CELSO R. HALILI AND ARTHUR R. HALILI, PETITIONERS, VS. COURT OF APPEALS, HELEN MEYERS GUZMAN, DAVID REY GUZMAN AND EMILIANO CATANIAG, RESPONDENTS.

Halili versus Court of Appeals

The Case

This is a petition for review filed by Celso Halili and Arthur Halili against the Court of Appeals, Helen Meyers Guzman, David Rey Guzman, and Emiliano Cataniag. The Halilis are owners of a lot adjoining a parcel of land in Bagbaguin, Santa Maria, Bulacan. They sued to question two conveyances of that land: first, a deed of quitclaim by which Helen Meyers Guzman, an American citizen, transferred her inherited rights to her son David Rey Guzman, also an American citizen; and second, the later sale of the land by David Rey to Emiliano Cataniag. The Halilis claimed ownership based on their right of legal redemption as adjoining owners. The case matters because it settles two enduring rules: the factual finding that land is urban, affirmed by the Court of Appeals, binds the Supreme Court; and an invalid transfer of land to a disqualified alien is cured once the land passes to a qualified Filipino citizen.

Procedural History

The Halilis filed a complaint before the Regional Trial Court of Malolos, Bulacan, questioning the constitutionality and validity of the two conveyances and asserting a right of legal redemption. In its decision dated March 10, 1992, the trial court dismissed the complaint. It held that Helen Guzman's waiver in favor of her son was not contrary to the constitutional prohibition, since its purpose was simply to authorize David Rey to dispose of the properties in accordance with the Constitution and the laws, and not to subvert them. It further held that the subject land was urban, so the right of redemption under Article 1621 of the Civil Code could not be invoked.

The Halilis appealed to the Court of Appeals, which denied the appeal and affirmed the trial court. The appellate court upheld the factual finding that the land was urban. Citing Tejido versus Zamacoma and Yap versus Grageda, it further held that although the transfer to David Rey may have been invalid for being contrary to the Constitution, there was no more point in allowing the petitioners to recover the property, since it had already passed to and was owned by a qualified person. The Halilis then came to the Supreme Court by petition for review under Rule 45.

Facts

Simeon de Guzman, an American citizen, died sometime in 1968, leaving real properties in the Philippines. His forced heirs were his widow, Helen Meyers Guzman, and his son, David Rey Guzman, both also American citizens. On August 9, 1989, Helen executed a deed of quitclaim assigning, transferring, and conveying to David Rey all her rights, titles, and interests over six parcels of land that the two of them had inherited from Simeon.

Among those parcels is the land now in litigation, situated in Bagbaguin, Santa Maria, Bulacan, containing an area of 6,695 square meters and covered by Transfer Certificate of Title Number T-170514 of the Registry of Deeds of Bulacan. The quitclaim having been registered, that title was cancelled and a new title, Transfer Certificate of Title Number T-120259, was issued in the name of David Rey Guzman.

On February 5, 1991, David Rey Guzman sold the parcel to Emiliano Cataniag, upon which Transfer Certificate of Title Number T-120259 was cancelled and Transfer Certificate of Title Number T-130721 was issued in Cataniag's name. The Halilis, owners of the adjoining lot, then filed their complaint, questioning the two conveyances and claiming a right of legal redemption.

Issues

• Whether or not the Court of Appeals erred in affirming the conclusion of the trial court that the land in question is urban rather than rural.
• Whether or not the Court of Appeals erred in denying the petitioners their right of redemption under Article 1621 of the Civil Code.
• Whether or not the Court of Appeals, having considered the conveyance from Helen Meyers Guzman to her son David Rey Guzman illegal, erred in not declaring the same null and void.

Applicable Provisions

Article 1621 of the Civil Code provides:

Article 1621. The owners of adjoining lands shall also have the right of redemption when a piece of rural land, the area of which does not exceed one hectare, is alienated, unless the grantee does not own any rural land.

This provision is the basis of the Halilis' claim, and its requirement that the land be rural defeats that claim once the land is found to be urban.

Article XII, Section 7 of the Constitution provides:

Section 7. Save in cases of hereditary succession, no private lands shall be transferred or conveyed except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain.

This is the provision against which the quitclaim in favor of David Rey Guzman, an alien, was measured, and which the Court held was not violated in the end because the land passed to a qualified citizen.

Ruling

On the first issue, the Court held that whether land is rural or urban is a factual question which, as a rule, is not reviewable by the Supreme Court. Findings of fact of a trial judge, when affirmed by the Court of Appeals, are binding upon the Supreme Court, subject only to a few exceptions, and the case fell within none of them. The trial court's conclusion that the property is urban rested on clear and convincing evidence: the roadsides along the national highway were lined with residential, commercial, and industrial establishments, including feed, woodcraft, and garment factories, commercial stores, a warehouse, a hospital, gasoline stations, and apartment buildings. The Court also noted that the Land Regulatory Board had attested that the property is commercial, and that this classification, based on the present condition of the property and the community, was later than the tax declaration describing the land as agricultural.

On the second issue, the Court held that since the land is urban, the petitioners have no right to invoke Article 1621, which presupposes that the land sought to be redeemed is rural. Under that article, both lands, that sought to be redeemed and the adjacent lot of the person exercising the right, must be rural; if one or both are urban, the right cannot be invoked. The purpose of the provision, limited to rural lands not exceeding one hectare, is to favor agricultural development, and that purpose would not be served here.

On the third issue, the Court held that the sale of the land to Cataniag rendered moot any question on the constitutionality of the prior transfer from Helen to David Rey. It acknowledged that the quitclaim collided with Article XII, Section 7 of the Constitution, and that under the landmark Krivenko versus Register of Deeds, non-Filipinos cannot acquire or hold title to private lands or lands of the public domain, except only by way of legal succession. But on the effect of a subsequent sale by the disqualified alien vendee to a qualified Filipino citizen, the Court held that jurisprudence is consistent: if land is invalidly transferred to an alien who subsequently becomes a citizen or transfers it to a citizen, the flaw in the original transaction is considered cured and the title of the transferee is rendered valid. The Court cited United Church Board of World Ministries versus Sebastian, De Castro versus Tan, Sarsosa versus Cuenco, Godinez versus Pak Luen, Vasquez versus Li Seng Giap, and Herrera versus Luy Kim Guan. Since the disputed land is now owned by Cataniag, a Filipino citizen, the prior invalid transfer can no longer be assailed, and the objective of the constitutional provision, to keep our land in Filipino hands, has been served.

Doctrine

First, findings of fact of the trial court, when affirmed by the Court of Appeals, are binding on the Supreme Court in a petition for review under Rule 45, save only for the recognized exceptions, none of which was present here. Whether land is rural or urban is such a factual question.

Second, the right of legal redemption of adjoining owners under Article 1621 of the Civil Code arises only when a piece of rural land not exceeding one hectare is alienated. Both the land sought to be redeemed and the adjacent lot must be rural; if either is urban, the right cannot be invoked, because the provision exists to favor agricultural development.

Third, under Article XII, Section 7 of the Constitution, no private lands shall be transferred or conveyed, save in cases of hereditary succession, except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain. A transfer of land to a disqualified alien is invalid, but the flaw is cured when the land subsequently passes to a qualified Filipino citizen, and the prior transfer can no longer be assailed.

Disposition

The petition was denied, the challenged decision of the Court of Appeals was affirmed, and costs were assessed against the petitioners.

Remember This

Memorize the curing rule: an invalid transfer of land to a disqualified alien is cured once the land passes to a qualified Filipino citizen, and the prior transfer can no longer be assailed. Examiners use this case to test the alien landholding prohibition under Article XII, Section 7, and the rural land requirement for legal redemption by adjoining owners under Article 1621.