Cabauatan v. Uy Hoo
REITERATIONFacts
The Antecedents: Plaintiffs sold two parcels of residential land to Chinese citizens Uy Hoo and Siy Hong on March 18, 1943, for P13,000 in Japanese war notes. The Register of Deeds cancelled the original title and issued a new one in the purchasers' names. Procedural History: On December 15, 1947, following the Supreme Court's decision in Krivenko vs. Register of Deeds (G.R. No. L-630) which declared conveyances of residential land to aliens unconstitutional, the plaintiffs demanded the return of the lands. Upon refusal, they filed an action on January 14, 1948, seeking to annul the sale. The defendants moved to dismiss, arguing the complaint stated no cause of action. The Court of First Instance dismissed the case, stating the matter required legislative action or a government policy decision. The Petition: Plaintiffs appealed the dismissal order to the Supreme Court, arguing purely on questions of law.
Issue(s)
Whether the deed of sale executed by the plaintiffs in favor of the defendants on March 18, 1943, over the two parcels of land can be declared null and void in light of the decision in the Krivenko case. Whether the plaintiffs can recover the lands sold to aliens during the Japanese occupation.
Ruling
The Supreme Court affirmed the order of dismissal. The sale was declared valid and the plaintiffs were barred from recovering the lands.
Ratio Decidendi
On the issue of whether the deed of sale can be declared null and void based on the Constitution and the Krivenko case: The Court held that the sale occurred on March 18, 1943, during the Japanese occupation when the Philippine Constitution was not in force. The principle of post liminium does not apply to constitutions as they operate prospectively unless clearly intended otherwise. Therefore, the Constitution could not be invoked to set aside the sale. Consequently, the doctrine in the Krivenko case, which was decided under the operative Philippine Constitution, was inapplicable to the transaction that took place when the Constitution was not in force. The Court emphasized that the laws in force at the time of the contract's execution govern its validity and interpretation. On the issue of whether the plaintiffs can recover the lands: The Court invoked Article 1306, paragraph 1 of the Civil Code of Spain, which was in force during the Japanese occupation, stating that when both parties are guilty, neither can recover what they have given by virtue of the contract. The plaintiffs, by selling land to aliens, acted with guilty knowledge that they were violating constitutional principles, even if the Constitution was not then in force. They are presumed to know the law, and the legal maxims 'Ex dolo malo non oritur actio' (from a deceitful thing, an action does not arise) and 'In pari delicto est conditio defendentis' (in equal fault, the condition of the defendant is equal) barred them from seeking judicial aid to recover the lands. The law leaves parties to an illegal agreement where it finds them.
Main Doctrine
A sale of residential land to aliens executed during the Japanese occupation, when the Philippine Constitution was not in force, cannot be declared null and void based on constitutional prohibitions, especially when the parties are in pari delicto.