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REPUBLIC v. COURT OF APPEALS
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-43938 April 15, 1988
REPUBLIC OF THE PHILIPPINES (DIRECTOR OF
FOREST DEVELOPMENT), petitioner,
vs.
HON. COURT OF APPEALS (THIRD DIVISION) and JOSE
Y. DE LA ROSA, respondents.
G.R. No. L-44081 April 15, 1988
BENGUET CONSOLIDATED, INC., petitioner,
vs.
HON. COURT OF APPEALS, JOSE Y. DE LA ROSA,
VICTORIA, BENJAMIN and EDUARDO, all surnamed DE
LA ROSA, represented by their father JOSE Y. DE LA
ROSA, respondents.
G.R. No. L-44092 April 15, 1988
ATOK-BIG WEDGE MINING COMPANY, petitioner,
vs.
HON. COURT OF APPEALS, JOSE Y. DE LA ROSA,
VICTORlA, BENJAMIN and EDUARDO, all surnamed DE
LA ROSA, represented by their father, JOSE Y. DE LA
ROSA, respondents.

CRUZ, J.:
The Regalian doctrine reserves to the State all natural
wealth that may be found in the bowels of the earth even if
the land where the discovery is made be private. 1 In the
cases at bar, which have been consolidated because they
pose a common issue, this doctrine was not correctly
applied.
These cases arose from the application for registration of a
parcel of land filed on February 11, 1965, by Jose de la Rosa
on his own behalf and on behalf of his three children,
Victoria, Benjamin and Eduardo. The land, situated in
Tuding, Itogon, Benguet Province, was divided into 9 lots
and covered by plan Psu-225009. According to the
application, Lots 1-5 were sold to Jose de la Rosa and Lots
6-9 to his children by Mamaya Balbalio and Jaime Alberto,
respectively, in 1964. 2
The application was separately opposed by Benguet
Consolidated, Inc. as to Lots 1-5, Atok Big Wedge

Corporation, as to Portions of Lots 1-5 and all of Lots 6-9,


and by the Republic of the Philippines, through the Bureau of
Forestry Development, as to lots 1-9. 3
In support of the application, both Balbalio and Alberto
testified that they had acquired the subject land by virtue of
prescription Balbalio claimed to have received Lots 1-5 from
her father shortly after the Liberation. She testified she was
born in the land, which was possessed by her parents under
claim of ownership. 4 Alberto said he received Lots 6-9 in
1961 from his mother, Bella Alberto, who declared that the
land was planted by Jaime and his predecessors-in-interest
to bananas, avocado, nangka and camote, and was
enclosed with a barbed-wire fence. She was corroborated by
Felix Marcos, 67 years old at the time, who recalled the
earlier possession of the land by Alberto's father. 5 Balbalio
presented her tax declaration in 1956 and the realty tax
receipts from that year to 1964, 6 Alberto his tax declaration
in 1961 and the realty tax receipts from that year to 1964. 7
Benguet opposed on the ground that the June Bug mineral
claim covering Lots 1-5 was sold to it on September 22,
1934, by the successors-in-interest of James Kelly, who
located the claim in September 1909 and recorded it on
October 14, 1909. From the date of its purchase, Benguet
had been in actual, continuous and exclusive possession of
the land in concept of owner, as evidenced by its
construction of adits, its affidavits of annual assessment, its
geological mappings, geological samplings and trench side
cuts, and its payment of taxes on the land. 8
For its part, Atok alleged that a portion of Lots 1-5 and all of
Lots 6-9 were covered by the Emma and Fredia mineral
claims located by Harrison and Reynolds on December 25,
1930, and recorded on January 2, 1931, in the office of the
mining recorder of Baguio. These claims were purchased
from these locators on November 2, 1931, by Atok, which
has since then been in open, continuous and exclusive
possession of the said lots as evidenced by its annual
assessment work on the claims, such as the boring of
tunnels, and its payment of annual taxes thereon.9
The location of the mineral claims was made in accordance
with Section 21 of the Philippine Bill of 1902 which provided
that:
SEC. 21. All valuable mineral deposits in public lands in the
philippine Islands both surveyed and unsurveyed are hereby
declared to be free and open to exploration, occupation and
purchase and the land in which they are found to occupation
and purchase by the citizens of the United States, or of said
islands.
The Bureau of Forestry Development also interposed its
objection, arguing that the land sought to be registered was
covered by the Central Cordillera Forest Reserve under
Proclamation No. 217 dated February 16, 1929. Moreover,

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by reason of its nature, it was not subject to alienation under
the Constitutions of 1935 and 1973. 10
The trial court * denied the application, holding that the
applicants had failed to prove their claim of possession and
ownership of the land sought to be registered. 11 The
applicants appealed to the respondent court, * which
reversed the trial court and recognized the claims of the
applicant, but subject to the rights of Benguet and Atok
respecting their mining claims. 12 In other words, the Court of
Appeals affirmed the surface rights of the de la Rosas over
the land while at the same time reserving the sub-surface
rights of Benguet and Atok by virtue of their mining claims.
Both Benguet and Atok have appealed to this Court, invoking
their superior right of ownership. The Republic has filed its
own petition for review and reiterates its argument that
neither the private respondents nor the two mining
companies have any valid claim to the land because it is not
alienable and registerable.
It is true that the subject property was considered forest land
and included in the Central Cordillera Forest Reserve, but
this did not impair the rights already vested in Benguet and
Atok at that time. The Court of Appeals correctly declared
that:
There is no question that the 9 lots applied for are within the
June Bug mineral claims of Benguet and the "Fredia and
Emma" mineral claims of Atok. The June Bug mineral claim
of plaintiff Benguet was one of the 16 mining claims of
James E. Kelly, American and mining locator. He filed his
declaration of the location of the June Bug mineral and the
same was recorded in the Mining Recorder's Office on
October 14, 1909. All of the Kelly claims ha subsequently
been acquired by Benguet Consolidated, Inc. Benguet's
evidence is that it had made improvements on the June Bug
mineral claim consisting of mine tunnels prior to 1935. It had
submitted the required affidavit of annual assessment. After
World War II, Benguet introduced improvements on mineral
claim June Bug, and also conducted geological mappings,
geological sampling and trench side cuts. In 1948, Benguet
redeclared the "June Bug" for taxation and had religiously
paid the taxes.
The Emma and Fredia claims were two of the several claims
of Harrison registered in 1931, and which Atok
representatives acquired. Portions of Lots 1 to 5 and all of
Lots 6 to 9 are within the Emma and Fredia mineral claims of
Atok Big Wedge Mining Company.
The June Bug mineral claim of Benguet and the Fredia and
Emma mineral claims of Atok having been perfected prior to
the approval of the Constitution of the Philippines of 1935,
they were removed from the public domain and had become
private properties of Benguet and Atok.

It is not disputed that the location of the mining claim under


consideration was perfected prior to November 15, 1935,
when the Government of the Commonwealth was
inaugurated; and according to the laws existing at that time,
as construed and applied by this court in McDaniel v.
Apacible and Cuisia (42 Phil. 749), a valid location of a
mining claim segregated the area from the public domain.
Said the court in that case: The moment the locator
discovered a valuable mineral deposit on the lands located,
and perfected his location in accordance with law, the power
of the United States Government to deprive him of the
exclusive right to the possession and enjoyment of the
located claim was gone, the lands had become mineral lands
and they were exempted from lands that could be granted to
any other person. The reservations of public lands cannot be
made so as to include prior mineral perfected locations; and,
of course, if a valid mining location is made upon public
lands afterwards included in a reservation, such inclusion or
reservation does not affect the validity of the former location.
By such location and perfection, the land located is
segregated from the public domain even as against the
Government. (Union Oil Co. v. Smith, 249 U.S. 337; Van
Mess v. Roonet, 160 Cal. 131; 27 Cyc. 546).
"The legal effect of a valid location of a mining claim is not
only to segregate the area from the public domain, but to
grant to the locator the beneficial ownership of the claim and
the right to a patent therefor upon compliance with the terms
and conditions prescribed by law. Where there is a valid
location of a mining claim, the area becomes segregated
from the public domain and the property of the locator." (St.
Louis Mining & Milling Co. v. Montana Mining Co., 171 U.S.
650; 655; 43 Law ed., 320, 322.) "When a location of a
mining claim is perfected it has the effect of a grant by the
United States of the right of present and exclusive
possession, with the right to the exclusive enjoyment of all
the surface ground as well as of all the minerals within the
lines of the claim, except as limited by the extralateral right of
adjoining locators; and this is the locator's right before as
well as after the issuance of the patent. While a lode locator
acquires a vested property right by virtue of his location
made in compliance with the mining laws, the fee remains in
the government until patent issues."(18 R.C.L. 1152) (Gold
Creek Mining Corporation v. Hon. Eulogio Rodriguez, Sec. of
Agriculture and Commerce, and Quirico Abadilla, Director of
the Bureau of Mines, 66 Phil. 259, 265-266)
It is of no importance whether Benguet and Atok had
secured a patent for as held in the Gold Creek Mining Corp.
Case, for all physical purposes of ownership, the owner is
not required to secure a patent as long as he complies with
the provisions of the mining laws; his possessory right, for all
practical purposes of ownership, is as good as though
secured by patent.
We agree likewise with the oppositors that having complied
with all the requirements of the mining laws, the claims were
removed from the public domain, and not even the

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government of the Philippines can take away this right from
them. The reason is obvious. Having become the private
properties of the oppositors, they cannot be deprived thereof
without due process of law. 13
Such rights were not affected either by the stricture in the
Commonwealth Constitution against the alienation of all
lands of the public domain except those agricultural in nature
for this was made subject to existing rights. Thus, in its
Article XIII, Section 1, it was categorically provided that:
SEC. 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 Philipppines 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 60% of the capital of which is owned by
such citizens, subject to any existing right, grant, lease or
concession at the time of the inauguration of the government
established under this Constitution. Natural resources with
the exception of public agricultural lands, shall not be
alienated, and no license, concession, or lease for the
exploitation, development or utilization of any of the natural
resources shall be granted for a period exceeding 25 years,
except as to water rights for irrigation, water supply, fisheries,
or industrial uses other than the development of water
power, in which case beneficial use may be the measure and
the limit of the grant.
Implementing this provision, Act No. 4268, approved on
November 8, 1935, declared:
Any provision of existing laws, executive order, proclamation
to the contrary notwithstanding, all locations of mining claim
made prior to February 8, 1935 within lands set apart as
forest reserve under Sec. 1826 of the Revised Administrative
Code which would be valid and subsisting location except to
the existence of said reserve are hereby declared to be valid
and subsisting locations as of the date of their respective
locations.
The perfection of the mining claim converted the property to
mineral land and under the laws then in force removed it
from the public domain. 14 By such act, the locators acquired
exclusive rights over the land, against even the government,
without need of any further act such as the purchase of the
land or the obtention of a patent over it. 15 As the land had
become the private property of the locators, they had the
right to transfer the same, as they did, to Benguet and Atok.
It is true, as the Court of Appeals observed, that such private
property was subject to the "vicissitudes of ownership," or
even to forfeiture by non-user or abandonment or, as the
private respondents aver, by acquisitive prescription.
However, the method invoked by the de la Rosas is not
available in the case at bar, for two reasons.

First, the trial court found that the evidence of open,


continuous, adverse and exclusive possession submitted by
the applicants was insufficient to support their claim of
ownership. They themselves had acquired the land only in
1964 and applied for its registration in 1965, relying on the
earlier alleged possession of their predecessors-ininterest. 16 The trial judge, who had the opportunity to
consider the evidence first-hand and observe the demeanor
of the witnesses and test their credibility was not convinced.
We defer to his judgment in the absence of a showing that it
was reached with grave abuse of discretion or without
sufficient basis. 17
Second, even if it be assumed that the predecessors-ininterest of the de la Rosas had really been in possession of
the subject property, their possession was not in the concept
of owner of the mining claim but of the property
asagricultural land, which it was not. The property was
mineral land, and they were claiming it as agricultural land.
They were not disputing the lights of the mining locators nor
were they seeking to oust them as such and to replace them
in the mining of the land. In fact, Balbalio testified that she
was aware of the diggings being undertaken "down
below" 18 but she did not mind, much less protest, the same
although she claimed to be the owner of the said land.
The Court of Appeals justified this by saying there is "no
conflict of interest" between the owners of the surface rights
and the owners of the sub-surface rights. This is rather
doctrine, for it is a well-known principle that the owner of
piece of land has rights not only to its surface but also to
everything underneath and the airspace above it up to a
reasonable height. 19 Under the aforesaid ruling, the land is
classified as mineral underneath and agricultural on the
surface, subject to separate claims of title. This is also
difficult to understand, especially in its practical application.
Under the theory of the respondent court, the surface owner
will be planting on the land while the mining locator will be
boring tunnels underneath. The farmer cannot dig a well
because he may interfere with the operations below and the
miner cannot blast a tunnel lest he destroy the crops above.
How deep can the farmer, and how high can the miner, go
without encroaching on each other's rights? Where is the
dividing line between the surface and the sub-surface rights?
The Court feels that the rights over the land are indivisible
and that the land itself cannot be half agricultural and half
mineral. The classification must be categorical; the land must
be either completely mineral or completely agricultural. In the
instant case, as already observed, the land which was
originally classified as forest land ceased to be so and
became mineral and completely mineral once the
mining claims were perfected. 20 As long as mining
operations were being undertaken thereon, or underneath, it
did not cease to be so and become agricultural, even if only
partly so, because it was enclosed with a fence and was

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cultivated by those who were unlawfully occupying the
surface.
What must have misled the respondent court
Commonwealth Act No. 137, providing as follows:

is

Sec. 3. All mineral lands of the public domain and minerals


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 60%
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 government established under the
Constitution.

claims which they validly acquired before the Constitution of


1935 prohibited the alienation of all lands of the public
domain except agricultural lands, subject to vested rights
existing at the time of its adoption. The land was not and
could not have been transferred to the private respondents
by virtue of acquisitive prescription, nor could its use be
shared simultaneously by them and the mining companies
for agricultural and mineral purposes.
WHEREFORE, the decision of the respondent court dated
April 30, 1976, is SET ASIDE and that of the trial court dated
March 11, 1969, is REINSTATED, without any
pronouncement as to costs.
SO ORDERED.

SEC. 4. The ownership of, and the right to the use of land for
agricultural, industrial, commercial, residential, or for any
purpose other than mining does not include the ownership
of, nor the right to extract or utilize, the minerals which may
be found on or under the surface.

REPUBLIC v. QUASHA
Republic of the Philippines
SUPREME COURT
Manila

SEC. 5. The ownership of, and the right to extract and utilize,
the minerals included within all areas for which public
agricultural land patents are granted are excluded and
excepted from all such patents.
SEC. 6. The ownership of, and the right to extract and utilize,
the minerals included within all areas for which Torrens titles
are granted are excluded and excepted from all such titles.
This is an application of the Regalian doctrine which, as its
name implies, is intended for the benefit of the State, not of
private persons. The rule simply reserves to the State all
minerals that may be found in public and even private land
devoted to "agricultural, industrial, commercial, residential or
(for) any purpose other than mining." Thus, if a person is the
owner of agricultural land in which minerals are discovered,
his ownership of such land does not give him the right to
extract or utilize the said minerals without the permission of
the State to which such minerals belong.
The flaw in the reasoning of the respondent court is in
supposing that the rights over the land could be used for
both mining and non-mining purposes simultaneously. The
correct interpretation is that once minerals are discovered in
the land, whatever the use to which it is being devoted at the
time, such use may be discontinued by the State to enable it
to extract the minerals therein in the exercise of its sovereign
prerogative. The land is thus converted to mineral land and
may not be used by any private party, including the
registered owner thereof, for any other purpose that will
impede the mining operations to be undertaken therein, For
the loss sustained by such owner, he is of course entitled to
just compensation under the Mining Laws or in appropriate
expropriation proceedings. 21
Our holding is that Benguet and Atok have exclusive rights to
the property in question by virtue of their respective mining

EN BANC

G.R. No. L-30299 August 17, 1972


REPUBLIC OF THE PHILIPPINES and/or THE SOLICITOR
GENERAL petitioners,
vs.
WILLIAM H. QUASHA, respondent.
Office of the Solicitor General Estelito P. Mendoza for
petitioner.
Quasha, Asperilla Blanco, Zafra & Tayag for respondent.

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


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

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that the Republic of the Philippines, through its officials,
claimed that upon expiration of the Parity Amendment on 3
July 1974, rights acquired by citizens of the United States of
America shall cease and be of no further force and effect;
that such claims necessarily affect the rights and interest of
the plaintiff, and that continued uncertainty as to the status of
plaintiff's property after 3 July 1974 reduces the value
thereof, and precludes further improvements being
introduced thereon, for which reason plaintiff Quasha sought
a declaration of his rights under the Parity Amendment, said
plaintiff contending that the ownership of properties during
the effectivity of the Parity Amendment continues
notwithstanding the termination and effectivity of the
Amendment.
The then Solicitor General Antonio P. Barredo (and later on
his successors in office, Felix V. Makasiar and Felix Q.
Antonio) contended that the land acquired by plaintiff
constituted private agricultural land and that the acquisition
violated section 5, Article XIII, of the Constitution of the
Philippines, which prohibits the transfer of private agricultural
land to non-Filipinos, except by hereditary succession; and
assuming, without conceding, that Quasha's acquisition was
valid, any and all rights by him so acquired "will expire ipso
facto and ipso jure at the end of the day on 3 July 1974, if he
continued to hold the property until then, and will be subject
to escheat or reversion proceedings" by the Republic.
After hearing, the Court of First Instance of Rizal (Judge
Pedro A. Revilla presiding) rendered a decision, dated 6
March 1969, in favor of plaintiff, with the following dispositive
portion:

Article XIII CONSERVATION


OF NATURAL RESOURCES

AND

UTILIZATION

Section 1. All Agricultural, timber, and mineral lands of the


public domain, waters, minerals, coal, petroleum, and other
mineral oils, all forces of potential energy, and other natural
resources of the Philippines belong to the State, and their
disposition, exploitation, development, or utilization shall be
limited to citizens of the Philippines, or to corporations or
associations at least sixty per centum of the capital of which
is owned by such citizens subject to any existing right, grant,
lease, or concession at the time of the inauguration of the
Government established under this Constitution. Natural
resources, with the exception of public agricultural land, shall
not be alienated, and no license, concession, or lease for the
resources shall be granted for a period exceeding twenty-five
years, renewable for another twenty-five years, except as to
water right for irrigation, water supply, fisheries, or industrial
uses other than the development of water power, in which
cases beneficial use may be the measure and the limit of the
grant.
Section 2. No private corporation or association may acquire,
lease, or hold public agricultural lands in excess of one
thousand and twenty-four hectares, nor may any individual
acquire such lands by purchase in excess of one hundred
and forty-four hectares, or by lease in excess of one
thousand and twenty-four hectares, or by homestead in
excess of twenty-four hectares. Lands adapted to grazing
not exceeding two thousand hectares, may be leased to an
individual, private corporation, or association.
xxx xxx xxx

WHEREFORE, judgment is hereby rendered declaring that


acquisition by the plaintiff on 26 November 1954 of, the
private agricultural land described in and covered by
Transfer Certificate of Title No. 36862 in his name was valid,
and that plaintiff has a right to continue in ownership of the
said property even beyond July 3, 1974.
Defendants appealed directly to this Court on questions of
law, pleading that the court below erred:
(1) In ruling that under the Parity Amendment American
citizens and American owned and/or controlled business
enterprises "are also qualified to acquire private agricultural
lands" in the Philippines; and
(2) In ruling that when the Parity Amendment ceases to be
effective on 3 July 1974, "what must be considered to end
should be the right to acquire land, and not the right to
continue in ownership of land already acquired prior to that
time."
As a historical background, requisite to a proper
understanding of the issues being litigated, it should be
recalled that the Constitution as originally adopted, contained
the following provisions:

Section 5. Save in cases of hereditary succession, no private


agricultural land shall be transferred or assigned except to
individuals, corporations, or associations qualified to acquire
or hold lands of the public domain in the Philippines.
Article XIV GENERAL PROVISIONS
Section 8. No franchise, certificate, or any other form of
authorization for the operation of a public utility shall be
granted except to citizens of the Philippines or to
corporations or other entities organized under the laws of the
Philippines, sixty per centum of the capital of which is owned
by citizens of the Philippines, nor shall such franchise,
certificate, or authorization be exclusive in character or for a
longer period than fifty years. No franchise or right shall be
granted to any individual, firm, or corporation, except under
the condition that it shall be subject to amendment,
alteration, or repeal by the Congress when the public interest
so requires.
The nationalistic spirit that pervaded these and other
provisions of the Constitution are self-evident and require no
further emphasis.

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From the Japanese occupation and the reconquest of the
Archipelago, the Philippine nation emerged with its industries
destroyed and its economy dislocated. It was described in
this Court's opinion in Commissioner of Internal Revenue vs.
Guerrero,
et
al.,
L-20942, 22 September 1967, 21 SCRA 181, 187, penned
by Justice Enrique M. Fernando, in the following terms:

oils,; all forces and sources of potential energy, and other


natural resources of the Philippines, and the operation of
public utilities shall, if open to any person, be open to
citizens of the United States and to all forms of business
enterprise owned or controlled, directly or indirectly, by
United States citizens.
and that:

It was fortunate that the Japanese Occupation ended when it


did. Liberation was hailed by all, but the problems faced by
the legitimate government were awesome in their immensity.
The Philippine treasury was bankrupt and her economy
prostrate. There were no dollar-earning export crops to
speak of; commercial operations were paralyzed; and her
industries were unable to produce with mills, factories and
plants either destroyed or their machineries obsolete or
dismantled. It was a desolate and tragic sight that greeted
the victorious American and Filipino troops. Manila,
particularly that portion south of the Pasig, lay in ruins, its
public edifices and business buildings lying in a heap of
rubble and numberless houses razed to the ground. It was in
fact, next to Warsaw, the most devastated city in the expert
opinion of the then General Eisenhower. There was thus a
clear need of help from the United States. American aid was
forthcoming but on terms proposed by her government and
later on accepted by the Philippines.
The foregoing description is confirmed by the 1945 Report of
the Committee on Territories and Insular Affairs to the United
States Congress:
When the Philippines do become independent next July, they
will start on the road to independence with a country whose
commerce, trade and political institutions have been very,
very seriously damaged. Years of rebuilding are necessary
before the former physical conditions of the islands can be
restored. Factories, homes, government and commercial
buildings, roads, bridges, docks, harbors and the like are in
need of complete reconstruction or widespread repairs. It will
be quite some while before the Philippine can produce
sufficient food with which to sustain themselves.
The internal revenues of the country have been greatly
diminished by war. Much of the assessable property basis
has been destroyed. Foreign trade has vanished. Internal
commerce is but a faction of what it used to be. Machinery,
farming implements, ships, bus and truck lines, inter-island
transportation and communications have been wrecked.
Shortly thereafter, in 1946, the United States 79th Congress
enacted Public Law 3721, known as the Philippine Trade Act,
authorizing the President of the United States to enter into
an Executive Agreement with the President of the
Philippines, which should contain a provision that
The disposition, exploitation, development, and utilization of
all agricultural, timber, and mineral lands of the public
domain, waters, minerals, coal, petroleum, and other mineral

The President of the United States is not authorized ... to


enter into such executive agreement unless in the
agreement the Government of the Philippines ... will promptly
take such steps as are necessary to secure the amendment
of the Constitution of the Philippines so as to permit the
taking effect as laws of the Philippines of such part of the
provisions of section 1331 ... as is in conflict with such
Constitution before such amendment.
The Philippine Congress, by Commonwealth Act No. 733,
authorized the President of the Philippines to enter into the
Executive Agreement. Said Act provided, inter alia, the
following:
ARTICLE VII
1. The disposition, exploitation, development, and utilization
of all agricultural, timber, and mineral lands of the public
domain, waters, mineral, coal, petroleum, and other mineral
oils, all forces and sources of potential energy, and other
natural resources of the Philippines, and the operation of
public utilities, shall, if open to any person, be open to
citizens of the United States and to all forms of business
enterprise owned or controlled, directly or indirectly, by
United States citizens, except that (for the period prior to the
amendment of the Constitution of the Philippines referred to
in Paragraph 2 of this Article) the Philippines shall not be
required to comply with such part of the foregoing provisions
of this sentence as are in conflict with such Constitution.
2. The Government of the Philippines will promptly take such
steps as are necessary to secure the amendment of the
constitution of the Philippines so as to permit the taking
effect as laws of the Philippines of such part of the provisions
of Paragraph 1 of this Article as is in conflict with such
Constitution before such amendment.
Thus authorized, the Executive Agreement was signed on 4
July 1946, and shortly thereafter the President of the
Philippines recommended to the Philippine Congress the
approval of a resolution proposing amendments to the
Philippine Constitution pursuant to the Executive Agreement.
Approved by the Congress in joint session, the proposed
amendment was submitted to a plebiscite and was ratified in
November of 1946. Generally known as the Parity
Amendment, it was in the form of an Ordinance appended to
the Philippine Constitution, reading as follows:

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Notwithstanding the provision of section one, Article Thirteen,
and section eight, Article Fourteen, of the foregoing
Constitution, during the effectivity of the Executive
Agreement entered into by the President of the Philippines
with the President of the United States on the fourth of July,
nineteen hundred and forty-six, pursuant to the provisions of
Commonwealth Act Numbered Seven hundred and thirtythree, but in no case to extend beyond the third of July,
nineteen hundred and seventy-four, the disposition,
exploitation, development, and utilization of all agricultural,
timber, and mineral lands of the public domain, waters,
minerals, coals, petroleum, and other mineral oils, all forces
and sources of potential energy, and other natural resources
of the Philippines, and the operation of public utilities, shall, if
OPEN to any person, be open to citizens of the United
States and to all forms of business enterprise owned or
controlled, directly or indirectly, by citizens of the United
States in the same manner as to and under the same
conditions imposed upon, citizens of the Philippines or
corporations or associations owned or controlled by citizens
of the Philippines.
A revision of the 1946 Executive Agreement was authorized
by the Philippines by Republic Act 1355, enacted in July
1955. The revision was duly negotiated by representatives of
the Philippines and the United States, and a new agreement
was concluded on 6 September 1955 to take effect on 1
January 1956, becoming known as the Laurel-Langley
Agreement.
This latter agreement, however, has no direct application to
the case at bar, since the purchase by herein respondent
Quasha of the property in question was made in 1954, more
than one year prior to the effectivity of the Laurel-Langley
Agreement..
I
Bearing in mind the legal provisions previously quoted and
their background, We turn to the first main issue posed in
this appeal: whether under or by virtue of the so-called Parity
Amendment to the Philippine Constitution respondent
Quasha could validly acquire ownership of the private
residential land in Forbes Park, Makati, Rizal, which is
concededly classified private agricultural land.
Examination of the "Parity Amendment", as ratified, reveals
that it only establishes an express exception to two (2)
provisions of our Constitution, to wit: (a) Section 1, Article
XIII, re disposition, exploitation, development and utilization
of agricultural, timber and mineral lands of the public domain
and other natural resources of the Philippines; and (b)
Section 8, Article XIV, regarding operation of public utilities.
As originally drafted by the framers of the Constitution, the
privilege to acquire and exploit agricultural lands of the
public domain, and other natural resources of the
Philippines, and to operate public utilities, were reserved to
Filipinos and entities owned or controlled by them: but the

"Parity Amendment" expressly extended the privilege to


citizens of the United States of America and/or to business
enterprises owned or controlled by them.
No other provision of our Constitution was referred to by the
"Parity Amendment"; nor Section 2 of Article XIII limiting the
maximum area of public agricultural lands that could be held
by individuals or corporations or associations; nor Section 5
restricting the transfer or assignment of private agricultural
lands to those qualified to acquire or hold lands of the public
domain (which under the original Section 1 of Article XIII
meant Filipinos exclusively), save in cases of hereditary
succession. These sections 2 and 5 were therefore left
untouched and allowed to continue in operation as originally
intended by the Constitution's framers.
Respondent Quasha argues that since the amendment
permitted United States citizens or entities controlled by
them to acquire agricultural lands of the public domain, then
such citizens or entities became entitled to acquire private
agricultural land in the Philippines, even without hereditary
succession, since said section 5 of Article XIII only negates
the transfer or assignment of private agricultural land to
individuals or entities not qualified to acquire or hold lands of
the public domain. Clearly, this argument of respondent
Quasha rests not upon the text of the Constitutional
Amendment but upon a mere inference therefrom. If it was
ever intended to create also an exception to section 5 of
Article XIII, why was mention therein made only of Section 1
of Article XIII and Section 8 of Article XIV and of no other?
When the text of the Amendment was submitted for popular
ratification, did the voters understand that three sections of
the Constitution were to be modified, when only two sections
were therein mentioned?
A reading of Sections 1 and 4 of Article XIII, as originally
drafted by its farmers, leaves no doubt that the policy of the
Constitution was to reserve to Filipinos the disposition,
exploitation development or utilization of agricultural lands,
public (section 1) or private (section 5), as well as all other
natural resources of the Philippines. The "Parity Amendment"
created exceptions to that Constitutional Policy and in
consequence to the sovereignty of the Philippines. By all
canons of construction, such exceptions must be given strict
interpretation; and this Court has already so ruled
in Commissioner of Internal Revenue vs. Guerrero, et al., L20942, 22 September 1967, 21 SCRA 181, per Justice
Enrique M. Fernando:
While good faith, no less than adherence to the categorical
wording of the Ordinance, requires that all the rights and
privileges thus granted to Americans and business
enterprises owned and controlled by them be respected,
anything further would not be warranted. Nothing less would
suffice but anything more is not justified.
The basis for the strict interpretation was given by former
President of the University of the Philippines, Hon. Vicente

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G. Sinco (Congressional Record, House of Representatives,
Volume 1, No. 26, page 561):
It should be emphatically stated that the provisions of our
Constitution which limit to Filipinos the rights to develop the
natural resources and to operate the public utilities of the
Philippines is one of the bulwarks of our national integrity.
The Filipino people decided to include it in our Constitution in
order that it may have the stability and permanency that its
importance requires. It is written in our Constitution so that it
may neither be the subject of barter nor be impaired in the
give and take of politics. With our natural resources, our
sources of power and energy, our public lands, and our
public utilities, the material basis of the nation's existence, in
the hands of aliens over whom the Philippine Government
does not have complete control, the Filipinos may soon find
themselves deprived of their patrimony and living as it were,
in a house that no longer belongs to them.
The true extent of the Parity Amendment, as understood by
its proponents in the Philippine Congress, was clearly
expressed by one of its advocates, Senator Lorenzo
Sumulong:
It is a misconception to believe that under this amendment
Americans will be able to acquire all kinds of natural
resources of this country, and even after the expiration of 28
years their acquired rights cannot be divested from them. If
we read carefully the language of this amendment which is
taken verbatim from the Provision of the Bell Act, and, which
in turn, is taken also verbatim from certain sections of the
Constitution, you will find out that the equality of rights
granted under this amendment refers only to two subjects.
Firstly, it refers to exploitation of natural resources, and
secondly, it refers to the operation of public utilities. Now,
when it comes to exploitation of natural resources, it must be
pointed out here that, under our Constitution and under this
amendment, only public agricultural land may be acquired,
may be bought, so that on the supposition that we give way
to this amendment and on the further supposition that it is
approved by our people, let not the mistaken belief be
entertained that all kinds of natural resources may be
acquired by Americans because under our Constitution
forest lands cannot be bought, mineral lands cannot be
bought, because by explicit provision of the Constitution they
belong to the State, they belong to our Government, they
belong to our people. That is why we call them rightly the
patrimony of our race. Even if the Americans should so
desire, they can have no further privilege than to ask for a
lease of concession of forest lands and mineral lands
because it is so commanded in the Constitution. And under
the Constitution, such a concession is given only for a limited
period. It can be extended only for 25 years, renewable for
another 25. So that with respect to mineral or forest lands, all
they can do is to lease it for 25 years, and after the
expiration of the original 25 years they will have to extend it,
and I believe it can be extended provided that it does not
exceed 28 years because this agreement is to be effected

only as an ordinance and for the express period of 28


years. So that it is my humble belief that there is nothing to
worry about insofar as our forest and mineral lands are
concerned.
Now, coming to the operation of public utilities, as every
member of the Congress knows, it is also for a limited
period, under our Constitution, for a period not exceeding 50
years. And since this amendment is intended to endure only
for 28 years, it is my humble opinion that when Americans
try to operate public utilities they cannot take advantage of
the maximum provided in the Constitution but only the 28
years which is expressly provided to be the life of this
amendment.
There remains for us to consider the case of our public
agricultural lands. To be sure, they may be bought, and if we
pass this amendment, Americans may buy our public
agricultural lands, but the very same Constitution applying
even to Filipinos, provides that the sale of public agricultural
lands to a corporation can never exceed one thousand and
twenty-four hectares. That is to say, if an American
corporation, and American enterprise, should decide to
invest its money in public agricultural lands, it will be limited
to the amount of 1,024 hectares, no more than 1,024
hectares' (Emphasis supplied).
No views contrary to these were ever expressed in the
Philippine Legislature during the discussion of the Proposed
Amendment to our Constitution, nor was any reference made
to acquisition of private agricultural lands by non-Filipinos
except by hereditary succession. On the American side, it is
significant to observe that the draft of the Philippine Trade
Act submitted to the House of Representatives by
Congressman Bell, provided in the first Portion of Section 19
the following:
SEC. 19. Notwithstanding any existing provision of the
constitution and statutes of the Philippine Government,
citizens and corporations of the United States shall enjoy in
the Philippine Islands during the period of the validity of this
Act, or any extension thereof by statute or treaty, the same
rights as to property, residence, and occupation as citizens of
the Philippine Islands ...
But as finally approved by the United States Congress, the
equality as to " property residence and occupation" provided
in the bill was eliminated and Section 341 of the Trade Act
limited such parity to the disposition, exploitation,
development, and utilization of lands of the public domain,
and other natural resources of the Philippines (V. ante, page
5 of this opinion).
Thus, whether from the Philippine or the American side, the
intention was to secure parity for United States citizens, only
in two matters: (1) exploitation, development and utilization
of public lands, and other natural resources of the

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Philippines; and (2) the operation of public utilities. That and
nothing else.

the Philippines and those of the United States, couched in


the following terms:

Respondent Quasha avers that as of 1935 when the


Constitution was adopted, citizens of the United States were
already qualified to acquire public agricultural lands, so that
the literal text of section 5 must be understood as permitting
transfer or assignment of private agricultural lands to
Americans even without hereditary succession. Such
capacity of United States citizens could exist only during the
American sovereignty over the Islands. For the Constitution
of the Philippines was designed to operate even beyond the
extinction of the United States sovereignty, when the
Philippines would become fully independent. That is
apparent from the provision of the original Ordinance
appended to the Constitution as originally approved and
ratified. Section 17 of said Ordinance provided that:

ARTICLE VI

(17) Citizens and corporations of the United States shall


enjoy in the Commonwealth of the Philippinesall the civil
rights of the citizens and corporations, respectively, thereof.
(Emphasis supplied)
The import of paragraph (17) of the Ordinance was
confirmed and reenforced by Section 127 of Commonwealth
Act 141 (the Public Land Act of 1936) that prescribes:
Sec. 127. During the existence and continuance of the
Commonwealth, and before the Republic of the Philippines
is established, citizens and corporations of the United States
shall enjoy the same rights granted to citizens and
corporations of the Philippines under this Act.
thus clearly evidencing once more that equal rights of
citizens and corporations of the United States to acquire
agricultural lands of the Philippines vanished with the advent
of the Philippine Republic. Which explains the need of
introducing the "Parity Amendment" of 1946.
It is then indubitable that the right of United States citizens
and corporations to acquire and exploit private or public
lands and other natural resources of the Philippines was
intended to expire when the Commonwealth ended on 4 July
1946. Thereafter, public and private agricultural lands and
natural resources of the Philippines were or became
exclusively reserved by our Constitution for Filipino citizens.
This situation lasted until the "Parity Amendment", ratified in
November, 1946, once more reopened to United States
citizens and business enterprises owned or controlled by
them the lands of the public domain, the natural resources of
the Philippines, and the operation of the public utilities,
exclusively, but not the acquisition or exploitation of private
agricultural lands, about which not a word is found in the
Parity Amendment..Respondent Quasha's pretenses can find
no support in Article VI of the Trade Agreement of 1955,
known popularly as the Laurel-Langley Agreement,
establishing a sort of reciprocity rights between citizens of

2. The rights provided for in Paragraph I may be exercised,


in the case of citizens of the Philippines with respect to
natural resources in the United States which are subject to
Federal control or regulations, only through the medium of a
corporation organized under the laws of the United States or
one of the States hereof and likewise, in the case of citizens
of the United States with respect to natural resources in
the public domain in the Philippines only through the medium
of a corporation organized under the laws of the Philippines
and at least 60% of the capital stock of which is owned or
controlled by citizens of the United States. This provision,
however, does not affect the right of citizens of the United
States to acquire or own private agricultural lands in the
Philippines or citizens of the Philippines to acquire or own
land in the United States which is subject to the jurisdiction
of the United States and not within the jurisdiction of any
state and which is not within the public domain. The
Philippines reserves the right to dispose of the public lands
in small quantities on especially favorable terms exclusively
to actual settlers or other users who are its own citizens. The
United States reserves the right to dispose of its public lands
in small quantities on especially favorable terms exclusively
to actual settlers or other users who are its own citizens or
aliens who have declared their intention to become citizens.
Each party reserves the right to limit the extent to which
aliens may engage in fishing, or engage in enterprises which
furnish communications services and air or water transport.
The United States also reserves the right to limit the extent
to which aliens may own land in its outlying territories and
possessions, but the Philippines will extend to American
nationals who are residents of any of those outlying
territories and possessions only the same rights, with respect
to, ownership of lands, which are granted therein to citizens
of the Philippines. The rights provided for in this paragraph
shall not, however, be exercised by either party so as to
derogate from the rights previously acquired by citizens or
corporations or associations owned or controlled by citizens
of the other party.
The words used in Article VI to the effect that
... This provision does not affect the right of citizen of the
United States to acquire or own private agricultural lands in
the Philippines, or citizens of the Philippines to acquire or
own land in the United States which is subject to the
jurisdiction of the United States ...
must be understood as referring to rights of United States
citizens to acquire or own private agricultural lands before
the independence of the Philippines since the obvious
purpose of the article was to establish rights of United States
and Filipino citizens on a basis of reciprocity. For as already
shown, no such right to acquire or own private agricultural

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lands in the Philippines has existed since the independent
Republic was established in 1946. The quoted expressions
of the Laurel-Langley Agreement could not expand the rights
of United States citizens as to public agricultural lands of the
Philippines to private lands, when the Parity Amendment and
the Constitution authorize such United States citizens and
business entities only to acquire and exploit agricultural
lands of the public domain. If the reopening of only public
lands to Americans required a Constitutional Amendment,
how could a mere Trade Agreement, like the Laurel-Langley,
by itself enable United States citizens to acquire and exploit
private agricultural lands, a right that ceased to exist since
the independence of the Philippines by express prescription
of our Constitution?
We turn to the second issue involved in this appeal: On the
assumption that respondent Quasha's purchase of the
private agricultural land involved is valid and constitutional,
will or will not his rights expire on 3 July 1974?
For the solution of this problem, We again turn to the "Parity
Amendment". Under it,
Notwithstanding the provision of section one, Article Thirteen,
and section eight, Article Fourteen, of the foregoing
Constitution, during the effectivity of the Executive
Agreement entered into by the President of the Philippines
with the President of the United States on the fourth of July,
nineteen hundred and forty-six, pursuant to the provisions of
Commonwealth Act Numbered Seven hundred and thirtythree, but in no case to extend beyond the third of July,
nineteen hundred and seventy-four, the disposition,
exploitation, development, and utilization of all agricultural,
timber, and mineral lands of the public domain, waters,
minerals, coals, petroleum, and other mineral oils, all forces
and sources of potential energy, and other natural resources
of the Philippines, and the operation of public utilities, shall, if
open to any person, be open to citizens of the United states
and to all forms of business enterprise owned or controlled,
directly or indirectly, by citizens of the United States in the
same manner as to, and under the same conditions imposed
upon, citizens of the Philippines or corporations or
associations owned or controlled by citizens of the
Philippines. (Emphasis supplied)
It is easy to see that all exceptional rights conferred upon
United States citizens and business entities owned or
controlled by them, under the Amendment, are subject to
one and the same resolutory term or period: they are to last
"during the effectivity of the Executive Agreement entered
into on 4 July 1946", "but in no case to extend beyond the,
third of July, 1974". None of the privileges conferred by the
"Parity Amendment" are excepted from this resolutory period.
This limitation of time is in conformity with Article X, Section
2, of the Philippine Trade Act of 1946, as embodied in
Commonwealth Act No. 733. It says:

ARTICLE X
2. This Agreement shall have no effect after 3 July 1974. It
may be terminated by either the United States or the
Philippines at any time, upon not less than five years' written
notice. It the President of the United States or the President
of the Philippines determines and proclaims that the other
Country has adopted or applied measures or practices which
would operate to nullify or impair any right or obligation
provided for in this Agreement, then the Agreement may be
terminated upon not less than six months' written notice.
Respondent Quasha argues that the limitative period set in
the "Parity Amendment" should be understood not to be
applicable to the disposition, or correlative acquisition, of
alienable agricultural lands of the public domain, since such
lands can be acquired in full ownership, in which event,
under Article 428 of the Civil Code of Philippines
ART, 428. The owner has the right to enjoy and dispose of a
thing, without other limitations than those established by law.
The owner has also a right of action against the holder and
possessor of the thing in order to recover it.
and that since any period or condition which produces the
effect of loss or deprivation of valuable rights is in derogation
of due process of law, there must be "a law which expressly
and indubitably limits and extinguishes the ownership of noncitizens over private agricultural lands situated in the
Philippines validly acquired under the law existing at the time
of acquisition."
Strangely enough, this argument ignores the provisions of
the "Parity Amendment" prescribing that the disposition and
exploitation, etc. of agricultural lands of the public
domain are in no case to extend beyond the third of July
1974. This limitation already existed when Quasha in 1954
purchased the Forbes Park property, and the acquisition was
subject to it. If the Philippine government can not dispose of
its alienable public agricultural lands beyond that date under
the "Parity Amendment", then, logically, the Constitution, as
modified by the Amendment, only authorizes either of two
things: (a) alienation or transfer of rights less than ownership
or (b) a resoluble ownership that will be extinguished not
later than the specified period. For the Philippine government
to dispose of the public agricultural land for an indefinite time
would necessarily be in violation of the Constitution. There is
nothing in the Civil Law of this country that is repugnant to
the existence of ownership for a limited duration; thus the
title of a "reservista" (ascendant inheriting from a
descendant) in reserva troncal, under Article 891 of the Civil
Code of the Philippines, is one such owner, holding title and
dominion, although under condition subsequent; he can do
anything that a genuine owner can do, until his death
supervenes with "reservataries surviving", i.e., relatives
within the third degree (Edroso vs. Sablan, 25 Phil. 295;
Lunsod vs. Ortega, 46 Phil. 661, 695). In truth, respondent

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himself invokes Article 428 of the Civil Code to the effect that
"the owner has the right to enjoy and dispose of a thing,
without other limitations than those established by law". One
such limitation is the period fixed on the "Parity Amendment",
which forms part of the Constitution, the highest law of the
land. How then can he complain of deprivation of due
process?

owned or controlled by them can not acquire and own, save


in cases of hereditary succession, private agricultural lands
in the Philippines and that all other rights acquired by them
under said amendment will expire on 3 July 1974.
AYOG v. CUSI
Republic of the Philippines
SUPREME COURT
Manila

That the legislature has not yet determined what is to be


done with the property when the respondent's rights thereto
terminate on 3 July 1974 is irrelevant to the issues in this
case. The law, making power has until that date full power to
adopt the apposite measures, and it is expected to do so.
One last point: under the "Parity Amendment" the disposition,
exploitation, development and utilization of lands of the
public domain, and other natural resources of the
Philippines, and the operation of public utilities are open
to citizens of the United States and to all forms of business
enterprises owned or controlled, directly or indirectly, by
citizens of the United States
while under the Philippine Constitution (section 1, Article XIII,
and section 8, Article XIV) utilization of such lands, natural
resources and public utilities are open to citizens of the
Philippines or to
corporations or associations at least sixty per centum of the
capital of which is owned by such citizens...
It is thus apparent that American business enterprises are
more favored than Philippine organization during the period
of parity in that, first, they need not be owned by American
citizens up to 60% of their capital; all that is required is that
they be controlled by United States citizens, a control that is
attained by ownership of only 51% a of the capital stock; and
second, that the control by United States citizens may be
direct or indirect (voting trusts, pyramiding, etc.) which
indirect control is not allowed in the case of Philippine
nationals.
That Filipinos should be placed under the so-called Parity in
a more disadvantageous position than United States citizens
in the disposition, exploitation, development and utilization of
the public lands, forests, mines, oils and other natural
resources of their own country is certainly rank injustice and
inequity that warrants a most strict interpretation of the
"Parity Amendment", in order that the dishonorable inferiority
in which Filipinos find themselves at present in the land of
their ancestors should not be prolonged more than is
absolutely necessary.
FOR THE FOREGOING REASONS, the appealed decision
of the Court of First Instance of Rizal is hereby reversed and
set aside; and judgment is rendered declaring that, under the
"Parity Amendment" to our Constitution, citizens of the
United States and corporations and business enterprises

EN BANC
G.R. No. L-46729 November 19, 1982
LAUSAN AYOG, BENITO AYOG, DAMASO AYOG, JULIO
AYOG, SEGUNDA AYOG, VICENTE ABAQUETA,
BERNARDINO ADORMEO, VIDAL ALBANO, FELICIANO
ARIAS, ANTONIO BALDOS, MAXIMO BALDOS, ROMERO
BINGZON, EMILIO CADAYDAY, FRUCTUOSO CHUA, SR.,
HERACLEO CHUA, GUILLERMO DAGOY, ABDON
DEIMOS, NICASIO DE LEON, JULIANA VDA. DE DIANNA,
DEMOCRITO DEVERO, ALFREDO DIVINAGRACIA,
ESTEBAN DIVINAGRACIA, LEODEGARDIO
DIVINAGRACIA, NELLO DIVINAGRACIA, MERQUIADES
EMBERADOR, JESUS EMPERADO, PORFERIO ENOC,
SOFRONIO ENOC, RAFAEL GAETOS, NICOLAS
GARLET, TRINIDAD GARLET, FORTUNATA GEONZON,
NICOLADA NAQUILA, TORIBIO NAQUILA, EFREN OKAY,
ELPIDIO OKAY, SR., DIEGO ONGRIA, ERNESTO
PANARES, VICENTE PATULOT, IGNACIA RIBAO, JUANO
RICO, JESUS ROSALITA, ARMANDO TANTE and
ANSELMO VALMORES, petitioners,
vs.
JUDGE VICENTE N. CUSI, JR., Court of First Instance of
Davao, Branch I, PROVINCIAL SHERIFF OF DAVAO, and
BINAN DEVELOPMENT CO., INC., respondents.
MINISTER OF NATURAL RESOURCES and DIRECTOR
OF LANDS, intervenors.
AQUINO, J.:
This case is about the application of section 11, Article XIV of
the 1973 Constitution (disqualifying a private corporation
from purchasing public lands) to a 1953 sales award made
by the Bureau of Lands, for which a sales patent and Torrens
title were issued in 1975, and to the 1964 decision of the trial
court, ejecting some of the petitioners from the land
purchased, which decision was affirmed in 1975 by the Court
of Appeals. That legal question arises under the following
facts:
On January 21, 1953, the Director of Lands, after a bidding,
awarded to Bian Development Co., Inc. on the basis of its
1951 Sales Application No. V-6834 Cadastral Lot No. 281
located at Barrio Tamugan, Guianga (Baguio District), Davao
City with an area of about two hundred fifty hectares. Some
occupants of the lot protested against the sale. The Director
of Lands in his decision of August 30, 1957 dismissed the

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protests and ordered the occupants to vacate the lot and
remove their improvements. No appeal was made from that
decision.

18. Ciriaco Fuentes 38. Meliton Sante

The Director found that the protestants (defendants in the


1961 ejectment suit, some of whom are now petitioners
herein) entered the land only after it was awarded to the
corporation and, therefore, they could not be regarded
as bona fide occupants thereof. The Director characterized
them as squatters. He found that some claimants were
fictitious persons (p. 30, Rollo of L-43505, Okay vs. CA). He
issued a writ of execution but the protestants defied the writ
and refused to vacate the land (p. 28, Rollo of L-43505,
Okay vs. CA). **

20. Constancio Garlic 40. Cosme Villegas

Because the alleged occupants refused to vacate the land,


the corporation filed against them on February 27, 1961 in
the Court of First Instance of Davao, Civil Case No. 3711, an
ejectment suit (accion publiciana). The forty defendants were
Identified as follows:
1. Vicente Abaqueta 21. Eniego Garlic
2. Candido Abella 22. Nicolas Garlic

19. Pulong Gabao 39. Amil Sidaani

That ejectment suit delayed the issuance of the patent. The


trial court found that the protests of twenty of the
abovenamed defendants were among those that were
dismissed by the Director of Lands in his 1957 decision
already mentioned.
On July 18, 1961 the purchase price of ten thousand pesos
was fully paid by Binan Development Co., Inc. OnNovember
10, 1961, an official of the Bureau of Lands submitted a final
investigation report wherein it was stated that the corporation
had complied with the cultivation and other requirements
under the Public Land Law and had paid the purchase price
of the land (p. 248, Rollo).
It was only more than thirteen years later or on August 14,
1975 when Sales Patent No. 5681 was issued to the
corporation for that lot with a reduced area of 175.3
hectares. The patent was registered. Original Certificate of
Title No. P-5176 was issued to the patentee.

3. Julio Ayog 23. Rufo Garlic


4. Arcadio Ayong 24. Alfonso Ibales
5. Generoso Bangonan 25. Julian Locacia
6. Lomayong Cabao 26. Filomeno Labantaban
7. Jose Catibring 27. Arcadio Lumantas
8. Teodolfo Chua 28. Santos Militante
9. Guillermo Dagoy 29. Toribio Naquila
10. Anastacia Vda. de Didal 30. Elpidio Okay

The Director of Lands in his memorandum dated June 29,


1974 for the Secretary of Natural Resources, recommending
approval of the sales patent, pointed out that the purchaser
corporation had complied with the said requirements long
before the effectivity of the Constitution, that the land in
question was free from claims and conflicts and that the
issuance of the patent was in conformity with the guidelines
prescribed in Opinion No. 64, series of 1973, of Secretary of
Justice Vicente Abad Santos and was an exception to the
prohibition in section 11, Article XIV of the Constitution (p.
258, Rollo).
Secretary of Natural Resources Jose J. Leido, Jr., in
approving the patent on August 14, 1975, noted that the
applicant had acquired a nested right to its issuance (p. 259,
Rollo).

11. Alfredo Divinagracia 31. Guillermo Omac


12. Silverio Divinagracia 32. Emilio Padayday
13. Galina Edsa 33. Marcosa Vda. de Rejoy
14. Jesus Emperado 34. Lorenzo Rutsa
15. Porfirio Enoc 35. Ramon Samsa
16. Benito Ente 36. Rebecca Samsa
17. German Flores 37. Alfeao Sante

Before that patent was issued, there was a trial in the


ejectment suit. Fifteen defendants (out of forty), namely, Julio
Ayog, Guillermo Bagoy, Generoso Bangonan, Jose
Catibring, Porfirio Enoc, Jose Emperado, Arcadio Lomanto,
Toribio Naquila, Elpidio Okay, Alfeo Sante, Meliton Sante,
Ramon Samsa, Rebecca Samsa, Arcadio Sarumines and
Felix Tahantahan, testified that they entered the disputed
land long before 1951 and that they planted it to coconuts,
coffee, jackfruit and other fruit trees. (p. 28, Record on
Appeal).
The trial court did not give credence to their testimonies. It
believed the report of an official of the Bureau of Lands that
in 1953 the land was free from private claims and conflicts

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and it gave much weight to the decision of the Director of
Lands dismissing the protests of the defendants against the
sales award (p. 30, Record on Appeal).
Furthermore, the trial court during its ocular inspection of the
land on November 8, 1964 found that the plantings on the
land could not be more than ten years old, meaning that they
were not existing in 1953 when the sales award was made.
Hence, the trial court ordered the defendants to vacate the
land and to restore the possession thereof to tile company.
The Court of Appeals affirmed that judgment on December
5, 1975 in its decision in Binan Development Co., Inc. vs,
Sante, CA-G.R. No. 37142- R. The review of the decision
was denied by this Court on May 17, 1976 in Elpidio Okay
vs. Court of Appeals, L-43505.
After the record was remanded to the trial court, the
corporation filed a motion for execution. The defendants,
some of whom are now petitioners herein, opposed the
motion. They contended that the adoption of the Constitution,
which took effect on January 17, 1973, was a supervening
fact which rendered it legally impossible to execute the lower
court's judgment. They invoked the constitutional prohibition,
already mentioned, that "no private corporation or
association may hold alienable lands of the public domain
except by lease not to exceed one thousand hectares in
area."
The lower court suspended action on the motion for
execution because of the manifestation of the defendants
that they would file a petition for prohibition in this Court. On
August 24, 1977, the instant prohibition action was filed.
Some of the petitioners were not defendants in the ejectment
case.
We hold that the said constitutional prohibition has no
retroactive application to the sales application of Bian
Development Co., Inc. because it had already acquired a
vested right to the land applied for at the time the 1973
Constitution took effect.
That vested right has to be respected. lt could not be
abrogated by the new Constitution. Section 2, Article XIII of
the 1935 Constitution allows private corporations to
purchase public agricultural lands not exceeding one
thousand and twenty-four hectares. Petitioners' prohibition
action is barred by the doctrine of vested rights in
constitutional law.
"A right is vested when the right to enjoyment has become
the property of some particular person or persons as a
present interest" (16 C.J.S. 1173). It is "the privilege to enjoy
property legally vested, to enforce contracts, and enjoy the
rights of property conferred by the existing law" (12 C.J. 955,
Note 46, No. 6) or "some right or interest in property which
has become fixed and established and is no longer open to
doubt or controversy" (Downs vs. Blount 170 Fed. 15, 20,
cited in Balboa vs. Farrales, 51 Phil. 498, 502).

The due process clause prohibits the annihilation of vested


rights. "A state may not impair vested rights by legislative
enactment, by the enactment or by the subsequent repeal of
a municipal ordinance, or by a change in the constitution of
the State, except in a legitimate exercise of the police power"
(16 C.J.S. 1177-78).
It has been observed that, generally, the term "vested right"
expresses the concept of present fixed interest, which in
right reason and natural justice should be protected against
arbitrary State action, or an innately just and imperative right
which an enlightened free society, sensitive to inherent and
irrefragable individual rights, cannot deny (16 C.J.S. 1174,
Note 71, No. 5, citing Pennsylvania Greyhound Lines, Inc.
vs. Rosenthal, 192 Atl. 2nd 587).
Secretary of Justice Abad Santos in his 1973 opinion ruled
that where the applicant, before the Constitution took effect,
had fully complied with all his obligations under the Public
Land Act in order to entitle him to a sales patent, there would
seem to be no legal or equitable justification for refusing to
issue or release the sales patent (p. 254, Rollo).
In Opinion No. 140, series of 1974, he held that as soon as
the applicant had fulfilled the construction or cultivation
requirements and has fully paid the purchase price, he
should be deemed to have acquired by purchase the
particular tract of land and to him the area limitation in the
new Constitution would not apply.
In Opinion No. 185, series of 1976, Secretary Abad Santos
held that where the cultivation requirements were fulfilled
before the new Constitution took effect but the full payment
of the price was completed after January 17, 1973, the
applicant was, nevertheless, entitled to a sales patent (p.
256, Rollo).
Such a contemporaneous construction of the constitutional
prohibition by a high executive official carries great weight
and should be accorded much respect. It is a correct
interpretation of section 11 of Article XIV.
In the instant case, it is incontestable that prior to the
effectivity of the 1973 Constitution the right of the corporation
to purchase the land in question had become fixed and
established and was no longer open to doubt or controversy.
Its compliance with the requirements of the Public Land Law
for the issuance of a patent had the effect of segregating the
said land from the public domain. The corporation's right to
obtain a patent for that land is protected by law. It cannot be
deprived of that right without due process (Director of Lands
vs. CA, 123 Phil. 919).
As we cannot review the factual findings of the trial court and
the Court of Appeals, we cannot entertain petitioners'
contention that many of them by themselves and through
their predecessors-in-interest have possessed portions of

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1ST EXAM COVERAGE CASE COMPILATION
land even before the war. They should have filed homestead
or free patent applications.

proceedings to which he is a stranger" (Ed. A. Keller & Co.


vs Ellerman & Bucknall Steamship Co., 38 Phil. 514, 520).

Our jurisdiction is limited to the resolution of the legal issue


as to whether the 1973 Constitution is an obstacle to the
implementation of the trial court's 1964 final and executory
judgment ejecting the petitioners. On that issue, we have no
choice but to sustain its enforceability.

To enforce the judgment against those who were not parties


to the case and who occupy portions of the disputed land
distinct and separate from the portions occupied by the
defendants in the ejectment suit, would be violative of due
process of law, the law which, according to Daniel Webster in
his argument in the Dartmouth College case, is the law of the
land, a law which hears before it condemns, which proceeds
upon inquiry and renders judgment only after trial. "The
meaning is, that every citizen shall hold his life, liberty,
property, and immunities, under the protection of the general
rules which govern society." (Cited in Lopez vs. Director of
Lands, 47 Phil. 23, 32. See Gatchalian vs. Arlegui, L-35615
and Tang Tee vs. Arlegui, L-41360, February 17, 1977, 75
SCRA 234 and Berses vs. Villanueva, 25 Phil. 473.)

Nevertheless, in the interest of social justice, to avoid


agrarian unrest and to dispel the notion that the law grinds
the faces of the poor, the administrative authorities should
find ways and means of accommodating some of the
petitioners if they are landless and are really tillers of the
soil who in the words of President Magsaysay deserve a little
more food in their stomachs, a little more shelter over their
heads and a little more clothing on their backs. The State
should endeavor to help the poor who find it difficult to make
both ends meet and who suffer privations in the universal
struggle for existence.
A tiller of the soil is entitled to enjoy basic human rights,
particularly freedom from want. The common man should be
assisted in possessing and cultivating a piece of land for his
sustenance, to give him social security and to enable him to
achieve a dignified existence and become an independent,
self-reliant and responsible citizen in our democratic society.
To guarantee him that right is to discourage him from
becoming a subversive or from rebelling against a social
order where, as the architect of the French Revolution
observed, the rich are choking with the superfluities of life
but the famished multitude lack the barest necessities.
Indeed, one purpose of the constitutional prohibition against
purchases of public agricultural lands by private corporations
is to equitably diffuse land ownership or to encourage
"owner-cultivatorship and the economic family- size farm"
and to prevent a recurrence of cases like the instant case.
Huge landholdings by corporations or private persons had
owned social unrest.
Petitioners' counsel claims that Bian Development Co., Inc.
seeks to execute the judgment in Civil Case No. 3711, the
ejectment suit from which this prohibition case arose, against
some of the petitioners who were not defendants in that
suit (p. 126, Rollo).

Contempt incident.-During the pendency of this case, or at


about four o'clock in the morning of December 12, 1978,
Ciriaco Tebayan, Domingo Nevasca, Rogelio Duterte and
Sofronio Etac, employees of the Crown Fruits and Cannery
Corporation, plowed or bulldozed with their tractors a portion
of the disputed land which was occupied by Melquiades
Emberador, one of the petitioners herein. The disputed land
was leased by Bian Development Co., Inc. to the canning
corporation.
The four tractor drivers destroyed the improvements thereon
worth about five thousand pesos consisting of coffee,
coconut and banana plants. Emberador was in the hospital
at the time the alleged destruction of the improvements
occurred. However, it should be noted that Emberador was
not expressly named as a defendant in the ejectment suit.
Apparently, he is not included in the trial court's decision
although he was joined as a co-petitioner in this prohibition
case.
The petitioners in their motion of January 11, 1979 asked
that the four tractor drivers and Honesto Garcia, the
manager of Bian Development Co., Inc., be declared in
contempt of court for having disregarded the restraining
order issued by this Court on August 29, 1977, enjoining
specifically Judge Vicente N. Cusi and the provincial sheriff
from enforcing the decision in the ejectment suit, Civil Case
No. 3711 (pp. 46-47, 138- 141, Rollo).

Those petitioners are not successors-in-interest of the


defendants in the ejectment suit. Nor do they derive their
right of possession from the said defendants. Those
petitioners occupy portions of the disputed land distinct and
separate from the portions occupied by the said defendants.

Garcia and the four drivers answered the motion. The


incident was assigned for hearing to Judge Antonio M.
Martinez of the Court of First Instance of Davao. Judge
Martinez found that the plowing was made at the instance of
Garcia who told the barrio captain, petitioner Lausan Ayog, a
Bagobo, that he (Garcia) could not wait anymore for the
termination of this case.

We hold that judgment cannot be enforced against the said


petitioners who were not defendants in that litigation or who
were not summoned and heard in that case. Generally, "it is
an axiom of the law that no man shall be affected by

The record shows that on April 30, 1979 or four months after
the said incident, Emberador, in consideration of P3,500, as
the value of the improvements on his land, executed a

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1ST EXAM COVERAGE CASE COMPILATION
quitclaim in favor of the Crown Fruits and Cannery
Corporation (Exh. 1, 2 and 3).

REPUBLIC v. VILLANUEVA
Republic of the Philippines
SUPREME COURT
Manila

We hold that no contempt was committed. The temporary


restraining order was not directed to Bian Development
Co., Inc. its officers, agents or privies. Emberador was not
named specifically in the trial court's judgment as one of the
occupants to be ejected.

EN BANC
G.R. No. L-55289 June 29, 1982

For the redress of whatever wrong or delict was committed


against Emberador by reason of the destruction of his
improvements, his remedy is not in a contempt proceeding
but in some appropriate civil and criminal actions against the
destroyer of the improvements.
In resume, we find that there is no merit in the instant
prohibition action. The constitutional prohibition relied upon
by the petitioners as a ground to stop the execution of the
judgment in the ejectment suit has no retroactive application
to that case and does not divest the trial court of jurisdiction
to enforce that judgment.
WHEREFORE, the petition is dismissed for lack of merit but
with the clarification that the said judgment cannot be
enforced against those petitioners herein who were not
defendants in the ejectment case, Civil Case No. 3711, and
over whom the lower court did not acquire jurisdiction. The
contempt proceeding is also dismissed. No costs.
SO ORDERED.

REPUBLIC OF THE PHILIPPINES, represented by the


Director of Lands, petitioner-appellant,
vs.
JUDGE CANDIDO P. VILLANUEVA, of the Court of First
Instance of Bulacan, Malolos Branch VII, and IGLESIA NI
CRISTO, as a corporation sole, represented by ERAO
G. MANALO, as Executive Minister,respondentsappellees.

AQUINO, J.:
Like L-49623, Manila Electric Company vs. Judge CastroBartolome, this case involves the prohibition in section 11,
Article XIV of the Constitution that "no private corporation or
association may hold alienable lands of the public domain
except by lease not to exceed one thousand hectares in
area".
Lots Nos. 568 and 569, located at Barrio Dampol, Plaridel,
Bulacan, with an area of 313 square meters and an
assessed value of P1,350 were acquired by the Iglesia Ni
Cristo on January 9, 1953 from Andres Perez in exchange
for a lot with an area of 247 square meters owned by the
said church (Exh. D).
The said lots were already possessed by Perez in 1933.
They are not included in any military reservation. They are
inside an area which was certified as alienable or disposable
by the Bureau of Forestry in 1927. The lots are planted to
santol and mango trees and banana plants. A chapel exists
on the said land. The land had been declared for realty tax
purposes. Realty taxes had been paid therefor (Exh. N).
On September 13, 1977, the Iglesia Ni Cristo, a corporation
sole, duly existing under Philippine laws, filed with the Court
of First Instance of Bulacan an application for the registration
of the two lots. It alleged that it and its predecessors-ininterest had possessed the land for more than thirty years. It
invoked section 48(b) of the Public Land Law, which
provides:
Chapter VIII.Judicial
incomplete titles.

confirmation

of

xxx xxx xxx

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imperfect

or

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1ST EXAM COVERAGE CASE COMPILATION
SEC. 48. The following-described citizens of the Philippines,
occupying lands of the public domain or claiming to own any
such lands or an interest therein, but whose titles have not
been perfected or completed, may apply to the Court of First
Instance of the province where the land is located for
confirmation of their claims and the issuance of a certificate
of title therefore, under the Land Register Act, to wit:
xxx xxx xxx
(b) Those who by themselves or through their predecessorsin-interest have been in open, continuous, exclusive, and
notorious possession and occupation of agricultural lands of
the public domain, under a bona fide claim of acquisition of
ownership, for at least thirty years immediately preceding the
filing of the application for confirmation of title except when
prevented by war or force majeure. These shall be
conclusively presumed to have performed all the conditions
essential to a Government grant and shall be entitled to a
certificate of title under the provisions of this chapter." (As
amended by Republic Act No. 1942, approved on June 22,
1957.)
The Republic of the Philippines, through the Direct/r of
Lands, opposed the application on the grounds that
applicant, as a private corporation, is disqualified to hold
alienable lands of the public domain, that the land applied for
is public land not susceptible of private appropriation and
that the applicant and its predecessors-in-interest have not
been in the open, continuous, exclusive and notorious
possession of the land since June 12, 1945.
After hearing, the trial court ordered the registration of the
two lots, as described in Plan Ap-04-001344 (Exh. E), in the
name of the Iglesia Ni Cristo, a corporation sole, represented
by Executive Minister Erao G. Manalo, with office at the
corner of Central and Don Mariano Marcos Avenues,
Quezon City, From that decision, the Republic of the
Philippines appealed to this Court under Republic Act No.
5440. The appeal should be sustained.

considered private land in the Susi case was a parcel of land


possessed by a Filipino citizen since time immemorial, as
in Cario vs. Insular Government, 212 U.S. 449, 53 L. ed.
594, 41 Phil. 935 and 7 Phil. 132. The lots sought to be
registered in this case do not fall within that category. They
are still public lands. A land registration proceeding under
section 48(b) "presupposes that the land is public"
(Mindanao vs. Director of Lands, L-19535, July 10, 1967, 20
SCRA 641, 644).
As held in Oh Cho vs. Director of Lands, 75 Phil. 890, "all
lands that were not acquired from the Government, either by
purchase or by grant, belong to the public domain. An
exception to the rule would be any land that should have
been in the possession of an occupant and of his
predecessors-in-interest since time immemorial, for such
possession would justify the presumption that the land had
never been part of the public domain or that it had been a
private property even before the Spanish conquest. "
In Uy Un vs. Perez, 71 Phil. 508, it was noted that the right of
an occupant of public agricultural land to obtain a
confirmation of his title under section 48(b) of the Public
Land Law is a "derecho dominical incoativo"and that before
the issuance of the certificate of title the occupant is not in
the juridical sense the true owner of the land since it still
pertains to the State.
The lower court's judgment is reversed and set aside. The
application for registration of the Iglesia Ni Cristo is
dismissed with costs against said applicant.
SO ORDERED.

As correctly contended by the Solicitor General, the Iglesia


Ni Cristo, as a corporation sole or a juridical person, is
disqualified to acquire or hold alienable lands of the public
domain, like the two lots in question, because of the
constitutional prohibition already mentioned and because the
said church is not entitled to avail itself of the benefits of
section 48(b) which applies only to Filipino citizens or natural
persons. A corporation sole (an "unhappy freak of English
law") has no nationality (Roman Catholic Apostolic Adm. of
Davao, Inc. vs. Land Registration Commission, 102 Phil.
596. See Register of Deeds vs. Ung Siu Si Temple, 97 Phil.
58 and sec. 49 of the Public Land Law).
The contention in the comments of the Iglesia Ni Cristo (its
lawyer did not file any brief) that the two lots are private
lands, following the rule laid down in Susi vs. Razon and
Director of Lands, 48 Phil. 424, is not correct. What was

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Republic of the Philippines
SUPREME COURT
Manila
EN BANC

G.R. No. L-49623 June 29, 1982


MANILA ELECTRIC COMPANY, petitioner-appellant,
vs.
JUDGE FLORENLIANA CASTRO-BARTOLOME of the
Court of First Instance of Rizal, Makati Branch XV, and
REPUBLIC OF THE PHILIPPINES,
respondent-appellees.

AQUINO, J.:p
This case involves the prohibition in section 11, Article XIV of
the Constitution that "no private coporation or associaiton
may hold alienable lands of the public domain except by
lease not to exceed on ethousand hectares in area". * That
prohibition is not found in the 1935 Constitution.
The Manila Electric Company, a domestic corporation
organized under Philippine laws, more than sixty percent of
whose capital stock is owned by Filipino citizens, in its
application filed on December 1, 1976 in the Makati branch
of the Court of First Instance of Rizal, prayed for the
confirmation of its title to two lots with a total area of one
hundred sixty-five square meters, located at Tanay, Rizal
with an assessed value of P3,270 (LRC Case No. N-9485,
LRC No. N-50801).
The Republic of the Philippines opposed theh application on
the grounds that the applicant, as a private corporation,is
disqualified to hold alienable public lands and that the
applicant and its prredecessors-in-interest have not been in
the open, continuous, exclusive and notorious possession
and occupation of the land for at least thirty years
immediately preceding the filing of the application (pp. 6566, Rollo).
After the trial had commenced, the Province of rizal and the
Municipality of Tanay filed a joint opposition to the application
on the ground that one of the lots, Lot No. 1165 of the Tanay
cadastre, would be needed for the widening and
improvement of Jose Abad Santos and E.Quirino Streetsin
the town of Tanay.
The land was possessed by Olimpia ramos before the
Pacific war which broke out in 1941. On July 3, 1947, Ramos
sold the land to the spouses Rafael Piguing and MInerva
Inocencio (Exh. K). The Piguing sapouses constructed a
house therereon. Because the Meralco had installed the

"anchor guy" of its steel post on the land, the Piguing


spouses sold the lot to the Meralco on August 13, 1976.
The said land was included in the1968 cadastral survey
made in Tanacy by the Bureau of Lands, Plan AP-04-000902
(Exh. F and H) and was divided into two lots, Lots Nos. 1164
and 1165, so as to segregate Lot No. 1165 which would be
used to widen the two street serving as the land's eastern
and southern boundaries.
The land was declared for realty tax purposes since 1945
and taxes had been paid thereon up to 1977. It is residential
in character as distinguished from a strictly agricultural land.
It is not included in any military reservation. Since 1927, it
has formed part of the alienable portion of the public domain.
After trial, the lowre court rendered a decision dismissing the
application because in its opinion the Meralco is not qualified
to apply for the registration of the said land since under
section 48(b) of the Public Land Law only Filipino citizens or
natural persons can apply for judicial confirmationof their
imperfect titles to public land. The Meralco is a juridical
person. The trial court assumed that the land which it seeks
to register is public land.
From that decision, the Meralco appealed to this Court under
Republic Act No. 5440.
In contends that the said land, after having been possessed
in the concept of owner by Olimpia Ramos and the Piguing
spouses for more than thirty years, had become private
land in the hands of the latter, and, therefore, the
constitutional prohibition, banning a private corporation from
acquiring alienable public land, is not applicable to the said
land.
The Meralco further contends that it has invoke section 48(b)
of the Public Land Law, not for itself, but for the Piguing
spouses who, as Filipino citizens, could secure a judicial
confirmation of their imperfect title to the land.
In reply to these contentions, the Solicitor General counters
that the said land is not private land because the Meralco
and its predecessors-in-interest have no composition title
from the Spanish government nor possessory information
title or any other means for the acquisition of public lands
such as grants or patents (Republic vs. Court of Appeals and
De Jesus, L-40912, September 30, 1976, 73 SCRA 146,
157; Director of Lands vs. Reyes, L-27594, November 28,
1975, and Alinsunurin vs. Director of Lands, L-28144,
November 28, 1975; 68 SCRA 177; 195; Lee Hong Hok vs.
David, L-30389, December 27, 1972, 48 SCRA 372, 378-9;
Director of Lands vs. Court of Appeals and Raymundo, L29575, April 30, 1971, 38 SCRA 634, 639; Padilla vs. Reyes
and Director of Lands, 60 Phil. 967, 969; Heirs of Datu
Pendatun vs. Director of Lands, 59 Phil. 600, 603).
The Public Land Law provides:

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CHAPTER VIII. Judicial confirmation of imperfect or
incomplete titles.
xxx xxx xxx
SEC. 48. The following described citizens of the Philippines,
occupying lands of the public domain or claiming to own any
such lands or an interest therein, but whose titles have not
been perfected or completed, may apply to the Court of First
Instance of the province where the land is located for
confirmation of their claims and the issuance of a certificate
of title therefor, under the Land Registration Act, to wit:
xxx xxx xxx
(b) Those who by themselves or through their predecessors
in interest have been in open, continuous, exclusive, and
notorious possession and occupation of agricultural lands of
the public domain, under a bona fide claim of acquisition of
ownership, for at least thirty years immediately preceding the
filing of the application for confirmation of title except when
prevented by war or force majeure. These shall be
conclusively presumed to have performed all the conditions
essential to a Government grant and shall be entitled to a
certificate of title under the provisions of this chapter. (As
amended by Republic Act No. 1942, approved on June 22,
1957.)
xxx xxx xxx
SEC. 49. No person claiming title to lands of the public
domain not in possession of the qualifications specified in
the last preceding section may apply for the benefits of this
chapter.
We hold that, as between the State and the Meralco, the said
land is still public land. It would cease to be public land only
upon the issuance of the certificate of title to any Filipino
citizen claiming it under section 48(b). Because it is still
public land and the Meralco, as a juridical person, is
disqualified to apply for its registration under section 48(b),
Meralco's application cannot be given due course or has to
be dismissed.
This conclusion is supported by the rule announced in Oh
Cho vs. Director of Lands, 75 Phil. 890, 892, which rule is a
compendious or quintessential precis of a pervasive principle
of public land law and land registration law, that"all lands that
were not acquired from the Government, either by purchase
or by grant, belong to the public domain. An exception to the
rule would be any land that should have been in the
possession of an occupant and of his predecessors-ininterest since time immemorial, for such possession would
justify the presumption that the land had never been part of
the public domain or that it had been a private property even
before the Spanish conquest." (Cario vs. Insular
Government, 212 U. S. 449, 53 L. ed. 594, 41 Phil. 935 and
7 Phil. 132).

The Meralco relies on the ruling in Susi vs. Razon and


Director of Lands, 48 Phil. 424, that "an open, continuous,
adverse and public possession of a land of the public domain
from time immemorial by a private individual personally and
through his predecessors confers an effective title on said
possessor, whereby the land ceases to be public" and
becomes private property.
That ruling is based on the Cario case which is about the
possession of land by an Igorot and his ancestors since time
immemorial or even before the Spanish conquest. The land
involved in the Susi case was possessed before 1880 or
since a period of time "beyond the reach of memory". That is
not the situation in this case. The Meralco does not pretend
that the Piguing spouses and their predecessor had been in
possession of the land since time immemorial.
In the Susi case, this Court applied section 45(b) of Act No.
2874 which corresponds to what is now section 48(b). It was
held that the long possession of the land under a bona
fide claim of ownership since July 26, 1894 gave rise to the
conclusive presumption that the occupant had complied with
all the conditions essential to a Government grant and was
thus entitled to a certificate of title.
On the other hand, in Uy Un vs. Perez, 71 Phil. 508, 510-11,
it was held that while occupants of public land, who have
applied for the confirmation of their title, "teian asimismo a su
favor la presuncion juris et de jure de que habian cumplido
con todas las condiciones necesarias para la concesion del
titulo; pero hasta que el titulo se expida no tenian el
concepto juridico de ser los verdaderos dueos del terreno
in este dejo de pertenecer a los terrenos publico del Estado
susceptibles de enajenacion."
That means that until the certificate of title is issued, a pice of
land, over which an imperfect title is sought to be confirmed,
remains public land. For that reason in the Uy Un case, it
was held that if that land was attached by a judgment
creditor of the applicant, while his application for confirmation
of his imperfect title was pending in the Bureau of Lands, the
levy and execution sald of the land were void.
For that same reason, lands over which an imperfect title is
sought to be confirmed are governed by the Public Land
Law. Such lands would not be covered by the Public Land
Law if they were already private lands. The occupants' right
to the said lands is characterized in the Uy Un case, not as
ownership in fee simple, but asderecho dominical incoativo.
The Meralco in its concluding argument contends that if the
Piguing spouses could ask for the confirmation of their
imperfect title to the said lands, then why should the
Meralco, as their transferee, be denied the same right to
register the said land in its name, there being no legal
prohibition for the Piguing spouses from selling the land to
the Meralco? This Court is disposing of that same contention
in the Oh Cho case said:

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The benefits provided in the Public Land Act (meaning the
confirmation of an imperfect title under section 48[b]) for
applicant's immediate predecessors-in-interest are or
constitute a grant or concession by the State; and before
they could acquire any right under such benefits, the
applicant's immediate predecessors-in-interest should
comply with the condition precedent for the grant of such
benefits.
The condition precedent is to apply for the registration of the
land of which they had been in possession at least since July
26, 1894. This the applicant's immediate predecessors-ininterest (meaning the Piguing spouses in the instant case)
failed to do.
They did not have any vested right in the lot amounting to
title which was transmissible to the applicant. The only right,
if it may thus be called, is their possession of the lot which,
tacked to that of their predecessors-in-interest, may be
availed of by a qualified person to apply for its registration
but not by a person as the applicant who is disqualified. (75
Phil. 890, 893.)
Finally, it may be observed that the constitutional prohibition
makes no distinction between (on one hand) alienable
agricultural public lands as to which no occupant has an
imperfect title and (on the other hand) alienable lands of the
public domain as to which an occupant has an imperfect title
subject to judicial confirmation.
Since section 11 of Article XIV does not distinguish, we
should not make any distinction or qualification. The
prohibition applies to alienable public lands as to which a
Torrens title may be secured under section 48(b). The
proceeding under section 48(b) "presupposes that the land is
public" (Mindanao vs. Director of Lands, L-19535, July 30,
1967, 20 SCRA 641, 644).
The lower court;s judgment dismissing Meralco's application
is affirmed. Costs against the petitioner-appellant.

INTERMEDIATE APPELLATE COURT and ACME


PLYWOOD & VENEER CO. INC., ETC., respondents.
D. Nacion Law Office for private respondent.

NARVASA, J.:
The Director of Lands has brought this appeal by certiorari
from a judgment of the Intermediate Appellate Court affirming
a decision of the Court of First Instance of Isabela, which
ordered registration in favor of Acme Plywood & Veneer Co.,
Inc. of five parcels of land measuring 481, 390 square
meters, more or less, acquired by it from Mariano and Acer
Infiel, members of the Dumagat tribe.
The registration proceedings were for confirmation of title
under Section 48 of Commonwealth Act No. 141 (The Public
Land Act). as amended: and the appealed judgment sums up
the findings of the trial court in said proceedings in this wise:
1. That Acme Plywood & Veneer Co. Inc., represented by Mr.
Rodolfo Nazario is a corporation duly organized in
accordance with the laws of the Republic of the Philippines
and registered with the Securities and Exchange
Commission on December 23, 1959;
2. That Acme Plywood & Veneer Co. Inc., represented by Mr.
Rodolfo Nazario can acquire real properties pursuant to the
provisions of the Articles of Incorporation particularly on the
provision of its secondary purposes (paragraph (9), Exhibit
'M-l');
3. That the land subject of the Land Registration proceeding
was ancestrally acquired by Acme Plywood & Veneer Co.,
Inc., on October 29, 1962, from Mariano Infiel and Acer Infiel,
both members of the Dumagat tribe and as such are cultural
minorities;
4. That the constitution of the Republic of the Philippines of
1935 is applicable as the sale took place on October 29,
1962;

SO ORDERED.

DIRECTOR v. IAC
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 73002 December 29, 1986
THE DIRECTOR OF LANDS, petitioner,
vs.

5. That the possession of the Infiels over the land


relinquished or sold to Acme Plywood & Veneer Co., Inc.,
dates back before the Philippines was discovered by
Magellan as the ancestors of the Infiels have possessed and
occupied the land from generation to generation until the
same came into the possession of Mariano Infiel and Acer
Infiel;
6. That the possession of the applicant Acme Plywood &
Veneer Co., Inc., is continuous, adverse and public from
1962 to the present and tacking the possession of the Infiels
who were granted from whom the applicant bought said land

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1ST EXAM COVERAGE CASE COMPILATION
on October 29, 1962, hence the possession is already
considered from time immemorial.
7. That the land sought to be registered is a private land
pursuant to the provisions of Republic Act No. 3872 granting
absolute ownership to members of the non-Christian Tribes
on land occupied by them or their ancestral lands, whether
with the alienable or disposable public land or within the
public domain;
8. That applicant Acme Plywood & Veneer Co. Inc., has
introduced more than Forty-Five Million (P45,000,000.00)
Pesos worth of improvements, said improvements were seen
by the Court during its ocular investigation of the land sought
to be registered on September 18, 1982;
9. That the ownership and possession of the land sought to
be registered by the applicant was duly recognized by the
government when the Municipal Officials of Maconacon,
Isabela, have negotiated for the donation of the townsite
from Acme Plywood & Veneer Co., Inc., and this negotiation
came to reality when the Board of Directors of the Acme
Plywood & Veneer Co., Inc., had donated a part of the land
bought by the Company from the Infiels for the townsite of
Maconacon Isabela (Exh. 'N') on November 15, 1979, and
which donation was accepted by the Municipal Government
of Maconacon, Isabela (Exh. 'N-l'), during their special
session on November 22, 1979.
The Director of Lands takes no issue with any of these
findings except as to the applicability of the 1935
Constitution to the matter at hand. Concerning this, he
asserts that, the registration proceedings have been
commenced only on July 17, 1981, or long after the 1973
Constitution had gone into effect, the latter is the correctly
applicable law; and since section 11 of its Article XIV
prohibits private corporations or associations from holding
alienable lands of the public domain, except by lease not to
exceed 1,000 hectares (a prohibition not found in the 1935
Constitution which was in force in 1962 when Acme
purchased the lands in question from the Infiels), it was
reversible error to decree registration in favor of Acme
Section 48, paragraphs (b) and (c), of Commonwealth Act
No. 141, as amended, reads:
SEC. 48. The following described citizens of the Philippines,
occupying lands of the public domain or claiming to own any
such lands or an interest therein, but whose titles have not
been perfected or completed, may apply to the Court of First
Instance of the province where the land is located for
confirmation of their claims, and the issuance of a certificate
of title therefor, under the Land Registration Act, to wit:
xxx xxx xxx
(b) Those who by themselves or through their predecessorsin-interest have been in open, continuous, exclusive and
notorious possession and occupation of agricultural lands of

the public domain, under a bona fide claim of acquisition or


ownership, for at least thirty years immediately preceding the
filing of the application for confirmation of title except when
prevented by war or force majeure. These shall be
conclusively presumed to have performed all the conditions
essential to a Government grant and shall be entitled to a
certificate of title under the provisions of this chapter.
(c) Members of the National Cultural minorities who by
themselves or through their predecessors-in-interest have
been in open. continuous, exclusive and notorious
possession and occupation of lands of the public domain
suitable to agriculture, whether disposable or not, under a
bona fide claim of ownership for at least 30 years shall be
entitled to the rights granted in subsection (b) hereof.
The Petition for Review does not dispute-indeed, in view of
the quoted findings of the trial court which were cited and
affirmed by the Intermediate Appellate Court, it can no longer
controvert before this Court-the fact that Mariano and Acer
Infiel, from whom Acme purchased the lands in question on
October 29, 1962, are members of the national cultural
minorities who had, by themselves and through their
progenitors, possessed and occupied those lands since time
immemorial, or for more than the required 30-year period
and were, by reason thereof, entitled to exercise the right
granted in Section 48 of the Public Land Act to have their title
judicially confirmed. Nor is there any pretension that Acme,
as the successor-in-interest of the Infiels, is disqualified to
acquire and register ownership of said lands under any
provisions of the 1973 Constitution other than Section 11 of
its Article XIV already referred to.
Given the foregoing, the question before this Court is
whether or not the title that the Infiels had transferred to
Acme in 1962 could be confirmed in favor of the latter in
proceedings instituted by it in 1981 when the 1973
Constitution was already in effect, having in mind the
prohibition therein against private corporations holding lands
of the public domain except in lease not exceeding 1,000
hectares.
The question turns upon a determination of the character of
the lands at the time of institution of the registration
proceedings in 1981. If they were then still part of the public
domain, it must be answered in the negative. If, on the other
hand, they were then already private lands, the constitutional
prohibition against their acquisition by private corporations or
associations obviously does not apply.
In this regard, attention has been invited to Manila Electric
Company vs. Castro-Bartolome, et al, 1 where a similar set of
facts prevailed. In that case, Manila Electric Company, a
domestic corporation more than 60% of the capital stock of
which is Filipino-owned, had purchased in 1947 two lots in
Tanay, Rizal from the Piguing spouses. The lots had been
possessed by the vendors and, before them, by their
predecessor-in-interest, Olimpia Ramos, since prior to the

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1ST EXAM COVERAGE CASE COMPILATION
outbreak of the Pacific War in 1941. On December 1, 1976,
Meralco applied to the Court of First Instance of Rizal,
Makati Branch, for confirmation of title to said lots. The court,
assuming that the lots were public land, dismissed the
application on the ground that Meralco, a juridical person,
was not qualified to apply for registration under Section 48(b)
of the Public Land Act which allows only Filipino citizens or
natural persons to apply for judicial confirmation of imperfect
titles to public land. Meralco appealed, and a majority of this
Court upheld the dismissal. It was held that:

convey to the mind of an Igorot chief the notion that ancient


family possessions were in danger, if he had read every
word of it. The words 'may prove' (acrediten) as well or
better, in view of the other provisions, might be taken to
mean when called upon to do so in any litigation. There are
indications that registration was expected from all but none
sufficient to show that, for want of it, ownership actually
gained would be lost. The effect of the proof, wherever
made, was not to confer title, but simply to establish it, as
already conferred by the decree, if not by earlier law. ...

..., the said land is still public land. It would cease to be


public land only upon the issuance of the certificate of title to
any Filipino citizen claiming it under section 48(b). Because it
is still public land and the Meralco, as a juridical person, is
disqualified to apply for its registration under section 48(b),
Meralco's application cannot be given due course or has to
be dismissed.

That ruling assumed a more doctrinal character because


expressed in more categorical language, in Susi:

Finally, it may be observed that the constitutional prohibition


makes no distinction between (on the one hand) alienable
agricultural public lands as to which no occupant has an
imperfect title and (on the other hand) alienable lands of the
public domain as to which an occupant has on imperfect title
subject to judicial confirmation.
Since section 11 of Article XIV does not distinguish, we
should not make any distinction or qualification. The
prohibition applies to alienable public lands as to which a
Torrens title may be secured under section 48(b). The
proceeding under section 48(b) 'presupposes that the land is
public' (Mindanao vs. Director of Lands, L-19535, July 30,
1967, 20 SCRA 641, 644).
The present Chief Justice entered a vigorous dissent, tracing
the line of cases beginning with Carino in 1909 2 thruSusi in
1925 3 down to Herico in 1980, 4 which developed, affirmed
and reaffirmed the doctrine that open, exclusive and
undisputed possession of alienable public land for the period
prescribed by law creates the legal fiction whereby the land,
upon completion of the requisite period ipso jure and without
the need of judicial or other sanction, ceases to be public
land and becomes private property. That said dissent
expressed what is the better and, indeed, the correct,
view-becomes evident from a consideration of some of the
principal rulings cited therein,
The main theme was given birth, so to speak,
in Carino involving the Decree/Regulations of June 25, 1880
for adjustment of royal lands wrongfully occupied by private
individuals in the Philippine Islands. It was ruled that:
It is true that the language of articles 4 and 5 5 attributes title
to those 'who may prove' possession for the necessary time
and we do not overlook the argument that this means may
prove in registration proceedings. It may be that an English
conveyancer would have recommended an application under
the foregoing decree, but certainly it was not calculated to

.... In favor of Valentin Susi, there is, moreover, the


presumption juris et de jure established in paragraph (b) of
section 45 of Act No. 2874, amending Act No. 926, that all
the necessary requirements for a grant by the Government
were complied with, for he has been in actual and physical
possession, personally and through his predecessors, of an
agricultural land of the public domain openly, continuously,
exclusively and publicly since July 26, 1984, with a right to a
certificate of title to said land under the provisions of Chapter
VIII of said Act. So that when Angela Razon applied for the
grant in her favor, Valentin Susi had already acquired, by
operation of law not only a right to a grant, but a grant of the
Government, for it is not necessary that a certificate of title
should be issued in order that said grant may be sanctioned
by the courts, an application therefore is sufficient, under the
provisions of section 47 of Act No. 2874. If by a legal fiction,
Valentin Susi had acquired the land in question by a grant of
the State, it had already ceased to be of the public domain
and had become private property, at least by presumption, of
Valentin Susi, beyond the control of the Director of Lands.
Consequently, in selling the land in question of Angela
Razon, the Director of Lands disposed of a land over which
he had no longer any title or control, and the sale thus made
was void and of no effect, and Angela Razon did not thereby
acquire any right. 6
Succeeding cases, of which only some need be mentioned,
likeof Lacaste vs. Director of Lands, 7 Mesina vs. Vda. de
Sonza, 8 Manarpac vs. Cabanatuan, 9 Miguel vs. Court of
Appeals 10 and Herico vs. Dar, supra, by invoking and
affirming the Susi doctrine have firmly rooted it in
jurisprudence.
Herico, in particular, appears to be squarely affirmative: 11
.... Secondly, under the provisions of Republic Act No. 1942,
which the respondent Court held to be inapplicable to the
petitioner's case, with the latter's proven occupation and
cultivation for more than 30 years since 1914, by himself and
by his predecessors-in-interest, title over the land has vested
on petitioner so as to segregate the land from the mass of
public land. Thereafter, it is no longer disposable under the
Public Land Act as by free patent. ....

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xxx xxx xxx
As interpreted in several cases, when the conditions as
specified in the foregoing provision are complied with, the
possessor is deemed to have acquired, by operation of law,
a right to a grant, a government grant, without the necessity
of a certificate of title being issued. The land, therefore,
ceases to be of the public domain and beyond the authority
of the Director of Lands to dispose of. The application for
confirmation is mere formality, the lack of which does not
affect the legal sufficiency of the title as would be evidenced
by the patent and the Torrens title to be issued upon the
strength of said patent. 12
Nothing can more clearly demonstrate the logical inevitability
of considering possession of public land which is of the
character and duration prescribed by statute as the
equivalent of an express grant from the State than the
dictum of the statute itself 13 that the possessor(s) "... shall
be conclusively presumed to have performed all the
conditions essential to a Government grant and shall be
entitled to a certificate of title .... " No proof being admissible
to overcome a conclusive presumption, confirmation
proceedings would, in truth be little more than a formality, at
the most limited to ascertaining whether the possession
claimed is of the required character and length of time; and
registration thereunder would not confer title, but simply
recognize a title already vested. The proceedings would
not originally convert the land from public to private land, but
only confirm such a conversion already affected by operation
of law from the moment the required period of possession
became complete. As was so well put in Carino, "... (T)here
are indications that registration was expected from all, but
none sufficient to show that, for want of it, ownership actually
gained would be lost. The effect of the proof, wherever
made, was not to confer title, but simply to establish it, as
already conferred by the decree, if not by earlier law."
If it is accepted-as it must be-that the land was already
private land to which the Infiels had a legally sufficient and
transferable title on October 29, 1962 when Acme acquired it
from said owners, it must also be conceded that Acme had a
perfect right to make such acquisition, there being nothing in
the 1935 Constitution then in force (or, for that matter, in the
1973 Constitution which came into effect later) prohibiting
corporations from acquiring and owning private lands.
Even on the proposition that the land remained technically
"public" land, despite immemorial possession of the Infiels
and their ancestors, until title in their favor was actually
confirmed in appropriate proceedings under the Public Land
Act, there can be no serious question of Acmes right to
acquire the land at the time it did, there also being nothing in
the 1935 Constitution that might be construed to prohibit
corporations from purchasing or acquiring interests in public
land to which the vendor had already acquired that type of
so-called "incomplete" or "imperfect" title. The only limitation
then extant was that corporations could not acquire, hold or

lease public agricultural lands in excess of 1,024 hectares.


The purely accidental circumstance that confirmation
proceedings were brought under the aegis of the 1973
Constitution which forbids corporations from owning lands of
the public domain cannot defeat a right already vested
before that law came into effect, or invalidate transactions
then perfectly valid and proper. This Court has already held,
in analogous circumstances, that the Constitution cannot
impair vested rights.
We hold that the said constitutional prohibition 14 has no
retroactive application to the sales application of Binan
Development Co., Inc. because it had already acquired a
vested right to the land applied for at the time the 1973
Constitution took effect.
That vested right has to be respected. It could not be
abrogated by the new Constitution. Section 2, Article XIII of
the 1935 Constitution allows private corporations to
purchase public agricultural lands not exceeding one
thousand and twenty-four hectares. Petitioner' prohibition
action is barred by the doctrine of vested rights in
constitutional law.
xxx xxx xxx
The due process clause prohibits the annihilation of vested
rights. 'A state may not impair vested rights by legislative
enactment, by the enactment or by the subsequent repeal of
a municipal ordinance, or by a change in the constitution of
the State, except in a legitimate exercise of the police
power'(16 C.J.S. 1177-78).
xxx xxx xxx
In the instant case, it is incontestable that prior to the
effectivity of the 1973 Constitution the right of the corporation
to purchase the land in question had become fixed and
established and was no longer open to doubt or controversy.
Its compliance with the requirements of the Public Land Law
for the issuance of a patent had the effect of segregating the
said land from the public domain. The corporation's right to
obtain a patent for the land is protected by law. It cannot be
deprived of that right without due process (Director of Lands
vs. CA, 123 Phil. 919).<re||an1w> 15
The fact, therefore, that the confirmation proceedings were
instituted by Acme in its own name must be regarded as
simply another accidental circumstance, productive of a
defect hardly more than procedural and in nowise affecting
the substance and merits of the right of ownership sought to
be confirmed in said proceedings, there being no doubt of
Acme's entitlement to the land. As it is unquestionable that in
the light of the undisputed facts, the Infiels, under either the
1935 or the 1973 Constitution, could have had title in
themselves confirmed and registered, only a rigid
subservience to the letter of the law would deny the same

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1ST EXAM COVERAGE CASE COMPILATION
benefit to their lawful successor-in-interest by
conveyance which violates no constitutional mandate.

valid

The Court, in the light of the foregoing, is of the view, and so


holds, that the majority ruling in Meralco must be
reconsidered and no longer deemed to be binding
precedent. The correct rule, as enunciated in the line of
cases already referred to, is that alienable public land held
by a possessor, personally or through his predecessors-ininterest, openly, continuously and exclusively for the
prescribed statutory period (30 years under The Public Land
Act, as amended) is converted to private property by the
mere lapse or completion of said period, ipso jure. Following
that rule and on the basis of the undisputed facts, the land
subject of this appeal was already private property at the
time it was acquired from the Infiels by Acme. Acme thereby
acquired a registrable title, there being at the time no
prohibition against said corporation's holding or owning
private land. The objection that, as a juridical person, Acme
is not qualified to apply for judicial confirmation of title under
section 48(b) of the Public Land Act is technical, rather than
substantial and, again, finds its answer in the dissent
in Meralco:
6. To uphold respondent judge's denial of Meralco's
application on the technicality that the Public Land Act allows
only citizens of the Philippines who are natural persons to
apply for confirmation of their title would be impractical and
would just give rise to multiplicity of court actions. Assuming
that there was a technical error not having filed the
application for registration in the name of the Piguing
spouses as the original owners and vendors, still it is
conceded that there is no prohibition against their sale of the
land to the applicant Meralco and neither is there any
prohibition against the application being refiled with
retroactive effect in the name of the original owners and
vendors (as such natural persons) with the end result of their
application being granted, because of their indisputable
acquisition of ownership by operation of law and the
conclusive presumption therein provided in their favor. It
should not be necessary to go through all the rituals at the
great cost of refiling of all such applications in their names
and adding to the overcrowded court dockets when the Court
can after all these years dispose of it here and now. (See
Francisco vs. City of Davao)
The ends of justice would best be served, therefore, by
considering the applications for confirmation as amended to
conform to the evidence, i.e. as filed in the names of the
original persons who as natural persons are duly qualified to
apply for formal confirmation of the title that they had
acquired by conclusive presumption and mandate of the
Public Land Act and who thereafter duly sold to the herein
corporations (both admittedly Filipino corporations duly
qualified to hold and own private lands) and granting the
applications for confirmation of title to the private lands so
acquired and sold or exchanged.

There is also nothing to prevent Acme from reconveying the


lands to the Infiels and the latter from themselves applying
for confirmation of title and, after issuance of the certificate/s
of title in their names, deeding the lands back to Acme. But
this would be merely indulging in empty charades, whereas
the same result is more efficaciously and speedily obtained,
with no prejudice to anyone, by a liberal application of the
rule on amendment to conform to the evidence suggested in
the dissent in Meralco.
While this opinion seemingly reverses an earlier ruling of
comparatively recent vintage, in a real sense, it breaks no
precedent, but only reaffirms and re-established, as it were,
doctrines the soundness of which has passed the test of
searching examination and inquiry in many past cases.
Indeed, it is worth noting that the majority opinion, as well as
the concurring opinions of Chief Justice Fernando and
Justice Abad Santos, in Meralco rested chiefly on the
proposition that the petitioner therein, a juridical person, was
disqualified from applying for confirmation of an imperfect
title to public land under Section 48(b) of the Public Land Act.
Reference to the 1973 Constitution and its Article XIV,
Section 11, was only tangential limited to a brief paragraph in
the main opinion, and may, in that context, be considered as
essentially obiter. Meralco, in short, decided no constitutional
question.
WHEREFORE, there being no reversible error in the
appealed judgment of the Intermediate Appellate Court, the
same is hereby affirmed, without costs in this instance. SO
ORDERED.
DE OCSIO v. COURT OF APPEALS
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-44237 February 28, 1989
VICTORIA ONG DE OCSIO, petitioner,
vs.
COURT OF APPEALS and the RELIGIOUS OF THE
VIRGIN MARY, represented by M.O. Leoncia Pacquing,
R.V.M., respondents.
Elpedio N. Cabasan for petitioner.
Padilla Law Office for private respondent.

NARVASA, J.:

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From the adverse judgment of the Court of
Appeals, 1 affirming in toto that of the Trial Court, 2 the
petitioner has come to this Court on an appeal by certiorari
to plead for reversal of (1) the factual determination that she
had sold the lot in controversy to private respondent, and (2)
the legal conclusion that neither the 1973 nor the 1987
Constitution disqualifies the corporation known as the
Religious of the Virgin Mary, from acquiring the land in
question and registering it in its name. In light of the timehonored rule that findings of fact of the Court of Appeals are
generally final, and the doctrine lately laid down by this Court
on the precise legal issue now raised by petitioner, her
appeal must fail.
The controversy at bar arose in connection with cadastral
proceedings initiated by the Director of Lands, in behalf of
the Republic, for the settlement and adjudication of title to a
large tract of land measuring 261.5791 hectares, divided into
1,419 lots, situated in the City of Iligan. 3
Victoria Ong de Ocsio (herein petitioner) seasonably
presented an answer to the petition. She alleged that she
was the owner, by purchase, of two (2) parcels of land with
specific boundaries comprehended in the cadastral
proceeding: Lot No. 1272, measuring 256 square meters,
and Lot 1273 a road lot, measuring 21 square meters; and
that as owner, she had been in possession of both lots for
fifteen (15) years, and her predecessors-in-interest, for sixty
(60) years. 4 Title to the same parcels of land was however
claimed by the Religious of the Virgin Mary. 5In its answer, it
averred that it had bought the lots from Victoria Ong de
Ocsio and had been in possession as owner thereof for over
four years, and its possession and that of its predecessors
was immemorial.
Evidence was received on these conflicting assertions after
which the Cadastral Court rendered judgment, declaring that
the evidence satisfactorily established that Victoria Ong de
Ocsio had in truth sold Lot No. 1272 to the Religious of the
Virgin Mary in virtue of a deed of sale dated April 12, 1956
(Exhibit 1), and Lot No. 1273 was a road right of way granted
to the City of Iligan. The judgment contained the following
dispositive portion, viz: 6
WHEREFORE, the court renders judgment adjudicating
Cadastral Lot 1272, Iligan Cadastre, to the Religious of the
Virgin Mary, a duly registered domestic religious corporation,
the members of which are all Filipino citizens, with main
office in the City of Manila, but the building existing thereon
is hereby declared to be the property of claimant Victoria
Ong de Ocsio who is hereby ordered to remove Said building
out of the premises within 90 days from date hereof. The
claim of Victoria Ong de Ocsio with respect to said cadastral
lot is dismiss. No pronouncement is made as to costs.
Let the corresponding decree issue 30 days after this
decision shall have become final.

As aforestated, the Court of Appeals affirmed the cadastral


court's decision in toto. So, too, will this Court.
Both the cadastral Court and the Court of Appeals came to
the conclusion, after analysing and weighing the testimonial
and documentary evidence adduced by the parties, that
Virginia Ong de Ocsio's version of the facts was not true-that
it was another property, not Lot No. 1272, that she had
conveyed to the religious corporation but that it was indeed
Lot No. 1272 that was subject of the sale and had indeed
been transferred to the latter. Now, findings of fact of this
sort, contained in a decision of the Court of Appeals are by
long and uniformly observed rule conclusive on the parties
and on the Supreme Court, as well; 7 subject only to a few
specified exceptions, 8 none of which obtains here, said
findings may not be reviewed on appeal.
As regards the issue of law raised by her, petitioner fares no
better. Citing Manila Electric Co. v. Castro-Bartolome,114
SCRA 799 (1982) and Republic v. Villanueva, 114 SCRA 875
(1982), in relation to Section 11, Article XIV of the 1973
Constitution, she asserts that as the private respondent is a
religious corporation, it is disqualified to obtain judicial
confirmation of an imperfect title under Section 48(b) of the
Public Land Act which grants that right only to natural
persons. The cited rulings no longer control. Current
doctrine, first announced by the Court en banc in Director of
Lands v. I.A.C. 146 SCRA 509 (1986), is that open,
continuous and exclusive possession of alienable public land
for at least thirty (30) years in accordance with the Public
Land Act ipso jure converts the land to private property, and
a juridical person who thereafter acquires the same may
have title thereto confirmed in its name. Virtually the same
state of facts obtained in said case that now obtain here. A
private corporation had purchased the land originally of the
public domain from parties who had, by themselves and
through their predecessors-in-interest, possessed and
occupied it since time immemorial. It had thereafter instituted
proceedings for confirmation of title under Section 48(b) of
the Public Land Act. In upholding its right to do so, the court
held that the fact that the proceedings had been instituted by
said purchaser in its own name and not in the name of the
transferors was "xx simply xx (an) accidental circumstance,
productive of a defect hardly more than procedural and in
nowise affecting the substance and merits of the right of
ownership sought to be confirmed." The ruling was
reaffirmed in two later cases, Director of Lands v. Manila
Electric Co., 153 SCRA 686 (September 11, 1987),
and Republic v. C.A., 156 SCRA 344 (October 30, 1987)
where the same question of law was raised. In the latter it
was expressly held that the prohibitions in the 1973 and
1987 Constitutions against acquisition or registration of lands
by or in behalf of private corporations do not apply to public
lands already converted to private ownership by natural
persons under the provisions of the Public Land Act. In the
present case, Virginia Ong de Ocsio and her predecessorsin-interest having possessed Lot No. 1272 for the period and
under the conditions prescribed by law for acquisition of
ownership of disposable public land prior to the sale of the

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1ST EXAM COVERAGE CASE COMPILATION
property to the Religious of the Virgin Mary, confirmation of
title thereto in the latter's name is, under the precedents
referred to, entirely in order.
WHEREFORE, the judgment of the Court of Appeals subject
of the petition for review on certiorari is AFFIRMED in
toto. Costs against the petitioner.

of Sepa Cario, H. Phelps Whitmarsh, and Calsi; on the


east, in lines running 991 meters and 50 decimeters with the
land of Kuidno, Esteban Gonzales, and of the Civil
Government; on the south, in lines of 115 meters and 60
decimeters, with the lands of Talaca; and on the west, in
lines running 982 meters and 20 decimeters, with the lands
of Sisco Cario and Mayengmeng.
By order of the court the hearing of this petition, No. 561,
and that of Antonio Rebollo and Vicente Valpiedad filed
under No. 834, were heard together for the reason that the
latter petition claimed a small portion of land included in the
parcel set out in the former petition.
The Insular Government opposed the granting of these
petitions, alleging that the whole parcel of land is public
property of the Government and that the same was never
acquired in any manner or through any title of egresionfrom
the State.
After trial, and the hearing of documentary and oral proof,
the court of Land Registration rendered its judgment in these
terms:

CARINO v. INSULAR GOVERNMENT


Republic of the Philippines
SUPREME COURT
Manila

Therefore the court finds that Cario and his predecessors


have not possessed exclusively and adversely any part of
the said property prior to the date on which Cario
constructed the house now there that is to say, for the
years 1897 and 1898, and Cario held possession for some
years afterwards of but a part of the property to which he
claims title. Both petitions are dismissed and the property in
question is adjudged to be public land. (Bill of exceptions, p.
15.)
The conclusions arrived at the set forth in definite terms in
the decision of the court below are the following:

EN BANC
G.R. No. 2869

March 25, 1907

MATEO CARIO, petitioner-appellant,


vs.
THE INSULAR GOVERNMENT, respondent-appellee.
Coudert Brothers for appellant.
Office of the Solicitor-General Araneta for appellee.
ARELLANO, C.J.:
Mateo Cario, the appellant herein, on the 23d of February,
1904, filed his petition in the Court of Land Registration
praying that there be granted to him title to a parcel of land
consisting of 40 hectares, 1 are, and 13 centares, and
situated in the town of Baguio, Province of Benguet, together
with a house erected thereon and constructed of wood and
roofed with rimo, and bounded as follows: On the north, in
lines running 1,048 metes and 20 decimeters with the lands

From the testimony given by Cario as well as from that of


several of the witnesses for the Government it is deduced,
that in or about the year 1884 Cario erected and utilized as
a domicile a house on the property situated to the north of
that property now in question, property which, according to
the plan attached toexpediente No. 561, appears to be
property belonging to Donaldson Sim; that during the year
1893 Cario sold said house to one Cristobal Ramos, who in
turn sold the same to Donaldson Sim, moving to and living
on the adjoining property, which appears on the plan
aforesaid to be the property of H. Phelps Whitmarsh, a place
where the father and the grandfather of his wife, that is to
say, Ortega and Minse, had lived . . ..
In or about the years 1898 Cario abandoned the property of
Whitmarsh and located on the property described in the plan
attached to expediente No. 561, having constructed a house
thereon in which he now lives, and which house is situated in
the center of the property, as is indicated on the plan; and
since which time he has undoubtedly occupied some portion

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1ST EXAM COVERAGE CASE COMPILATION
of the property now claimed by him. (Bill of exceptions, pp.
11 and 12.)
1. Therefore it is evident that this court can not decree the
registration of all of the superficial extension of the land
described in the petition and as appears on the plan filed
herein, such extension containing 40 hectares, 1 are, and 13
centares, inasmuch as the documentary evidence
accompanying the petition is conclusive proof against the
petitioners; this documentary proof consists of a possessory
information under date of March 7, 1901, and registered on
the 11th day of the same month and year; and, according to
such possessory information, the land therein described
contains an extension of only 28 hectares limited by "the
country road to the barrio of Pias," a road appearing on the
plan now presented and cutting the land, as might be said, in
half, or running through its center from north to south, a
considerable extension of land remaining on the other side of
the said road, the west side, and which could not have been
included in the possessory information mentioned.
2. As has been shown during the trial of this case, this land,
of which mention is made in said possessory information,
and upon which is situated the house now actually occupied
by the petitioner, all of which is set forth as argument as to
the possession in the judgment, is "used for pasture and
sowing," and belongs to the class called public lands.
3. Under the express provisions of law, a parcel of land,
being of common origin, presumptively belonged to the State
during its sovereignty, and, in order to perfect the legitimate
acquisition of such land by private persons, it was necessary
that the possession of the same pass from the State. And
there is no evidence or proof of title ofegresion of this land
from the domain of the Spanish Government, nor is there
any
possessory
information
equivalent
to
title
by composicion or under agreement. 4, The possessory
information filed herein is not the title to property authorized
in substitution for that of adjustment by the royal decree of
February 13, 1894, this being the last law or legal disposition
of the former sovereignty applicable to the present subjectmatter of common lands: First, for the reason that the land
referred to herein is not covered nor does it come within any
one of the three conditions required by article 19 of the said
royal decree, to wit, that the land has been in an
uninterrupted state of cultivation during a period of six years
last past; or that the same has been possessed without
interruption during a period of twelve years and has been in
a state of cultivation up to the date of the information and
during the three years immediately preceding such
information; or that such land had been possessed openly
without interruption during a period of thirty or more years,
notwithstanding the land had not been cultivated; nor is it
necessary to refer to the testimony given by the two
witnesses to the possessory information for the following
reason: Second, because the possessory information
authorized by said royal decree or last legal disposition of
the Spanish Government, as title or for the purpose of

acquiring actual proprietary right, equivalent to that of


adjustment with the Spanish Government and required and
necessary at all times until the publication of said royal
decree was limited in time to one year, in accordance with
article 21, which is as follows: " A period of one year, not to
be extended, is allowed to verify the possessory informations
which are referred to in articles 19 and 20. After the
expiration of this period of the right of the cultivators and
persons in possession to obtain gratuitous title thereto
lapses and the land together with full possession reverts to
the state, or, as the case may be, to the community, and the
said possessors and cultivators or their assigns would simply
have rights under universal or general title of average in the
event that the land is sold within a period of five years
immediately following the cancellation. The possessors not
included under this chapter can only acquire by time the
ownership and title to unappropriated or royal lands in
accordance with common law."
5. In accordance with the preceding provisions, the right that
remained to Cario, if it be certain that he was the true
possessor of the land in question, was the right of average in
case the Government or State could have sold the same
within the period of five years immediately following for
example, if the denouncement of purchase had been carried
out by Felipe Zafra or any other person, as appears from the
record of the trial of the case. Aside from this right, in such
event, his possession as attested in the possessory
information herein could not, in accordance with common
law, go to show any right of ownership until after the
expiration of twenty years from the expiration of twenty years
from the verification and registry of the same in conformity
with the provisions of article 393 of the Mortgage Law and
other conditions prescribe by this law.
6. The right of possession in accordance with common law
that is to say, civil law remains at all times subordinate
to the Spanish administrative law, inasmuch as it could only
be of force when pertaining to royaltransferable or
alienable lands, which condition and the determination
thereof is reversed to the government, which classified and
designated the royal alienable lands for the purpose of
distinguishing them from those lands strictly public, and from
forestry lands which could at no time pass to private
ownership nor be acquired through time even after the said
royal decree of February 13, 1894.
7. The advent of the new sovereignty necessarily brought a
new method of dealing with lands and particularly as to the
classification and manner of transfer and acquisition of royal
or common lands then appropriated, which were thenceforth
merely called public lands, the alienation of which was
reserved to the Government, in accordance with section 12
and 13 of the act of Congress of July 1, 1902, 1 and in
conformity with other laws enacted under this act of
Congress by the Philippine Commission prescribing rules for
the execution thereof, one of which is Act No. 648,2 herein
mentioned by the petitioner, in connection with Act No.

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1ST EXAM COVERAGE CASE COMPILATION
627,3 which appears to be the law upon which the petition
herein is founded.
8. Section 6 of Act No. 627 admits prescription, in
accordance with the provisions contained in Act No. 190, as
a basis for obtaining the right of ownership. "The petitioners
claims title under the period of prescription of ten years
established by that act, as well as by reason of his
occupancy and use thereof from time immemorial."
(Allegation 1.) But said act admits such prescription for the
purpose of obtaining title and ownership to lands "not
exceeding more that sixteen hectares in extent." (Sec. 6 of
said act.) The land claimed by Cario is 40 hectares in
extent, if we take into consideration his petition, or an
extension of 28 hectares, according to the possessory
information, the only thing that can be considered. Therefore,
it follows that the judgment denying the petition herein and
now appealed from was strictly in accordance with the law
invoked herein.
9. And of the 28 hectares of land as set out in the
possessory information, one part of same, according to the
testimony of Cario, belongs to Vicente Valpiedad, the extent
of which is not determined. From all of which it follows that
the precise extent has not been determined in the trial of this
case on which judgment might be based in the event that the
judgment and title be declared in favor of the petitioner,
Mateo Cario. And we should not lose sight of the fact that,
considering the intention of Congress in granting ownership
and title to 16 hectares, that Mateo Cario and his children
have already exceeded such amount in various
acquirements of lands, all of which is shown in different
cases decided by the said Court of Land Registration,
donations or gifts of land that could only have been made
efficacious as to the conveyance thereof with the assistance
of these new laws.

Republic of the Philippines


SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-27952 February 15, 1982
TESTATE ESTATE OF JOSE EUGENIO RAMIREZ, MARIA
LUISA PALACIOS, Administratrix, petitioner-appellee,
vs.
MARCELLE D. VDA. DE RAMIREZ, ET AL., oppositors,
JORGE and ROBERTO RAMIREZ, legatees, oppositorsappellants.

ABAD SANTOS, J.:


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

By reason of the findings set forth it is clearly seen that the


court below did not err:

INVENTARIO

1. In finding that Mateo Cario and those from whom he


claims his right had not possessed and claimed as owners
the lands in question since time immemorial;

Una sexta parte (1/6) proindiviso de un te rreno, con sus


mejoras
y
edificaciones,
situadoen
la
Escolta,
Manila............................................................. P500,000.00

2. In finding that the land in question did not belong to the


petitioner, but that, on the contrary, it was the property of the
Government. (Allegation 21.)

Una sexta parte (1/6) proindiviso de dos parcelas de terreno


situadas en Antipolo, Rizal................... 658.34

Wherefore, the judgment appealed from is affirmed with the


costs of this instance against the appellant. After the
expiration of twenty days from the notification of this decision
let judgment be entered in accordance herewith, and ten
days thereafter let the case be remanded to the court from
whence it came for proper action. So ordered.

Cuatrocientos noventa y uno (491) acciones de la 'Central


Azucarera
de
la
Carlota
a
P17.00
por
accion ................................................................................8,3
47.00
Diez mil ochocientos seize (10,806) acciones de la 'Central
Luzon Milling Co.', disuelta y en liquidacion a P0.15 por
accion ..............................................1,620.90

RAMIREZ v. VDA. DE RAMIREZ

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1ST EXAM COVERAGE CASE COMPILATION
Cuenta
de
Ahorros
en
el
Philippine
Trust
Co............................................................................................
.. 2,350.73
TOTAL.............................................................. P512,976.97
MENOS:
Deuda al Banco de las Islas Filipinas, garan-tizada con
prenda de las acciones de La Carlota ......... P 5,000,00
VALOR LIQUIDO........................................... P507,976.97
The testamentary dispositions are as follows:
A.En nuda propiedad, a D. Roberto y D. Jorge Ramirez,
ambas menores de edad, residentes en Manila, I.F., calle
'Alright, No. 1818, Malate, hijos de su sobrino D. Jose Ma.
Ramirez, con sustitucion vulgar a favor de sus respectivos
descendientes, y, en su defecto, con sustitucion vulgar
reciprocal entre ambos.
El precedente legado en nuda propiedad de la participacion
indivisa de la finca Santa Cruz Building, lo ordena el testador
a favor de los legatarios nombrados, en atencion a que
dicha propiedad fue creacion del querido padre del otorgante
y por ser aquellos continuadores del apellido Ramirez,
B.Y en usufructo a saber:
a. En cuanto a una tercera parte, a favor de la esposa del
testador, Da. Marcelle Ramirez, domiciliada en IE PECO,
calle del General Gallieni No. 33, Seine Francia, con
sustitucion vulgar u fideicomisaria a favor de Da. Wanda de
Wrobleski, de Palma de Mallorca, Son Rapina Avenida de
los Reyes 13,
b.Y en cuanto a las dos terceras partes restantes, a favor
de la nombrada Da. Wanda de Nrobleski con sustitucion
vulgar v fideicomisaria a saber:
En cuanto a la mitad de dichas dos terceras partes, a favor
de D. Juan Pablo Jankowski, de Son Rapina Palma de
Mallorca; y encuanto a la mitad restante, a favor de su
sobrino, D. Horace V. Ramirez, San Luis Building, Florida St.
Ermita, Manila, I.F.
A
pesar
de
las
sustituciones
fideiconiisarias
precedentemente ordinadas, las usufiructuarias nombradas
conjuntamente con los nudo propietarios, podran en
cualquier memento vender a tercero los bienes objeto
delegado, sin intervencion alguna de los titulares
fideicomisaarios.
On June 23, 1966, the administratrix submitted a project of
partition as follows: the property of the deceased is to be
divided into two parts. One part shall go to the widow 'en

pleno dominio" in satisfaction of her legitime; the other part


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

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

inheritance as provided in Art. 859 of the Civil Code, supra.


Hence, the vulgar substitution is valid.
As regards the substitution in its fideicommissary aspect, the
appellants are correct in their claim that it is void for the
following reasons:
(a) The substitutes (Juan Pablo Jankowski and Horace V.
Ramirez) are not related to Wanda, the heir originally
instituted. Art. 863 of the Civil Code validates a
fideicommissary substitution "provided such substitution
does not go beyond one degree from the heir originally
instituted."
What is meant by "one degree" from the first heir is
explained by Tolentino as follows:
Scaevola Maura, and Traviesas construe "degree" as
designation, substitution, or transmission. The Supreme
Court of Spain has decidedly adopted this construction.
From this point of view, there can be only one tranmission or
substitution, and the substitute need not be related to the
first heir. Manresa, Morell and Sanchez Roman, however,
construe the word "degree" as generation, and the present
Code has obviously followed this interpretation. by providing
that the substitution shall not go beyond one degree "from
the heir originally instituted." The Code thus clearly indicates
that the second heir must be related to and be one
generation from the first heir.
From this, it follows that the fideicommissary can only be
either a child or a parent of the first heir. These are the only
relatives who are one generation or degree from the fiduciary
(Op. cit., pp. 193-194.)
(b) There is no absolute duty imposed on Wanda to transmit
the usufruct to the substitutes as required by Arts. 865 and
867 of the Civil Code. In fact, the appellee admits "that the
testator contradicts the establishment of a fideicommissary
substitution when he permits the properties subject of the
usufruct to be sold upon mutual agreement of the
usufructuaries and the naked owners." (Brief, p. 26.)
3. The usufruct of Wanda.
The appellants claim that the usufruct over real properties of
the estate in favor of Wanda is void because it violates the
constitutional prohibition against the acquisition of lands by
aliens.
The 1935 Constitution which is controlling provides as
follows:
SEC. 5. Save in cases of hereditary succession, no private
agricultural land shall be transferred or assigned except to
individuals, corporations, or associations qualified to acquire

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1ST EXAM COVERAGE CASE COMPILATION
or hold lands of the public domain in the Philippines. (Art.
XIII.)
The court a quo upheld the validity of the usufruct given to
Wanda on the ground that the Constitution covers not only
succession by operation of law but also testamentary
succession. We are of the opinion that the Constitutional
provision which enables aliens to acquire private lands does
not extend to testamentary succession for otherwise the
prohibition will be for naught and meaningless. Any alien
would be able to circumvent the prohibition by paying money
to a Philippine landowner in exchange for a devise of a piece
of land.
This opinion notwithstanding, We uphold the usufruct in favor
of Wanda because a usufruct, albeit a real right, does not
vest title to the land in the usufructuary and it is the vesting
of title to land in favor of aliens which is proscribed by the
Constitution.
IN VIEW OF THE FOREGOING, the estate of Jose Eugenio
Ramirez is hereby ordered distributed as follows:
One-half (1/2) thereof to his widow as her legitime;
One-half (1/2) thereof which is the free portion to Roberto
and Jorge Ramirez in naked ownership and the usufruct to
Wanda de Wrobleski with a simple substitution in favor of
Juan Pablo Jankowski and Horace V. Ramirez.
The distribution herein ordered supersedes that of the
court a quo. No special pronouncement as to costs.
SO ORDERED.
RELIOSA v. GAW CHEE HUN
EN BANC
[G.R. No. L-1411. September 29, 1953.]
DIONISIO RELLOSA, Petitioner, vs. GAW CHEE
HUN, Respondent.
DECISION
BAUTISTA ANGELO, J.:
This is a petition for review of a decision of the Court of
Appeals holding that the sale in question is valid and, even if
it were invalid, plaintiff cannot maintain the action under the
principle of pari delicto.
On February 2, 1944, Dionisio Rellosa sold to Gaw Chee
Hun a parcel of land, together with the house erected
thereon, situated in the City of Manila, Philippines, for the
sum of P25,000. The vendor remained in possession of the

property under a contract of lease entered into on the same


date between the same parties. Alleging that the sale was
executed subject to the condition that the vendee, being a
Chinese citizen, would obtain the approval of the Japanese
Military Administration in accordance with (seirei) No. 6
issued on April 2, 1943, by the Japanese authorities, and
said approval has not been obtained, and that, even if said
requirement were met, the sale would at all events be void
under article XIII, section 5, of our Constitution, the vendor
instituted the present action in the Court of First Instance of
Manila seeking the annulment of the sale as well as the
lease covering the land and the house above mentioned,
and praying that, once the sale and the lease are declared
null and void, the vendee be ordered to return to vendor the
duplicate of the title covering the property, and be restrained
from in any way dispossessing the latter of said property.
Defendant answered the complaint setting up as special
defense that the sale referred to in the complaint was
absolute and unconditional and was in every respect valid
and binding between the parties, it being not contrary to law,
morals and public order, and that plaintiff is guilty of estoppel
in that, by having executed a deed of lease over the property,
he thereby recognized the title of defendant to that property.
Issues having been joined, and the requisite evidence
presented by both parties, the court declared both the sale
and the lease valid and binding and dismissed the complaint.
The court likewise ordered plaintiff to turn over the property
to defendant and to pay a rental of P50 a month from August
1, 1945 until the property has been actually delivered. As this
decision was affirmed in toto by the Court of Appeals, plaintiff
sued out the present petition for review.
One of the issues raised by petitioner refers to the validity of
Seirei No. 6 issued on April 2, 1943 by the Japanese
authorities which prohibits an alien from acquiring any
private land not agricultural in nature during the occupation
unless the necessary approval is obtained from the Director
General of the Japanese Military Administration. Petitioner
contends that the sale in question cannot have any validity
under the above military directive in view of the failure of
respondent to obtain the requisite approval and it was error
for the Court of Appeals to declare said directive without any
binding effect because the occupation government could not
have issued it under article 43 of the Hague Regulations
which command that laws that are municipal in character of
an occupied territory should be respected and cannot be
ignored unless prevented by military necessity.
We do not believe it necessary to consider now the question
relative to the validity of Seirei No. 6 of the Japanese Military
Administration for the simple reason that in our opinion the
law that should govern the particular transaction is not the
above directive but the Constitution adopted by the then
Republic of the Philippines on September 4, 1943, it
appearing that the aforesaid transaction was executed on
February 2, 1944. Said Constitution, in its article VIII, section
5, provides that "no private agricultural land shall be

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transferred or assigned except to individuals, corporations,
or associations qualified to acquire or hold lands of the public
domain in the Philippines", which provisions are similar to
those contained in our present Constitution. As to whether
the phrase "private agricultural land" employed in said
Constitution includes residential lands, as the one involved
herein, there can be no doubt because said phrase has
already been interpreted in the affirmative sense by this court
in the recent case of Krivenko vs. Register of Deeds, 79 Phil.
461, wherein this court held that "under the Constitution
aliens may not acquire private or public agricultural lands,
including residential lands." This matter has been once more
submitted to the court for deliberation, but the ruling was
reaffirmed. This ruling fully disposes of the question touching
on the validity of the sale of the property herein involved.
The sale in question having been entered into in violation of
the Constitution, the next question to be determined is, can
petitioner have the sale declared null and void and recover
the property considering the effect of the law governing
rescission of contracts? Our answer must of necessity be in
the negative following the doctrine laid down in the case of
Trinidad Gonzaga de Cabauatan, et al. vs. Uy Hoo, et al., 88
Phil. 103, wherein we made the following pronouncement:
"We can, therefore, say that even if the plaintiffs can still
invoke the Constitution, or the doctrine in the Krivenko Case,
to set aside the sale in question, they are now prevented
from doing so if their purpose is to recover the lands that
they have voluntarily parted with, because of their guilty
knowledge that what they were doing was in violation of the
Constitution. They cannot escape this conclusion because
they are presumed to know the law. As this court well said: 'A
party to an illegal contract cannot come into a court of law
and ask to have his illegal objects carried out. The law will
not aid either party to an illegal agreement; it leaves the
parties where it finds them.' The rule is expressed in the
maxims: 'Ex dolo malo non oritur actio,' and 'In pari delicto
potior est conditio defendentis.' (Bough and Bough vs.
Cantiveros and Hanopol, 40 Phil., 210, 216.)"
The doctrine above adverted to is the one known as In Pari
Delicto. This is well known not only in this jurisdiction but
also in the United States where common law prevails. In the
latter jurisdiction, the doctrine is stated thus: "The proposition
is universal that no action arises, in equity or at law, from an
illegal contract; no suit can be maintained for its specific
performance, or to recover the property agreed to be sold or
delivered, or the money agreed to be paid, or damages for
its violation. The rule has sometimes been laid down as
though it were equally universal, that where the parties are in
pari delicto, no affirmative relief of any kind will be given to
one against the other." (Pomeroy's Equity Jurisprudence,
Vol. 3, 5th ed., p. 728.)
It is true that this doctrine is subject to one important
limitation, namely, "whenever public policy is considered as
advanced by allowing either party to sue for relief against the
transaction" (idem, p. 733). But not all contracts which are
illegal because opposed to public policy come under this

limitation. The cases in which this limitation may apply only


"include the class of contracts which are intrinsically contrary
to public policy, contracts in which the illegality itself consists
in their opposition to public policy, and any other species of
illegal contracts in which, from their particular circumstances,
incidental and collateral motives of public policy require
relief." Examples of this class of contracts are usurious
contracts, marriage-brokerage contracts and gambling
contracts. (Idem. pp. 735-737.)
In our opinion, the contract in question does not come under
this exception because it is not intrinsically contrary to public
policy, nor one where the illegality itself consists in its
opposition to public policy. It is illegal not because it is
against public policy but because it is against the
Constitution. Nor may it be contended that to apply the
doctrine of pari delicto would be tantamount to contravening
the fundamental policy embodied in the constitutional
prohibition in that it would allow an alien to remain in the
illegal possession of the land, because in this case the
remedy is lodged elsewhere. To adopt the contrary view
would be merely to benefit petitioner and not to enhance
public interest.
The danger foreseen by counsel in the application of the
doctrine above adverted to is more apparent than real. If we
go deeper in the analysis of our situation we would not fail to
see that the best policy would be for Congress to approve a
law laying down the policy and the procedure to be followed
in connection with transactions affected by our doctrine in the
Krivenko case. We hope that this should be done without
much delay. And even if this legislation be not forthcoming in
the near future, we do not believe that public interest would
suffer thereby if only our executive department would follow
a more militant policy in the conservation of our natural
resources as or dained by our Constitution. And we say so
because there are at present two ways by which this
situation may be remedied, to wit, (1) action for reversion,
and (2) escheat to the state. An action for reversion is slightly
different from escheat proceeding, but in its effects they are
the same. They only differ in procedure. Escheat
proceedings may be instituted as a consequence of a
violation of article XIII, section 5 of our Constitution, which
prohibits transfers of private agricultural lands to aliens,
whereas an action for reversion is expressly authorized by
the Public Land Act (sections 122, 123, and 124 of
Commonwealth Act No. 141).
In the United States, as almost everywhere else, the doctrine
which imputes to the sovereign or to the government the
ownership of all lands and makes such sovereign or
government the original source of private titles, is well
recognized (42 Am. Jur., 785). This doctrine, which was
expressly affirmed in Lawrence vs. Garduo, G. R. No. 16542,
and which underlies all titles in the Philippines, (See Ventura,
Land Registration and Mortgages, 2nd ed., pp. 2-3) has
been enshrined in our Constitution (article XIII). The doctrine
regarding the course of all titles being the same here as in
the United States, it would seem that if escheat lies against

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aliens holding lands in those states of the Union where
common law prevails or where similar constitutional or
statutory prohibitions exist, no cogent reason is perceived
why similar proceedings may not be instituted in this
jurisdiction.
"Escheat is an incident or attribute of sovereignty, and rests
on the principle of the ultimate ownership by the state of all
property within its jurisdiction.' (30 C.J.S., 1164.)
". . . America escheats belong universally to the state or
some corporation thereof as the ultimate proprietor of land
within its Jurisdiction." (19 Am. Jur., 382.)
"An escheat is nothing more or less than the reversion of
property to the state, which takes place when the title fails."
(Delany vs. State, 42 N. D., 630, 174 N.W., 290, quoted in
footnote 6, 19 Am. Jur., 381.)
"As applied to the right of the state to lands purchased by an
alien, it would more properly be termed a 'forfeiture' at
common law." (19 Am. Jur., 381.)
"In modern law escheat denotes a falling of the estate into
the general property of the state because the tenant is an
alien or because he has died intestate without lawful heirs to
take his estate by succession, or because of some other
disability to take or hold property imposed by law." (19 Am.
Jur.,
With regard to an action for reversion, the following sections
of Commonwealth Act No. 141 are pertinent:
"SEC. 122. No land originally acquired in any manner under
the provisions of this Act, nor any permanent improvement
on such land, shall be encumbered, alienated, or transferred,
except to persons, corporations, associations, or
partnerships who may acquire lands of the public domain
under this Act or to corporations organized in the Philippines
authorized therefor by their charters."
"SEC. 123. No land originally acquired in any manner under
the provisions of any previous Act, ordinance, royal decree,
royal order, or any other provision of law formerly in force in
the Philippines with regard to public lands, terrenos baldios y
realenqos, or lands of any other denomination that were
actually or presumptively of the public domain or by royal
grant or in any other form, nor any permanent improvement
on such land, shall be encumbered, alienated, or conveyed,
except to persons, corporations or associations who may
acquire land of the public domain under this Act or to
corporate bodies organized in the Philippines whose charters
authorize them to do so: Provided, however, That this
prohibition shall not be applicable to the conveyance or
acquisition by reason of hereditary succession duly
acknowledged and legalized by competent courts; Provided,
further, That in the event of the ownership of the lands and
improvements mentioned in this section and in the last
preceding section being transferred by judicial decree to

persons, corporations or associations not legally capacitated


to acquire the same under the provisions of this Act, such
persons, corporation, or associations shall be obliged to
alienate said lands or improvements to others so capacitated
within the precise period of five years; otherwise, such
property shall revert to the Government."
"SEC. 124. Any acquisition, conveyance, alienation, transfer,
or other contract made or executed in violation of any of the
provisions of sections one hundred and eighteen, one
hundred and twenty, one hundred and twenty-one, one
hundred and twenty-two, and one hundred and twenty-three
of this Act shall be unlawful and null and void from its
execution and shall produce the effect of annulling and
cancelling the grant, title, patent, or permit originally issued,
recognized or confirmed, actually or presumptively, and
cause the reversion of the property and its improvements to
the State."
Note that the last quoted provision declared any prohibited
conveyance not only unlawful but null and void ab initio.
More important yet, it expressly provides that such
conveyances will produce "the effect of annulling and
cancelling the grant, title, patent, or permit, originally issued,
recognized of confirmed, actually or presumptively", and of
causing "the reversion of the property and its improvements
to the State." The reversion would seem to be but a
consequence of the annulment and cancellation of the
original grant or title, and this is so for in the event of such
annulment or cancellation no one else could legitimately
claim the property except its original owner or grantor the
state.
We repeat. There are two ways now open to our government
whereby it could implement the doctrine of this Court in the
Krivenko case thereby putting in force and carrying to its
logical conclusion the mandate of our Constitution. By
following either of these remedies, or by approving an
implementary law as above suggested, we can enforce the
fundamental policy of our Constitution regarding our natural
resources without doing violence to the principle of pari
delicto. With these remedies open to us, we see no
justifiable reason for pursuing the extreme unusual remedy
now vehemently urged by the amici curiae.
In view of the foregoing, we hold that the sale in question is
null and void, but plaintiff is barred from taking the present
action under the principle of pari delicto.
The decision appealed from is hereby affirmed without
pronouncement as to costs.

MIRANDA, MEL CATHERINE C. 2 SANCHEZ ROMAN

PHIL. BANKING CORP. v. LUI SHE


Republic of the Philippines
SUPREME COURT
Manila
EN BANC

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1ST EXAM COVERAGE CASE COMPILATION
G.R. No. L-17587

September 12, 1967

PHILIPPINE BANKING CORPORATION, representing the


estate of JUSTINA SANTOS Y CANON FAUSTINO,
deceased, plaintiff-appellant,
vs.
LUI SHE in her own behalf and as administratrix of the
intestate estate of Wong Heng, deceased,defendantappellant.
Nicanor S. Sison for plaintiff-appellant.
Ozaeta, Gibbs & Ozaeta for defendant-appellant.

CASTRO, J.:
Justina Santos y Canon Faustino and her sister Lorenzo
were the owners in common of a piece of land in Manila.
This parcel, with an area of 2,582.30 square meters, is
located on Rizal Avenue and opens into Florentino Torres
street at the back and Katubusan street on one side. In it are
two residential houses with entrance on Florentino Torres
street and the Hen Wah Restaurant with entrance on Rizal
Avenue. The sisters lived in one of the houses, while Wong
Heng, a Chinese, lived with his family in the restaurant.
Wong had been a long-time lessee of a portion of the
property, paying a monthly rental of P2,620.
On September 22, 1957 Justina Santos became the owner
of the entire property as her sister died with no other heir.
Then already well advanced in years, being at the time 90
years old, blind, crippled and an invalid, she was left with no
other relative to live with. Her only companions in the house
were her 17 dogs and 8 maids. Her otherwise dreary
existence was brightened now and then by the visits of
Wong's four children who had become the joy of her life.
Wong himself was the trusted man to whom she delivered
various amounts for safekeeping, including rentals from her
property at the corner of Ongpin and Salazar streets and the
rentals which Wong himself paid as lessee of a part of the
Rizal Avenue property. Wong also took care of the payment;
in her behalf, of taxes, lawyers' fees, funeral expenses,
masses, salaries of maids and security guard, and her
household expenses.
"In grateful acknowledgment of the personal services of the
lessee to her," Justina Santos executed on November 15,
1957 a contract of lease (Plff Exh. 3) in favor of Wong,
covering the portion then already leased to him and another
portion fronting Florentino Torres street. The lease was for 50
years, although the lessee was given the right to withdraw at
any time from the agreement; the monthly rental was
P3,120. The contract covered an area of 1,124 square
meters. Ten days later (November 25), the contract was
amended (Plff Exh. 4) so as to make it cover the entire
property, including the portion on which the house of Justina
Santos stood, at an additional monthly rental of P360. For

his part Wong undertook to pay, out of the rental due from
him, an amount not exceeding P1,000 a month for the food
of her dogs and the salaries of her maids.
On December 21 she executed another contract (Plff Exh. 7)
giving Wong the option to buy the leased premises for
P120,000, payable within ten years at a monthly installment
of P1,000. The option, written in Tagalog, imposed on him
the obligation to pay for the food of the dogs and the salaries
of the maids in her household, the charge not to exceed
P1,800 a month. The option was conditioned on his obtaining
Philippine citizenship, a petition for which was then pending
in the Court of First Instance of Rizal. It appears, however,
that this application for naturalization was withdrawn when it
was discovered that he was not a resident of Rizal. On
October 28, 1958 she filed a petition to adopt him and his
children on the erroneous belief that adoption would confer
on them Philippine citizenship. The error was discovered and
the proceedings were abandoned.
On November 18, 1958 she executed two other contracts,
one (Plff Exh. 5) extending the term of the lease to 99 years,
and another (Plff Exh. 6) fixing the term of the option of 50
years. Both contracts are written in Tagalog.
In two wills executed on August 24 and 29, 1959 (Def Exhs.
285 & 279), she bade her legatees to respect the contracts
she had entered into with Wong, but in a codicil (Plff Exh. 17)
of a later date (November 4, 1959) she appears to have a
change of heart. Claiming that the various contracts were
made by her because of machinations and inducements
practiced by him, she now directed her executor to secure
the annulment of the contracts.
On November 18 the present action was filed in the Court of
First Instance of Manila. The complaint alleged that the
contracts were obtained by Wong "through fraud,
misrepresentation, inequitable conduct, undue influence and
abuse of confidence and trust of and (by) taking advantage
of the helplessness of the plaintiff and were made to
circumvent the constitutional provision prohibiting aliens from
acquiring lands in the Philippines and also of the Philippine
Naturalization Laws." The court was asked to direct the
Register of Deeds of Manila to cancel the registration of the
contracts and to order Wong to pay Justina Santos the
additional rent of P3,120 a month from November 15, 1957
on the allegation that the reasonable rental of the leased
premises was P6,240 a month.
In his answer, Wong admitted that he enjoyed her trust and
confidence as proof of which he volunteered the information
that, in addition to the sum of P3,000 which he said she had
delivered to him for safekeeping, another sum of P22,000
had been deposited in a joint account which he had with one
of her maids. But he denied having taken advantage of her
trust in order to secure the execution of the contracts in
question. As counterclaim he sought the recovery of
P9,210.49 which he said she owed him for advances.

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Wong's admission of the receipt of P22,000 and P3,000 was
the cue for the filing of an amended complaint. Thus on June
9, 1960, aside from the nullity of the contracts, the collection
of various amounts allegedly delivered on different occasions
was sought. These amounts and the dates of their delivery
are P33,724.27 (Nov. 4, 1957); P7,344.42 (Dec. 1, 1957);
P10,000 (Dec. 6, 1957); P22,000 and P3,000 (as admitted in
his answer). An accounting of the rentals from the Ongpin
and Rizal Avenue properties was also demanded.
In the meantime as a result of a petition for guardianship
filed in the Juvenile and Domestic Relations Court, the
Security Bank & Trust Co. was appointed guardian of the
properties of Justina Santos, while Ephraim G. Gochangco
was appointed guardian of her person.
In his answer, Wong insisted that the various contracts were
freely and voluntarily entered into by the parties. He likewise
disclaimed knowledge of the sum of P33,724.27, admitted
receipt of P7,344.42 and P10,000, but contended that these
amounts had been spent in accordance with the instructions
of Justina Santos; he expressed readiness to comply with
any order that the court might make with respect to the sums
of P22,000 in the bank and P3,000 in his possession.
The case was heard, after which the lower court rendered
judgment as follows:
[A]ll the documents mentioned in the first cause of action,
with the exception of the first which is the lease contract of
15 November 1957, are declared null and void; Wong Heng
is condemned to pay unto plaintiff thru guardian of her
property the sum of P55,554.25 with legal interest from the
date of the filing of the amended complaint; he is also
ordered to pay the sum of P3,120.00 for every month of his
occupation as lessee under the document of lease herein
sustained, from 15 November 1959, and the moneys he has
consigned since then shall be imputed to that; costs against
Wong Heng.
From this judgment both parties appealed directly to this
Court. After the case was submitted for decision, both parties
died, Wong Heng on October 21, 1962 and Justina Santos
on December 28, 1964. Wong was substituted by his wife,
Lui She, the other defendant in this case, while Justina
Santos was substituted by the Philippine Banking
Corporation.
Justina Santos maintained now reiterated by the
Philippine Banking Corporation that the lease contract
(Plff Exh. 3) should have been annulled along with the four
other contracts (Plff Exhs. 4-7) because it lacks mutuality;
because it included a portion which, at the time, was
in custodia legis; because the contract was obtained in
violation of the fiduciary relations of the parties; because her
consent was obtained through undue influence, fraud and
misrepresentation; and because the lease contract, like the
rest of the contracts, is absolutely simulated.

Paragraph 5 of the lease contract states that "The lessee


may at any time withdraw from this agreement." It is claimed
that this stipulation offends article 1308 of the Civil Code
which provides that "the contract must bind both contracting
parties; its validity or compliance cannot be left to the will of
one of them."
We have had occasion to delineate the scope and
application of article 1308 in the early case of Taylor v. Uy
Tieng Piao.1 We said in that case:
Article 1256 [now art. 1308] of the Civil Code in our opinion
creates no impediment to the insertion in a contract for
personal service of a resolutory condition permitting the
cancellation of the contract by one of the parties. Such a
stipulation, as can be readily seen, does not make either the
validity or the fulfillment of the contract dependent upon the
will of the party to whom is conceded the privilege of
cancellation; for where the contracting parties have agreed
that such option shall exist, the exercise of the option is as
much in the fulfillment of the contract as any other act which
may have been the subject of agreement. Indeed, the
cancellation of a contract in accordance with conditions
agreed upon beforehand is fulfillment.2
And so it was held in Melencio v. Dy Tiao Lay 3 that a
"provision in a lease contract that the lessee, at any time
before he erected any building on the land, might rescind the
lease, can hardly be regarded as a violation of article 1256
[now art. 1308] of the Civil Code."
The case of Singson Encarnacion v. Baldomar 4 cannot be
cited in support of the claim of want of mutuality, because of
a difference in factual setting. In that case, the lessees
argued that they could occupy the premises as long as they
paid the rent. This is of course untenable, for as this Court
said, "If this defense were to be allowed, so long as
defendants elected to continue the lease by continuing the
payment of the rentals, the owner would never be able to
discontinue it; conversely, although the owner should desire
the lease to continue the lessees could effectively thwart his
purpose if they should prefer to terminate the contract by the
simple expedient of stopping payment of the rentals." Here,
in contrast, the right of the lessee to continue the lease or to
terminate it is so circumscribed by the term of the contract
that it cannot be said that the continuance of the lease
depends upon his will. At any rate, even if no term had been
fixed in the agreement, this case would at most justify the
fixing of a period5 but not the annulment of the contract.
Nor is there merit in the claim that as the portion of the
property formerly owned by the sister of Justina Santos was
still in the process of settlement in the probate court at the
time it was leased, the lease is invalid as to such portion.
Justina Santos became the owner of the entire property
upon the death of her sister Lorenzo on September 22, 1957
by force of article 777 of the Civil Code. Hence, when she
leased the property on November 15, she did so already as

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1ST EXAM COVERAGE CASE COMPILATION
owner thereof. As this Court explained in upholding the sale
made by an heir of a property under judicial administration:
That the land could not ordinarily be levied upon while
in custodia legis does not mean that one of the heirs may not
sell the right, interest or participation which he has or might
have in the lands under administration. The ordinary
execution of property in custodia legis is prohibited in order
to avoid interference with the possession by the court. But
the sale made by an heir of his share in an inheritance,
subject to the result of the pending administration, in no wise
stands in the way of such administration.6
It is next contended that the lease contract was obtained by
Wong in violation of his fiduciary relationship with Justina
Santos, contrary to article 1646, in relation to article 1941 of
the Civil Code, which disqualifies "agents (from leasing) the
property whose administration or sale may have been
entrusted to them." But Wong was never an agent of Justina
Santos. The relationship of the parties, although admittedly
close and confidential, did not amount to an agency so as to
bring the case within the prohibition of the law.
Just the same, it is argued that Wong so completely
dominated her life and affairs that the contracts express not
her will but only his. Counsel for Justina Santos cites the
testimony of Atty. Tomas S. Yumol who said that he prepared
the lease contract on the basis of data given to him by Wong
and that she told him that "whatever Mr. Wong wants must
be followed."7
The testimony of Atty. Yumol cannot be read out of context in
order to warrant a finding that Wong practically dictated the
terms of the contract. What this witness said was:
Q Did you explain carefully to your client, Doa
Justina, the contents of this document before she
signed it?
A I explained to her each and every one of these
conditions and I also told her these conditions were
quite onerous for her, I don't really know if I have
expressed my opinion, but I told her that we would
rather not execute any contract anymore, but to
hold it as it was before, on a verbal month to month
contract of lease.
Q But, she did not follow your advice, and she went
with the contract just the same?
A She agreed first . . .
Q Agreed what?
A Agreed with my objectives that it is really onerous
and that I was really right, but after that, I was called

again by her and she told me to follow the wishes of


Mr. Wong Heng.
xxx

xxx

xxx

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


satisfied that this document was perfectly proper?
xxx

xxx

xxx

A Your Honor, if I have to express my personal


opinion, I would say she is not, because, as I said
before, she told me "Whatever Mr. Wong wants
must be followed."8
Wong might indeed have supplied the data which Atty. Yumol
embodied in the lease contract, but to say this is not to
detract from the binding force of the contract. For the
contract was fully explained to Justina Santos by her own
lawyer. One incident, related by the same witness, makes
clear that she voluntarily consented to the lease contract.
This witness said that the original term fixed for the lease
was 99 years but that as he doubted the validity of a lease to
an alien for that length of time, he tried to persuade her to
enter instead into a lease on a month-to-month basis. She
was, however, firm and unyielding. Instead of heeding the
advice of the lawyer, she ordered him, "Just follow Mr. Wong
Heng."9 Recounting the incident, Atty. Yumol declared on
cross examination:
Considering her age, ninety (90) years old at the time and
her condition, she is a wealthy woman, it is just natural when
she said "This is what I want and this will be done." In
particular reference to this contract of lease, when I said
"This is not proper," she said "You just go ahead, you
prepare that, I am the owner, and if there is any illegality, I
am the only one that can question the illegality."10
Atty. Yumol further testified that she signed the lease
contract in the presence of her close friend, Hermenegilda
Lao, and her maid, Natividad Luna, who was constantly by
her side.11 Any of them could have testified on the undue
influence that Wong supposedly wielded over Justina
Santos, but neither of them was presented as a witness. The
truth is that even after giving his client time to think the
matter over, the lawyer could not make her change her mind.
This persuaded the lower court to uphold the validity of the
lease contract against the claim that it was procured through
undue influence.
Indeed, the charge of undue influence in this case rests on a
mere inference12 drawn from the fact that Justina Santos
could not read (as she was blind) and did not understand the
English language in which the contract is written, but that
inference has been overcome by her own evidence.

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Nor is there merit in the claim that her consent to the lease
contract, as well as to the rest of the contracts in question,
was given out of a mistaken sense of gratitude to Wong who,
she was made to believe, had saved her and her sister from
a fire that destroyed their house during the liberation of
Manila. For while a witness claimed that the sisters were
saved by other persons (the brothers Edilberto and Mariano
Sta. Ana)13 it was Justina Santos herself who, according to
her own witness, Benjamin C. Alonzo, said "very
emphatically" that she and her sister would have perished in
the fire had it not been for Wong. 14 Hence the recital in the
deed of conditional option (Plff Exh. 7) that "[I]tong si Wong
Heng ang siyang nagligtas sa aming dalawang magkapatid
sa halos ay tiyak na kamatayan", and the equally emphatic
avowal of gratitude in the lease contract (Plff Exh. 3).
As it was with the lease contract (Plff Exh. 3), so it was with
the rest of the contracts (Plff Exhs. 4-7) the consent of
Justina Santos was given freely and voluntarily. As Atty.
Alonzo, testifying for her, said:
[I]n nearly all documents, it was either Mr. Wong Heng or
Judge Torres and/or both. When we had conferences, they
used to tell me what the documents should contain. But, as I
said, I would always ask the old woman about them and
invariably the old woman used to tell me: "That's okay. It's all
right."15
But the lower court set aside all the contracts, with the
exception of the lease contract of November 15, 1957, on
the ground that they are contrary to the expressed wish of
Justina Santos and that their considerations are fictitious.
Wong stated in his deposition that he did not pay P360 a
month for the additional premises leased to him, because
she did not want him to, but the trial court did not believe
him. Neither did it believe his statement that he paid P1,000
as consideration for each of the contracts (namely, the option
to buy the leased premises, the extension of the lease to 99
years, and the fixing of the term of the option at 50 years),
but that the amount was returned to him by her for
safekeeping. Instead, the court relied on the testimony of
Atty. Alonzo in reaching the conclusion that the contracts are
void for want of consideration.
Atty. Alonzo declared that he saw no money paid at the time
of the execution of the documents, but his negative
testimony does not rule out the possibility that the
considerations were paid at some other time as the contracts
in fact recite. What is more, the consideration need not pass
from one party to the other at the time a contract is executed
because the promise of one is the consideration for the
other.16
With respect to the lower court's finding that in all probability
Justina Santos could not have intended to part with her
property while she was alive nor even to lease it in its
entirety as her house was built on it, suffice it to quote the

testimony of her own witness and lawyer who prepared the


contracts (Plff Exhs. 4-7) in question, Atty. Alonzo:
The ambition of the old woman, before her death, according
to her revelation to me, was to see to it that these properties
be enjoyed, even to own them, by Wong Heng because
Doa Justina told me that she did not have any relatives,
near or far, and she considered Wong Heng as a son and his
children her grandchildren; especially her consolation in life
was when she would hear the children reciting prayers in
Tagalog.17
She was very emphatic in the care of the seventeen (17)
dogs and of the maids who helped her much, and she told
me to see to it that no one could disturb Wong Heng from
those properties. That is why we thought of the ninety-nine
(99) years lease; we thought of adoption, believing that thru
adoption Wong Heng might acquire Filipino citizenship; being
the adopted child of a Filipino citizen.18
This is not to say, however, that the contracts (Plff Exhs. 3-7)
are valid. For the testimony just quoted, while dispelling
doubt as to the intention of Justina Santos, at the same time
gives the clue to what we view as a scheme to circumvent
the Constitutional prohibition against the transfer of lands to
aliens.
"The
illicit
purpose
then
becomes
the
illegal causa"19 rendering the contracts void.
Taken singly, the contracts show nothing that is necessarily
illegal, but considered collectively, they reveal an insidious
pattern to subvert by indirection what the Constitution directly
prohibits. To be sure, a lease to an alien for a reasonable
period is valid. So is an option giving an alien the right to buy
real property on condition that he is granted Philippine
citizenship. As this Court said in Krivenko v. Register of
Deeds:20
[A]liens are not completely excluded by the Constitution from
the use of lands for residential purposes. Since their
residence in the Philippines is temporary, they may be
granted temporary rights such as a lease contract which is
not forbidden by the Constitution. Should they desire to
remain here forever and share our fortunes and misfortunes,
Filipino citizenship is not impossible to acquire.
But if an alien is given not only a lease of, but also an option
to buy, a piece of land, by virtue of which the Filipino owner
cannot sell or otherwise dispose of his property,21 this to last
for 50 years, then it becomes clear that the arrangement is a
virtual transfer of ownership whereby the owner divests
himself in stages not only of the right to enjoy the land ( jus
possidendi, jus utendi, jus fruendi and jus abutendi) but also
of the right to dispose of it ( jus disponendi) rights the sum
total of which make up ownership. It is just as if today the
possession is transferred, tomorrow, the use, the next day,
the disposition, and so on, until ultimately all the rights of
which ownership is made up are consolidated in an alien.
And yet this is just exactly what the parties in this case did

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within the space of one year, with the result that Justina
Santos' ownership of her property was reduced to a hollow
concept. If this can be done, then the Constitutional ban
against alien landholding in the Philippines, as announced
in Krivenko v. Register of Deeds,22 is indeed in grave peril.
It does not follow from what has been said, however, that
because the parties are in pari delicto they will be left where
they are, without relief. For one thing, the original parties
who were guilty of a violation of the fundamental charter
have died and have since been substituted by their
administrators to whom it would be unjust to impute their
guilt.23 For another thing, and this is not only cogent but also
important, article 1416 of the Civil Code provides, as an
exception to the rule on pari delicto, that "When the
agreement is not illegal per se but is merely prohibited, and
the prohibition by law is designed for the protection of the
plaintiff, he may, if public policy is thereby enhanced, recover
what he has paid or delivered." The Constitutional provision
that "Save in cases of hereditary succession, no private
agricultural land shall be transferred or assigned except to
individuals, corporations, or associations qualified to acquire
or hold lands of the public domain in the Philippines"24 is an
expression of public policy to conserve lands for the
Filipinos. As this Court said in Krivenko:
It is well to note at this juncture that in the present case we
have no choice. We are construing the Constitution as it is
and not as we may desire it to be. Perhaps the effect of our
construction is to preclude aliens admitted freely into the
Philippines from owning sites where they may build their
homes. But if this is the solemn mandate of the Constitution,
we will not attempt to compromise it even in the name of
amity or equity . . . .
For all the foregoing, we hold that under the Constitution
aliens may not acquire private or public agricultural lands,
including residential lands, and, accordingly, judgment is
affirmed, without costs.25
That policy would be defeated and its continued violation
sanctioned if, instead of setting the contracts aside and
ordering the restoration of the land to the estate of the
deceased Justina Santos, this Court should apply the
general rule of pari delicto. To the extent that our ruling in this
case conflicts with that laid down in Rellosa v. Gaw Chee
Hun 26 and subsequent similar cases, the latter must be
considered as pro tanto qualified.
The claim for increased rentals and attorney's fees, made in
behalf of Justina Santos, must be denied for lack of merit.
And what of the various amounts which Wong received in
trust from her? It appears that he kept two classes of
accounts, one pertaining to amount which she entrusted to
him from time to time, and another pertaining to rentals from
the Ongpin property and from the Rizal Avenue property,
which he himself was leasing.

With respect to the first account, the evidence shows that he


received P33,724.27 on November 8, 1957 (Plff Exh. 16);
P7,354.42 on December 1, 1957 (Plff Exh. 13); P10,000 on
December 6, 1957 (Plff Exh. 14) ; and P18,928.50 on August
26, 1959 (Def. Exh. 246), or a total of P70,007.19. He
claims, however, that he settled his accounts and that the
last amount of P18,928.50 was in fact payment to him of
what in the liquidation was found to be due to him.
He made disbursements from this account to discharge
Justina Santos' obligations for taxes, attorneys' fees, funeral
services and security guard services, but the checks (Def
Exhs. 247-278) drawn by him for this purpose amount to only
P38,442.84.27 Besides, if he had really settled his accounts
with her on August 26, 1959, we cannot understand why he
still had P22,000 in the bank and P3,000 in his possession,
or a total of P25,000. In his answer, he offered to pay this
amount if the court so directed him. On these two grounds,
therefore, his claim of liquidation and settlement of accounts
must be rejected.
After subtracting P38,442.84 (expenditures) from P70,007.19
(receipts), there is a difference of P31,564 which, added to
the amount of P25,000, leaves a balance of P56,564.3528 in
favor of Justina Santos.
As to the second account, the evidence shows that the
monthly income from the Ongpin property until its sale in
Rizal Avenue July, 1959 was P1,000, and that from the Rizal
Avenue property, of which Wong was the lessee, was
P3,120. Against this account the household expenses and
disbursements for the care of the 17 dogs and the salaries of
the 8 maids of Justina Santos were charged. This account is
contained in a notebook (Def. Exh. 6) which shows a
balance of P9,210.49 in favor of Wong. But it is claimed that
the rental from both the Ongpin and Rizal Avenue properties
was more than enough to pay for her monthly expenses and
that, as a matter of fact, there should be a balance in her
favor. The lower court did not allow either party to recover
against the other. Said the court:
[T]he documents bear the earmarks of genuineness; the
trouble is that they were made only by Francisco Wong and
Antonia Matias, nick-named Toning, which was the way
she signed the loose sheets, and there is no clear proof that
Doa Justina had authorized these two to act for her in such
liquidation; on the contrary if the result of that was a deficit
as alleged and sought to be there shown, of P9,210.49, that
was not what Doa Justina apparently understood for as the
Court understands her statement to the Honorable Judge of
the Juvenile Court . . . the reason why she preferred to stay
in her home was because there she did not incur in any
debts . . . this being the case, . . . the Court will not
adjudicate in favor of Wong Heng on his counterclaim; on the
other hand, while it is claimed that the expenses were much
less than the rentals and there in fact should be a superavit, .
. . this Court must concede that daily expenses are not easy
to compute, for this reason, the Court faced with the choice

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of the two alternatives will choose the middle course which
after all is permitted by the rules of proof, Sec. 69, Rule 123
for in the ordinary course of things, a person will live within
his income so that the conclusion of the Court will be that
there is neither deficit nor superavit and will let the matter
rest here.

ANTONIO, J.:

Both parties on appeal reiterate their respective claims but


we agree with the lower court that both claims should be
denied. Aside from the reasons given by the court, we think
that the claim of Justina Santos totalling P37,235, as rentals
due to her after deducting various expenses, should be
rejected as the evidence is none too clear about the amounts
spent by Wong for food29 masses30 and salaries of her
maids.31 His claim for P9,210.49 must likewise be rejected as
his averment of liquidation is belied by his own admission
that even as late as 1960 he still had P22,000 in the bank
and P3,000 in his possession.

On June 27, 1956, this Court rendered judgment in G. R. No.


L-5996, entitled Rafael Dinglasan, et al. vs. Lee Bun Ting, et
al., 1 In that case, We found that:

ACCORDINGLY, the contracts in question (Plff Exhs. 3-7)


are annulled and set aside; the land subject-matter of the
contracts is ordered returned to the estate of Justina Santos
as represented by the Philippine Banking Corporation; Wong
Heng (as substituted by the defendant-appellant Lui She) is
ordered to pay the Philippine Banking Corporation the sum
of P56,564.35, with legal interest from the date of the filing of
the amended complaint; and the amounts consigned in court
by Wong Heng shall be applied to the payment of rental from
November 15, 1959 until the premises shall have been
vacated by his heirs. Costs against the defendant-appellant.
LEE BUNTING v. ALIGAEN
Republic of the Philippines
SUPREME COURT
Manila

Petition for certiorari to annul the Orders of respondent court


dated October 10, 1968 and November 10, 1968 and other
related Orders in Civil Case No. V-3064, entitled Rafael A.
Dinglasan, et al., vs. Lee Bun Ting, et al.,with prayer for the
issuance of writ of preliminary injunction. The antecedent
facts are as follows:

In the month of March, 1936, petitioners-appellants sold to


Lee Liong, a Chinese citizen, predecessor in interest of
respondents-appellees, a parcel of land situated on the
corner of Roxas Avenue and Pavia Street, Capiz (now Roxas
City), Capiz, designated as lot 398 and covered by Original
Certificate of Title No. 3389. The cost was P6,000.00 and
soon after the sale Lee Liong constructed thereon a concrete
building which he used as a place for his lumber business
and in part as residence for himself and family. Petitioners
had contended that the sale was a conditional sale, or one
with the right of repurchase during the last years of a tenyear period, but the trial court and the Court of Appeals
found that the sale was an absolute one. Another contention
of the petitioners-appellants is that the sale is null and void
as it was made in violation of the provision contained in the
Constitution (Article XIII, section 5), but the Court of Appeals
found that the purchaser was not aware of the constitutional
prohibition while petitioners-appellants were because the
negotiations for the sale were conducted with the knowledge
and direct intervention of Judge Rafael Dinglasan, one of the
plaintiffs, who was at that time an assistant attorney in the
Department of Justice. ... (P. 42-Q)

G.R. No. L-30523 April 22, 1977


LEE BUN TING and ANG CHIA petitioners,
vs.
HON. JOSE A. ALIGAEN Judge of the Court of First
Instance, of Capiz, 11th Judicial District, Branch II; ATTY.
ANTONIO D. AMOSIN, as court-appointed Receiver;
RAFAEL A. DINGLASAN, FRANCISCO A. DINGLASAN,
CARMEN A. DINGLASAN, RAMON A. DINGLASAN,
LOURDES A. DINGLASAN, MERCEDES A. DINGLASAN,
CONCEPCION A, DINGLASAN, MARIANO A.
DINGLASAN, JOSE A. DINGLASAN, LORETO A.
DINGLASAN, RIZAL A. DINGLASAN, JIMMY
DINGLASAN, and JESSE DINGLASAN, respondents.
Norberto J Quisumbing and Humberto V. Quisumbing for
petitioners.
Rafael A. Dinglasan for respondents.

In reply to the contention of appellants therein that as the


sale to Lee Liong is prohibited by the Constitution, title to the
land did not pass to said alien because the sale did not
produce any juridical effect in his favor, and that the
constitutional prohibition should be deemed self-executing in
character in order to give effect to the constitutional
mandate, this Court said:
... In answer we state that granting the sale to be null and
void and can not give title to the vendee, it does not n
necessarily follow therefrom that the title remained in the
vendor, who had also violated the constitutional prohibition,
or that he (vendor) has the right to recover the title of which
he has divested himself by his act in ignoring the prohibition.
In such contingency another principle of law sets in to bar to
equally guilty vendor from recovering the title which he had
voluntarily conveyed for a consideration, that of pan delicto
We have applied this principle as a bar to the present action
in a series of cases thus:

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xxx xxx xxx
We can, therefore, say that even if the plaintiffs can still
invoke the Constitution, or the doctrine in the Krivenko case,
to set aside the sale in question, they are now prevented
from doing so if their purpose is to recover the lands that
they have voluntarily parted with, because of their guilty
knowledge that what they were doing was in violation of the
Constitution. They cannot escape the law. As this Court well
said: A party to an illegal contract cannot come into a court of
law and ask to have his illegal objects carried out. The law
will not aid either party to an illegal agreement; it leaves the
parties where it finds them. The rule is expressed in the
maxims: Ex dolo malo non oritur actio and In pari delicto
potior eat conditio defendentis ....
It is not necessary for us to re-examine the doctrine laid
down by us in the above cases. We must add in justification
of the adoption of the doctrine that the scope of our power
and authority is to interpret the law merely, leaving to the
proper coordinate body the function of laying down the policy
that should be followed in relation to conveyances in
violation of the constitutional prohibition and in implementing
said policy. The situation of these prohibited conveyances is
not different from that of homestead sold within five yearn
from and after the issuance of the patent, (Section 118, C.A.
141, otherwise known as the Public Land Law), for which
situation the legislature has adopted the policy, not of
returning the homestead sold to the original homesteader but
of forfeiting the homestead and returning it to the public
domain again subject to disposition in accordance with law.
(Section 124, Id.)
The doctrine of in pari delicto bars petitioners-appellants
from recovering the title to the property in question and
renders unnecessary the consideration of the other
arguments presented in appellants brief.
There is one other cause why petitioner' remedy cannot be
entertained, that is the prescription of the action. As the sale
occurred in March, 1936, more than ten years had already
elapsed from the time the cause of action accrued when the
action was filed (1948). (pp. 431-432)
Noting the absence of policy governing lands sold to aliens
in violation of the constitutional prohibition, We further said:
We take this occasion to call the attention of the legislature
to the absence of a law or policy on sales in violation of the
Constitution; this Court would have filled the void were we
not aware of the fact that the matter falls beyond the scope
of oar authority and properly belongs to a co-ordinate power.
(P. 432)
Accordingly, the petition in the foregoing case was denied.
Twelve (12) years later, on the basis of the decision of this
Court in Philippine Banking Corporation vs. Lui She, 2private

respondents Rafael A. Dinglasan, et al. filed a complaint on


July 1, 1968 for the recovery of the same parcel of land
subject matter of the first-mentioned case. Said complaint
was docketed as Civil Case No. V-3064 before respondent
court. Private respondents (plaintiffs before the court a quo)
reiterated their contention that the sale made to Lee Liong,
predecessor-in-interest of petitioners (defendants a quo),
was null and void for being violative of the Constitution, and
prayed that plaintiffs be declared as the rightful and legal
owners of the property in question; that defendants be
ordered to vacate the premises, to surrender possession
thereof to plaintiffs and to receive the amount of P6,000.00
from the plaintiffs as restitution of the purchase price; and
that defendants be ordered to pay damages to the plaintiffs
in the amount of P2,000.000 a month from the time of the
filing of the complaint until the property is returned to them,
as well as the costs of suit.
A motion to dismiss, dated September 23, 1968, was filed by
defendants- petitioners on the ground of res judicata,
alleging that the decision in the case of "Rafael Dinglagan, et
al. vs. Lee Bun Ting, et al.", supra, promulgated on June 27,
1956, has definitely settled the issues between the parties.
An opposition thereto was filed by plaintiffs, with the
averment that the decision in the prior case "cannot be
pleaded in bar of the instant action because of new or
additional facts or grounds of recovery and because of
change of law or jurisprudence. 3 In support of the change in
jurisprudence asserted, the decision of this Court
in Philippine Banking Corporation vs. Lui She, supra, was
advanced, upon the contention that said decision warrants a
reopening of the case and the return of the parcel of land
involved to the plaintiffs, A reply to the opposition was filed by
defendants by registered mall on October 16, 1968, alleging
that the decision in Philippine Banking Corporation vs. Lui
She, which was promulgated in 1967, "cannot affect the
outcome of the instant case. Said 1967 decision cannot be
applied to the instant case where there had been already a
final and conclusive determination some twelve years earlier.
While a doctrine laid down in previous cases may be
overruled, the previous cases themselves cannot thereby be
reopened. The doctrine may be changed for future cases but
it cannot reach back into the past and overturn finally settled
cases. 4
However, on October 10, 1968, before the filing of the above
reply, respondent court had issued an Order denying the
motion to dismiss. The court said:
A copy of the decision rendered in the case of Rafael
Dinglasan, et al. vs. Lee Bun Ting, et al., G. R. No. L-5996 is
attached to the motion to dismiss.
In that case, the Supreme Court ruled that both parties
violated the constitutional prohibition (Article XIII, see. 9) for
the purchaser was an alien and prohibited to acquire
residential lot while the vendors, Filipino citizens, can not
also recover the property for having violated the

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constitutional prohibition, under the principle of pari delicto.
The vendee cannot own the property, neither ran the vendor
recover what he sold.
To fill the void, the Supreme Court pointed out that the
coordinate body Congress of the Philippines can pass
remedial legislation.
But Congress failed to act, Neither was there any proceeding
after almost twenty years for escheat or reversion instituted
by
the
Office
of
the
Solicitor
General
after
the Krivenko decision which prohibits the transfer to aliens of
any private agricultural land including residential lands
whatever its origin might have been.
But the Supreme Court took a decisive step and in bold relief
dispelled darkening clouds in the case of Philippine Banking
Corporations vs. Lui She, promulgated September 12,
1967, ... .
The concurring opinion of Justice Fernando is very
enlightening and elucidating. ...
The Court wishes to refer to the concurring opinion of Justice
Fernando as an additional authority supporting the herein
order.

(a) The sale of the parcel of land involved was made in 1935
before the promulgation of the Constitution.
(b) Said conveyance ' as an absolute sale, not subject to any
right or repurchase ...
(c) Upon the purchase of the said parcel of land by the
deceased Lee Liong, he and defendant Ang Chia
constructed thereon a camarin for lumber business and later
a two-storey five door accessoria with an assessed-valuation
of P35,000.00, which said improvements were destroyed
during the Japanese entry into the municipality of Capiz in
April 1942, thereafter, the same improvements were rebuilt.
(d) In July 1947, the said Lee Liong being already deceased,
defendants as his legal heirs entered into an extrajudicial
settlement of said property, there being no creditors or other
heirs, and by virtue of said extra-judicial settlement,
approximately two-thirds of said property was adjudicated to
defendant Ang Chia and Lee Bing Hoo as co-owners and the
remaining one-third to defendant Lee Bun Ting
(e) The deceased Lee Liong and defendants have been
declaring and paying real estate taxes on the said property
since 1935 and up to the present year.
xxx xxx xxx

PREMISES CONSIDERED, the Court finds the motion to


dismiss unmeritrious and holds that the same be as it is
hereby DENIED. 5
A motion for reconsideration of the foregoing Order was filed
by defendants, alleging that their reply to plaintiffs' opposition
to the motion to dismiss was not even considered by the
court a quo because the Order was issued before said reply
Could reach the court, Further, it was asserted that
the Philippine Banking Corporation vs. Lui She case had the
effect of annulling and setting aside only the contracts
subject matter thereof "and no other contracts, certainly not
contracts outside the issues in said judgment as that in the
instant case", and of ordering the return only of the lands
involved in said case, and not the land subject of the present
action. Moreover, it was averred that "Nowhere in the
majority opinion nor in the concurring opinion in said decision
of Philippine Banking Corporation vs. Lui She does there
appear any statement which would have the effect of
reopening and changing previously adjudicated rights of
parties and finally settled cases" and that the principle
enunciated in such case "should apply after, not on or
before, September 12, 1967". The motion for reconsideration
was found to have not been well taken and, consequently,
was denied by respondent court on November 9, 1968.
Defendants were given ten (10) days from receipt of the
Order within which to file their answer to the complaint,
Which defendants complied with.
Defendants' answer, dated December 5, 1968, contained the
following allegations, among others:

In addition to the foregoing, defendants reiterated their


defense of res judicata, on the basis of the decision of the
Supreme Court of June 27, 1956. It was, therefore, prayed
that the complaint be dismissed, with counterclaim for
attorney's fees and expenses of litigation or, in case of
adverse judgment, that plaintiffs be ordered to pay the
reasonable equivalent of the value of the property at the time
of the restoration, plus reimbursement of improvements
thereon.
A reply and answer to the counterclaim, dated December 14,
1968, was filed by plaintiffs. On March 31, 1969, respondent
court issued an Order denying a motion filed by petitioners
for simplification of the issues and for the striking out from
the records of the declaration of Rafael Dinglasan under the
Survivorship
Disqualification
Rule.
A motion
for
reconsideration of the foregoing Order was denied on May 7,
1969.
During the pendency of the trial, plaintiffs filed a petition for
the appointment of a receiver "to receive, collect and hold in
trust all income of the property in the form of monthly rentals
of P2,000.00", on the premise that defendants have no other
visible property which will answer for the payment of said
rentals. This petition was opposed by defendants, alleging
that plaintiffs will not suffer any irreparable injury or grave
damage if the petition for receivership is not granted,
particularly as defendants are solvent and further
considering that defendants have a building on the parcel of
land, the value of which must likewise be considered before

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plaintiffs can be awarded possession of the land. The matter
of receivership was heard by respondent court and on May
17, 1969, it issued an Order appointing respondent Atty.
Antonio D. Amosin, Deputy Clerk of Court, as receiver with
instructions to take immediate possession of the property in
litigation and to preserve, administer and dispose of the
same in accordance with law and order of the court, upon
the posting of a bond in the amount of P500.00. On May 17,
1969, the appointed receiver took his oath. Hence, the
instant petition.
Petitioners herein pray that judgment be rendered annulling
and setting aside respondent court's complained of Orders
(rated October 10, 1968. November 9, 1968, March 31,
1969, May 7, 1969 and May 17, 1969, and ordering the
dismissal of Civil Case no. L-3064 of respondent court on the
ground of res judicata Petitioners further prayed for the
issuance of a writ of preliminary injunction to restrain
respondent court from proceeding with the scheduled
hearings of the case, and respondent receiver from
executing the order to take immediate possession of the
property in litigation.
On June 16, 1969, this Court issued the writ of preliminary
injunction prayed for, restraining respondent court from
continuing with the scheduled trial of the case and
respondent receiver from executing the order to take
immediate possession of the property in litigation and/or
otherwise discharging or performing his function as receiver.
The issue posed before Us is whether the questions which
were decided in Rafael Dinglagan, et al. vs. Lee Bun Ting et
al., supra, could still be relitigated in Civil Case No. V-3064,
in view of the subsequent decision of this Court in Philippine
Banking Corporation vs. Lui She, supra.
We resolve the issue in the negative. The decision of this
Court in G. R. No. L-5996, "Rafael Dinglasan, et al. vs. Lee
Bun Ting, et al." constitutes a bar to Civil Case No. V-3064
before the respondent court. Said Civil case, therefore,
should have been dismissed because it is a mere relitigation
of the same issues previously adjudged with finality, way
back in 1956, between the same parties or their privies and
concerning the same subject matter. We have consistently
held that the doctrine of res judicata applies where, between
a pending action and one which has been finally and
definitely settled, there is Identity of parties, subject matter
and cause of action.
The concept of res judicata as a "bar by prior judgment" was
explained in Comilang vs. Court of Appeals, et al.,
promulgated on July 15, 1975, 6 thus:
The fundamental principle upon which the doctrine of res
judicata rests is that parties ought not to be permitted to
litigate the same issue more than once; that, when a right or
fact has been jurisdically tried and determined by a court of
competent jurisdiction, or an opportunity for such trial has

been given, the judgment of the court, so long as is remains


unreversed, should be conclusive upon the parties and those
in privity with them in law or estate. ...
xxx xxx xxx
This principle of res judicata is embodied in Rule 39, Sec.
49(b) and (c) of the Rules oil' Court, as follows;
(b) In other cases the judgment or order is, with respect to
the matter directly adjudged or as to any other matter that
could have been raised in relation thereto, conclusive
between the parties and their successors in interest by title
subsequent to the commencement of the action or special
proceeding, litigating for the same title and in the same
capacity.
(c) In any other litigation between the same parties or their
successors-in- interest, that only is deemed to have been
adjudged in a former judgment which appears upon its face
to have been so adjudged, or was actually and necessarily
included therein or necessary thereto.
Sec. 49(b) enunciates that concept of res judicata known as
'bar by prior judgment' while Sec. 49(c) refers to
'Conclusiveness of judgment.' There is bar by prior judgment'
when, between the first case where the judgment was
rendered and the second case which is sought to be barred,
there is Identity of parties, subject matter and cause of
action. The judgment in the first case constitutes an absolute
bar to the subsequent action. It is final as to the claim or
demand in controversy, including the parties and those in
privity with them, not only as to every matter which was
offered and received to sustain or defeat the claim or
demand, but as to any other admissible matter which might
have been offered for that purpose and of all matters that
could have been adjudged in that case. But where between
the first and second cases, there is Identity of parties but no
Identity or cause of action, the first judgment is conclusive in
the second case, only as to those matters actually and
directly controverted and determined and not as to matters
merely involved therein. (pp. 76-78).
A comparison between the earlier case of "Rafael Dinglasan,
et al. vs. Lee Bun Ting, et al." (G. R. No. L-5996) and the
case pending before respondent court 7 reveals that the
requisites for the application of the doctrine of res
judiciataare present. It is undisputed that the first case was
tried and decided by a court of compentent jurisdiction,
whose decision was affirmed on appeal by this Tribunal. The
parties to the two cases are substantially the same, namely,
as plaintiffs, Rafael A. Dinglasan, Carmen A. Dinglasan,
Francisco A. Dinglasan, Jr., Ramon A. Dinglasan, Lourdes A.
Dinglasan, Mercedes A. Dinglasan, Concepcion A.
Dinglasan, Mariano A. Dinglasan, Jose A. Dinglasan, Loreto
A. Dinglasan, Manuel A. Dinglasan, Rizal A. Dinglasan and
Jimmy Dinglasan (the differences being the inclusions of the
minor Vicente Dinglasan in L-5996 and Jesse Dinglasan in

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1ST EXAM COVERAGE CASE COMPILATION
the case before respondent court), against defendants Lee
Bun Ting and Ang Chia, in her capacity as Widow of the
deceased Lee Liong (and Administratrix of his estate in L5996). The subject matter of the two actions are the same,
namely, that "parcel of land, Cadastral Lot No. 398, located
at Trece de Agosto Street, now Roxas Avenue, corner of
Pavia St., in the municipality of Capiz, now Roxas City,
covered by Original Certificate of Title No. 3389 of the Office
of Register of Deeds of Capiz in the name of ... Francisco
Dinglasan and originally declared under Tax (Declaration)
No. 19284 also in his name in the municipality of Capiz, but
now declared as Cadastral Lots Nos. 398-A and 398-B
respectively under Tax Declarations Nos. 7487 and 7490 in
the City of Roxas in the names of Ang Chia Vda. de Lee and
Lee Bun Ting respectively ... " The causes of action and the
reliefs prayed for are identical the annulment of the sale
and the recovery of the subject parcel of land.
Notwithstanding the mode of action taken by private
respondents, We find that in the ultimate analysis, Civil Case
No. V-3064 is but an attempt to reopen the issues which
were resolved in the previous case. Contrary to the
contentions of private respondents, there has been no
change in the facts or in the conditions of the parties. Neither
do We find Our ruling in the Philippine Banking
Corporation case applicable to the case at bar, considering
the rule that posterior changes in the doctrine of this Court
cannot retroactively be applied to nullify a prior final ruling in
the same proceeding where the prior adjudication was had,
whether the case should be civil or criminal in nature. The
determination of the questions of fact and of law by this
Court on June 27, 1956 in case No. L-5996 has become the
law of the case, and may not now be disputed or relitigated
by a reopening of the same questions in a subsequent
litigation between the same parties and their privies the
same subject matter. Thus, inPeople vs. Olarte, 8 We
explained this doctrine, as follows:
Suffice it to say that our ruling in Case L-13027, rendered on
the first appeal, constitutes the law of the case, and, even if
erroneous it may no longer be disturbed or modified since it
has become final long ago. A subsequent reinterpretation of
the law may be applied to new cases bat certainly not to an
old one finally and conclusively determined (People, vs.
Pinuila, G. R. No. L-11374, May 30, 1958; 55 O.G. 4228).
Law of the case' has been defined as the opinion delivered
on a former appeal. More specifically, it means that whatever
is once irrevocably established the controlling legal rule of
decision Between the same parties in the same case
continues to 1)(, the law of the case whether correct on
general principles or not, so long as the facts on which such
decision was predicated continue to be the facts of the case
before the court. (21 C.J.S. 330). (cited in Pinuila
case, supra).
As a general rule a decision on a prior appeal of the same
case is held to be the law of the case whether that decision

is right or wrong, the remedy of the party being to seek a


rehearing. (5 C.J.S. 1277). (also cited in Pinuila case)
It is also aptly held in another case that:
It need not be stated that the Supreme Court, being the court
of last resort, is the final arbiter of all legal questions properly
brought before it and that its decision in any given case
constitutes the law of that particular case. Once its judgment
becomes final it is binding on all inferior courts, and hence
beyond their power and authority to alter or modify Kabigting
vs. Acting Director of Prisons, G. R. No. L-15548, October
30, 1962).
More categorical still is the pronouncement of this Court
in Pomeroy vs. Director of Prisons, L-14284-85, February 24,
1960:
It will be seen that the prisoner's stand assumes that
doctrines and rulings of the Supreme Court operate
retrospectively and that they can claim the benefit of
decisions
inPeople
vs,
Hernandez;
People
vs.
Geronimo, and People vs. Dugonon (L-6025-26, July 18,
1956; L-8936, Oct. 31, 1956; and L-8926, June 29, 1957,
respectively), promulgated four or more years after the
prisoner applicants had been convicted by final j judgment
and started serving sentence. However, the rule adopted by
this Court (and by the Federal Supreme Court) is that judicial
doctrines have only prospective operation and do not apply
to cases previously decided (People vs. Pinuila, L-11374,
promulgated May 30, 1958)
In the foregoing decision, furthermore, this Court quoted and
reiterated the rule in the following excerpts from People vs.
Pinuila, G.R No. L-11374, jam cit.:
The decision of this Court on that appeal by the government
from the order of dismissal, holding that said appeal did not
place the appellants, including Absalong Bignay in double
jeopardy, signed and concurred in by six justices as against
three dissenters headed by the Chief Justice, promulgated
way back in the year 1952, has long become the latter of the
curse. It may be erroneous, judge by the law on double
jeopardy as recently interpreted by this same. Tribunal. Even
so, it may not be disturbed and modified. Our recent
interpretation of the law may be applied to new cases, but
certainly not to an old one finally and conclusively
determined. As already stated, the majority opinion in that
appeal isnow the law of the case.
The same principle, the immutability of the law of the case
notwithstanding subsequent changes of judicial opinion, has
been followed in civil cases:
Fernando vs. Crisostomo, 90 Phil. 585; Padilla vs. Paterno,
93 Phil. 884; Samahang Magsasaka, Inc. vs. Chua Guan, L7252, February, 1955.

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It is thus clear that posterior changes in the doctrine of this
Court can not retroactively be applied to nullify a prior final
ruling in the same proceeding where the prior adjudication
was had, whether the case should be civil or criminal in
nature. 9
Reasons of public policy, judicial orderliness, economy and
judicial time and the interests of litigants, as well as the
peace and order of society, all require that stability be
accorded the solemn and final judgments of the courts or
tribunals of competent jurisdiction. There can be no question
that such reasons apply with greater force on final judgments
of the highest Court of the land.
WHEREFORE, certiorari is granted, the Orders complained
of are hereby annulled and set aside, and respondent Judge
is directed to issue an Order dismissing Civil Case No. V3064. With costs against private respondents.
SARSOSA VDA. DE BARSOBIA v. CUENCO
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-33048 April 16, 1982
EPIFANIA SARSOSA VDA. DE BARSOBIA and PACITA W.
VALLAR, petitioners,
vs.
VICTORIANO T. CUENCO, respondent.

MELENCIO-HERRERA, J.:
Sought to be reviewed herein is the judgment dated August
18, 1970, of the Court of Appeals, 1 rendered in CA-G.R. No.
41318-R, entitled "Victoriano T. Cuenco, Plaintiff-appellant,
vs. Epifania Sarsosa Vda. de Barsobia and Pacita W. Vallar,
Defendants- appellees, " declaring Victoriano T. Cuenco
(now the respondent) as the absolute owner of the coconut
land in question.
The lot in controversy is a one-half portion (on the northern
side) of two adjoining parcels of coconut land located at
Barrio Mancapagao, Sagay, Camiguin, Misamis Oriental
(now Camiguin province), with an area of 29,150 square
meters, more or less. 2
The entire land was owned previously by a certain Leocadia
Balisado, who had sold it to the spouses Patricio Barsobia
(now deceased) and Epifania Sarsosa, one of the petitioners
herein. They are Filipino citizens.

On September 5, 1936, Epifania Sarsosa then a widow, sold


the land in controversy to a Chinese, Ong King Po, for the
sum of P1,050.00 (Exhibit "B"). Ong King Po took actual
possession and enjoyed the fruits thereof.
On August 5, 1961, Ong King Po sold the litigated property
to Victoriano T. Cuenco (respondent herein), a naturalized
Filipino, for the sum of P5,000.00 (Exhibit "A"). Respondent
immediately took actual possession and harvested the fruits
therefrom.
On March 6, 1962, Epifania "usurped" the controverted
property, and on July 26, 1962, Epifania (through her only
daughter and child, Emeteria Barsobia), sold a one-half (1/2)
portion of the land in question to Pacita W. Vallar, the other
petitioner herein (Exhibit "2"). Epifania claimed that it was not
her intention to sell the land to Ong King Po and that she
signed the document of sale merely to evidence her
indebtedness to the latter in the amount of P1,050.00.
Epifania has been in possession ever since except for the
portion sold to the other petitioner Pacita.
On September 19, 1962, respondent filed a Forcible Entry
case against Epifania before the Municipal Court of Sagay,
Camiguin. The case was dismissed for lack of jurisdiction
since, as the laws then stood, the question of possession
could not be properly determined without first settling that of
ownership.
On December 27, 1966, respondent instituted before the
Court of First Instance of Misamis Oriental a Complaint for
recovery of possession and ownership of the litigated land,
against Epifania and Pacita Vallar (hereinafter referred to
simply as petitioners).
In their Answer below, petitioners insisted that they were the
owners and possessors of the litigated land; that its sale to
Ong King Po, a Chinese, was inexistent and/or void ab initio;
and that the deed of sale between them was only an
evidence of Epifania's indebtedness to Ong King Po.
The trial Court rendered judgment:
1. Dismissing the complaint with costs against plaintiff
(respondent herein).
2. Declaring the two Deeds of Sale, Exhibits A and B,
respectively, inexistent and void from the beginning; and
3. Declaring defendant Pacita W. Vallar as the lawful owner
and possessor of the portion of land she bought from
Emeteria Barsobia (pp. 57, 67, Record.) 3
On appeal, the Court of Appeals reversed the
aforementioned Decision and decreed instead that
respondent was the owner of the litigated property, thus:

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xxx xxx xxx
In view of all the foregoing considerations, the judgment
appealed from is hereby reversed. In lieu thereof, we render
judgment:
(a) Declaring the plaintiff-appellant Victoriano T. Cuenco the
absolute owner of the land in question, with the right of
possession thereof;
(b) Ordering the defendants-appellees to restore the
possession of said land to the plaintiff;
(c) Dismissing the defendants' counterclaim;
(d) Condemning the defendants to pay to the plaintiff the
sum
of
P10,000.00 representing the latter's share from the sale of
copra which he failed to receive since March, 1962 when he
was deprived of his possession over the land, and which
defendants illegally appropriated it to their own use and
benefit, plus legal interest from the filing of the complaint
until fully paid; plus P2,000.00 representing expenses and
attorney's fees;
(e) Sentencing the defendants to pay the costs.
SO ORDERED.

Following the denial of their Motion for Reconsideration,


petitioners filed the instant Petition for Review on certiorari
with this Court on January 21, 1971. Petitioners claim that
the Court of Appeals erred:
I. ... when it reversed the judgment of the trial court declaring
petitioner Pacita W. Vallar as the lawful possessor and owner
of the portion of land she purchased from Emeteria Barsobia,
not a party to this case, there being no evidence against her.
II ... when it included petitioner Pacita W. Vallar to pay
P10,000.00, with legal interest from the filing of the
complaint, representing respondent's share in the harvest
and to pay the costs, there being no evidence against her.
III. ... when it condemned petitioners to pay P2,000.00
representing expenses and attorney's fees, there being no
factual, legal and equitable justification.
IV. ... in not applying the rule on pari delicto to the facts of the
case or the doctrine enunciated ... in the case of Philippine
Banking Corporation vs. Lui She, L-17587, September 12,
1967, to ... Petitioner Epifania Sarsosa Vda. de Barsobia.
V. ... in denying, for lack of sufficient merits, petitioners'
motion for rehearing or reconsideration of its decision. 5

As the facts stand, a parcel of coconut land was sold by its


Filipino owner, petitioner Epifania, to a Chinese, Ong King
Po, and by the latter to a naturalized Filipino, respondent
herein. In the meantime, the Filipino owner had unilaterally
repudiated the sale she had made to the Chinese and had
resold the property to another Filipino. The basic issue is:
Who is the rightful owner of the property?
There should be no question that the sale of the land in
question in 1936 by Epifania to Ong King Po was inexistent
and void from the beginning (Art. 1409 [7], Civil
Code) 6 because it was a contract executed against the
mandatory provision of the 1935 Constitution, which is an
expression of public policy to conserve lands for the
Filipinos. Said provision reads:
Save in cases of hereditary succession, no private
agricultural land shall be transferred or assigned except to
individuals, corporations, or associations, qualified to acquire
or hold lands of the public domain. 7
Had this been a suit between Epifania and Ong King Po, she
could have been declared entitled to the litigated land on the
basis, as claimed, of the ruling in Philippine Banking
Corporation vs. Lui She, 8 reading:
... For another thing, and this is not only cogent but also
important. Article 1416 of the Civil Code provides as an
exception to the rule on pari delicto that when the agreement
is not illegal per se but is merely prohibited, and the
prohibition by the law is designed for the protection of the
plaintiff, he may, if public policy is thereby enhanced, recover
what he has sold or delivered. ...
But the factual set-up has changed. The litigated property is
now in the hands of a naturalized Filipino. It is no longer
owned by a disqualified vendee. Respondent, as a
naturalized citizen, was constitutionally qualified to own the
subject property. There would be no more public policy to be
served in allowing petitioner Epifania to recover the land as it
is already in the hands of a qualified person. Applying by
analogy the ruling of this Court in Vasquez vs. Giap and Li
Seng Giap & Sons: 9
... if the ban on aliens from acquiring not only agricultural but
also urban lands, as construed by this Court in the Krivenko
case, is to preserve the nation's lands for future generations
of Filipinos, that aim or purpose would not be thwarted but
achieved by making lawful the acquisition of real estate by
aliens who became Filipino citizens by naturalization.
While, strictly speaking, Ong King Po, private respondent's
vendor, had no rights of ownership to transmit, it is likewise
inescapable that petitioner Epifania had slept on her rights
for 26 years from 1936 to 1962. By her long inaction or
inexcusable neglect, she should be held barred from
asserting her claim to the litigated property (Sotto vs. Teves,
86 SCRA 157 [1978]).

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Laches has been defined as the failure or neglect, for an
unreasonable and unexplained length of time, to do that
which by exercising due diligence could or should have been
done earlier; it is negligence or omission to assert a right
within a reasonable time, warranting a presumption that the
party entitled to assert it either has abandoned it or declined
to assert it. (Tijam, et al. vs. Sibonghanoy, et al., No. L21450, April 15, 1968, 23 SCRA 29, 35). (cited in Sotto vs.
Teves, 86 SCRA 154 [1978]).
Respondent, therefore, must be declared to be the rightful
owner of the property.
The award of actual damages in respondent's favor of
P10,000.00, as well as of attorney's fees and expenses of
litigation of P2,000.00, is justified. Respondent was deprived
of the possession of his land and the enjoyment of its fruits
from March, 1962. The Court of Appeals fixed respondent's
share of the sale of copra at P10,000.00 for eight years at
four (4) harvests a year. The accuracy of this finding has not
been disputed.
However, we find merit in the assigned error that petitioner,
Pacita Vallar, should not be held also liable for actual
damages to respondent. In the absence of contrary proof,
she, too, must be considered as a vendee in good faith of
petitioner Epifania.
The award of attorney's fees and litigation expenses in the
sum of P2,000.00 in respondent's favor is in order
considering that both petitioners compelled respondent to
litigate for the protection of his interests. Moreover, the
amount is reasonable. 10
WHEREFORE, except for that portion holding petitioner,
Pacita W. Vallar, also liable for damages of P10,000.00, the
appealed judgment is hereby affirmed.
Costs against petitioners.
SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 74170 July 18, 1989
REPUBLIC OF THE PHILIPPINES, petitioner,
vs.
INTERMEDIATE APPELLATE COURT, GUILLERMO
GONZALVES,** respondents.
Amando Fabio Jr. for private respondent.

NARVASA, J.:
The chief question presented in the appeal at bar concerns
the validity of a conveyance of residential land to an alien
prior to his acquisition of Filipino citizenship by naturalization.
The Trial Court's description of the factual background is
largely undisputed. The case principally concerns Chua Kim
@ Uy Teng Be, who became a naturalized Filipino citizen,
taking his oath as such, on January 7,1977. 1 He was the
adopted son of Gregorio Reyes Uy Un.
The case involved three (3) parcels of land, which were
among those included in Land Registration Cases Numbered
405 and 14817 of the Court of First Instance of Quezon
Province: Lots Numbered 1 and 2, plan Psu-57676, 2 and Lot
No. 549 of plan AP-7521-identical to Plan Psu54565. 3 These were respectively adjudicated in said land
registration cases to two persons, as follows:
1) Lots 1 and 2, Psu-57676, to the Spouses Benigno
Maosca and Julia Daguison (in Opposition No. 51 ); 4 and
2) Lot 549, AP-7521 (Psu-54565), to Gaspar Marquez,
married to Marcela Masaganda (in opposition No.
155). 5 However, no decree of confirmation and registration
was entered at the time.
Lots 1 and 2, Psu-57676, were sold by the owners, the
Maosca Spouses, to Gregorio Reyes Uy Un on Dec. 30,
1934. 6 Lot 549, Psu-54565, was also sold by the Marquez
Spouses to Gregorio Reyes Uy Un on December 27, 1934. 7
Subsequently, Gregorio Reyes Uy Un died, and his adopted
son, Chua Kim @ Uy Teng, took possession of the property.

REPUBLIC v. IAC

The three (3) parcels of land above mentioned, together with


several others, later became subject of a compromise
agreement in a litigation in the Court of First Instance of

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Quezon Province, docketed as Civil Case No. C-385. 8 The
compromise agreement was executed not only by the parties
in the case (plaintiffs Domingo Reyes and Lourdes Abustan,
and the defendants, So Pick, et al.) respectively described
as "First Parties" and "Second Parties"-but also Chua Kim @
Ting Be Uy, designated therein as "Third Party," although he
had not been impleaded as a party to the case. In the
agreement, in consideration of Chua Kim's renunciation (a)
of "any right or claim of whatever nature in .. (certain
specifically identified) parcels of land" and (b) of any other
claim against the First Parties and Second Parties, both the
latter, in turn waived "any claim of ownership or other right in
or to the parcels of land, or the improvements thereon, in
Buenavista, Quezon covered by OCT Nos. 3697, 3696, 3439
and 4382 of the Registry of Deeds of Quezon," in the name
of Gregorio Reyes Uy Un, Chua Kim's adoptive father, and
that they (the First and Second Parties) "will not oppose the
transfer, by means not contrary to law, of the ownership
thereof to the Third Party," said Chua Kim. The compromise
agreement was afterwards submitted to the Court 9 which
rendered judgment on July 29,1970 (amended by Order
dated July 31, 1970), approving the same. 10
Chua Kim then filed a petition for issuance of decree of
confirmation and registration in Land Registration Case No.
405 (LRC Rec. No. 14817) of the Court of First Instance of
Quezon Province. 11
After due proceedings, and on the basis of the foregoing
facts found to have been duly proven by the evidence, the
Court of First Instance of Quezon 12 promulgated on January
14, 1982 the following Order, to wit:
WHEREFORE, premises considered, this Court finds that
herein petitioner Chua Kim alias Uy Teng Be has duly
established his registerable title over the properties in
question in this land registration case in so far as
Oppositions Nos. 51 and 155 are concerned, and hereby
GRANTS his petition. The decision rendered on January 14,
1933 in so far as Opposition Nos. 51 and 155 are concerned,
is hereby amended adjudicating the said properties, better
known now as Lots 1 and 2 of plan Psu-57676 in Opposition
No. 51 and as Lot.549 of plan Ap-7521, which is Identical to
plan Psu-54565 in Opposition No. 155, to herein petitioner
Chua Kim alias Uy Teng Be. Upon this order becoming final,
let the corresponding decrees of confirmation and
registration be entered and thereafter upon payment of the
fees required by law, let the corresponding certificate of titles
be issued in the name of petitioner, Chua Kim alias Uy Teng
Be, married to Amelia Tan, of legal age, a naturalized Filipino
citizen, and a resident of the Municipality of Buenavista,
Province of Quezon, as his own exclusive properties, free
from all liens and encumbrances.
SO ORDERED.
The Republic of the Philippines, through the Solicitor
General, challenged the correctness of the Order and

appealed it to the Court of Appeals. That Court, however,


affirmed the Order "in all respects," in a decision
promulgated on March 25,1986. 13
Still not satisfied, the Republic has come to this Court on
appeal by certiorari, in a final attempt to prevent the
adjudication of the property in question to Chua Kim. The
Solicitor General argues that
1) the deeds and instruments presented by Chua Kim to
prove the conveyance to him of the lands in question by the
successor-in- interest of the original adjudicates are
inadequate for the purpose; and
2) Chua Kim has not proven his qualification to own private
agricultural land at the time of the alleged acquisition of the
property in question.
The Republic's theory is that the conveyances to Chua Kim
were made while he was still an alien, i.e., prior to his taking
oath as a naturalized Philippine citizen on January 7, 1977,
at a time when he was disqualified to acquire ownership of
land in the Philippines (ART XIII, SEC. 5, 1935 Constitution;
ART. XIV, Sec. 14, 1973 Constitution); hence, his asserted
titles are null and void. 14 It is also its contention that reliance
on the decision and amendatory order in Civil Case No. C385 of the CFI, Rizal 15 is unavailing, since neither document
declares that the property in question was adjudicated to
Chua Kim as his inheritance from his adoptive father,
Gregorio Reyes Uy Un. 16
The conclusions of fact of the Intermediate Appellate Court,
sustaining those of the Land Registration Court, reached
after analysis and assessment of the evidence presented at
a formal hearing by the parties, are by firmly entrenched rule
binding on and may not be reviewed by this Court. 17 Those
facts thus found to exist, and the legal principles subsumed
in them, impel rejection of the Republic's appeal.
It is a fact that the lands in dispute were properly and
formally adjudicated by a competent Court to the Spouses
Gaspar and to the Spouses Marquez in fee simple, and that
the latter had afterwards conveyed said lands to Gregorio
Reyes Uy Un, Chua Kim's adopting parent, by deeds
executed in due form on December 27, 1934 and December
30, 1934, respectively. Plainly, the conveyances were made
before the 1935 Constitution went into effect, i.e., at a time
when there was no prohibition against acquisition of private
agricultural lands by aliens. 18Gregorio Reyes Uy Un
therefore acquired good title to the lands thus purchased by
him, and his ownership was not at all affected either (1) by
the principle subsequently enunciated in the 1935
Constitution that aliens were incapacitated to acquire lands
in the country, since that constitutional principle has no
retrospective application, 19 or (2) by his and his successor's
omission to procure the registration of the property prior to
the coming into effect of the Constitution. 20

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It is a fact, furthermore, that since the death of Gregorio
Reyes Uy Un in San Narciso, Quezon, in 1946, Chua Kim @
Uy Teng Be had been in continuous possession of the lands
in concept of owner, as the putative heir of his adoptive
father, said Gregorio Reyes; 21 this, without protest whatever
from any person. It was indeed Chua Kim's being in
possession of the property in concept of owner, and his
status as adopted son of Gregorio Reyes, that were the
factors that caused his involvement in Civil Case No. C-385
of the CFI at Calauag, Quezon, at the instance of the original
parties thereto, 22 and his participation in the Compromise
Agreement later executed by all parties. As already
mentioned, that compromise agreement, approved by
judgment rendered on July 29, 1970, 23 implicity recognized
Chua Kim's title to the lands in question.
Be this as it may, the acquisition by Chua Kim of Philippine
citizenship should foreclose any further debate regarding the
title to the property in controversy, in line with this Court's
rulings relative to persons similarly situated. 24 In Sarsosa
Vda. de Barsobia v. Cuenco, 113 SCRA 547, for instance,
the ruling was as follows:
... The litigated property is now in the hands of a naturalized
Filipino. It is no longer owned by a disqualified vendee.
Respondent, as a naturalized citizen, was constitutionally
qualified to own the subject property. There would be no
more public policy to be served in allowing petitioner Epifania
to recover the land as it is already in the hands of a qualified
person. Applying by analogy the ruling of this Court
in Vasquez vs. Giap and Li Seng Giap & Sons (96 Phil. 447
[1955]),
... if the ban on aliens from acquiring not only agricultural but
also urban lands, as construed by this Court in the Krivenko
case, is to preserve the nation's land for future generations
of Filipinos, that aim or purpose would not be thwarted but
achieved by making lawful the acquisition of real estate by
aliens who became Filipino citizens by naturalization.
WHEREFORE, the petition is DISMISSED, and the judgment
of the Intermediate Appellate Court subject thereof
AFFIRMED in toto. SO ORDERED.

UNITED CHURCH v. SEBASTIAN


Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-34672 March 30,1988

UNITED CHURCH BOARD FOR WORLD MINISTRIES, as


owner of BROKENSHIRE MEMORIAL
HOSPITAL,petitioner,
vs.
HON. JUDGE ALEJANDRO E. SEBASTIAN, as Presiding
Judge of the CFI of Davao del Norte, and MELENCIO B.
DELENA and MAURO GEMENTIZA as Co-Executors of
the Testate Estate of DAVID, Jacobson, respondents.

CRUZ, J.:
This case is unusual because it arose not out of greed but of
generosity. The only question to be resolved is the Identity
and eligibility of the beneficiary in the light of the pertinent
constitutional provisions and the evidence of record.
David Jacobson was an American citizen who had been a
resident of the Philippines for more than thirty years and up
to the time of his death in 1970. 1 He left a will in which he
"devised and bequeathed" to the Brokenshire Memorial
Hospital 60% of his shares of stocks in the Tagdangua
Plantation Co., inc. which was incorporated under Philippine
law in 1948. 2 This corporation was the registered owner of a
tract of land in Pantuhan Davao del Norte, with a total area
of about 445 hectares acquired by virtue of a sales patent
issued to it in 11953 . 3
In Special Proceeding No. 1695 of the Court of First Instance
of Davao del Norte, Judge Alejandro E. Sebastian disallowed
the above-described legacy on the ground that it was in
effect an alienation of private agricultural land in favor of a
transferee which was not qualified under the Constitution of
1935. 4 The finding was that the Brokenshire Memorial
Hospital was owned by the United Church Board for World
Ministries (UCBWM) ,the herein petitioner, which was a nonstock corporation organized in the United States by virtue of
a charter granted by the state legislature of
Massachussets . 5
The basis of this ruling was Article XII, Sections I and 5 of
the 1935 Constitution, which barred foreigners, including
Americans, from acquiring agricultural lands in this country
except only by hereditary succession. The court directed that
a copy of its order be sent to the Solicitor General so he
could take the proper action, in view of the invalidity of the
transfer, for the escheat of the subject property to the State. 6
Its motion for reconsideration having been denied, the
petitioner came to this Court, contending that the above-cited
constitutional provisions were not applicable because the
object of the legacy was not land but shares of stocks.
Moreover, even assuming that what was really involved was
a transfer of land, the petitioner was nonetheless qualified to
acquire it under the provisions of the Parity Amendment and
the Laurel-Langley Agreement.

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The Solicitor General disagreed at first, insisting that the
legacy was prohibited by the 1935 Constitution and did not
come under any of the allowed exceptions. During the
protracted exchange of pleadings among the parties,
however, certain events transpired to considerably change
the original situation and, consequently, also the position of
government.
It now appears from the voluminous documents submitted in
this case that at the time the will was executed in 1966, the
land on which the Brokenshire Memorial Hospital was
situated was already registered in the name of the Mindanao
District Conference, an affiliate of the United Church of Christ
in the Philippines (PUCC). 7 It was this non-stock corporation,
organized in 1949 under Philippine law with a 100% Filipino
membership, that owned and was operating the Hospital at
the time of Jacobson's death. 8 Later, the Brokenshire
Memorial Hospital was itself incorporated as a charitable
institution, with Filipinos constituting the majority of its
membership, 9 and on December 16,1970, became the
successor-in-interest of the UCCP to the devised parcel of
land. 10
In proof of these circumstances, the new counsel for
Brokenshire presented, among many other documents, the
articles of incorporation of the UCCP and the Hospital and
their corresponding certificates of registration issued by the
Securities and Exchange Commission, the licenses issued
by the Board of Medical Sciences for the operation of the
Hospital to the UCCP from 1968 to 1972 and to the
Brokenshire Memorial Hospital, Inc. from 1973 to 1974, and
the certificate of title over the subject land in the name of the
"Mindanao District Conference, commonly known as the
Brokenshire Memorial Hospital." 11
These facts were not brought earlier to the attention of the
probate court by the former counsel of the Hospital, Atty.
Juan V. Faune for reasons that do not appear in the record. It
was for such omission (the new counsel would call it
"misrepresentation") that Atty. Faune was replaced by Atty.
Rodolfo D. de la Cruz, who disavowed his predecessor's
representations. At any rate, the above-stated documents
have now made it clear that the United Church for Christ in
the Philippines and not the United Church Board for World
Ministries was the owner of the Hospital at the time of the
execution of the win in 1966 and of the testator's death in
1970. It is also not disputed that such ownership passed to
the Brokenshire Memorial Hospital itself upon its
incorporation in 1970 when it thus became the proper partyin-interest to claim the property directly devised by Jacobson
to it.
That the United Church Board for World Ministries no longer
claims the subject property (if indeed it really did claim it
before), is manifest in its sur rejoinder to the rejoinder of the
movant Brokenshire Memorial Hospital, Inc., which had
asked to be substituted for the former as petitioner in this

case. The body of this pleading is reproduced in full as


follows:
PETITIONER, by the Undersigned Counsel,
Honorable Court most respectfully states:

to

this

l. That upon its organization in 1948 the United Church of


Christ in the Philippines succeeded to the religious work,
service and mission of the United Church Board for World
Ministries and other religion boards in the United States of
America;
2. It was the intention, following the independence of the
Philippines from the U.S.A. the constitution of an
independent and autonomous United Church of Christ in the
Philippines, to eventually transfer all properties, schools, and
hospitals established by said mission boards, to the United
Church of Christ in the Philippines;
3. That the United Church Board for World Ministries had, in
fact, transferred the ownership of most of its properties in the
Philippines to the United Church of Christ in the Philippines,
its religious organizations and/or instrumentalities;
4. That when the Brokenshire Memorial Hospital was
destroyed by fire in 1964, reconstruction efforts and
responsibilities was assumed by the United Church of Christ
in the Philippines, it was the intention of the United Church
Board for World Ministries to relinquish the rights, interests
and ownership to the Brokenshire Memorial Hospital, now
Brokenshire Memorial Hospital, Inc. and considered it so
relinquished, with continuing funding assistance from the
United Church Board for World Ministries and other mission
boards overseas;
5. The United Church Board for World Ministries continues to
this date, with its fraternal and cooperative relationship with
the United Church of Christ in the Philippines;
6. That as has already been stated, the United Church Board
for World Ministries does not intend to take, possess, or
enjoy the legacy of David Jacobson and has manifested and
mandated that all properties that may be derived therefrom
shall be used entirely and exclusively for the work of the
Brokenshire Memorial Hospital and its School of Nursing in
accordance with the wishes of David Jacobson;
7. Considering the clear intention of David Jacobson to
support the life and work of Brokenshire Memorial Hospital
and its School of Nursing, and further considering that what
was bequeathed are shares of stocks in a corporation,, there
exists no legal and moral impediment for the legacy to be
delivered to the Brokenshire Memorial Hospital, Inc., an
instrumentality of the United Church of Christ in the
Philippines, that has succeeded to the ownership of and the
humanitarian, and charitable service of said Hospital.

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Parenthetically, it should be observed, in fairness to Judge
Sebastian, that he was unaware of these circumstances
when he declared the legacy invalid to enforce the
nationalistic provisions of Article XIII of the 1935 Constitution.
For his vigilance in the protection of the national patrimony,
he should be, as he is hereby, commenced.
Even on the assumption that the UCBWN was really the
owner of the Hospital at the time of the effectivity of the will
and that the devise was for that reason unenforceable, the
defect in the will should be deemed rectified by the
subsequent transfer of the property to the Brokenshire
Memorial Hospital, Inc. Our consistent ruling on this matter is
that if land is invalidly transferred to an alien who
subsequently becomes a citizen or transfers it to a ctitizen,
the flaw in the original transaction is considered cured and
the title of the transferee is rendered valid.
Thus, in Sarsosa vda. de Barsobia v. Cuenco, 13 where a
Filipino citizen sold her land to an alien who later sold it to a
Filipino, we held that the invalidity of the initial transfer to the
alien was corrected by the subsequent transfer of the
property to a citizen. A similar ruling was made in Godinez v.
Fong Pak Luen, 14 involving a similar set of facts, where we
also cited Vasquez v. Li Seng Giap, 15 and Herrera v. Luy
King Guan. 16 In Yap v. Maravillas, 17we validated the sale of
agricultural land to an alien who, after the purchase, was
naturalized as a Filipino and so became qualified to acquire
it. The facts were slightly different in De Castro v.
Teng, 18 where, upon the death of an alien who had
purchased a residential lot, his heirs entered into an
extrajudicial partition of his estate and transferred the land to
one of his sons who was a naturalized Filipino. We also
sustained the sale.
This action has been pending for quite some time now
because of the confusion regarding the status of the
Brokenshire Memorial Hospital as the ultimate beneficiary of
the challenged legacy. The curious thing is that this case was
mired in factual and legal complications caused by needless
misunderstanding among the parties which, it now appears,
were never in any substantial disagreement over the
ownership of the Hospital. Their common concern for its
welfare, in line with the charitable spirit and purposes of the
testator, should have avoided all this tedious and
acrimonious dispute.
WHEREFORE, the Brokenshire Memorial Hospital, Inc. is
hereby substituted for the United Church Board for World
Ministries as petitioner in this case and DECLARED to be
qualified to accept the legacy of the late David Jacobson.
The petition as thus modified is GRANTED. The order of the
respondent judge dated December 9, 1971, and his
Resolution dated December 9, 1971, are SET ASIDE. This
decision is immediately executory. No costs.
SO ORDERED.

VASQUEZ v. GIAP and LEE SENG GIAP


Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-3676

January 31, 1955

SOCORRO VASQUEZ, plaintiff-appellant,


vs.
LI SENG GIAPand LI SENG GIAP & SONS, defendantsappellees.
Jose S. Sarte for appellant.
Lee, Orendain and Guzman for appellees.
PADILLA, J.:
This is an action to rescind the sale of a parcel of land
together with the improvements erected thereon, described
in the complaint, which was sold by the plaintiff to the
defendant Li Seng Giap on 22 January 1940, on the ground
that the vendee was an alien and under the Constitution
incapable to own and hold title to lands. The case was
decided upon the following stipulation of facts:
Plaintiff and defendants in the above-entitled case, by their
respective attorneys, hereby stipulate and agree that the
facts involved in this litigation are as follows:.
I. That plaintiff and defendant Li Seng Giap are, and were at
all times mentioned herein, of legal age and residents of the
City of Manila, Philippines; that defendant Li Seng Giap &
Sons, Inc., is a corporation duly organized and existing
under and by virtue of the laws of the Philippines, with
principal office in the City of Manila, Philippines.
II. That on January 22, 1940, plaintiff sold and transferred to
defendant Li Seng Giap, then Chinese citizen, for the sum of
P14,500, a parcel of land together with a house of strong
materials existing thereon, more particularly bounded and
described as follows:.
A PARCEL OF LAND (Lot No. 22-A of the subdivision plan
Psd-15360, being a portion of Lot No. 22, Block No. 2809 of
the Cadastral survey of Manila, G.L.R.O. Cadastral Record
No. 192), situated in the District of Tondo, City of Manila.
Bounded on the NE. by lot No. 23, Block No. 2809, on the
SE. by Lot No. 22-B, Block No. 2809; on the SW. by Lot No.
21, Block No. 2809; and on the NW. by Calle Magdalena; * *
* containing an area of four hundred twenty-three square
meters and forty-five square decimeters (423.45) more or
less. (Assessed Value P15,579.00).

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III. That on August 21, 1940, defendant Li Seng Giap sold
and transferred unto defendant Li Seng Giap & Sons, Inc.,
whose shareholdings then were owned by Chinese citizens,
for the same sum of P14,500, the above-mentioned parcel,
together with the improvements thereon, and duly registered
under Transfer Certificate of Title No. 59684 of the Office of
the Register of Deeds for the city of Manila on August 23,
1940.
IV. That defendant Li Seng Giap was duly naturalized as a
Filipino citizen on May 10, 1941, under Certificate of
Naturalization No. 515, the records of which were duly
reconstituted under an order of this Honorable Court in Case
No. R-603 dated May 24, 1946.
V. That defendant Li Seng Giap & Sons, Inc., is now a
Filipino corporation, 96.67 per cent of its stock being owned
by Filipinos, and duly authorized by its articles of
incorporation to own, acquire or dispose of real properties.
VI. That the following are the names and respective
citizenship and shareholdings of the present stockholders of
Li Seng Giap & Sons, Inc:
Names Citizenship No. of Shares Per cent Total Amount.
Li Seng Giap Filipino 3,400 56.67 P340,000.00 Tang Ho de
Li Seng Giap Filipino 1,200 20.00 120,000.00 William Lee
Filipino 200 3.33 20,000.00 Henry Lee Filipino 200 3.33
20,000.00 Thomas J. Lee Filipino 200 3.33 20,000.00 Sofia
Lee Teehankee Filipino 200 3.33 20,000.00 Julian M. Lee
Filipino 200 3.33 20,000.00 Anthony P. Lee Chinese 200
3.33 20,000.00 6,000 100.00% P600,000.00.
VII. That Henry Lee was duly naturalized as a Filipino citizen
on October 21, 1936, under Certificate of Naturalization No.
352, the records of which were duly reconstituted under an
order of this Honorable Court in Case No. R-407 dated May
24, 1946.
VIII. That Thomas J. Lee was duly naturalized as a Filipino
citizen on May 10, 1941, under Certificate of Naturalization
No. 516, the records of which were duly reconstituted under
an order of this Honorable Court in Case No. R-604 dated
May 24, 1946.
IX. That William Lee was duly naturalized as a Filipino citizen
on November 1, 1948, under Certificate of Naturalization No.
2 of the Court of First Instance of Daet, Camarines Norte.
X. That Sofia Lee Teehankee is a Filipino citizen being
married to Dr. Rafael Teehankee, a Filipino citizen.
XI. That Julia M. Lee and Charles Lee are both Filipinos by
operation of law as they were both minors when their father,
Li Seng Giap, became a Filipino citizen on May 10, 1941.

Manila, Philippines, September 7, 1949.


Respectfully Submitted:
(Sgd.) JOSE S. SARTE Counsel for the Plaintiff Room 213
Central Hotel, Manila.
LEE, ORENDAIN, & GUZMAN Counsel for the Defendants
60 Novaliches St., Manila.
By: (Sgd.) LEONARDO M. GUZMAN
The Court rendered judgment dismissing the complaint with
cost against the plaintiff. She has appealed.
In Caoile vs. Yu Chiao, 49 Off. Gaz., 4321; Talento vs.
Makiki, 49 Off. Gaz., 4331; Bautista vs. Uy 49 Off. Gaz.,
4331; Rellosa vs. Gaw Chee, 49 Off. Gaz., 4345 and
Mercado vs. Go Bio, 49 Off. Gaz., 5360, the majority of this
Court has ruled that in Sales of real estate to aliens
incapable of holding title thereto by virtue of the provisions of
the Constitution 1 both the vendor and the vendee are
deemed to have committed the constitutional violation and
being thus in pari delicto the courts will not afford protection
to either party.2 From this ruling three Justices dissented.3
The action is not of rescission because it is not postulated
upon any of the grounds provided for in Article 1291 of the
old Civil Code and because the action of rescission involves
lesion or damage and seeks to repair it. It is an action for
annulment under Chapter VI, Title II, Book II, on nullity of
contracts, based on a defect in the contract which invalidates
it independently of such lesion or damages. 4 It is very likely
that the majority of this Court proceeded upon that theory
when it applied the in pari delicto rule referred to above.
In the United States the rule is that in a sale of real estate to
an alien disqualified to hold title thereto the vendor divests
himself of the title to such real estate and has no recourse
against the vendee despite the latter's disability on account
of alienage to hold title to such real estate and the vendee
may hold it against the whole except as against the State. It
is only the State that is entitled by proceedings in the nature
of office found to have a forfeiture or escheat declared
against the vendee who is incapable of holding title to the
real estate sold and conveyed to him.5
However, if the State does not commence such proceedings
and in the meantime the alien becomes naturalized citizen
the State is deemed to have waived its right to escheat the
real property and the title of the alien thereto becomes lawful
and valid as of the date of its conveyance or transfer to
him. 6 The Rule in the United States that in a sale of real
estate to an alien disqualified to hold title thereto, the vendor
divests himself of the title to such real estate and is not
permitted to sue for the annulment of his contract, is also the
rule under the Civil Code. * * *Article 1302 of the old Civil

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Code provides: * * *Persons sui juris cannot, however, avail
themselves of the incapacity of those with whom they
contracted; * * *.".
Manresa's comment on this clause of article 1302 of the Civil
Code is as follows:.

FILOMENA GERONA DE CASTRO, petitioner,


vs.
JOAQUIN TENG QUEEN TAN, TAN TENG BIO, DOLORES
TAN, ROSARIO TAN HUA ING, and TO O.
HIAP,respondents.
Pascual G. Mier for petitioner.

Irresponsabilidad del defecto alegada. Es la segunda de


las condiciones necesarias para el ejercicio de la accion.
Algunos la expresan diciendo que solo puede intrenar
aquella el perjudicado, pero esta expresion puede conducir a
ideas equivocadas, ya quela nulidad es independiente de la
lesion, como declara el art. 1.300, y es licito al favorecido
economicamente por el contrato pedir la nulidad basandose
en causas a el no imputables, y en cambio no autoriza la ley
el caso inverso.
Sencilla la regla contenida en el parrafo segundo de este
articulo,puede complicarse cuando coexisten dos defectos
del contrato, comopuede suceder, derivandose a veces de
un mismo hecho, verbigracia,el contrato celebrado con un
incapaz por quien ignora que lo es: eneste ejemplo es
indudable que la persona capaz no podra pedir lanulidad
fundado en la incapacidad de la otra, pero si alegar elerror o
el dolo que padeciera si las circunstancias del sujetoeran de
decisiva influencia en el contrato. (Supra, pp.709-709.).
Appellant argues that if at the time of the conveyance of the
real property the appellee was incapable of holding title to
such real estate, the contract of sale was null or void and
may be annulled, and his subsequent naturalization as a
Filipino citizen cannot retroact to the date of the conveyance
to make it lawful and valid. However, if the ban on aliens
from acquiring not only agricultural but also urban lands, as
construed by this Court in the Krivenko case, is to preserve
the nation's lands for future generations of Filipinos, that aim
or purpose would not be thwarted but achieved by making
lawful the acquisition of real estate by aliens who became
Filipino citizens by naturalization. The title to the parcel of
land of the vendee, a naturalized Filipino citizen, being valid
that of the domestic corporation to which the parcel of land
has been transferred, must also be valid, 96.67 per cent of
its capital stock being owned by Filipinos.
The judgment appealed from is affirmed, without costs.

Eddie Tamondong for respondent Joaquin Teng Queen Tan.


Carlos Buenviaje for respondent Tan Teng Bio.
Arnulfo L. Perete for respondent Ong Shi (To O. Hiap).

PLANA, J.:+.wph!1
Review on certiorari of the order of the former Court of First
Instance of Sorsogon dismissing petitioner's action for
annulment of contract with damages.
In 1938, petitioner Filomena Gerona de Castro sold a 1,258
sq. m. residential lot in Bulan, Sorsogon to Tan Tai, a
Chinese. In 1956, Tan Tai died leaving herein respondents
his widow, To O. Hiap, and children Joaquin Teng Queen
Tan, Tan Teng Bio, Dolores Tan and Rosario Tan Hua Ing.
Before the death of Tan Tai or on August 11, 1956, one of his
sons, Joaquin, became a naturalized Filipino. Six years after
Tan Tai's death, or on November 18, 1962, his heirs
executed an extra-judicial settlement of estate with sale,
whereby the disputed lot in its entirety was alloted to
Joaquin.
On July 15, 1968, petitioner commenced suit against the
heirs of Tan Tai for annulment of the sale for alleged violation
of the 1935 Constitution prohibiting the sale of land to aliens.
Except for respondent Tan Teng Bio who filed an answer to
the complaint, respondents moved to dismiss the complaint
on the grounds of (a) lack of cause of action, the plaintiff
being in pari delicto with the vendee, and the land being
already owned by a Philippine citizen; (b) laches; and (c)
acquisitive prescription.

DE CASTRO v. TAN
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-31956 April 30, 1984

Over the opposition of petitioner, the court a quo dismissed


the complaint, sustaining the first two grounds invoked by the
movants. It is this order of dismissal that is now the subject
of this review.
The assailed order must be sustained.
Independently of the doctrine of pari delicto, the petitioner
cannot have the sale annulled and recover the lot she herself
has sold. While the vendee was an alien at the time of the

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sale, the land has since become the property, of respondent
Joaquin Teng, a naturalized Philippine citizen, who is
constitutionally qualified to own land.t.hqw
... The litigated property is now in the hands of a naturalized
Filipino. It is no longer owned by a disqualified vendee.
Respondent, as a naturalized citizen, was constitutionally
qualified to own the subject property. There would be no
more public policy to be served in allowing petitioner Epifania
to recover the land as it is already in the hands of a qualified
person. Applying by analogy the ruling of this Court in
Vasquez vs. Giap and Li Seng Giap & Sons:t.hqw
... if the ban on aliens from acquiring not only agricultural but
also urban lands, as construed by this Court in the Krivenko
case, is to preserve the nation's lands for future generations
of Filipinos, that aim or purpose would not be thwarted but
achieved by making lawful the acquisition of real estate by
aliens who became Filipino citizens by naturalization.
(Sarsosa Vda. de Barsobia vs. Cuenco, 113 SCRA 547, at
553.)
Laches also militates against petitioner's cause. She sold the
disputed lot in 1938. She instituted the action to annul the
sale only on July 15, 1968. What the Court said in the
cited Sarsosa case applies with equal force to the
petitioner.t.hqw
... it is likewise inescapable that petitioner Epifania had slept
on her rights for 26 years from 1936 to 1962. By her long
inaction of inexcusable neglect, she should be held barred
from asserting her claim to the litigated property (Sotto vs.
Teves, 86 SCRA 157 [1978]).t.hqw
Laches has been defined as the failure or neglect, for an
unreasonable and unexplained length of time, to do that
which by exercising due diligence could or should have been
done earlier; it is negligence or omission to assert a right
within a reasonable time, warranting a presumption that the
party entitled to assert it either has abandoned it or declined
to assert it. (Tijam, et al. vs. Sibonghanoy, et al., No. L21450, April 15, 1968, 23 SCRA 29, 35). (cited in Sotto vs.
Teves, 86 SCRA 154 [1978]).
Respondent, therefore, must be declared to be the rightful
owner of the property. (p. 553.)
WHEREFORE, the appealed order is affirmed. Costs against
petitioner.
SO ORDERED.1wph

TEODORO AGUSTINO v. COURT OF APPEALS


Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. L-46955 February 27, 1989
CONSORCIA, TEODORO and ERNESTO, all surnamed
AGUSTINO, and SPOUSES BENITO VILLAVICENCIO &
CORAZON SOTTO, petitioners,
vs.
THE HONORABLE COURT OF APPEALS (Third Division)
and SEVERINO MOLDOGO and CATALINA
MERCENE, respondents.
Rio Sesinando E. Venturanza and J.V. Balili for petitioners.
Reynaldo Magalang Mambil and Ramon Y Pardo for private
respondents.

GUTIERREZ, JR. J.:


This petition involves a three hectare parcel of land forming
part of a sixteen hectare homestead which was originally
covered by Original Certificate of Title (OCT) No. 597 issued
in accordance with the provisions of Commonwealth Act No.
141 on Homesteads in favor of one, Ambrocio Loren, way
back in 1925. It was only in 1958 or about 32 years after
Loren's death that his heirs, herein petitioners (who are all
surnamed Agustino) executed an affidavit of adjudication
over the said parcel of land and obtained Transfer Certificate
of Title (TCT) No. 7894 in their favor. However, in 1937, the
private respondents had acquired the same parcel of land
from a certain Gavino Luarca, who in turn acquired the same
from Loren in 1926.
The appellate court awarded the parcel of land to the private
respondents. It also ordered the cancellation of the titles of
the petitioners and their co-petitioners, the vendees of the
said land. Hence, this petition.
The records show that in 1926 Ambrocio Loren executed a
deed of sale over the parcel of land for a consideration of
P150.00 in favor of Gavino Luarca. Admittedly, Loren's
original certificate of title which covered the land was barely

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1ST EXAM COVERAGE CASE COMPILATION
one year old at the time so there is no question that the sale
was within the 5-year prohibition against alienation of
homesteads under Com. Act 141. Luarca immediately took
possession of the land consisting of three (3) hectares and
remained there until 1937, when he sold the same land to
the private respondents for P180.00. Since then, the private
respondents have been in possession of the land. The deed
of sale, between Loren and Luarca and between Luarca and
the private respondents were both unregistered.

The private respondents appealed the decision as regards


Parcel A.

Meanwhile, in 1958, the heirs of Juana Loren who was the


only child of Ambrocio Loren, executed an affidavit of
adjudication, thereby succeeding to the land covered by OCT
No. 597 which included the three hectare parcel in dispute.
OCT No. 597 was cancelled and TCT No. 7894 was issued
in the petitioner's favor. According to the private respondents,
prior to execution of the affidavit and the issuance of TCT
No. 7894, the petitioners approached them and asked them
to pay P500.00 a hectare for the land they were occupying in
consideration of a new document to be signed by the
petitioners but the respondents failed to pay so they were left
out of the project of partition.

In this petition, therefore, the petitioners raise the issue of


whether or not the Court of Appeals committed grave abuse
of discretion in holding that the defense of laches can be set
up against the petitioner-heirs who are presumed by law to
have continued possession of the land from the time their
grandfather, Ambrocio Loren, acquired the same in 1926
until the time when they, themselves, acquired title thereto by
virtue of succession. May it also be set up against the other
petitioners who acquired the said land as innocent
purchasers for value, especially since the original sale by
Ambrocio Loren to Gavino Luarca from whom the private
respondents acquired the land was void ab initio being
contrary to public policy?

As alleged by the private respondents and as it appears from


the records, the other areas covered by OCT No. 597 were
also previously sold to different persons. Apparently, these
people were able to pay the petitioners the corresponding
amounts that the latter demanded because when TCT No.
7894 was issued, four (4) partial sales were annotated on
the Memorandum of Encumbrances of the title; then, another
one in 1962 and another in 1967. In 1962, however, the
private respondents, were able to annotate their adverse
claim on the petitioners' title. The respondents remained in
possession of the land up to the events leading to the filing
of the case.
In 1967, the petitioners sold a portion of the land covered by
TCT No. 7894 to their co-petitioners, Villavicencio and Sotto.
This portion is the land occupied by the private respondents.
The sale covered four (4) hectares; 1 hectare was
designated as Parcel B which the private respondents
bought from a certain Ines Pastrana, who in turn, bought the
same from the deceased Juana Loren after the 5-year
prohibition period in the Homestead Law and 3 hectares
designated as Parcel A, which is the subject of this present
petition, TCT No. 31676 was issued in favor of Villavicencio
and Sotto. The new owners succeeded in ousting the private
respondents from the land. Hence, the private respondents
instituted an action for recovery of possession with damages.
The trial court adjudicated Parcel B to the private
respondents. Parcel A was awarded to the petitioners on the
ground that the sale between Ambrocio Loren to Gavino
Luarca and that between Luarca and the private respondents
were null and void as the first sale was executed within the
5-year prohibitive period under the Homestead law.

On April 28, 1977, the Court of Appeals rendered the


questioned decision, adjudicating Parcel A to the private
respondents on the ground that the petitioners, heirs of
Ambrocio Loren, by their inaction from 1926 to 1958, have
lost their right to claim the land because of the equitable
principle of laches.

If the sale by Ambrocio Loren to Gavino Luarca had been


outside the 5-year prohibitory period pursuant to
Commonwealth Act No. 141 and the sale had been void on
some other grounds, there would be no question about the
application of the equitable principle of laches. However, it is
an established rule that equity cannot be set up against clear
provisions of law based on public policy. Thus, in a number
of cases, we have consistently ruled that a sale of a
homestead within the 5-year prohibitive period is void ab
initio and the same cannot be ratified nor can it acquire
validity through the passage of time. In the case of Arsenal v.
Intermediate Appellate Court (143 SCRA 49,53 [1986] we
said:
The above provisions of law are clear and explicit. A contract
which purports to alienate, transfer, convey or encumber any
homestead within the prohibitory period of five years from
the date of the issuance of the patent is void from its
execution. In a number of cases, this Court has held that
such provision is mandatory (De Los Santos v. Roman
Catholic Church of Midsayap, 94 Phil. 405).
Under the provision of the Civil Code, a void contract is
inexistent from the beginning. It cannot be ratified neither
can the right to set up the defense of its illegality be waived.
(Art. 1409, Civil Code).
xxx xxx xxx
xxx xxx xxx
Concededly, the contract of sale executed between the
respondents Palaos and Suralta in 1957 is void. It was
entered into three (3) years and eight (8) months after the

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grant of the homestead patent to the respondent Palaos in
1954.
xxx xxx xxx
xxx xxx xxx
At first blush, the equities of the case seem to lean in favor of
the respondent Suralta who, since 1957, has been in
possession of the land which was almost acquired in an
underhanded manner by the petitioners. We cannot,
however, gloss over the fact that the respondent Suralta was
himself guilty of transgressing the law by entering, in 1957,
into a transaction clearly prohibited by law. It is a long
standing principle that equity follows the law. Court
exercising equity jurisdiction are bound by rules of law and
have no arbitrary discretion to disregard them. Equitable
reasons will not control against any well-settled rule of law or
public policy (McCurdy v. County of Shiawassee 118 N.W.
625). Thus, equity cannot give validity to a void contract. If,
on the basis of equity, we uphold the respondent Suralta's
claim over the land which is anchored on the contracts
previously executed we would in effect be giving life to a void
contract.
Neither can the doctrine of pari delicto which could have
effectively barred Loren's heirs from recovering the property,
be set up against them by the mere fact that Loren, himself,
was guilty of violating the 5-year prohibition. In the case
of Santos v. Roman Catholic Church of Midsayap, et al., (94
Phil. 405, 411) we ruled:
... Ordinarily the principle of pari delicto would apply to her
because her predecessor-in-interest has carried out the sale
with the presumed knowledge of its illegality (8 Manresa 4th
Ed., pp. 717718), but because the subject of the transaction
is a piece of public land, public policy requires that she, as
heir, be not prevented from re-acquiring it because it was
given by law to her family for her home and cultivation. This
is the policy on which our homestead law is predicated

(Pascua v. Talens, 80 Phil. 792). This right cannot be waived.


'It is not within the competence of any citizen to barter away
what public policy by law seeks to preserve (Gonzalo Puyat
and Sons, Inc. v. Pantaleon de las Ama, et al., 74 Phil. 3). ...
It is, however, noteworthy to mention that the petitioners'
interest in the land in question hardly exemplifies the
beneficent purpose for which the provisions on homesteads
were enacted and the spirit behind the homestead law. We
should also stress that the petitioner-vendees are not, as
they claim to be, innocent purchasers for value because at
the time they bought the land, the private respondents had
already caused the annotation of their adverse claim on the
title of the land. Be that as it may, it is not within the power of
this Court to pass judgment on who is more deserving of the
land in question. We only decide who, under the law, is
entitled to the disputed property. It is up to the government to
decide whether or not the petitioners should retain ownership
of the land. Our decision, therefore, in this present petition is
without prejudice to the Government's institution of reversion
proceedings as provided by law.
WHEREFORE, the petition is hereby GRANTED. The
appealed decision and resolution of the Court of Appeals are
ANNULLED and SET ASIDE. The decision of the then Court
of First Instance of Oriental Mindoro is REINSTATED with
the modification that the petitioner who are heirs are ordered
to reimburse the private respondents the amount of P150.00,
which represents the purchase price received by the late
Ambrocio Loren in consideration for the sale of the land.
Let a copy of this decision be furnished the Solicitor General
and the Director of Lands for appropriate action.
SO ORDERED.

MIRANDA, MEL CATHERINE C. 2 SANCHEZ ROMAN

S.Y. 2014-2015