On August 18, 1943, Pilar T. Bautista was the owner of four parcels of land, with improvements, located at the corner of Azcarraga and Ylaya Streets in the City of Manila, and more particularly described in transfer certificates of title Nos. 40007 and 40008 of the Register of Deeds of Manila. On the said date she executed a deed of absolute sale in favor of the defendant Hilaria Uy Isabelo, conveying the properties to the latter in consideration of P150,000, P90,000 of which was then paid. Simultaneously a mortgage was executed by Hilaria in favor of Pilar whereby it was stipulated that the balance of P60,000 was to be paid within two years with interest at 6 per cent per annum, and as a security a first mortgage was constituted in favor or Pilar on the same properties. Although the consideration mentioned in the deed of sale was P150,000, there is no question that the true purchase price was P300,000, P240,000 of which was paid in Japanese military notes and the balance of P60,000 was secured by the aforesaid mortgage. The deed of sale and the mortgage contract were presented on August 18, 1943 in the office of the Register of Deeds of Manila for registration, but on August 31, Pilar withdrew said documents so as to prevent registration. However, through the filing of signed carbon copies of the instruments the necessary registration was effected and new certificates of title Nos. 67070 and 67071, were issued in the name of Hilaria.

In the early part of September, 1943, assisted by her husband, instituted in the Court of First Instance of Manila a complaint for annulment, subsequently amended, against Hilaria and her husband Eusebio Valdez Tankeh. On September 14, 1944, Pilar deposited in court the sum of P240,000, intended to cover that part of the purchase price already paid by Hilaria. On the other hand, after Pilar had previously refused to accept a PNB certified check for P60,000 which Hilaria tendered in payment of the balance secured by the mortgage, the said amount was deposited in court. The records and the deposits were burned during the battle for the liberation of Manila, and as the parties were unable to reconstitute the same, Pilar instituted the present action for the annulment of the deed of sale and the contract of mortgage hereinabove referred to.

It appears that the improvements on the land in question were burned, and the land was occupied by the United States Army as part of the supply depot. The payment of the rentals by the Army has been withheld until final adjudication of this case. After the Army had left, Eusebio Valdez Tankeh took possession of the property and constructed thereon a building.

The theory of the plaintiff Pilar Bautista is that the defendants Chinese citizens and accordingly disqualified to purchase real properties in this country, and that the consent of Pilar to the sale was obtained through duress and misrepresentation. On the other hand, it is contended for the defendants that Hilaria was and is a Filipino citizen; that as appears in the deed, she was the sole purchaser; and that the deal was voluntary.

After trial the Court of First Instance of Manila rendered a decision finding that the sale was in fact made to the defendant spouses who were Chinese citizens and therefore disqualified to acquire real property in the Philippines; that the sale was obtained through misrepresentation on the part of the defendants, in that Pilar was made to believe, contrary to what is actually recited in the contracts, that the balance of P60,000 was to be paid after two years, without interest, and she could continue occupying the portion of the improvements used by her as residence without any rental, and collecting for herself the rentals for the remainder of said improvements. The dispositive part of the decision reads as follows:

"IN VIEW OF ALL THE FOREGOING CONSIDERATIONS, the court hereby declares the deed of sale, Exhibit A, and the deed of mortgage, Exhibit B, null and void, and of no legal effect; and that the consignation in court of the sum of P240,000 in Japanese Military notes was legally made by the plaintiff and therefore, she has fully returned the part of the purchase price of the property received by her from the defendants. The court also hereby orders the Register of Deeds of Manila to cancel transfer certificates of Title Nos. 67070 and 67071 issued in the name of defendant Hilaria Uy Isabelo, and to issue new ones in the name of plaintiff Pilar T. Bautista. The plaintiff is hereby absolved from the defendants' counterclaim, the same not having been sufficiently proven. No damages are awarded to said plaintiff; and no special pronouncement as to costs."

From this decision both the plaintiff and the defendants have appealed, the plaintiffs insofar as the decision fails to declare that they are the owners of the improvements erected by Eusebio Valdez Tankeh, to order the defendants to account for the rentals collected by them, and to appoint a receiver; and the defendants insofar as the deed of sale and mortgage contract are annulled.

While the trial court overruled the contention of the plaintiffs that there was duress on the part of the defendants, consisting in the alleged fact that Pilar was forced to accede to the sale for fear that the defendants would avail themselves of their influence with the Japanese if Pilar had refused, it sustained the contention that there was misrepresentation in the sense already above indicated, namely, that the balance of P60,000 was to be paid after two years without interest, instead of within two years with interest, Pilar having the right to continue residing in the premises and collecting the rentals. We have examined the evidence thoroughly and found that its preponderance weighs on the side of the defendants. Pilar Bautista is admittedly an intelligent woman with business experience, and it is fair to assume that she would not sign the deed of sale covering her property of considerable size and value without ascertaining its terms and conditions. Indeed, there is enough evidence on record to show that Pilar not only read the document herself but called her daughter to read it aloud, and that even before the signing of the contract in the office of the Register of Deeds of Manila, she again read the document. Of course she denies having read the deed, but this assertion seems to be more unlikely than the theory of the defendants, considering, as already stated, her intelligence and business experience. At any rate, as aptly pointed out by the defendants, the alleged misrepresentation could not have been decisive in the execution of the deed of sale, the material and important factor undoubtedly being the adequacy of the price offered and paid; and there is no controversy on the latter point.

This leads us to the question whether the defendant spouses, assuming that they were Chinese citizens and that the sale was made to both and not solely to Hilaria Uy Isabelo, are disqualified to acquire and hold the property in question in view of section 1 of Article XII of the Constitution, as construed in Krivenko vs. Register of Deeds of Manila,^[1] 44 Off. Gaz., 471. In the case of Trinidad Gonzaga de Cabauatan, et al., vs. Uy Hoo, et al.,^[2] G. R. No. L-2207, decided on January 23, 1951, we already held that the Constitution was not in force during the Japanese military occupation and therefore the constitutional provision disqualifying aliens from acquiring real properties in the Philippines was not applicable and the doctrine laid down in the Krivenko case cannot be invoked in a sale that took place during said occupation. This decision was followed in the later case of Ricamara, et al., vs. Ngo Ki alias Sin Sim.^[3] It results that the sale in question has to be sustained.

Moreover, as also intimated in our decision in Gonzaga de Cabauatan vs. Uy Hoo, et al., even assuming that the constitutional prohibition and the doctrine in the Krivenko case may be invoked by the herein plaintiffs, as both parties were in pari delicto, knowing that what they did was in violation of the Constitution, the law will maintain them in their actual situation, in the absence of any statute to the contrary. Another consideration in favor of the defendant Hilaria is that, after the death of her Chinese husband on April 3, 1948, she had admittedly been repatriated and is now beyond question a Filipino citizen.

Wherefore, the appealed decision is reversed and the plaintiffs' complaint dismissed, and the plaintiffs are ordered to execute, within sixty days from the finality of this decision, the necessary cancellation of the mortgage in question.

Bengzon, Tuason, Montemayor, Jugo and Bautista Angelo, JJ., concur.

---

^[1] 79 Phil., 461.

^[2] 88 Phil., 103.

^[3] 92 Phil., 1084.


tags