2nd Batch of Cases July 20

7/28/2019 2nd Batch of Cases July 20

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LANDS, TITLES AND DEEDS (FOR RECITATION JULY 20, 2013)2nd Batch of

Cases

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EN BANC

G.R. No. L-17587 December 18, 1967

PHILIPPINE BANKING CORPORATION, representing the estate of JUSTINIA

SANTOS Y CANON FAUSTINO, deceased, plaintiff-appellant,vs.LUI SHE, in her own behalf and as administratrix of the intestate estate ofWong Heng, deceased, defendant-appellant.

Nicanor S. Sison for plaintiff-appellant.Ozaeta, Gibbs and Ozaeta for defendant-appellant.

R E S O L U T I O N

CASTRO, J.:

This is the second motion that the defendant-appellant has filed relative to thisCourt's decision of September 12, 1967. The first was a motion forreconsideration. Accepting the nullity of the other contracts (Plff Exhs. 4-7), thedefendant-appellant nevertheless contended that the lease contract (Plff Exh. 3)is so separable from the rest of the contracts that it should be saved frominvalidation.lawphil

In denying the motion, we pointed to the circumstances

that on November 15, 1957, the parties entered into the lease contract for50 years: that ten days after, that is on November 25, they amended thecontract so as to make it cover the entire property of Justina Santos; thaton December 21, less than a month after, they entered into anothercontract giving Wong Heng the option to buy the leased premises shouldhis pending petition for naturalization be granted; that on November 18,1958, after failing to secure naturalization and after finding thatadoption does not confer the citizenship of the adopting parent on theadopted, the parties entered into two other contracts extending the leaseto 99 years and fixing the period of the option to buy at 50 years.

which indubitably demonstrate that each of the contracts in question wasdesigned to carry out Justina Santos' expressed wish to give the land to Wongand thereby in effect place its ownership in alien hands,1 about which we shallhave something more to say toward the end of this resolution. We concludedthat "as the lease contract was part of a scheme to violate the Constitution itsuffers from the same infirmity that renders the other contracts void and canno more be saved from illegality than the rest of the contracts."


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The present motion is for a new trial and is based on three documents executedby Justina Santos which, so it is claimed, constitute newly-discovered materialevidence. These documents are a codicil dated November 11, 1957 and twowills executed on August 24 and August 29, 1959. In the codicil Justina Santosnot only named Tita Yaptinchay LaO the administratrix of her estate with the

right to buy the properties of the estate, but also provided that if the said LaOwas legally disqualified from buying (as she really was under article 1491 (3) ofthe Civil Code), she was to be her sole heir. In either case, the codicil imposedon the administratrix the obligation to have masses said for the soul of thetestatrix and those of the latter's sister and parent. On the other hand, in bothher 1959 wills Justina Santos enjoined her heirs to respect the lease contractmade, and the conditional option given, in favor of Wong.

These documents form part of the records of civil case 59470 of the Court ofFirst Instance of Manila in which the settlement of the estate of Justina Santosis pending, and so it is now claimed that they could not have been produced at

the trial of this case which was concluded on August 6, 1960 because they werepresented in the probate court only after the death of Justina Santos onDecember 28, 1964.itc-alf

This is a misrepresentation of the grossest sort. The documents were known tothe defendant-appellant and her counsel even before the death of JustinaSantos. As a matter of fact, the wills executed on August 24 and August 29,1959 were presented in this case as Exhibits 285 and 279, respectively, for thedefendant-appellant, and were considered and expressly referred to in thedecision of the lower court and in our decision.itc-alfAs for the codicil ofNovember 11, 1957, the defendant-appellant can hardly feign ignorance of itsessence even when this case was being tried in the lower court considering thatits provisions were substantially adverted to in the testimony of one of herwitnesses2 and were in fact recited in the decision a own a quo.3 By no meanscan the documents in question be considered newly-discovered evidence so asto warrant a reopening of this case.4

Nor is there anything in the documents that is likely to alter the result we havealready reached in this case. With respect to the 1957 codicil, it is claimed thatJustina Santos could not have intended by the 99-year lease to give Wong theownership of the land considering that she had earlier (the codicil was made on

November 11, 1957 while the lease contract was executed on November 15,1957) devised the property to Tita Yaptinchay LaO.

Without passing on the validity of her testamentary disposition since the issueis one pending before the probate court, it suffices to state here that evengranting that Justina Santos had devised the land in dispute to LaO, JustinaSantos was not thereby barred or precluded from subsequently giving the landto Wong. The execution of the lease contract which, together with the other


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contracts, amount to a transfer of ownership to Wong, constitutes an impliedrevocation of her codicil, at least insofar as the disposition of the land isconcerned.5

As for the 1959 wills, it is said that they manifest a desire to abide by the law,

as is evident from the statement therein that Wong's right to buy the land beallowed "anytime he or his children should be entitled to buy lands in thePhilippines (i.e., upon becoming Filipino citizens)".lawphilit seems obvious,however, that this is nothing but a reiteration of the substance of the leasecontract and conditional option to buy which in compensation, as our decisiondemonstrates, amount to a conveyance, the protestation of compliance with thelaw notwithstanding. In cases like the one at bar, motives are seldom avowedand avowals are not always candid. The problem is not, however, insuperable,especially as in this case the very witnesses for the defendant-appellanttestified that

Considering her age, ninety (90) years old at the time and her condition,she is a wealthy woman, it is just natural when she said. "This is what Iwant and this will be done." In particular reference to this contract oflease, when I said "This is not proper, she said 'you just go ahead, youprepare that, I am the owner, and if there is illegality, I am the only onethat can question the illegality.'"6

The ambition of the old woman before her death, according to herrevelation to me, was to see to it that these properties be enjoyed, even toown them, by Wong Heng because Doa Justina told me that she did nothave any relatives, near or far, and she considered Wong Heng as a sonand his children her grandchildren; especially her consolation in life waswhen she would hear the children reciting prayers in Tagalog.7

She was very emphatic in the care of the seventeen (17) dogs and of themaids who helped her much, and she told me to see to it that no onecould disturb Wong Heng from those properties. That is why we thoughtof adoption, believing that thru adoption Wong Heng might acquiredFilipino citizenship, being the adopted child of a Filipino citizen.lawphil8

The other points raised in the motion for new trial either have already been

disposed of in our decision or are so insubstantial to merit any attention.

ACCORDINGLY, the motion for new trial is denied.

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


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Footnotes

1 Resolution, Oct. 5, 1967.

2 T.s.n., p. 82, June 20, 1960.

3 Decision, Sept. 16, 1960, Rec. on Appeal 208, 212 n. 1.

4Cf. Bersabal v. Bernal, 13 Phil. 463 (1909).

5 Civ Code arts. 830(l) and 957.

6 Testimony of Atty. Tomas Yumol, T.s.n., p. 86, June 20, 1960 (emphasis added).

7 Testimony of Atty. Benjamin Alonzo, t.s.n, p. 79, July 6, 1960 (emphasis added).

8Id., t.s.n., p. 121, June 20, 1960.

FIRST DIVISION

FELIX TING HO, JR., G.R. No. 130115

MERLA TING HO BRADEN,

JUANA TING HO & LYDIA

TING HO BELENZO, Present:

Petitioners, PUNO, C.J., Chairperson,CARPIO,

CORONA,- versus - AZCUNA, and

LEONARDO-DE CASTRO,JJ.

Promulgated:VICENTE TENG GUI,Respondent. July 16, 2008

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x


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D E C I S I O N

PUNO, C.J.:

This is a Petition for Review on Certiorari[1]assailing the Decision[2]of the

Court of Appeals (CA) in CA-G.R. CV No. 42993 which reversed and set aside the

Decision of the Regional Trial Court (RTC) of Olongapo City, Branch 74, in Civil

Case No. 558-0-88.

The instant case traces its origin to an action for partition filed by petitioners

Felix Ting Ho, Jr., Merla Ting Ho Braden, Juana Ting Ho and Lydia Ting Ho

Belenzo against their brother, respondent Vicente Teng Gui, before theRTC,

Branch 74 of Olongapo City. The controversy revolves around a parcel of land,and the improvements established thereon, which, according to petitioners, should

form part of the estate of their deceased father, Felix Ting Ho, and should be

partitioned equally among each of the siblings.

In their complaint before the RTC, petitioners alleged that their father Felix

Ting Ho died intestate on June 26, 1970, and left upon his death an estate

consisting of the following:

a) A commercial land consisting of 774 square meters, more or less,located at Nos. 16 and 18 Afable St., East Bajac-Bajac, Olongapo City, covered by

Original Certificate of Title No. P-1064 and Tax Declaration No. 002-2451;

b) A two-storey residential house on the aforesaid lot;

c) A two-storey commercial building, the first floor rented to different

persons and the second floor, Bonanza Hotel, operated by the defendant also

located on the above described lot; and

d) A sari-sari store (formerly a bakery) also located on the above described

lot.[3]

According to petitioners, the said lot and properties were titled and tax declared

under trust in the name of respondent Vicente Teng Gui for the benefit of the

deceased Felix Ting Ho who, being a Chinese citizen, was then disqualified to own

public lands in the Philippines; and that upon the death of Felix Ting Ho, the
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respondent took possession of the same for his own exclusive use and benefit to

their exclusion and prejudice.[4]

In his answer, the respondent countered that on October 11, 1958, Felix Ting

Ho sold the commercial and residential buildings to his sister-in-law, Victoria

Cabasal, and the bakery to his brother-in-law, Gregorio Fontela.[5]He alleged that

he acquired said properties from the respective buyers on October 28, 1961 and has

since then been in possession of subject properties in the concept of an owner; and

that on January 24, 1978, Original Certificate of Title No. P-1064 covering the

subject lot was issued to him pursuant to a miscellaneous sales patent granted to

him onJanuary 3, 1978.[6]

The undisputed facts as found by the trial court (RTC), and affirmed by theappellate court (CA), are as follows:

[T]he plaintiffs and the defendant are all brothers and sisters, the

defendant being the oldest. They are the only legitimate children of the deceased

Spouses Felix Ting Ho and Leonila Cabasal. Felix Ting Ho died on June 26,1970while the wife Leonila Cabasal died on December 7, 1978. The defendant

Vicente Teng Gui is the oldest among the children as he was born on April 5,

1943. The father of the plaintiffs and the defendant was a Chinese citizenalthough their mother was Filipino. That sometime in 1947, the father of the

plaintiffs and defendant, Felix Ting Ho, who was already then married to their

mother Leonila Cabasal, occupied a parcel of land identified to (sic) as Lot No. 18Brill which was thereafter identified as Lot No. 16 situated at Afable Street, East

Bajac-Bajac, Olongapo City, by virtue of the permission granted him by the then

U.S. Naval Reservation Office, Olongapo, Zambales. The couple thereafter

introduced improvements on the land. They built a house of strong material at 16Afable Street which is a commercial and residential house and another building of

strong material at 18 Afable Street which was a residential house and a

bakery. The couple, as well as their children, lived and resided in the saidproperties until their death. The father, Felix Ting Ho had managed the bakery

while the mother managed the sari-sari store. Long before the death of Felix

Ting Ho, who died on June 26, 1970, he executed on October 11, 1958 a Deed

of Absolute Sale of a house of strong material located at 16 Afable Street,Olongapo, Zambales, specifically described in Tax Dec. No. 5432, in favor ofVictoria Cabasal his sister-in-law (Exh. C). This Deed of Sale cancelled the

Tax Dec. of Felix Ting Ho over the said building (Exh. C-1) and the building was

registered in the name of the buyer Victoria Cabasal, as per Tax Dec. No. 7579(Exh. C-2). On the same date, October 11, 1958 the said Felix Ting Ho also

sold a building of strong material located at 18 Afable Street, described in

Tax Dec. No. 5982, in favor of Gregorio Fontela, of legal age, an American
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citizen, married (Exh. D). This Deed of Sale, in effect, cancelled Tax Dec. No.

5982 and the same was registered in the name of the buyer Gregorio Fontela, as

per Tax Dec. No. 7580 (Exh. D-2). In turn Victoria Cabasal and her husband

Gregorio Fontela sold to Vicente Teng Gui on October 28, 1961 the buildings

which were bought by them from Felix Ting Ho and their tax declarations

for the building they bought (Exhs. C-2 and D-2) were accordingly cancelledand the said buildings were registered in the name of the defendant Vicente

Teng Gui (Exhs. C-3 and D-3). On October 25, 1966 the father of the parties

Felix Ting Ho executed an Affidavit of Transfer, Relinquishment andRenouncement of Rights and Interest including Improvements on Land in favor of

his eldest son the defendant Vicente Teng Gui. On the basis of the said document

the defendant who then chose Filipino citizenship filed a miscellaneous sales

application with the Bureau of Lands. Miscellaneous Sales Patent No. 7457 of

the land which was then identified to be Lot No. 418, Ts-308 consisting of 774

square meters was issued to the applicant Vicente Teng Gui and accordingly

on the 24th

of January, 1978 Original Certificate of Title No. P-1064 covering

the lot in question was issued to the defendant Vicente Teng Gui. Althoughthe buildings and improvements on the land in question were sold by Felix Ting

Ho to Victoria Cabasal and Gregorio Fontela in 1958 and who in turn sold the

buildings to the defendant in 1961 the said Felix Ting Ho and his wife remainedin possession of the properties as Felix Ting Ho continued to manage the bakery

while the wife Leonila Cabasal continued to manage the sari-sari store. During all

the time that the alleged buildings were sold to the spouses Victoria Cabasal and

Gregorio Fontela in 1958 and the subsequent sale of the same to the defendantVicente Teng Gui in October of 1961 the plaintiffs and the defendant continued to

live and were under the custody of their parents until their father Felix Ting Ho

died in 1970 and their mother Leonila Cabasal died in 1978 .[7](Emphasis

supplied)

In light of these factual findings, the RTC found that Felix Ting Ho, being a

Chinese citizen and the father of the petitioners and respondent, resorted to a series

of simulated transactions in order to preserve the right to the lot and the properties

thereon in the hands of the family. As stated by the trial court:

After a serious consideration of the testimonies given by both one of the

plaintiffs and the defendant as well as the documentary exhibits presented in the

case, the Court is inclined to believe that Felix Ting Ho, the father of the plaintiffsand the defendant, and the husband of Leonila Cabasal thought of preserving the

properties in question by transferring the said properties to his eldest son as hethought that he cannot acquire the properties as he was a Chinese citizen. To

transfer the improvements on the land to his eldest son the defendant Vicente

Teng Gui, he first executed simulated Deeds of Sales in favor of the sister and

brother-in-law of his wife in 1958 and after three (3) years it was made to appearthat these vendees had sold the improvements to the defendant Vicente Teng Gui
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who was then 18 years old. The Court finds that these transaction (sic) were

simulated and that no consideration was ever paid by the vendees.

x x x x x x x x x

With regards (sic) to the transfer and relinquishment of Felix Ting Hosright to the land in question in favor of the defendant, the Court believes, that

although from the face of the document it is stated in absolute terms that without

any consideration Felix Ting Ho was transferring and renouncing his right infavor of his son, the defendant Vicente Teng Gui, still the Court believes that the

transaction was one of implied trust executed by Felix Ting Ho for the benefit of

his family[8]

Notwithstanding such findings, the RTC considered the Affidavit of

Transfer, Relinquishment and Renouncement of Rights and Interests over the land

as a donation which was accepted by the donee, the herein respondent. Withrespect to the properties in the lot, the trial court held that although the sales were

simulated, pursuant to Article 1471 of the New Civil Code[9]it can be assumed that

the intention of Felix Ting Ho in such transaction was to give and donate such

properties to the respondent. As a result, it awarded the entire conjugal share of

Felix Ting Ho in the subject lot and properties to the respondent and divided only

the conjugal share of his wife among the siblings. The dispositive portion of

the RTC decision decreed:

WHEREFORE,judgment is hereby rendered in favor of the plaintiffs andagainst the defendant as the Court orders the partition and the adjudication of the

subject properties, Lot 418, Ts-308, specifically described in original Certificate

of Title No. P-1064 and the residential and commercial houses standing on the lot

specifically described in Tax Decs. Nos. 9179 and 9180 in the name of VicenteTeng Gui in the following manner, to wit: To the defendant Vicente Teng Gui is

adjudicated an undivided six-tenth (6/10) of the aforementioned properties and to

each of the plaintiffs Felix Ting Ho, Jr., Merla Ting-Ho Braden, Juana Ting andLydia Ting Ho-Belenzo each an undivided one-tenth (1/10) of the

properties[10]

From this decision, both parties interposed their respective appeals. The

petitioners claimed that the RTC erred in awarding respondent the entire conjugal

share of their deceased father in the lot and properties in question contrary to its

own finding that an implied trust existed between the parties. The respondent, on

the other hand, asserted that the RTC erred in not ruling that the lot and properties

do not form part of the estate of Felix Ting Ho and are owned entirely by him.
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On appeal, the CA reversed and set aside the decision of the RTC. The

appellate court held that the deceased Felix Ting Ho was never the owner and

never claimed ownership of the subject lot since he is disqualified under Philippine

laws from owning public lands, and that respondent Vicente Teng Gui was the

rightful owner over said lot by virtue of Miscellaneous Sales Patent No. 7457

issued in his favor, viz:

The deceased Felix Ting Ho, plaintiffs and defendants late father,

was never the owner of the subject lot, now identified as Lot No. 418, Ts-308

covered by OCT No. P-1064 (Exh. A; Record, p. 104). As stated by Felix

Ting Ho no less in the Affidavit of Transfer, Relinquishment and

Renouncement of Rights and Interest etc. (Exh. B: Record, p. 107), executed

on October 25, 1966 he, the late Felix Ting Ho, was merely a possessor or

occupant of the subject lot by virtue of a permission granted by the

then U.S. Naval Reservation Office, Olongapo, Zambales. The late Felix Ting

Ho was never the owner and never claimed ownership of the land. (Emphasis

supplied)

The affidavit, Exhibit B, was subscribed and sworn to before a Land

Investigator of the Bureau of Lands and in the said affidavit, the late Felix Ting

Ho expressly acknowledged that because he is a Chinese citizen he is not

qualified to purchase public lands under Philippine laws for which reason hethereby transfers, relinquishes and renounces all his rights and interests in the

subject land, including all the improvements thereon to his son, the defendant

Vicente Teng Gui, who is of legal age, single, Filipino citizen and qualified underthe public land law to acquire lands.

x x x x x x x x x

Defendant Vicente Teng Gui acquired the subject land by sales patent

or purchase from the government and not from his father, the late Felix Ting

Ho. It cannot be said that he acquired or bought the land in trust for his fatherbecause on December 5, 1977 when the subject land was sold to him by the

government and on January 3, 1978 when Miscellaneous Sales Patent No. 7457

was issued, the late Felix Ting Ho was already dead, having died on June 6, 1970

(TSN, January 10, 1990, p. 4).[11]

Regarding the properties erected over the said lot, the CA held that the

finding that the sales of the two-storey commercial and residential buildings and

sari-sari store to Victoria Cabasal and Gregorio Fontela and subsequently to

respondent were without consideration and simulated is supported by evidence,


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which clearly establishes that these properties should form part of the estate of the

late spouses Felix Ting Ho and Leonila Cabasal.

Thus, while the appellate court dismissed the complaint for partition with

respect to the lot in question, it awarded the petitioners a four-fifths (4/5) share of

the subject properties erected on the said lot. The dispositive portion of the CA

ruling reads as follows:

WHEREFORE, premises considered, the decision appealed from is

REVERSED and SET ASIDE and NEW JUDGMENTrendered:

1. DISMISSING plaintiff-appellants complaint with respect to thesubject parcel of land, identified as Lot No. 418, Ts-308, covered by OCT No. P-

1064, in the name of plaintiff-appellants [should be defendant-appellant];

2. DECLARING that the two-storey commercial building, the two-storey

residential building and sari-sari store (formerly a bakery), all erected on thesubject lot No. 418, Ts-308, form part of the estate of the deceased spouses Felix

Ting Ho and Leonila Cabasal, and that plaintiff-appellants are entitled to four-

fifths (4/5) thereof, the remaining one-fifth (1/5) being the share of the defendant-

appellant;

3. DIRECTING the court a quo to partition the said two-storey

commercial building, two-storey residential building and sari-sari store (formerly

a bakery) in accordance with Rule 69 of the Revised Rules of Court and pertinentprovisions of the Civil Code;

4. Let the records of this case be remanded to the court of origin forfurther proceedings;

5. Let a copy of this decision be furnished the Office of the Solicitor

General; and

6. There is no pronouncement as to costs.

SO ORDERED.[12]

Both petitioners and respondent filed their respective motions for

reconsideration from this ruling, which were summarily denied by the CA in its

Resolution[13]dated August 5, 1997. Hence, this petition.
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According to the petitioners, the CA erred in declaring that Lot No. 418, Ts-

308 does not form part of the estate of the deceased Felix Ting Ho and is owned

alone by respondent. Respondent, on the other hand, contends that he should be

declared the sole owner not only of Lot No. 418, Ts-308 but also of the properties

erected thereon and that the CA erred in not dismissing the complaint for partition

with respect to the said properties.

The primary issue for consideration is whether both Lot No. 418, Ts-308 and

the properties erected thereon should be included in the estate of the deceased Felix

Ting Ho.

We affirm the CA ruling.

With regard to Lot No. 418, Ts-308, Article XIII, Section 1 of the 1935

Constitution states:

Section 1. All agricultural timber, and mineral lands of the public

domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of

potential energy and other natural resources of the Philippines belong to the

State, and their disposition, exploitation, development, or utilization shall be

limited to citizens of the Philippines or to corporations or associations at least

sixty per centum of the capital of which is owned by such citizens, subject to

any existing right, grant, lease, or concession at the time of the inauguration of theGovernment established under this Constitution (Emphasis supplied)

Our fundamental law cannot be any clearer. The right to acquire lands of the

public domain is reserved for Filipino citizens or corporations at least sixty percent

of the capital of which is owned by Filipinos. Thus, inKrivenko v. Register of

Deeds,[14]

the Court enunciated that:

Perhaps the effect of our construction is to preclude aliens, admitted

freely into the Philippines from owning sites where they may build theirhomes. 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. We are

satisfied, however, that aliens are not completely excluded by the Constitution

from the use of lands for residential purposes. Since their residence in

thePhilippines is temporary, they may be granted temporary rights such as a leasecontract which is not forbidden by the Constitution. Should they desire to remain


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here forever and share our fortunes and misfortunes, Filipino citizenship is not

impossible to acquire.[15]

In the present case, the father of petitioners and respondent was a Chinese

citizen; therefore, he was disqualified from acquiring and owning real property inthe Philippines. In fact, he was only occupying the subject lot by virtue of the

permission granted him by the then U.S. Naval Reservation Office of Olongapo,

Zambales. As correctly found by the CA, the deceased Felix Ting Ho was never

the owner of the subject lot in light of the constitutional proscription and the

respondent did not at any instance act as the dummy of his father.

On the other hand, the respondent became the owner of Lot No. 418, Ts-308

when he was granted Miscellaneous Sales Patent No. 7457 on January 3, 1978, by

the Secretary of Natural Resources By Authority of the President of the

Philippines, and when Original Certificate of Title No. P-1064 was

correspondingly issued in his name. The grant of the miscellaneous sales patent by

the Secretary of Natural Resources, and the corresponding issuance of the original

certificate of title in his name, show that the respondent possesses all the

qualifications and none of the disqualifications to acquire alienable and disposable

lands of the public domain. These issuances bear the presumption of regularity in

their performance in the absence of evidence to the contrary.

Registration of grants and patents involving public lands is governed by

Section 122 of Act No. 496, which was subsequently amended by Section 103 of

Presidential Decree No. 1529, viz:

Sec. 103. Certificate of title pursuant to patents.Whenever publicland is by the Government alienated, granted or conveyed to any person, the same

shall be brought forthwith under the operation of this Decree. It shall be the duty

of the official issuing the instrument of alienation, grant, patent or conveyance inbehalf of the Government to cause such instrument to be filed with the Register of

Deeds of the province or city where the land lies, and to be there registered likeother deeds and conveyance, whereupon a certificate of title shall be entered as inother cases of registered land, and an owners duplicate issued to the grantee. The

deeds, grant, patent or instrument of conveyance from the Government to the

grantee shall not take effect as a conveyance or bind the land, but shall operate

only as a contract between the Government and the grantee and as evidence ofauthority to the Register of Deeds to make registration. It is the act of registration

that shall be the operative act to affect and convey the land, and in all cases under


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this Decree registration shall be made in the office of the Register of Deeds of the

province or city where the land lies. The fees for registration shall be paid by the

grantee. After due registration and issuance of the certificate of title, such

land shall be deemed to be registered land to all intents and purposes under

this Decree.[16]

(Emphasis supplied)

Under the law, a certificate of title issued pursuant to any grant or patent

involving public land is as conclusive and indefeasible as any other certificate of

title issued to private lands in the ordinary or cadastral registration

proceeding. The effect of the registration of a patent and the issuance of a

certificate of title to the patentee is to vest in him an incontestable title to the land,

in the same manner as if ownership had been determined by final decree of the

court, and the title so issued is absolutely conclusive and indisputable, and is not

subject to collateral attack.[17]

Nonetheless, petitioners invoke equity considerations and claim that the

ruling of the RTC that an implied trust was created between respondent and their

father with respect to the subject lot should be upheld.

This contention must fail because the prohibition against an alien from

owning lands of the public domain is absolute and not even an implied trust can be

permitted to arise on equity considerations.

In the case ofMuller v. Muller,[18]wherein the respondent, a German

national, was seeking reimbursement of funds claimed by him to be given in trust

to his petitioner wife, a Philippine citizen, for the purchase of a property in

Antipolo, the Court, in rejecting the claim, ruled that:

Respondent was aware of the constitutional prohibition and expressly

admitted his knowledge thereof to this Court. He declared that he had theAntipolo property titled in the name of the petitioner because of the said

prohibition. His attempt at subsequently asserting or claiming a right on the saidproperty cannot be sustained.

The Court of Appeals erred in holding that an implied trust was

created and resulted by operation of law in view of petitioner's marriage to

respondent. Save for the exception provided in cases of hereditary succession,

respondent's disqualification from owning lands in the Philippines is

absolute. Not even an ownership in trust is allowed. Besides, where the


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purchase is made in violation of an existing statute and in evasion of its express

provision, no trust can result in favor of the party who is guilty of the fraud. To

hold otherwise would allow circumvention of the constitutional prohibition.

Invoking the principle that a court is not only a court of law but also a

court of equity, is likewise misplaced. It has been held that equity as a rule willfollow the law and will not permit that to be done indirectly which, because of

public policy, cannot be done directly...[19]

Coming now to the issue of ownership of the properties erected on the

subject lot, the Court agrees with the finding of the trial court, as affirmed by the

appellate court, that the series of transactions resorted to by the deceased were

simulated in order to preserve the properties in the hands of the family. The

records show that during all the time that the properties were allegedly sold to the

spouses Victoria Cabasal and Gregorio Fontela in 1958 and the subsequent sale ofthe same to respondent in 1961, the petitioners and respondent, along with their

parents, remained in possession and continued to live in said properties.

However, the trial court concluded that:

In fairness to the defendant, although the Deeds of Sale executed by FelixTing Ho regarding the improvements in favor of Victoria Cabasal and Gregorio

Fontela and the subsequent transfer of the same by Gregorio Fontela and Victoria

Cabasal to the defendant are all simulated, yet, pursuant to Article 1471 of the

New Civil Code it can be assumed that the intention of Felix Ting Ho in such

transaction was to give and donate the improvements to his eldest son thedefendant Vicente Teng Gui

[20]

Its finding was based on Article 1471 of the Civil Code, which provides that:

Art. 1471. If the price is simulated, the sale is void, but the act may beshown to have been in reality a donation, or some other act or contract.

[21]

The Court holds that the reliance of the trial court on the provisions ofArticle 1471 of the Civil Code to conclude that the simulated sales were a valid

donation to the respondent is misplaced because its finding was based on a mere

assumption when the law requires positive proof.


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The respondent was unable to show, and the records are bereft of any

evidence, that the simulated sales of the properties were intended by the deceased

to be a donation to him. Thus, the Court holds that the two-storey residential

house, two-storey residential building and sari-sari store form part of the estate of

the late spouses Felix Ting Ho and Leonila Cabasal, entitling the petitioners to a

four-fifths (4/5) share thereof.

IN VIEW WHEREOF, the petition is DENIED. The assailed Decision

dated December 27, 1996 of the Court of Appeals in CA-G.R. CV No. 42993 is

hereby AFFIRMED.

SO ORDERED.

REYNATO S. PUNOChief Justice

WE CONCUR:


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ANTONIO T. CARPIOAssociate Justice

RENATO C. CORONA ADOLFO S. AZCUNA

Associate Justice Associate Justice

TERESITA J. LEONARDO-DE CASTRO

Associate Justice

C E R T I F I C A T I O NPursuant to Section 13, Article VIII of the Constitution, I certify that the

conclusions in the above decision had been reached in consultation before the casewas assigned to the writer of the opinion of the Courts Division.

REYNATO S. PUNO

Chief Justice

[1]Under Rule 45 of the 1997 Rules of Civil Procedure.[2]Rollo, pp. 49-62; penned by Associate Justice Eduardo G. Montenegro, concurred in by Associate Justices

Antonio M. Martinez and Celia Lipana-Reyes.[3]Id. at 78.[4]Id. at 78-79.
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[5]Id. at 79.[6]Id. at 80.[7]Id. at 53-55.[8]Id. at 84-85.[9]Article 1471 of the Civil Code provides:

Art. 1471. If the price is simulated, the sale is void, but the act may be shown to have been in

reality a donation, or some other act or contract.[10]Rollo,p. 86.[11]Id. at 55-57 (emphasis supplied).[12]Rollo, pp. 60-61.[13]CA Records, p. 235.[14]79 Phil. 461 (1947).[15]Id. at 474 (emphasis supplied).[16]Property Registration Decree, P.D. No. 1529, 103.[17]This rule does not apply where the land covered by a patent issued by the Government had previously been

determined in a registration proceeding and adjudicated in favor of a private individual other than the patentee,

which situation is not present in this case.[18]G.R. No. 149615, August 29, 2006, 500 SCRA 65.[19]Id. at 68.[20]

Rollo, pp. 85-86 (emphasis supplied).[21]Civil Code, Art. 1471.

FIRST DIVISION

G.R. No. 149615 August 29, 2006

IN RE: PETITION FOR SEPARATION OF PROPERTY ELENA BUENAVENTURAMULLER, Petitioner,vs.

HELMUT MULLER, Respondent.

D E C I S I O N

YNARES-SANTIAGO, J.:

This petition for review on certiorari1assails the February 26, 2001Decision2of the Court of Appeals in CA-G.R. CV No. 59321 affirming withmodification the August 12, 1996 Decision3of the Regional Trial Court ofQuezon City, Branch 86 in Civil Case No. Q-94-21862, which terminated theregime of absolute community of property between petitioner and respondent,

as well as the Resolution4dated August 13, 2001 denying the motion forreconsideration.

The facts are as follows:

Petitioner Elena Buenaventura Muller and respondent Helmut Muller weremarried in Hamburg, Germany on September 22, 1989. The couple resided inGermany at a house owned by respondents parents but decided to move and
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reside permanently in the Philippines in 1992. By this time, respondent hadinherited the house in Germany from his parents which he sold and used theproceeds for the purchase of a parcel of land in Antipolo, Rizal at the cost ofP528,000.00 and the construction of a house amounting to P2,300,000.00. TheAntipolo property was registered in the name of petitioner under Transfer

Certificate of Title No. 2194385of the Register of Deeds of Marikina, MetroManila.

Due to incompatibilities and respondents alleged womanizing, drinking, andmaltreatment, the spouses eventually separated. On September 26, 1994,respondent filed a petition6for separation of properties before the RegionalTrial Court of Quezon City.

On August 12, 1996, the trial court rendered a decision which terminated theregime of absolute community of property between the petitioner andrespondent. It also decreed the separation of properties between them and

ordered the equal partition of personal properties located within the country,excluding those acquired by gratuitous title during the marriage. With regard tothe Antipolo property, the court held that it was acquired using paraphernalfunds of the respondent. However, it ruled that respondent cannot recover hisfunds because the property was purchased in violation of Section 7, Article XIIof the Constitution. Thus

However, pursuant to Article 92 of the Family Code, properties acquired bygratuitous title by either spouse during the marriage shall be excluded from thecommunity property. The real property, therefore, inherited by petitioner inGermany is excluded from the absolute community of property of the hereinspouses. Necessarily, the proceeds of the sale of said real property as well asthe personal properties purchased thereby, belong exclusively to the petitioner.However, the part of that inheritance used by the petitioner for acquiring thehouse and lot in this country cannot be recovered by the petitioner, itsacquisition being a violation of Section 7, Article XII of the Constitution whichprovides that "save in cases of hereditary succession, no private lands shall betransferred or conveyed except to individuals, corporations or associationsqualified to acquire or hold lands of the public domain." The law will leave theparties in the situation where they are in without prejudice to a voluntarypartition by the parties of the said real property. x x x

x x x x

As regards the property covered by Transfer Certificate of Title No. 219438 ofthe Registry of Deeds of Marikina, Metro Manila, situated in Antipolo, Rizal andthe improvements thereon, the Court shall not make any pronouncement onconstitutional grounds.7
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Respondent appealed to the Court of Appeals which rendered the assaileddecision modifying the trial courts Decision. It held that respondent merelyprayed for reimbursement for the purchase of the Antipolo property, and notacquisition or transfer of ownership to him. It also considered petitionersownership over the property in trust for the respondent. As regards the house,

the Court of Appeals ruled that there is nothing in the Constitution whichprohibits respondent from acquiring the same. The dispositive portion of theassailed decision reads:

WHEREFORE, in view of the foregoing, the Decision of the lower court datedAugust 12, 1996 is hereby MODIFIED. Respondent Elena Buenaventura Muller ishereby ordered to REIMBURSE the petitioner the amount of P528,000.00 for theacquisition of the land and the amount of P2,300,000.00 for the construction ofthe house situated in Atnipolo, Rizal, deducting therefrom the amountrespondent spent for the preservation, maintenance and development of theaforesaid real property including the depreciation cost of the house or in the

alternative to SELL the house and lot in the event respondent does not have themeans to reimburse the petitioner out of her own money and from theproceeds thereof, reimburse the petitioner of the cost of the land and the housededucting the expenses for its maintenance and preservation spent by therespondent. Should there be profit, the same shall be divided in proportion tothe equity each has over the property. The case is REMANDED to the lowercourt for reception of evidence as to the amount claimed by the respondentsfor the preservation and maintenance of the property.

SO ORDERED.8

Hence, the instant petition for review raising the following issues:

I

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT THERESPONDENT HEREIN IS ENTITLED TO REIMBURSEMENT OF THE AMOUNTUSED TO PURCHASE THE LAND AS WELL AS THE COSTS FOR THECONSTRUCTION OF THE HOUSE, FOR IN SO RULING, IT INDIRECTLY ALLOWEDAN ACT DONE WHICH OTHERWISE COULD NOT BE DIRECTLY x x x DONE,WITHOUT DOING VIOLENCE TO THE CONSTITUTIONAL PROSCRIPTION THAT

AN ALIEN IS PROHIBITED FROM ACQUIRING OWNERSHIP OF REAL PROPERTIESLOCATED IN THE PHILIPPINES.

II

THE COURT OF APPEALS GRAVELY ERRED IN SUSTAINING RESPONDENTSCAUSE OF ACTION WHICH IS ACTUALLY A DESPERATE ATTEMPT TO OBTAIN
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OWNERSHIP OVER THE LOT IN QUESTION, CLOTHED UNDER THE GUISE OFCLAIMING REIMBURSEMENT.

Petitioner contends that respondent, being an alien, is disqualified to ownprivate lands in the Philippines; that respondent was aware of the

constitutional prohibition but circumvented the same; and that respondentspurpose for filing an action for separation of property is to obtain exclusivepossession, control and disposition of the Antipolo property.

Respondent claims that he is not praying for transfer of ownership of theAntipolo property but merely reimbursement; that the funds paid by him forthe said property were in consideration of his marriage to petitioner; that thefunds were given to petitioner in trust; and that equity demands thatrespondent should be reimbursed of his personal funds.

The issue for resolution is whether respondent is entitled to reimbursement of

the funds used for the acquisition of the Antipolo property.

The petition has merit.

Section 7, Article XII of the 1987 Constitution states:

Save in cases of hereditary succession, no private lands shall be transferred orconveyed except to individuals, corporations, or associations qualified toacquire or hold lands of the public domain.

Aliens, whether individuals or corporations, are disqualified from acquiringlands of the public domain. Hence, they are also disqualified from acquiringprivate lands.9The primary purpose of the constitutional provision is theconservation of the national patrimony. In the case of Krivenko v. Register ofDeeds,10the Court held:

Under section 1 of Article XIII of the Constitution, "natural resources, with theexception of public agricultural land, shall not be alienated," and with respectto public agricultural lands, their alienation is limited to Filipino citizens. Butthis constitutional purpose conserving agricultural resources in the hands ofFilipino citizens may easily be defeated by the Filipino citizens themselves who

may alienate their agricultural lands in favor of aliens. It is partly to preventthis result that section 5 is included in Article XIII, and it reads as follows:

"Sec. 5. Save in cases of hereditary succession, no private agricultural land willbe transferred or assigned except to individuals, corporations, or associationsqualified to acquire or hold lands of the public domain in the Philippines."
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This constitutional provision closes the only remaining avenue through whichagricultural resources may leak into aliens hands. It would certainly be futile toprohibit the alienation of public agricultural lands to aliens if, after all, theymay be freely so alienated upon their becoming private agricultural lands in thehands of Filipino citizens. x x x

x x x x

If the term "private agricultural lands" is to be construed as not includingresidential lots or lands not strictly agricultural, the result would be that "aliensmay freely acquire and possess not only residential lots and houses forthemselves but entire subdivisions, and whole towns and cities," and that "theymay validly buy and hold in their names lands of any area for building homes,factories, industrial plants, fisheries, hatcheries, schools, health and vacationresorts, markets, golf courses, playgrounds, airfields, and a host of other usesand purposes that are not, in appellants words, strictly agricultural." (Solicitor

Generals Brief, p. 6.) That this is obnoxious to the conservative spirit of theConstitution is beyond question.

Respondent was aware of the constitutional prohibition and expressly admittedhis knowledge thereof to this Court.11He declared that he had the Antipoloproperty titled in the name of petitioner because of the said prohibition.12Hisattempt at subsequently asserting or claiming a right on the said propertycannot be sustained.

The Court of Appeals erred in holding that an implied trust was created andresulted by operation of law in view of petitioners marriage to respondent.Save for the exception provided in cases of hereditary succession, respondentsdisqualification from owning lands in the Philippines is absolute. Not even anownership in trust is allowed. Besides, where the purchase is made in violationof an existing statute and in evasion of its express provision, no trust can resultin favor of the party who is guilty of the fraud.13To hold otherwise would allowcircumvention of the constitutional prohibition.

Invoking the principle that a court is not only a court of law but also a court ofequity, is likewise misplaced. It has been held that equity as a rule will followthe law and will not permit that to be done indirectly which, because of public

policy, cannot be done directly.

14

He who seeks equity must do equity, and hewho comes into equity must come with clean hands. The latter is a frequentlystated maxim which is also expressed in the principle that he who has doneinequity shall not have equity. It signifies that a litigant may be denied relief bya court of equity on the ground that his conduct has been inequitable, unfairand dishonest, or fraudulent, or deceitful as to the controversy in issue.15
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Thus, in the instant case, respondent cannot seek reimbursement on theground of equity where it is clear that he willingly and knowingly bought theproperty despite the constitutional prohibition.

Further, the distinction made between transfer of ownership as opposed to

recovery of funds is a futile exercise on respondents part. To allowreimbursement would in effect permit respondent to enjoy the fruits of aproperty which he is not allowed to own. Thus, it is likewise proscribed by law.As expressly held in Cheesman v. Intermediate Appellate Court:16

Finally, the fundamental law prohibits the sale to aliens of residential land.Section 14, Article XIV of the 1973 Constitution ordains that, "Save in cases ofhereditary succession, no private land shall be transferred or conveyed exceptto individuals, corporations, or associations qualified to acquire or hold landsof the public domain." Petitioner Thomas Cheesman was, of course, chargedwith knowledge of this prohibition. Thus, assuming that it was his intention

that the lot in question be purchased by him and his wife, he acquired no rightwhatever over the property by virtue of that purchase; and in attempting toacquire a right or interest in land, vicariously and clandestinely, he knowinglyviolated the Constitution; the sale as to him was null and void. In any event, hehad and has no capacity or personality to question the subsequent sale of thesame property by his wife on the theory that in so doing he is merely exercisingthe prerogative of a husband in respect of conjugal property. To sustain such atheory would permit indirect controversion of the constitutional prohibition. Ifthe property were to be declared conjugal, this would accord to the alienhusband a not insubstantial interest and right over land, as he would then havea decisive vote as to its transfer or disposition. This is a right that theConstitution does not permit him to have.

As already observed, the finding that his wife had used her own money topurchase the property cannot, and will not, at this stage of the proceedings bereviewed and overturned. But even if it were a fact that said wife had usedconjugal funds to make the acquisition, the considerations just set out tomilitate, on high constitutional grounds, against his recovering and holding theproperty so acquired, or any part thereof. And whether in such an event, hemay recover from his wife any share of the money used for the purchase orcharge her with unauthorized disposition or expenditure of conjugal funds is

not now inquired into; that would be, in the premises, a purely academicexercise. (Emphasis added)

WHEREFORE, in view of the foregoing, the instant petition is GRANTED. TheDecision dated February 26, 2001 of the Court of Appeals in CA-G.R. CV No.59321 ordering petitioner Elena Buenaventura Muller to reimburse respondentHelmut Muller the amount of P528,000 for the acquisition of the land and theamount of P2,300,000 for the construction of the house in Antipolo City, and
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the Resolution dated August 13, 2001 denying reconsideration thereof, areREVERSED and SET ASIDE. The August 12, 1996 Decision of the Regional TrialCourt of Quezon City, Branch 86 in Civil Case No. Q-94-21862 terminating theregime of absolute community between the petitioner and respondent,decreeing a separation of property between them and ordering the partition of

the personal properties located in the Philippines equally, is REINSTATED.

SO ORDERED.

CONSUELO YNARES-SANTIAGO

Associate Justice

WE CONCUR:

ARTEMIO V. PANGANIBAN

Chief JusticeChairperson

MA. ALICIA AUSTRIA-MARTINEZ, ROMEO J. CALLEJO, SR.

Associate Justice Associate Justice

MINITA V. CHICO-NAZARIOAssociate Justice

C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified thatthe conclusions in the above Decision were reached in consultation before thecase was assigned to the writer of the opinion of the Courts Division.

ARTEMIO V. PANGANIBANChief Justice

Footnotes

1Rollo, pp. 31-50.

2Id. at 8-13. Penned by Associate Justice Juan Q. Enriquez, Jr. and concurred in by AssociateJustices Ruben T. Reyes and Presbitero J. Velasco, Jr. (who is now a Member of this Court).

3Id. at 98-101. Penned by Judge Teodoro A. Bay.

4Id. at 22.
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5Id. at 58.

6Id. at 52-57.

7Id. at 100-101.

8Id. at 12.

9Ong Ching Po v. Court of Appeals, G.R. Nos. 113472-73, December 20, 1994, 239 SCRA 341, 346.

1079 Phil. 461, 473, 476 (1947).

11Rollo, p. 114.

12TSN, April 18, 1995, p. 12.

13Morales v. Court of Appeals, G.R. No. 117228, June 19, 1997, 274 SCRA 282, 299.

14

Frenzel v. Catito, 453 Phil. 885, 905 (2003).

15University of the Philippines v. Catungal, Jr., 338 Phil. 728, 743-744 (1997).

16G.R. No. 74833, January 21, 1991, 193 SCRA 93, 103-104.

_____

SECOND DIVISION

G.R. No. 143958 July 11, 2003

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

CALLEJO, SR., J.:

Before us is a petition for review of the Decision1 of the Court of Appeals in CA-G.R. CV No. 53485 which affirmed the Decision2 of the Regional Trial Court ofDavao City, Branch 14, in Civil Case No. 17,817 dismissing the petitioner's

complaint, and the resolution of the Court of Appeals denying his motion forreconsideration of the said decision.

The Antecedents3

As gleaned from the evidence of the petitioner, the case at bar stemmed fromthe following factual backdrop:
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Petitioner Alfred Fritz Frenzel is an Australian citizen of German descent. He isan electrical engineer by profession, but worked as a pilot with the New GuineaAirlines. He arrived in the Philippines in 1974, started engaging in business inthe country two years thereafter, and married Teresita Santos, a Filipino citizen.In 1981, Alfred and Teresita separated from bed and board without obtaining a

divorce.

Sometime in February 1983, Alfred arrived in Sydney, Australia for a vacation.He went to King's Cross, a night spot in Sydney, for a massage where he metEderlina Catito, a Filipina and a native of Bajada, Davao City. Unknown toAlfred, she resided for a time in Germany and was married to Klaus Muller, aGerman national. She left Germany and tried her luck in Sydney, Australia,where she found employment as a masseuse in the King's Cross nightclub. Shewas fluent in German, and Alfred enjoyed talking with her. The two saw eachother again; this time Ederlina ended up staying in Alfred's hotel for three days.Alfred gave Ederlina sums of money for her services.4

Alfred was so enamored with Ederlina that he persuaded her to stop working atKing's Cross, return to the Philippines, and engage in a wholesome business ofher 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 weeksof Ederlina's arrival in Manila, Alfred joined her. Alfred reiterated his proposalfor Ederlina to stay in the Philippines and engage in business, even offering tofinance her business venture. Ederlina was delighted at the idea and proposedto put up a beauty parlor. Alfred happily agreed.

Alfred told Ederlina that he was married but that he was eager to divorce hiswife in Australia. Alfred proposed marriage to Ederlina, but she replied thatthey 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. Jose Hidalgo who offered to convey hisrights 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 nameEdorial Beauty Salon, and had it registered with the Department of Trade andIndustry under her name. Alfred paid Atty. Hidalgo P20,000.00 for his rightover the property and gave P300,000.00 to Ederlina for the purchase of

equipment and furniture for the parlor. As Ederlina was going to Germany, sheexecuted a special power of attorney on December 13, 19835 appointing herbrother, Aser Catito, as her attorney-in-fact in managing the beauty parlorbusiness. She stated in the said deed that she was married to 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 Manilaresidence and found it unsuitable for her. He decided to purchase a house and


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lot owned by Victoria Binuya Steckel in San Francisco del Monte, Quezon City,covered by Transfer Certificate of Title No. 218429 for US$20,000.00. SinceAlfred knew that as an alien he was disqualified from owning lands in thePhilippines, he agreed that only Ederlina's name would appear in the deed ofsale as the buyer of the property, as well as in the title covering the same. After

all, he was planning to marry Ederlina and he believed that after their marriage,the two of them would jointly own the property. On January 23, 1984, aContract to Sell was entered into between Victoria Binuya Steckel as the vendorand Ederlina as the sole vendee. Alfred signed therein as a witness.6 Victoriareceived from Alfred, for and in behalf of Ederlina, the amount of US$10,000.00as partial payment, for which Victoria issued a receipt.7 When Victoria executedthe deed of absolute sale over the property on March 6, 1984,8 she receivedfrom Alfred, for and in behalf of Ederlina, the amount of US$10,000.00 as finaland full payment. Victoria likewise issued a receipt for the said amount.9 AfterVictoria had vacated the property, Ederlina moved into her new house. Whenshe left for Germany to visit Klaus, she had her father Narciso Catito and her

two sisters occupy the property.

Alfred decided to stay in the Philippines for good and live with Ederlina. Hereturned to Australia and sold his fiber glass pleasure boat to John Reid for$7,500.00 on May 4, 1984.10 He also sold his television and video business inPapua New Guinea for K135,000.00 to Tekeraoi Pty. Ltd.11 He had his personalproperties shipped to the Philippines and stored at No. 14 Fernandez Street,San Francisco del Monte, Quezon City. The proceeds of the sale were depositedin Alfred's account with the Hong Kong Shanghai Banking Corporation (HSBC),Kowloon Branch under Bank Account No. 018-2-807016.12 When Alfred was inPapua New Guinea selling his other properties, the bank sent telegraphic lettersupdating him of his account.13 Several checks were credited to his HSBC bankaccount from Papua New Guinea Banking Corporation, Westpac Bank ofAustralia and New Zealand Banking Group Limited and Westpac Bank-PNG-Limited. Alfred also had a peso savings account with HSBC, Manila, underSavings Account No. 01-725-183-01.14

Once, when Alfred and Ederlina were in Hong Kong, they opened anotheraccount with HSBC, Kowloon, this time in the name of Ederlina, under SavingsAccount No. 018-0-807950.15 Alfred transferred his deposits in Savings AccountNo. 018-2-807016 with the said bank to this new account. Ederlina also opened

a savings account with the Bank of America Kowloon Main Office underAccount No. 30069016.16

On July 28, 1984, while Alfred was in Papua New Guinea, he received a Letterdated December 7, 1983 from Klaus Muller 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 and Ederlina's amorous relationship, and


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discovered the same sometime in November 1983 when he arrived in Manila. Healso begged Alfred to leave Ederlina alone and to return her to him, saying thatAlfred could not possibly build his future on his (Klaus') misfortune.17

Alfred had occasion to talk to Sally MacCarron, a close friend of Ederlina. He

inquired if there was any truth to Klaus' statements and Sally confirmed thatKlaus was married to Ederlina. When Alfred confronted Ederlina, she admittedthat she and Klaus were, indeed, married. But she assured Alfred that shewould divorce Klaus. Alfred was appeased. He agreed to continue the amorousrelationship and wait for the outcome of Ederlina's petition for divorce. Afterall, he intended to marry her. He retained the services of RechtsanwaltinBanzhaf with offices in Berlin, as her counsel who informed her of the progressof the proceedings.18 Alfred paid for the services of the lawyer.

In the meantime, Alfred decided to purchase another house and lot, owned byRodolfo Morelos covered by TCT No. 92456 located in Pea Street, Bajada,

Davao City.19 Alfred again agreed to have the deed of sale made out in the nameof Ederlina. On September 7, 1984, Rodolfo Morelos executed a deed ofabsolute sale over the said property in favor of Ederlina as the sole vendee forthe amount of P80,000.00.20 Alfred paid US$12,500.00 for the property.

Alfred purchased another parcel of land from one Atty. MardoecheoCamporedondo, located in Moncado, Babak, Davao, covered by TCT No. 35251.Alfred once more agreed for the name of Ederlina to appear as the sole vendeein the deed of sale. On December 31, 1984, Atty. Camporedondo executed adeed of sale over the property for P65,000.00 in favor of Ederlina as the solevendee.21 Alfred, through Ederlina, paid the lot at the cost of P33,682.00 andUS$7,000.00, respectively, for which the vendor signed receipts.22 On August 14,1985, TCT No. 47246 was issued to Ederlina as the sole owner of the saidproperty.23

Meanwhile, Ederlina deposited on December 27, 1985, the total amount ofUS$250,000 with the HSBC Kowloon under Joint Deposit Account No. 018-462341-145.24

The couple decided to put up a beach resort on a four-hectare land inCamudmud, Babak, Davao, owned by spouses Enrique and Rosela Serrano.

Alfred purchased the property from the spouses for P90,000.00, and the latterissued a receipt therefor.25 A draftsman commissioned by the couple submitteda sketch of the beach resort.26 Beach houses were forthwith constructed on aportion of the property and were eventually rented out by Ederlina's father,Narciso Catito. The rentals were collected by Narciso, while Ederlina kept theproceeds of the sale of copra from the coconut trees in the property. By thistime, Alfred had already spent P200,000.00 for the purchase, construction andupkeep of the property.


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

Because Ederlina was preoccupied with her business in Manila, she executed onJuly 8, 1985, two special powers of attorney28 appointing Alfred as attorney-in-fact to receive in her behalf the title and the deed of sale over the property soldby the spouses Enrique Serrano.

In the meantime, Ederlina's petition for divorce was denied because Klausopposed the same. A second petition filed by her met the same fate. Klauswanted half of all the properties owned by Ederlina in the Philippines before hewould agree to a divorce. Worse, Klaus threatened to file a bigamy case againstEderlina.29

Alfred proposed the creation of a partnership to Ederlina, or as an alternative,the establishment of a corporation, with Ederlina owning 30% of the equitythereof. She initially agreed to put up a corporation and contacted Atty.Armando Dominguez to prepare the necessary documents. Ederlina changedher mind at the last minute when she was advised to insist on claimingownership over the properties acquired by them during their coverture.

Alfred and Ederlina's relationship started deteriorating. Ederlina had not beenable to secure a divorce from Klaus. The latter could charge her for bigamy andcould even involve Alfred, who himself was still married. To avoidcomplications, Alfred decided to live separately from Ederlina and cut off allcontacts with her. In one of her letters to Alfred, Ederlina complained that hehad 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 toher by Atty. Mardoecheo Camporedondo and Rodolfo Morelos, asking Alfred toprepare her affidavit for the said purpose and send it to her for hersignature.30 The last straw for Alfred came on September 2, 1985, whensomeone smashed the front and rear windshields of Alfred's car and damagedthe windows. Alfred thereafter executed an affidavit-complaint chargingEderlina and Sally MacCarron with malicious mischief.31

On October 15, 1985, Alfred wrote to Ederlina's father, complaining thatEderlina had taken all his life savings and because of this, he was virtuallypenniless. He further accused the Catito family of acquiring for themselves theproperties he had purchased with his own money. He demanded the return ofall the amounts that Ederlina and her family had "stolen" and turn over all theproperties acquired by him and Ederlina during their coverture.32


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Shortly thereafter, Alfred filed a Complaint33 dated October 28, 1985, againstEderlina, with the Regional Trial Court of Quezon City, for recovery of real andpersonal properties located in Quezon City and Manila. In his complaint, Alfredalleged, inter alia, that Ederlina, without his knowledge and consent, managedto transfer funds from their joint account in HSBC Hong Kong, to her own

account with the same bank. Using the said funds, Ederlina was able topurchase the properties subject of the complaints. He also alleged that thebeauty parlor in Ermita was established with his own funds, and that theQuezon City property was likewise acquired by him with his personal funds.34

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

In the meantime, on November 7, 1985, Alfred also filed a complaint35 againstEderlina with the Regional Trial Court, Davao City, for specific performance,declaration of ownership of real and personal properties, sum of money, and

damages. He alleged, inter alia, in his complaint:

4. That during the period of their common-law relationship, plaintiffsolely through his own efforts and resourcesacquired in the Phil

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