2nd Batch of Cases July 20

LANDS, TITLES AND DEEDS (FOR RECITATION JULY 20, 2013)
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EN BANC G.R. No. L-17587 December 18, 1967
PHILIPPINE BANKING CORPORATION, representing the estate of JUSTINIA 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 and Ozaeta for defendant-appellant. RESOLUTION CASTRO, J.: This is the second motion that the defendant-appellant has filed relative to this Court's decision of September 12, 1967. The first was a motion for reconsideration. Accepting the nullity of the other contracts (Plff Exhs. 4-7), the defendant-appellant nevertheless contended that the lease contract (Plff Exh. 3) is so separable from the rest of the contracts that it should be saved from invalidation.lawphil In denying the motion, we pointed to the circumstances that on November 15, 1957, the parties entered into the lease contract for 50 years: that ten days after, that is on November 25, they amended the contract so as to make it cover the entire property of Justina Santos; that on December 21, less than a month after, they entered into another contract giving Wong Heng the option to buy the leased premises should his pending petition for naturalization be granted; that on November 18, 1958, after failing to secure naturalization and after finding that adoption does not confer the citizenship of the adopting parent on the adopted, the parties entered into two other contracts extending the lease to 99 years and fixing the period of the option to buy at 50 years. which indubitably demonstrate that each of the contracts in question was designed to carry out Justina Santos' expressed wish to give the land to Wong and thereby in effect place its ownership in alien hands,1 about which we shall have something more to say toward the end of this resolution. We concluded that "as the lease contract was part of a scheme to violate the Constitution it suffers from the same infirmity that renders the other contracts void and can no more be saved from illegality than the rest of the contracts."
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The present motion is for a new trial and is based on three documents executed by Justina Santos which, so it is claimed, constitute newly-discovered material evidence. These documents are a codicil dated November 11, 1957 and two wills executed on August 24 and August 29, 1959. In the codicil Justina Santos not only named Tita Yaptinchay LaO the administratrix of her estate with the right to buy the properties of the estate, but also provided that if the said LaO was legally disqualified from buying (as she really was under article 1491 (3) of the Civil Code), she was to be her sole heir. In either case, the codicil imposed on the administratrix the obligation to have masses said for the soul of the testatrix and those of the latter's sister and parent. On the other hand, in both her 1959 wills Justina Santos enjoined her heirs to respect the lease contract made, and the conditional option given, in favor of Wong. These documents form part of the records of civil case 59470 of the Court of First Instance of Manila in which the settlement of the estate of Justina Santos is pending, and so it is now claimed that they could not have been produced at the trial of this case which was concluded on August 6, 1960 because they were presented in the probate court only after the death of Justina Santos on December 28, 1964.itc-alf This is a misrepresentation of the grossest sort. The documents were known to the defendant-appellant and her counsel even before the death of Justina Santos. As a matter of fact, the wills executed on August 24 and August 29, 1959 were presented in this case as Exhibits 285 and 279, respectively, for the defendant-appellant, and were considered and expressly referred to in the decision of the lower court and in our decision.itc-alf As for the codicil of November 11, 1957, the defendant-appellant can hardly feign ignorance of its essence even when this case was being tried in the lower court considering that its provisions were substantially adverted to in the testimony of one of her witnesses2 and were in fact recited in the decision a own a quo.3 By no means can the documents in question be considered newly-discovered evidence so as to warrant a reopening of this case.4 Nor is there anything in the documents that is likely to alter the result we have already reached in this case. With respect to the 1957 codicil, it is claimed that Justina Santos could not have intended by the 99-year lease to give Wong the ownership of the land considering that she had earlier (the codicil was made on November 11, 1957 while the lease contract was executed on November 15, 1957) devised the property to Tita Yaptinchay LaO. Without passing on the validity of her testamentary disposition since the issue is one pending before the probate court, it suffices to state here that even granting that Justina Santos had devised the land in dispute to LaO, Justina Santos was not thereby barred or precluded from subsequently giving the land to Wong. The execution of the lease contract which, together with the other
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contracts, amount to a transfer of ownership to Wong, constitutes an implied revocation of her codicil, at least insofar as the disposition of the land is concerned.5 As for the 1959 wills, it is said that they manifest a desire to abide by the law, as is evident from the statement therein that Wong's right to buy the land be allowed "anytime he or his children should be entitled to buy lands in the Philippines (i.e., upon becoming Filipino citizens)".lawphil it seems obvious, however, that this is nothing but a reiteration of the substance of the lease contract and conditional option to buy which in compensation, as our decision demonstrates, amount to a conveyance, the protestation of compliance with the law notwithstanding. In cases like the one at bar, motives are seldom avowed and avowals are not always candid. The problem is not, however, insuperable, especially as in this case the very witnesses for the defendant-appellant testified that 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 illegality, I am the only one that can question the illegality.'"6 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.7 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 adoption, believing that thru adoption Wong Heng might acquired Filipino citizenship, being the adopted child of a Filipino citizen.lawphil8 The other points raised in the motion for new trial either have already been disposed of in our decision or are so insubstantial to merit any attention. ACCORDINGLY, the motion for new trial is denied. Concepcion, C.J., Reyes J.B.L., Dizon, Makalintal, Bengzon, J.P., Zaldivar, Sanchez, Angeles and Fernando, JJ.,concur.
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Footnotes
1
Resolution, Oct. 5, 1967. T.s.n., p. 82, June 20, 1960. Decision, Sept. 16, 1960, Rec. on Appeal 208, 212 n. 1. Cf . Bersabal v. Bernal, 13 Phil. 463 (1909). Civ Code arts. 830(l) and 957. Testimony of Atty. Tomas Yumol, T.s.n., p. 86, June 20, 1960 (emphasis added). Testimony of Atty. Benjamin Alonzo, t.s.n, p. 79, July 6, 1960 (emphasis added). Id., t.s.n., p. 121, June 20, 1960.
FIRST DIVISION
FELIX TING HO, JR., MERLA TING HO BRADEN, JUANA TING HO & LYDIA TING HO BELENZO, Petitioners, G.R. No. 130115
Present: PUNO, C.J., Chairperson, CARPIO, CORONA, AZCUNA, and LEONARDO-DE CASTRO, JJ.
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Promulgated: VICENTE TENG GUI, Respondent. July 16, 2008
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DECISION
PUNO, C.J.: This is a Petition for Review on Certiorari[1] assailing the Decision[2] of the Court of Appeals (CA) in CA-G.R. CV No. 42993 which reversed and set aside the Decision of the Regional Trial Court (RTC) of Olongapo City, Branch 74, in Civil Case No. 558-0-88. The instant case traces its origin to an action for partition filed by petitioners Felix Ting Ho, Jr., Merla Ting Ho Braden, Juana Ting Ho and Lydia Ting Ho Belenzo against their brother, respondent Vicente Teng Gui, before theRTC, Branch 74 of Olongapo City. The controversy revolves around a parcel of land, and the improvements established thereon, which, according to petitioners, should form part of the estate of their deceased father, Felix Ting Ho, and should be partitioned equally among each of the siblings. In their complaint before the RTC, petitioners alleged that their father Felix Ting Ho died intestate on June 26, 1970, and left upon his death an estate consisting of the following: a) A commercial land consisting of 774 square meters, more or less, located at Nos. 16 and 18 Afable St., East Bajac-Bajac, Olongapo City, covered by Original Certificate of Title No. P-1064 and Tax Declaration No. 002-2451; b) A two-storey residential house on the aforesaid lot; c) A two-storey commercial building, the first floor rented to different persons and the second floor, Bonanza Hotel, operated by the defendant also located on the above described lot; and d) A sari-sari store (formerly a bakery) also located on the above described [3] lot. According to petitioners, the said lot and properties were titled and tax declared under trust in the name of respondent Vicente Teng Gui for the benefit of the deceased Felix Ting Ho who, being a Chinese citizen, was then disqualified to own public lands in the Philippines; and that upon the death of Felix Ting Ho, the
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respondent took possession of the same for his own exclusive use and benefit to their exclusion and prejudice.[4] In his answer, the respondent countered that on October 11, 1958, Felix Ting Ho sold the commercial and residential buildings to his sister-in-law, Victoria Cabasal, and the bakery to his brother-in-law, Gregorio Fontela.[5] He alleged that he acquired said properties from the respective buyers on October 28, 1961 and has since then been in possession of subject properties in the concept of an owner; and that on January 24, 1978, Original Certificate of Title No. P-1064 covering the subject lot was issued to him pursuant to a miscellaneous sales patent granted to him onJanuary 3, 1978.[6] The undisputed facts as found by the trial court (RTC), and affirmed by the appellate court (CA), are as follows:
[T]he plaintiffs and the defendant are all brothers and sisters, the defendant being the oldest. They are the only legitimate children of the deceased Spouses Felix Ting Ho and Leonila Cabasal. Felix Ting Ho died on June 26, 1970while the wife Leonila Cabasal died on December 7, 1978. The defendant Vicente Teng Gui is the oldest among the children as he was born on April 5, 1943. The father of the plaintiffs and the defendant was a Chinese citizen although their mother was Filipino. That sometime in 1947, the father of the plaintiffs and defendant, Felix Ting Ho, who was already then married to their mother Leonila Cabasal, occupied a parcel of land identified to (sic) as Lot No. 18 Brill which was thereafter identified as Lot No. 16 situated at Afable Street, East Bajac-Bajac, Olongapo City, by virtue of the permission granted him by the then U.S. Naval Reservation Office, Olongapo, Zambales. The couple thereafter introduced improvements on the land. They built a house of strong material at 16 Afable Street which is a commercial and residential house and another building of strong material at 18 Afable Street which was a residential house and a bakery. The couple, as well as their children, lived and resided in the said properties until their death. The father, Felix Ting Ho had managed the bakery while the mother managed the sari-sari store. Long before the death of Felix Ting Ho, who died on June 26, 1970, he executed on October 11, 1958 a Deed of Absolute Sale of a house of strong material located at 16 Afable Street, Olongapo, Zambales, specifically described in Tax Dec. No. 5432, in favor of Victoria Cabasal his sister-in-law (Exh. C). This Deed of Sale cancelled the Tax Dec. of Felix Ting Ho over the said building (Exh. C-1) and the building was registered in the name of the buyer Victoria Cabasal, as per Tax Dec. No. 7579 (Exh. C-2). On the same date, October 11, 1958 the said Felix Ting Ho also sold a building of strong material located at 18 Afable Street, described in Tax Dec. No. 5982, in favor of Gregorio Fontela, of legal age, an American
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citizen, married (Exh. D). This Deed of Sale, in effect, cancelled Tax Dec. No. 5982 and the same was registered in the name of the buyer Gregorio Fontela, as per Tax Dec. No. 7580 (Exh. D-2). In turn Victoria Cabasal and her husband Gregorio Fontela sold to Vicente Teng Gui on October 28, 1961 the buildings which were bought by them from Felix Ting Ho and their tax declarations for the building they bought (Exhs. C-2 and D-2) were accordingly cancelled and the said buildings were registered in the name of the defendant Vicente Teng Gui (Exhs. C-3 and D-3). On October 25, 1966 the father of the parties Felix Ting Ho executed an Affidavit of Transfer, Relinquishment and Renouncement of Rights and Interest including Improvements on Land in favor of his eldest son the defendant Vicente Teng Gui. On the basis of the said document the defendant who then chose Filipino citizenship filed a miscellaneous sales application with the Bureau of Lands. Miscellaneous Sales Patent No. 7457 of the land which was then identified to be Lot No. 418, Ts-308 consisting of 774 square meters was issued to the applicant Vicente Teng Gui and accordingly on the 24th of January, 1978 Original Certificate of Title No. P-1064 covering the lot in question was issued to the defendant Vicente Teng Gui. Although the buildings and improvements on the land in question were sold by Felix Ting Ho to Victoria Cabasal and Gregorio Fontela in 1958 and who in turn sold the buildings to the defendant in 1961 the said Felix Ting Ho and his wife remained in possession of the properties as Felix Ting Ho continued to manage the bakery while the wife Leonila Cabasal continued to manage the sari-sari store. During all the time that the alleged buildings were sold to the spouses Victoria Cabasal and Gregorio Fontela in 1958 and the subsequent sale of the same to the defendant Vicente Teng Gui in October of 1961 the plaintiffs and the defendant continued to live and were under the custody of their parents until their father Felix Ting Ho [7] died in 1970 and their mother Leonila Cabasal died in 1978. (Emphasis supplied)
In light of these factual findings, the RTC found that Felix Ting Ho, being a Chinese citizen and the father of the petitioners and respondent, resorted to a series of simulated transactions in order to preserve the right to the lot and the properties thereon in the hands of the family. As stated by the trial court:
After a serious consideration of the testimonies given by both one of the plaintiffs and the defendant as well as the documentary exhibits presented in the case, the Court is inclined to believe that Felix Ting Ho, the father of the plaintiffs and the defendant, and the husband of Leonila Cabasal thought of preserving the properties in question by transferring the said properties to his eldest son as he thought that he cannot acquire the properties as he was a Chinese citizen. To transfer the improvements on the land to his eldest son the defendant Vicente Teng Gui, he first executed simulated Deeds of Sales in favor of the sister and brother-in-law of his wife in 1958 and after three (3) years it was made to appear that these vendees had sold the improvements to the defendant Vicente Teng Gui
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who was then 18 years old. The Court finds that these transaction (sic) were simulated and that no consideration was ever paid by the vendees. xxx xxx xxx
With regards (sic) to the transfer and relinquishment of Felix Ting Hos right to the land in question in favor of the defendant, the Court believes, that although from the face of the document it is stated in absolute terms that without any consideration Felix Ting Ho was transferring and renouncing his right in favor of his son, the defendant Vicente Teng Gui, still the Court believes that the transaction was one of implied trust executed by Felix Ting Ho for the benefit of his family[8]
Notwithstanding such findings, the RTC considered the Affidavit of Transfer, Relinquishment and Renouncement of Rights and Interests over the land as a donation which was accepted by the donee, the herein respondent. With respect to the properties in the lot, the trial court held that although the sales were simulated, pursuant to Article 1471 of the New Civil Code[9] it can be assumed that the intention of Felix Ting Ho in such transaction was to give and donate such properties to the respondent. As a result, it awarded the entire conjugal share of Felix Ting Ho in the subject lot and properties to the respondent and divided only the conjugal share of his wife among the siblings. The dispositive portion of the RTC decision decreed:
WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendant as the Court orders the partition and the adjudication of the subject properties, Lot 418, Ts-308, specifically described in original Certificate of Title No. P-1064 and the residential and commercial houses standing on the lot specifically described in Tax Decs. Nos. 9179 and 9180 in the name of Vicente Teng Gui in the following manner, to wit: To the defendant Vicente Teng Gui is adjudicated an undivided six-tenth (6/10) of the aforementioned properties and to each of the plaintiffs Felix Ting Ho, Jr., Merla Ting-Ho Braden, Juana Ting and Lydia Ting Ho-Belenzo each an undivided one-tenth (1/10) of the properties[10]
From this decision, both parties interposed their respective appeals. The petitioners claimed that the RTC erred in awarding respondent the entire conjugal share of their deceased father in the lot and properties in question contrary to its own finding that an implied trust existed between the parties. The respondent, on the other hand, asserted that the RTC erred in not ruling that the lot and properties do not form part of the estate of Felix Ting Ho and are owned entirely by him.
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On appeal, the CA reversed and set aside the decision of the RTC. The appellate court held that the deceased Felix Ting Ho was never the owner and never claimed ownership of the subject lot since he is disqualified under Philippine laws from owning public lands, and that respondent Vicente Teng Gui was the rightful owner over said lot by virtue of Miscellaneous Sales Patent No. 7457 issued in his favor, viz:
The deceased Felix Ting Ho, plaintiffs and defendants late father, was never the owner of the subject lot, now identified as Lot No. 418, Ts-308 covered by OCT No. P-1064 (Exh. A; Record, p. 104). As stated by Felix Ting Ho no less in the Affidavit of Transfer, Relinquishment and Renouncement of Rights and Interest etc. (Exh. B: Record, p. 107), executed on October 25, 1966 he, the late Felix Ting Ho, was merely a possessor or occupant of the subject lot by virtue of a permission granted by the then U.S. Naval Reservation Office, Olongapo, Zambales. The late Felix Ting Ho was never the owner and never claimed ownership of the land. (Emphasis supplied) The affidavit, Exhibit B, was subscribed and sworn to before a Land Investigator of the Bureau of Lands and in the said affidavit, the late Felix Ting Ho expressly acknowledged that because he is a Chinese citizen he is not qualified to purchase public lands under Philippine laws for which reason he thereby transfers, relinquishes and renounces all his rights and interests in the subject land, including all the improvements thereon to his son, the defendant Vicente Teng Gui, who is of legal age, single, Filipino citizen and qualified under the public land law to acquire lands. xxx xxx xxx
Defendant Vicente Teng Gui acquired the subject land by sales patent or purchase from the government and not from his father, the late Felix Ting Ho. It cannot be said that he acquired or bought the land in trust for his father because on December 5, 1977 when the subject land was sold to him by the government and on January 3, 1978 when Miscellaneous Sales Patent No. 7457 was issued, the late Felix Ting Ho was already dead, having died on June 6, 1970 (TSN, January 10, 1990, p. 4).[11]
Regarding the properties erected over the said lot, the CA held that the finding that the sales of the two-storey commercial and residential buildings and sari-sari store to Victoria Cabasal and Gregorio Fontela and subsequently to respondent were without consideration and simulated is supported by evidence,
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which clearly establishes that these properties should form part of the estate of the late spouses Felix Ting Ho and Leonila Cabasal. Thus, while the appellate court dismissed the complaint for partition with respect to the lot in question, it awarded the petitioners a four-fifths (4/5) share of the subject properties erected on the said lot. The dispositive portion of the CA ruling reads as follows:
WHEREFORE, premises considered, the decision appealed from is REVERSED and SET ASIDE and NEW JUDGMENT rendered: 1. DISMISSING plaintiff-appellants complaint with respect to the subject parcel of land, identified as Lot No. 418, Ts-308, covered by OCT No. P1064, in the name of plaintiff-appellants [should be defendant-appellant]; 2. DECLARING that the two-storey commercial building, the two-storey residential building and sari-sari store (formerly a bakery), all erected on the subject lot No. 418, Ts-308, form part of the estate of the deceased spouses Felix Ting Ho and Leonila Cabasal, and that plaintiff-appellants are entitled to fourfifths (4/5) thereof, the remaining one-fifth (1/5) being the share of the defendantappellant; 3. DIRECTING the court a quo to partition the said two-storey commercial building, two-storey residential building and sari-sari store (formerly a bakery) in accordance with Rule 69 of the Revised Rules of Court and pertinent provisions of the Civil Code; 4. Let the records of this case be remanded to the court of origin for further proceedings; 5. Let a copy of this decision be furnished the Office of the Solicitor General; and 6. There is no pronouncement as to costs. SO ORDERED.[12]
Both petitioners and respondent filed their respective motions for reconsideration from this ruling, which were summarily denied by the CA in its Resolution[13] dated August 5, 1997. Hence, this petition.
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According to the petitioners, the CA erred in declaring that Lot No. 418, Ts308 does not form part of the estate of the deceased Felix Ting Ho and is owned alone by respondent. Respondent, on the other hand, contends that he should be declared the sole owner not only of Lot No. 418, Ts-308 but also of the properties erected thereon and that the CA erred in not dismissing the complaint for partition with respect to the said properties. The primary issue for consideration is whether both Lot No. 418, Ts-308 and the properties erected thereon should be included in the estate of the deceased Felix Ting Ho. We affirm the CA ruling. With regard to Lot No. 418, Ts-308, Article XIII, Section 1 of the 1935 Constitution states:
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 (Emphasis supplied)
Our fundamental law cannot be any clearer. The right to acquire lands of the public domain is reserved for Filipino citizens or corporations at least sixty percent of the capital of which is owned by Filipinos. Thus, inKrivenko v. Register of Deeds,[14] the Court enunciated that:
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 thePhilippines 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
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here forever and share our fortunes and misfortunes, Filipino citizenship is not impossible to acquire.[15]
In the present case, the father of petitioners and respondent was a Chinese citizen; therefore, he was disqualified from acquiring and owning real property in the Philippines. In fact, he was only occupying the subject lot by virtue of the permission granted him by the then U.S. Naval Reservation Office of Olongapo, Zambales. As correctly found by the CA, the deceased Felix Ting Ho was never the owner of the subject lot in light of the constitutional proscription and the respondent did not at any instance act as the dummy of his father. On the other hand, the respondent became the owner of Lot No. 418, Ts-308 when he was granted Miscellaneous Sales Patent No. 7457 on January 3, 1978, by the Secretary of Natural Resources By Authority of the President of the Philippines, and when Original Certificate of Title No. P-1064 was correspondingly issued in his name. The grant of the miscellaneous sales patent by the Secretary of Natural Resources, and the corresponding issuance of the original certificate of title in his name, show that the respondent possesses all the qualifications and none of the disqualifications to acquire alienable and disposable lands of the public domain. These issuances bear the presumption of regularity in their performance in the absence of evidence to the contrary. Registration of grants and patents involving public lands is governed by Section 122 of Act No. 496, which was subsequently amended by Section 103 of Presidential Decree No. 1529, viz:
Sec. 103. Certificate of title pursuant to patents.Whenever public land is by the Government alienated, granted or conveyed to any person, the same shall be brought forthwith under the operation of this Decree. It shall be the duty of the official issuing the instrument of alienation, grant, patent or conveyance in behalf of the Government to cause such instrument to be filed with the Register of Deeds of the province or city where the land lies, and to be there registered like other deeds and conveyance, whereupon a certificate of title shall be entered as in other cases of registered land, and an owners duplicate issued to the grantee. The deeds, grant, patent or instrument of conveyance from the Government to the grantee shall not take effect as a conveyance or bind the land, but shall operate only as a contract between the Government and the grantee and as evidence of authority to the Register of Deeds to make registration. It is the act of registration that shall be the operative act to affect and convey the land, and in all cases under
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this Decree registration shall be made in the office of the Register of Deeds of the province or city where the land lies. The fees for registration shall be paid by the grantee. After due registration and issuance of the certificate of title, such land shall be deemed to be registered land to all intents and purposes under this Decree.[16] (Emphasis supplied)
Under the law, a certificate of title issued pursuant to any grant or patent involving public land is as conclusive and indefeasible as any other certificate of title issued to private lands in the ordinary or cadastral registration proceeding. The effect of the registration of a patent and the issuance of a certificate of title to the patentee is to vest in him an incontestable title to the land, in the same manner as if ownership had been determined by final decree of the court, and the title so issued is absolutely conclusive and indisputable, and is not subject to collateral attack.[17] Nonetheless, petitioners invoke equity considerations and claim that the ruling of the RTC that an implied trust was created between respondent and their father with respect to the subject lot should be upheld. This contention must fail because the prohibition against an alien from owning lands of the public domain is absolute and not even an implied trust can be permitted to arise on equity considerations. In the case of Muller v. Muller,[18] wherein the respondent, a German national, was seeking reimbursement of funds claimed by him to be given in trust to his petitioner wife, a Philippine citizen, for the purchase of a property in Antipolo, the Court, in rejecting the claim, ruled that:
Respondent was aware of the constitutional prohibition and expressly admitted his knowledge thereof to this Court. He declared that he had the Antipolo property titled in the name of the petitioner because of the said prohibition. 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 petitioner's marriage to respondent. Save for the exception provided in cases of hereditary succession, respondent's disqualification from owning lands in the Philippines is absolute. Not even an ownership in trust is allowed. Besides, where the
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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. 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...[19]
Coming now to the issue of ownership of the properties erected on the subject lot, the Court agrees with the finding of the trial court, as affirmed by the appellate court, that the series of transactions resorted to by the deceased were simulated in order to preserve the properties in the hands of the family. The records show that during all the time that the properties were allegedly sold to the spouses Victoria Cabasal and Gregorio Fontela in 1958 and the subsequent sale of the same to respondent in 1961, the petitioners and respondent, along with their parents, remained in possession and continued to live in said properties. However, the trial court concluded that:
In fairness to the defendant, although the Deeds of Sale executed by Felix Ting Ho regarding the improvements in favor of Victoria Cabasal and Gregorio Fontela and the subsequent transfer of the same by Gregorio Fontela and Victoria Cabasal to the defendant are all simulated, yet, pursuant to Article 1471 of the New Civil Code it can be assumed that the intention of Felix Ting Ho in such transaction was to give and donate the improvements to his eldest son the defendant Vicente Teng Gui [20]
Its finding was based on Article 1471 of the Civil Code, which provides that:
Art. 1471. If the price is simulated, the sale is void, but the act may be shown to have been in reality a donation, or some other act or contract.[21]
The Court holds that the reliance of the trial court on the provisions of Article 1471 of the Civil Code to conclude that the simulated sales were a valid donation to the respondent is misplaced because its finding was based on a mere assumption when the law requires positive proof.
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The respondent was unable to show, and the records are bereft of any evidence, that the simulated sales of the properties were intended by the deceased to be a donation to him. Thus, the Court holds that the two-storey residential house, two-storey residential building and sari-sari store form part of the estate of the late spouses Felix Ting Ho and Leonila Cabasal, entitling the petitioners to a four-fifths (4/5) share thereof. IN VIEW WHEREOF, the petition is DENIED. The assailed Decision dated December 27, 1996 of the Court of Appeals in CA-G.R. CV No. 42993 is hereby AFFIRMED. SO ORDERED.
REYNATO S. PUNO Chief Justice
WE CONCUR:
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ANTONIO T. CARPIO
Associate Justice
RENATO C. CORONA Associate Justice
ADOLFO S. AZCUNA Associate Justice
TERESITA J. LEONARDO-DE CASTRO Associate Justice
CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.
[1] [2]
Under Rule 45 of the 1997 Rules of Civil Procedure. Rollo, pp. 49-62; penned by Associate Justice Eduardo G. Montenegro, concurred in by Associate Justices Antonio M. Martinez and Celia Lipana-Reyes. [3] Id. at 78. [4] Id. at 78-79.
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Id. at 79. Id. at 80. [7] Id. at 53-55. [8] Id. at 84-85. [9] Article 1471 of the Civil Code provides: Art. 1471. If the price is simulated, the sale is void, but the act may be shown to have been in reality a donation, or some other act or contract. [10] Rollo, p. 86. [11] Id. at 55-57 (emphasis supplied). [12] Rollo, pp. 60-61. [13] CA Records, p. 235. [14] 79 Phil. 461 (1947). [15] Id. at 474 (emphasis supplied). [16] Property Registration Decree, P.D. No. 1529, 103. [17] This rule does not apply where the land covered by a patent issued by the Government had previously been determined in a registration proceeding and adjudicated in favor of a private individual other than the patentee, which situation is not present in this case. [18] G.R. No. 149615, August 29, 2006, 500 SCRA 65. [19] Id. at 68. [20] Rollo, pp. 85-86 (emphasis supplied). [21] Civil Code, Art. 1471.
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. Q-94-21862, 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
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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 associations qualified to acquire or hold lands of the 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
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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 THE COURT OF APPEALS GRAVELY ERRED IN SUSTAINING RESPONDENTS CAUSE OF ACTION WHICH IS ACTUALLY A DESPERATE ATTEMPT TO OBTAIN
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OWNERSHIP OVER THE LOT IN QUESTION, CLOTHED UNDER THE GUISE OF CLAIMING REIMBURSEMENT. 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. 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. 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: 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. Aliens, whether individuals or corporations, are disqualified from acquiring lands of the public domain. 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: 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: "Sec. 5. Save in cases of hereditary succession, no private agricultural land will be transferred or assigned except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain in the Philippines."
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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. 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. 12His 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
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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 associations qualified to acquire or hold lands of the 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
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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. CONSUELO YNARES-SANTIAGO Associate Justice WE CONCUR: ARTEMIO V. PANGANIBAN Chief Justice Chairperson MA. ALICIA AUSTRIA-MARTINEZ, ROMEO J. CALLEJO, SR. Associate Justice Associate Justice MINITA V. CHICO-NAZARIO Associate Justice CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. ARTEMIO V. PANGANIBAN Chief Justice
Footnotes
1
Rollo, pp. 31-50.
Id. at 8-13. Penned by Associate Justice Juan Q. Enriquez, Jr. and concurred in by Associate Justices Ruben T. Reyes and Presbitero J. Velasco, Jr. (who is now a Member of this Court).
2 3
Id. at 98-101. Penned by Judge Teodoro A. Bay. Id. at 22.
23

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Id. at 58. Id. at 52-57. Id. at 100-101. Id. at 12. Ong Ching Po v. Court of Appeals, G.R. Nos. 113472-73, December 20, 1994, 239 SCRA 341, 346. 79 Phil. 461, 473, 476 (1947). Rollo, p. 114. TSN, April 18, 1995, p. 12. Morales v. Court of Appeals, G.R. No. 117228, June 19, 1997, 274 SCRA 282, 299. Frenzel v. Catito, 453 Phil. 885, 905 (2003). University of the Philippines v. Catungal, Jr., 338 Phil. 728, 743-744 (1997). G.R. No. 74833, January 21, 1991, 193 SCRA 93, 103-104.
10
11
12
13
14
15
16
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SECOND DIVISION G.R. No. 143958 July 11, 2003
ALFRED FRITZ FRENZEL, petitioner, vs. EDERLINA P. CATITO, respondent. CALLEJO, SR., J.: Before us is a petition for review of the Decision1 of the Court of Appeals in CAG.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:
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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, 19835 appointing 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
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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 Bank-PNGLimited. Alfred also had a peso savings account with HSBC, Manila, under Savings Account No. 01-725-183-01.14 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
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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 proceedings.18 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. 018462341-145.24 The couple decided to put up a beach resort on a four-hectare 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.
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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 affidavit-complaint 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
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Shortly thereafter, Alfred filed a Complaint33 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: I. Real Properties 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; 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; 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; II. Personal Properties: a. Furniture valued at P10,000.00.
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... 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: (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; (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; (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) Declaring the plaintiff to be the sole and absolute owner of the abovementioned real and personal properties; d) Awarding moral damages to plaintiff in an amount deemed reasonable by the trial court; e) To reimburse plaintiff the sum of P12,000.00 as attorney's fees for having compelled the plaintiff to litigate;
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f) To reimburse plaintiff the sum of P5,000.00 incurred as litigation expenses also for having compelled the plaintiff to litigate; and g) To pay the costs of this suit; 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. The same amount in (1) above as moral damages; 3. Attorney's fees in the amount equivalent to TWENTY FIVE PER CENT (25%) of (1) and (2) above; 4. Litigation expenses in the amount equivalent to TEN PER CENT (10%) of the amount in (1) above; and 5. For such other reliefs as are just and equitable under the circumstances.42 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:
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WHEREFORE, premises considered, judgment is hereby rendered ordering the defendant to perform the following: (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; (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 (1) Electric Washing Machine (1) Office desk and chair (1) Double bed suits (1) Mirror/dresser (1) Heavy duty voice/working mechanic (1) "Sony" Beta-Movie camera (1) Suitcase with personal belongings
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(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; (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: WHEREFORE, the Court cannot give due course to the complaint and hereby orders its dismissal. The counterclaims of the defendant are likewise dismissed. SO ORDERED.44 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. 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 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.
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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: 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 and 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 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 court a quo merely for the purpose of having him declared as the owner of the
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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 provides, as follows: Save in cases of hereditary succession, no private land shall be transferred or conveyed except to individuals, corporations, or associations qualified 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 disqualified from acquiring lands of the public domain. 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
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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. Q. In 14 Fernandez St., San Francisco, del Monte, Manila. 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). xxx COURT: Q. So you understand that you are a foreigner that you cannot buy land in the Philippines? xxx xxx
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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. A. Q. xxx xxx
What happened after that? She said you foreigner you are using Filipinos to buy property. 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? A Q A Yes, sir. To whom are you married? To a Filipina, since 1976.
Q Would you tell us who is that particular person you are married since 1976? A Q A Teresita Santos Frenzel. Where is she now? In Australia.
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Q Is this not the person of Teresita Frenzel who became an Australian citizen? A Q A Q A I am not sure, since 1981 we were separated. You were only separated, in fact, but not legally separated? Thru my counsel in Australia I filed a separation case. As of the present you are not legally divorce[d]? I am still legally married.62
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-in-interest, if disqualified to acquire or hold lands of the public domain in the Philippines, shall not
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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.
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Bellosillo, Austria-Martinez and Tinga, JJ ., concur. Quisumbing, J ., is on leave.
Footnotes Penned by Justice Martin Villarama, Jr., with Presiding Justice Cancio C. Garcia and Justice Andres B. Reyes, Jr. concurring.
1 2
Penned by Judge William M. Layague.
The petitioner adduced testimonial and documentary evidence. The respondent did not adduce any testimonial evidence, but adduced as Exhibit "5," the petitioner's complaint in Civil Case No. 18,750-87 filed with the RTC of Davao City.
3 4
Exhibits "A" to "D-4." Exhibits "B" and "B-1." Exhibit "C." Exhibit "E." Exhibit "D." Exhibit "F." Exhibit "G." Exhibits "H" to "H-12." Exhibit "J." Exhibits "K" to "K-5." Exhibit "L." Exhibit "M." Exhibit "V." Exhibit "N." Exhibits "O" to "O-4." Exhibit "P-4." Exhibit "P" & "P-1." Exhibit "Q" & "Q-1."
10
11
12
13
14
15
16
17
18
19
20
21
40

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Exhibits "Q-4" to "Q-6." Exhibit "Q-20." Exhibits "V-4""V-10." Exhibit "R-5." Exhibit "R-13." Exhibit "BB." Exhibits "S" and "T." Exhibit "BB." Exhibits "CC" to "CC-4."
23
24
25
26
27
28
29
30
Exhibit "U;" Entitled and docketed as Alfred Fritz Frenzel vs. Ederlina P. Catito, Civil Case No. 46350.
31 32
Exhibit "GG." Entitled and docketed as Alfred Fritz Frenzel vs. Ederlina P. Catito, Civil Case No. Q-46350. Exhibit "W." Entitled and docketed as Alfred Frenzel vs. Ederlina P. Catito, Civil Case No. 17,817. Records, p. 2. Records, pp. 45. Exhibit "5." Records, pp. 1316. Docketed as Civil Case No. 18,750-87. Exhibit "5;" Records, pp. 194198. Exhibit "5-D;" Records, pp. 197198. Exhibit "X-2""X-3." Records, p. 232. Docketed as CA-G.R. CV. No. 53485. Rollo, p. 30. Id., at 16.
33
34
35
36
37
38
39
40
41
42
43
44
45
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47
41

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Id., at 19.
An act to authorize the mortgage of private real property in favor of any individual, corporation or association subject to certain conditions.
49
Supra. The conveyances subject of the case were executed when the 1973 Constitution was in effect.
50 51
Ong Ching Po vs. Court of Appeals, 239 SCRA 341 [1994].
Alexander Krivenko, vs. Register of Deeds, et al., 79 Phil. 461 [1947]; Rellosa vs. Hun, 93 Phil. 827 [1953]; Caoile vs. Peng, 93 Phil. 861 [1953]; Ong Ching Po vs. Court of Appeals , supra.
52 53
Francisco Chavez vs. Presidential Commission on Good Government, et al., 307 SCRA 394 [1999]. Aikman vs. City of Wheeling, Southeastern Reporter, 667 [1938]. Rellosa vs. Hun, supra.
54
55
ART. 1412. If the act in which the unlawful or forbidden cause consists does not constitute a criminal offense, the following rules shall be observed:
56
(1) When the fault is on the part of both contracting parties, neither may recover what he has given by virtue of the contract, or demand the performance of the other's undertaking. . . Corkins vs. Ritter, 40 N.W., Reporter, 2d 726 [1950], Daley vs. City of Melvindale, 260 N.W. Reporter, 898 [1935].
57 58
19 Am. Jur., Equity, Section 478. Bough & Bough vs. Cantiveros and Hanopol, 40 Phil. 209 [1919], Reporter. Cheesman vs. Intermediate Appellate Court, et al., 193 SCRA 93 [1991]. Records, pp. 230231. TSN, 7 April 1987, pp. 23 (Frenzel). See note 57. Supra. Supra. Supra. Id., at 85. Tolentino, Civil Code of the Philippines, 1990 ed., Vol. I, p. 85. Cited in Marissey vs. Bologna, 123 So. 2d 537 [1960].
59
60
61
62
63
64
65
66
67
68
69
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FIRST DIVISION
G.R. No. 74833 January 21, 1991 THOMAS C. CHEESMAN, petitioner, vs. INTERMEDIATE APPELLATE COURT and ESTELITA PADILLA, respondents. Estanislao L. Cesa, Jr. for petitioner. Benjamin I. Fernandez for private respondent.
NARVASA, J.:p This appeal concerns the attempt by an American citizen (petitioner Thomas Cheesman) to annul for lack of consent on his part the sale by his Filipino wife (Criselda) of a residential lot and building to Estelita Padilla, also a Filipino. Thomas Cheesman and Criselda P. Cheesman were married on December 4, 1970 but have been separated since February 15,1981. 1 On June 4, 1974, a "Deed of Sale and Transfer of Possessory Rights" was executed by Armando Altares conveying a parcel of unregistered land and the house thereon (at No. 7 Neptune Street, Gordon Heights, Olongapo City) in favor of "Criselda P. Cheesman, of legal age, Filipino citizen, married to Thomas Cheesman, and residing at Lot No. 1, Blk. 8, Filtration Road, Sta. Rita, Olongapo City . . ." 2 Thomas Cheesman, although aware of the deed, did not object to the transfer being made only to his wife. 3 Thereafterand again with the knowledge of Thomas Cheesman and also without any protest by himtax declarations for the property purchased were issued in the name only of Criselda Cheesman and Criselda assumed exclusive management and administration of said property, leasing it to tenants. 4 On July 1, 1981, Criselda Cheesman sold the property to Estelita M. Padilla, without the knowledge or consent of Thomas Cheesman. 5 The deed described Criselda as being" . . . of legal age, married to an American citizen,. . ." 6 Thirty days later, or on July 31, 1981, Thomas Cheesman brought suit in the Court of First Instance at Olongapo City against his wife, Criselda, and Estelita
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Padilla, praying for the annulment of the sale on the ground that the transaction had been executed without his knowledge and consent. 7 An answer was filed in the names of both defendants, alleging that (1) the property sold was paraphernal, having been purchased by Criselda with funds exclusively belonging to her ("her own separate money"); (2) Thomas Cheesman, being an American, was disqualified to have any interest or right of ownership in the land; and (3) Estelita Padilla was a buyer in good faith. 8 During the pre-trial conference, the parties agreed upon certain facts which were subsequently set out in a pre-trial Order dated October 22, 1981, 9 as follows: 1. Both parties recognize the existence of the Deed of Sale over the residential house located at No. 7 Granada St., Gordon Heights, Olongapo City, which was acquired from Armando Altares on June 4, 1974 and sold by defendant Criselda Cheesman to Estelita Padilla on July 12, 1981; and 2. That the transaction regarding the transfer of their property took place during the existence of their marriage as the couple were married on December 4, 1970 and the questioned property was acquired sometime on June 4,1974. The action resulted in a judgment dated June 24, 1982, 10 declaring void ab initio the sale executed by Criselda Cheesman in favor of Estelita M. Padilla, and ordering the delivery of the property to Thomas Cheesman as administrator of the conjugal partnership property, and the payment to him of P5,000.00 as attorney's fees and expenses of litigation. 11 The judgment was however set aside as regards Estelita Padilla on a petition for relief filed by the latter, grounded on "fraud, mistake and/or excusable negligence" which had seriously impaired her right to present her case adequately. 12 "After the petition for relief from judgment was given due course," according to petitioner, "a new judge presided over the case." 13 Estelita Padilla filed a supplemental pleading on December 20, 1982 as her own answer to the complaint, and a motion for summary judgment on May 17, 1983. Although there was initial opposition by Thomas Cheesman to the motion, the parties ultimately agreed on the rendition by the court of a summary judgment after entering into a stipulation of facts, at the hearing of the motion on June 21, 1983, the stipulation being of the following tenor: 14 (1) that the property in question was bought during the existence of the marriage between the plaintiff and the defendant Criselda P. Cheesman;
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(2) that the property bought during the marriage was registered in the name of Criselda Cheesman and that the Deed of Sale and Transfer of Possessory Rights executed by the former ownervendor Armando Altares in favor of Criselda Cheesman made no mention of the plaintiff; (3) that the property, subject of the proceedings, was sold by defendant Criselda Cheesman in favor of the other defendant Estelita M. Padilla, without the written consent of the plaintiff. Obviously upon the theory that no genuine issue existed any longer and there was hence no need of a trial, the parties having in fact submitted, as also stipulated, their respective memoranda each praying for a favorable verdict, the Trial Court 15 rendered a "Summary Judgment" dated August 3, 1982 declaring "the sale executed by . . . Criselda Cheesman in favor of . . . Estelita Padilla to be valid," dismissing Thomas Cheesman's complaint and ordering him "to immediately turn over the possession of the house and lot subject of . . . (the) case to . . . Estelita Padilla . . ." 16 The Trial Court found that 1) the evidence on record satisfactorily overcame the disputable presumption in Article 160 of the Civil Codethat all property of the marriage belongs to the conjugal partnership "unless it be proved that it pertains exclusively to the husband or to the wife" and that the immovable in question was in truth Criselda's paraphernal property; 2) that moreover, said legal presumption in Article 160 could not apply "inasmuch as the husband-plaintiff is an American citizen and therefore disqualified under the Constitution to acquire and own real properties; and 3) that the exercise by Criselda of exclusive acts of dominion with the knowledge of her husband "had led . . . Estelita Padilla to believe that the properties were the exclusive properties of Criselda Cheesman and on the faith of such a belief she bought the properties from her and for value," and therefore, Thomas Cheesman was, under Article 1473 of the Civil Code, estopped to impugn the transfer to Estelita Padilla. Thomas Cheesman appealed to the Intermediate Appellate Court. There he assailed the Trial Court acts (1) of granting Estelita Padilla's petition for relief, and its resolution of matters not subject of said petition; (2) of declaring valid the sale to Estelita Padilla despite the lack of consent thereto by him, and the
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presumption of the conjugal character of the property in question pursuant to Article 160 of the Civil Code; (3) of disregarding the judgment of June 24, 1982 which, not having been set aside as against Criselda Cheesman, continued to be binding on her; and (4) of making findings of fact not supported by evidence. All of these contentions were found to be without merit by the Appellate Tribunal which, on January 7, 1986, promulgated a decision (erroneously denominated, "Report") 17affirming the "Summary Judgment complained of," "having found no reversible error" therein. Once more, Thomas Cheesman availed of the remedy of appeal, this time to this Court. Here, he argues that it was reversible error for the Intermediate Appellate Court 1) to find that the presumption that the property in question is conjugal in accordance with Article 160 had been satisfactorily overcome by Estelita Padilla; 18 2) to rule that Estelita Padilla was a purchaser of said property in good faith, it appearing: a) that the deed by which the property was conveyed to Criselda Cheesman described her as "married to Thomas C. Cheesman," as well as the deed by which the property was later conveyed to Estelita Padilla by Criselda Cheesman also described her as "married to an American citizen," and both said descriptions had thus "placed Estelita on knowledge of the conjugal nature of the property;" and b) that furthermore, Estelita had admitted to stating in the deed by which she acquired the property a price much lower than that actually paid "in order to avoid payment of more obligation to the government;" 19 3) to decline to declare that the evidence did not warrant the grant of Estelita Padilla's petition for relief on the ground of "fraud, mistake and/or excusable negligence;" 20 4) to hold that Thomas Cheesman had waived his objection to Estelita's petition for relief by failing to appeal from the order granting the same; 5) to accord to Estelita Padilla a relief other than that she had specifically prayed for in her petition for relief, ie., "the restoration of the purchase price which Estelita allegedly paid to Criselda;" 21 and
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6) to fail to declare that Thomas Cheesman's citizenship is not a bar to his action to recover the lot and house for the conjugal partnership. 22 Such conclusions as that (1) fraud, mistake or excusable negligence existed in the premises justifying relief to Estelita Padilla under Rule 38 of the Rules of Court, or (2) that Criselda Cheesman had used money she had brought into her marriage to Thomas Cheesman to purchase the lot and house in question, or (3) that Estelita Padilla believed in good faith that Criselda Cheesman was the exclusive owner of the property that she (Estelita) intended to and did in fact buyderived from the evidence adduced by the parties, the facts set out in the pleadings or otherwise appearing on recordare conclusions or findings of fact. As distinguished from a question of lawwhich exists "when the doubt or difference arises as to what the law is on a certain state of facts" "there is a question of fact when the doubt or difference arises as to the truth or the falsehood of alleged facts;" 23 or when the "query necessarily invites calibration of the whole evidence considering mainly the credibility of witnesses, existence and relevancy of specific surrounding circumstances, their relation; to each other and to the whole and the probabilities of the situation." 24 Now, it is axiomatic that only questions of law, distinctly set forth, may be raised in a petition for the review oncertiorari of a decision of the Court of Appeals presented to this Court. 25 As everyone knows or ought to know, the appellate jurisdiction of this Court is limited to reviewing errors of law, accepting as conclusive the factual findings of the lower court upon its own assessment of the evidence. 26 The creation of the Court of Appeals was precisely intended to take away from the Supreme Court the work of examining the evidence, and confine its task to the determination of questions which do not call for the reading and study of transcripts containing the testimony of witnesses. 27 The rule of conclusiveness of the factual findings or conclusions of the Court of Appeals is, to be sure, subject to certain exceptions, 28 none of which however obtains in the case at bar. It is noteworthy that both the Trial Court and the Intermediate Appellate Court reached the same conclusions on the three (3) factual matters above set forth, after assessment of the evidence and determination of the probative value thereof. Both Courts found that the facts on record adequately proved fraud, mistake or excusable negligence by which Estelita Padilla's rights had been substantially impaired; that the funds used by Criselda Cheesman was money she had earned and saved prior to her marriage to Thomas Cheesman, and that Estelita Padilla did believe in good faith that Criselda Cheesman was the sole owner of the property in question. Consequently, these determinations of fact will not be here disturbed, this Court having been cited to no reason for doing so.
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These considerations dispose of the first three (3) points that petitioner Cheesman seeks to make in his appeal. They also make unnecessary an extended discussion of the other issues raised by him. As to them, it should suffice to restate certain fundamental propositions. An order of a Court of First Instance (now Regional Trial Court) granting a petition for relief under Rule 38 is interlocutory and is not appealable. Hence, the failure of the party who opposed the petition to appeal from said order, or his participation in the proceedings subsequently had, cannot be construed as a waiver of his objection to the petition for relief so as to preclude his raising the same question on appeal from the judgment on the merits of the main case. Such a party need not repeat his objections to the petition for relief, or perform any act thereafter (e.g., take formal exception) in order to preserve his right to question the same eventually, on appeal, it being sufficient for this purpose that he has made of record "the action which he desires the court to take or his objection to the action of the court and his grounds therefor." 29 Again, the prayer in a petition for relief from judgment under Rule 38 is not necessarily the same prayer in the petitioner's complaint, answer or other basic pleading. This should be obvious. Equally obvious is that once a petition for relief is granted and the judgment subject thereof set aside, and further proceedings are thereafter had, the Court in its judgment on the merits may properly grant the relief sought in the petitioner's basic pleadings, although different from that stated in his petition for relief. 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 associations qualified to acquire or hold lands of the public domain." 30 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. 31 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.
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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 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. An equally decisive consideration is that Estelita Padilla is a purchaser in good faith, both the Trial Court and the Appellate Court having found that Cheesman's own conduct had led her to believe the property to be exclusive property of the latter's wife, freely disposable by her without his consent or intervention. An innocent buyer for value, she is entitled to the protection of the law in her purchase, particularly as against Cheesman, who would assert rights to the property denied him by both letter and spirit of the Constitution itself. WHEREFORE, the appealed decision is AFFIRMED, with costs against petitioner. SO ORDERED. Cruz, Gancayco, Grio-Aquino and Medialdea, JJ., concur.
Footnotes 1 Rollo, p. 50 (Decision [Report] of the Second Civil Cases Division, Intermediate Appellate Court); p. 226 (petitioner's brief). 2 Id., p. 227. 3 Factual finding of Trial Court, adopted by the Court of Appeals: rollo, pp. 55-56. 4 Factual findings of Trial Court, adopted by the Court of appeals: rollo, pp. 55-56. 5 Rollo, p. 50. 6 Id., p. 228. 7 Id., pp. 10, 50, 103, 229. 8 Id., pp. 50. 9 Id., pp. 11, 232-235. 10 Rendered by Hon. Regino T. Veridiano, who has since been transferred to Manila. 11 Id., p. 12. It appears that a writ of execution was issued and on Aug. 26, 1982 the house and lot in question were delivered to Thomas Cheesman (See rollo, p. 283).
49

12 Id., pp. 14, 51. 13 Id., p. 14. The "new judge" was Hon. Nicias O. Mendoza.
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14 Id., pp. 284-285; the petitioner acknowledges that "in the hearing of June 21, 1983, the parties agreed to submit the case for decision upon some stipulation of facts" (rollo, p. 247) 15 Since renamed, in virtue of BP 129, "Regional Trial Court (Branch LXXIV at Olongapo City) 16 Rollo, pp. 281-291. 17 Id., pp. 42-49, 50-57, 58. 18 Id., pp. 24-25, 19 Id., pp. 26-28. 20 Id., pp. 28-32, 251-255. 21 Id., pp. 33-35. 22 Id., pp. 36-38. 23 Ramos, et al. vs. Pepsi-Cola Bottling Co. of the P.I., et al., 19 SCRA 289, 292, citing II Bouvier's Law Dictionary, 2784, and II Martin, Rules of Court, 255; See also, Francisco, The Rules of Court, Annotated and Commented, 1968, ed., Vol. III, pp. 485- 488. 24 SEE Lim v. Calaguas, 83 Phil. 796, 799, and Mackay Radio & Tel. Co. v. Rich, 28 SCRA 699, 705, cited in Moran, Comments on the Rules, 1979 ed., p. 474. 25 Sec. 2, Rule 45, Rules of Court; Villanueva v. IAC, G.R. No. 67582, Oct. 29, 1987; Andres v. Manufacturers Hanover & Trust Corp., G.R. No. 82670, Sept. 15, 1989. 26 See Moran, Comments on the Rules, 1979 ed., Vol. 2, 472-473, citing Evangelista & Co. v. Abad Santos, June 28, 1973, 51 SCRA 416, 419; See, too, Francisco, op. cit., p. 489; Korean Airlines, Ltd. v. C.A., G.R. No. 61418, Sept. 24, 1987. 27 Moran, op. cit., p. 473, citing Sta. Ana v. Hernandez, 18 SCRA 973, 978. 28 SEE Ramos v. Pepsi-Cola Bottling Co. of the Phil., 19 SCRA 289, 291-292. 29 Sec. 1, Rule 41, Rules of Court. 30 Identical to Sec. 7, Art. XII of the 1987 Constitution, and Sec. 5, ART. XIII of the 1935 Constitution (except that the latter section refers not simply to "private land" but to "private agricultural land". 31 Rellosa v. Gaw Chee Hun, 93 Phil. 827 (1953) applying the pari delicto rule to disallow the Filipino vendor from recovering the land sold to an alien (See also Bautista v. Uy Isabelo, 93 Phil. 843; Talento v. Makiki, 93 Phil. 855; Caoile v. Chiao Peng, 93 Phil. 861; Arambulo v. Cua So, 95 Phil. 749; Dinglasan v. Lee Bun Ting, 99 Phil. 427); and Philippine Banking Corporation v. Lui She, 21 SCRA 52, which declared that the pari delicto rule
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should not apply where the original parties had already died and had been succeeded by administrators to whom it would have been unjust and to impute guilt, and recovery would enhance the declared public policy of preserving lands for Filipinos.
THIRD DIVISION PHILIP MATTHEWS, Petitioner, G.R. No. 164584 Present: YNARES-SANTIAGO, J., Chairperson, CHICO-NAZARIO, VELASCO, JR. NACHURA, and PERALTA, JJ. Promulgated: June 22, 2009
- versus -
BENJAMIN A. TAYLOR and JOSELYN C. TAYLOR, Respondents.
x------------------------------------------------------------------------------------x DECISION NACHURA, J.:
Assailed in this petition for review on certiorari are the Court of Appeals (CA) December 19, 2003 Decision[1]and July 14, 2004 Resolution[2] in CA-G.R. CV No. 59573. The assailed decision affirmed and upheld the June 30, 1997 Decision[3] 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.
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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 ManocManoc, Boracay Island, Malay, Aklan, for and in consideration [5] [6] of P129,000.00. The sale was allegedly financed by Benjamin. 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 sublease 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 Lease[10] (Agreement) involving the Boracay property for a period of 25 years, with an annual rental of P12,000.00. 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. 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 Damages[11] 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
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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 pre-trial, trial on the merits ensued. On June 30, 1997, the RTC disposed of the case in this manner:
WHEREFORE, premises considered, judgment is 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 T7) 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
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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 THEPHILIPPINES WHICH IS A PROVISION REFERRING TO THE ABSOLUTE COMMUNITY OF PROPERTY. THE
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PROPERTY REGIME GOVERNING THE PROPERTY RELATIONS OF BENJAMIN TAYLOR AND JOSELYNTAYLOR IS THE CONJUGAL PARTNERSHIP OF GAINS BECAUSE THEY WERE MARRIED ON 30 JUNE 1988WHICH IS PRIOR TO THE EFFECTIVITY OF THE FAMILY CODE. ARTICLE 96 OF THE FAMILY CODE OF THEPHILIPPINES 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]
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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.
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 qualified to acquire or hold lands of the public domain in thePhilippines. 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,
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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 thePhilippines, 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;[27] that 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 above-mentioned constitutional prohibition. In Muller v. Muller,[31] petitioner Elena Buenaventura Muller and respondent Helmut Muller were married inGermany. 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
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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 thePhilippines, 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
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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 enteredDISMISSING the complaint against petitioner Philip Matthews. SO ORDERED.
ANTONIO EDUARDO B. NACHURA Associate Justice
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WE CONCUR:
CONSUELO YNARES-SANTIAGO Associate Justice Chairperson
MINITA V. CHICO-NAZARIO Associate Justice
PRESBITERO J. VELASCO, JR. Associate Justice
DIOSDADO M. PERALTA Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.
CONSUELO YNARES-SANTIAGO Associate Justice Chairperson, Third Division
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.
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[1]
Penned by Associate Justice Sergio L. Pestao, with Associate Justices Marina L. Buzon and Jose C. Mendoza, concurring; rollo, pp. 54-61. [2] Id. at 52. [3] Penned by Acting Presiding Judge Pepito T. Ta-ay; CA rollo, pp. 102-115. [4] Evidenced by a Marriage Contract; Exh A, Folder of Exhibits of t he Plaintiff. [5] The sale was evidenced by a Deed of Sale duly executed by the parties and registered with the Registry of Deeds of Aklan; Exh. D, Folder of Exhibits of the Plaintiff. [6] Rollo, p. 55. [7] Id. [8] The licenses and permits were under the name of Joselyns sister because at the time of the application, Joselyn was still a minor. [9] Exh. V; Folder of Exhibits of the Plaintiff. [10] Exh. T; Folder of Exhibits of the Plaintiff. [11] Records, pp. 1-3. [12] Id. at 132-137. [13] Penned by Associate Justice Ruben T. Reyes, with Associate Justices Oscar M. Herrera and Angelina Sandoval-Gutierrez, concurring; Id. at 139-148. [14] Id. at 201-201-m. [15] Id. at 355. [16] Supra note 1. [17] Rollo, pp. 554-556. [18] A similar provision was set forth in the 1935 and 1973 Constitutions, viz: Section 5, Article XIII of the 1935 Constitution states: 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. Section 14, Article XIV of the 1973 Constitution also states: Save in cases of hereditary succession, no private land shall be transferred or conveyed except to individuals, corporations, or associations qualified to acquire or hold lands in the public domain. [19] Muller v. Muller, G.R. No. 149615, August 29, 2006, 500 SCRA 65, 71; Frenzel v. Catito, 453 Phil. 885, 904 (2003). [20] Muller v. Muller, Id. [21] Ting Ho, Jr. v. Teng Gui, G.R. No. 130115, July 16, 2008, 558 SCRA 421. [22] 79 Phil. 461 (1947). [23] Supra. [24] Id. at 71-72; Krivenko v. Register of Deeds of Manila, 79 Phil. 461, 473-476 (1947). [25] The instances when aliens may be allowed to acquire private lands in the Philippines are: (a) By hereditary succession (Section 7, Article XII, Philippine Constitution). (b) A natural-born citizen of the Philippines who has lost his Philippine citizenship may be a transferee of private lands, subject to limitations provided by law ( Section 8, Article XII, Philippine
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[26] [27] [28] [29] [30] [31] [32] [33]
Constitution). Republic Act No. 8179 now allows a former natural-born Filipino citizen to acquire up to 5,000 square meters of urban land and 3 hectares or rural land, and he may now use the land not only for residential purposes, but even for business or other purposes. (c) Americans who may have acquired tile to private lands during the effectivity of the Parity Agreement shall hold valid title thereto as against private persons ( Section 11, Article XVII, 1973 Constitution). Ting Ho, Jr. v. Teng Gui, supra. note 21. Muller v. Muller, supra. note 19; Frenzel v. Catito, supra. note 19. Muller v. Muller, Id. Cheesman v. Intermediate Appellate Court, G.R. No. 74833, January 21, 1991, 193 SCRA 93. Supra. Supra. Supra. Supra. Cheesman v. Intermediate Appellate Court, supra. at 103-104.
[34]
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LANDS, TITLES AND DEEDS (FOR RECITATION JULY 20, 2013)