term 'agricultural public lands' and,
therefore, acquired a technical meaning in our public
laws. The Supreme Court of the Philippines in the
leading case of Mapa vs. Insular Government, 10 Phil.,
175, held that the phrase 'agricultural public lands'
means those public lands acquired from Spain which
are neither timber nor mineral lands. This definition
has been followed by our Supreme Court in many
subsequent case. . . .
Residential commercial, or industrial lots forming part
of the public domain must have to be included in one
or more of these classes. Clearly, they are neither
timber nor mineral, of necessity, therefore, they must
be classified as agricultural.
Viewed from another angle, it has been held that in
determining whether lands are agricultural or not, the
character of the land is the test (Odell vs. Durant, 62
N.W., 524; Lorch vs. Missoula Brick and Tile Co., 123
p.25). In other words, it is the susceptibility of the land
to cultivation for agricultural purposes by ordinary
farming methods which determines whether it is
agricultural or not (State vs. Stewart, 190 p. 129).
Furthermore, as said by the Director of Lands, no
reason is seen why a piece of land, which may be sold
to a person if he is to devote it to agricultural, cannot
be sold to him if he intends to use it as a site for his
home.
This opinion is important not alone because it comes

from a Secratary of Justice who later became the Chief
Justice of this Court, but also because it was rendered
by a member of the cabinet of the late President
Quezon who actively participated in the drafting of the
constitutional provision under consideration. (2 Aruego,
Framing of the Philippine Constitution, p. 598.) And the
opinion of the Quezon administration was reiterated by
the Secretary of Justice under the Osmea
administration, and it was firmly maintained in this
Court by the Solicitor General of both administrations.
It is thus clear that the three great departments of the
Government judicial, legislative and executive
have always maintained that lands of the public
domain are classified into agricultural, mineral and
timber, and that agricultural lands include residential
lots.
Under section 1 of Article XIII of the Constitution,
agricultural land, shall not be aliented," and with
prevent this result that section 5 is included in Article
in the Philippines.
into aliens' hands. It would certainly be futile to prohibit
Filipino citizens. Undoubtedly, as above indicated,
section 5 is intended to insure the policy of
nationalization contained in section 1. Both sections
must, therefore, be read together for they have the
same purpose and the same subject matter. It must be
noticed that the persons against whom the prohibition
is directed in section 5 are the very same persons who
under section 1 are disqualified "to acquire or hold
lands of the public domain in the Philippines." And the
subject matter of both sections is the same, namely,
the non-transferability of "agricultural land" to aliens.
Since "agricultural land" under section 1 includes

residential lots, the same technical meaning should be
attached to "agricultural land under section 5. It is a
rule of statutory construction that "a word or phrase
repeated in a statute will bear the same meaning
throughout the statute, unless a different intention
appears." (II Sutherland, Statutory Construction, p.
758.) The only difference between "agricultural land"
under section 5, is that the former is public and the
latter private. But such difference refers to ownership
and not to the class of land. The lands are the same in
both sections, and, for the conservation of the national
patrimony, what is important is the nature or class of
the property regardless of whether it is owned by the
State or by its citizens.
Reference is made to an opinion rendered on
September 19, 1941, by the Hon. Teofilo Sison, then
Secretary of Justice, to the effect that residential lands
of the public domain may be considered as agricultural
lands, whereas residential lands of private ownership
cannot be so considered. No reason whatsoever is
given in the opinion for such a distinction, and no valid
reason can be adduced for such a discriminatory view,
particularly having in mind that the purpose of the
constitutional provision is the conservation of the
national patrimony, and private residential lands are as
much an integral part of the national patrimony as the
residential lands of the public domain. Specially is this
so where, as indicated above, the prohibition as to the
alienable of public residential lots would become
superflous if the same prohibition is not equally applied
to private residential lots. Indeed, the prohibition as to
private residential lands will eventually become more
important, for time will come when, in view of the
constant disposition of public lands in favor of private
individuals, almost all, if not all, the residential lands of
the public domain shall have become private
residential lands.
It is maintained that in the first draft of section 5, the
words "no land of private ownership" were used and
later changed into "no agricultural land of private
ownership," and lastly into "no private agricultural land"
and from these changes it is argued that the word
"agricultural" introduced in the second and final drafts
was intended to limit the meaning of the word "land" to
land actually used for agricultural purposes. The
implication is not accurate. The wording of the first
draft was amended for no other purpose than to clarify
concepts and avoid uncertainties. The words "no land"
of the first draft, unqualified by the word "agricultural,"
may be mistaken to include timber and mineral lands,
and since under section 1, this kind of lands can never
be private, the prohibition to transfer the same would
be superfluous. Upon the other hand, section 5 had to
be drafted in harmony with section 1 to which it is

supplementary, as above indicated. Inasmuch as
under section 1, timber and mineral lands can never
be private, and the only lands that may become private
are agricultural lands, the words "no land of private
ownership" of the first draft can have no other meaning
than "private agricultural land." And thus the change in
the final draft is merely one of words in order to make
its subject matter more specific with a view to avoiding
the possible confusion of ideas that could have arisen
from the first draft.
homes,
factories,
industrial
plants,
fisheries,
appellant's words, strictly agricultural." (Solicitor
General's Brief, p. 6.) That this is obnoxious to the
question.
One of the fundamental principles underlying the
provision of Article XIII of the Constitution and which
was embodied in the report of the Committee on
Nationalization and Preservation of Lands and other
Natural Resources of the Constitutional Convention,
is "that lands, minerals, forests, and other natural
resources constitute the exclusive heritage of the
Filipino nation. They should, therefore, be preserved
for those under the sovereign authority of that nation
and for their posterity." (2 Aruego, Framing of the
Filipino Constitution, p. 595.) Delegate Ledesma,
Chairman of the Committee on Agricultural
Development of the Constitutional Convention, in a
speech delivered in connection with the national policy
on agricultural lands, said: "The exclusion of aliens
from the privilege of acquiring public agricultural lands
and of owning real estate is a necessary part of the
Public Land Laws of the Philippines to keep pace with
the idea of preserving the Philippines for the Filipinos."
(Emphasis ours.) And, of the same tenor was the
speech of Delegate Montilla who said: "With the
complete nationalization of our lands and natural
resources it is to be understood that our God-given
birthright should be one hundred per cent in Filipino
hands . . .. Lands and natural resources are
immovables and as such can be compared to the vital
organs of a person's body, the lack of possession of

which may cause instant death or the shortening of
life. If we do not completely antionalize these two of
our most important belongings, I am afraid that the
time will come when we shall be sorry for the time we
were born. Our independence will be just a mockery,
for what kind of independence are we going to have if
a part of our country is not in our hands but in those of
foreigners?" (Emphasis ours.) Professor Aruego says
that since the opening days of the Constitutional
Convention one of its fixed and dominating objectives
was the conservation and nationalization of the natural
resources of the country. (2 Aruego, Framing of the
Philippine Constitution, p 592.) This is ratified by the
members of the Constitutional Convention who are
now members of this Court, namely, Mr. Justice
Perfecto, Mr. Justice Briones, and Mr. Justice
Hontiveros. And, indeed, if under Article XIV, section 8,
of the Constitution, an alien may not even operate a
small jitney for hire, it is certainly not hard to
understand that neither is he allowed to own a pieace
of land.
This constitutional intent is made more patent and is
strongly implemented by an act of the National
Assembly passed soon after the Constitution was
approved. We are referring again to Commonwealth
Act No. 141. Prior to the Constitution, there were in the
Public Land Act No. 2874 sections 120 and 121 which
granted aliens the right to acquire private only by way
of reciprocity. Said section reads as follows:
SEC. 120. No land originally acquired in any manner
under the provisions of this Act, nor any permanent
improvement on such land, shall be encumbered,
alienated, or transferred, except to persons,
corporations, associations, or partnerships who may
acquire lands of the public domain under this Act; to
corporations organized in the Philippine Islands
authorized therefor by their charters, and, upon
express authorization by the Philippine Legislature, to
citizens of countries the laws of which grant to citizens
of the Philippine Islands the same right to acquire,
hold, lease, encumber, dispose of, or alienate land, or
permanent improvements thereon, or any interest
therein, as to their own citizens, only in the manner
and to the extent specified in such laws, and while the
same are in force but not thereafter.
under the provisions of the former Public Land Act or
of any other Act, ordinance, royal order, royal decree,
or any other provision of law formerly in force in the
Philippine Islands with regard to public lands, terrenos
baldios y realengos, or lands of any other
denomination that were actually or presumptively of
the public domain or by royal grant or in any other

form, nor any permanent improvement on such land,
shall be encumbered, alienated, or conveyed, except
to persons, corporations, or associations who may
acquire land of the public domain under this Act; to
corporate bodies organized in the Philippine Islands
whose charters may authorize them to do so, and,
upon express authorization by the Philippine
Legislature, to citizens of the countries the laws of
which grant to citizens of the Philippine Islands the
same right to acquire, hold, lease, encumber, dispose
of, or alienate land or pemanent improvements thereon
or any interest therein, as to their own citizens, and
only in the manner and to the extent specified in such
laws, and while the same are in force, but not
thereafter: Provided, however, That this prohibition
shall not be applicable to the conveyance or
acquisition by reason of hereditary succession duly
acknowledged and legalized by competent courts, nor
to lands and improvements acquired or held for
industrial or residence purposes, while used for such
purposes: Provided, further, That in the event of the
ownership of the lands and improvements mentioned
in this section and in the last preceding section being
transferred by judicial decree to persons,corporations
or associations not legally capacitated to acquire the
same under the provisions of this Act, such persons,
corporations, or associations shall be obliged to
alienate said lands or improvements to others so
capacitated within the precise period of five years,
under the penalty of such property reverting to the
Government in the contrary case." (Public Land Act,
No. 2874.)
It is to be observed that the pharase "no land" used in
these section refers to all private lands, whether strictly
agricultural, residential or otherwise, there being
practically no private land which had not been acquired
by any of the means provided in said two sections.
Therefore, the prohibition contained in these two
provisions was, in effect, that no private land could be
transferred to aliens except "upon express
authorization by the Philippine Legislature, to citizens
of Philippine Islands the same right to acquire, hold,
lease, encumber, dispose of, or alienate land." In other
words, aliens were granted the right to acquire private
land merely by way of reciprocity. Then came the
Constitution and Commonwealth Act No. 141 was
passed, sections 122 and 123 of which read as
follows:
under the provisions of this Act, nor any permanent
improvement on such land, shall be encumbered,
alienated, or transferred, except to persons,

corporations, associations, or partnerships who may
acquire lands of the public domain under this Act or to
corporations organized in the Philippines authorized
thereof by their charters.
under the provisions of any previous Act, ordinance,
royal order, royal decree, or any other provision of law
formerly in force in the Philippines with regard to public
lands terrenos baldios y realengos, or lands of any
other denomination that were actually or presumptively
of the public domain, or by royal grant or in any other
form, nor any permanent improvement on such land,
shall be encumbered, alienated, or conveyed, except
to persons, corporations or associations who may
acquire land of the public domain under this Act or to
corporate bodies organized in the Philippines whose
charters authorize them to do so: Provided,
however, That this prohibition shall not be applicable to
the conveyance or acquisition by reason of hereditary
succession duly acknowledged and legalized by
competent courts: Provided, further, That in the event
of the ownership of the lands and improvements
mentioned in this section and in the last preceding
section being transferred by judicial decree to persons,
corporations or associations not legally capacitated to
acquire the same under the provisions of this Act, such
persons, corporations, or associations shall be obliged
to alienate said lands or improvements to others so
capacitated within the precise period of five years;
otherwise, such property shall revert to the
Government.
These two sections are almost literally the same as
sections 120 and 121 of Act No. 2874, the only
difference being that in the new provisions, the right to
reciprocity granted to aliens is completely stricken out.
This, undoubtedly, is to conform to the absolute policy
contained in section 5 of Article XIII of the Constitution
which, in prohibiting the alienation of private
agricultural lands to aliens, grants them no right of
reciprocity. This legislative construction carries
exceptional weight, for prominent members of the
National Assembly who approved the new Act had
been members of the Constitutional Convention.
It is said that the lot question does not come within the
purview of sections 122 and 123 of Commonwealth Act
No. 141, there being no proof that the same had been
acquired by one of the means provided in said
provisions. We are not, however, diciding the instant
case under the provisions of the Public Land Act,
which have to refer to land that had been formerly of
the public domain, otherwise their constitutionality may
be doubtful. We are deciding the instant case under
section 5 of Article XIII of the Constitution which is

more comprehensive and more absolute in the sense
that it prohibits the transfer to alien of any private
agricultural land including residential land whatever its
origin might have been.
And, finally, on June 14, 1947, the Congress approved
Republic Act No. 133 which allows mortgage of
"private real property" of any kind in favor of aliens but
with a qualification consisting of expressly prohibiting
aliens to bid or take part in any sale of such real
property as a consequence of the mortgage. This
prohibition makes no distinction between private lands
that are strictly agricultural and private lands that are
residental or commercial. The prohibition embraces
the sale of private lands of any kind in favor of aliens,
which is again a clear implementation and a legislative
interpretation of the constitutional prohibition. Had the
Congress been of opinion that private residential lands
may be sold to aliens under the Constitution, no
legislative measure would have been found necessary
to authorize mortgage which would have been deemed
also permissible under the Constitution. But clearly it
was the opinion of the Congress that such sale is
forbidden by the Constitution and it was such opinion
that prompted the legislative measure intended to
clarify that mortgage is not within the constitutional
prohibition.
It is well to note at this juncture that in the present case
we have no choice. We are construing the Constitution
as it is and not as we may desire it to be. Perhaps the
effect of our construction is to preclude aliens,
admitted freely into the Philippines from owning sites
where they may build their homes. But if this is the
solemn mandate of the Constitution, we will not
attempt to compromise it even in the name of amity or
equity. We are satisfied, however, that aliens are not
completely excluded by the Constitution from the use
of lands for residential purposes. Since their residence
in the Philippines is temporary, they may be granted
temporary rights such as a lease contract which is not
forbidden by the Constitution. Should they desire to
remain here forever and share our fortunes and
misfortunes, Filipino citizenship is not impossible to
acquire.
For all the foregoing, we hold that under the
Constitution aliens may not acquire private or public
agricultural lands, including residential lands, and,
accordingly, judgment is affirmed, without costs.
SASOSA VDA. DE BARSOBIA v. CUENCO

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-33048
Epifania claimed that it was not her intention to sell the

land to Ong King Po and that she signed the document
of sale merely to evidence her indebtedness to the
latter in the amount of P1,050.00. Epifania has been in
possession ever since except for the portion sold to
the other petitioner Pacita.
April 16, 1982
EPIFANIA SARSOSA VDA. DE BARSOBIA and

PACITA W. VALLAR, petitioners,
vs.
VICTORIANO T. CUENCO, respondent.
MELENCIO-HERRERA, J.:
Sought to be reviewed herein is the judgment dated
August 18, 1970, of the Court of Appeals, 1 rendered in
CA-G.R. No. 41318-R, entitled "Victoriano T. Cuenco,
Plaintiff-appellant, vs. Epifania Sarsosa Vda. de
Barsobia and Pacita W. Vallar, Defendants- appellees,
" declaring Victoriano T. Cuenco (now the respondent)
as the absolute owner of the coconut land in question.
The lot in controversy is a one-half portion (on the
northern side) of two adjoining parcels of coconut land
located at Barrio Mancapagao, Sagay, Camiguin,
Misamis Oriental (now Camiguin province), with an
area of 29,150 square meters, more or less. 2
The entire land was owned previously by a certain
Leocadia Balisado, who had sold it to the spouses
Patricio Barsobia (now deceased) and Epifania
Sarsosa, one of the petitioners herein. They are
Filipino citizens.
On September 5, 1936, Epifania Sarsosa then a
widow, sold the land in controversy to a Chinese, Ong
King Po, for the sum of P1,050.00 (Exhibit "B"). Ong
King Po took actual possession and enjoyed the fruits
thereof.
On August 5, 1961, Ong King Po sold the litigated
property to Victoriano T. Cuenco (respondent herein), a
naturalized Filipino, for the sum of P5,000.00 (Exhibit
"A"). Respondent immediately took actual possession
and harvested the fruits therefrom.
On March 6, 1962, Epifania "usurped" the controverted
property, and on July 26, 1962, Epifania (through her
only daughter and child, Emeteria Barsobia), sold a
one-half (1/2) portion of the land in question to Pacita
W. Vallar, the other petitioner herein (Exhibit "2").
On September 19, 1962, respondent filed a Forcible

Entry case against Epifania before the Municipal Court
of Sagay, Camiguin. The case was dismissed for lack
of jurisdiction since, as the laws then stood, the
question of possession could not be properly
determined without first settling that of ownership.
On December 27, 1966, respondent instituted before
the Court of First Instance of Misamis Oriental a
Complaint for recovery of possession and ownership of
the litigated land, against Epifania and Pacita Vallar
(hereinafter referred to simply as petitioners).
In their Answer below, petitioners insisted that they
were the owners and possessors of the litigated land;
that its sale to Ong King Po, a Chinese, was inexistent
and/or void ab initio; and that the deed of sale between
them was only an evidence of Epifania's indebtedness
to Ong King Po.
The trial Court rendered judgment:
1. Dismissing the complaint with costs against plaintiff
(respondent herein).
2. Declaring the two Deeds of Sale, Exhibits A and B,
respectively, inexistent and void from the beginning;
and
3. Declaring defendant Pacita W. Vallar as the lawful
owner and possessor of the portion of land she bought
from Emeteria Barsobia (pp. 57, 67, Record.) 3
On appeal, the Court of Appeals reversed the
aforementioned Decision and decreed instead that
respondent was the owner of the litigated property,
thus:
xxx xxx xxx
In view of all the foregoing considerations, the
judgment appealed from is hereby reversed. In lieu
thereof, we render judgment:
(a) Declaring the plaintiff-appellant Victoriano T.
Cuenco the absolute owner of the land in question,
with the right of possession thereof;

(b) Ordering the defendants-appellees to restore the
possession of said land to the plaintiff;
(c) Dismissing the defendants' counterclaim;
(d) Condemning the defendants to pay to the plaintiff
the
sum
of
P10,000.00 representing the latter's share from the
sale of copra which he failed to receive since March,
1962 when he was deprived of his possession over the
land, and which defendants illegally appropriated it to
their own use and benefit, plus legal interest from the
filing of the complaint until fully paid; plus P2,000.00
representing expenses and attorney's fees;
(e) Sentencing the defendants to pay the costs.
SO ORDERED. 4
Following
the
denial
of
their
Motion
for
Reconsideration, petitioners filed the instant Petition
for Review on certiorari with this Court on January 21,
1971. Petitioners claim that the Court of Appeals erred:
I. ... when it reversed the judgment of the trial court
declaring petitioner Pacita W. Vallar as the lawful
possessor and owner of the portion of land she
purchased from Emeteria Barsobia, not a party to this
case, there being no evidence against her.
II ... when it included petitioner Pacita W. Vallar to pay
P10,000.00, with legal interest from the filing of the
complaint, representing respondent's share in the
harvest and to pay the costs, there being no evidence
against her.
III. ... when it condemned petitioners to pay P2,000.00
representing expenses and attorney's fees, there being
no factual, legal and equitable justification.
IV. ... in not applying the rule on pari delicto to the facts
of the case or the doctrine enunciated ... in the case of
Philippine Banking Corporation vs. Lui She, L-17587,
September 12, 1967, to ... Petitioner Epifania Sarsosa
Vda. de Barsobia.
V. ... in denying, for lack of sufficient merits, petitioners'
motion for rehearing or reconsideration of its
decision. 5
As the facts stand, a parcel of coconut land was sold
by its Filipino owner, petitioner Epifania, to a Chinese,
Ong King Po, and by the latter to a naturalized Filipino,
respondent herein. In the meantime, the Filipino owner
had unilaterally repudiated the sale she had made to

the Chinese and had resold the property to another
Filipino. The basic issue is: Who is the rightful owner of
the property?
There should be no question that the sale of the land
in question in 1936 by Epifania to Ong King Po was
inexistent and void from the beginning (Art. 1409 [7],
Civil Code) 6 because it was a contract executed
against the mandatory provision of the 1935
Constitution, which is an expression of public policy to
conserve lands for the Filipinos. Said provision reads:
Save in cases of hereditary succession, no private
agricultural land shall be transferred or assigned
except to individuals, corporations, or associations,
qualified to acquire or hold lands of the public
domain. 7
Had this been a suit between Epifania and Ong King
Po, she could have been declared entitled to the
litigated land on the basis, as claimed, of the ruling
in Philippine
Banking
Corporation
vs.
Lui
She, 8 reading:
... For another thing, and this is not only cogent but
also important. Article 1416 of the Civil Code provides
as an exception to the rule on pari delicto that when
the agreement is not illegal per se but is merely
prohibited, and the prohibition by the law is designed
for the protection of the plaintiff, he may, if public policy
is thereby enhanced, recover what he has sold or
delivered. ...
But the factual set-up has changed. The litigated
property is now in the hands of a naturalized Filipino. It
is no longer owned by a disqualified vendee.
Respondent, as a naturalized citizen, was
constitutionally qualified to own the subject property.
There would be no more public policy to be served in
allowing petitioner Epifania to recover the land as it is
already in the hands of a qualified person. Applying by
analogy the ruling of this Court in Vasquez vs. Giap
and Li Seng Giap & Sons: 9
While, strictly speaking, Ong King Po, private
respondent's vendor, had no rights of ownership to

transmit, it is likewise inescapable that petitioner
Epifania had slept on her rights for 26 years from 1936
to 1962. By her long inaction or inexcusable neglect,
she should be held barred from asserting her claim to
the litigated property (Sotto vs. Teves, 86 SCRA 157
[1978]).

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 74170

have been done earlier; it is negligence or omission to
assert a right within a reasonable time, warranting a
23 SCRA 29, 35). (cited in Sotto vs. Teves, 86 SCRA
154 [1978]).
rightful owner of the property.
The award of actual damages in respondent's favor of
P10,000.00, as well as of attorney's fees and
expenses of litigation of P2,000.00, is justified.
Respondent was deprived of the possession of his
land and the enjoyment of its fruits from March, 1962.
The Court of Appeals fixed respondent's share of the
sale of copra at P10,000.00 for eight years at four (4)
harvests a year. The accuracy of this finding has not
been disputed.
However, we find merit in the assigned error that
petitioner, Pacita Vallar, should not be held also liable
for actual damages to respondent. In the absence of
contrary proof, she, too, must be considered as a
vendee in good faith of petitioner Epifania.
The award of attorney's fees and litigation expenses in
the sum of P2,000.00 in respondent's favor is in order
considering that both petitioners compelled respondent
to litigate for the protection of his interests. Moreover,
the amount is reasonable. 10
WHEREFORE, except for that portion holding
petitioner, Pacita W. Vallar, also liable for damages of
P10,000.00, the appealed judgment is hereby affirmed.
Costs against petitioners.
SO ORDERED.
REPUBLIC v. IAC
July 18, 1989
REPUBLIC OF THE PHILIPPINES, petitioner,

vs.
INTERMEDIATE APPELLATE COURT, GUILLERMO
GONZALVES,** respondents.
Amando Fabio Jr. for private respondent.
NARVASA, J.:
The chief question presented in the appeal at bar
concerns the validity of a conveyance of residential
land to an alien prior to his acquisition of Filipino
citizenship by naturalization.
The Trial Court's description of the factual background
is largely undisputed. The case principally concerns
Chua Kim @ Uy Teng Be, who became a naturalized
Filipino citizen, taking his oath as such, on January
7,1977. 1 He was the adopted son of Gregorio Reyes
Uy Un.
The case involved three (3) parcels of land, which
were among those included in Land Registration
Cases Numbered 405 and 14817 of the Court of First
Instance of Quezon Province: Lots Numbered 1 and 2,
plan Psu-57676, 2 and Lot No. 549 of plan AP-7521identical to Plan Psu-54565. 3 These were respectively
adjudicated in said land registration cases to two
persons, as follows:
1) Lots 1 and 2, Psu-57676, to the Spouses Benigno
Maosca and Julia Daguison (in Opposition No.
51 ); 4 and
2) Lot 549, AP-7521 (Psu-54565), to Gaspar Marquez,
married to Marcela Masaganda (in opposition No.
155). 5 However, no decree of confirmation and
registration was entered at the time.
Lots 1 and 2, Psu-57676, were sold by the
Maosca Spouses, to Gregorio Reyes Uy
30, 1934. 6 Lot 549, Psu-54565, was also
Marquez Spouses to Gregorio Reyes
December 27, 1934. 7
owners, the
Un on Dec.
sold by the
Uy Un on

Subsequently, Gregorio Reyes Uy Un died, and his
adopted son, Chua Kim @ Uy Teng, took possession
of the property.
The three (3) parcels of land above mentioned,
together with several others, later became subject of a
compromise agreement in a litigation in the Court of
First Instance of Quezon Province, docketed as Civil
Case No. C-385. 8 The compromise agreement was
executed not only by the parties in the case (plaintiffs
Domingo Reyes and Lourdes Abustan, and the
defendants, So Pick, et al.) respectively described
as "First Parties" and "Second Parties"-but also Chua
Kim @ Ting Be Uy, designated therein as "Third
Party," although he had not been impleaded as a party
to the case. In the agreement, in consideration of Chua
Kim's renunciation (a) of "any right or claim of
whatever nature in .. (certain specifically identified)
parcels of land" and (b) of any other claim against the
First Parties and Second Parties, both the latter, in turn
waived "any claim of ownership or other right in or to
the parcels of land, or the improvements thereon, in
Buenavista, Quezon covered by OCT Nos. 3697,
3696, 3439 and 4382 of the Registry of Deeds of
Quezon," in the name of Gregorio Reyes Uy Un, Chua
Kim's adoptive father, and that they (the First and
Second Parties) "will not oppose the transfer, by
means not contrary to law, of the ownership thereof to
the Third Party," said Chua Kim. The compromise
agreement was afterwards submitted to the
Court 9 which rendered judgment on July 29,1970
(amended by Order dated July 31, 1970), approving
the same. 10
Chua Kim then filed a petition for issuance of decree of
confirmation and registration in Land Registration
Case No. 405 (LRC Rec. No. 14817) of the Court of
First Instance of Quezon Province. 11
After due proceedings, and on the basis of
foregoing facts found to have been duly proven by
evidence, the Court of First Instance
Quezon 12 promulgated on January 14, 1982
following Order, to wit:
the
the
of
the
WHEREFORE, premises considered, this Court finds

that herein petitioner Chua Kim alias Uy Teng Be has
duly established his registerable title over the
properties in question in this land registration case in
so far as Oppositions Nos. 51 and 155 are concerned,
and hereby GRANTS his petition. The decision
rendered on January 14, 1933 in so far as Opposition
Nos. 51 and 155 are concerned, is hereby amended
adjudicating the said properties, better known now as
Lots 1 and 2 of plan Psu-57676 in Opposition No. 51
and as Lot.549 of plan Ap-7521, which is Identical to

plan Psu-54565 in Opposition No. 155, to herein
petitioner Chua Kim alias Uy Teng Be. Upon this order
becoming final, let the corresponding decrees of
confirmation and registration be entered and thereafter
upon payment of the fees required by law, let the
corresponding certificate of titles be issued in the
name of petitioner, Chua Kim alias Uy Teng Be,
married to Amelia Tan, of legal age, a naturalized
Filipino citizen, and a resident of the Municipality of
Buenavista, Province of Quezon, as his own exclusive
properties, free from all liens and encumbrances.
SO ORDERED.
The Republic of the Philippines, through the Solicitor
General, challenged the correctness of the Order and
appealed it to the Court of Appeals. That Court,
however, affirmed the Order "in all respects," in a
decision promulgated on March 25,1986. 13
Still not satisfied, the Republic has come to this Court
on appeal by certiorari, in a final attempt to prevent the
adjudication of the property in question to Chua Kim.
The Solicitor General argues that
1) the deeds and instruments presented by Chua Kim
to prove the conveyance to him of the lands in
question by the successor-ininterest of the original
adjudicates are inadequate for the purpose; and
2) Chua Kim has not proven his qualification to own
private agricultural land at the time of the alleged
acquisition of the property in question.
The Republic's theory is that the conveyances to Chua
Kim were made while he was still an alien, i.e., prior to
his taking oath as a naturalized Philippine citizen on
January 7, 1977, at a time when he was disqualified to
acquire ownership of land in the Philippines (ART XIII,
SEC. 5, 1935 Constitution; ART. XIV, Sec. 14, 1973
Constitution); hence, his asserted titles are null and
void. 14 It is also its contention that reliance on the
decision and amendatory order in Civil Case No. C385 of the CFI, Rizal 15 is unavailing, since neither
document declares that the property in question was
adjudicated to Chua Kim as his inheritance from his
adoptive father, Gregorio Reyes Uy Un. 16
The conclusions of fact of the Intermediate Appellate
Court, sustaining those of the Land Registration Court,
reached after analysis and assessment of the
evidence presented at a formal hearing by the parties,
are by firmly entrenched rule binding on and may not
be reviewed by this Court. 17 Those facts thus found to

exist, and the legal principles subsumed in them, impel
rejection of the Republic's appeal.
It is a fact that the lands in dispute were properly and
formally adjudicated by a competent Court to the
Spouses Gaspar and to the Spouses Marquez in fee
simple, and that the latter had afterwards conveyed
said lands to Gregorio Reyes Uy Un, Chua Kim's
adopting parent, by deeds executed in due form on
December 27, 1934 and December 30, 1934,
respectively. Plainly, the conveyances were made
before the 1935 Constitution went into effect, i.e., at a
time when there was no prohibition against acquisition
of private agricultural lands by aliens. 18Gregorio
Reyes Uy Un therefore acquired good title to the lands
thus purchased by him, and his ownership was not at
all affected either (1) by the principle subsequently
enunciated in the 1935 Constitution that aliens were
incapacitated to acquire lands in the country, since that
constitutional
principle
has
no
retrospective
19
application, or (2) by his and his successor's
omission to procure the registration of the property
prior to the coming into effect of the Constitution. 20
It is a fact, furthermore, that since the death of
Gregorio Reyes Uy Un in San Narciso, Quezon, in
1946, Chua Kim @ Uy Teng Be had been in
continuous possession of the lands in concept of
owner, as the putative heir of his adoptive father, said
Gregorio Reyes; 21 this, without protest whatever from
any person. It was indeed Chua Kim's being in
possession of the property in concept of owner, and
his status as adopted son of Gregorio Reyes, that
were the factors that caused his involvement in Civil
Case No. C-385 of the CFI at Calauag, Quezon, at the
instance of the original parties thereto, 22 and his
participation in the Compromise Agreement later
executed by all parties. As already mentioned, that
compromise agreement, approved by judgment
rendered on July 29, 1970, 23 implicity recognized
Chua Kim's title to the lands in question.
Be this as it may, the acquisition by Chua Kim of
Philippine citizenship should foreclose any further
debate regarding the title to the property in
controversy, in line with this Court's rulings relative to
persons similarly situated. 24 In Sarsosa Vda. de
Barsobia v. Cuenco, 113 SCRA 547, for instance, the
ruling was as follows:
... The litigated property is now in the hands of a
naturalized Filipino. It is no longer owned by a
disqualified vendee. Respondent, as a naturalized
citizen, was constitutionally qualified to own the subject
property. There would be no more public policy to be
served in allowing petitioner Epifania to recover the

land as it is already in the hands of a qualified person.
Applying by analogy the ruling of this Court in Vasquez
vs. Giap and Li Seng Giap & Sons (96 Phil. 447
[1955]),
land for future generations of Filipinos, that aim or
WHEREFORE, the petition is DISMISSED, and the
judgment of the Intermediate Appellate Court subject
thereof AFFIRMED in toto. SO ORDERED.
VASQUEZ v. GIAP and LEE SENG GIAP

SUPREME COURT
Manila
EN BANC
G.R. No. L-3676
January 31, 1955
SOCORRO VASQUEZ, plaintiff-appellant,

vs.
LI SENG GIAPand LI SENG GIAP &
SONS, defendants-appellees.
Jose S. Sarte for appellant.
Lee, Orendain and Guzman for appellees.
PADILLA, J.:
This is an action to rescind the sale of a parcel of land
together with the improvements erected thereon,
described in the complaint, which was sold by the
plaintiff to the defendant Li Seng Giap on 22 January
1940, on the ground that the vendee was an alien and
under the Constitution incapable to own and hold title
to lands. The case was decided upon the following
stipulation of facts:

Plaintiff and defendants in the above-entitled case, by
their respective attorneys, hereby stipulate and agree
that the facts involved in this litigation are as follows:.
That plaintiff and defendant Li Seng Giap are, and
were at all times mentioned herein, of legal age and
residents of the City of Manila, Philippines; that
defendant Li Seng Giap & Sons, Inc., is a corporation
duly organized and existing under and by virtue of the
laws of the Philippines, with principal office in the City
of Manila, Philippines.
II.
That on January 22, 1940, plaintiff sold and transferred
to defendant Li Seng Giap, then Chinese citizen, for
the sum of P14,500, a parcel of land together with a
house of strong materials existing thereon, more
particularly bounded and described as follows:.
A PARCEL OF LAND (Lot No. 22-A of the subdivision
plan Psd-15360, being a portion of Lot No. 22, Block
No. 2809 of the Cadastral survey of Manila, G.L.R.O.
Cadastral Record No. 192), situated in the District of
Tondo, City of Manila. Bounded on the NE. by lot No.
23, Block No. 2809, on the SE. by Lot No. 22-B, Block
No. 2809; on the SW. by Lot No. 21, Block No. 2809;
and on the NW. by Calle Magdalena; * * * containing
an area of four hundred twenty-three square meters
and forty-five square decimeters (423.45) more or less.
(Assessed Value P15,579.00).
That defendant Li Seng Giap & Sons, Inc., is now a

Filipino corporation, 96.67 per cent of its stock being
owned by Filipinos, and duly authorized by its articles
of incorporation to own, acquire or dispose of real
properties.
VI.
That the following are the names and respective
citizenship and shareholdings of the present
stockholders of Li Seng Giap & Sons, Inc:
Names Citizenship No. of Shares Per cent Total
Amount.
Li Seng Giap Filipino 3,400 56.67 P340,000.00 Tang
Ho de Li Seng Giap Filipino 1,200 20.00 120,000.00
William Lee Filipino 200 3.33 20,000.00 Henry Lee
Filipino 200 3.33 20,000.00 Thomas J. Lee Filipino 200
3.33 20,000.00 Sofia Lee Teehankee Filipino 200 3.33
20,000.00 Julian M. Lee Filipino 200 3.33 20,000.00
Anthony P. Lee Chinese 200 3.33 20,000.00 6,000
100.00% P600,000.00.
VII.
That Henry Lee was duly naturalized as a Filipino
citizen on October 21, 1936, under Certificate of
Naturalization No. 352, the records of which were duly
reconstituted under an order of this Honorable Court in
Case No. R-407 dated May 24, 1946.
III.
VIII.
That on August 21, 1940, defendant Li Seng Giap sold

and transferred unto defendant Li Seng Giap & Sons,
Inc., whose shareholdings then were owned by
Chinese citizens, for the same sum of P14,500, the
above-mentioned
parcel,
together
with
the
improvements thereon, and duly registered under
Transfer Certificate of Title No. 59684 of the Office of
the Register of Deeds for the city of Manila on August
23, 1940.
That Thomas J. Lee was duly naturalized as a Filipino

citizen on May 10, 1941, under Certificate of
IV.
That defendant Li Seng Giap was duly naturalized as a
Filipino citizen on May 10, 1941, under Certificate of
V.
IX.
That William Lee was duly naturalized as a Filipino
citizen on November 1, 1948, under Certificate of
Naturalization No. 2 of the Court of First Instance of
Daet, Camarines Norte.
X.
That Sofia Lee Teehankee is a Filipino citizen being
married to Dr. Rafael Teehankee, a Filipino citizen.
XI.

That Julia M. Lee and Charles Lee are both Filipinos
by operation of law as they were both minors when
their father, Li Seng Giap, became a Filipino citizen on
May 10, 1941.
Manila, Philippines, September 7, 1949.
Respectfully Submitted:
(Sgd.) JOSE S. SARTE Counsel for the Plaintiff Room
213 Central Hotel, Manila.
LEE, ORENDAIN, & GUZMAN Counsel for the
Defendants 60 Novaliches St., Manila.
By: (Sgd.) LEONARDO M. GUZMAN
The Court rendered judgment dismissing the complaint
with cost against the plaintiff. She has appealed.
In Caoile vs. Yu Chiao, 49 Off. Gaz., 4321; Talento vs.
Makiki, 49 Off. Gaz., 4331; Bautista vs. Uy 49 Off.
Gaz., 4331; Rellosa vs. Gaw Chee, 49 Off. Gaz.,
4345 and Mercado vs. Go Bio, 49 Off. Gaz., 5360, the
majority of this Court has ruled that in Sales of real
estate to aliens incapable of holding title thereto by
virtue of the provisions of the Constitution 1 both the
vendor and the vendee are deemed to have committed
the constitutional violation and being thus in pari
delicto the courts will not afford protection to either
party.2 From this ruling three Justices dissented.3
The action is not of rescission because it is not
postulated upon any of the grounds provided for in
Article 1291 of the old Civil Code and because the
action of rescission involves lesion or damage and
seeks to repair it. It is an action for annulment under
Chapter VI, Title II, Book II, on nullity of contracts,
based on a defect in the contract which invalidates it
independently of such lesion or damages. 4 It is very
likely that the majority of this Court proceeded upon
that theory when it applied the in pari delicto rule
referred to above.
In the United States the rule is that in a sale of real
estate to an alien disqualified to hold title thereto the
vendor divests himself of the title to such real estate
and has no recourse against the vendee despite the
latter's disability on account of alienage to hold title to
such real estate and the vendee may hold it against
the whole except as against the State. It is only the
State that is entitled by proceedings in the nature
of office found to have a forfeiture or escheat declared
against the vendee who is incapable of holding title to
the real estate sold and conveyed to him.5
However, if the State does not commence such

proceedings and in the meantime the alien becomes
naturalized citizen the State is deemed to have waived
its right to escheat the real property and the title of the
alien thereto becomes lawful and valid as of the date
of its conveyance or transfer to him. 6 The Rule in the
United States that in a sale of real estate to an alien
disqualified to hold title thereto, the vendor divests
himself of the title to such real estate and is not
permitted to sue for the annulment of his contract, is
also the rule under the Civil Code. * * *Article 1302 of
the old Civil Code provides: * * *Persons sui
juris cannot, however, avail themselves of the
incapacity of those with whom they contracted; * * *.".
Manresa's comment on this clause of article 1302 of
the Civil Code is as follows:.
Irresponsabilidad del defecto alegada. Es la
segunda de las condiciones necesarias para el
ejercicio de la accion. Algunos la expresan diciendo
que solo puede intrenar aquella el perjudicado, pero
esta expresion puede conducir a ideas equivocadas,
ya quela nulidad es independiente de la lesion, como
declara el art. 1.300, y es licito al favorecido
economicamente por el contrato pedir la nulidad
basandose en causas a el no imputables, y en cambio
no autoriza la ley el caso inverso.
Sencilla la regla contenida en el parrafo segundo de
este articulo,puede complicarse cuando coexisten dos
defectos
del
contrato,
comopuede
suceder,
derivandose a veces de un mismo hecho,
verbigracia,el contrato celebrado con un incapaz por
quien ignora que lo es: eneste ejemplo es indudable
que la persona capaz no podra pedir lanulidad
fundado en la incapacidad de la otra, pero si alegar
elerror o el dolo que padeciera si las circunstancias del
sujetoeran de decisiva influencia en el contrato.
(Supra, pp.709-709.).
Appellant argues that if at the time of the conveyance
of the real property the appellee was incapable of
holding title to such real estate, the contract of sale
was null or void and may be annulled, and his
subsequent naturalization as a Filipino citizen cannot
retroact to the date of the conveyance to make it lawful
and valid. However, if the ban on aliens from acquiring
not only agricultural but also urban lands, as construed
by this Court in the Krivenko case, is to preserve the
nation's lands for future generations of Filipinos, that
aim or purpose would not be thwarted but achieved by
who became Filipino citizens by naturalization. The
title to the parcel of land of the vendee, a naturalized

Filipino citizen, being valid that of the domestic
corporation to which the parcel of land has been
transferred, must also be valid, 96.67 per cent of its
capital stock being owned by Filipinos.
The judgment appealed from is affirmed, without costs.
I
On July 23, 1947, Ong Joi Jong sold a parcel of land
located at Fundidor Street, San Nicolas to private
respondent Soledad Parian, the wife of Ong Yee. The
latter, the brother of petitioner Ong Ching Po, died in
January 1983; while petitioner Ong Ching Po died in
October 1986. The said sale was evidenced by a
notarized Deed of Sale written in English.
Subsequently, the document was registered with the
Register of Deeds of Manila, which issued Transfer
Certificate of Title No. 9260 dated September 2, 1947
in the name of private respondent.
According to private respondent, she entrusted the
administration of the lot and building to petitioner Ong
Ching Po when she and her husband settled in Iloilo.
When her husband died, she demanded that the lot be
vacated because she was going to sell it.
Unfortunately, petitioners refused to vacate the said
premises.
ONG CHING PO v. COURT OF APPEALS

SUPREME COURT
Manila
FIRST DIVISION
G.R. Nos. 113472-73
December 20, 1994
ONG CHING PO, YU SIOK LIAN DAVID ONG and

JIMMY ONG, petitioners,
vs.
COURT OF APPEALS and SOLEDAD
PARIAN, respondents.
Bautista, Salva, Arrieta, Salva for petitioner.
Arthem Maceda Potian for private respondent.
QUIASON, J.:
This is a petition for review on certiorari under Rule 45
of the Revised Rules of Court of the Decision of the
Court of Appeals dated July 15, 1993, which dismissed
the petition for certiorari in CA-G.R. CV Nos. 2839192.
On March 19, 1984, private respondent filed a case for

unlawful detainer against petitioner Ong Ching Po
before the Metropolitan Trial Court of Manila, Branch
26. The inferior court dismissed her case. The
dismissal was affirmed by the Regional Trial Court,
Branch 10, Manila. The decision of the Regional Trial
Court was, in turn, affirmed by the Court of Appeals,
which dismissed the petition. The decision of the Court
of Appeals became final and executory.
Petitioners, on the other hand, claimed that on July 23,
1946, petitioner Ong Ching Po bought the said parcel
of land from Ong Joi Jong. The sale was evidenced by
a photo copy of a Deed of Sale written in Chinese with
the letter head "Sincere Trading Co." (Exh. "B"). An
English translation of said document (Exh. "C") read as
follows:
Deed of Sale
I, Ong Joi Jong, a party to this Deed of Sale hereby
sell in absolutely (sic) manner a lot located on No. 4
Fundidor Street, San Nicolas an (sic) area consisting
213 square meters including a one-story house
erected thereon unto Mr. Ong Ching Po for the sum of
P6,000.00 the receipt of which is hereby
acknowledged by me and consequently I have
executed and signed the government registered title
(sic) the said lot inclusive of the house erected
thereon, now belong (sic) to Mr. Ong Ching Po
unequivocally. And the purpose of this document is to
precisely serve as proof of the sale.

Addendum: I have acceded to the request of Mr. Ong
Ching Po into signing another document in favor of
Soledad Parian (She is the Filipino wife of Ong Yee,
brother of Ong Ching Po) for the purpose of facilitating
the issuance of the new title by the City Register of
Deeds and for the reason that he is not yet a Filipino. I
certify to the truthfulness of this fact.
Lot Seller: Ong Joi Jong
(Exhibits for the plaintiff, p. 4)
On December 6, 1983, petitioner Ong Ching Po
executed a Deed of Absolute Sale conveying to his
children, petitioners Jimmy and David Ong, the same
property sold by Ong Joi Jong to private respondent in
1947. On December 12 1985, petitioners Ong Ching
Po, Jimmy Ong and David Ong filed an action for
reconveyance
and
damages
against
private
respondent in the Regional Trial Court, Branch 53,
Manila, docketed as Case No. 85-33962.
On July 26, 1986, private respondent filed an action for
quieting of title against petitioners Ong Ching Po and
his wife, petitioner Yu Siok Lian, in the Regional Trial
Court, Branch 58, Manila, docketed as Civil Case No.
86-36818. Upon her motion, the case was
consolidated
with
Civil
Case
No.
85-33962. On May 30 1990, the trial court rendered a
decision in favor of private respondent. On appeal by
petitioners to the Court of Appeals, the said court
affirmed the decision of the Regional Trial Court.
Hence, this petition.
II
document is what it purports to be (i.e., a deed of

conveyance in favor of Soledad Parian [private
respondent] or it was only resorted to or executed as a
subterfuge because the real buyer (Ong Ching Po)
was an alien and it was agreed upon between Ong
Ching Po and his brother (Ong Yee, Soledad Parian's
husband) that the land be registered in the name of
Soledad Parian in order to avoid legal complications
and to facilitate registration and transfer and that the
said title would be transferred by Soledad to Ong
Ching Po or his successors-in-interest and that she
would be holding the title in trust for him" (Rollo, pp.
19-20).
We cannot go along with the claim that petitioner Ong
Ching Po merely used private respondent as a dummy
to have the title over the parcel of land registered in
her name because being an alien he was disqualified
to own real property in the Philippines. To sustain such
an outrageous contention would be giving a high
premium to a violation of our nationalization laws.
Assuming that Exhibit "B" is in existence and that it
was duly executed, still petitioners cannot claim
ownership of the disputed lot by virtue thereof.
Section 5, Article XIII of the 1935 Constitution
provides, as follows:
in the Philippines.
Section 14, Article XIV of the 1973 Constitution
According to petitioners, the Court of Appeals erred:

(1) When it gave full faith and credit to the Deed of
Sale (Exh. "A") in favor of private respondent, instead
of the Deed of Sale (Exh. "B" and its translation, Exh.
"C") in favor of petitioner Ong Ching Po.

land shall be transferred or conveyed except to
individuals, corporations, or associations qualified to
acquire or hold lands in the public domain.
Section 7, Article XII of the 1987 Constitution provides:
(2) When it concluded that the acts of petitioners were

not acts of ownership; and
(3) When it ruled that no express nor implied trust
existed between petitioners and private respondent
(Rollo, pp. 17-18).
As stated by petitioners themselves, what is in dispute
". . . is not so much as to which between Exhibit "A"
and "Exhibit "B" is more weighty, but whether this

lands shall be transferred or conveyed except to
acquire or hold lands in the public domain.
The capacity to acquire private land is made
dependent upon the capacity to acquire or hold lands
of the public domain. Private land may be transferred
or conveyed only to individuals or entities "qualified to

acquire lands of the public domain" (II Bernas, The
Constitution of the Philippines 439-440 [1988 ed.]).
The 1935 Constitution reserved the right to participate
in the "disposition, exploitation, development and
utilization" of all "lands of the public domain and other
natural resources of the Philippines" for Filipino
citizens or corporations at least sixty percent of the
capital of which was owned by Filipinos. Aliens,
whether individuals or corporations, have been
disqualified from acquiring public lands; hence, they
have also been disqualified from acquiring private
lands.
Petitioner Ong Ching Po was a Chinese citizen;
therefore, he was disqualified from acquiring and
owning real property. Assuming that the genuineness
and due execution of Exhibit "B" has been established,
the same is null and void, it being contrary to law.
On the other end of the legal spectrum, the deed of
sale executed by Ong Joi Jong in favor of private
respondent (Exh. "A") is a notarized document.
To remove the mantle of validity bestowed by law on
said document, petitioners claim that private
respondent admitted that she did not pay anything as
consideration for the purported sale in her favor. In the
same breath, petitioners said that private respondent
implied in her deposition that it was her husband who
paid for the property. It appears, therefore, that the
sale was financed out of conjugal funds and that it was
her husband who handled the transaction for the
purchase of the property. Such transaction is a
common practice in Filipino-family affairs.
It is not correct to say that private respondent never
took possession of the property. Under the law,
possession is transferred to the vendee by virtue of the
notarized deed of conveyance. Under Article 1498 of
the Civil Code of the Philippines, "when the sale is
made through a public instrument, the execution
thereof shall be equivalent to the delivery of the object
of the contract, if from the deed the contrary does not
appear or cannot clearly be inferred." If what
petitioners meant was that private respondent never
lived in the building constructed on said land, it was
because her family had settled in Iloilo.
There is no document showing the establishment of an
express trust by petitioner Ong Ching Po as trustor
and private respondent as trustee. Not even Exhibit
"B" can be considered as such a document because
private respondent, the registered owner of the
property subject of said "deed of sale," was not a party
thereto. The oral testimony to prove the existence of

the express trust will not suffice. Under Article 1443 of
the Civil Code of the Philippines, "No express trust
concerning an immovable or any interest therein may
be proved by parole evidence."
Undaunted, petitioners argue that if they cannot prove
an express trust in writing, they can prove an implied
trust orally. While an implied trust may be proved orally
(Civil Code of the Philippines, Art. 1457), the evidence
must be trustworthy and received by the courts with
extreme caution, because such kind of evidence may
be easily fabricated (Salao v. Salao, 70 SCRA 65
[1976]). It cannot be made to rest on vague and
uncertain evidence or on loose, equivocal or indefinite
declarations (Cf. De Leon v. Molo-Peckson, et al., 116
Phil. 1267 [1962]). Petitioners do not claim that Ong
Yee was not in a financial position to acquire the land
and to introduce the improvements thereon. On the
other hand, Yu Siok Lian, the wife of petitioner Ong
Ching Po, admitted in her testimony in court that Ong
Yee was a stockholder of Lam Sing Corporation and
was engaged in business.
The Court of Appeals did not give any credence to
Exhibit "B" and its translation, Exhibit "C", because
these documents had not been properly authenticated.
Under Section 4, Rule 130 of the Revised Rules of
Court:
Secondary Evidence when Original is lost or
destroyed. When the original writing has been lost or
destroyed, or cannot be produced in court, upon proof
of its execution and lost or destruction, or
unavailability, its contents may be proved by a copy, or
by a recital of its contents in some authentic document,
or by the recollection of the witnesses.
Secondary evidence is admissible when the original
documents were actually lost or destroyed. But prior to
the introduction of such secondary evidence, the
proponent must establish the former existence of the
document. The correct order of proof is as follows:
existence; execution; loss; contents. This order may be
changed if necessary in the discretion of the court (De
Vera v. Aguilar, 218 SCRA 602 [1993]).
Petitioners failed to adduce evidence as to the
genuineness and due execution of the deed of sale,
Exhibit "B".
The due execution of the document may be
established by the person or persons who executed it;
by the person before whom its execution was

acknowledged; or by any person who was present and
saw it executed or who after its execution, saw it and
recognized the signatures; or by a person to whom the
parties to the instrument had previously confessed the
execution thereof (De Vera v. Aguilar, supra).
ALFRED FRITZ FRENZEL, petitioner,

vs.
EDERLINA P. CATITO, respondent.
Petitioner Yu Siok Lian testified that she was present

when said document was executed, but the trial court
rejected her claim and held:
CALLEJO, SR., J.:
If it is true that she was present, why did she not sign
said document, even merely as a witness? Her oral
testimony is easy to concoct or fabricate. Furthermore,
she was married only on September 6, 1946 to the
plaintiff, Ong Ching Po, in Baguio City where she
apparently resided, or after the deed of sale was
executed. The Court does not believe that she was
present during the execution and signing of the deed
of sale involved therein, notwithstanding her
pretensions to the contrary (Decision p. 6, Records p.
414).
As to the contention of petitioners that all the tax
receipts, tax declaration, rental receipts, deed of sale
(Exh. "B") and transfer certificate of title were in their
possession, private respondent explained that she and
her husband entrusted said lot and building to
petitioners when they moved to Iloilo.
As observed by the Court of Appeals:
We find, however, that these acts, even if true, are not
necessarily reflective of dominion, as even a mere
administrator or manager may lawfully perform them
pursuant to his appointment or employment (Rollo,
p. 10).
It is markworthy that all the tax receipts were in the
name of private respondent and her husband. The
rental receipts were also in the name of her husband.
WHEREFORE, the petition is DISMISSED.
SO ORDERED.
FRENZEL v. CATITO
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 143958
July 11, 2003
Before us is a petition for review of the Decision 1 of the

Court of Appeals in CA-G.R. CV No. 53485 which
affirmed the Decision2 of the Regional Trial Court of
Davao City, Branch 14, in Civil Case No. 17,817
dismissing the petitioner's complaint, and the
resolution of the Court of Appeals denying his motion
for reconsideration of the said decision.
The Antecedents3
As gleaned from the evidence of the petitioner, the
case at bar stemmed from the following factual
backdrop:
Petitioner Alfred Fritz Frenzel is an Australian citizen of
German descent. He is an electrical engineer by
profession, but worked as a pilot with the New Guinea
Airlines. He arrived in the Philippines in 1974, started
engaging in business in the country two years
thereafter, and married Teresita Santos, a Filipino
citizen. In 1981, Alfred and Teresita separated from
bed and board without obtaining a divorce.
Sometime in February 1983, Alfred arrived in Sydney,
Australia for a vacation. He went to King's Cross, a
night spot in Sydney, for a massage where he met
Ederlina Catito, a Filipina and a native of Bajada,
Davao City. Unknown to Alfred, she resided for a time
in Germany and was married to Klaus Muller, a
German national. She left Germany and tried her luck
in Sydney, Australia, where she found employment as
a masseuse in the King's Cross nightclub. She was
fluent in German, and Alfred enjoyed talking with her.
The two saw each other again; this time Ederlina
ended up staying in Alfred's hotel for three days. Alfred
gave Ederlina sums of money for her services.4
Alfred was so enamored with Ederlina that he
persuaded her to stop working at King's Cross, return
to the Philippines, and engage in a wholesome
business of her own. He also proposed that they meet
in Manila, to which she assented. Alfred gave her
money for her plane fare to the Philippines. Within two
weeks of Ederlina's arrival in Manila, Alfred joined her.
Alfred reiterated his proposal for Ederlina to stay in the

Philippines and engage in business, even offering to
finance her business venture. Ederlina was delighted
at the idea and proposed to put up a beauty parlor.
Alfred happily agreed.
Alfred told Ederlina that he was married but that he
was eager to divorce his wife in Australia. Alfred
proposed marriage to Ederlina, but she replied that
they should wait a little bit longer.
Ederlina found a building at No. 444 M.H. del Pilar
corner Arquiza Street, Ermita, Manila, owned by one
Atty. Jose Hidalgo who offered to convey his rights
over the property for P18,000.00. Alfred and Ederlina
accepted the offer. Ederlina put up a beauty parlor on
the property under the business name Edorial Beauty
Salon, and had it registered with the Department of
Trade and Industry under her name. Alfred paid Atty.
Hidalgo P20,000.00 for his right over the property and
gave P300,000.00 to Ederlina for the purchase of
equipment and furniture for the parlor. As Ederlina was
going to Germany, she executed a special power of
attorney on December 13, 19835appointing her
brother, Aser Catito, as her attorney-in-fact in
managing the beauty parlor business. She stated in
the said deed that she was married to Klaus Muller.
Alfred went back to Papua New Guinea to resume his
work as a pilot.
When Alfred returned to the Philippines, he visited
Ederlina in her Manila residence and found it
unsuitable for her. He decided to purchase a house
and lot owned by Victoria Binuya Steckel in San
Francisco del Monte, Quezon City, covered by
Transfer Certificate of Title No. 218429 for
US$20,000.00. Since Alfred knew that as an alien he
was disqualified from owning lands in the Philippines,
he agreed that only Ederlina's name would appear in
the deed of sale as the buyer of the property, as well
as in the title covering the same. After all, he was
planning to marry Ederlina and he believed that after
their marriage, the two of them would jointly own the
property. On January 23, 1984, a Contract to Sell was
entered into between Victoria Binuya Steckel as the
vendor and Ederlina as the sole vendee. Alfred signed
therein as a witness.6 Victoria received from Alfred, for
and in behalf of Ederlina, the amount of US$10,000.00
as partial payment, for which Victoria issued a
receipt.7 When Victoria executed the deed of absolute
sale over the property on March 6, 1984, 8 she received
from Alfred, for and in behalf of Ederlina, the amount of
US$10,000.00 as final and full payment. Victoria
likewise issued a receipt for the said amount. 9 After
Victoria had vacated the property, Ederlina moved into
her new house. When she left for Germany to visit
Klaus, she had her father Narciso Catito and her two
sisters occupy the property.
Alfred decided to stay in the Philippines for good and
live with Ederlina. He returned to Australia and sold his
fiber glass pleasure boat to John Reid for $7,500.00 on
May 4, 1984.10 He also sold his television and video
business in Papua New Guinea for K135,000.00 to
Tekeraoi Pty. Ltd.11 He had his personal properties
shipped to the Philippines and stored at No. 14
Fernandez Street, San Francisco del Monte, Quezon
City. The proceeds of the sale were deposited in
Alfred's account with the Hong Kong Shanghai
Banking Corporation (HSBC), Kowloon Branch under
Bank Account No. 018-2-807016.12 When Alfred was in
Papua New Guinea selling his other properties, the
bank sent telegraphic letters updating him of his
account.13 Several checks were credited to his HSBC
bank account from Papua New Guinea Banking
Corporation, Westpac Bank of Australia and New
Zealand Banking Group Limited and Westpac BankPNG-Limited. Alfred also had a peso savings account
with HSBC, Manila, under Savings Account No. 01725-183-01.14
Once, when Alfred and Ederlina were in Hong Kong,
they opened another account with HSBC, Kowloon,
this time in the name of Ederlina, under Savings
Account No. 018-0-807950.15 Alfred transferred his
deposits in Savings Account No. 018-2-807016 with
the said bank to this new account. Ederlina also
opened a savings account with the Bank of America
Kowloon Main Office under Account No. 30069016.16
On July 28, 1984, while Alfred was in Papua New
Guinea, he received a Letter dated December 7, 1983
from Klaus Muller who was then residing in Berlin,
Germany. Klaus informed Alfred that he and Ederlina
had been married on October 16, 1978 and had a
blissful married life until Alfred intruded therein. Klaus
stated that he knew of Alfred and Ederlina's amorous
relationship, and discovered the same sometime in
November 1983 when he arrived in Manila. He also
begged Alfred to leave Ederlina alone and to return her
to him, saying that Alfred could not possibly build his
future on his (Klaus') misfortune.17
Alfred had occasion to talk to Sally MacCarron, a close
friend of Ederlina. He inquired if there was any truth to
Klaus' statements and Sally confirmed that Klaus was
married to Ederlina. When Alfred confronted Ederlina,
she admitted that she and Klaus were, indeed,
married. But she assured Alfred that she would divorce
Klaus. Alfred was appeased. He agreed to continue
the amorous relationship and wait for the outcome of

Ederlina's petition for divorce. After all, he intended to
marry her. He retained the services of Rechtsanwaltin
Banzhaf with offices in Berlin, as her counsel who
informed
her
of
the
progress
of
the
18
proceedings. Alfred paid for the services of the
lawyer.
In the meantime, Alfred decided to purchase another
house and lot, owned by Rodolfo Morelos covered by
TCT No. 92456 located in Pea Street, Bajada, Davao
City.19 Alfred again agreed to have the deed of sale
made out in the name of Ederlina. On September 7,
1984, Rodolfo Morelos executed a deed of absolute
sale over the said property in favor of Ederlina as the
sole vendee for the amount of P80,000.00. 20 Alfred
paid US$12,500.00 for the property.
Alfred purchased another parcel of land from one Atty.
Mardoecheo Camporedondo, located in Moncado,
Babak, Davao, covered by TCT No. 35251. Alfred once
more agreed for the name of Ederlina to appear as the
sole vendee in the deed of sale. On December 31,
1984, Atty. Camporedondo executed a deed of sale
over the property for P65,000.00 in favor of Ederlina as
the sole vendee.21 Alfred, through Ederlina, paid the lot
at the cost of P33,682.00 and US$7,000.00,
respectively, for which the vendor signed receipts. 22 On
August 14, 1985, TCT No. 47246 was issued to
Ederlina as the sole owner of the said property.23
Meanwhile, Ederlina deposited on December 27, 1985,
the total amount of US$250,000 with the HSBC
Kowloon under Joint Deposit Account No. 018-462341145.24
The couple decided to put up a beach resort on a fourhectare land in Camudmud, Babak, Davao, owned by
spouses Enrique and Rosela Serrano. Alfred
purchased the property from the spouses for
P90,000.00, and the latter issued a receipt therefor.25 A
draftsman commissioned by the couple submitted a
sketch of the beach resort.26 Beach houses were
forthwith constructed on a portion of the property and
were eventually rented out by Ederlina's father,
Narciso Catito. The rentals were collected by Narciso,
while Ederlina kept the proceeds of the sale of copra
from the coconut trees in the property. By this time,
Alfred had already spent P200,000.00 for the
purchase, construction and upkeep of the property.
Ederlina often wrote letters to her family informing
them of her life with Alfred. In a Letter dated January
21, 1985, she wrote about how Alfred had financed the
purchases of some real properties, the establishment
of her beauty parlor business, and her petition to

divorce Klaus.27
Because Ederlina was preoccupied with her business
in Manila, she executed on July 8, 1985, two special
powers of attorney28 appointing Alfred as attorney-infact to receive in her behalf the title and the deed of
sale over the property sold by the spouses Enrique
Serrano.
In the meantime, Ederlina's petition for divorce was
denied because Klaus opposed the same. A second
petition filed by her met the same fate. Klaus wanted
half of all the properties owned by Ederlina in the
Philippines before he would agree to a divorce. Worse,
Klaus threatened to file a bigamy case against
Ederlina.29
Alfred proposed the creation of a partnership to
Ederlina, or as an alternative, the establishment of a
corporation, with Ederlina owning 30% of the equity
thereof. She initially agreed to put up a corporation and
contacted Atty. Armando Dominguez to prepare the
necessary documents. Ederlina changed her mind at
the last minute when she was advised to insist on
claiming ownership over the properties acquired by
them during their coverture.
Alfred and Ederlina's relationship started deteriorating.
Ederlina had not been able to secure a divorce from
Klaus. The latter could charge her for bigamy and
could even involve Alfred, who himself was still
married. To avoid complications, Alfred decided to live
separately from Ederlina and cut off all contacts with
her. In one of her letters to Alfred, Ederlina complained
that he had ruined her life. She admitted that the
money used for the purchase of the properties in
Davao were his. She offered to convey the properties
deeded to her by Atty. Mardoecheo Camporedondo
and Rodolfo Morelos, asking Alfred to prepare her
affidavit for the said purpose and send it to her for her
signature.30 The last straw for Alfred came on
September 2, 1985, when someone smashed the front
and rear windshields of Alfred's car and damaged the
windows. Alfred thereafter executed an affidavitcomplaint charging Ederlina and Sally MacCarron with
malicious mischief.31
On October 15, 1985, Alfred wrote to Ederlina's father,
complaining that Ederlina had taken all his life savings
and because of this, he was virtually penniless. He
further accused the Catito family of acquiring for
themselves the properties he had purchased with his
own money. He demanded the return of all the
amounts that Ederlina and her family had "stolen" and

turn over all the properties acquired by him and
Ederlina during their coverture.32
II. Personal Properties:

a. Furniture valued at P10,000.00.
33
Shortly thereafter, Alfred filed a Complaint dated

October 28, 1985, against Ederlina, with the Regional
Trial Court of Quezon City, for recovery of real and
personal properties located in Quezon City and Manila.
In his complaint, Alfred alleged, inter alia, that Ederlina,
without his knowledge and consent, managed to
transfer funds from their joint account in HSBC Hong
Kong, to her own account with the same bank. Using
the said funds, Ederlina was able to purchase the
properties subject of the complaints. He also alleged
that the beauty parlor in Ermita was established with
his own funds, and that the Quezon City property was
likewise acquired by him with his personal funds.34
Ederlina failed to file her answer and was declared in
default. Alfred adduced his evidence ex parte.
In the meantime, on November 7, 1985, Alfred also
filed a complaint35 against Ederlina with the Regional
Trial Court, Davao City, for specific performance,
declaration of ownership of real and personal
properties, sum of money, and damages. He
alleged, inter alia, in his complaint:
4. That during the period of their common-law
relationship, plaintiff solely through his own efforts and
resources acquired in the Philippines real and personal
properties valued more or less at P724,000.00; The
defendant's common-law wife or live-in partner did not
contribute anything financially to the acquisition of the
said real and personal properties. These properties are
as follows:
...
5. That defendant made no contribution at all to the
acquisition, of the above-mentioned properties as all
the monies (sic) used in acquiring said properties
belonged solely to plaintiff;36
Alfred prayed that after hearing, judgment be rendered
in his favor:
WHEREFORE, in view of the foregoing premises, it is
respectfully prayed that judgment be rendered in favor
of plaintiff and against defendant:
a) Ordering the defendant to execute the
corresponding deeds of transfer and/or conveyances
in favor of plaintiff over those real and personal
properties enumerated in Paragraph 4 of this
complaint;
b) Ordering the defendant to deliver to the plaintiff all
the above real and personal properties or their money
value, which are in defendant's name and custody
because these were acquired solely with plaintiffs
money and resources during the duration of the
common-law relationship between plaintiff and
defendant, the description of which are as follows:
I. Real Properties
(1) TCT No. T-92456 (with residential house) located at

Bajada, Davao City, consisting of 286 square meters,
registered in the name of the original title owner
Rodolfo Morelos but already fully paid by plaintiff.
Valued at P342,000.00;
a. TCT No. T-92456 located at Bajada, Davao City,

consisting of 286 square meters, (with residential
house) registered in the name of the original title
owner Rodolfo M. Morelos but already fully paid by
plaintiff. Valued at P342,000.00;
(2) TCT No. T-47246 (with residential house) located at

Babak, Samal, Davao, consisting of 600 square
meters, registered in the name of Ederlina Catito, with
the Register of Deeds of Tagum, Davao del Norte,
valued at P144,000.00;
b. TCT No. T-47246 (with residential house) located at

Babak, Samal, Davao, consisting of 600 square
meters, registered in the name of Ederlina Catito, with
the Register of Deeds of Tagum, Davao del Norte
valued at P144,000.00;
(3) A parcel of agricultural land located at Camudmud,

Babak, Samal, Davao del Norte, consisting of 4.2936
hectares purchased from Enrique Serrano and Rosela
B. Serrano. Already fully paid by plaintiff. Valued at
P228,608.32;
c. A parcel of agricultural land located at Camudmud,

Babak, Samal, Davao del Norte, consisting of 4.2936
hectares purchased from Enrique Serrano and Rosela
B. Serrano. Already paid in full by plaintiff. Valued at
P228,608.32;
c) Declaring the plaintiff to be the sole and absolute

owner of the above-mentioned real and personal
properties;

d) Awarding moral damages to plaintiff in an amount
deemed reasonable by the trial court;
5. For such other reliefs as are just and equitable

under the circumstances.42
e) To reimburse plaintiff the sum of P12,000.00 as

attorney's fees for having compelled the plaintiff to
litigate;
On April 28, 1986, the RTC of Quezon City rendered

its decision in Civil Case No. Q-46350, in favor of
Alfred, the decretal portion of which reads as follows:
f) To reimburse plaintiff the sum of P5,000.00 incurred

as litigation expenses also for having compelled the
plaintiff to litigate; and

hereby rendered ordering the defendant to perform the
following:
g) To pay the costs of this suit;
(1) To execute a document waiving her claim to the

house and lot in No. 14 Fernandez St., San Francisco
Del Monte, Quezon City in favor of plaintiff or to return
to the plaintiff the acquisition cost of the same in the
amount of $20,000.00, or to sell the said property and
turn over the proceeds thereof to the plaintiff;
Plaintiff prays other reliefs just and equitable in the

premises.37
In her answer, Ederlina denied all the material
allegations in the complaint, insisting that she acquired
the said properties with her personal funds, and as
such, Alfred had no right to the same. She alleged that
the deeds of sale, the receipts, and certificates of titles
of the subject properties were all made out in her
name.38 By way of special and affirmative defense, she
alleged that Alfred had no cause of action against her.
She interposed counterclaims against the petitioner.39
In the meantime, the petitioner filed a Complaint dated
August 25, 1987, against the HSBC in the Regional
Trial Court of Davao City40 for recovery of bank
deposits and damages.41 He prayed that after due
proceedings, judgment be rendered in his favor, thus:
WHEREFORE, plaintiff respectfully prays that the
Honorable Court adjudge defendant bank, upon
hearing the evidence that the parties might present, to
pay plaintiff:
1. ONE HUNDRED TWENTY SIX THOUSAND TWO
HUNDRED AND THIRTY U.S. DOLLARS AND
NINETY EIGHT CENTS (US$126,230.98) plus legal
interests, either of Hong Kong or of the Philippines,
from 20 December 1984 up to the date of execution or
satisfaction of judgment, as actual damages or in
restoration of plaintiffs lost dollar savings;
(2) To deliver to the plaintiff the rights of ownership and

management of the beauty parlor located at 444
Arquiza St., Ermita, Manila, including the equipment
and fixtures therein;
(3) To account for the earnings of rental of the house
and lot in No. 14 Fernandez St., San Francisco Del
Monte, Quezon City, as well as the earnings in the
beauty parlor at 444 Arquiza St., Ermita, Manila and
turn over one-half of the net earnings of both
properties to the plaintiff;
(4) To surrender or return to the plaintiff the personal
properties of the latter left in the house at San
Francisco Del Monte, to wit:
"(1) Mamya automatic camera
(1) 12 inch "Sonny" T.V. set, colored with remote
control.
(1) Micro oven
(1) Electric fan (tall, adjustable stand)
(1) Office safe with (2) drawers and safe
2. The same amount in (1) above as moral damages;
(1) Electric Washing Machine
3. Attorney's fees in the amount equivalent to

TWENTY FIVE PER CENT (25%) of (1) and (2) above;
(1) Office desk and chair
4. Litigation expenses in the amount equivalent to TEN

PER CENT (10%) of the amount in (1) above; and
(1) Double bed suits

(1) Mirror/dresser
(1) Heavy duty voice/working mechanic

(1) "Sony" Beta-Movie camera
(1) Suitcase with personal belongings
declared the transient owner for the purpose of selling

the properties at public auction, ultimately enabling him
to recover the money he had spent for the purchase
thereof.
(1) Cardboard box with belongings

(1) Guitar Amplifier
(1) Hanger with men's suit (white)."
To return to the plaintiff, (1) Hi-Fi Stereo equipment left
at 444 Arquiza Street, Ermita, Manila, as well as the
Fronte Suzuki car.
(4) To account for the monies (sic) deposited with the
joint account of the plaintiff and defendant (Account
No. 018-0-807950); and to restore to the plaintiff all the
monies (sic) spent by the defendant without proper
authority;
On March 8, 2000, the CA rendered a decision

affirming in toto the decision of the RTC. The appellate
court ruled that the petitioner knowingly violated the
Constitution; hence, was barred from recovering the
money used in the purchase of the three parcels of
land. It held that to allow the petitioner to recover the
money used for the purchase of the properties would
embolden aliens to violate the Constitution, and defeat,
rather than enhance, the public policy.46
Hence, the petition at bar.
The petitioner assails the decision of the court
contending that:
WHEREFORE, the Court cannot give due course to

the complaint and hereby orders its dismissal. The
counterclaims of the defendant are likewise dismissed.
THE HONORABLE COURT OF APPEALS ERRED IN

APPLYING THE RULE OF IN PARI DELICTO IN THE
INSTANT CASE BECAUSE BY THE FACTS AS
NARRATED IN THE DECISION IT IS APPARENT
THAT
THE
PARTIES
ARE NOT
EQUALLY
GUILTY BUT RATHER IT WAS THE RESPONDENT
WHO EMPLOYED FRAUD AS WHEN SHE DID NOT
INFORM PETITIONER THAT SHE WAS ALREADY
MARRIED TO ANOTHER GERMAN NATIONAL AND
WITHOUT
SUCH
FRAUDULENT
DESIGN
PETITIONER COULD NOT HAVE PARTED WITH HIS
MONEY
FOR
THE
PURCHASE
OF
THE
PROPERTIES.47
SO ORDERED.44
and
The trial court ruled that based on documentary

evidence, the purchaser of the three parcels of land
subject of the complaint was Ederlina. The court
further stated that even if Alfred was the buyer of the
properties; he had no cause of action against Ederlina
for the recovery of the same because as an alien, he
was disqualified from acquiring and owning lands in
the Philippines. The sale of the three parcels of land to
the petitioner was null and void ab initio. Applying
the pari delicto doctrine, the petitioner was precluded
from recovering the properties from the respondent.
THE HONORABLE COURT OF APPEALS ERRED IN

NOT HOLDING THAT THE INTENTION OF THE
PETITIONER IS NOT TO OWN REAL PROPERTIES
IN THE PHILIPPINES BUT TO SELL THEM AT
PUBLIC AUCTION TO BE ABLE TO RECOVER HIS
MONEY USED IN PURCHASING THEM.48
(5) To pay the amount of P5,000.00 by way of

attorney's fees, and the costs of suit.
SO ORDERED.43
However, after due proceedings in the RTC of Davao
City, in Civil Case No. 17,817, the trial court rendered
judgment on September 28, 1995 in favor of Ederlina,
the dispositive portion of which reads:
Alfred appealed the decision to the Court of

Appeals45 in which the petitioner posited the view that
although he prayed in his complaint in the court a
quo that he be declared the owner of the three parcels
of land, he had no intention of owning the same
permanently. His principal intention therein was to be
Since the assignment of errors are intertwined with

each other, the Court shall resolve the same
simultaneously.
The petitioner contends that he purchased the three
parcels of land subject of his complaint because of his
desire to marry the respondent, and not to violate the
Philippine Constitution. He was, however, deceived by
the respondent when the latter failed to disclose her
previous marriage to Klaus Muller. It cannot, thus, be
said that he and the respondent are "equally guilty;" as
such, the pari delicto doctrine is not applicable to him.

He acted in good faith, on the advice of the
respondent's uncle, Atty. Mardoecheo Camporedondo.
There is no evidence on record that he was aware of
the constitutional prohibition against aliens acquiring
real property in the Philippines when he purchased the
real properties subject of his complaint with his own
funds. The transactions were not illegal per se but
merely prohibited, and under Article 1416 of the New
Civil Code, he is entitled to recover the money used for
the purchase of the properties. At any rate, the
petitioner avers, he filed his complaint in the courta
quo merely for the purpose of having him declared as
the owner of the properties, to enable him to sell the
same at public auction. Applying by analogy Republic
Act No. 13349 as amended by Rep. Act No. 4381 and
Rep. Act No. 4882, the proceeds of the sale would be
remitted to him, by way of refund for the money he
used to purchase the said properties. To bar the
petitioner from recovering the subject properties, or at
the very least, the money used for the purchase
thereof, is to allow the respondent to enrich herself at
the expense of the petitioner in violation of Article 22 of
the New Civil Code.
The petition is bereft of merit.
Section 14, Article XIV of the 1973 Constitution
land shall be transferred or conveyed except to
acquire or hold lands in the public domain.50
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
Hence, they have also been disqualified from acquiring
private lands.51
Even if, as claimed by the petitioner, the sales in
question were entered into by him as the real vendee,
the said transactions are in violation of the
Constitution; hence, are null and void ab initio.52 A
contract that violates the Constitution and the law, is
null and void and vests no rights and creates no
obligations. It produces no legal effect at all. 53 The
petitioner, being a party to an illegal contract, cannot
come into a court of law and ask to have his illegal
objective carried out. One who loses his money or
property by knowingly engaging in a contract or
transaction which involves his own moral turpitude
may not maintain an action for his losses. To him who

moves in deliberation and premeditation, the law is
unyielding.54 The law will not aid either party to an
illegal contract or agreement; it leaves the parties
where it finds them.55 Under Article 1412 of the New
Civil Code, the petitioner cannot have the subject
properties deeded to him or allow him to recover the
money he had spent for the purchase thereof. 56 Equity
as a rule will follow the law and will not permit that to
be done indirectly which, because of public policy,
cannot be done directly.57 Where the wrong of one
party equals that of the other, the defendant is in the
stronger position . . . it signifies that in such a situation,
neither a court of equity nor a court of law will
administer a remedy.58 The rule is expressed. in the
maxims: EX DOLO ORITUR ACTIO and IN PARI
DELICTO POTIOR EST CONDITIO DEFENDENTIS.59
The petitioner cannot feign ignorance of the
constitutional proscription, nor claim that he acted in
good faith, let alone assert that he is less guilty than
the respondent. The petitioner is charged with
knowledge of the constitutional prohibition. 60 As can be
gleaned from the decision of the trial court, the
petitioner was fully aware that he was disqualified from
acquiring and owning lands under Philippine law even
before he purchased the properties in question; and, to
skirt the constitutional prohibition, the petitioner had
the deed of sale placed under the respondent's name
as the sole vendee thereof:
Such being the case, the plaintiff is subject to the
constitutional restrictions governing the acquisition of
real properties in the Philippines by aliens.
From the plaintiff's complaint before the Regional Trial
Court, National Capital Judicial Region, Branch 84,
Quezon City in Civil Case No. Q-46350 he alleged:
x x x "That on account that foreigners are not allowed
by the Philippine laws to acquire real properties in their
name as in the case of my vendor Miss Victoria Vinuya
(sic) although married to a foreigner, we agreed and I
consented in having the title to subject property placed
in defendant's name alone although I paid for the
whole price out of my own exclusive funds."
(paragraph IV, Exhibit "W.")
and his testimony before this Court which is hereby
quoted:
ATTY. ABARQUEZ:
Q.
In whose name the said house and lot placed,
by the way, where is his house and lot located?

A.
In 14 Fernandez St., San Francisco, del
Monte, Manila.
Q.
Yes, sir.
To whom are you married?
To a Filipina, since 1976.
In whose name was the house placed?
A.
Ederlina Catito because I was informed being
not a Filipino, I cannot own the property. (tsn, p. 11,
August 27, 1986).
Q
Would you tell us who is that particular person
you are married since 1976?
xxx
Teresita Santos Frenzel.
COURT:
Where is she now?
Q.
So you understand that you are a foreigner
that you cannot buy land in the Philippines?
In Australia.
xxx
xxx
A.
That is correct but as she would eventually be
my wife that would be owned by us later on. (tsn, p. 5,
September 3, 1986)
xxx
Q.
xxx
xxx
I am not sure, since 1981 we were separated.
Q
You were only separated, in fact, but not legally
separated?
What happened after that?
A.
She said you foreigner you are using Filipinos
to buy property.
Q.
Q
Is this not the person of Teresita Frenzel who
became an Australian citizen?
A
Thru my counsel in Australia I filed a separation
case.
Q
As of the present you are not legally divorce[d]?
I am still legally married.62
And what did you answer?
A:
I said thank you very much for the property I
bought because I gave you a lot of money (tsn., p.
14,ibid).
It is evident that the plaintiff was fully aware that as a
non-citizen of the Philippines, he was disqualified from
validly purchasing any land within the country.61
The petitioner's claim that he acquired the subject
properties because of his desire to marry the
respondent, believing that both of them would
thereafter jointly own the said properties, is belied by
his own evidence. It is merely an afterthought to
salvage a lost cause. The petitioner admitted on crossexamination that he was all along legally married to
Teresita Santos Frenzel, while he was having an
amorous relationship with the respondent:
ATTY. YAP:
Q
When you were asked to identify yourself on
direct examination you claimed before this Honorable
Court that your status is that of being married, do you
confirm that?
The respondent was herself married to Klaus Muller, a

German citizen. Thus, the petitioner and the
respondent could not lawfully join in wedlock. The
evidence on record shows that the petitioner in fact
knew of the respondent's marriage to another man, but
nonetheless purchased the subject properties under
the name of the respondent and paid the purchase
prices therefor. Even if it is assumed gratia
arguendi that the respondent and the petitioner were
capacitated to marry, the petitioner is still disqualified
to own the properties in tandem with the respondent. 63
The petitioner cannot find solace in Article 1416 of the
New Civil Code which reads:
Art. 1416. When the agreement is not illegal per se but
is merely prohibited, and the prohibition by the law is
designed for the protection of the plaintiff, he may, if
public policy is thereby enhanced, recover what he has
paid or delivered.64
The provision applies only to those contracts which are
merely prohibited, in order to benefit private interests.
It does not apply to contracts void ab initio. The sales

of three parcels of land in favor of the petitioner who is
a foreigner is illegal per se. The transactions are
void ab initio because they were entered into in
violation of the Constitution. Thus, to allow the
petitioner to recover the properties or the money used
in the purchase of the parcels of land would be
subversive of public policy.
Neither may the petitioner find solace in Rep. Act No.
133, as amended by Rep. Act No. 4882, which reads:
SEC. 1. Any provision of law to the contrary
notwithstanding, private real property may be
mortgaged in favor of any individual, corporation, or
association, but the mortgagee or his successor-ininterest, if disqualified to acquire or hold lands of the
public domain in the Philippines, shall not take
possession of the mortgaged property during the
existence of the mortgage and shall not take
possession of mortgaged property except after default
and for the sole purpose of foreclosure, receivership,
enforcement or other proceedings and in no case for a
period of more than five years from actual possession
and shall not bid or take part in any sale of such real
property in case of foreclosure: Provided, That said
mortgagee or successor-in-interest may take
possession of said property after default in accordance
with the prescribed judicial procedures for foreclosure
and receivership and in no case exceeding five years
from actual possession.65
From the evidence on record, the three parcels of land
subject of the complaint were not mortgaged to the
petitioner by the owners thereof but were sold to the
respondent as the vendee, albeit with the use of the
petitioner's personal funds.
Futile, too, is petitioner's reliance on Article 22 of the
New Civil Code which reads:
Art. 22. Every person who through an act of
performance by another, or any other means, acquires
or comes into possession of something at the expense
of the latter without just or legal ground, shall return
the same to him.66
The provision is expressed in the maxim: "MEMO
CUM ALTERIUS DETER DETREMENTO PROTEST"
(No person should unjustly enrich himself at the
expense of another). An action for recovery of what
has been paid without just cause has been designated
as an accion in rem verso.67 This provision does not
apply if, as in this case, the action is proscribed by the
Constitution or by the application of the pari
delicto doctrine. 68 It may be unfair and unjust to bar
the petitioner from filing an accion in rem verso over

the subject properties, or from recovering the money
he paid for the said properties, but, as Lord Mansfield
stated in the early case of Holman vs. Johnson:69 "The
objection that a contract is immoral or illegal as
between the plaintiff and the defendant, sounds at all
times very ill in the mouth of the defendant. It is not for
his sake, however, that the objection is ever allowed;
but it is founded in general principles of policy, which
the defendant has the advantage of, contrary to the
real justice, as between him and the plaintiff."
IN LIGHT OF ALL THE FOREGOING, the petition is
DISMISSED. The decision of the Court of Appeals is
AFFIRMED in toto.
Costs against the petitioner.
SO ORDERED.
MULLER v. MULLER
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 149615
August 29, 2006
IN RE: PETITION FOR SEPARATION OF

PROPERTY ELENA BUENAVENTURA
MULLER, Petitioner,
vs.
HELMUT MULLER, Respondent.
DECISION
YNARES-SANTIAGO, J.:
This petition for review on certiorari 1 assails the
February 26, 2001 Decision 2 of the Court of Appeals
in CA-G.R. CV No. 59321 affirming with modification
the August 12, 1996 Decision 3 of the Regional Trial
Court of Quezon City, Branch 86 in Civil Case No. Q94-21862, which terminated the regime of absolute
community of property between petitioner and
respondent, as well as the Resolution 4 dated August
13, 2001 denying the motion for reconsideration.
The facts are as follows:

Petitioner Elena Buenaventura Muller and respondent
Helmut Muller were married in Hamburg, Germany on
September 22, 1989. The couple resided in Germany
at a house owned by respondents parents but decided
to move and reside permanently in the Philippines in
1992. By this time, respondent had inherited the house
in Germany from his parents which he sold and used
the proceeds for the purchase of a parcel of land in
Antipolo, Rizal at the cost of P528,000.00 and the
construction of a house amounting to P2,300,000.00.
The Antipolo property was registered in the name of
petitioner under Transfer Certificate of Title No.
219438 5 of the Register of Deeds of Marikina, Metro
Manila.
Due to incompatibilities and respondents alleged
womanizing, drinking, and maltreatment, the spouses
eventually separated. On September 26, 1994,
respondent filed a petition 6 for separation of properties
before the Regional Trial Court of Quezon City.
On August 12, 1996, the trial court rendered a decision
which terminated the regime of absolute community of
property between the petitioner and respondent. It also
decreed the separation of properties between them
and ordered the equal partition of personal properties
located within the country, excluding those acquired by
gratuitous title during the marriage. With regard to the
Antipolo property, the court held that it was acquired
using paraphernal funds of the respondent. However, it
ruled that respondent cannot recover his funds
because the property was purchased in violation of
Section 7, Article XII of the Constitution. Thus
However, pursuant to Article 92 of the Family Code,
properties acquired by gratuitous title by either spouse
during the marriage shall be excluded from the
community property. The real property, therefore,
inherited by petitioner in Germany is excluded from the
absolute community of property of the herein spouses.
Necessarily, the proceeds of the sale of said real
property as well as the personal properties purchased
thereby, belong exclusively to the petitioner. However,
the part of that inheritance used by the petitioner for
acquiring the house and lot in this country cannot be
recovered by the petitioner, its acquisition being a
violation of Section 7, Article XII of the Constitution
which provides that "save in cases of hereditary
succession, no private lands shall be transferred or
conveyed except to individuals, corporations or
public domain." The law will leave the parties in the
situation where they are in without prejudice to a
voluntary partition by the parties of the said real
property. x x x
xxxx
As regards the property covered by Transfer Certificate
of Title No. 219438 of the Registry of Deeds of
Marikina, Metro Manila, situated in Antipolo, Rizal and
the improvements thereon, the Court shall not make
any pronouncement on constitutional grounds. 7
Respondent appealed to the Court of Appeals which
rendered the assailed decision modifying the trial
courts Decision. It held that respondent merely prayed
for reimbursement for the purchase of the Antipolo
property, and not acquisition or transfer of ownership
to him. It also considered petitioners ownership over
the property in trust for the respondent. As regards the
house, the Court of Appeals ruled that there is nothing
in the Constitution which prohibits respondent from
acquiring the same. The dispositive portion of the
assailed decision reads:
WHEREFORE, in view of the foregoing, the Decision
of the lower court dated August 12, 1996 is hereby
MODIFIED. Respondent Elena Buenaventura Muller is
hereby ordered to REIMBURSE the petitioner the
amount of P528,000.00 for the acquisition of the land
and the amount of P2,300,000.00 for the construction
of the house situated in Atnipolo, Rizal, deducting
therefrom the amount respondent spent for the
preservation, maintenance and development of the
aforesaid real property including the depreciation cost
of the house or in the alternative to SELL the house
and lot in the event respondent does not have the
means to reimburse the petitioner out of her own
money and from the proceeds thereof, reimburse the
petitioner of the cost of the land and the house
deducting the expenses for its maintenance and
preservation spent by the respondent. Should there be
profit, the same shall be divided in proportion to the
equity each has over the property. The case is
REMANDED to the lower court for reception of
evidence as to the amount claimed by the respondents
for the preservation and maintenance of the property.
SO ORDERED. 8
Hence, the instant petition for review raising the
following issues:
I
THE HONORABLE COURT OF APPEALS GRAVELY
ERRED IN HOLDING THAT THE RESPONDENT
HEREIN IS ENTITLED TO REIMBURSEMENT OF
THE AMOUNT USED TO PURCHASE THE LAND AS
WELL AS THE COSTS FOR THE CONSTRUCTION

OF THE HOUSE, FOR IN SO RULING, IT
INDIRECTLY ALLOWED AN ACT DONE WHICH
OTHERWISE COULD NOT BE DIRECTLY x x x
DONE, WITHOUT DOING VIOLENCE TO THE
CONSTITUTIONAL PROSCRIPTION THAT AN ALIEN
IS PROHIBITED FROM ACQUIRING OWNERSHIP
OF REAL PROPERTIES LOCATED IN THE
PHILIPPINES.
II
Under section 1 of Article XIII of the Constitution,

agricultural land, shall not be alienated," and with
prevent this result that section 5 is included in Article
THE COURT OF APPEALS GRAVELY ERRED IN

SUSTAINING RESPONDENTS CAUSE OF ACTION
WHICH IS ACTUALLY A DESPERATE ATTEMPT TO
OBTAIN OWNERSHIP OVER THE LOT IN
QUESTION, CLOTHED UNDER THE GUISE OF
CLAIMING REIMBURSEMENT.
"Sec. 5. Save in cases of hereditary succession, no

in the Philippines."
Petitioner contends that respondent, being an alien, is

disqualified to own private lands in the Philippines; that
respondent was aware of the constitutional prohibition
but circumvented the same; and that respondents
purpose for filing an action for separation of property is
to obtain exclusive possession, control and disposition
of the Antipolo property.

into aliens hands. It would certainly be futile to prohibit
Filipino citizens. x x x
Respondent claims that he is not praying for transfer of

ownership of the Antipolo property but merely
reimbursement; that the funds paid by him for the said
property were in consideration of his marriage to
petitioner; that the funds were given to petitioner in
trust; and that equity demands that respondent should
be reimbursed of his personal funds.
xxxx
The issue for resolution is whether respondent is

entitled to reimbursement of the funds used for the
acquisition of the Antipolo property.
The petition has merit.
Section 7, Article XII of the 1987 Constitution states:
lands shall be transferred or conveyed except to
acquire or hold lands of the public domain.
Aliens, whether individuals or corporations, are
Hence, they are also disqualified from acquiring private
lands. 9 The primary purpose of the constitutional
provision is the conservation of the national patrimony.
In the case of Krivenko v. Register of Deeds, 10 the
Court held:

homes,
factories,
industrial
plants,
fisheries,
appellants words, strictly agricultural." (Solicitor
Generals Brief, p. 6.) That this is obnoxious to the
question.
Respondent was aware of the constitutional prohibition
and expressly admitted his knowledge thereof to this
Court. 11 He declared that he had the Antipolo property
titled in the name of petitioner because of the said
prohibition. 12 His attempt at subsequently asserting or
claiming a right on the said property cannot be
sustained.
The Court of Appeals erred in holding that an implied
trust was created and resulted by operation of law in
view of petitioners marriage to respondent. Save for

the exception provided in cases of hereditary
succession, respondents disqualification from owning
lands in the Philippines is absolute. Not even an
ownership in trust is allowed. Besides, where the
purchase is made in violation of an existing statute and
in evasion of its express provision, no trust can result
in favor of the party who is guilty of the fraud. 13 To hold
otherwise would allow circumvention of the
constitutional prohibition.
Invoking the principle that a court is not only a court of
law but also a court of equity, is likewise misplaced. It
has been held that equity as a rule will follow the law
and will not permit that to be done indirectly which,
because of public policy, cannot be done directly. 14 He
who seeks equity must do equity, and he who comes
into equity must come with clean hands. The latter is a
frequently stated maxim which is also expressed in the
principle that he who has done inequity shall not have
equity. It signifies that a litigant may be denied relief by
a court of equity on the ground that his conduct has
been inequitable, unfair and dishonest, or fraudulent,
or deceitful as to the controversy in issue. 15
Thus, in the instant case, respondent cannot seek
reimbursement on the ground of equity where it is
clear that he willingly and knowingly bought the
property despite the constitutional prohibition.
Further, the distinction made between transfer of
ownership as opposed to recovery of funds is a futile
exercise on respondents part. To allow reimbursement
would in effect permit respondent to enjoy the fruits of
a property which he is not allowed to own. Thus, it is
likewise proscribed by law. As expressly held in
Cheesman v. Intermediate Appellate Court: 16
Finally, the fundamental law prohibits the sale to aliens
of residential land. Section 14, Article XIV of the 1973
Constitution ordains that, "Save in cases of hereditary
succession, no private land shall be transferred or
conveyed except to individuals, corporations, or
public domain." Petitioner Thomas Cheesman was, of
course, charged with knowledge of this prohibition.
Thus, assuming that it was his intention that the lot in
question be purchased by him and his wife, he
acquired no right whatever over the property by virtue
of that purchase; and in attempting to acquire a right or
interest in land, vicariously and clandestinely, he
knowingly violated the Constitution; the sale as to him
was null and void. In any event, he had and has no
capacity or personality to question the subsequent sale
of the same property by his wife on the theory that in
so doing he is merely exercising the prerogative of a
husband in respect of conjugal property. To sustain

such a theory would permit indirect controversion of
the constitutional prohibition. If the property were to be
declared conjugal, this would accord to the alien
husband a not insubstantial interest and right over
land, as he would then have a decisive vote as to its
transfer or disposition. This is a right that the
Constitution does not permit him to have.
As already observed, the finding that his wife had used
her own money to purchase the property cannot, and
will not, at this stage of the proceedings be reviewed
and overturned. But even if it were a fact that said wife
had used conjugal funds to make the acquisition, the
considerations just set out to militate, on high
constitutional grounds, against his recovering and
holding the property so acquired, or any part thereof.
And whether in such an event, he may recover from
his wife any share of the money used for the purchase
or charge her with unauthorized disposition or
expenditure of conjugal funds is not now inquired into;
that would be, in the premises, a purely academic
exercise. (Emphasis added)
WHEREFORE, in view of the foregoing, the instant
petition is GRANTED. The Decision dated February
26, 2001 of the Court of Appeals in CA-G.R. CV No.
59321 ordering petitioner Elena Buenaventura Muller
to reimburse respondent Helmut Muller the amount of
P528,000 for the acquisition of the land and the
amount of P2,300,000 for the construction of the
house in Antipolo City, and the Resolution dated
August 13, 2001 denying reconsideration thereof, are
REVERSED and SET ASIDE. The August 12, 1996
Decision of the Regional Trial Court of Quezon City,
Branch 86 in Civil Case No. Q-94-21862 terminating
the regime of absolute community between the
petitioner and respondent, decreeing a separation of
property between them and ordering the partition of
the personal properties located in the Philippines
equally, is REINSTATED.
SO ORDERED.

cancellation of Original Certificates of Title Nos. 29332
and 29410 and the consequent issuance in his favor of
Transfer Certificate of Title No. T-2433 covering the
two lots subject matter of the Contract of Sale.
YAP v. GRAJEDA
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-31606
March 28, 1983
DONATO REYES YAP and MELITONA

MARAVILLAS, petitioners,
vs.
HON. EZEKIEL S. GRAGEDA, as Judge of the
Court of First Instance of Albay and JOSE A.
RICO,respondents.
Jose P. Oira for petitioners.
Rodolfo A. Madrid for respondents.
GUTIERREZ, JR., J.:

We are asked in this petition to review the amended
decision of the respondent court which declared as
absolutely null and void the sale of a residential lot in
Guinobatan, Albay to a Chinese national and ordered
its reconveyance to the vendors thirty years after the
sale inspite of the fact that the vendee had been a
naturalized Filipino citizen for fifteen years at the time.
We grant the petition. The questioned decision and the
order amending it are reversed and set aside.
After the lapse of nearly fifteen years from and after

the execution of the deed of absolute sale, Donato
Reyes Yap was admitted as a Filipino citizen and
allowed to take his oath of allegiance to the Republic
of the Philippines. He was, thereafter, issued
Certificate of Naturalization No. 7, File No. 19 of the
Court of First Instance of Albay.
On December 1, 1967, the petitioner ceded the major
portion of Lot No. 327 consisting of 1,078 square
meters which he acquired by purchase under the deed
of sale in favor of his engineer son, Felix Yap, who was
also a Filipino citizen because of the Filipino
citizenship of his mother and the naturalization of his
father Donato Reyes Yap.
Subsequently, Lourdes Rico, aunt and co-heir of
respondent Jose A. Rico. sold the remaining portion of
Lot 327 to the petitioner who had his rights thereon
duly registered under Act 496. Petitioner, Donato
Reyes Yap, has been in possession of the lots in
question since 1939, openly, publicly, continuously,
and adversely in the concept of owner until the present
time. The petitioner has one surviving son by his first
marriage to a Filipino wife. He has five children by his
second marriage also to a Filipina and has a total of 23
grandchildren all of whom are Filipino citizens.
The respondent court considered Section 5, Article XIII
of the 1935 Constitution that "no private agricultural
land shall be transferred or assigned except to
acquire or hold lands of the public domain in the
Philippines" to be an absolute and unqualified
prohibition and, therefore, ruled that a conveyance
contrary to it would not be validated nor its void nature
altered by the subsequent naturalization of the vendee.
The facts are not disputed.

The dispositive portion of the amended decision reads:
On April 12, 1939, Maximino Rico, for and in his own
behalf and that of the minors Maria Rico, Filomeno
Rico, Prisco Rico, and Lourdes' Rico, executed a Deed
of Absolute Sale (Annex 'A' to the complaint) over Lot
339 and a portion of Lot 327 in favor of the petitioner
Donato Reyes Yap who was then a Chinese national.
Respondent Jose A. Rico is the eldest son of
Maximino Rico, one of the vendors in Annex 'A'.
Subsequently, the petitioner as vendee caused the
registration of the instrument of sale and the
WHEREFORE, in view of all the foregoing, the

Contract of Sale embodied in the 'Escritura de Compra
Venta' which is attached to the Complaint as Annex 'A',
is hereby declared null and void ab initio and without
any legal force and effect.
The action to recover Lot 339 of the Cadastral Survey
of Guinobatan, Albay, covered by Transfer Certificate
of Title No. T2433. and Lot 327 covered by the same
Transfer Certificate of Title, is hereby granted to

plaintiff, upon payment of the consideration price of
P150.00 and declaring plaintiff as the lawful owner and
entitled to the possession thereof.
Defendant Donato Reyes Yap is hereby ordered to
produce his Transfer Certificate of Title No. T-2433 to
the Register of Deeds of Albay, so as to enable said
office to make the due and proper annotations on said
title as well as in the original of the declaration of nullity
as herein adjudged. Let Transfer Certificate of Title
issued to plaintiff, concerning said Lots 339 and 327 of
the Cadastral Survey of Guinobatan, Albay.
COSTS AGAINST DEFENDANTS.
The rulings in Vasquez v.Leng Seng Giap et al. (96
Phil. 447) and Sarosa Vda. de Bersabia v.
Cuenco (113 SCRA 547) sustain the petitioner's
contentions. We stated in Sarosa Vda de Bersabia:
analogy the ruling of this Court in Vasquez vs. Giap

and Leng Seng Giap & Sons:
Only recently, we had occasion to reiterate the above
rulings in Vicente Godines v. Fong Pak Luen, et al.
(G.R. No. L-36731, January 27, 1983).
WHEREFORE, the amended judgment of the
respondent court is hereby REVERSED and SET
ASIDE. The complaint is DISMISSED.
SO ORDERED.
There should be no question that the sale of the land

in question in 1936 by Epifania to Ong King Po was
inexistent and void from the beginning (Art. 1409 [7],
Civil Code) because it was a contract executed against
the mandatory provision of the 1935 Constitution,
which is an expression of public policy to conserve
lands for the Filipinos. Said provision reads:
GODINEZ v. PARK LUEN

SUPREME COURT
Manila
FIRST DIVISION

except to in. individuals, corporations, or associations,
qualified to acquire or hold lands of the public domain.
Had this been a suit between Epifania and Ong King
Po she could have been declared entitled to the
litigated land on the basis, as claimed, of the ruling in
Philippine Banking Corporation vs. Lui She, reading:
... For another thing, and this is not only cogent but
also important. Article 1416 of the Civil Code provides
as an exception to the rule on pari delicto that when
the agreement is not illegal per se but is merely
prohibited, and the prohibition by the law is designed
for the protection of the plaintiff, he may, if public policy
is thereby enhanced, recover what he has sold or
delivered. ...
G.R. No. L-36731
January 27, 1983
VICENTE GODINEZ, ET AL., plaintiffs-appellants,

vs.
FONG PAK LUEN ET AL., defendants, TRINIDAD S.
NAVATA, defendant-appellee.
Dominador Sobrevinas for plaintiffs-appellants.
Muss S. Inquerto for defendant-appellee
GUTIERREZ, JR., J.:

The plaintiffs filed this case to recover a parcel of land
sold by their father, now deceased, to Fong Pak Luen,
an alien, on the ground that the sale was null and void
ab initio since it violates applicable provisions of the
Constitution and the Civil Code.
The order of the Court of First Instance of Sulu
dismissing the complaint was appealed to the Court of
Appeals but the latter court certified the appeal to us

since only pure questions of law were raised by the
appellants.
The facts of the case were summarized by the Court of
Appeals as follows:
On September 30, 1966, the plaintiffs filed a complaint
in the Court of First Instance of Sulu alleging among
others that they are the heirs of Jose Godinez who
was married to Martina Alvarez Godinez sometime in
1910; that during the marriage of their parents the said
parents acquired a parcel of land lot No. 94 of Jolo
townsite with an area of 3,665 square meters as
evidenced by Original Certificate of Title No. 179 (D
-155) in the name of Jose Godinez; that their mother
died sometime in 1938 leaving the plaintiffs as their
sole surviving heirs; that on November 27, 1941,
without the knowledge of the plaintiffs, the said Jose
Godinez, for valuable consideration, sold the aforesaid
parcel of land to the defendant Fong Pak Luen, a
Chinese citizen, which transaction is contrary to law
and in violation of the Civil Code because the latter
being an alien who is inhibited by law to purchase real
property; that Transfer Certificate Title No. 884 was
then issued by the Register of Deeds to the said
defendant, which is null and void ab initio since the
transaction constituted a non-existent contract; that on
January 11, 1963, said defendant Fong Pak Luen
executed a power of attorney in favor of his codefendant Kwan Pun Ming, also an alien, who
conveyed and sold the above described parcel of land
to co-defendant Trinidad S. Navata, who is aware of
and with full knowledge that Fong Pak Luen is a
Chinese citizen as well as Kwan Pun Ming, who under
the law are prohibited and disqualified to acquire real
property in this jurisdiction; that defendant Fong Pak
Luen has not acquired any title or interest in said
parcel of land as the purported contract of sale
executed by Jose Godinez alone was contrary to law
and considered nonexistent, so much so that the
alleged attorney-in-fact, defendant Kwan Pun Ming
had not conveyed any title or interest over said
property and defendant Navata had not acquired
anything from said grantor and as a consequence
Transfer Certificate of Title No. 1322, which was issued
by the Register of Deeds in favor of the latter is null
and void ab initio,- that since one-half of the said
property is conjugal property inherited by the plaintiffs
from their mother, Jose Godinez could -not have
legally
conveyed
the
entire
property;
that
notwithstanding repeated demands on said defendant
to surrender to plaintiffs the said property she refused
and still refuses to do so to the great damage and
prejudice of the plaintiffs; and that they were
constrained to engage the services of counsel in the
sum of P2,000.00.1wph1.t The plaintiffs thus pray

that they be adjudged as the owners of the parcel of
land in question and that Transfer Certificate of Title
RT-90 (T-884) issued in the name of defendant Fong
Pak Luen be declared null and void ab initio; and that
the power of attorney issued in the name of Kwan Pun
Ming, as well as Transfer Certificate of Title No. 'L322
issued in the name of defendant Navata be likewise
declared null and void, with costs against defendants.
On August 18, 1966, the defendant Register of Deeds
filed an answer claiming that he was not yet the
register of deeds then; that it was only the ministerial
duty of his office to issue the title in favor of the
defendant Navata once he was determined the
registerability of the documents presented to his office.
On October 20, 1966, the defendant Navata filed her
answer with the affirmative defenses and counterclaim
alleging among others that the complaint does not
state a cause of action since it appears from the
allegation that the property is registered in the name of
Jose Godinez so that as his sole property he may
dispose of the same; that the cause of action has been
barred by the statute of limitations as the alleged
document of sale executed by Jose Godinez on
November 27, 1941, conveyed the property to
defendant Fong Pak Luen as a result of which a title
was issued to said defendant; that under Article 1144
(1) of the Civil Code, an action based upon a written
contract must be brought within 10 years from the time
the right of action accrues; that the right of action
accrued on November 27, 1941 but the complaint was
filed only on September 30, 1966, beyond the 10 year
period provided for by law; that the torrens title in the
name of defendant Navata is indefeasible who
acquired the property from defendant Fong Pak Luen
who had been in possession of the property since
1941 and thereafter defendant Navata had possessed
the same for the last 25 years including the possession
of Fong Pak Luen; that the complaint is intended to
harass the defendant as a civic leader and respectable
member of the community as a result of which she
suffered moral damages of P100,000.00, P2,500.00
for attorney's fees and P500.00 expenses of litigation,
hence, said defendant prays that the complaint be
dismissed and that her counterclaim be granted, with
costs against the plaintiffs. On November 24, 1967, the
plaintiffs filed an answer to the affirmative defenses
and counter-claim. As the defendants Fong Pak Luen
and Kwan Pun Ming are residing outside the
Philippines, the trial court upon motion issued an order
of April 17, 1967, for the service of summons on said
defendants by publication. No answer has been filed
by said defendants.

violative of Section 5, Article XIII of the 1935
Constitution which provided:
On December 2, 196 7, the court issued an order as
follows:
Both parties having agreed to the suggestion of the
Court that they submit their supplemental pleadings to
support both motion and opposition and after submittal
of the same the said motion to dismiss which is an
affirmative defense alleged in the complaint is deemed
submitted. Failure of both parties or either party to
submit their supplemental pleadings on or about
December 9, the Court will resolve the case.
On November 29, 1968, the trial court issued an order
missing the complaint without pronouncement as to
costs. (Record on Appeal, pp. 31- 37). A motion for
reconsideration of this order was filed by the plaintiffs
on December 12, 196F, which was denied by the trial
court in an order of July 11, 1969, (Rec. on Appeal, pp.
38, 43, 45, 47). The plaintiffs now interpose this appeal
with the following assignments of errors:
I. The trial court erred in dismissing plaintiffsappellants' complaint on the ground of prescription of
action, applying Art. 1144 (1) New Civil Code on the
basis of defendant Trinidad S. Navata's affirmative
defense of prescription in her answer treated as a
motion to dismiss.
II. The trial court erred in denying plaintiffs-appellants'
motion for reconsideration of the order of dismissal.
III. The trial court erred in not ordering this case to be
tried on the merits."
The appellants contend that the lower court erred in
dismissing the complaint on the ground that their
cause of action has prescribed. While the issue raised
appears to be only the applicability of the law
governing prescription, the real question before us is
whether or not the heirs of a person who sold a parcel
of land to an alien in violation of a constitutional
prohibition may recover the property if it had, in the
meantime, been conveyed to a Filipino citizen qualified
to own and possess it.

in the Philippines.
The meaning of the above provision was fully
discussed in Krivenko v. Register of Deeds of
Manila (79 Phil. 461) which also detailed the evolution
of the provision in the public land laws, Act No. 2874
and Commonwealth Act No. 141. The Krivenko ruling
that "under the Constitution aliens may not acquire
private or agricultural lands, including residential lands"
is a declaration of an imperative constitutional policy.
Consequently, prescription may never be invoked to
defend that which the Constitution prohibits. However,
we see no necessity from the facts of this case to pass
upon the nature of the contract of sale executed by
Jose Godinez and Fong Pak Luen whether void ab
initio, illegal per se or merely pro-exhibited.** It is
enough to stress that insofar as the vendee is
concerned, prescription is unavailing. But neither can
the vendor or his heirs rely on an argument based on
imprescriptibility because the land sold in 1941 is now
in the hands of a Filipino citizen against whom the
constitutional prescription was never intended to apply.
The lower court erred in treating the case as one
involving simply the application of the statute of
limitations.
From the fact that prescription may not be used to
defend a contract which the Constitution prohibits, it
does not necessarily follow that the appellants may be
allowed to recover the property sold to an alien. As
earlier mentioned, Fong Pak Luen, the disqualified
alien vendee later sold the same property to Trinidad
S. Navata, a Filipino citizen qualified to acquire real
property.
The question is not a novel one. Judicial precedents

indicate fairly clearly how the question should be
resolved.
In Vasquez v. Li Seng Giap and Li Seng Giap &

Sons (96 Phil. 447), where the alien vendee later sold
the property to a Filipino corporation, this Court, in
affirming a judgment dismissing the complaint to
rescind the sale of real property to the defendant Li
Seng Giap on January 22, 1940, on the ground that
the vendee was an alien and under the Constitution
incapable to own and hold title to lands, held:
There can be no dispute that the sale in 1941 by Jose

Godinez of his residential lot acquired from the Bureau
of Lands as part of the Jolo townsite to Fong Pak
Luen, a Chinese citizen residing in Hongkong, was
In Caoile vs. Yu Chiao 49 Qff Gaz., 4321; Talento vs.

Makiki 49 Off. Gaz., 4331; Bautista vs. Uy 49 Off.
Gaz., 4336; Rellosa vs. Gaw Chee 49 Off. Gaz., 4345
and Mercado vs. Go Bio, 49 Off. Gaz., 5360, the

majority of this Court has ruled that in sales of real
estate to aliens incapable of holding title thereto by
virtue of the provisions of the Constitution (Section 5,
Article XIII Krivenko vs. Register of Deeds, 44 Off.
Gaz., 471) both the vendor and the vendee are
deemed to have committed the constitutional violation
and being thus in pari delicto the courts will not afford
protection to either party. (Article 1305, old Civil Code;
Article 1411, new Civil Code) From this ruling three
Justices dissented. (Mr. Justice Pablo, Mr. Justice
Alex. Reyes and the writer. See Caoile vs. Yu Chiao
Talento vs. Makiki Bautista us. Uy, Rellosa vs. Gaw
Chee and Mercado vs. Go Bio). supra.
The action is not of rescission because it is not
postulated upon any of the grounds provided for in
Article 1291 of the old Civil Code and because the
action of rescission involves lesion or damage and
seeks to repair it. It is an action for annulment under
Chapter VI, Title II, Book 11, on nullity of contracts,
based on a defect in the contract which invalidates it
independently of such lesion or damages. (Manresa,
Commentarios al Codigo Civil Espanol Vol. VIII, p.
698, 4th ed.) It is very likely that the majority of this
Court proceeded upon that theory when it applied
the in pari delicto rule referred to above.
In the United States the rule is that in a sale of real
estate to an alien disqualified to hold title thereto the
vendor divests himself of the title to such real estate
and has no recourse against the vendee despite the
latter's disability on account of alienage to hold title to
such real estate and the vendee may hold it against
the whole world except as against the State. It is only
the State that is entitled by proceedings in the nature
of office found to have a forfeiture or escheat declared
against the vendee who is incapable of holding title to
the real estate sold and conveyed to him. Abrams vs.
State, 88 Pac. 327; Craig vs. Leslie et al., 4 Law, Ed.
460; 3 Wheat, 563, 589590; Cross vs. Del Valle, 1
Wall, [U.S.] 513; 17 Law. Ed., 515; Governeur vs.
Robertson, 11 Wheat, 332, 6 Law. Ed., 488.)
However, if the State does not commence such
proceedings and in the meantime the alien becomes
naturalized citizen, the State is deemed to have
waived its right to escheat the real property and the
title of the alien thereto becomes lawful and valid as of
the date of its conveyance or transfer to him.
(Osterman vs. Baldwin, 6 Wall, 116, 18 Law. ed. 730;
Manuel vs. Wulff, 152 U.S. 505, 38 Law. ed. 532;
Pembroke vs. Houston, 79, SW 470; Fioerella vs.
Jones, 259 SW 782. The rule in the United States that
in a sale of real estate to an alien disqualified to hold
title thereto, the vendor divests himself of the title to
such real estate and is not permitted to sue for the

annulment Of his Contract, is also the rule under the
Civil Code. ... Article 1302 of the old Civil Code
provides: ... Persons sui juriscannot, however, avail
themselves of the incapacity of those with whom they
contracted; ...
xxx
xxx
xxx
. . . (I)f the ban on aliens from acquiring not only

agricultural but, also urban lands, as construed by this
land for future generations of Filipinos, that aim or
who became Filipino citizens by naturalization. The
title to the parcel of land of the vendee, a naturalized
Filipino citizen, being valid that of the domestic
corporation to which the parcel of land has been
transferred, must also be valid, 96.67 per cent of its
capital stock being owned by Filipinos.
Herrera v. Luy Kim Guan (SCRA 406) reiterated the
above ruling by declaring that where land is sold to a
Chinese citizen, who later sold it to a Filipino, the sale
to the latter cannot be impugned.
The appellants cannot find solace from Philippine
Banking Corporation v. Lui She (21 SCRA 52) which
relaxed the pari delicto doctrine to allow the heirs or
successors-in-interest, in appropriate cases, to recover
that which their predecessors sold to aliens.
Only recently, in Sarsosa vda. de Barsobia v.
Cuenco (113 SCRA 547) we had occasion to pass
upon a factual situation substantially similar to the one
in the instant case. We ruled:
analogy the ruling of this Court in Vasquez vs. Giap &
Sons: (.96 Phil. 447 [1955])


rightful owner of the property.
While, strictly speaking, Ong King Po, private

respondent's vendor, had no rights of ownership to
transmit, it is likewise in escapable that petitioner
Epifania had slept on her rights for 26 years from 1936
to 1962. By her long inaction or inexcusable neglect,
she should be held barred from asserting her claim to
the litigated property (Sotto vs. Teves, 86 SCRA 157
[1978])
In the light of the above considerations, we find the

second and third assignments of errors without merit.
Respondent Navata, the titled owner of the property is
declared the rightful owner.

have been done earlier; it is negligence or ommission
to assert a right within a reasonable time, warranting a
23 SCRA 29, 35).' (Cited in Sotto vs. Teves, 86 SCRA
154 [1978]).
SO ORDERED.
WHEREFORE, the instant appeal is hereby denied.

The orders dismissing the complaint and denying the
motion for reconsideration are affirmed.
LEE v. DIRECTOR OF LANDS

XXX
XXX
XXX

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LAND TITLES and DEEDS (Atty.

Jeffrey Jefferson Coronel) 1

RAMIREZ v. VDA. DE RAMIREZ

February 15, 1982

TESTATE ESTATE OF JOSE EUGENIO RAMIREZ,

ABAD SANTOS, J.:

On June 23, 1966, the administratrix submitted a

Jorge and Roberto Ramirez "en nuda propriedad."

LAND TITLES and DEEDS (Atty. Jeffrey Jefferson Coronel) 2

We have ruled above, the widow is not entitled to any

LAND TITLES and DEEDS (Atty. Jeffrey Jefferson Coronel) 3

PHIL. BANKING v. LUI SHE

3. The usufruct of Wanda.

September 12, 1967

PHILIPPINE BANKING CORPORATION,

LAND TITLES and DEEDS (Atty. Jeffrey Jefferson Coronel) 4

"through fraud, misrepresentation, inequitable conduct,

LAND TITLES and DEEDS (Atty. Jeffrey Jefferson Coronel) 5

where the contracting parties have agreed that such

LAND TITLES and DEEDS (Atty. Jeffrey Jefferson Coronel) 6

Q So, as far as consent is concerned, you were

A Your Honor, if I have to express my personal opinion,

Atty. Yumol further testified that she signed the lease

A Agreed with my objectives that it is really onerous

Indeed, the charge of undue influence in this case

LAND TITLES and DEEDS (Atty. Jeffrey Jefferson Coronel) 7

LAND TITLES and DEEDS (Atty. Jeffrey Jefferson Coronel) 8

For all the foregoing, we hold that under the

LAND TITLES and DEEDS (Atty. Jeffrey Jefferson Coronel) 9

ACCORDINGLY, the contracts in question (Plff Exhs.

August 17, 1972

REPUBLIC OF THE PHILIPPINES and/or THE

REYES J. B. L., J.:p

LAND TITLES and DEEDS (Atty. Jeffrey Jefferson Coronel) 10

(2) In ruling that when the Parity Amendment ceases to

Section 5. Save in cases of hereditary succession, no

LAND TITLES and DEEDS (Atty. Jeffrey Jefferson Coronel) 11

institutions have been very, very seriously damaged.

LAND TITLES and DEEDS (Atty. Jeffrey Jefferson Coronel) 12

manner as to and under the same conditions imposed

LAND TITLES and DEEDS (Atty. Jeffrey Jefferson Coronel) 13

It should be emphatically stated that the provisions of

LAND TITLES and DEEDS (Atty. Jeffrey Jefferson Coronel) 14

But as finally approved by the United States Congress,

LAND TITLES and DEEDS (Atty. Jeffrey Jefferson Coronel) 15

water transport. The United States also reserves the

LAND TITLES and DEEDS (Atty. Jeffrey Jefferson Coronel) 16

Respondent Quasha argues that the limitative period

It is easy to see that all exceptional rights conferred

Strangely enough, this argument ignores the

This limitation of time is in conformity with Article X,

ART, 428. The owner has the right to enjoy and

LAND TITLES and DEEDS (Atty. Jeffrey Jefferson Coronel) 17

FOR THE FOREGOING REASONS, the appealed

One last point: under the "Parity Amendment" the

Republic of the Philippines

to citizens of the United States and to all forms of

G.R. No. 156364

JACOBUS BERNHARD HULST, petitioner,

corporations or associations at least sixty per centum

It is thus apparent that American business enterprises

Before the Court is a Petition for Review