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G.R. Nos. 113472-73 December 20, 1994

ONG CHING PO, YU SIOK LIAN DAVID ONG and JIMMY ONG, petitioners,vs.COURT OF APPEALS and SOLEDAD PARIAN, respondents.

Bautista, Salva, Arrieta, Salva for petitioner.

Arthem Maceda Potian for private respondent.

QUIASON, J .:

This is a petition for review on certiorariunder Rule 45 of the Revised Rules of Court of the Decision of thCourt of Appeals dated July 15, 1993, which dismissed the petition for certiorari in CA-G.R. CV Nos. 283992.

I

On July 23, 1947, Ong Joi Jong sold a parcel of land located at Fundidor Street, San Nicolas to private

espondent Soledad Parian, the wife of Ong Yee. The latter, the brother of petitioner Ong Ching Po, died anuary 1983; while petitioner Ong Ching Po died in October 1986. The said sale was evidenced by a

notarized Deed of Sale written in English. Subsequently, the document was registered with the Register oDeeds of Manila, which issued Transfer Certificate of Title No. 9260 dated September 2, 1947 in the namof private respondent.

According to private respondent, she entrusted the administration of the lot and building to petitioner OngChing Po when she and her husband settled in Iloilo. When her husband died, she demanded that the lot vacated because she was going to sell it. Unfortunately, petitioners refused to vacate the said premises.

On March 19, 1984, private respondent filed a case for unlawful detainer against petitioner Ong Ching Po

before the Metropolitan Trial Court of Manila, Branch 26. The inferior court dismissed her case. Thedismissal was affirmed by the Regional Trial Court, Branch 10, Manila. The decision of the Regional TrialCourt was, in turn, affirmed by the Court of Appeals, which dismissed the petition. The decision of the Coof Appeals became final and executory.

Petitioners, on the other hand, claimed that on July 23, 1946, petitioner Ong Ching Po bought the saidparcel of land from Ong Joi Jong. The sale was evidenced by a photo copy of a Deed of Sale written inChinese with the letter head "Sincere Trading Co." (Exh. "B"). An English translation of said document (EC") read as follows:

Deed of Sale

I, Ong Joi Jong, a party to this Deed of Sale hereby sell in absolutely (sic) manner a lot located on No. 4 FundiStreet, San Nicolas an (sic) area consisting 213 square meters including a one-story house erected thereon uMr. Ong Ching Po for the sum of P6,000.00 the receipt of which is hereby acknowledged by me and consequeI have executed and signed the government registered title (sic) the said lot inclusive of the house erectedthereon, now belong (sic) to Mr. Ong Ching Po unequivocally. And the purpose of this document is to preciselyserve as proof of the sale.

Addendum: I have acceded to the request of Mr. Ong Ching Po into signing another document in favor of SoleParian (She is the Filipino wife of Ong Yee, brother of Ong Ching Po) for the purpose of facilitating the issuancthe new title by the City Register of Deeds and for the reason that he is not yet a Filipino. I certify to thetruthfulness of this fact.


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Lot Seller: Ong Joi Jong

Exhibits for the plaintiff, p. 4)

On December 6, 1983, petitioner Ong Ching Po executed a Deed of Absolute Sale conveying to his childrpetitioners Jimmy and David Ong, the same property sold by Ong Joi Jong to private respondent in 1947On December 12 1985, petitioners Ong Ching Po, Jimmy Ong and David Ong filed an action foreconveyance and damages against private respondent in the Regional Trial Court, Branch 53, Manila,

docketed as Case No. 85-33962.

On July 26, 1986, private respondent filed an action for quieting of title against petitioners Ong Ching Po his wife, petitioner Yu Siok Lian, in the Regional Trial Court, Branch 58, Manila, docketed as Civil Case N86-36818. Upon her motion, the case was consolidated with Civil Case No.85-33962. On May 30 1990, the trial court rendered a decision in favor of private respondent. On appeal bpetitioners to the Court of Appeals, the said court affirmed the decision of the Regional Trial Court.

Hence, this petition.

II

According to petitioners, the Court of Appeals erred:

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

(2) When it concluded that the acts of petitioners were not acts of ownership; and

(3) When it ruled that no express nor implied trust existed between petitioners and private respondent (Rollo, 17-18).

As stated by petitioners themselves, what is in dispute ". . . is not so much as to which between Exhibit "Aand "Exhibit "B" is more weighty, but whether this document is what it purports to be (i.e., a deed ofconveyance in favor of Soledad Parian [private respondent] or it was only resorted to or executed as a

subterfuge because the real buyer (Ong Ching Po) was an alien and it was agreed upon between OngChing Po and his brother (Ong Yee, Soledad Parian's husband) that the land be registered in the name oSoledad Parian in order to avoid legal complications and to facilitate registration and transfer and that thesaid title would be transferred by Soledad to Ong Ching Po or his successors-in-interest and that she woube holding the title in trust for him" (Rollo, pp. 19-20).

We cannot go along with the claim that petitioner Ong Ching Po merely used private respondent as adummy to have the title over the parcel of land registered in her name because being an alien he wasdisqualified to own real property in the Philippines. To sustain such an outrageous contention would begiving a high premium to a violation of our nationalization laws.

Assuming that Exhibit "B" is in existence and that it was duly executed, still petitioners cannot claimownership of the disputed lot by virtue thereof.

Section 5, Article XIII of the 1935 Constitution provides, as follows:

Save in cases of hereditary succession, no private agricultural land shall be transferred or assigned except toindividuals, corporations, or associations qualified to acquire or hold lands of the public domain in the Philippin

Section 14, Article XIV of the 1973 Constitution provides, as follows:

Save in cases of hereditary succession, no private land shall be transferred or conveyed except to individualscorporations, or associations qualified to acquire or hold lands in the public domain.


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Section 7, Article XII of the 1987 Constitution provides:

Save in cases of hereditary succession, no private lands shall be transferred or conveyed except to individualcorporations, or associations qualified to acquire or hold lands in the public domain.

The capacity to acquire private land is made dependent upon the capacity to acquire or hold lands of thepublic domain. Private land may be transferred or conveyed only to individuals or entities "qualified toacquire lands of the public domain" (II Bernas, The Constitution of the Philippines 439-440 [1988 ed.]).

The 1935 Constitution reserved the right to participate in the "disposition, exploitation, development and

utilization" of all "lands of the public domain and other natural resources of the Philippines" for Filipinocitizens or corporations at least sixty percent of the capital of which was owned by Filipinos. Aliens, whethndividuals or corporations, have been disqualified from acquiring public lands; hence, they have also beedisqualified from acquiring private lands.

Petitioner Ong Ching Po was a Chinese citizen; therefore, he was disqualified from acquiring and owningeal property. Assuming that the genuineness and due execution of Exhibit "B" has been established, the

same is null and void, it being contrary to law.

On the other end of the legal spectrum, the deed of sale executed by Ong Joi Jong in favor of privateespondent (Exh. "A") is a notarized document.

To remove the mantle of validity bestowed by law on said document, petitioners claim that privateespondent admitted that she did not pay anything as consideration for the purported sale in her favor. In

same breath, petitioners said that private respondent implied in her deposition that it was her husband whpaid for the property. It appears, therefore, that the sale was financed out of conjugal funds and that it washer husband who handled the transaction for the purchase of the property. Such transaction is a commonpractice in Filipino-family affairs.

t is not correct to say that private respondent never took possession of the property. Under the law,possession is transferred to the vendee by virtue of the notarized deed of conveyance. Under Article 1498he Civil Code of the Philippines, "when the sale is made through a public instrument, the execution there

shall be equivalent to the delivery of the object of the contract, if from the deed the contrary does not appeor cannot clearly be inferred." If what petitioners meant was that private respondent never lived in thebuilding constructed on said land, it was because her family had settled in Iloilo.

There is no document showing the establishment of an express trust by petitioner Ong Ching Po as trustoand private respondent as trustee. Not even Exhibit "B" can be considered as such a document becauseprivate respondent, the registered owner of the property subject of said "deed of sale," was not a partyhereto. The oral testimony to prove the existence of the express trust will not suffice. Under Article 1443 he Civil Code of the Philippines, "No express trust concerning an immovable or any interest therein may proved by parole evidence."

Undaunted, petitioners argue that if they cannot prove an express trust in writing, they can prove an implirust orally. While an implied trust may be proved orally (Civil Code of the Philippines, Art. 1457), theevidence must be trustworthy and received by the courts with extreme caution, because such kind ofevidence may be easily fabricated (Salao v. Salao, 70 SCRA 65 [1976]). It cannot be made to rest on vagand uncertain evidence or on loose, equivocal or indefinite declarations (Cf. De Leon v. Molo-Peckson, e16 Phil. 1267 [1962]). Petitioners do not claim that Ong Yee was not in a financial position to acquire the

and and to introduce the improvements thereon. On the other hand, Yu Siok Lian, the wife of petitioner OChing Po, admitted in her testimony in court that Ong Yee was a stockholder of Lam Sing Corporation andwas engaged in business.


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The Court of Appeals did not give any credence to Exhibit "B" and its translation, Exhibit "C", because thedocuments had not been properly authenticated.

Under Section 4, Rule 130 of the Revised Rules of Court:

Secondary Evidence when Original is lost or destroyed. When the original writing has been lost or destroyed, ocannot be produced in court, upon proof of its execution and lost or destruction, or unavailability, its contents mbe proved by a copy, or by a recital of its contents in some authentic document, or by the recollection of thewitnesses.

Secondary evidence is admissible when the original documents were actually lost or destroyed. But prior he introduction of such secondary evidence, the proponent must establish the former existence of thedocument. The correct order of proof is as follows: existence; execution; loss; contents. This order may bchanged if necessary in the discretion of the court (De Vera v. Aguilar, 218 SCRA 602 [1993]).

Petitioners failed to adduce evidence as to the genuineness and due execution of the deed of sale, ExhibB".

The due execution of the document may be established by the person or persons who executed it; by theperson before whom its execution was acknowledged; or by any person who was present and saw itexecuted or who after its execution, saw it and recognized the signatures; or by a person to whom the

parties to the instrument had previously confessed the execution thereof (De Vera v. Aguilar, supra).

Petitioner Yu Siok Lian testified that she was present when said document was executed, but the trial couejected her claim and held:

If it is true that she was present, why did she not sign said document, even merely as a witness? Her oraltestimony is easy to concoct or fabricate. Furthermore, she was married only on September 6, 1946 to the plaOng Ching Po, in Baguio City where she apparently resided, or after the deed of sale was executed. The Courdoes not believe that she was present during the execution and signing of the deed of sale involved therein,notwithstanding her pretensions to the contrary (Decision p. 6, Records p. 414).

As to the contention of petitioners that all the tax receipts, tax declaration, rental receipts, deed of sale (E

B") and transfer certificate of title were in their possession, private respondent explained that she and hehusband entrusted said lot and building to petitioners when they moved to Iloilo.

As observed by the Court of Appeals:

We find, however, that these acts, even if true, are not necessarily reflective of dominion, as even a mereadministrator or manager may lawfully perform them pursuant to his appointment or employment (Rollo,p. 10).

t is markworthy that all the tax receipts were in the name of private respondent and her husband. The reneceipts were also in the name of her husband.

WHEREFORE, the petition is DISMISSED.

SO ORDERED.

Padilla, Davide, Jr., Bellosillo and Kapunan, JJ., concur.

ALFRED FRITZ FRENZEL,petitioner, vs. EDERLINA P. CATITO, respondent.

D E C I S I O N


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CALLEJO, SR.,J.:

Before us is a petition for review of the Decision1[1]of the Court of Appeals in CA-G.R. CV No. 53485 which affirmhe Decision2[2]of the Regional Trial Court of Davao City, Branch 14, in Civil Case No. 17,817 dismissing the

petitioners complaint,and the resolution of the Court of Appeals denying his motion for reconsideration of the saiddecision.

The Antecedents3[3]

As gleaned from the evidence of the petitioner, the case at bar stemmed from the following factual backdrop:

Petitioner Alfred Fritz Frenzel is an Australian citizen of German descent. He is an electrical engineer by professionbut worked as a pilot with the New Guinea Airlines. He arrived in the Philippines in 1974, started engaging in businn the country two years thereafter, and married Teresita Santos, a Filipino citizen. In 1981, Alfred and Teresitaeparated from bed and board without obtaining a divorce.

Sometime in February 1983, Alfred arrived in Sydney, Australia for a vacation. He went to Kings Cross, a night spn Sydney, for a massage where he met Ederlina Catito, a Filipina and a native of Bajada, Davao City. Unknown to

Alfred, she resided for a time in Germany and was married to Klaus Muller, a German national. She left Germany aried her luck in Sydney, Australia, where she found employment as a masseusein the Kings Cross nightclub. She

was fluent in German, and Alfred enjoyed talking with her. The two saw each other again; this time Ederlina endedtaying in Alfreds hotel for three days. Alfred gave Ederlina sums of money for her services.4[4]

Alfred was so enamored with Ederlina that he persuaded her to stop working at Kings Cross, return to the Philippinnd engage in a wholesome business of her own. He also proposed that they meet in Manila, to which she assented.

Alfred gave her money for her plane fare to the Philippines. Within two weeks of Ederlinas arrival in Manila, Alfreoined her. Alfred reiterated his proposal for Ederlina to stay in the Philippines and engage in business, even offerininance her business venture. Ederlina was delighted at the idea and proposed to put up a beauty parlor. Alfred hapgreed.

Alfred told Ederlina that he was married but that he was eager to divorce his wife in Australia. Alfred proposedmarriage to Ederlina, but she replied that they should wait a little bit longer.

Ederlina found a building at No. 444 M.H. del Pilar corner Arquiza Street, Ermita, Manila, owned by one Atty. JoseHidalgo who offered to convey his rights over the property for P18,000.00. Alfred and Ederlina accepted the offer.Ederlina put up a beauty parlor on the property under the business name Edorial Beauty Salon, and had it registeredwith the Department of Trade and Industry under her name. Alfred paid Atty. Hidalgo P20,000.00 for his right overproperty and gave P300,000.00 to Ederlina for the purchase of equipment and furnitures for the parlor. As Ederlina


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was going to Germany, she executed a special power of attorney on December 13, 19835[5]appointing her brother, ACatito, as her attorney-in-fact in managing the beauty parlor business. She stated in the said deed that she was marro Klaus Muller. Alfred went back to Papua New Guinea to resume his work as a pilot.

When Alfred returned to the Philippines, he visited Ederlina in her Manila residence and found it unsuitable for her.decided to purchase a house and lot owned by Victoria Binuya Steckel in San Francisco del Monte, Quezon City,overed by Transfer Certificate of Title No. 218429 for US$20,000.00. Since Alfred knew that as an alien he was

disqualified from owning lands in the Philippines, he agreed that only Ederlinas name would appear in the deed of s the buyer of the property, as well as in the title covering the same. After all, he was planning to marry Ederlina an

he believed that after their marriage, the two of them would jointly own the property. On January 23, 1984, a Contrao Sell was entered into between Victoria Binuya Steckel as the vendor and Ederlina as the sole vendee. Alfred signherein as a witness.6[6]Victoria received from Alfred, for and in behalf of Ederlina, the amount of US$10,000.00 as

partial payment, for which Victoria issued a receipt.7[7]When Victoria executed the deed of absolute sale over theproperty on March 6, 1984,8[8]she received from Alfred, for and in behalf of Ederlina, the amount of US$10,000.00inal and full payment. Victoria likewise issued a receipt for the said amount.9[9]After Victoria had vacated the prop

Ederlina moved into her new house. When she left for Germany to visit Klaus, she had her father Narciso Catito andher two sisters occupy the property.

Alfred decided to stay in the Philippines for good and live with Ederlina. He returned to Australia and sold his fiberglass pleasure boat to John Reid for $7,500.00 on May 4, 1984.10[10]He also sold his television and video business iPapua New Guinea for K135,000.00 to Tekeraoi Pty. Ltd.11[11]He had his personal properties shipped to the Philippnd stored at No. 14 Fernandez Street, San Francisco del Monte, Quezon City. The proceeds of the sale were

deposited in Alfreds account with the Hong KongShanghai Banking Corporation (HSBC), Kowloon Branch underBank Account No. 018-2-807016.12[12]When Alfred was in Papua New Guinea selling his other properties, the bank


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ent telegraphic letters updating him of his account.13[13]Several checks were credited to his HSBC bank account froPapua New Guinea Banking Corporation, Westpac Bank of Australia and New Zealand Banking Group Limited andWestpac BankPNG-Limited. Alfred also had a peso savings account with HSBC, Manila, under Savings Account N01-725-183-01.14[14]

Once, when Alfred and Ederlina were in Hong Kong, they opened another account with HSBC, Kowloon, this timehe name of Ederlina, under Savings Account No. 018-0-807950.15[15]Alfred transferred his deposits in Savings

Account No. 018-2-807016 with the said bank to this new account. Ederlina also opened a savings account with theBank of America Kowloon Main Office under Account No. 30069016.16[16]

On July 28, 1984, while Alfred was in Papua New Guinea, he received a Letter dated December 7, 1983 from KlausMuller who was then residing in Berlin, Germany. Klaus informed Alfred that he and Ederlina had been married onOctober 16, 1978 and had a blissful married life until Alfred intruded therein. Klaus stated that he knew of Alfred anEderlinas amorous relationship, and discovered the same sometimein November 1983 when he arrived in Manila. lso begged Alfred to leave Ederlina alone and to return her to him, saying that Alfred could not possibly build hisuture on his (Klaus) misfortune.17[17]

Alfred had occasion to talk to Sally MacCarron, a close friend of Ederlina. He inquired if there was any truth to Klau

tatements and Sally confirmed that Klaus was married to Ederlina. When Alfred confronted Ederlina, she admittedhat she and Klaus were, indeed, married. But she assured Alfred that she would divorce Klaus. Alfred was appeased

He agreed to continue the amorous relationship and wait for the outcome of Ederlinas petition for divorce. After allntended to marry her. He retained the services of Rechtsanwltin Banzhaf with offices in Berlin, as her counsel whonformed her of the progress of the proceedings.18[18]Alfred paid for the services of the lawyer.

n the meantime, Alfred decided to purchase another house and lot, owned by Rodolfo Morelos covered by TCT No92456 located in Pea Street, Bajada, Davao City.19[19]Alfred again agreed to have the deed of sale made out in the


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name of Ederlina. On September 7, 1984, Rodolfo Morelos executed a deed of absolute sale over the said property avor of Ederlina as the sole vendee for the amount of P80,000.00.20[20]Alfred paid US$12,500.00 for the property.

Alfred purchased another parcel of land from one Atty. Mardoecheo Camporedondo, located in Moncado, Babak,Davao, covered by TCT No. 35251. Alfred once more agreed for the name of Ederlina to appear as the sole vendee he deed of sale. On December 31, 1984, Atty. Camporedondo executed a deed of sale over the property for P65,000n favor of Ederlina as the sole vendee.21[21]Alfred, through Ederlina, paid the lot at the cost of P33,682.00 and

US$7,000.00, respectively, for which the vendor signed receipts.22[22]On August 14, 1985, TCT No. 47246 was isso Ederlina as the sole owner of the said property.23[23]

Meanwhile, Ederlina deposited on December 27, 1985, the total amount of US$250,000 with the HSBC Kowloonunder Joint Deposit Account No. 018-462341-145.24[24]

The couple decided to put up a beach resort on a four-hectare land in Camudmud, Babak, Davao, owned by spousesEnrique and Rosela Serrano. Alfred purchased the property from the spouses for P90,000.00, and the latter issued aeceipt therefor.25[25]A draftsman commissioned by the couple submitted a sketch of the beach resort.26[26]Beach

houses were forthwith constructed on a portion of the property and were eventually rented out by Ederlinas father,

Narciso Catito. The rentals were collected by Narciso, while Ederlina kept the proceeds of the sale of copra from thoconut trees in the property. By this time, Alfred had already spent P200,000.00 for the purchase, construction and

upkeep of the property.

Ederlina often wrote letters to her family informing them of her life with Alfred. In a Letter dated January 21, 1985,wrote about how Alfred had financed the purchases of some real properties, the establishment of her beauty parlorbusiness, and her petition to divorce Klaus.27[27]


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Because Ederlina was preoccupied with her business in Manila, she executed on July 8, 1985, two special powers ofttorney28[28]appointing Alfred as attorney-in-fact to receive in her behalf the title and the deed of sale over the

property sold by the spouses Enrique Serrano.

n the meantime, Ederlinas petition for divorce was denied because Klaus opposed the same. A second petition file

by her met the same fate. Klaus wanted half of all the properties owned by Ederlina in the Philippines before he wogree to a divorce. Worse, Klaus threatened to file a bigamy case against Ederlina.29[29]

Alfred proposed the creation of a partnership to Ederlina, or as an alternative, the establishment of a corporation, wiEderlina owning 30% of the equity thereof. She initially agreed to put up a corporation and contacted Atty. ArmandDominguez to prepare the necessary documents. Ederlina changed her mind at the last minute when she was advisensist on claiming ownership over the properties acquired by them during their coverture.

Alfred and Ederlinas relationship started deteriorating. Ederlina had not been able to secure a divorce from Klaus. Tatter could charge her for bigamy and could even involve Alfred, who himself was still married. To avoidomplications, Alfred decided to live separately from Ederlina and cut off all contacts with her. In one of her letters

Alfred, Ederlina complained that he had ruined her life. She admitted that the money used for the purchase of theproperties in Davao were his. She offered to convey the properties deeded to her by Atty. Mardoecheo Camporedonnd Rodolfo Morelos, asking Alfred to prepare her affidavit for the said purpose and send it to her for herignature.30[30]The last straw for Alfred came on September 2, 1985, when someone smashed the front and rear

windshields of Alfreds car and damaged the windows. Alfred thereafter executed an affidavit-complaint chargingEderlina and Sally MacCarron with malicious mischief.31[31]

On October 15, 1985, Alfred wrote to Ederlinas father, complaining that Ederlina had taken all his life savings andbecause of this, he was virtually penniless. He further accused the Catito family of acquiring for themselves theproperties he had purchased with his own money. He demanded the return of all the amounts that Ederlina and heramily had stolen and turn over all the properties acquired by him and Ederlina during their coverture.32[32]

Shortly thereafter, Alfred filed a Complaint33[33]dated October 28, 1985, against Ederlina, with the Regional TrialCourt of Quezon City, for recovery of real and personal properties located in Quezon City and Manila. In hisomplaint, Alfred alleged, inter alia, that Ederlina, without his knowledge and consent, managed to transfer funds fr


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heir joint account in HSBC Hong Kong, to her own account with the same bank. Using the said funds, Ederlina wable to purchase the properties subject of the complaints. He also alleged that the beauty parlor in Ermita wasstablished with his own funds, and that the Quezon City property was likewise acquired by him with his personalunds.34[34]

Ederlina failed to file her answer and was declared in default. Alfred adduced his evidence ex-parte.

n the meantime, on November 7, 1985, Alfred also filed a complaint35[35]against Ederlina with the Regional TrialCourt, Davao City, for specific performance, declaration of ownership of real and personal properties, sum of moneynd damages. He alleged, inter alia, in his complaint:

4. That during the period of their common-law relationship, plaintiff solely through his own efforts and resourcescquired in the Philippines real and personal properties valued more or less at P724,000.00; The defendants commoaw wife or live-in partner did not contribute anything financially to the acquisition of the said real and personal

properties. These properties are as follows:

. Real Properties

. TCT No. T-92456 located at Bajada, Davao City, consisting of 286 square meters, (with residential house) registen the name of the original title owner Rodolfo M. Morelos but already fully paid by plaintiff. Valued at P342,000.0

b. TCT No. T-47246 (with residential house) located at Babak, Samal, Davao, consisting of 600 square meters,egistered in the name of Ederlina Catito, with the Register of Deeds of Tagum, Davao del Norte valued at P144,000

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

I. Personal Properties:

. Furniture valued at P10,000.00.

. .

. That defendant made no contribution at all to the acquisition of the above-mentioned properties as all the monies used in acquiring said properties belonged solely to plaintiff;36[36]

Alfred prayed that after hearing, judgment be rendered in his favor:

WHEREFORE, in view of the foregoing premises, it is respectfully prayed that judgment be rendered in favor ofplaintiff and against defendant:


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) Ordering the defendant to execute the corresponding deeds of transfer and/or conveyances in favor of plaintiff ovhose real and personal properties enumerated in Paragraph 4 of this complaint;

b) Ordering the defendant to deliver to the plaintiff all the above real and personal properties or their money value,which are in defendants name and custody because these were acquired solely with plaintiffs money and resources

during the duration of the common-law relationship between plaintiff and defendant, the description of which are asollows:

1) TCT No. T-92456 (with residential house) located at Bajada, Davao City, consisting of 286 square meters,egistered in the name of the original title owner Rodolfo Morelos but already fully paid by plaintiff. Valued at

P342,000.00;

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

P144,000.00;

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

) Declaring the plaintiff to be the sole and absolute owner of the above-mentioned real and personal properties;

d) Awarding moral damages to plaintiff in an amount deemed reasonable by the trial court;

) To reimburse plaintiff the sum of P12,000.00 as attorneys fees for having compelled the plaintiff to litigate;

) To reimburse plaintiff the sum of P5,000.00 incurred as litigation expenses also for having compelled the plaintiffitigate; and

g) To pay the costs of this suit;

Plaintiff prays for other reliefs just and equitable in the premises.37[37]

n her answer, Ederlina denied all the material allegations in the complaint, insisting that she acquired the saidproperties with her personal funds, and as such, Alfred had no right to the same. She alleged that the deeds of sale,eceipts, and certificates of titles of the subject properties were all made out in her name.38[38]By way of special andffirmative defense, she alleged that Alfred had no cause of action against her. She interposed counterclaims against

petitioner.39[39]


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n the meantime, the petitioner filed a Complaint dated August 25, 1987, against the HSBC in the Regional Trial Coof Davao City40[40]for recovery of bank deposits and damages.41[41]He prayed that after due proceedings, judgment endered in his favor, thus:

WHEREFORE, plaintiff respectfully prays that the Honorable Court adjudge defendant bank, upon hearing thevidence that the parties might present, to pay plaintiff:

. ONE HUNDRED TWENTY SIX THOUSAND TWO HUNDRED AND THIRTY U.S. DOLLARS AND NINETEIGHT CENTS (US$126,230.98) plus legal interests, either of Hong Kong or of the Philippines, from 20 December984 up to the date of execution or satisfaction of judgment, as actual damages or in restoration of plaintiffs lost doavings;

2.The same amount in (1) above as moral damages;

. Attorneys fees in the amount equivalent to TWENTY FIVE PER CENT (25%) of (1) and (2) above;

4. Litigation expenses in the amount equivalent to TEN PER CENT (10%) of the amount in (1) above; and

. For such other reliefs as are just and equitable under the circumstances.42[42]

On April 28, 1986, the RTC of Quezon City rendered its decision in Civil Case No. Q-46350, in favor of Alfred, thedecretal portion of which reads as follows:

WHEREFORE, premises considered, judgment is hereby rendered ordering the defendant to perform the following:

1) To execute a document waiving her claim to the house and lot in No. 14 Fernandez St., San Francisco Del MonQuezon City in favor of plaintiff or to return to the plaintiff the acquisition cost of the same in the amount of$20,000.00, or to sell the said property and turn over the proceeds thereof to the plaintiff;

2) To deliver to the plaintiff the rights of ownership and management of the beauty parlor located at 444 Arquiza SErmita, Manila, including the equipment and fixtures therein;

3) To account for the earnings of rental of the house and lot in No. 14 Fernandez St., San Francisco Del Monte,Quezon City, as well as the earnings in the beauty parlor at 444 Arquiza St., Ermita, Manila and turn over one-half ohe net earnings of both properties to the plaintiff;

4) To surrender or return to the plaintiff the personal properties of the latter left in the house at San Francisco DelMonte, to wit:

(1) Mamya automatic camera(1) 12 inch Sonny T.V. set, colored with remote control.(1) Micro oven


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(1) Electric fan (tall, adjustable stand)(1) Office safe with (2) drawers and safe(1) Electric Washing Machine(1) Office desk and chair(1) Double bed suits(1) Mirror/dresser(1) Heavy duty voice/working mechanic(1) Sony Beta-Movie camera(1) Suitcase with personal belongings(1) Cardboard box with belongings(1) Guitar Amplifier(1) Hanger with mens suit (white).

To return to the plaintiff, (1) Hi-Fi Stereo equipment left at 444 Arquiza Street, Ermita, Manila, as well as the FronSuzuki car.

4) To account for the monies (sic) deposited with the joint account of the plaintiff and defendant (Account No. 01807950); and to restore to the plaintiff all the monies (sic) spent by the defendant without proper authority;

5) To pay the amount of P5,000.00 by way of attorneys fees, and the costs of suit.

SO ORDERED.43[43]

However, after due proceedings in the RTC of Davao City, in Civil Case No. 17,817, the trial court rendered judgmon September 28, 1995 in favor of Ederlina, the dispositive portion of which reads:

WHEREFORE, the Court cannot give due course to the complaint and hereby orders its dismissal. The counterclaimof the defendant are likewise dismissed.

SO ORDERED.44[44]

The trial court ruled that based on documentary evidence, the purchaser of the three parcels of land subject of theomplaint was Ederlina. The court further stated that even if Alfred was the buyer of the properties, he had no causction against Ederlina for the recovery of the same because as an alien, he was disqualified from acquiring and ownands in the Philippines. The sale of the three parcels of land to the petitioner was null and voidab initio. Applying t

pari delictodoctrine, the petitioner was precluded from recovering the properties from the respondent.

Alfred appealed the decision to the Court of Appeals45[45]in which the petitioner posited the view that although heprayed in his complaint in the court a quothat he be declared the owner of the three parcels of land, he had no intenof owning the same permanently. His principal intention therein was to be declared the transient owner for the purpof selling the properties at public auction, ultimately enabling him to recover the money he had spent for the purchahereof.


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On March 8, 2000, the CA rendered a decision affirming in totothe decision of the RTC. The appellate court ruled the petitioner knowingly violated the Constitution; hence, was barred from recovering the money used in the purcha

of the three parcels of land. It held that to allow the petitioner to recover the money used for the purchase of theproperties would embolden aliens to violate the Constitution, and defeat, rather than enhance, the public policy.46[46

Hence, the petition at bar.

The petitioner assails the decision of the court contending that:

THE HONORABLE COURT OF APPEALS ERRED IN APPLYING THE RULE OFIN PARI DELICTOIN THENSTANT CASE BECAUSE BY THE FACTS AS NARRATED IN THE DECISION IT IS APPARENT THAT T

PARTIES ARE NOT EQUALLY GUILTY BUT RATHER IT WAS THE RESPONDENT WHO EMPLOYEDFRAUD AS WHEN SHE DID NOT INFORM PETITIONER THAT SHE WAS ALREADY MARRIED TOANOTHER GERMAN NATIONAL AND WITHOUT SUCH FRAUDULENT DESIGN PETITIONER COULD NHAVE PARTED WITH HIS MONEY FOR THE PURCHASE OF THE PROPERTIES.47[47]

nd

THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE INTENTION OF THEPETITIONER IS NOT TO OWN REAL PROPERTIES IN THE PHILIPPINES BUT TO SELL THEM AT PUBLIAUCTION TO BE ABLE TO RECOVER HIS MONEY USED IN PURCHASING THEM.48[48]

Since the assignment of errors are intertwined with each other, the Court shall resolve the same simultaneously.

The petitioner contends that he purchased the three parcels of land subject of his complaint because of his desire tomarry the respondent, and not to violate the Philippine Constitution. He was, however, deceived by the respondentwhen the latter failed to disclose her previous marriage to Klaus Muller. It cannot, thus, be said that he and theespondent are equally guilty; as such, thepari delictodoctrine is not applicable to him. He acted in good faith, onhe advice of the respondents uncle, Atty. Mardoecheo Camporedondo. There is no evidence on record that he was

ware of the constitutional prohibition against aliens acquiring real property in the Philippines when he purchased theal properties subject of his complaint with his own funds. The transactions were not illegalper sebut merely

prohibited, and under Article 1416 of the New Civil Code, he is entitled to recover the money used for the purchasehe properties. At any rate, the petitioner avers, he filed his complaint in the court a quomerely for the purpose of

having him declared as the owner of the properties, to enable him to sell the same at public auction. Applying bynalogy Republic Act No. 13349[49]as amended by Rep. Act No. 4381 and Rep. Act No. 4882, the proceeds of the sa

would be remitted to him, by way of refund for the money he used to purchase the said properties. To bar the petitiorom recovering the subject properties, or at the very least, the money used for the purchase thereof, is to allow theespondent to enrich herself at the expense of the petitioner in violation of Article 22 of the New Civil Code.


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The petition is bereft of merit.

Section 14, Article XIV of the 1973 Constitution provides, as follows:

Save in cases of hereditary succession, no private land shall be transferred or conveyed except to individuals,orporations, or associations qualified to acquire or hold lands in the public domain.50[50]

Lands of the public domain, which include private lands, may be transferred or conveyed only to individuals or entiqualified to acquire or hold private lands or lands of the public domain. Aliens, whether individuals or corporations,have been disqualified from acquiring lands of the public domain. Hence, they have also been disqualified fromcquiring private lands.51[51]

Even if, as claimed by the petitioner, the sales in question were entered into by him as the real vendee, the saidransactions are in violation of the Constitution; hence, are null and void ab initio.52[52]A contract that violates the

Constitution and the law, is null and void and vests no rights and creates no obligations. It produces no legal effect all.53[53]The petitioner, being a party to an illegal contract, cannot come into a court of law and ask to have his illega

objective carried out. One who loses his money or property by knowingly engaging in a contract or transaction whinvolves his own moral turpitude may not maintain an action for his losses. To him who moves in deliberation and

premeditation, the law is unyielding.54[54]The law will not aid either party to an illegal contract or agreement; it leavhe parties where it finds them.55[55]Under Article 1412 of the New Civil Code, the petitioner cannot have the subjec

properties deeded to him or allow him to recover the money he had spent for the purchase thereof.56[56]Equity as a rwill follow the law and will not permit that to be done indirectly which, because of public policy, cannot be donedirectly.57[57]Where the wrong of one party equals that of the other, the defendant is in the stronger position ... it


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ignifies that in such a situation, neither a court of equity nor a court of law will administer a remedy.58[58]The rule xpressed in the maxims:EX DOLO MALO NON ORITUR ACTIOandIN PARI DELICTO POTIOR EST CONDITI

DEFENDENTIS.59[59]

The petitioner cannot feign ignorance of the constitutional proscription, nor claim that he acted in good faith, let alossert that he is less guilty than the respondent. The petitioner is charged with knowledge of the constitutional

prohibition.60[60]As can be gleaned from the decision of the trial court, the petitioner was fully aware that he wasdisqualified from acquiring and owning lands under Philippine law even before he purchased the properties in questnd, to skirt the constitutional prohibition, the petitioner had the deed of sale placed under the respondents name as

ole vendee thereof:

Such being the case, the plaintiff is subject to the constitutional restrictions governing the acquisition of real propertn the Philippines by aliens.

From the plaintiffs complaint before the Regional Trial Court, National Capital Judicial Region, Branch 84, QuezoCity in Civil Case No. Q-46350 he alleged:

xxx That on account that foreigners are not allowed by the Philippine laws to acquire real properties in their name

n the case of my vendor Miss Victoria Vinuya (sic) although married to a foreigner, we agreed and I consented inhaving the title to subject property placed in defendants name alone although I paid for the whole price out of my o

xclusive funds. (paragraph IV, Exhibit W.)

nd his testimony before this Court which is hereby quoted:

ATTY. ABARQUEZ:

Q. In whose name the said house and lot placed, by the way, where is his house and lot located?

A. In 14 Fernandez St., San Francisco, del Monte, Manila.

Q. In whose name was the house placed?

A. Ederlina Catito because I was informed being not a Filipino, I cannot own the property. (tsn, p. 11, August 27,986).

xxx xxx xxx

COURT:

Q. So you understand that you are a foreigner that you cannot buy land in the Philippines?


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A. That is correct but as she would eventually be my wife that would be owned by us later on. (tsn, p. 5, Septem, 1986)

xxx xxx xxx

Q. What happened after that?

A. She said you foreigner you are using Filipinos to buy property.

Q. And what did you answer?

A. I said thank you very much for the property I bought because I gave you a lot of money (tsn., p. 14, ibid).

t is evident that the plaintiff was fully aware that as a non-citizen of the Philippines, he was disqualified from validpurchasing any land within the country.61[61]

The petitioners claim that he acquired the subject properties because of his desire to marry the respondent, believinhat both of them would thereafter jointly own the said properties, is belied by his own evidence. It is merely anfterthought to salvage a lost cause. The petitioner admitted on cross-examination that he was all along legally marro Teresita Santos Frenzel, while he was having an amorous relationship with the respondent:

ATTY. YAP:

Q When you were asked to identify yourself on direct examination you claimed before this Honorable Court thyour status is that of being married, do you confirm that?

A Yes, sir.

Q To whom are you married?

A To a Filipina, since 1976.

Q Would you tell us who is that particular person you are married since 1976?

A Teresita Santos Frenzel.

Q Where is she now?

A In Australia.

Q Is this not the person of Teresita Frenzel who became an Australian citizen?

A I am not sure, since 1981 we were separated.

Q You were only separated, in fact, but not legally separated?

A Thru my counsel in Australia I filed a separation case.

Q As of the present you are not legally divorce[d]?


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A I am still legally married.62[62]

The respondent was herself married to Klaus Muller, a German citizen. Thus, the petitioner and the respondent coulnot lawfully join in wedlock. The evidence on record shows that the petitioner in fact knew of the respondentsmarriage to another man, but nonetheless purchased the subject properties under the name of the respondent and paihe purchase prices therefor. Even if it is assumedgratia arguendithat the respondent and the petitioner wereapacitated to marry, the petitioner is still disqualified to own the properties in tandem with the respondent.63[63]

The petitioner cannot find solace in Article 1416 of the New Civil Code which reads:

Art. 1416. When the agreement is not illegalper sebut is merely prohibited, and the prohibition by the law is designor the protection of the plaintiff, he may, if public policy is thereby enhanced, recover what he has paid or

delivered.64[64]

The provision applies only to those contracts which are merely prohibited, in order to benefit private interests. It doenot apply to contracts void ab initio. The sales of three parcels of land in favor of the petitioner who is a foreigner isllegalper se.The transactions are void ab initiobecause they were entered into in violation of the Constitution. Thuo allow the petitioner to recover the properties or the money used in the purchase of the parcels of land would beubversive of public policy.

Neither may the petitioner find solace in Rep. Act No. 133, as amended by Rep. Act No. 4882, which reads:

SEC. 1. Any provision of law to the contrary notwithstanding, private real property may be mortgaged in favor of anndividual, corporation, or association, but the mortgagee or his successor-in- interest, if disqualified to acquire or hands of the public domain in the Philippines, shall not take possession of the mortgaged property during the existen

of the mortgage and shall not take possession of mortgaged property except after default and for the sole purpose oforeclosure, receivership, enforcement or other proceedings and in no case for a period of more than five years fromctual possession and shall not bid or take part in any sale of such real property in case of foreclosure:Provided, Thaid mortgagee or successor-in-interest may take possession of said property after default in accordance with the

prescribed judicial procedures for foreclosure and receivership and in no case exceeding five years from actualpossession.65[65]

From the evidence on record, the three parcels of land subject of the complaint were not mortgaged to the petitionehe owners thereof but weresoldto the respondent as the vendee, albeit with the use of the petitioners personal fun

Futile, too, is petitioners reliance on Article 22 of the New Civil Code which reads:


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Art. 22. Every person who through an act of performance by another, or any other means, acquires or comes intopossession of something at the expense of the latter without just or legal ground, shall return the same to him.66[66]

The provision is expressed in the maxim: MEMO CUM ALTERIUS DETER DETREMENTO PROTEST (No persohould unjustly enrich himself at the expense of another). An action for recovery of what has been paid without justause has been designated as an accion in rem verso.67[67]This provision does not apply if, as in this case, the action

proscribed by the Constitution or by the application of thepari delictodoctrine.68[68]It may be unfair and unjust to bhe petitioner from filing an accion in rem versoover the subject properties, or from recovering the money he paid fhe said properties, but, as Lord Mansfield stated in the early case ofHolman vs. Johnson:69[69]The objection that aontract is immoral or illegal as between the plaintiff and the defendant, sounds at all times very ill in the mouth of t

defendant. It is not for his sake, however, that the objection is ever allowed; but it is founded in general principles opolicy, which the defendant has the advantage of, contrary to the real justice, as between him and the plaintiff.

N LIGHT OF ALL THE FOREGOING, the petition is DISMISSED. The decision of the Court of Appeals isAFFIRMED in toto.

Costs against the petitioner.

SO ORDERED.

Bellosillo, J., (Chairman), Austria-Martinez, and Tinga, JJ., concur.

Quisumbing, on leave.

September 12, 1967

G.R. No. L-17587

PHILIPPINE BANKING CORPORATION, representing the estate of JUSTINA SANTOS Y CANONFAUSTINO, deceased, plaintiff-appellant,vs.LUI SHE in her own behalf and as administratrix of the intestate estate of Wong Heng, deceased , defendant-ppellant.

Nicanor S. Sison for plaintiff-appellant.

Ozaeta, Gibbs & Ozaeta for defendant-appellant.

Castro, J .:


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ustina Santos y Canon Faustino and her sister Lorenzo were the owners in common of a piece of land in Manila. Thparcel, with an area of 2,582.30 square meters, is located on Rizal Avenue and opens into Florentino Torres street atback and Katubusan street on one side. In it are two residential houses with entrance on Florentino Torres street andHen Wah Restaurant with entrance on Rizal Avenue. The sisters lived in one of the houses, while Wong Heng, aChinese, lived with his family in the restaurant. Wong had been a long-time lessee of a portion of the property, payimonthly 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 withother relative to live with. Her only companions in the house were her 17 dogs and 8 maids. Her otherwise drearyxistence was brightened now and then by the visits of Wongs four children who had become the joy of her life. W

himself was the trusted man to whom she delivered various amounts for safekeeping, including rentals from herproperty at the corner of Ongpin and Salazar streets and the rentals which Wong himself paid as lessee of a part of tRizal Avenue property. Wong also took care of the payment; in her behalf, of taxes, lawyers fees, funeral expensesmasses, 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 15957 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 towithdraw at any time from the agreement; the monthly rental was P3,120. The contract covered an area of 1,124 squmeters. Ten days later (November 25), the contract was amended (Plff Exh. 4) so as to make it cover the entire propncluding the portion on which the house of Justina Santos stood, at an additional monthly rental of P360. For his pa

Wong undertook to pay, out of the rental due from him, an amount not exceeding P1,000 a month for the food of hedogs 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 forP120,000, payable within ten years at a monthly installment of P1,000. The option, written in Tagalog, imposed on he 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 thenpending in the Court of First Instance of Rizal. It appears, however, that this application for naturalization waswithdrawn when it was discovered that he was not a resident of Rizal. On October 28, 1958 she filed a petition to adhim and his children on the erroneous belief that adoption would confer on them Philippine citizenship. The error w

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 yeand another (Plff Exh. 6) fixing the term of the option of 50 years. Both contracts are written in Tagalog.

n two wills executed on August 24 and 29, 1959 (Def Exhs. 285 & 279), she bade her legatees to respect the contrahe had entered into with Wong, but in a codicil (Plff Exh. 17) of a later date (November 4, 1959) she appears to havhange 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 th

ontracts were obtained by Wong through fraud, misrepresentation, inequitable conduct, undue influence and abusonfidence and trust of and (by) taking advantage of the helplessness of the plaintiff and were made to circumvent tonstitutional 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 theontracts and to order Wong to pay Justina Santos the additional rent of P3,120 a month from November 15, 1957 ohe allegation that the reasonable rental of the leased premises was P6,240 a month.

n his answer, Wong admitted that he enjoyed her trust and confidence as proof of which he volunteered thenformation that, in addition to the sum of P3,000 which he said she had delivered to him for safekeeping, another su

of P22,000 had been deposited in a joint account which he had with one of her maids. But he denied having taken


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dvantage of her trust in order to secure the execution of the contracts in question. As counterclaim he sought theecovery of P9,210.49 which he said she owed him for advances.

Wongs admission of the receipt of P22,000 and P3,000 was the cue for the filing of an amended complaint. Thus onune 9, 1960, aside from the nullity of the contracts, the collection of various amounts allegedly delivered on differe

occasions was sought. These amounts and the dates of their delivery are P33,724.27 (Nov. 4, 1957); P7,344.42 (Dec957); P10,000 (Dec. 6, 1957); P22,000 and P3,000 (as admitted in his answer). An accounting of the rentals from t

Ongpin and Rizal Avenue properties was also demanded.

n the meantime as a result of a petition for guardianship filed in the Juvenile and Domestic Relations Court, theSecurity Bank & Trust Co. was appointed guardian of the properties of Justina Santos, while Ephraim G. Gochangcwas appointed guardian of her person.

n his answer, Wong insisted that the various contracts were freely and voluntarily entered into by the parties. Heikewise disclaimed knowledge of the sum of P33,724.27, admitted receipt of P7,344.42 and P10,000, but contendedhat these amounts had been spent in accordance with the instructions of Justina Santos; he expressed readiness toomply 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 5 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 alsoordered to pay the sum of P3,120.00 for every month of his occupation as lessee under the document of lease hereinustained, from 15 November 1959, and the moneys he has consigned since then shall be imputed to that; costs agai

Wong Heng.

From this judgment both parties appealed directly to this Court. After the case was submitted for decision, both partdied, Wong Heng on October 21, 1962 and Justina Santos on December 28, 1964. Wong was substituted by his wifeLui She, the other defendant in this case, while Justina Santos was substituted by the Philippine Banking Corporatio

ustina Santos maintainednow reiterated by the Philippine Banking Corporationthat the lease contract (Plff E) should have been annulled along with the four other contracts (Plff Exhs. 4-7) because it lacks mutuality; becausencluded a portion which, at the time, was in custodia legis; because the contract was obtained in violation of theiduciary 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 claimehat this stipulation offends article 1308 of the Civil Code which provides that the contract must bind both contract

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 fopersonal service of a resolutory condition permitting the cancellation of the contract by one of the parties. Such atipulation, as can be readily seen, does not make either the validity or the fulfillment of the contract dependent uponhe will of the party to whom is conceded the privilege of cancellation; for where the contracting parties have agreedhat such option shall exist, the exercise of the option is as much in the fulfillment of the contract as any other act w

may have been the subject of agreement. Indeed, the cancellation of a contract in accordance with conditions agreedupon beforehand is fulfillment.2


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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 befhe erected any building on the land, might rescind the lease, can hardly be regarded as a violation of article 1256 [nort. 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, becausof a difference in factual setting. In that case, the lessees argued that they could occupy the premises as long as theypaid the rent. This is of course untenable, for as this Court said, If this defense were to be allowed, so long asdefendants elected to continue the lease by continuing the payment of the rentals, the owner would never be able todiscontinue it; conversely, although the owner should desire the lease to continue the lessees could effectively thwarhis purpose if they should prefer to terminate the contract by the simple expedient of stopping payment of the rental

Here, in contrast, the right of the lessee to continue the lease or to terminate it is so circumscribed by the term of theontract that it cannot be said that the continuance of the lease depends upon his will. At any rate, even if no term ha

been fixed in the agreement, this case would at most justify the fixing of a period5 but not the annulment of the cont

Nor is there merit in the claim that as the portion of the property formerly owned by the sister of Justina Santos wastill in the process of settlement in the probate court at the time it was leased, the lease is invalid as to such portion.ustina Santos became the owner of the entire property upon the death of her sister Lorenzo on September 22, 1957 orce of article 777 of the Civil Code. Hence, when she leased the property on November 15, she did so already as

owner thereof. As this Court explained in upholding the sale made by an heir of a property under judicialdministration:

That the land could not ordinarily be levied upon while in custodia legisdoes not mean that one of the heirs may noell the right, interest or participation which he has or might have in the lands under administration. The ordinaryxecution of property in custodia legisis prohibited in order to avoid interference with the possession by the court. Bhe sale made by an heir of his share in an inheritance, subject to the result of the pending administration, in no wisetands in the way of such administration.6

t is next contended that the lease contract was obtained by Wong in violation of his fiduciary relationship with JustSantos, contrary to article 1646, in relation to article 1941 of the Civil Code, which disqualifies agents (from leasin

he property whose administration or sale may have been entrusted to them. But Wong was never an agent of JustinSantos. The relationship of the parties, although admittedly close and confidential, did not amount to an agency so abring the case within the prohibition of the law.

ust the same, it is argued that Wong so completely dominated her life and affairs that the contracts express not her wbut only his. Counsel for Justina Santos cites the testimony of Atty. Tomas S. Yumol who said that he prepared theease contract on the basis of data given to him by Wong and that she told him that whatever Mr. Wong wants musollowed.7

The testimony of Atty. Yumol cannot be read out of context in order to warrant a finding that Wong practically dictahe 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 fher, I dont really know if I have expressed my opinion, but I told her that we would rather not execute any contractnymore, 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?


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A Agreed with my objectives that it is really onerous and that I was really right, but after that, I was called again by nd she told me to follow the wishes of Mr. Wong Heng.

x x x x x x x x x

Q So, as far as consent is concerned, you were satisfied that this document was perfectly proper?

x x x x x x x x x

A Your Honor, if I have to express my personal opinion, I would say she is not, because, as I said before, she told mWhatever 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 detract from the binding force of the contract. For the contract was fully explained to Justina Santos by her own lawOne incident, related by the same witness, makes clear that she voluntarily consented to the lease contract. This witnaid that the original term fixed for the lease was 99 years but that as he doubted the validity of a lease to an alien fohat length of time, he tried to persuade her to enter instead into a lease on a month-to-month basis. She was, howeveirm 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 whe said This is what I want and this will be done. In particular reference to this contract of lease, when Isaid Th

not proper, she said You just go ahead, you prepare that, I am the owner, and if there is any illegality, I am theonly 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 Laond her maid, Natividad Luna, who was constantly by her side.11 Any of them could have testified on the unduenfluence that Wong supposedly wielded over Justina Santos, but neither of them was presented as a witness. The trs that even after giving his client time to think the matter over, the lawyer could not make her change her mind. Thi

persuaded the lower court to uphold the validity of the lease contract against the claim that it was procured throughundue influence.

ndeed, the charge of undue influence in this case rests on a mere inference12 drawn from the fact that Justina Santoould not read (as she was blind) and did not understand the English language in which the contract is written, but thnference has been overcome by her own evidence.

Nor is there merit in the claim that her consent to the lease contract, as well as to the rest of the contracts in questionwas given out of a mistaken sense of gratitude to Wong who, she was made to believe, had saved her and her sisterrom a fire that destroyed their house during the liberation of Manila. For while a witness claimed that the sisters weaved by other persons (the brothers Edilberto and Mariano Sta. Ana)13 it was Justina Santos herself who, accordin

her own witness, Benjamin C. Alonzo, said very emphatically that she and her sister would have perished in the fi

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 emphat

vowal 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 consentustina 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, theused to tell me what the documents should contain. But, as I said, I would always ask the old woman about them annvariably the old woman used to tell me: Thats okay. Its all right.15

But the lower court set aside all the contracts, with the exception of the lease contract of November 15, 1957, on theground that they are contrary to the expressed wish of Justina Santos and that their considerations are fictitious. Wo


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tated in his deposition that he did not pay P360 a month for the additional premises leased to him, because she did want him to, but the trial court did not believe him. Neither did it believe his statement that he paid P1,000 asonsideration for each of the contracts (namely, the option to buy the leased premises, the extension of the lease to 9

years, and the fixing of the term of the option at 50 years), but that the amount was returned to him by her forafekeeping. Instead, the court relied on the testimony of Atty. Alonzo in reaching the conclusion that the contracts

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 negativeestimony does not rule out the possibility that the considerations were paid at some other time as the contracts in faecite. 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 courts finding that in all probability Justina Santos could not have intended to part with hproperty while she was alive nor even to lease it in its entirety as her house was built on it, suffice it to quote theestimony 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 theseproperties be enjoyed, even to own them, by Wong Heng because Doa Justina told me that she did not have anyelatives, near or far, and she considered Wong Heng as a son and his children her grandchildren; especially heronsolation 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 mo see to it that no one could disturb Wong Heng from those properties. That is why we thought of the ninety-nine (9

years lease; we thought of adoption, believing that thru adoption Wong Heng might acquire Filipino citizenship; beihe 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 dispellidoubt as to the intention of Justina Santos, at the same time gives the clue to what we view as a scheme to circumvehe Constitutional prohibition against the transfer of lands to aliens. The illicit purpose then becomes the illegalausa19 rendering the contracts void.

Taken singly, the contracts show nothing that is necessarily illegal, but considered collectively, they reveal an insidipattern to subvert by indirection what the Constitution directly prohibits. To be sure, a lease to an alien for a reasonaperiod is valid. So is an option giving an alien the right to buy real property on condition that he is granted Philippinitizenship. 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 theiresidence in the Philippines is temporary, they may be granted temporary rights such as a lease contract which is notorbidden 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 Filipinoowner cannot sell or otherwise dispose of his property,21 this to last for 50 years, then it becomes clear that the

rrangement is a virtual transfer of ownership whereby the owner divests himself in stages not only of the right to enhe land ( jus possidendi, jus utendi, jus fruendi and jus abutendi) but also of the right to dispose of it ( jus disponend

rights the sum total of which make up ownership. It is just as if today the possession is transferred, tomorrow, theuse, the next day, the disposition, and so on, until ultimately all the rights of which ownership is made up areonsolidated in an alien. And yet this is just exactly what the parties in this case did within the space of one year, wihe result that Justina Santos ownership of her property was reduced to a hollow concept. If this can be done, then t

Constitutional ban against alien landholding in the Philippines, as announced in Krivenko v. Register of Deeds,22 isndeed in grave peril.

t does not follow from what has been said, however, that because the parties are in pari delicto they will be left whehey are, without relief. For one thing, the original parties who were guilty of a violation of the fundamental charter


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have died and have since been substituted by their administrators to whom it would be unjust to impute their guilt.23For another thing, and this is not only cogent but also important, article 1416 of the Civil Code provides, as anxception to the rule on pari delicto, that When the agreement is not illegalper sebut is merely prohibited, and the

prohibition by law is designed for the protection of the plaintiff, he may, if public policy is thereby enhanced, recovwhat he has paid or delivered. The Constitutional provision that Save in cases of hereditary succession, no private

gricultural land shall be transferred or assigned except to individuals, corporations, or associations qualified to acquor hold lands of the public domain in the Philippines24 is an expression of public policy to conserve lands for the

Filipinos. As this Court said in Krivenko:

t is well to note at this juncture that in the present case we have no choice. We are construing the Constitution as it nd 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 Constitutiwe 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 landsncluding 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 andordering the restoration of the land to the estate of the deceased Justina Santos, this Court should apply the general rof pari delicto. To the extent that our ruling in this case conflicts with that laid down in Rellosa v. Gaw Chee Hun 26nd subsequent similar cases, the latter must be considered aspro tantoqualified.

The claim for increased rentals and attorneys fees, made in behalf of Justina Santos, must be denied for lack of mer

And what of the various amounts which Wong received in trust from her? It appears that he kept two classes ofccounts, one pertaining to amount which she entrusted to him from time to time, and another pertaining to rentals fhe 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. 1P7,354.42 on December 1, 1957 (Plff Exh. 13); P10,000 on December 6, 1957 (Plff Exh. 14) ; and P18,928.50 onAugust 26, 1959 (Def. Exh. 246), or a total of P70,007.19. He claims, however, that he settled his accounts and that ast 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, funeralervices and security guard services, but the checks (Def Exhs. 247-278) drawn by him for this purpose amount to o

P38,442.84.27 Besides, if he had really settled his accounts with her on August 26, 1959, we cannot understand whytill 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 thimount if the court so directed him. On these two grounds, therefore, his claim of liquidation and settlement ofccounts must be rejected.

After subtracting P38,442.84 (expenditures) from P70,007.19 (receipts), there is a difference of P31,564 which, addo 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 RizAvenue July, 1959 was P1,000, and that from the Rizal Avenue property, of which Wong was the lessee, was P3,12Against this account the household expenses and disbursements for the care of the 17 dogs and the salaries of the 8maids of Justina Santos were charged. This account is contained in a notebook (Def. Exh. 6) which shows a balanceP9,210.49 in favor of Wong. But it is claimed that the rental from both the Ongpin and Rizal Avenue properties wasmore than enough to pay for her monthly expenses and that, as a matter of fact, there should be a balance in her favoThe 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 andAntonia Matias, nick-named Toning,which was the way she signed the loose sheets, and there is no clear proof tDoa Justina had authorized these two to act for her in such liquidation; on the contrary if the result of that was a


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deficit as alleged and sought to be there shown, of P9,210.49, that was not what Doa Justina apparently understoods the Court understands her statement to the Honorable Judge of the Juvenile Court . . . the reason why she preferreo stay in her home was because there she did not incur in any debts . . . this being the case, . . . the Court will notdjudicate 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 arnot easy to compute, for this reason, the Court faced with the choice of the two alternatives will choose the middleourse which after all is permitted by the rules of proof, Sec. 69, Rule 123 for in the ordinary course of things, a per

will live within his income so that the conclusion of the Court will be that there is neither deficit nor superavit and wet the matter rest here.

Both parties on appeal reiterate their respective claims but we agree with the lower court that both claims should bedenied. Aside from the reasons given by the court, we think that the claim of Justina Santos totalling P37,235, as rendue to her after deducting various expenses, should be rejected as the evidence is none too clear about the amountspent by Wong for food29 masses30 and salaries of her maids.31 His claim for P9,210.49 must likewise be rejected

his averment of liquidation is belied by his own admission that even as late as 1960 he still had P22,000 in the bank P3,000 in his possession.

ACCORDINGLY, the contracts in question (Plff Exhs. 3-7) are annulled and set aside; the land subject-matter of thontracts 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 Corporatiohe sum of P56,564.35, with legal interest from the date of the filing of the amended complaint; and the amountsonsigned in court by Wong Heng shall be applied to the payment of rental from November 15, 1959 until the premhall have been vacated by his heirs. Costs against the defendant-appellant.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Bengzon, J.P., Zaldivar, Sanchez and Angeles, JJ., concur.

Separate Opinions

FERNANDO, J., concurring:

With the able and well-written opinion of Justice Castro, I am in full agreement. The exposition of the facts leavesnothing to be desired and the statement of the law is notable for its comprehensiveness and clarity. This concurringopinion has been written solely to express what I consider to be the unfortunate and deplorable consequences ofpplying the pari delicto concept, as was, to my mind, indiscriminately done, to alien landholding declared illegal unhe Krivenko doctrine in some past decisions.

t is to be remembered that in Krivenko v. The Register of Deeds of Manila,1 this Court over strong dissents held thesidential and commercial lots may be considered agricultural within the meaning of the constitutional provision

prohibiting the transfer of any private agricultural land to individuals, corporations or associations not qualified tocquire or hold lands of the public domain in the Philippines save in cases of hereditary succession.

That provision of the Constitution took effect on November 15, 1935 when the Commonwealth Government wasstablished. The interpretation as set forth in the Krivenko decision was only handed down on November 15, 1947.

Prior to that date there were many who were of the opinion that the phrase agricultural land should be construed strind not be made to cover residential and commercial lots. Acting on that belief, several transactions were entered inransferring such lots to alien vendees by Filipino-vendors.

After the Krivenko decision, some Filipino vendors sought recovery of the lots in question on the ground that the sawere null and void. No definite ruling was made by this Court until September of 1953, when on the 29th of said moRellosa v. Gaw Chee Hun,2 Bautista v. Uy Isabelo,3 Talento v. Makiki,4 Caoile v. Chiao Peng5 were decided.

Of the four decisions in September, 1953, the most extensive discussion of the question is found in Rellosa v. GawChee Hun, the opinion being penned by retired Justice Bautista Angelo with the concurrence only of one Justice,ustice Labrador, also retired. Former Chief Justice Paras as well as the former Justices Tuason and Montemayor


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oncurred in the result. The necessary sixth vote for a decision was given by the then Justice Bengzon, who had a twparagraph concurring opinion disagreeing with the main opinion as to the force to be accorded to the two cases,6herein cited. There were two dissenting opinions by former Justices Pablo and Alex Reyes. The doctrine as announn the Rellosa case is that while the sale by a Filipino-vendor to an alien-vendee of a residential or a commercial lot

null and void as held in the Krivenko case, still the Filipino-vendor has no right to recover under a civil law doctrinehe parties being in pari delicto. The only remedy to prevent this continuing violation of the Constitution which the

decision impliedly sanctions by allowing the alien vendees to retain the lots in question is either escheat or reversionThus: By following either of these remedies, or by approving an implementary law as above suggested, we cannforce the fundamental policy of our Constitution regarding our natural resources without doing violence to the

principle of pari delicto.7

Were the parties really in pari delicto? Had the sale by and between Filipino-vendor and alien-vendee occurred afterdecision in the Krivenko case, then the above view would be correct that both Filipino-vendor and alien-vendee counot be considered as innocent parties within the contemplation of the law. Both of them should be held equally guiltvasion of the Constitution.

Since, however, the sales in question took place prior to the Krivenko decision, at a time when the assumption couldhonestly entertained that there was no constitutional prohibition against the sale of commercial or residential lots byFilipino-vendor to alien-vendee, in the absence of a definite decision by the Supreme Court, it would not be doingviolence to reason to free them from the imputation of evading the Constitution. For evidently evasion implies at thevery least knowledge of what is being evaded. The new Civil Code expressly provides: Mistakes upon a doubtful odifficult question of law may be the basis of good faith.8

According to the Rellosa opinion, both parties are equally guilty of evasion of the Constitution, based on the broadeprinciple that both parties are presumed to know the law. This statement that the sales entered into prior to the

Krivenko decision were at that time already vitiated by a guilty knowledge of the parties may be too extreme a viewppears to ignore a postulate of a constitutional system, wherein the words of the Constitution acquire meaning thro

Supreme Court adjudication.

Reference may be made by way of analogy to a decision adjudging a statute void. Under the orthodox theory ofonstitutional law, the act having been found unconstitutional was not a law, conferred no rights, imposed no duty,fforded no protection.9 As pointed out by former Chief Justice Hughes though in Chicot County Drainage District

Baxter State Bank:10 It is quite clear, however, that such broad statements as tothe effect of a determination ofunconstitutionality must be taken with qualifications. The actual existence of a statute, prior to such a determinationn operative fact and may have consequences which cannot justly be ignored. The past cannot always be erased by a

new judicial declaration. The effect of subsequent ruling as to invalidity may have to be considered in various aspecwith respect to particular relations, individual and corporate, and particular conduct, private and official. Questioof rights claimed to have become vested, of status, of prior determinations deemed to have finality and acted uponccordingly, of public policy in the light of the nature both of the statute and of its previous application, demandxamination.

After the Krivenko decision, there is no doubt that continued possession by alien-vendee of property acquired beforpromulgation is violative of the Constitution. It is as if an act granting aliens the right to acquire residential and

ommercial lots were annulled by the Supreme Court as contrary to the provision of the Constitution prohibiting alirom acquiring private agricultural land.

The question then as now, therefore, was and is how to divest the alien of such property rights on terms equitable toboth parties. That question should be justly resolved in accordance with the mandates of the Constitution not by awholesale condemnation of both parties for entering into a contract at a time when there was no ban as yet arising frhe Krivenko decision, which could not have been anticipated. Unfortunately, under the Rellosa case, it was assumehat the parties, being in pari delicto, would be left in the situation in which they were, neither being in a position toeek judicial redress.


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Would it not have been more in consonance with the Constitution, if instead the decision compelled the restitution ohe property by the alien-vendee to the Filipino-vendor? Krivenko decision held in clear, explicit and unambigousanguage that: We are deciding the instant case under section 5 of Article XIII of the Constitution which is moreomprehensive and more absolute in the sense that it prohibits the transfer to aliens of any private agricultural landncluding residential land whatever its origin might have been . . . . This prohibition [Rep. Act No. 133] makes no

distinction between private lands that are strictly agricultural and private lands that are residential or commercial. Thprohibition embraces the sale of private lands of any kind in favor of aliens, which is again a clear implementation a

legislative interpretation of the constitutional prohibition. . . . It is well to note at this juncture that in the present cawe have no choice. We are construing the Constitution as it is and not as we may desire it to be. Perhaps the effect oour construction is to preclude aliens, admitted freely into the Philippines, from owning sites where they may buildheir 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.11

Alien-vendee is therefore incapacitated or disqualified to acquire and hold real estate. That incapacity and thatdisqualification should date from the adoption of the Constitution on November 15, 1935. That incapacity and thatdisqualification, however, was made known to Filipino-vendor and to alien-vendee only upon the promulgation of thKrivenko decision on November 15, 1947. Alien-vendee, therefore, cannot be allowed to continue owning andxercising acts of ownership over said property, when it is clearly included within the Constitutional prohibition. Al

vendee should thus be made to restore the property with its fruits and rents to Filipino-vendor, its previous owner, ifould be shown that in the utmost good faith, he transferred his title over the same to alien-vendee, upon restitution he purchase price of course.

The Constitution bars alien-vendees from owning the property in question.

lnr 3rd cases

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