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either expressly or impliedy. (Reyes vs. BPI Family Savings Bank, Inc., 486
SCRA 276 [2006])
——o0o——
G.R. No. 164584. June 22, 2009.*
PHILIP MATTHEWS, petitioner, vs. BENJAMIN A. TAYLOR and JOSELYN C.
TAYLOR, respondents.
Constitutional Law; Public Land Act; Aliens whether individuals or corporations,
have been disqualified from acquiring lands of the public domain; They are also
disqualified from acquiring private lands.—Aliens, whether individuals or corporations,
have been disqualified from acquiring lands of the public domain. Hence, by virtue of the
aforecited constitutional provision, they are also disqualified from acquiring private
lands. The primary purpose of this constitutional provision is the conservation of the
national patrimony. Our fundamental law cannot be any clearer. The right to acquire
lands of the public domain is reserved only to Filipino citizens or corporations at least
sixty percent of the capital of which is owned by Filipinos.
Same; Same; The rule is clear and inflexible: aliens are absolutely not allowed to
acquire public or private lands in the Philippines, save only in constitutionally recognized
exceptions.—The rule is clear and inflexible: aliens are absolutely not allowed to acquire
public or private lands in the Philippines, save only in constitutionally recognized
exceptions. There is no rule more settled than this constitutional prohibition, as more and
more aliens attempt to circumvent the provision by trying to own lands through another.
In a long line of cases, we have settled issues that directly or indirectly involve the above
constitutional provision.
PETITION for review on certiorari of the decision and resolution of the Court of
Appeals.
_______________
* THIRD DIVISION.
395
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The facts are stated in the opinion of the Court.
Policarpio, Pangulayan and Azura Law Office for petitioner.
Cyril A. Tagle for respondent Benjamin A. Taylor.
NACHURA, J.:
Assailed in this petition for review on certiorari are the Court of Appeals (CA)
December 19, 2003 Decision1and July 14, 2004 Resolution2 in CA-G.R. CV No.
59573. The assailed decision affirmed and upheld the June 30, 1997 Decision3of
the Regional Trial Court (RTC), Branch 8, Kalibo, Aklan in Civil Case No. 4632
for Declaration of Nullity of Agreement of Lease with Damages.
On June 30, 1988, respondent Benjamin A. Taylor (Benjamin), a British
subject, married Joselyn C. Taylor (Joselyn), a 17-year old Filipina.4 On June 9,
1989, while their marriage was subsisting, Joselyn bought from Diosa M. Martin
a 1,294 square-meter lot (Boracay property) situated at Manoc-Manoc, Boracay
Island, Malay, Aklan, for and in consideration of P129,000.00.5 The sale was
allegedly financed by Benjamin.6 Joselyn and Benjamin, also using the latter’s
funds, constructed improvements thereon and eventually converted the property
to a vacation and tourist resort known as the
_______________
1 Penned by Associate Justice Sergio L. Pestaño, with Associate Justices Marina L. Buzon and
Jose C. Mendoza, concurring; Rollo, pp. 54-61.
2 Id., at p. 52.
3 Penned by Acting Presiding Judge Pepito T. Ta-ay; CA Rollo, pp. 102-115.
4 Evidenced by a Marriage Contract; Exh “A,” Folder of Exhibits of the Plaintiff.
5 The sale was evidenced by a Deed of Sale duly executed by the parties and registered with the
Registry of Deeds of Aklan; Exh. “D,” Folder of Exhibits of the Plaintiff.
6 Rollo, p. 55.
396
396 SUPREME COURT
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ANNOTATED
Matthews vs. Taylor
Admiral Ben Bow Inn.7 All required permits and licenses for the operation of the
resort were obtained in the name of Ginna Celestino, Joselyn’s sister.8
However, Benjamin and Joselyn had a falling out, and Joselyn ran away with
Kim Philippsen. On June 8, 1992, Joselyn executed a Special Power of Attorney
(SPA) in favor of Benjamin, authorizing the latter to maintain, sell, lease, and
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sub-lease and otherwise enter into contract with third parties with respect to
their Boracay property.9
On July 20, 1992, Joselyn as lessor and petitioner Philip Matthews as lessee,
entered into an Agreement of Lease10 (Agreement) involving the Boracay
property for a period of 25 years, with an annual rental of P12,000.00. The
agreement was signed by the parties and executed before a Notary Public.
Petitioner thereafter took possession of the property and renamed the resort as
Music Garden Resort.
Claiming that the Agreement was null and void since it was entered into by
Joselyn without his (Benjamin’s) consent, Benjamin instituted an action for
Declaration of Nullity of Agreement of Lease with Damages11against Joselyn
and the petitioner. Benjamin claimed that his funds were used in the acquisition
and improvement of the Boracay property, and coupled with the fact that he was
Joselyn’s husband, any transaction involving said property required his consent.
No Answer was filed, hence, the RTC declared Joselyn and the petitioner in
default. On March 14, 1994, the RTC rendered judgment by default declaring
the Agreement null and void.12The decision was, however, set aside by the CA in
CA-
_______________
7 Id.
8 The licenses and permits were under the name of Joselyn’s sister because at the time of the
application, Joselyn was still a minor.
9 Exh. “V”; Folder of Exhibits of the Plaintiff.
10 Exh. “T”; Folder of Exhibits of the Plaintiff.
11 Records, pp. 1-3.
12 Id., at pp. 132-137.
397
VOL. 590, JUNE 22, 397
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Matthews vs. Taylor
G.R. SP No. 34054.13 The CA also ordered the RTC to allow the petitioner to file
his Answer, and to conduct further proceedings.
In his Answer,14petitioner claimed good faith in transacting with Joselyn.
Since Joselyn appeared to be the owner of the Boracay property, he found it
unnecessary to obtain the consent of Benjamin. Moreover, as appearing in the
Agreement, Benjamin signed as a witness to the contract, indicating his
knowledge of the transaction and, impliedly, his conformity to the agreement
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entered into by his wife. Benjamin was, therefore, estopped from questioning the
validity of the Agreement.
There being no amicable settlement during the pre-trial, trial on the merits
ensued.
On June 30, 1997, the RTC disposed of the case in this manner:
“WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff and
against the defendants as follows:
1. The Agreement of Lease dated July 20, 1992 consisting of eight (8) pages (Exhibits
“T,” “T-1,” “T-2,” “T-3,” “T-4,” “T-5,” “T-6” and “T-7”) entered into by and between
Joselyn C. Taylor and Philip Matthews before Notary Public Lenito T. Serrano under
Doc. No. 390, Page 79, Book I, Series of 1992 is hereby declared NULL and VOID;
2. Defendants are hereby ordered, jointly and severally, to pay plaintiff the sum of
SIXTEEN THOUSAND (P16,000.00) PESOS as damages representing unrealized
income for the residential building and cottages computed monthly from July 1992 up
to the time the property in question is restored to plaintiff; and
_______________
13 Penned by Associate Justice Ruben T. Reyes, with Associate Justices Oscar M. Herrera and
Angelina Sandoval-Gutierrez, concurring; Id., at pp. 139-148.
14 Id., at pp. 201-201-m.
398
398 SUPREME COURT
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ANNOTATED
Matthews vs. Taylor
3. Defendants are hereby ordered, jointly and severally, to pay plaintiff the sum of
TWENTY THOUSAND (P20,000.00) PESOS, Philippine Currency, for attorney’s fees
and other incidental expenses.
SO ORDERED.”15
The RTC considered the Boracay property as community property of
Benjamin and Joselyn; thus, the consent of the spouses was necessary to
validate any contract involving the property. Benjamin’s right over the Boracay
property was bolstered by the court’s findings that the property was purchased
and improved through funds provided by Benjamin. Although the Agreement
was evidenced by a public document, the trial court refused to consider the
alleged participation of Benjamin in the questioned transaction primarily
because his signature appeared only on the last page of the document and not on
every page thereof.
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On appeal to the CA, petitioner still failed to obtain a favorable decision. In
its December 19, 2003 Decision,16 the CA affirmed the conclusions made by the
RTC. The appellate court was of the view that if, indeed, Benjamin was a willing
participant in the questioned transaction, the parties to the Agreement should
have used the phrase “with my consent” instead of “signed in the presence of.”
The CA noted that Joselyn already prepared an SPA in favor of Benjamin
involving the Boracay property; it was therefore unnecessary for Joselyn to
participate in the execution of the Agreement. Taken together, these
circumstances yielded the inevitable conclusion that the contract was null and
void having been entered into by Joselyn without the consent of Benjamin.
Aggrieved, petitioner now comes before this Court in this petition for review
on certiorari based on the following grounds:
_______________
15 Id., at p. 355.
16 Supra note 1.
399
VOL. 590, JUNE 22, 399
2009
Matthews vs. Taylor
4.1. THE MARITAL CONSENT OF RESPONDENT BENJAMIN TAYLOR IS NOT
REQUIRED IN THE AGREEMENT OF LEASE DATED 20 JULY 1992.
GRANTING ARGUENDOTHAT HIS CONSENT IS REQUIRED, BENJAMIN TAYLOR
IS DEEMED TO HAVE GIVEN HIS CONSENT WHEN HE AFFIXED HIS SIGNATURE
IN THE AGREEMENT OF LEASE AS WITNESS IN THE LIGHT OF THE RULING OF
THE SUPREME COURT IN THE CASE OF SPOUSES PELAYO VS. MELKI PEREZ,
G.R. NO. 141323, JUNE 8, 2005.
4.2. THE PARCEL OF LAND SUBJECT OF THE AGREEMENT OF LEASE IS THE
EXCLUSIVE PROPERTY OF JOCELYN C. TAYLOR, A FILIPINO CITIZEN, IN THE
LIGHT OF CHEESMAN VS. IAC, G.R. NO. 74833, JANUARY 21, 1991.
4.3. THE COURTS A QUOERRONEOUSLY APPLIED ARTICLE 96 OF THE
FAMILY CODE OF THE PHILIPPINES WHICH IS A PROVISION REFERRING TO
THE ABSOLUTE COMMUNITY OF PROPERTY. THE PROPERTY REGIME
GOVERNING THE PROPERTY RELATIONS OF BENJAMIN TAYLOR AND JOSELYN
TAYLOR IS THE CONJUGAL PARTNERSHIP OF GAINS BECAUSE THEY WERE
MARRIED ON 30 JUNE 1988 WHICH IS PRIOR TO THE EFFECTIVITY OF THE
FAMILY CODE. ARTICLE 96 OF THE FAMILY CODE OF THE PHILIPPINES FINDS
NO APPLICATION IN THIS CASE.
4.4. THE HONORABLE COURT OF APPEALS IGNORED THE PRESUMPTION OF
REGULARITY IN THE EXECUTION OF NOTARIAL DOCUMENTS.
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4.5. THE HONORABLE COURT OF APPEALS FAILED TO PASS UPON THE
COUNTERCLAIM OF PETITIONER DESPITE THE FACT THAT IT WAS NOT
CONTESTED AND DESPITE THE PRESENTATION OF EVIDENCE ESTABLISHING
SAID CLAIM.17
The petition is impressed with merit.
In fine, we are called upon to determine the validity of an Agreement of Lease
of a parcel of land entered into by a Filipino wife without the consent of her
British husband. In addressing the matter before us, we are confronted not only
with
_______________
17 Rollo, pp. 554-556.
400
400 SUPREME COURT
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ANNOTATED
Matthews vs. Taylor
civil law or conflicts of law issues, but more importantly, with a constitutional
question.
It is undisputed that Joselyn acquired the Boracay property in 1989. Said
acquisition was evidenced by a Deed of Sale with Joselyn as the vendee. The
property was also declared for taxation purposes under her name. When Joselyn
leased the property to petitioner, Benjamin sought the nullification of the
contract on two grounds: first, that he was the actual owner of the property since
he provided the funds used in purchasing the same; and second, that Joselyn
could not enter into a valid contract involving the subject property without his
consent.
The trial and appellate courts both focused on the property relations of
petitioner and respondent in light of the Civil Code and Family Code provisions.
They, however, failed to observe the applicable constitutional principles, which,
in fact, are the more decisive.
Section 7, Article XII of the 1987 Constitution states:18
“Section 7. Save in cases of hereditary succession, no private lands shall be
transferred or conveyed except to individuals, corporations, or associations qualified to
acquire or hold lands of the public domain.”
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_______________
18 A similar provision was set forth in the 1935 and 1973 Constitutions, viz.:
Section 5, Article XIII of the 1935 Constitution states:
“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.”
Section 14, Article XIV of the 1973 Constitution also states:
“Save in cases of hereditary succession, no private land shall be transferred or conveyed except to
individuals, corporations, or associations qualified to acquire or hold lands in the public domain.”
401
VOL. 590, JUNE 22, 401
2009
Matthews vs. Taylor
Aliens, whether individuals or corporations, have been disqualified from
acquiring lands of the public domain. Hence, by virtue of the aforecited
constitutional provision, they are also disqualified from acquiring private
lands.19 The primary purpose of this constitutional provision is the conservation
of the national patrimony.20 Our fundamental law cannot be any clearer. The
right to acquire lands of the public domain is reserved only to Filipino citizens or
corporations at least sixty percent of the capital of which is owned by Filipinos.21
In Krivenko v. Register of Deeds,22 cited in Muller v. Muller,23 we had the
occasion to explain the constitutional prohibition:
“Under Section 1 of Article XIII of the Constitution, “natural resources, with the
exception of public agricultural land, shall not be alienated,” and with respect to public
agricultural lands, their alienation is limited to Filipino citizens. But this constitutional
purpose conserving agricultural resources in the hands of Filipino citizens may easily be
defeated by the Filipino citizens themselves who may alienate their agricultural lands in
favor of aliens. It is partly to prevent this result that Section 5 is included in Article XIII,
and it reads as follows:
“Section 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.”
This constitutional provision closes the only remaining avenue through which
agricultural resources may leak into alien’s hands. It would certainly be futile to prohibit
the alienation of public agricultural lands to aliens if, after all, they may be freely so
alienated upon
_______________
19 Muller v. Muller, G.R. No. 149615, August 29, 2006, 500 SCRA 65, 71; Frenzel v. Catito, 453 Phil. 885, 904;
406 SCRA 55, 69(2003).
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20 Muller v. Muller, Id.
21 Ting Ho, Jr. v. Teng Gui, G.R. No. 130115, July 16, 2008, 558 SCRA 421.
22 79 Phil. 461 (1947).
23 Supra.
402
402 SUPREME COURT
REPORTS
ANNOTATED
Matthews vs. Taylor
their becoming private agricultural lands in the hands of Filipino citizens. x x x
xxxx
If the term “private agricultural lands” is to be construed as not including residential
lots or lands not strictly agricultural, the result would be that “aliens may freely acquire
and possess not only residential lots and houses for themselves but entire subdivisions,
and whole towns and cities,” and that “they may validly buy and hold in their names
lands of any area for building homes, factories, industrial plants, fisheries, hatcheries,
schools, health and vacation resorts, markets, golf courses, playgrounds, airfields, and a
host of other uses and purposes that are not, in appellant’s words, strictly agricultural.”
(Solicitor General’s Brief, p. 6) That this is obnoxious to the conservative spirit of the
Constitution is beyond question.”24
The rule is clear and inflexible: aliens are absolutely not allowed to acquire
public or private lands in the Philippines, save only in constitutionally
recognized exceptions.25There is no rule more settled than this constitutional
prohibition, as more and more aliens attempt to circumvent the provision by
_______________
24 Id., at pp. 71-72; Krivenko v. Register of Deeds of Manila, 79 Phil. 461, 473-476 (1947).
25 The instances when aliens may be allowed to acquire private lands in the Philippines are:
(a) By hereditary succession (Section 7, Article XII, Philippine Constitution).
(b) A natural-born citizen of the Philippines who has lost his Philippine citizenship may be a
transferee of private lands, subject to limitations provided by law (Section 8, Article XII, Philippine
Constitution). Republic Act No. 8179 now allows a former natural-born Filipino citizen to acquire up
to 5,000 square meters of urban land and 3 hectares or rural land, and he may now use the land not
only for residential purposes, but even for business or other purposes.
(c) Americans who may have acquired title to private lands during the effectivity of the Parity
Agreement shall hold valid title thereto as against private persons (Section 11, Article XVII, 1973
Constitution).
403
VOL. 590, JUNE 22, 403
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Matthews vs. Taylor
trying to own lands through another. In a long line of cases, we have settled
issues that directly or indirectly involve the above constitutional provision. We
had cases where aliens wanted that a particular property be declared as part of
their father’s estate;26that they be reimbursed the funds used in purchasing a
property titled in the name of another;27 that an implied trust be declared in
their (aliens’) favor;28 and that a contract of sale be nullified for their lack of
consent.29
In Ting Ho, Jr. v. Teng Gui,30 Felix Ting Ho, a Chinese citizen, acquired a
parcel of land, together with the improvements thereon. Upon his death, his
heirs (the petitioners therein) claimed the properties as part of the estate of their
deceased father, and sought the partition of said properties among themselves.
We, however, excluded the land and improvements thereon from the estate of
Felix Ting Ho, precisely because he never became the owner thereof in light of
the above-mentioned constitutional prohibition.
In Muller v. Muller,31petitioner Elena Buenaventura Muller and respondent
Helmut Muller were married in Germany. During the subsistence of their
marriage, respondent purchased a parcel of land in Antipolo City and
constructed a house thereon. The Antipolo property was registered in the name
of the petitioner. They eventually separated, prompting the respondent to file a
petition for separation of property. Specifically, respondent prayed for
reimbursement of the funds he paid for the acquisition of said property. In
deciding the case in favor of the petitioner, the Court held that respondent was
aware that as an alien, he was prohibited from own-
_______________
26 Ting Ho, Jr. v. Teng Gui,supra, note 21.
27 Muller v. Muller, supra, note 19; Frenzel v. Catito, supra, note 19.
28 Muller v. Muller, Id.
29 Cheesman v. Intermediate Appellate Court, G.R. No. 74833, January 21, 1991, 193 SCRA 93.
30 Supra.
31 Supra.
404
404 SUPREME COURT
REPORTS
ANNOTATED
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ing a parcel of land situated in the Philippines. He had, in fact, declared that
when the spouses acquired the Antipolo property, he had it titled in the name of
the petitioner because of said prohibition. Hence, we denied his attempt at
subsequently asserting a right to the said property in the form of a claim for
reimbursement. Neither did the Court declare that an implied trust was created
by operation of law in view of petitioner’s marriage to respondent. We said that
to rule otherwise would permit circumvention of the constitutional prohibition.
In Frenzel v. Catito,32petitioner, an Australian citizen, was married to
Teresita Santos; while respondent, a Filipina, was married to Klaus Muller.
Petitioner and respondent met and later cohabited in a common-law
relationship, during which petitioner acquired real properties; and since he was
disqualified from owning lands in the Philippines, respondent’s name appeared
as the vendee in the deeds of sale. When their relationship turned sour,
petitioner filed an action for the recovery of the real properties registered in the
name of respondent, claiming that he was the real owner. Again, as in the other
cases, the Court refused to declare petitioner as the owner mainly because of the
constitutional prohibition. The Court added that being a party to an illegal
contract, he could not come to court and ask to have his illegal objective carried
out. One who loses his money or property by knowingly engaging in an illegal
contract may not maintain an action for his losses.
Finally, in Cheesman v. Intermediate Appellate Court,33 petitioner (an
American citizen) and Criselda Cheesman acquired a parcel of land that was
later registered in the latter’s name. Criselda subsequently sold the land to a
third person without the knowledge of the petitioner. The petitioner then sought
the nullification of the sale as he did not give his con-
_______________
32 Supra.
33 Supra.
405
VOL. 590, JUNE 22, 405
2009
Matthews vs. Taylor
sent thereto. The Court held that assuming that it was his (petitioner’s)
intention that the lot in question be purchased by him and his wife, he acquired
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no right whatever over the property by virtue of that purchase; and in
attempting to acquire a right or interest in land, vicariously and clandestinely,
he knowingly violated the Constitution; thus, the sale as to him was null and
void.
In light of the foregoing jurisprudence, we find and so hold that Benjamin
has no right to nullify the Agreement of Lease between Joselyn and petitioner.
Benjamin, being an alien, is absolutely prohibited from acquiring private and
public lands in the Philippines. Considering that Joselyn appeared to be the
designated “vendee” in the Deed of Sale of said property, she acquired sole
ownership thereto. This is true even if we sustain Benjamin’s claim that he
provided the funds for such acquisition. By entering into such contract knowing
that it was illegal, no implied trust was created in his favor; no reimbursement
for his expenses can be allowed; and no declaration can be made that the subject
property was part of the conjugal/community property of the spouses. In any
event, he had and has no capacity or personality to question the subsequent
lease of the Boracay property by his wife on the theory that in so doing, he was
merely exercising the prerogative of a husband in respect of conjugal property.
To sustain such a theory would countenance indirect controversion of the
constitutional prohibition. If the property were to be declared conjugal, this
would accord the alien husband a substantial interest and right over the land, as
he would then have a decisive vote as to its transfer or disposition. This is a
right that the Constitution does not permit him to have.34
In fine, the Agreement of Lease entered into between Joselyn and petitioner
cannot be nullified on the grounds advanced by Benjamin. Thus, we uphold its
validity.
_______________
34 Cheesman v. Intermediate Appellate Court, supra, at pp. 103-104.
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