Republic of the Philippines vs. Register of Deeds of Roxas City, Elizabeth Lee, and Pacita Yu-Lee

Where land invalidly sold to an alien has subsequently been transferred by succession to Filipino citizens qualified to own land, the flaw in the original transaction is considered cured and reversion or escheat proceedings will no longer prosper.

Lot No. 398, located at the corner of Roxas Avenue and Pavia Street in Roxas City, was originally acquired in March 1936 by Lee Liong, a Chinese citizen, from the Dinglasan family. The property later came into the hands of Elizabeth Lee and Pacita Yu-Lee, the widows of Lee Liong’s sons and Filipino citizens. The constitutional backdrop is the prohibition against alien ownership of lands of the public or private domain, intended to keep lands in Filipino hands, and the State’s remedy of reversion or escheat. Earlier litigation involving the same lot, Dinglasan vs. Lee Bun Ting and Lee Bun Ting vs. Judge Aligaen, established that the sale to Lee Liong was null and void for violating that prohibition, although the sellers were barred by in pari delicto from recovering title and later by res judicata.

In March 1936, Lee Liong, a Chinese citizen, bought Lot No. 398 from Vicenta Arcenas, Francisco, Carmen Ramon, Mercedes, Concepcion, Mariano, Jose, and Manuel, all surnamed Dinglasan. Lot No. 398, with an area of 1,574 square meters, is located at the corner of Roxas Avenue and Pavia Street in Roxas City. Lee Liong died intestate in February 1944, survived by his widow Ang Chia and his sons Lee Bing Hoo and Lee Bun Ting. On 30 June 1947, the surviving heirs extrajudicially settled Lee Liong’s estate and partitioned Lot No. 398 among themselves. When Lee Bing Hoo and Lee Bun Ting died, Lot No. 398 was transferred by succession to their respective wives, Elizabeth Lee and Pacita Yu-Lee.

In 1956, in Dinglasan vs. Lee Bun Ting, involving Lot No. 398, the Court held that even if the sale of the property was null and void for violating the constitutional prohibition on the sale of land to an alien, the doctrine of in pari delicto barred the sellers from recovering title to the property. Eleven years later, in Lee Bun Ting vs. Judge Aligaen, the Court ordered the trial court to dismiss the Dinglasans’ complaint for recovery of Lot No. 398. Applying res judicata, the Court held that the case was a mere relitigation of the same issues previously adjudged with finality in the Dinglasan case, involving the same parties or their privies and concerning the same subject matter.

On 7 September 1993, Elizabeth and Pacita filed a petition for reconstitution of title of Lot No. 398 because the records of the Register of Deeds of Roxas City were burned during the war. On 3 October 2001, the Court held that the trial court’s order of reconstitution was void for lack of factual support because it was based merely on the plan and technical description approved by the Land Registration Authority.

Meanwhile, on 26 January 1995, the Republic of the Philippines, through the Office of the Solicitor General, filed with the Regional Trial Court of Roxas City a Complaint for Reversion of Title against private respondents and the Register of Deeds of Roxas City. The complaint prayed that (a) the sale of Lot No. 398 to Lee Liong be set aside for being null and void ab initio, and (b) Lot No. 398 be reverted to the public domain for the State’s disposal in accordance with law. In their Answer, private respondents invoked as affirmative defenses prescription, private ownership of Lot No. 398, and Lee Liong’s being a buyer in good faith and for value. They further claimed that as Filipino citizens, they are qualified to acquire Lot No. 398 by succession. The Register of Deeds of Roxas City did not file an answer.

By the time the reversion action was instituted in 1995, Lot No. 398 had already been transferred by succession to private respondents Elizabeth Lee and Pacita Yu-Lee, who are Filipino citizens. The Office of the Solicitor General did not dispute that private respondents are Filipino citizens. The reversion action was initiated almost 40 years after the 1956 Dinglasan vs. Lee Bun Ting ruling that the sale to Lee Liong was null and void.

• Void Sale and Succession: Petitioner argued that since the sale of Lot No. 398 to Lee Liong was void, the lot never became part of the deceased Lee Liong’s estate and could not be transmitted by succession to his surviving heirs and eventually to private respondents.
• No Transmissible Title: Petitioner maintained that Lee Liong, an alien constitutionally prohibited from owning real property in the Philippines, acquired no right or title over Lot No. 398 that he could have transmitted by succession to private respondents’ predecessors-in-interest.

• Prescription: Private respondents invoked prescription as an affirmative defense.
• Ownership and Good Faith: Private respondents claimed private ownership of Lot No. 398 and that Lee Liong was a buyer in good faith and for value.
• Succession by Filipino Citizens: Private respondents claimed that as Filipino citizens, they are qualified to acquire Lot No. 398 by succession.

• Reversion and Succession: Whether the Court of Appeals erred in reversing the trial court and declaring private respondents the absolute and lawful owners of Lot No. 398, considering that Lee Liong, an alien constitutionally prohibited from owning real property, acquired no right or title that could be transmitted by succession to private respondents’ predecessors-in-interest.
• Viability of Reversion: Whether reversion proceedings remain viable where Lot No. 398 has already been transferred to Filipino citizens.

• Reversion and Succession: No. The petition is without merit. Since Lot No. 398 had already been transferred by succession to private respondents who are Filipino citizens, the flaw in the original sale to Lee Liong is considered cured and the prior invalid sale can no longer be assailed.
• Viability of Reversion: No. Reversion proceedings will no longer prosper because the land is now in the hands of Filipino citizens qualified to own it, and the constitutional objective of keeping lands in Filipino hands has been achieved.

• Reversion and Succession: The controlling rule is that where land is invalidly transferred to an alien who subsequently becomes a citizen or transfers it to a citizen, the flaw in the original transaction is considered cured and the title of the transferee is rendered valid. The Court found the circumstances similar to De Castro vs. Teng Queen Tan, where a residential lot sold to a Chinese citizen was sustained after the alien vendee died and the land became the property of a naturalized Filipino citizen qualified to own land. Here, Lee Liong, a Chinese citizen, bought Lot No. 398 in 1936; after his death, his widow and sons extrajudicially settled his estate, and when the sons died, the lot passed by succession to their respective spouses, Elizabeth Lee and Pacita Yu-Lee, who are Filipino citizens. Because the land had already been transferred to Filipino citizens, the prior invalid sale to Lee Liong could no longer be assailed. The Court also cited Chavez vs. Public Estates Authority for the consistent rule that the invalidity of the first transfer is corrected by a subsequent transfer to a citizen, or by the alien buyer’s acquisition of citizenship, since the constitutional purpose of limiting land ownership to Filipinos has been achieved.
• Viability of Reversion: Although the Office of the Solicitor General may initiate an action for reversion or escheat of lands sold to aliens disqualified from acquiring lands under the Constitution, the Court held that reversion proceedings were no longer viable in this case. In Lee vs. Republic of the Philippines, involving Lot No. 398, the Court explained that subsequent circumstances militated against escheat because the land was already in the hands of Filipinos. The original vendee, Lee Liong, had died, and the land had been inherited by his heirs and subsequently by their heirs, private respondents, whose Filipino citizenship was not disputed by the Solicitor General. The constitutional proscription on alien ownership of lands of the public or private domain was intended to protect lands from falling into the hands of non-Filipinos; since the land was in the hands of Filipinos qualified to acquire and own it, no public policy was violated. The reversion action was initiated only in 1995, almost 40 years after Dinglasan vs. Lee Bun Ting declared the sale void. Had reversion been commenced while Lot No. 398 was still in the hands of the original alien vendee, reversion would have been allowed; but because the lot had already passed to Filipino citizens when the action was instituted, the flaw in the original transaction was considered cured and reversion could no longer prosper.

• Constitutional Prohibition on Alien Land Ownership — The Constitution prohibits aliens from acquiring lands of the public or private domain, and the purpose of the prohibition is to keep lands in Filipino hands. In this case, the original sale of Lot No. 398 to Lee Liong, a Chinese citizen, violated the prohibition, but the Court found that the constitutional objective was achieved once the land passed to Filipino citizens.
• Cure of Invalid Transfer to an Alien — Where land invalidly transferred to an alien is subsequently transferred to a Filipino citizen, or the alien buyer later becomes a citizen, the flaw in the original transaction is considered cured and the title of the transferee is rendered valid. The Court applied this rule because Lot No. 398 had passed by succession to private respondents Elizabeth Lee and Pacita Yu-Lee, both Filipino citizens, so the prior invalid sale to Lee Liong could no longer be assailed.
• Non-Viability of Reversion or Escheat When Land Is in Filipino Hands — Although the Office of the Solicitor General may initiate reversion or escheat proceedings for lands sold to disqualified aliens, such proceedings will not prosper where subsequent circumstances show that the land is already in the hands of Filipinos qualified to own it. The Court applied this because the reversion action was filed in 1995, after Lot No. 398 had already been transferred by succession to Filipino citizens, and no public policy was violated.
• In Pari Delicto and Res Judicata in Prior Litigation — In Dinglasan vs. Lee Bun Ting, the Court held that even if the sale of Lot No. 398 was null and void for violating the constitutional prohibition, the doctrine of in pari delicto barred the sellers from recovering title. In Lee Bun Ting vs. Judge Aligaen, the Court applied res judicata and ordered dismissal of the sellers’ later complaint for recovery because it was a mere relitigation of the same issues, parties or privies, and subject matter. These prior rulings established the invalidity of the original sale and the history of the lot, but the present ruling turned on the subsequent transfer to Filipino citizens.

• “If land is invalidly transferred to an alien who subsequently becomes a citizen or transfers it to a citizen, the flaw in the original transaction is considered cured and the title of the transferee is rendered valid.” — This passage, quoted from Lee vs. Republic of the Philippines, states the controlling rule on which the denial of reversion rested.
• “In this case, subsequent circumstances militate against escheat proceedings because the land is now in the hands of Filipinos.” — This passage explains why the Court considered reversion or escheat no longer viable despite the original alien disqualification.
• “Thus, the Court has ruled consistently that where a Filipino citizen sells land to an alien who later sells the land to a Filipino, the invalidity of the first transfer is corrected by the subsequent sale to a citizen. Similarly, where the alien who buys the land subsequently acquires Philippine citizenship, the sale was validated since the purpose of the constitutional ban to limit land ownership to Filipinos has been achieved.” — This passage, quoted from Chavez vs. Public Estates Authority, articulates the consistent jurisprudence on curing the flaw in an alien land acquisition.
• “Clearly, since Lot No. 398 has already been transferred to private respondents who are Filipino citizens, the prior invalid sale to Lee Liong can no longer be assailed. Hence, reversion proceedings will no longer prosper since the land is now in the hands of Filipino citizens.” — This is the Court’s own conclusion applying the cure doctrine to the facts of the case.

• Dinglasan vs. Lee Bun Ting, 99 Phil. 427 (1956) — Prior case involving Lot No. 398; held the sale to Lee Liong null and void for violating the constitutional prohibition on sale of land to an alien, but barred the sellers from recovering title under the doctrine of in pari delicto.
• Lee Bun Ting vs. Judge Aligaen, 167 Phil. 164 (1977) — Applied res judicata and ordered dismissal of the Dinglasans’ complaint for recovery of Lot No. 398 as a mere relitigation of the issues settled in Dinglasan.
• De Castro vs. Teng Queen Tan, 214 Phil. 68 (1984) — Similar precedent relied on by the Court; independently of in pari delicto, the sale to an alien was sustained because the land had become the property of a naturalized Filipino citizen qualified to own land.
• Lee vs. Republic of the Philippines, 418 Phil. 793 (2001) — Reconstitution case involving Lot No. 398; explained that the OSG may initiate reversion or escheat, but subsequent circumstances militated against escheat because the land was already in the hands of Filipinos; quoted the cure rule.
• Chavez vs. Public Estates Authority, 451 Phil. 1 (2003) — Cited for the consistent rule that the invalidity of the first transfer to an alien is corrected by a subsequent sale to a Filipino citizen, or by the alien buyer’s acquisition of Philippine citizenship.
• Halili vs. CA, 350 Phil. 906 (1998) — Cited in support of the rule that the flaw in the original transaction is considered cured when the land has been transferred to Filipino citizens.
• United Church Board for World Ministries vs. Sebastian, No. L-34672, 30 March 1988, 159 SCRA 446 — Cited together with Halili for the same cure-of-flaw principle.

• Rule 45, 1997 Rules of Civil Procedure — The petition for review was filed under Rule 45. The Court entertained and denied it on the merits, affirming the Court of Appeals.
• Section 13, Article VIII, 1987 Constitution — The Chief Justice certified that the conclusions in the Decision had been reached in consultation before the case was assigned to the writer of the opinion. This is the procedural certification accompanying the Decision.
• Constitutional Prohibition on Alien Land Ownership — The Decision refers to the constitutional prohibition on the sale of land to an alien and the constitutional proscription on alien ownership of lands of the public or private domain, but it does not cite a specific article or section. The Court applied the prohibition by holding that its purpose was achieved once Lot No. 398 passed to Filipino citizens, curing the original invalid transfer.

Reynato S. Puno (Chief Justice, Chairperson), Renato C. Corona, Adolfo S. Azcuna, and Teresita J. Leonardo-De Castro concurred. No separate concurring opinions are summarized in the text.