REGISTER OF DEEDS OF MANILA, PETITIONER AND APPELLEE, VS. CHINA BANKING CORPORATION, RESPONDENT AND APPELLANT.

Appeal from a resolution of the Land Registration Commission holding “that
the deed of transfer in favor of an alien bank, subject of the present Consulta,
is unregisterable for being in contravention of the Constitution of the
Philippines”.

In an information filed on June 16, 1953 in the Court of First Instance of
Manila (Criminal Case No. 22908) Alfonso Pangilinan and one Guillermo Chua were
charged with qualified theft, the money involved amounting to P275,000.00. On
September 18, 1956, Pangilinan and his wife, Belen Sta. Ana, executed a public
instrument entitled deed op transfer whereby, after admitting his civil
liability in favor of his employer, the China Banking Corporation, in relation
to the offense aforesaid, he ceded and transferred to the latter, in
satisfaction thereof, a parcel of land located in the City of Manila, registered
in the name of “Belen Sta. Ana, married to Alfonso Pangilinan” (Transfer
Certificate of Title No. 32230). On October 24, 1956 the deed was presented for
registration to the Register of Deeds of the City of Manila, but because the
transferee—the China Banking Corporation—was alien-owned and, as such, barred
from acquiring lands in the Philippines in accordance with the provisions of
Section 5, Article XIII of the Constitution of the Philippines, said officer
submitted the matter of its registration to the Land Registration Commission for
resolution. After granting the parties concerned ample opportunity to submit
their views upon the issue, the Commission issued the resolution appealed
from.

Plainly stated, the question before Us is whether appellant—an alien-owned
bank—can acquire ownership of the residential lot covered by Transfer
Certificate of Title No. 32230 by virtue of the deed of transfer mentioned
heretofore (Vide pages 1—6 of the Record on Appeal).

Maintaining the affirmative, appellant argues that: (a) the temporary holding
of land by an alien-owned commercial bank under a public instrument such as the
deed of transfer in question “bears no reasonable connection with the
constitutional purpose” underlying the provisions of Section 5, Article XIII of
the Constitution of the Philippines; hence, such holding or acquisition “was not
within the contemplation of the franuirs of the Constitution”; (b) by judicial
as well as by executive-administrative and legislative construction, the
constitutional prohibition against alien landholding does not preclude enjoyment
by aliens of temporary rights in land; and (c) under the provisions of Section
25 of Republic Act No. 337 (General Banking Act) an alien or an alien-owned
commercial bank may acquire land in the Philippines subject to the obligation of
disposing of it within 5 years from the date of its acquisition.

Upon the other hand, the argument supporting the appealed resolution is that
the privilege of acquiring real estate granted to commercial banks under the
provisions of Section 25 of Republic Act No. 337 was not intended as an
amendment, much less as a nullification of the constitutional prohibition
against alien acquisition of lands in the Philippines, the same being merely an
exception to the general rule, under existing banking and corporation laws, that
banks and corporations can engage only in the particular business for which they
were specifically created; that a mere statute, like the republic act relied
upon by appellant, cannot amend the Constitution; that in connection with the
particular constitutional prohibition involved herein, it is the
character and nature of the possession—whether in strict ownership
or otherwise—and not the length of possession that is material, the
result being that, if real property is to be held in ownership, an alien
may not legally do so even for a single day.

After considering the arguments adduced by appellant in its brief, jointly
with those expounded in the briefs submitted by Alfonso Ponce Enrile and William
H. Quasha and Associates, as amici curiae, on the one hand, and, on the other,
those relied upon in the brief submitted by the Office of the Solicitor General
on behalf of the Commission, we are inclined to uphold, as we do uphold, the
appealed resolution.

To support its view appellant relies particularly upon paragraphs (c)
and (d), Section 25 of Republic Act 337 which reads as follows:

“SEC. 25. Any commercial bank may purchase, hold, and convey real estate for
the following purposes:

“* * * * * * *

“(c) Such as shall be conveyed to it in satisfaction of debts previously
contracted in the course of its dealings;

“(d) Such asi it shall purchase at sales urider judgments, decrees;
mortgages, or trust deeds held by it and such as it shall purchase to secure
debts due to it.

“But no such bank shall hold the possession of any real estate under mortgage
or trust deed, or the title and possession of any real estate purchased to
secure any debt due to it, for a longer period than five
years.”

Assuming, arguendo, that under the provisions of the aforesaid Act any
commercial bank, whether alien-owned or controlled or not, may purchase and hold
real estate for the specific purposes and in the particular cases enumerated in
Section 25 thereof, we find that the case before Us does not fall under anyone
of them.

Paragraph (c), Section 25 of Republic Act-337 allows a commercial bank
to purchase and hold such real estate as shall be conveyed to it in satisfaction
of debts previously contracted in the course of its dealings. We
deem it quite clear and free from doubt that the “debts” referred to in this
provision are only those resulting from previous loans and other similar
transactions made or entered into by a commercial bank in the ordinary course of
its business as such. Obviously, whatever “civil liability”—arising from the
criminal offense of qualified theft—was admitted in favor of appellant bank by
its former employee, Alfonso Pangilinaiv was not a debt resulting from a loan or
a similar transaction had between the two parties in the ordinary course of
banking business.

Neither do the provisions of paragraph (d) of the same section apply
to the present case because the deed of transfer in question can in no sense be
considered as a sale made by virtue of a judgment, decree, mortgage, or
trust deed held by appellant bank. In the same manner it can not be said that
the real property in question wa3 purchased by appellant “to secure debts due to
it”, considering that, as stated heretofore, the term debt employed in
the pertinent legal provision can logically refer only to such debts as may
become payable to appellant bank as a result of a banking transaction.

That the constitutional prohibition under consideration has for its purpose
the preservation of the patrimony of the nation can not be denied, but appellant
and the amid curiae claim that it should be liberally construed so that the
prohibition be limited to the permanent acquisition of real estate by
aliens—whether natural or juridical persons. This, of course, would make legal
the ownership acquired by appellant bank by virtue, of the deed of transfer
mentioned heretofore, subject to its obligation to dispose of it in accordance
with law, within 5 years from the date of its acquisition. We can not give
assent to this contention, in view of the fact that the constitutional
prohibition in question is absolute in terms. We have so held in Ong Sui Si
Temple vs. The Register of Deeds of Manila 97 Phil., 58; 50 Off. Gaz., [6] 2866
where we said, inter alia, the following:

“We are of the opinion that the Court below has correctly held that in view
of the absolute terms of section 5, Title XIII, of the Constitution, the
provisions of Act 271 of the old Philippine Commission most be deemed repealed
since the Constitution was enacted, in so far as incompatible therewith. In
providing that

‘Save in cases of hereditary succession, no private agricultural land shall
be transferred or assigned except to individuals, corporations or associations
qualified to acquire tir hold lands of the public domain in the
Philippines’,

the Constitution makes no exception in favor of religious associations.
Neither is there any such saving found in Sections 1 and 2 of Article XIII,
restricting the acquisition of public agricultural lands and other natural
resources to ‘corporations or associations at least sixty per centum of the
capital of which is owned by such citizens’ (of the Philippines).” (Italics
ours)

Even in the case of Smith Bell & Co. vs. Register of Deeds of Davao (96
Phil. 53, 50 Off. Gaz. 5239) where a lease of a parcel of land for a total
period of 50 years in favor of an alien corporation was held to be registerable,
the reason we gave for such ruling was that a lease—unlike a sale—does not
involve the transfer of dominion over the land, the clear implication from this
being that transfer of ownership over land, even for a limited period of time,
is not permissible in view of the constitutional prohibition. The reason for
this is manifestly the desire and purpose of the Constitution to place and keep
in the hands of the people the ownership over private lands in order not to
endanger the integrity of the nation. Inasmuch as when an alien buys land he
acquires and will naturally exercise ownership over the same, either permanently
or temporarily, to that extent his acquisition jeopardizes the purpose of the
Constitution. Some may say that this construction is too narrow and unwise; to
this we answer that it is not our privilege to determine the wisdom or lack of
wisdom of this constitutional mandate. It is, rather, Our sworn duty to enforce
it free from qualifications and distinctions that tend to render futile the
constitutional intent.

Wherefore, the resolution appealed from is hereby affirmed, with costs.

Bengzon, C. J., Bautista Angelo, Concepcion, Reyes, J. B. L., Barrera,
and Paredes, JJ., concur.