FIRST DIVISION

G.R. No. 113539. March 12, 1998

CELSO R. HALILI and ARTHUR R. HALILI, Petitioners, v. COURT OF

APPEALS, HELEN MEYERS GUZMAN, DAVID REY GUZMAN and
EMILIANO CATANIAG, Respondents.

DECISION

PANGANIBAN, J.:

The factual findings of a trial court, when affirmed by the Court of Appeals,
may no longer be reviewed and reversed by this Court in a petition for
review under Rule 45 of the Rules of Court. The transfer of an interest in a
piece of land to an alien may no longer be assailed on constitutional grounds
after the entire parcel has been sold to a qualified citizen.
The Case

These familiar and long-settled doctrines are applied by this Court in denying
this petition under Rule 45 to set aside the Decision[1] of the Court of
Appeals[2] in CA-GR CV No. 37829 promulgated on September 14, 1993,
the dispositive portion of which states:[3]

WHEREFORE, and upon all the foregoing, the Decision of the court below
dated March 10, 1992 dismissing the complaint for lack of merit is AFFIRMED
without pronouncement as to costs.
The Facts

The factual antecedents, as narrated by Respondent Court, are not disputed

by the parties. We reproduce them in part, as follows:

Simeon de Guzman, an American citizen, died sometime in 1968, leaving

real properties in the Philippines. His forced heirs were his widow, defendant
appellee [herein private respondent] Helen Meyers Guzman, and his son,
defendant appellee [also herein private respondent] David Rey Guzman,
both of whom are also American citizens. On August 9, 1989, Helen
executed a deed of quitclaim (Annex A-Complaint), assigning[,] transferring
and conveying to David Rey all her rights, titles and interests in and over six
parcels of land which the two of them inherited from Simeon.
Among the said parcels of land is that now in litigation, x x x situated in
Bagbaguin, Sta. Maria, Bulacan, containing an area of 6,695 square meters,
covered by Transfer Certificate of Title No. T-170514 of the Registry of
Deeds of Bulacan. The quitclaim having been registered, TCT No. T-170514
was cancelled and TCT No. T-120259 was issued in the name of appellee
David Rey Guzman.

On February 5, 1991, David Rey Guzman sold said parcel of land to

defendant-appellee [also herein private respondent] Emiliano Cataniag, upon
which TCT No. T-120259 was cancelled and TCT No. T-130721(M) was
issued in the latters name.[4]

Petitioners, who are owners of the adjoining lot, filed a complaint before the
Regional Trial Court of Malolos, Bulacan, questioning the constitutionality
and validity of the two conveyances -- between Helen Guzman and David
Rey Guzman, and between the latter and Emiliano Cataniag -- and claiming
ownership thereto based on their right of legal redemption under Art.
1621[5]of the Civil Code.

In its decision[6] dated March 10, 1992,[7] the trial court dismissed the

complaint. It ruled that Helen Guzmans waiver of her inheritance in favor of
her son was not contrary to the constitutional prohibition against the sale of
land to an alien, since the purpose of the waiver was simply to authorize
David Rey Guzman to dispose of their properties in accordance with the
Constitution and the laws of the Philippines, and not to subvert them. On the
second issue, it held that the subject land was urban; hence, petitioners had
no reason to invoke their right of redemption under Art. 1621 of the Civil
Code.

The Halilis sought a reversal from the Court of Appeals which, however,
denied their appeal. Respondent Court affirmed the factual finding of the
trial court that the subject land was urban. Citing Tejido vs.
Zamacoma[8] and Yap vs. Grageda,[9] it further held that, although the
transfer of the land to David Rey may have been invalid for being contrary to
the Constitution, there was no more point in allowing herein petitioners to
recover the property, since it has passed on to and was thus already owned
by a qualified person.

Hence, this petition.[10]

Issues

The petition submits the following assignment of errors:

x x x the Honorable Court of Appeals -

1. Erred in affirming the conclusion of the trial court that the land in question
is urban, not rural

2. Erred in denying petitioners right of redemption under Art. 1621 of the

Civil Code

3. Having considered the conveyance from Helen Meyers Guzman to her son
David Rey Guzman illegal, erred in not declaring the same null and void[.]
[11]
The Courts Ruling

The petition has no merit.

First Issue: The Land Is Urban;

Thus, No Right of Redemption

The first two errors assigned by petitioners being interrelated -- the

determination of the first being a prerequisite to the resolution of the second
-- shall be discussed together.

Subject Land Is Urban

Whether the land in dispute is rural or urban is a factual question which, as a

rule, is not reviewable by this Court.[12] Basic and long-settled is the
doctrine that findings of fact of a trial judge, when affirmed by the Court of
Appeals, are binding upon the Supreme Court. This admits of only a few
exceptions, such as when the findings are grounded entirely on speculation,
surmises or conjectures; when an inference made by the appellate court
from its factual findings is manifestly mistaken, absurd or impossible; when
there is grave abuse of discretion in the appreciation of facts; when the
findings of the appellate court go beyond the issues of the case, run contrary
to the admissions of the parties to the case or fail to notice certain relevant
facts which, if properly considered, will justify a different conclusion; when
there is a misappreciation of facts; when the findings of fact are conclusions
without mention of the specific evidence on which they are based, are
premised on the absence of evidence or are contradicted by evidence on
record.[13]

The instant case does not fall within any of the aforecited exceptions. In
fact, the conclusion of the trial court -- that the subject property is urban
land -- is based on clear and convincing evidence, as shown in its decision
which disposed thus:

x x x As observed by the court, almost all the roadsides along the national
ghighway [sic] of Bagbaguin, Sta. Maria, Bulacan, are lined up with
residential, commercial or industrial establishments. Lined up along the
Bagbaguin Road are factories of feeds, woodcrafts [sic] and garments,
commercial stores for tires, upholstery materials, feeds supply and spare
parts. Located therein likewise were the Pepsi-Cola Warehouse, the Cruz
Hospital, three gasoline stations, apartment buildings for commercial
purposes and construction firms. There is no doubt, therefore, that the
community is a commercial area thriving in business activities. Only a short
portion of said road [is] vacant. It is to be noted that in the Tax Declaration
in the name of Helen Meyers Guzman[,] the subject land is termed
agricultural[,] while in the letter addressed to defendant Emiliano Cataniag,
dated October 3, 1991, the Land Regulatory Board attested that the subject
property is commercial and the trend of development along the road is
commercial. The Boards classification is based on the present condition of
the property and the community thereat. Said classification is far more later
[sic] than the tax declaration.[14]

No Ground to Invoke Right of Redemption

In view of the finding that the subject land is urban in character, petitioners
have indeed no right to invoke Art. 1621 of the Civil Code, which
presupposes that the land sought to be redeemed is rural. The provision is
clearly worded and admits of no ambiguity in construction:

ART. 1621. The owners of adjoining lands shall also have the right of
redemption when a piece of rural land, the area of which does not
exceed one hectare, is alienated, unless the grantee does not own any
rural land.

xxx xxx xxx

Under this article, both lands -- that sought to be redeemed and the
adjacent lot belonging to the person exercising the right of redemption --
must be rural. If one or both are urban, the right cannot be invoked.
[15] The purpose of this provision which is limited in scope to rural lands
not exceeding one hectare, is to favor agricultural development.[16] The
subject land not being rural and, therefore, not agricultural, this purpose
would not be served if petitioners are granted the right of redemption under
Art. 1621. Plainly, under the circumstances, they cannot invoke it.
 Second Issue: Sale to Cataniag Valid

Neither do we find any reversible error in the appellate courts holding that
the sale of the subject land to Private Respondent Cataniag renders moot
any question on the constitutionality of the prior transfer made by Helen
Guzman to her son David Rey.

True, Helen Guzmans deed of quitclaim -- in which she assigned, transferred

and conveyed to David Rey all her rights, titles and interests over the
property she had inherited from her husband -- collided with the
Constitution, Article XII, Section 7 of which provides:

SEC. 7. Save in cases of hereditary succession, no private lands shall be

transferred or conveyed except to individuals, corporations, or associations
qualified to acquire or hold lands of the public domain.

The landmark case of Krivenko vs. Register of Deeds[17] settled the issue

as to who are qualified (and disqualified) to own public as well as private
lands in the Philippines. Following a long discourse maintaining that the
public agricultural lands mentioned in Section 1, Article XIII of the 1935
Constitution, include residential, commercial and industrial lands, the Court
then stated:

Under section 1 of Article XIII [now Sec. 2, Art. XII] of the Constitution,
natural resources, with the exception of public agricultural land, shall not be
alienated, and with respect to public agricultural lands, their alienation is
limited to Filipino citizens. But this constitutional purpose conserving
agricultural resources in the hands of Filipino citizens may easily be defeated
by the Filipino citizens themselves who may alienate their agricultural lands
in favor of aliens. It is partly to prevent this result that section 5 is included
in Article XIII, and it reads as follows:

Sec. 5. Save in cases of hereditary succession, no private agricultural

land will be transferred or assigned except to individuals, corporations or
associations qualified to acquire or hold lands of the public domain in the
Philippines.

This constitutional provision closes the only remaining avenue through which
agricultural resources may leak into aliens hands. It would certainly be futile
to prohibit the alienation of public agricultural lands to aliens if, after all,
they may be freely so alienated upon their becoming private agricultural
lands in the hands of Filipino citizens. Undoubtedly, as above indicated,
section 5 [now Sec. 7] is intended to insure the policy of nationalization
contained in section 1 [now Sec. 2]. Both sections must, therefore, be read
together for they have the same purpose and the same subject matter. It
must be noticed that the persons against whom the prohibition is directed in
section 5 [now Sec. 7] are the very same persons who under section 1 [now
Sec. 2] are disqualified to acquire or hold lands of the public domain in the
Philippines. And the subject matter of both sections is the same, namely, the
non transferability of agricultural land to aliens. x x x[18]

The Krivenko rule was recently reiterated in Ong Ching Po vs. Court of

Appeals,[19] which involves a sale of land to a Chinese citizen. The Court
said:

The capacity to acquire private land is made dependent upon the

capacity to acquire or hold lands of the public domain. Private land may
be transferred or conveyed only to individuals or entities qualified to
acquire lands of the public domain (II Bernas, The Constitution of the
Philippines 439-440 [1988 ed.]).

The 1935 Constitution reserved the right to participate in the

disposition, exploitation, development and utilization of all lands of the
public domain and other natural resources of the Philippines for Filipino
citizens or corporations at least sixty percent of the capital of which was
owned by Filipinos. Aliens, whether individuals or corporations, have
been disqualified from acquiring public lands; hence, they have also been
disqualified from acquiring private lands.[20]

In fine, non-Filipinos cannot acquire or hold title to private lands or to lands

of the public domain, except only by way of legal succession.[21]

But what is the effect of a subsequent sale by the disqualified alien vendee
to a qualified Filipino citizen? This is not a novel question. Jurisprudence is
consistent that 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.[22]

Thus, in United Church Board of World Ministries vs. Sebastian,[23] in which

an alien resident who owned properties in the Philippines devised to an
American non-stock corporation part of his shares of stock in a Filipino
corporation that owned a tract of land in Davao del Norte, the Court
sustained the invalidity of such legacy. However, upon proof that ownership
of the American corporation has passed on to a 100 percent Filipino
corporation, the Court ruled that the defect in the will was rectified by the
subsequent transfer of the property.
The present case is similar to De Castro vs. Tan.[24] In that case, a
residential lot was sold to a Chinese. Upon his death, his widow and children
executed an extrajudicial settlement, whereby said lot was allotted to one of
his sons who became a naturalized Filipino. The Court did not allow the
original vendor to have the sale annulled and to recover the property, for the
reason that the land has since become the property of a naturalized Filipino
citizen who is constitutionally qualified to own land.

Likewise, in the cases of Sarsosa vs. Cuenco,[25] Godinez vs. Pak Luen,

[26] Vasquez vs. Li Seng Giap[27] and Herrera vs. Luy Kim Guan,
[28] which similarly involved the sale of land to an alien who thereafter sold
the same to a Filipino citizen, the Court again applied the rule that the
subsequent sale can no longer be impugned on the basis of the invalidity of
the initial transfer.

The rationale of this principle was explained in Vasquez vs. Li Seng

Giap thus:

x x x [I]f 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 nations 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.[29]

Accordingly, since the disputed land is now owned by Private Respondent

Cataniag, a Filipino citizen, the prior invalid transfer can no longer be
assailed. The objective of the constitutional provision -- to keep our land in
Filipino hands -- has been served.

WHEREFORE, the petition is hereby DENIED. The challenged Decision is

AFFIRMED. Costs against petitioner.

SO ORDERED.

Davide, Jr. (Chairman), Bellosillo, Vitug and Quisumbing, JJ., concur.

Endnotes: