Republic vs Pasig Rizal

REPUBLIC OF THE PHILIPPINES VS. PASIG RIZAL CO., INC.
[ G.R. No. 213207. February 15, 2022 ] EN BANC

Petitioner: Republic of the Philippines

Respondent: Pasig Rizal Co., Inc.

Ponente: Justice Caguioa

Nature: Petition for review on certiorari filed under Rule 45 against the decision of the CA First Division and Special First Division

Keywords: substantial requirements for registration, RA 11573, Section 7, Public Domain, Public Dominion, Patrimonial Property

Facts: Sometime in 1958, Manuel Dee Ham (Manuel) caused the survey of the Subject Property under Plan Psu-169919. The plan was subsequently approved by the Director of Lands, and the Subject Property was declared in Manuel's name for tax purposes.

Manuel died in 1961. Consequently, the Subject Property was inherited by his surviving wife Esperanza Gerona (Esperanza), and their children, who, in turn, collectively transferred their beneficial ownership over the Subject Property to the Dee Ham family corporation, PRCI. Thereafter, PRCI began paying the real property taxes due in its name.

On November 6, 2009, Esperanza executed an Affidavit to formalize the transfer.

In 2010, Esperanza, as President of PRCI, filed before the RTC an application for original registration of title over the Subject Property, for and on behalf of the latter. There, Esperanza asserted that PRCI is the owner of the Subject Property and all improvements found thereon, and that PRCI and its predecessors in interest have been in open, continuous, exclusive, and notorious possession of the Subject Property for more than fifty (50) years. Esperanza also averred that the Subject Property has neither been encumbered, nor has it been adversely possessed or claimed by any other party.

No opposition was entered against the application after due notice and publication. Thus, an order of general default was entered against the whole world, with the exception of the Republic of the Philippines (Republic).

PRCI presented the following evidence:

a) Approved Survey Plan, Technical Description and Surveyor's Certification of [the Subject Property] showing its area and boundaries;

 

b) Tax Declarations and Tax Receipts proving that since 1956, [the Subject Property] was already declared for tax purposes and the corresponding realty taxes were paid; 

c) Affidavit of Esperanza Gerona establishing the transfer of ownership and possession of the subject realty to [PRCI]; 

d) Certification of the Regional Technical Director of Forest Management Service of the Department of Environment and Natural Resources (DENR) proving that the subject lot is within the alienable and disposable land of public domain, as verified under Project No. 21 of Pasig pursuant to [Land Classification] Map 639 which was approved on [March 11, 1927 and] per ocular inspection on the ground on [September 12, 2011; and 

e) Affidavit of Bernarda Lu, a friend and neighbor of the Dee Ham family, attesting to [PRCI's] ownership of the [Subject Property] and its uninterrupted possession as well as the payment of land taxes thereon.

RTC: Confirmed and affirmed title of PRCI

OSG, (as Republic): Assailed the RTC before the CA via Appeal (Rule 41)

CA: Assailed decision dismissing the Appeal brought by the OSG and held that the evidence presented by PRCI sufficiently established that subject property is alienable and disposable.

Republic: Filed an MR

CA: Denied the MR

Republic: Filed present case and asserts that lands of the public domain become patrimonial only when there is an express government manifestation that the property is no longer retained for public service or the development of national wealth.

Issue: 

Whether PRCI has established that the Subject Property forms part of the alienable and disposable agricultural land of the public domain in accordance with the requirements set by prevailing law.

Held:

PRCI and its predecessors in interest, has been in open, continuous, exclusive, and notorious possession and occupation of the Subject Property since 1956. PRCI application stood unopposed before the RTC when presented evidence to prove that the Subject Property forms part of the alienable and disposable agricultural land of the public domain. Under the new parameters set by Sec. 7 RA 11573, these certifications are not acceptable proof of the required land classification status. Nevertheless, in the interest of substantial justice, bearing in mind the curative nature of RA 11573, and recognizing the long period of possession by PRCI, the Court deems it proper to remand the case to the CA for the reception of evidence on the Subject Property’s land classification status in accordance with Section 7 of RA 11573.

Ruling: 

Petition for review on certiorari by Republic - DENIED in part.

SC also AFFIRMED decision of CA insofar as it holds that Pasig Rizal Co., Inc., by itself and through its predecessors in interest, has been in open, continuous, exclusive, and notorious possession and occupation of the Subject Property since 1956.

The case is REMANDED to the Court of Appeals for reception of evidence on the Subject Property's land classification status based on the parameters set forth in Section 7 of Republic Act No. 11573. Thereafter, the Court of Appeals is directed to resolve the present case in accordance with this Decision with due and deliberate dispatch.

Doctrine:

Land classification under the 1987 Constitution and the Civil Code

The Regalian doctrine has long been recognized as the foundation of the State's property regime and has been consistently adopted under the 1935, 1973, and 1987 Constitutions. In essence, the Regalian doctrine espouses that lands not appearing to be clearly under private ownership are generally presumed to form part of the public domain belonging to the State.

However, this general rule admits of a single exception: native title to land. Claims of private ownership pursuant to native title are presumed to have been held even before the Spanish conquest. Thus, lands subject of native titles are deemed excluded from the mass of lands forming part of the public domain.

Public Domain under the constitution - pertain to all lands owned or held by the state in a public or private capacity.

Public Dominon - pertains to those which are intended for public use, public service, or the development of national wealth, and excludes patrimonial property (held by the State in its private capacity to attain economic ends).

Tomas vs. Tomas

Tomas vs. Tomas

G.R. No. L-36897 | June 25, 1980

DE CASTRO, J.

Parties:

Plaintiffs-appellees: SPOUSES FLORENTINO S. TOMAS and FRANCISCA CARINO

Defendant-appellant: EUSEBIA TOMAS (defendant) PHILIPPINE NATIONAL BANK, SANTIAGO, ISABELA BRANCH (defendant-appellant)

Nature: PETITION for certiorari to review the decision of the then Intermediate Appellate Court.

Keyword: Mortgaged property through fraudalent means, good faith

Summary: The parcel of land owned by Florentino Tomas which was obtain through a homestead patent was fraudulently transferred to Eusebia Tomas, claiming that she was the heir of the former. She successfully cancelled the OCT of Florentino Tomas and had a TCT issued under her name through an extra-judicial settlement. She then took a loan from PNB mortgaging the questioned property. Upon the discovery of the original owner of the said fraudulent act, he filed an action against Eusebia Tomas alleging that the mortgage be declared null and void, since the mortgagor (Eusebia) is not the true owner of the property.

Facts: Plaintiff spouses, Florentino S. Tomas and Francisca Cariño, are the owners of a parcel of land located in Malasian, Santiago, Isabela (now Saguday, Nueva Vizcaya) since 1929, which they obtained through a homestead patent with Original Certificate of Title. Through fraud and misrepresentation, one Eusebia Tomas succeeded in having the said OCT cancelled, and obtained another in her name, now TCT-360 Nueva Vizcaya, with which she obtained a loan from the Philippine National Bank branch in Santiago, Isabela, as a security, mortgaging the land with the bank for the loan of P2,500.00. Florentino Tomas discovered the fraudulent acts of Eusebia Tomas when he himself applied for a loan from the Philippine National Bank, and offered as a collateral the same land already mortgaged by Eusebia Tomas to the bank.

In the action plaintiffs filed on April 14, 1964 to declare TCT-350, Nueva Vizcaya, null and void, against Eusebia Tomas, it was found by the court (Court of First Instance of Nueva Vizcaya) that Eusebia Tomas succeeded in having plaintiffs’ OCT No. I-4620 (Isabela)¹ cancelled and having TCT No. 8779 (Isabela)² issued in her name, by executing a deed of extra-judicial settlement³ in which she made it appear that she is the lone heir of the registered owner, Florentino Tomas, to whom she was not even known before, and who was at the time very much alive. She then petitioned for the issuance of another owner’s duplicate of OCT No. I-4620, alleging loss of said owner’s duplicate. On Order of the court (Court of First Instance of Isabela) where the petition was filed, a new owner’s duplicate was issued to Eusebia Tomas as the petitioner. Upon the registration of the deed of extra-judicial settlement (Exhibit “J”), OCT No. I-4620 was cancelled, and TCT No. 8779, now TCT-350 Nueva Vizcaya was issued in the name of Eusebia Tomas on March 14, 1957.

In the same action, the Philippine National Bank was made a co-defendant as the mortgagee of the land, the plaintiffs alleging that the mortgage is null and void, the mortgagor not being the owner of the property mortgaged. After trial in which Eusebia Tomas never appeared to present any evidence, the court a quo rendered judgment declaring the CTC of Eusebia Tomas null and void as well as declaring the mortgage in favor of the Philippine National Bank without force and effect against the plaintiffs

Issue:

a. Whether the mortgage of the land in favor of the appellant bank is valid or not as against appellees

b. Whether the appellant is a mortgagee in good faith and for value, for if it is, and without anything to excite suspension as it claims, it is protected in the same way as a purchaser in good faith and for value is protected under Section 39 of Act 496, otherwise known as the Land Registration Act.

Held:

a. The SC find no error in the holding of the court a quo that the mortgage executed by Eusebia Tomas, appellant’s co-defendant in favor of said appellant bank over the land in question which the former never owned, I [sic] without effect as against appellees herein

b. The SC find more weight and vigor in a doctrine which recognizes a better right for the innocent original registered owner who obtained his certificate of title through perfectly legal and regular proceedings, than one who obtains his certificate from a totally void one, as to prevail over judicial pronouncements to the effect that one dealing with a registered land, such as a purchaser, is under no obligation to look beyond the certificate of title of the vendor, for in the latter case, good faith has yet to be established by the vendee or transferee, being the most essential condition, coupled with valuable consideration, to entitle him to respect for his newly acquired title even as against the holder of an earlier and perfectly valid title. There might be circumstances apparent on the face of the certificate of title which could excite suspicion as to prompt inquiry, such as when the transfer is not by virtue of a voluntary act of the original registered owner, as in the instant case, where it was by means of a self-executed deed of extra-judicial settlement, a fact which should be noted on the face of Eusebia Tomas’ certificate of title. Failing to make such inquiry would hardly be consistent with any pretense of good faith, which the appellant bank invokes to claim the right to be protected as a mortgagee, and for the reversal of the judgment rendered against it by the lower court.

Ratio: In claiming good faith as a mortgagee, and for value, appellant bank claims that no proof to the contrary was presented by appellees in the trial court.⁷ It is a fact, however, that incontrovertible proofs have seen adduced showing that Eusebia Tomas, the mortgagor, was not the owner of the property mortgaged. This is all that appellees had to prove that would place appellant bank on obligation to show good faith, as in fact, it was the bank that alleged good faith as its defense.⁸ It would be more legally correct, therefore, to say that it was incumbent on appellant to prove its affirmative allegation of good faith rather than appellee to show the contrary.

Ruling: WHEREFORE, the judgment appealed from is hereby affirmed, without pronouncement as to costs. SO ORDERED.

Notes: The owner of the building is equitably entitled to reimbursement of the cost of improvements made on public land lot granted to another. (Manila Pencil Company, Inc. vs. Trazo, 77 SCRA 181).

A petition for quieting of title on the ground of fraud although essentially an action for reconveyance should not be dismissed on the ground of prescription where the petition contains an averment that “the malicious and illegal acts committed by the defendants were known to the plaintiffs only during this year 1977.” (Heirs of Segundo Uberas vs. Court of First Instance of Negros Occidental, 86 SCRA 145).

If the vendor failed to redeem the property mortgaged equitably within the period agreed upon, the vendee’s title becomes irrevocable by the mere registration of an affidavit of consolidation. (Labasan vs. Lacuesta, 86 SCRA 16).

The remedy of a realty owner whose property was erroneously registered in another’s name is to recover from the Assurance Fund the losses as damages he had sustained. (Frias vs. Esquivel, 67 SCRA 487).

Where the petitioner and the respondent agreed “to give and to do” certain rights and obligations respecting the land and mortgage debts of the petitioner, but partaking the nature of antichresis, the agreement entered into is an innominate contract. (Dizon vs. Gaborro, 83 SCRA 688).

A mortgage on the land includes the improvements found thereon. (Manahan vs. Cruz, 61 SCRA 137).

Same Same: Land Registration; Between the mortgagee in good faith who extended a mortgage loan to a person who claimed to be the registered owner of the collateral as per the submitted Transfer Certificate of Title and the innocent original registered owner, the latter deserves better protection.—We, indeed, find more weight and vigor in a doctrine which recognizes a better right for the innocent original registered owner who obtained his certificate of title through perfectly legal and regular proceedings, than one who obtains his certificate from a totally void one, as to prevail over judicial pronouncements to the effect that one dealing with a registered land, such as a purchaser, is under no obligation to look beyond the certificate of title of the vendor, for in the latter case, good faith has yet to be established by the vendee or transferee, being the most essential condition, coupled with valuable consideration, to entitle him to respect for his newly acquired title even as against the holder of an earlier and perfectly valid title. There might be circumstances apparent on the face of the certificate of title which could could excite suspicion as to prompt inquiry, such as when the transfer is not by virtue of a voluntary act of the original registered owner, as in the instant case, where it was by means of a self-executed deed of extra-judicial settlement, a fact which should be noted on the face of Eusebia Tomas’ certificate of title. Failing to make such inquiry would hardly be consistent with any pretense of good faith, which the appellant bank invokes to claim the right to be protected as a mortgagee, and for the reversal of the judgment rendered against it by the lower court.

De Guzman, Jr. vs. National Treasurer of the Republic of the Phils

De Guzman, Jr. vs. National Treasurer of the Republic of the Phils

G.R. No. 143281 | August 3, 2000

KAPUNAN, J.

Parties:

Petitioners: SPOUSES FRANCISCO and AMPARO DE GUZMAN, JR.

Respondents: THE NATIONAL TREASURER OF THE REPUBLIC OF THE PHILIPPINES and THE REGISTER OF DEEDS OF MARIKINA CITY

Nature: PETITION for review on certiorari of a decision of the Court of Appeals.

Keyword: Original duplicate of title; impostors selling property; Assurance Fund

Summary: Spouses Milambiling purchased a parcel of land in Antipolo. Due to their work as accountant and nurse in Saudi Arabia, they entrusted the deed of sale of the parcel of land they bought from Sta. Lucia Realty & the corresponding certificate of title to Belgica, a long-time friend. After some time, Belgica informed the spouses that the certificate of title of the said land had been transferred in their name. After an agreement by the couple and Belgica that she will bring the title in Saudi, she informed them that she forgot the title in their house in the Philippines. Angered by the circumstance, Urlan Malimbing asked his relatives to check with the office of the registrar what had happened to their title and was informed that the CTC had been indeed transferred to their names but was subsequently cancelled and title transferred to the spouses de Guzman. Delving in deeper, it turned out that an imposter-couple who had a copy of the owner’s duplicate copy of Malimbiling’s property in Antipolo convinced and sold the property to the spouses de Guzman. Learning upon the circumstance, Urlan Malimbiling went back to the Philippines and filed a case of declaration of nullity of sale and title with damages against spouses de Guzman and the former won. Spouses de Guzman appealed to the CA and the SC but they still lost. Subsequently, the Spouses De Guzman filed an action for damages against the Assurance Fund before the RTC impleading the National Treasuer and the Register of Deeds of Marikina.

RTC: rendered decision in favor of the spouses de Guzman

CA: Reversed the decision of the RTC stating that they do not fall under the circumstance stated in PD 1529 and thus not entitled to damages.

SC: Affirmed the decision of the CA.

Facts: On 01 July 1985, Urlan Milambiling and Asuncion Velarde purchased a parcel of land situated in Antipolo, Rizal from Sta. Lucia Realty and Development, Inc. Although they were already civilly married, Asuncion used her maiden name in the Deed of Sale because, being conservative, she did not want to use her married name until she was married in church.

After their church wedding on 05 July 1985, Urlan and Asuncion Milambiling left for Europe on their honeymoon and from there, they proceeded to Saudi Arabia where they were working as accountant and nurse, respectively.

Before leaving for abroad, the spouses Milambiling entrusted the Deed of Sale of the parcel of land they bought from Sta. Lucia Realty and the corresponding Certificate of Title still in the name of Sta. Lucia Realty to a long-time friend and one of their principal wedding sponsors, Marilyn Belgica, who volunteered to register the sale and transfer the title in their names.

Later, the spouses Milambiling learned from Belgica through an overseas telephone call that a transfer certificate of title of the said parcel of land had already been issued in their names. Belgica committed to the Milambiling spouses that she will personally deliver the title to them in Saudi Arabia. Sometime in May 1986, Belgica arrived in Saudi Arabia but the title was not with her. Belgica said that she left it in their house in the Philippines and forgot to bring it with her.

Urlan Milambiling was angry and immediately called up his relatives in the Philippines and asked them to find out from the Office of the Register of Deeds of Rizal what happened to their title. He was informed that the Certificate of Title covering the said parcel of land had indeed been transferred in their names but was subsequently cancelled and title transferred in the names of x x x the spouses De Guzman.

Milambiling was also told about the circumstances that led to the cancellation of their title. It appears that while the spouses Milambiling were in Saudi Arabia, a couple identifying themselves as the spouses Urlan and Asuncion Milambiling went to the house of a certain Natividad Javiniar, a real estate broker, inquiring if the latter could find a buyer for their lot located in Vermont Subdivision, Antipolo, Rizal. Javiniar accompanied the said couple to the house of [the] spouses De Guzman. Having somehow obtained possession of the owner’s duplicate copy of the certificate of title in the name of the spouses Milambiling, the impostor-couple were able to convince the de Guzmans to buy the property. On 20 November 1985, the impostor-couple, posing as the spouses Milambiling, executed a Deed of Absolute Sale in favor of [the] spouses de Guzman who paid the stipulated purchase price of P99,200.00. On 30 April 1986, [the De Guzmans] registered the said sale with the Register of Deeds of Marikina who cancelled the certificate of title in the name of the Milambilings and issued TCT No. N-117249 in the names of [the] De Guzman[s].

Upon learning of the above, Urlan Milambiling quickly returned to the Philippines. On 24 July 1986, the spouses Milambiling filed an action against [the spouses De Guzman] before the Regional Trial Court of Antipolo, Rizal, Branch 73, for declaration of nullity of sale and title with damages.

 [The] spouses De Guzman appealed the decision of the trial court to the Court of Appeals. On 18 July 1991, [the Court of Appeals] rendered its decision affirming the decision of the court a quo.

[The] spouses De Guzman then went to the Supreme Court on a petition for review on certiorari. On 01 July 1992, the High Tribunal issued a resolution denying the petition on the ground that no reversible error was committed by the Court of Appeals.

On 11 February 1993, [the] spouses De Guzman filed [an] action for damages against the Assurance Fund before the Regional Trial Court of Pasig, Branch 153[,] [impleading the National Treasurer of the Republic of the Philippines and the Register of Deeds of Marikina City.]¹

RTC: rendered its decision finding in favor of the De Guzman spouses adjudging the Assurance Fund liable to the amount actually paid by the plaintiffs in the amount of PHP 99,200.00, ordering the defendants treasurer and/or registrar to pay or cause the payment of the said amount to herein plaintiff.

CA: Found merit on the appeal of the National Treasurer and the Marikina Registrar of Deeds and reversed the decision of the RTC.

SC: Affirmed the decision of the CA.

Issue: Whether or not the spouses De Guzman are entitled to compensation for damages by the Assurance Fund

Held: No. They are not entitled.

Ratio: Section 95 of Presidential Decree No. 1529, otherwise known as the Property Registration Decree, provides:

SEC. 95. Action for compensation from funds.—A person who, without negligence on his part, sustains loss or damage, or is deprived of land or any estate or interest therein in consequence of the bringing of the land under the operation of the Torrens system or arising after original registration of land, through fraud or in consequence of any error, omission, mistake or misdescription in any certificate of title or in any entry or memorandum in the registration book, and who by the provisions of this Decree is barred or otherwise precluded under the provision of any law from bringing an action for the recovery of such land or the estate or interest therein, may bring an action in any court of competent jurisdiction for the recovery of damage to be paid out of the Assurance Fund.

The precursor of Section 95, Section 101 of the Land Registration Act (Act No. 496), similarly states:

SEC. 101. Any person who without negligence on his part sustains loss or damage through any omission, mistake or misfeasance of the clerk, or register of deeds, or of any examiner of titles, or of any deputy or clerk of the register of deeds in the performance of their respective duties under the provisions of this Act, and any person who is wrongfully deprived of any land or any interest therein, without negligence on his part, through the bringing of the same under the provisions of this Act or by the registration of any other persons as owner of such land, or by any mistake, omission, or misdescription in any certificate or owner’s duplicate, or in any entry or memorandum in the register or other official book, or by any cancellation, and who by the provisions of this Act is barred or in any way precluded from bringing an action for the recovery of such land or interest therein, or claim upon the same, may bring in any court of competent jurisdiction an action against the Treasurer of the Philippine Archipelago for the recovery of damages to be paid out of the Assurance Fund.

It may be discerned from the foregoing provisions that the persons who may recover from the Assurance Fund are:

1.     1)Any person who sustains loss or damage under the following conditions:

1.     a)that there was no negligence on his part; and

2.     b)that the loss or damage sustained was through any omission, mistake or malfeasance of the court personnel, or the Registrar of Deeds, his deputy, or other employees of the Registry in the performance of their respective duties under the provisions of the Land Registration Act, now, the Property Registration Decree; or

1.     2)Any person who has been deprived of any land or interest therein under the following conditions:

1.     a)that there was no negligence on his part;

2.     b)that he was deprived as a consequence of the bringing of his land or interest therein under the provisions of the Property Registration Decree; or by the registration by any other person as owner of such land; or by mistake, omission or misdescription in any certificate of owner’s duplicate, or in any entry or memorandum in the register or other official book or by any cancellation; and

3.     c)that he is barred or in any way precluded from bringing an action for the recovery of such land or interest therein, or claim upon the same.

The Court of Appeals correctly held that petitioners’ circumstances do not fall under the first case. Petitioners have not alleged that the loss or damage they sustained was “through any omission, performance of their respective duties.” Moreover, petitioners were negligent in not ascertaining whether the impostors who executed a deed of sale in their (petitioner’s) favor were really the owners of the property.

Nor does petitioners’ situation fall under the second case. They were not deprived of their land “as a consequence of the bringing of [the] land or interest therein under the provisions of the Property Registration Decree.” Neither was the deprivation due to “the registration by any other person as owner of such land,” or “by mistake, omission or misdescription in any certificate or owner’s duplicate, or in any entry or memorandum in the register or other official book or by any cancellation.”

Petitioners’ claim is not supported by the purpose for which the Assurance Fund was established. The Assurance Fund is intended to relieve innocent persons from the harshness of the doctrine that a certificate is conclusive evidence of an indefeasible title to land.⁵ Petitioners did not suffer any prejudice because of the operation of this doctrine. On the contrary, petitioners sought to avail of the benefits of the Torrens System by registering the property in their name. Unfortunately for petitioners, the original owners were able to judicially recover the property from them. That petitioners eventually lost the property to the original owners, however, does not entitle them to compensation under the Assurance Fund. While we commiserate with petitioners, who appear to be victims of unscrupulous scoundrels, we cannot sanction compensation that is not within the law’s contemplation. As we said in Treasurer of the Philippines vs. Court of Appeals, the Government is not an insurer of the unwary citizen’s property against the chicanery of scoundrels. Petitioners’ recourse is not against the Assurance Fund, as the Court of Appeals pointed out, but against the rogues who duped them.

Ruling: ACCORDINGLY, the petition is DENIED.

Same Same: Land Titles; Land Registration; Assurance Fund; The Assurance Fund is intended to relieve innocent persons from the harshness of the doctrine that a certificate is conclusive evidence of an indefeasible title to land.—Petitioners’ claim is not supported by the purpose for which the Assurance Fund was established. The Assurance Fund is intended to relieve innocent persons from the harshness of the doctrine that a certificate is conclusive evidence of an indefeasible title to land. Petitioners did not suffer any prejudice because of the operation of this doctrine. On the contrary, petitioners sought to avail of the benefits of the Torrens System by registering the property in their name. Unfortunately for petitioners, the original owners were able to judicially recover the property from them. That petitioners eventually lost the property to the original owners, however, does not entitle them to compensation under the Assurance Fund.

Same; Same; Same; The Government is not an insurer of the unwary citizen’s property against the chicanery of scoundrels.—While we commiserate with petitioners, who appear to be victims of unscrupulous scoundrels, we cannot sanction compensation that is not within the law’s contemplation. As we said in Treasurer of the Philippines vs. Court of Appeals, the Government is not an insurer of the unwary citizen’s property against the chicanery of scoundrels. Petitioners’ recourse is not against the Assurance Fund, as the Court of Appeals pointed out, but against the rogues who duped them.

Notes: The law must protect and prefer the lawful owner of registered title over the transferee of a vendor bereft of any transmissible rights. (Mathay vs. Court of Appeals, 295 SCRA 556 [1998])

Philippine Banking Corporation vs. Lui She

G.R. No. L-17587             September 12, 1967

CASTRO, J.

Parties of the Case:

PHILIPPINE BANKING CORPORATION, representing the estate of JUSTINA SANTOS Y CANON FAUSTINO, deceased, (plaintiff-appellant)

LUI SHE in her own behalf and as administratrix of the intestate estate of Wong Heng, deceased, (defendant-appellant)

Keyword: Leasing, lease for 50 years, lease for 99 years

Summary: Justina Santos leased her land in favor of Wong for 50 years and an option to sell it to him once he acquired philippine citizenship.

Facts: 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.

Justina Santos then executed on a contract of lease 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.

On December 21 she executed another contract 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.

In two wills executed on August 24 and 29, 1959, she bade her legatees to respect the contracts she had entered into with Wong, but in a codicil 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.

Issue: Whether or not the contracts with Wong were valid

Held: NO.

Ratio: 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.

            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, 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 but also of the right to dispose of it— rights the sum total of which make up ownership. If this can be done, then the Constitutional ban against alien landholding in the Philippines, is indeed in grave peril.

Ruling: 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.

Doctrine: Even if the contract appears to be valid, if the provisions is against a constitutional prohibition, the same should be considered null and void.

Cheesman vs Intermediate Appelate Court

G.R. No. 74833             January 21, 1991

NARVASA, J.

Parties of the Case:

THOMAS C. CHEESMAN (petitioner)

INTERMEDIATE APPELLATE COURT and ESTELITA PADILLA (respondents)

Keyword: american citizen, lack of consent of foreigner spouse of the sale of Philippine property, prohibition of barring foreigners to own property in the philippines

Summary: petitioner (an American citizen) and Criselda Cheesman acquired a parcel of land that was later registered in the latter’s name. Criselda subsequently sold the land to a third person without the knowledge of the petitioner. The petitioner then sought the nullification of the sale as he did not give his consent thereto. The Court held that assuming that it was his (petitioner’s) intention that the lot in question be purchased by him and his wife, he acquired no right whatever over the property by virtue of that purchase; and in attempting to acquire a right or interest in land, vicariously and clandestinely, he knowingly violated the Constitution; thus, the sale as to him was null and void.

Facts: Thomas Cheesman and Criselda P. Cheesman were married on December 4, 1970 but have been separated since February 15,1981.1

On June 4, 1974, a "Deed of Sale and Transfer of Possessory Rights" was executed by Armando Altares conveying a parcel of unregistered land and the house thereon (at No. 7 Neptune Street, Gordon Heights, Olongapo City) in favor of "Criselda P. Cheesman, of legal age, Filipino citizen, married to Thomas Cheesman, and residing at Lot No. 1, Blk. 8, Filtration Road, Sta. Rita, Olongapo City . . ." Thomas Cheesman, although aware of the deed, did not object to the transfer being made only to his wife.

Thereafter—and again with the knowledge of Thomas Cheesman and also without any protest by him—tax declarations for the property purchased were issued in the name only of Criselda Cheesman and Criselda assumed exclusive management and administration of said property, leasing it to tenants.

On July 1, 1981, Criselda Cheesman sold the property to Estelita M. Padilla, without the knowledge or consent of Thomas Cheesman. The deed described Criselda as being " . . . of legal age, married to an American citizen,. . ."

Thirty days later, or on July 31, 1981, Thomas Cheesman brought suit in the Court of First Instance at Olongapo City against his wife, Criselda, and Estelita Padilla, praying for the annulment of the sale on the ground that the transaction had been executed without his knowledge and consent. An answer was filed in the names of both defendants, alleging that (1) the property sold was paraphernal, having been purchased by Criselda with funds exclusively belonging to her ("her own separate money"); (2) Thomas Cheesman, being an American, was disqualified to have any interest or right of ownership in the land; and (3) Estelita Padilla was a buyer in good faith.

CFI: Declared that the sale executed by Criselda Cheesman in favor of Padilla is void ab initio  and ordering the delivery of the property to thomas cheesman as administrator of the conjugal partnership property.

Trial Court’s summary judgment: the sale between Criselda Cheesman and Padilla is valid. Thomas Cheesman’s complaint is dismissed and is ordered to immediately turn over the possession of the hous and lot to Padilla.

IAC: Found all of Thomas Cheesman’s contention to be without merit. IAC affirmed summary judgment having found no reversible error.

Issue: Whether or not Thomas Cheesman has a right over the alleged conjugal property sold by his Filipino Wife without his consent despiite him being an American Citizen.

Held: No.

Ratio: the fundamental law prohibits the sale to aliens of residential land. Section 14, Article XIV of the 1973 Constitution ordains that, "Save in cases of hereditary succession, no private land shall be transferred or conveyed except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain." Petitioner Thomas Cheesman was, of course, charged with knowledge of this prohibition. Thus, assuming that it was his intention that the lot in question be purchased by him and his wife, he acquired no right whatever over the property by virtue of that purchase; and in attempting to acquire a right or interest in land, vicariously and clandestinely, he knowingly violated the Constitution; the sale as to him was null and void. In any event, he had and has no capacity or personality to question the subsequent sale of the same property by his wife on the theory that in so doing he is merely exercising the prerogative of a husband in respect of conjugal property. To sustain such a theory would permit indirect controversion of the constitutional prohibition. If the property were to be declared conjugal, this would accord to the alien husband a not insubstantial interest and right over land, as he would then have a decisive vote as to its transfer or disposition. This is a right that the Constitution does not permit him to have.

As already observed, the finding that his wife had used her own money to purchase the property cannot, and will not, at this stage of the proceedings be reviewed and overturned. But even if it were a fact that said wife had used conjugal funds to make the acquisition, the considerations just set out militate, on high constitutional grounds, against his recovering and holding the property so acquired or any part thereof. And whether in such an event, he may recover from his wife any share of the money used for the purchase or charge her with unauthorized disposition or expenditure of conjugal funds is not now inquired into; that would be, in the premises, a purely academic exercise. An equally decisive consideration is that Estelita Padilla is a purchaser in good faith, both the Trial Court and the Appellate Court having found that Cheesman's own conduct had led her to believe the property to be exclusive property of the latter's wife, freely disposable by her without his consent or intervention. An innocent buyer for value, she is entitled to the protection of the law in her purchase, particularly as against Cheesman, who would assert rights to the property denied him by both letter and spirit of the Constitution itself.

Ruling: WHEREFORE, the appealed decision is AFFIRMED, with costs against petitioner.

SO ORDERED.

Ramirez vs. Vda De Ramirez

Ramirez vs. Vda De Ramirez

G.R. No. L-27952            February 15, 1982

ABAD SANTOS, J.

Parties of the Case:

TESTATE ESTATE OF JOSE EUGENIO RAMIREZ, MARIA LUISA PALACIOS, Administratrix (petitioner-appellee)

MARCELLE D. VDA. DE RAMIREZ, ET AL., oppositors, JORGE and ROBERTO RAMIREZ (legatees, oppositors- appellants)

Keyword: usufruct land in favor of a foreigner as stated in the Filipino’s will

Facts: Jose Eugenio Ramirez, a Filipino national, died in Spain on December 11, 1964, with only his widow (a French national living in Paris) as compulsory heir. His will was admitted to probate by the Court of First Instance of Manila, Branch X, on July 27, 1965 by Maria Luisa Palacios who was appointed administratrix of the estate. The principal beneficiaries are as follows: his widow Marcelle Demoron de Ramirez; his two grandnephews Roberto and Jorge Ramirez; and his companion Wanda de Wrobleski.

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 (An Austrian living in Spain).

Issue:

Whether or not 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

Held: No. It is not violative of the Constitution.

Ratio: The appellants claim that the usufruct over real properties of the estate in favor of Wanda is void because it violates the constitutional prohibition against the acquisition of lands by aliens.

The 1935 Constitution which is controlling provides as follows:

SEC. 5. Save in cases of hereditary succession, no private agricultural land shall be transferred or assigned except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain in the Philippines. (Art. XIII.)

The court a quo upheld the validity of the usufruct given to Wanda on the ground that the Constitution covers not only succession by operation of law but also testamentary succession. We are of the opinion that the Constitutional provision which enables aliens to acquire private lands does not extend to testamentary succession for otherwise the prohibition will be for naught and meaningless. Any alien would be able to circumvent the prohibition by paying money to a Philippine landowner in exchange for a devise of a piece of land.

This opinion notwithstanding, We uphold the usufruct in favor of Wanda because a usufruct, albeit a real right, does not vest title to the land in the usufructuary and it is the vesting of title to land in favor of aliens which is proscribed by the Constitution.

Ruling: 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