FIRST DIVISION

[G.R. No. L-36731. January 27, 1983.]

VICENTE GODINEZ, ET AL., plaintiffs-appellants, vs. FONG PAK

LUEN, ET AL., defendants, TRINIDAD S. NAVATA , defendant-
appellee.

Dominador Sobrevinas for plaintiffs-appellants.

Muss S. Inquerto for defendant-appellee.

SYLLABUS

1. CONSTITUTIONAL LAW; PATRIMONY OF THE NATIONS; PROHIBITION

AGAINST ACQUISITION BY ALIENS OF PRIVATE, AGRICULTURAL OR RESIDENTIAL
LANDS; CASE AT BAR. — There can be no dispute that the sale in 1941 by Jose
Godinez of his residential lot acquired from the Bureau of Lands as part of the Jolo
townsite to Fong Pak Luen, a Chinese citizen, was violative of Section 5, Article XIII
of the 1935 Constitution which was fully discussed in Krivenko v. Register of Deeds
of Manila (79 Phil. 461). Said case also detailed the evolution of the provision in the
public land laws, Act No. 2874 and Commonwealth Act No. 141.

2. ID.; ID.; ID.; A DECLARATION OF AN IMPERATIVE CONSTITUTIONAL POLICY. —

The Krivenko ruling that "under the Constitution aliens may not acquire private or
agricultural lands, including residential lands," is a declaration of an imperative
constitutional policy.

3. ID.; ID.; ID.; PRESCRIPTION; EFFECT ON THE PROHIBITED CONTRACT; CASE

AT BAR. — Prescription may never be invoked to defend that which the Constitution
prohibits. Insofar as the vendee is concerned, prescription is unavailing but neither
can the vendor or his heirs rely on an argument base on imprescriptibility because
the land sold in 1941 is now in the hands of a Filipino citizen against whom the
constitutional prescription was never intended to apply. From the fact that
prescription may not be used to defend a contract which the Constitution prohibits,
it does not necessarily follow that the appellants may be allowed to recover the
property sold to an alien, in line with the ruling of this Court in Vasquez v. Li Seng
Giap and Li Seng Giap & Sons (96 Phil. 447) and reiterated in Herrera v. Luy Kim
Guan (1 SCRA 406) and Sarsosa vda. de Barsobia v. Cuenco (113 SCRA 547).
Neither can appellants find solace from Philippine Banking Corporation v. Lui She
(21 SCRA 52) which relaxed the pari delicto doctrine to allow the heirs or
successors-in-interest, in appropriate cases to recover that which their predecessors
sold to aliens.

DECISION
GUTIERREZ, JR., J : p

The plaintiffs filed this case to recover a parcel of land sold by their father, now
deceased, to Fong Pak Luen, an alien, on the ground that the sale was null and void
ab initio since it violates applicable provisions of the Constitution and the Civil Code.
cdrep

The order of the Court of First Instance of Sulu dismissing the complaint was
appealed to the Court of Appeals but the latter court certified the appeal to us since
only pure questions of law were raised by the appellants.

The facts of the case were summarized by the Court of Appeals as follows:

"On September 30, 1966, the plaintiffs filed a complaint in the Court of First
Instance of Sulu alleging among others that they are the heirs of Jose
Godinez who was married to Martina Alvarez Godinez sometime in 1910;
that during the marriage of their parents the said parents acquired a parcel
of land lot No. 94 of Jolo townsite with an area of 3,665 square meters as
evidenced by Original Certificate of Title No. 179 (D - 155) in the name of
Jose Godinez; that their mother died sometime in 1938 leaving the plaintiffs
as their sole surviving heirs; that on November 27, 1941, without the
knowledge of the plaintiffs, the said Jose Godinez, for valuable consideration
sold the aforesaid parcel of land to the defendant Fong Pak Luen, a Chinese
citizen, which transaction is contrary to law and in violation of the Civil Code
because the latter being an alien who is inhibited by law to purchase real
property; that Transfer Certificate Title No. 884 was then issued by the
Register of Deeds to the said defendant, which is null and void ab initio since
the transaction constituted a non-existent contract; that on January 11,
1963, said defendant Fong Pak Luen executed a power of attorney in favor
of his co-defendant Kwan Pun Ming, also an alien, who conveyed and sold
the above described parcel of land to co-defendant Trinidad S. Navata, who
is aware of and with full knowledge that Fong Pak Luen is a Chinese citizen
as well as Kwan Pun Ming, who under the law are prohibited and disqualified
to acquire real property in this jurisdiction; that defendant Fong Pak Luen
has not acquired any title or interest in said parcel of land as the purported
contract of sale executed by Jose Godinez alone was contrary to law and
considered non-existent, so much so that the alleged attorney-in-fact,
defendant Kwan Pun Ming had not conveyed any title or interest over said
property and defendant Navata had not acquired anything from said grantor
and as a consequence Transfer Certificate of Title No. 1322, which was
issued by the Register of Deeds in favor of the latter is null and void ab initio;
that since one-half of the said property is conjugal property inherited by the
plaintiffs from their mother, Jose Godinez could not have legally conveyed
the entire property; that notwithstanding repeated demands on said
defendant to surrender to plaintiffs the said property she refused and still
refuses to do so to the great damage and prejudice of the plaintiffs; and that
they were constrained to engage the services of counsel in the sum of
P2,000.00. The plaintiffs thus pray that they be adjudged as the owners of
the parcel of land in question and that Transfer Certificate of Title RT-90 (T-
884) issued in the name of defendant Fong Pak Luen be declared null and
void ab initio; and that the power of attorney issued in the name of Kwan
Pun Ming, as well as Transfer Certificate of Title No. 1322 issued in the name
of defendant Navata be likewise declared null and void, with costs against
defendants.

"On August 18, 1966, the defendant Register of Deeds filed an answer
claiming that he was not yet the register of deeds then; that it was only the
ministerial duty of his office to issue the title in favor of the defendant
Navata once he was determined the registerability of the documents
presented to his office.

"On October 20, 1966, the defendant Navata filed her answer with the
affirmative defenses and counterclaim alleging among others that the
complaint does not state a cause of action since it appears from the
allegation that the property is registered in the name of Jose Godinez so that
as has sole property he may dispose of the same; that the cause of action
has been barred by the statute of limitations as the alleged document of sale
executed by Jose Godinez on November 27, 1941, conveyed the property to
defendant Fong Pak Luen as a result of which a title was issued to said
defendant; that under Article 1144 (1) of the Civil Code, an action based
upon a written contract must be brought within 10 years from the time the
right of action accrues; that the right of action accrued on November 27,
1941 but the complaint was filed only on September 30, 1966, beyond the
10-year period provided for by law; that the torrens title in the name of
defendant Navata is indefeasible who acquired the property from defendant
Fong Pak Luen who had been in possession of the property since 1941 and
thereafter defendant Navata had possessed the same for the last 25 years
including the possession of Fong Pak Luen; that the complaint is intended to
harass the defendant as a civic leader and respectable member of the
community as a result of which she suffered moral damages of
P100,000.00, P2,500.00 for attorney's fees and P500.00 expenses of
litigation, hence, said defendant prays that the complaint be dismissed and
that her counterclaim be granted, with costs against the plaintiffs. On
November 24, 1967, the plaintiffs filed an answer to the affirmative defenses
and counter-claim. As the defendants Fong Pak Luen and Kwan Pun Ming
are residing outside the Philippines, the trial court upon motion issued an
order of April 17, 1967, for the service of summons on said defendants by
publication. No answer has been filed by said defendants.

"On December 2, 1967, the court issued an order as follows:

"'Both parties having agreed to the suggestion of the Court that

they submit their supplemental pleadings to support both motion and
opposition and after submittal of the same the said motion to dismiss
which is an affirmative defense alleged in the complaint is deemed
submitted. Failure of both parties or either party to submit their
supplemental pleadings on or about December 9, the Court will resolve
the case.'

"On November 29, 1968, the trial court issued an order dismissing the
complaint without pronouncement as to costs. (Record on Appeal, pp. 31-
37). A motion for reconsideration of this order was filed by the plaintiffs on
 December 12, 1968, which was denied by the trial court in an order of July
11, 1969, (Rec. on Appeal, pp. 38, 43, 45, 47). The plaintiffs now interpose
this appeal with the following assignments of errors:

I. The trial court erred in dismissing plaintiffs-appellants'

complaint on the ground of prescription of action, applying Art. 1144
(1) New Civil Code on the basis of defendant Trinidad S. Navata's
affirmative defense of prescription in her answer treated as a motion
to dismiss.

II. The trial court erred in denying plaintiffs-appellants'

motion for reconsideration of the order of dismissal.

III. The trial court erred in not ordering this case to be tried
on the merits."

The appellants contend that the lower court erred in dismissing the complaint on
the ground that their cause of action has prescribed. While the issue raised appears
to be only the applicability of the law governing prescription, the real question
before us is whether or not the heirs of a person who sold a parcel of land to an
alien in violation of a constitutional prohibition may recover the property if it had, in
the meantime, been conveyed to a Filipino citizen qualified to own and possess it.

The question is not a novel one. Judicial precedents indicate fairly clearly how the
question should be resolved.

There can be no dispute that the sale in 1941 by Jose Godinez of his residential lot
acquired from the Bureau of Lands as part of the Jolo townsite to Fong Pak Luen, a
Chinese citizen residing in Hongkong, was violative of Section 5, Article XIII of the
1935 Constitution which provided:

Sec. 5. Save in cases of hereditary succession, no private agricultural

land will be transferred or assigned except to individuals, corporations, or
associations qualified to acquire or hold lands of the public domain in the
Philippines.

The meaning of the above provision was fully discussed in Krivenko v. Register of
Deeds of Manila (79 Phil. 461) which also detailed the evolution of the provision in
the public land laws, Act No. 2874 and Commonwealth Act No. 141. The Krivenko
ruling that "under the Constitution aliens may not acquire private or agricultural
lands, including residential lands" is a declaration of an imperative constitutional
policy. Consequently, prescription may never be invoked to defend that which the
Constitution prohibits. However, we see no necessity from the facts of this case to
pass upon the nature of the contract of sale executed by Jose Godinez and Fong Pak
Luen - whether void ab initio, illegal per se, or merely prohibited. * It is enough to
stress that insofar as the vendee is concerned, prescription is unavailing. But neither
can the vendor or his heirs rely on an argument based on imprescriptibility because
the land sold in 1941 is now in the hands of a Filipino citizen against whom the
constitutional prescription was never intended to apply. The lower court erred in
treating the case as one involving simply the application of the statute of
limitations.LLpr

From the fact that prescription may not be used to defend a contract which the
Constitution prohibits, it does not necessarily follow that the appellants may be
allowed to recover the property sold to an alien. As earlier mentioned, Fong Pak
Luen, the disqualified alien vendee later sold the same property to Trinidad S.
Navata, a Filipino citizen qualified to acquire real property.

I n Vasquez v. Li Seng Giap and Li Seng Giap & Sons (96 Phil. 447), where the alien
vendee later sold the property to a Filipino corporation, this Court, in affirming a
judgment dismissing the complaint to rescind the sale of real property to the
defendant Li Seng Giap on January 22, 1940, on the ground that the vendee was an
alien and under the Constitution incapable to own and hold title to lands, held:

"In Caoile vs. Yu Chiao, 49 Off. Gaz., 4321; Talento vs. Makiki, 49 Off. Gaz.,
4331; Bautista vs. Uy 49 Off. Gaz., 4336; Rellosa vs. Gaw Chee, 49 Off.
Gaz., 4345 and Mercado vs. Go Bio, 49 Off. Gaz., 5360, the majority of this
Court has ruled that in sales of real estate to aliens incapable of holding title
thereto by virtue of the provisions of the Constitution (Section 5, Article XIII;
Krivenko vs. Register of Deeds, 44 Off. Gaz., 471) both the vendor and the
vendee are deemed to have committed the constitutional violation and being
thus in pari delicto the courts will not afford protection to either party.
(Article 1305, old Civil Code; Article 1411, new Civil Code) From this ruling
three Justices dissented. (Mr. Justice Pablo, Mr. Justice Alex. Reyes and the
writer. See Caoile vs. Yu Chiao, Talento vs. Makiki, Bautista vs. Uy, Rellosa vs.
Gaw Chee and Mercado vs. Go Bio, supra.

"The action is not of rescission because it is not postulated upon any of the
grounds provided for in Article 1291 of the old Civil Code and because the
action of rescission involves lesion or damage and seeks to repair it. It is an
action for annulment under Chapter VI, Title II, Book II, on nullity of
contracts, based on a defect in the contract which invalidates it
independently of such lesion or damages. (Manresa, Commentarios al
Codigo Civil Español, Vol. VIII, p. 698, 4th ed.) It is very likely that the
majority of this Court proceeded upon that theory when it applied the in pari
delicto rule referred to above.

"In the United States the rule is that in a sale of real estate to an alien
disqualified to hold title thereto the vendor divests himself of the title to such
real estate and has no recourse against the vendee despite the latter's
disability on account of alienage to hold title to such real estate and the
vendee may hold it against the whole world except as against the State. It is
only the State that is entitled by proceedings in the nature of office found to
have a forfeiture or escheat declared against the vendee who is incapable of
holding title to the real estate sold and conveyed to him, (Abrams vs. State,
88 Pac. 327; Craig vs. Leslie et al., 4 Law, Ed. 460; 3 Wheat, 563, 589-590;
Cross vs. Del Valle, 1 Wall, [U.S.] 513; 17 Law. Ed., 515; Governeur vs.
Robertson, 11 Wheat, 332, 6 Law. Ed., 488.)
 "However, if the State does not commence such proceedings and in the
meantime the alien becomes naturalized citizen, the State is deemed to have
waived its right to escheat the real property and the title of the alien thereto
becomes lawful and valid as of the date of its conveyance or transfer to him.
(Osterman vs. Baldwin, 6 Wall, 116, 18 Law. ed. 730; Manuel vs. Wulff, 152
U.S. 505, 38 Law. ed. 532; Pembroke vs. Houston, 79, SW 470; Fioerella vs.
Jones, 259 SW 782. The rule in the United States that in a sale of real estate
to an alien disqualified to hold title thereto, the vendor divests himself of the
title to such real estate and is not permitted to sue for the annulment of his
contract, is also the rule under the Civil Code. . . . Article 1302 of the old Civil
Code provides: . . . Persons sui juris cannot, however, avail themselves of
the incapacity of those with whom they contracted; . . .'

xxx xxx xxx

". . . (I)f the ban on aliens from acquiring not only agricultural but also urban
lands, as construed by this Court in the Krivenko case, is to preserve the
nation's land for future generations of Filipinos, that aim or purpose would
not be thwarted but achieved by making lawful the acquisition of real estate
by aliens who became Filipino citizens by naturalization. The title to the parcel
of land of the vendee, a naturalized Filipino citizen, being valid that of the
domestic corporation to which the parcel of land has been transferred, must
also be valid, 96.67 per cent of its capital stock being owned by Filipinos."

Herrera v. Luy Kim Guan (1 SCRA 406) reiterated the above ruling by declaring that
where land is sold to a Chinese citizen, who later sold it to a Filipino, the sale to the
latter cannot be impugned.

The appellants cannot find solace from Philippine Banking Corporation v. Lui She
(21 SCRA 52) which relaxed the pari delicto doctrine to allow the heirs or
successors-in-interest, in appropriate cases, to recover that which their predecessors
sold to aliens.
LexLib

Only recently, in Sarsosa vda. de Barsobia v. Cuenco (113 SCRA 547) we had
occasion to pass upon a factual situation substantially similar to the one in the
instant case. We ruled:

"But the factual set-up has changed. The litigated property is now in the
hands of a naturalized Filipino. It is no longer owned by a disqualified vendee.
Respondent, as a naturalized citizen, was constitutionally qualified to own
the subject property. There would be no more public policy to be served in
allowing petitioner Epifania to recover the land as it is already in the hands of
a qualified person. Applying by analogy the ruling of this Court in Vasquez
vs. Giap & Sons: (96 Phil. 447 [1955]).

" '. . . if the ban on aliens from acquiring not only agricultural but also urban
lands, as construed by this Court in the Krivenko case, is to preserve the
nation's lands for future generations of Filipinos, that aim or purpose would
not be thwarted but achieved by making lawful the acquisition of real estate
by aliens who became Filipino citizens by naturalization.'
 "While, strictly speaking, Ong King Po, private respondent's vendor, had no
rights of ownership to transmit, it is likewise inescapable that petitioner
Epifania had slept on her rights for 26 years from 1936 to 1962. By her long
inaction or inexcusable neglect, she should be held barred from asserting
her claim to the litigated property (Sotto vs. Teves, 86 SCRA 157 [1978]).

" 'Laches has been defined as the failure or neglect, for an unreasonable and
unexplained length of time, to do that which by exercising due diligence
could or should have been done earlier; it is negligence or omission to assert
a right within a reasonable time, warranting a presumption that the party
entitled to assert it either has abandoned it or declined to assert it. (Tijam, et
al. vs. Sibonghanoy, et al., No. L-21450, April 15, 1968, 23 SCRA 29, 35).'
(Cited in Sotto vs. Teves, 86 SCRA 154 [1978]).

"Respondent, therefore, must be declared to be the rightful owner of the

property."

In the light of the above considerations, we find the second and third assignments of
errors without merit. Respondent Navata, the titled owner of the property is
declared the rightful owner.

WHEREFORE, the instant appeal is hereby denied. The orders dismissing the
complaint and denying the motion for reconsideration are affirmed.

SO ORDERED.

Teehankee (Chairman), Melencio-Herrera, Plana, Vasquez and Relova, JJ., concur.

Footnotes

* Under the facts in Sarsosa vda. de Barsobia v. Cuenco (113 SCRA 547), this Court
stated that "(t)here should be no question that the sale of the land in question in
1936 by Epifania Sarsosa to Ong King Po was non-existent and void from the
beginning (Art. 1409 [7], Civil Code) because it was a contract executed against
the mandatory provision of the 1935 Constitution, which is an expression of public
policy to conserve lands for the Filipinos." In Philippine Banking Corporation v. Lui
She (21 SCRA 52) the Court, however, applied Article 1416 of the Civil Code, which
refers to agreements not illegal per se but merely prohibited, to justify the
exception to the rule on pari delicto.