Fullido v. Grilli
REITERATIONFacts
The Antecedents: Gino Grilli (Grilli), an Italian national, met Rebecca Fullido (Fullido) in 1994. They entered into a common-law relationship and Grilli financially assisted Fullido in procuring a lot registered in her name. They constructed a house on the lot, funded by Grilli, and lived there during Grilli's vacations. In 1998, they executed a contract of lease and a memorandum of agreement (MOA). The lease contract stipulated a 50-year lease, automatically renewable for another 50 years, for P10,000.00 for the whole term, and prohibited Fullido from selling the lot without Grilli's consent. The MOA stated that ownership of the house and lot resided with Grilli, prohibited Fullido from selling the property without Grilli's conformity, granted Grilli the right to reside therein, and obliged Fullido to execute a deed of absolute sale in favor of Grilli's nominee should their common-law relationship terminate or should Fullido marry another. The lease contract was registered. Their relationship soured after 16 years, leading to mutual accusations of infidelity. Grilli demanded Fullido vacate the property, which she refused. Procedural History: Grilli filed an unlawful detainer case against Fullido. The Municipal Circuit Trial Court (MCTC) dismissed the case, finding Fullido to be a co-owner and respecting a Temporary Protection Order (TPO) issued by another court. Grilli appealed to the Regional Trial Court (RTC), which reversed the MCTC decision, holding that Grilli had the exclusive right to possess the property by virtue of the lease contract, which was valid absent a judicial declaration of nullity. Fullido appealed to the Court of Appeals (CA), arguing that the land was unlawfully transferred to Grilli's new girlfriend via a Special Power of Attorney (SPA). The CA affirmed the RTC decision, stating that in ejectment cases, only physical possession is at issue and that Fullido should file a separate action for annulment if she claimed the contracts were voidable. The CA denied Fullido's motion for reconsideration for failure to attach proof of service. The Petition: Fullido filed a petition for review on certiorari, arguing that the CA erred in affirming the RTC decision ejecting her from the property, as the contracts were null and void for violating the Constitution and law. She also argued that the TPO/Permanent Protection Order (PPO) should not be defeated by the ejectment suit and that the CA should have liberally applied procedural rules for her motion for reconsideration.
Issue(s)
Whether the Court of Appeals gravely erred in denying the petition for review and affirming the RTC decision ejecting petitioner from the subject properties, which ejectment order is anchored on patently null and void contracts; and whether the lease contract and MOA are null and void for circumventing the constitutional restraint against foreign ownership of lands. Whether the Court of Appeals gravely erred in affirming the RTC decision ejecting petitioner from their conjugal abode where respondent has been earlier ordered to vacate by virtue of a Permanent Protection Order, thus effectively setting aside, negating and/or violating an order issued by a court of co-equal jurisdiction; and whether Grilli has a cause of action for unlawful detainer. Whether the Court of Appeals gravely erred in denying the petitioner’s motion for reconsideration, among others, for non-compliance with procedural rules; and on the applicability of the in pari delicto doctrine.
Ruling
The petition is GRANTED. The May 31, 2013 Decision of the Court of Appeals and its September 24, 2014 Resolution in CA-G.R. CEB-SP No. 06946 are REVERSED and SET ASIDE. The complaint filed by Gino Grilli before the Municipal Circuit Trial Court, Dauis-Panglao, Dauis, Bohol, docketed as Civil Case No. 244, is DISMISSED for lack of cause of action.
Ratio Decidendi
On the issue of whether a contract can be declared void in an unlawful detainer suit and whether the lease contract and MOA are null and void for circumventing the constitutional restraint against foreign ownership of lands: The Court ruled in the affirmative that a contract can be declared void in an unlawful detainer suit. Unlawful detainer is an action to recover possession of real property where the defendant's possession was initially legal but became illegal due to the termination of their right to possess. The sole issue is physical possession, independent of ownership claims. However, a void contract, which lacks essential elements for validity, has no force and effect from the very beginning and produces no legal effect whatsoever. Article 1409 of the New Civil Code states that void contracts cannot be ratified, and the right to set up the defense of illegality cannot be waived. Therefore, there is no need for a separate action to set aside a void contract, and the Court can declare a contract void even in a summary action for unlawful detainer, as void contracts cannot be the source of any right. The Court also found the lease contract and the MOA to be null and void. The Constitution prohibits the alienation of natural resources and private agricultural lands to aliens. This prohibition extends to leases that amount to a transfer of substantially all rights of dominion. The lease contract granted Grilli a 50-year lease, automatically renewable for another 50 years, for a meager sum, and prohibited Fullido from selling the property without his consent. The MOA further cemented Grilli's rights, stating ownership resided with him and prohibiting Fullido from selling without his conformity. These provisions effectively stripped Fullido of her property rights and transferred dominion to Grilli, a foreigner, for over a century, in violation of constitutional provisions and Presidential Decree No. 471, which limits leases of private lands to aliens to 25 years, renewable for another 25 years. Such an arrangement is a virtual transfer of ownership and a circumvention of the constitutional ban. On whether the Court of Appeals gravely erred in affirming the RTC decision ejecting petitioner from their conjugal abode where respondent has been earlier ordered to vacate by virtue of a Permanent Protection Order, thus effectively setting aside, negating and/or violating an order issued by a court of co-equal jurisdiction; and on whether Grilli has a cause of action for unlawful detainer: The Court did not explicitly address the issue of the Permanent Protection Order in the provided text. The Court ruled that Grilli has no cause of action for unlawful detainer. An unlawful detainer complaint requires the plaintiff to have some right of possession over the property. Since the lease contract and MOA from which Grilli derived his purported right of possession were found to be null and void for being unconstitutional, they could not be the source of any rights. A person who does not have any right over a property from the beginning cannot eject another person possessing it. Consequently, Grilli's complaint for unlawful detainer must be dismissed for failure to prove his cause of action. On Whether the Court of Appeals gravely erred in denying the petitioner’s motion for reconsideration, among others, for non-compliance with procedural rules; and on the applicability of the in pari delicto doctrine: The Court's decision regarding the motion for reconsideration based on procedural rules is not detailed in the provided text. The Court held that the doctrine of in pari delicto (in equal fault) is not applicable in this case. While both parties were parties to a void contract, an exception to the doctrine arises when its application contravenes public policy. In this instance, the matter involved the constitutional prohibition against land ownership by aliens, which is a matter of public policy. Allowing the continued possession of the land by a foreigner under void contracts would defeat the constitutional provision. Therefore, Fullido was not barred from seeking relief, and the doctrine of in pari delicto was not applied.
Main Doctrine
A contract that violates the Constitution and the law is null and void ab initio and vests no rights and creates no obligations. Such void contracts cannot be the source of any right and cannot be utilized in an ejectment suit, even if the parties are in pari delicto, when public policy is advanced by allowing a party to sue for relief against the transaction.