PHILIPPINE BANKING CORPORATION, representing the estate
of JUSTINA SANTOS Y CANON FAUSTINO, deceased vs. LUI SHE in her own behalf and as administratrix of the intestate estate
of Wong Heng, deceased, G.R. No. L-17587, September 12, 1967
“x x x.
It is next contended that the lease contract was obtained by
Wong in violation of his fiduciary relationship with Justina Santos, contrary
to article 1646, in relation to article 1941 of the Civil Code, which
disqualifies "agents (from leasing) the property whose administration or
sale may have been entrusted to them." But Wong was never an agent of Justina
Santos. The relationship of the parties, although admittedly close and
confidential, did not amount to an agency so as to bring the case within the
prohibition of the law.
X x x.
Taken singly, the contracts show nothing that is necessarily
illegal, but considered collectively, they reveal an insidious pattern to
subvert by indirection what the Constitution directly prohibits. To be sure, a
lease to an alien for a reasonable period is valid. So is an option giving an
alien the right to buy real property on condition that he is granted Philippine
citizenship. As this Court said in Krivenko v. Register of Deeds:20
[A]liens are not completely
excluded by the Constitution from the use of lands for residential purposes.
Since their residence in the Philippines is temporary, they may be granted temporary
rights such as a lease contract which is not forbidden by the Constitution.
Should they desire to remain here forever and share our fortunes and
misfortunes, Filipino citizenship is not impossible to acquire.
But if an alien is given not only a lease of, but also an
option to buy, a piece of land, by virtue of which the Filipino owner cannot
sell or otherwise dispose of his property,21 this to last for
50 years, then it becomes clear that the arrangement is a virtual transfer of
ownership whereby the owner divests himself in stages not only of the right to
enjoy the land ( jus possidendi, jus utendi, jus fruendi and jus
abutendi) but also of the right to dispose of it ( jus disponendi)
— rights the sum total of which make up ownership. It is just as if today the
possession is transferred, tomorrow, the use, the next day, the disposition,
and so on, until ultimately all the rights of which ownership is made up are
consolidated in an alien. And yet this is just exactly what the parties in this
case did within the space of one year, with the result that Justina Santos'
ownership of her property was reduced to a hollow concept. If this can be done,
then the Constitutional ban against alien landholding in the Philippines, as
announced in Krivenko v. Register of Deeds,22 is
indeed in grave peril.
It does not follow from what has been said, however, that
because the parties are in pari delicto they will be left
where they are, without relief. For one thing, the original parties who were
guilty of a violation of the fundamental charter have died and have since been
substituted by their administrators to whom it would be unjust to impute their
guilt.23 For another thing, and this is not only cogent but
also important, article 1416 of the Civil Code provides, as an exception to the
rule on pari delicto, that "When the agreement is not illegal per
se but is merely prohibited, and the prohibition by law is designed
for the protection of the plaintiff, he may, if public policy is thereby
enhanced, recover what he has paid or delivered." The Constitutional
provision that "Save in cases of hereditary succession, no private
agricultural land shall be transferred or assigned except to individuals,
corporations, or associations qualified to acquire or hold lands of the public
domain in the Philippines"24 is an expression of public
policy to conserve lands for the Filipinos. As this Court said in Krivenko:
It is well to note at this
juncture that in the present case we have no choice. We are construing the
Constitution as it is and not as we may desire it to be. Perhaps the effect of
our construction is to preclude aliens admitted freely into the Philippines
from owning sites where they may build their homes. But if this is the solemn
mandate of the Constitution, we will not attempt to compromise it even in the
name of amity or equity . . . .
For all the foregoing, we hold
that under the Constitution aliens may not acquire private or public
agricultural lands, including residential lands, and, accordingly, judgment is
affirmed, without costs.25
That policy would be defeated and its continued violation
sanctioned if, instead of setting the contracts aside and ordering the
restoration of the land to the estate of the deceased Justina Santos, this
Court should apply the general rule of pari delicto. To the extent
that our ruling in this case conflicts with that laid down in Rellosa
v. Gaw Chee Hun26 and subsequent similar cases, the latter
must be considered as pro tanto qualified.
X x x.”
