Llantino v. Chong
REITERATIONFacts
The Antecedents: Plaintiffs-appellants, the Llantinos, owned a commercial-residential land in Virac, Catanduanes. In 1954, they leased the property to the defendant-appellee, Co Liong Chong (alias Juan Molina), then a Chinese national, for 13 years for P6,150.00. The lease was to end in 1967. The defendant claimed the lease was for 60 years, that he had constructed a P50,000.00 building on the land, and that he had become a Filipino citizen. The Llantinos disputed the 60-year period, as it would virtually make Chong the owner of the realty, which he, as an alien, could not legally own. Despite repeated invitations for a conference, Chong ignored them. Procedural History: On January 10, 1968, the Llantinos filed a complaint to quiet title with damages. At the pre-trial, parties agreed on the land's identity and admitted the existence of the lease contract, Chong's alien status in 1954, his construction of a P40,000.00 building, his naturalization in 1961, and his name change to Juan Molina. The Court of First Instance of Catanduanes dismissed the complaint, declaring the lease contract valid and in accordance with law. The court found no sufficient ground for damages or attorney's fees, believing the suit stemmed from an honest conviction by the plaintiffs. The Petition: The plaintiffs appealed directly to the Supreme Court on pure questions of law, assigning as errors the lower court's declaration of the contract's validity and its refusal to declare the contract not a lease.
Issue(s)
Whether the contract of lease entered into by and between the appellants and the defendant on October 5, 1954, for a period of sixty (60) years is valid. Whether the contract should be declared not a lease.
Ruling
The Supreme Court affirmed the decision of the lower court, upholding the validity of the contract of lease. The complaint was dismissed with costs against the plaintiffs-appellants.
Ratio Decidendi
On the validity of the contract of lease: The Court held that a lease contract to an alien for a reasonable period is valid. The constitutional prohibition against aliens owning land does not extend to temporary rights like a lease contract, especially for residential purposes. The Court noted that the defendant, Co Liong Chong, was a Chinese national at the time of the contract's execution in 1954, but he had since become a naturalized Filipino citizen in 1961. The Court found no scheme to circumvent the constitutional prohibition, as the contract was for a lease, not an outright sale or transfer of ownership. The Llantinos admitted that Chong had merely asked for a lease, and the contract itself did not prevent the Llantinos from disposing of their title, subject to Chong's rights as lessee. The Court cited Philippine Banking Corporation vs. Lui She (21 SCRA 52) and Krivenko vs. Register of Deeds (79 Phil. 461) in support of the principle that temporary rights like leases to aliens are not forbidden by the Constitution. On the nature of the contract: The Court found that the issue of whether the contract was a lease or something else was not raised in the basic pleadings or at the pre-trial. Therefore, it was too late to raise this issue on appeal. The Court reiterated the principle that contracts are to be interpreted according to their literal meaning and should not be interpreted beyond their obvious intent, citing Plastic Town Center Corporation vs. NLRC (172 SCRA 580) and Herrera v. Petrophil Corp. (146 SCRA 385). The Court also noted that there was no option to buy the property in favor of Chong, and the contract did not indicate a virtual transfer of ownership. The Court further stated that even assuming arguendo that the contract was prohibited at its inception, its validity could no longer be questioned after the private respondent acquired Filipino citizenship, citing De Castro vs. Tan (129 SCRA 85) which held that a sale of residential land to an alien, if now in the hands of a naturalized Filipino citizen, is valid.
Main Doctrine
A lease contract to an alien for a reasonable period is valid, and even if initially prohibited, it may be validated upon the alien's subsequent naturalization as a Filipino citizen, provided there was no scheme to circumvent constitutional prohibitions against alien ownership of land.