PHILIP MATTHEWS, PETITIONER, VS. BENJAMIN A. TAYLOR AND JOSELYN C. TAYLOR, RESPONDENTS.

Matthews versus Taylor

The Case

This is a petition for review on certiorari brought by Philip Matthews against the spouses Benjamin Taylor and Joselyn Taylor. Benjamin, a British subject, sued to nullify an Agreement of Lease over a Boracay property that his Filipino wife Joselyn had entered into with Matthews, on the ground that he, the husband, never gave his marital consent. The case matters because the Supreme Court brushes aside the ordinary civil law analysis of conjugal property and decides the dispute on a constitutional ground: an alien husband cannot be heard to complain about the lease of land that the Constitution forbids him from owning in the first place.

Procedural History

Benjamin filed before the Regional Trial Court of Kalibo, Aklan an action for Declaration of Nullity of Agreement of Lease with Damages against Joselyn and Matthews. Because no Answer was filed, the trial court declared the defendants in default and rendered a judgment by default nullifying the Agreement. The Court of Appeals set that default judgment aside and ordered the trial court to allow Matthews to file his Answer and to conduct further proceedings.

After trial on the merits, the Regional Trial Court rendered judgment in favor of Benjamin, declaring the Agreement null and void and ordering the defendants to pay damages, attorney's fees, and incidental expenses. Matthews appealed to the Court of Appeals, which affirmed the trial court in its Decision of December 2003 and denied reconsideration in its Resolution of July 2004. Matthews then came to the Supreme Court by petition for review on certiorari.

Facts

On June 30, 1988, Benjamin Taylor, a British subject, married Joselyn, then a seventeen-year-old Filipina. On June 9, 1989, while the marriage subsisted, Joselyn bought a one thousand two hundred ninety-four square meter lot on Boracay Island in Malay, Aklan for one hundred twenty-nine thousand pesos. The sale was allegedly financed by Benjamin. Using his funds, the spouses built improvements and converted the property into a vacation and tourist resort known as the Admiral Ben Bow Inn, with the permits and licenses issued in the name of Joselyn's sister.

The spouses later had a falling out, and Joselyn ran away with another man. On June 8, 1992, she executed a Special Power of Attorney in favor of Benjamin, authorizing him to maintain, sell, lease, and sublease the Boracay property and to contract with third parties regarding it.

On July 20, 1992, Joselyn, as lessor, and Philip Matthews, as lessee, entered into an Agreement of Lease over the property for twenty-five years at an annual rental of twelve thousand pesos. The agreement was signed by the parties and notarized, and Matthews took possession and renamed the resort the Music Garden Resort. Benjamin then sued, claiming that the lease was void because Joselyn entered into it without his consent, and that his funds had acquired and improved the property. Matthews answered that he acted in good faith, that Joselyn appeared to be the owner, and that Benjamin had signed the Agreement as a witness, showing his knowledge and conformity, so that he was estopped from questioning it.

Issues

• Whether or not the marital consent of Benjamin Taylor was required for the validity of the Agreement of Lease.
• Whether or not Benjamin, an alien, may nullify the lease on the theory that the Boracay property was conjugal or community property in which he had an interest.
• Whether or not the property should be treated as the exclusive property of Joselyn, a Filipino citizen.

Applicable Provisions

Section 7 of Article XII of the 1987 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 decisive provision: it disqualifies Benjamin, an alien, from acquiring the Boracay land, and therefore from claiming any interest in it that would give him standing to nullify its lease.

Ruling

On the first issue, the Court held that Benjamin's marital consent was not required, because he had no right capable of being protected by such consent. The Court ruled that Benjamin has no right to nullify the Agreement of Lease between Joselyn and Matthews. Being an alien, he is absolutely prohibited from acquiring private and public lands in the Philippines. Since Joselyn appeared as the vendee in the Deed of Sale, she acquired sole ownership of the property, and this holds true even if Benjamin provided the funds for its acquisition.

On the second issue, the Court refused to declare the property conjugal or community property. By entering into the acquisition knowing that it was illegal, no implied trust was created in Benjamin's favor, no reimbursement for his expenses could be allowed, and no declaration could be made that the property formed part of the conjugal or community property of the spouses. The Court stressed that Benjamin had no capacity or personality to question the subsequent lease on the theory that he was merely exercising the prerogative of a husband over conjugal property, because to sustain that theory would countenance an indirect controversion of the constitutional prohibition. If the property were declared conjugal, the alien husband would gain a substantial interest and right over the land, including a decisive vote as to its transfer or disposition, a right the Constitution does not permit him to have.

On the third issue, the Court confirmed that the property belonged exclusively to Joselyn as the Filipino vendee, and that the Agreement of Lease she entered into with Matthews was valid and could not be nullified on the grounds Benjamin advanced. Having resolved the case on the constitutional ground, the Court found it unnecessary to address the other issues raised by Matthews.

Doctrine

An alien is absolutely disqualified from acquiring private lands in the Philippines, save only in constitutionally recognized cases of hereditary succession. An alien who knowingly funds the acquisition of land placed in the name of a Filipino does not thereby acquire any right or interest in the land. No implied trust arises in his favor, no reimbursement of his expenses may be allowed, and the property cannot be declared conjugal or community property, because any of these would allow the alien to circumvent the constitutional prohibition indirectly. Lacking any lawful interest in the land, the alien spouse has no standing to nullify a lease of that land by his Filipino spouse on the ground of lack of marital consent.

Disposition

The Court reversed and set aside the Decision and Resolution of the Court of Appeals and entered a new judgment dismissing the complaint against Philip Matthews, thereby upholding the validity of the Agreement of Lease.

Remember This

The one line to memorize: an alien cannot acquire Philippine land, and so cannot complain when his Filipino spouse leases it, for the Constitution gives him no interest to protect. Examiners use this case to test the constitutional land prohibition against aliens and the rule that no implied trust or reimbursement arises in favor of an alien who knowingly circumvents it.