Yap vs. Grageda

A sale of private agricultural land to an alien, though void ab initio for contravening the constitutional prohibition, is validated by the vendee's subsequent naturalization as a Filipino citizen, because the public policy underlying the ban—preserving the nation's lands for Filipinos—is thereby served and no further purpose would be advanced by allowing the vendor to recover the property.

Petitioner Donato Reyes Yap was a Chinese national who acquired private agricultural land in Guinobatan, Albay from Maximino Rico and the latter's co-vendor minors in 1939. Respondent Jose A. Rico is the eldest son of Maximino Rico, one of the vendors. The sale was executed under the regime of the 1935 Constitution, whose Section 5, Article XIII provided that "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." Yap was subsequently naturalized as a Filipino citizen, approximately fifteen years after the sale.

On April 12, 1939, Maximino Rico, acting for himself and on behalf of the minors Maria Rico, Filomeno Rico, Prisco Rico, and Lourdes Rico, executed a Deed of Absolute Sale over Lot 339 and a portion of Lot 327 in Guinobatan, Albay in favor of Donato Reyes Yap, who was then a Chinese national. Respondent Jose A. Rico is the eldest son of Maximino Rico, one of the vendors. Petitioner Yap thereafter caused the registration of the instrument of sale, the cancellation of Original Certificates of Title Nos. 29332 and 29410, and the issuance in his favor of Transfer Certificate of Title No. T-2433 covering the two lots.

After the lapse of nearly fifteen years from the execution of the deed, Yap was admitted as a Filipino citizen and allowed to take his oath of allegiance to the Republic, thereafter being issued Certificate of Naturalization No. 7, File No. 19 of the Court of First Instance of Albay. On December 1, 1967, Yap ceded the major portion of Lot No. 327, consisting of 1,078 square meters, to his engineer son Felix Yap, who was a Filipino citizen by virtue of his mother's Filipino citizenship and his father's naturalization. Subsequently, Lourdes Rico, aunt and co-heir of respondent Jose A. Rico, sold the remaining portion of Lot 327 to Yap, who duly registered his rights thereon under Act 496.

Yap has been in possession of the lots since 1939, openly, publicly, continuously, and adversely in the concept of owner until the time of the decision. He has one surviving son by his first marriage to a Filipino wife, five children by a second marriage also to a Filipina, and a total of twenty-three grandchildren, all of whom are Filipino citizens. The respondent court treated Section 5, Article XIII of the 1935 Constitution as an absolute and unqualified prohibition, ruling that a conveyance contrary to it could not be validated by the subsequent naturalization of the vendee, and accordingly declared the sale null and void ab initio and ordered reconveyance to the vendors upon payment of the ₱150.00 consideration.

• Subsequent Naturalization Cures the Defect: Petitioner maintained that his subsequent naturalization as a Filipino citizen rendered the sale valid, the constitutional purpose of reserving lands for Filipinos having been achieved by the property being already in the hands of a qualified person.
• Reliance on Precedent: Petitioner relied on the rulings in Vasquez vs. Leng Seng Giap and Sarosa Vda. de Bersabia vs. Cuenco, which sustained the proposition that naturalization of the alien vendee validates an otherwise void sale of private agricultural land.

• Absolute Constitutional Prohibition: Respondent court considered Section 5, Article XIII of the 1935 Constitution to be an absolute and unqualified prohibition, arguing that a conveyance contrary to it would not be validated nor its void nature altered by the subsequent naturalization of the vendee.

• Validity of Sale to Alien Subsequently Naturalized: Whether the subsequent naturalization of an alien vendee as a Filipino citizen validates a sale of private agricultural land that was void ab initio for contravening the 1935 Constitution's prohibition on alien acquisition of such lands.

• Validity of Sale to Alien Subsequently Naturalized: Yes. The sale, though void at its inception due to the vendee's alien status, was validated by his subsequent naturalization as a Filipino citizen, the constitutional policy of conserving lands for Filipinos having been thereby served.

• Validity of Sale to Alien Subsequently Naturalized: The 1935 Constitution's prohibition on the transfer of private agricultural land to aliens is an expression of public policy designed to conserve the nation's lands for future generations of Filipinos. While a sale to a disqualified alien is indeed inexistent and void from the beginning under Article 1409(7) of the Civil Code, the factual situation changes once the vendee becomes a naturalized Filipino citizen. The litigated property is then no longer owned by a disqualified vendee but by one who is constitutionally qualified to own it. There is no longer any public policy to be served in allowing the original vendor to recover the land, as the property is already in the hands of a qualified person. The Court applied by analogy its ruling in Vasquez vs. Leng Seng Giap, which held that if the ban on aliens acquiring agricultural and urban lands is to preserve the nation's lands for future generations of Filipinos, that aim is not thwarted but achieved by making lawful the acquisition of real estate by aliens who became Filipino citizens by naturalization. The Court also cited its recent reiteration of this doctrine in Godines vs. Fong Pak Luen (G.R. No. L-36731, January 27, 1983).

• Validation of Void Sale by Subsequent Naturalization — A sale of private agricultural land to an alien, while void ab initio for contravening the constitutional prohibition, is validated by the vendee's subsequent naturalization as a Filipino citizen. The rationale is that the constitutional ban exists to conserve the nation's lands for Filipinos, and that purpose is achieved—not thwarted—when the alien vendee becomes a Filipino citizen by naturalization. At that point, there is no public policy left to serve by allowing the vendor to recover the property, as the land is already in the hands of a constitutionally qualified person. This doctrine was established in Vasquez vs. Leng Seng Giap and reiterated in Sarosa Vda. de Bersabia vs. Cuenco and Godines vs. Fong Pak Luen.

• "The factual set-up has changed. The litigated property is now in the hands of a naturalized Filipino. It is no longer owned by a disqualified vendee. Respondent, as a naturalized citizen, was constitutionally qualified to own the subject property. There would be no more public policy to be served in allowing petitioner Epifania to recover the land as it is already in the hands of a qualified person." — This passage, quoted by the Court from Sarosa Vda. de Bersabia vs. Cuenco, articulates the core ratio decidendi: that subsequent naturalization cures the constitutional defect because the policy underlying the prohibition is already satisfied.

• "If the ban on aliens from acquiring not only agricultural but also urban lands, as construed by this Court in the Krivenko case, is to preserve the nation's lands for future generations of Filipinos, that aim or purpose would not be thwarted but achieved by making lawful the acquisition of real estate by aliens who became Filipino citizens by naturalization." — This passage, quoted from Vasquez vs. Leng Seng Giap, states the canonical formulation of the doctrine that naturalization validates the alien's prior acquisition, because the constitutional objective is fulfilled rather than defeated.

• Vasquez vs. Leng Seng Giap, 96 Phil. 447 — Controlling precedent establishing the doctrine that an alien's subsequent naturalization as a Filipino citizen validates an otherwise void sale of land to the alien, because the constitutional aim of preserving lands for Filipinos is thereby achieved.
• Sarosa Vda. de Bersabia vs. Cuenco, 113 SCRA 547 — Followed and applied. Held that while a sale of land to an alien is void ab initio, the vendee's subsequent naturalization changes the factual setup such that there is no longer any public policy to be served by allowing the vendor to recover the property.
• Godines vs. Fong Pak Luen, G.R. No. L-36731, January 27, 1983 — Recently decided case cited as a reiteration of the same doctrine, reinforcing its continued applicability.
• Philippine Banking Corporation vs. Lui She — Cited within the Sarosa quotation for the proposition that under Article 1416 of the Civil Code, when an agreement is not illegal per se but merely prohibited for the protection of the plaintiff, recovery may be allowed if public policy is enhanced; however, the Court noted this rule would not apply once the vendee has become a naturalized citizen.

• Section 5, Article XIII, 1935 Constitution — Provides that "save in cases of hereditary succession, no private agricultural land shall be transferred or assigned except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain in the Philippines." The respondent court treated this as an absolute prohibition rendering the sale void; the Supreme Court agreed the sale was void at inception but held that subsequent naturalization of the vendee cured the defect.
• Article 1409(7), Civil Code — Classifies contracts whose object or purpose is contrary to law as inexistent and void from the beginning. Applied to characterize the sale to the alien vendee as void ab initio, though subsequently validated by naturalization.
• Article 1416, Civil Code — Provides an exception to the rule of pari delicto where the agreement is not illegal per se but merely prohibited, and the prohibition is designed for the protection of the plaintiff. Cited in the Sarosa quotation but distinguished from the situation where the vendee has already become a naturalized citizen.

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