GREGORIO LLANTINO AND BELINDA LLANTINO ASSISTED BY HUSBAND NAPOLEON BARBA, PLAINTIFFS- APPELLANTS, VS. CO LIONG CHONG ALIAS JUAN MOLINA, DEFENDANT-APPELLEE.

This is an appeal perfected before the effectivity of Republic
Act 5440, from the decision*
of the Court of First Instance of Catanduanes in Civil Case No. 611, to quiet
title with damages, entitled “Gregorio Llantino, et al. vs. Cong Liong Chong
alias Juan Molina,” dismissing the complaint and declaring that the contract of
lease entered into between the plaintiffs and the defendant valid and in
accordance with law.

The facts of the case as summarized by the trial court are as
follows:

Plaintiffs (petitioners herein) aver that they are the owners of
a commercial-residential land situated in the municipality of Virac,
Catanduanes, described in paragraph 2 of the complaint, which sometime in 1954
they leased to the defendant (private respondent) who was then a Chinese
national and went by the name of Co Liong Chong for a period of thirteen (13)
years for the sum of P6,150.00 for the whole period. The defendant was placed in possession of the property but
knowing that the period of the lease would end with the year 1967, petitioners
requested private respondent for a conference but the latter did not honor the
request and instead he informed the petitioners that he had already constructed
a commercial building on the
land worth P50,000.00; that the lease contract was for a period of sixty (60)
years, counted from 1954; and that he is already a Filipino citizen. The claim of Chong came as a surprise to the
Llantinos because they did not remember having agreed to a sixty-year lease
agreement as that would virtually make Chong the owner of the realty which, as a Chinese national, he had no right
to own and neither could he have acquired such ownership after naturalization
subsequent to 1954. On December 16,
1967, in order to avoid a court
litigation the Llantinos once more invited Chong to a conference about the matter but again Chong ignored the
invitation. (Rollo, p. 48; Appellant’s
Brief, p. 12)

Hence, on January 10, 1968, the Llantinos filed their complaint
to quiet title with damages before the Court of First Instance of Catanduanes
(Rollo, p. 12; Record on Appeal, pp. 1-4).

After Chong has filed an answer to the complaint and the
Llantinos their reply, (Rollo, p. 12; Record on Appeal, pp. 9-10) the trial
court set the case for pre-trial and trial for April 2, 1968 (Rollo, p. 12;
Record on Appeal, pp. 10-11).

At the pre-trial, both parties agreed upon the identity of the
land as described in the complaint. It
was mutually admitted that the defendants original name was Co Liong Chong who
was then a Chinese national in 1954, when he approached the plaintiffs and
offered to lease the land in question. It was also admitted by
the counsel for the defendant that prior to the filing of the case, the
plaintiffs have in fact invited the defendant to a conference about the matter
(Rollo, p. 12; Record on Appeal; p. 14).

Chong’s counsel produced the carbon original of the contract of
lease entered into between Chong and the Llantinos and the existence of the
contract of lease as a public
instrument was admitted (Rollo, p. 12; Record on Appeal, pp. 14-15).

It was also admitted that Chong had in fact constructed a
building of strong materials on the land worth P40,000.00 (Rollo, p. 12; Record
on Appeal, p. 15); that Chong has become a naturalized Filipino citizen in 1961
and that his name is no longer Co Liong Chong but Juan Molina (Rollo, p. 12;
Record on Appeal, p. 15).

On May 17, 1968, the trial court rendered a Decision the
dispositive portion of which reads:

“WHEREFORE, in view of the foregoing considerations, the Court finds
the contract of lease entered into between the plaintiffs and the defendant on
October 5, 1954, valid and in accordance with law and the complaint is
dismissed with costs against the plaintiffs.

“The Court, however, feels that there is no sufficient ground to
award moral damages or attorney’s fees as claimed by the defendant because the
Court is fairly convinced that the institution of the suit sprung from an
honest conviction on the part of the plaintiffs that on account of the period
fixed in the contract of lease and the fact that the defendant was a Chinese
national at the time of its celebration constituted valid grounds for
annulment.

SO ORDERED.” (Rollo, p. 12; Record on Appeal, p. 24).

From this judgment, plaintiffs appealed directly to this Court on
a pure question of law (Rollo,
p. 12; Record on Appeal, pp. 24-25).

The plaintiffs-appellants filed their brief on May 26, 1969
(Rollo, p. 48). The defendant-appellee
filed his corresponding brief on July 22, 1969 (Rollo, p. 59).

The appellants raised the following assignment of errors:

I

THE LOWER COURT ERRED IN
DECLARING THE CONTRACT ENTERED INTO BY AND BETWEEN THE APPELLANTS AND THE
DEFENDANTS ON OCTOBER 5, 1954 VALID;

II

THE LOWER COURT ERRED IN REFUSING TO
DECLARE THAT CONTRACT NOT A LEASE.

Stripping the case of irrelevant allegations, the pivotal issue
in this case is whether or not the contract of lease entered into by and
between the petitioners including Virgilio
Llantino now deceased and private respondent on October 5, 1954 for a
period of sixty (60) years is valid.

Petitioners contend that
when the contract which is sought to be declared void was entered into by and
between the parties, private respondent was still a Chinese national
(Rollo, p. 48; Appellants’ Brief, p. 2). However, petitioners also stated
that they do not dispute the right of private respondent to hold the
landholding in dispute under a contract of lease but they cannot fathom how
Congress could have thought of a lease
contract which shall be for an indefinite period and yet say that the period to
be valid should not exceed 99 years (Rollo, p. 48; Appellants’ Brief, p. 4;
Article 1643 of the New Civil Code of the Philippines).

On the other hand, private respondent argued that even though he was
still an alien when he entered into the contract of lease (on October 5, 1954),
he was not prohibited by law to do so. In fact, prior to his becoming a naturalized Filipino citizen in 1961,
the appellants did not question his right to enter into that contract so that
the parties are in pari delicto. He constructed a building
on the property worth P40,000.00 and prays that he be awarded P30,000.00 for
moral damages and P2,000.00 for Attorneys’ fees. (Rollo, p. 48; Appellants’ Brief, p. 2).

The position of private respondent is well taken.

The lower court correctly ruled that the defendant-appellee Chong
had at the time of the execution of the contract, the right to hold by lease
the property involved in the case although at the time of the execution of the
contract, he was still a Chinese national (Rollo, p. 59; Appellee’s Brief, pp.
10-11).

In the present case, it has been established that there is only
one contract and there is no option to buy the leased property in favor of
Chong. There is nothing in the record,
either in the lease contract or in the complaint itself, to indicate any scheme
to circumvent the constitutional prohibition. On the contrary, the Llantinos themselves admit openly that right from
the start and before entering into the contract,
the Chong had merely asked them for a lease of the premises to which
they agreed. Admittedly under the terms
of the contract there is nothing to prevent the Llantinos from disposing of
their title to the land to any qualified party but subject to the rights of the
lessee Chong. Neither is there under
the terms of the said contract to indicate that the ownership of the Llantinos
of the leased premises has been virtually transferred to the lessee (Rollo, p.
59; Appellee’s Brief, p. 14).

Under the circumstances, a lease to an alien for a reasonable
period is valid. So is an option giving
an alien the right to buy real property on condition that he is granted
Philippine citizenship. Aliens are not
completely excluded by the Constitution from use of lands for residential
purposes. Since their residence in the
Philippines is temporary, they may be granted temporary rights such as a lease
contract which is not forbidden by the Constitution. Should they desire to remain here forever and share our fortune and
misfortune, Filipino citizenship is not impossible to acquire (Philippine
Banking Corporation vs. Lui She, 21 SCRA 52 (1967); citing Krivenko vs.
Register of Deeds, 79 Phil. 461 (1947)).

The only instance where a contract of lease may be considered invalid,
is, if there are circumstances
attendant to its execution, which are used as a scheme to circumvent the
constitutional prohibition.

If an alien is given not only a lease of, but also an option to
buy, a piece of land, by virtue of which the Filipino owner cannot sell or
otherwise dispose of his property, this to last for 50 years, then it becomes
clear that the arrangement is a virtual transfer of ownership whereby the owner
divests himself in stages not only of the right to enjoy the land (jus possidendi,
jus utendi, jus fruendi, and jus abutendi)– rights, the sum of which make up
ownership. It is just as if today the
possession is transferred, tomorrow the use, the next day the disposition, and
so on, until ultimately all the rights of which ownership is made up are
consolidated in an alien (Philippine Banking Corporation vs. Lui She, 21 SCRA
52 (1967).

Coming back to the case at bar, even assuming, arguendo,
that the subject contract is prohibited, the same can no longer be questioned
presently upon the acquisition by the private respondent of Filipino
citizenship. It was held that sale of a
residential land to an alien which is now in the hands of a naturalized
Filipino citizen is valid (De Castro vs. Tan, 129 SCRA 85 (1984).

A contract is the law between the contracting parties, and when
there is nothing in it which is contrary to law, morals, good customs, public
policy or public order, the validity of the contract must be sustained
(Marimperio Compania Naviera, S.A. vs. Court of Appeals,
156 SCRA 358 (1987).

The issue of the nature of the contract in the case at bar was
never raised in the basic pleadings or in the pre-trial (Rollo, p. 59;
Appellee’s Brief, p. 22).

It is too late to raise an issue on appeal in the Supreme Court
when it has not been raised in the lower court (Espadera vs. Court of Appeals,
165 SCRA 364 (1988).

Moreover, contracts which are not ambiguous are to be interpreted
according to their literal meaning and should not be interpreted beyond their
obvious intendment (Plastic Town Center Corporation vs. NLRC, 172 SCRA 580
(1989); Herrera vs. Petrophil Corp., 146 SCRA 385 (1986).

PREMISES CONSIDERED, the decision appealed is hereby
AFFIRMED with costs against the plaintiffs-appelants.

SO ORDERED.

Melencio-Herrera, (Chairman), Padilla, and Regalado, JJ., concur.

Sarmiento, J., on leave.

*
Penned by Judge Feliciano S. Gonzales