PORTUGAL VS IAC

Facts:
Cornelia Clanor and her late husband Pascual Portugal, during the lifetime of the latter,
were able to accumulate several parcels of real property. Hugo Portugal, a son of the
spouses, borrowed from his mother, Cornelia, the certificates of title to the above-
mentioned parcels of land on the pretext that he had to use them in securing a loan that
he was negotiating. Cornelia asked the private respondent for the return of the two
titles she previously loaned, Hugo manifested that the said titles no longer exist. Hugo
showed the petitioners Transfer Certificate of Title T.C.T. No. 23539 registered in his
and his brother Emiliano Portugal's names, and which new T.C.T. cancelled the two
previous ones. This falsification was triggered by a deed of sale by which the spouses
Pascual Portugal and Cornelia Clanor purportedly sold for P8,000.00 the two parcels of
land adverted to earlier to their two sons, Hugo and Emiliano. Confronted by his mother
of this fraud, Emiliano denied any participation. And to show his good faith, Emiliano
caused the reconveyance of Lot No. 2337 previously covered by TCT No. RT-9356 and
which was conveyed to him in the void deed of sale. Hugo, on the other hand, refused
to make the necessary restitution thus compelling the petitioners, his mother and his
other brothers and sisters, to institute an action for the annulment of the controversial
deed of sale and the reconveyance of the title over Lot No. 3201 (the residential land).
Trial Court declared deed of sale is inoperative. Ca reversed said decision.
Issue: Whether deed of sale is valid?
Held: No. Deed of sale is void ab inito.
Ruling:
Applying the provisions of Articles 1350, 1352, and 1409 of the new Civil Code in
relation to the indispensable requisite of a valid cause or consideration in any contract,
and what constitutes a void or inexistent contract, we rule that the disputed deed of sale
is void ab initio or inexistent, not merely voidable. And it is provided in Article 1410 of
the Civil Code, that '(T)he action or defense for the declaration of the inexistence of a
contract does not prescribe.
Deed of sale in controversy is not simply fraudulent but void ab initio or inexistent our
ruling on this third issue would not have any material bearing on the overall outcome of
this petition. The petitioner's action remains to be seasonably instituted.
PHILIPPINE BANKING CORP. VS LIU SHE

DOCTRINE:

Even if the contract appears to be valid, if the provisions is against a

constitutional prohibition, the same should be considered null and void.

FACTS:

Justina Santos executed on a contract of lease in favor of Wong, covering the portion
then already leased to him and another portion fronting Florentino Torres street. The
lease was for 50 years, although the lessee was given the right to withdraw at any time
from the agreement.

On December 21 she executed another contract giving Wong the option to buy the
leased premises for P120,000, payable within ten years at a monthly installment of
P1,000. The option, written in Tagalog, imposed on him the obligation to pay for the
food of the dogs and the salaries of the maids in her household, the charge not to
exceed P1,800 a month. The option was conditioned on his obtaining Philippine
citizenship, a petition for which was then pending in the Court of First Instance of Rizal.

It appears, however, that this application for naturalization was withdrawn when it was
discovered that he was not a resident of Rizal. On October 28, 1958 she filed a petition
to adopt him and his children on the erroneous belief that adoption would confer on
them Philippine citizenship. The error was discovered and the proceedings were
abandoned.

In two wills executed on August 24 and 29, 1959, she bade her legatees to respect the
contracts she had entered into with Wong, but in a codicil of a later date (November 4,
1959) she appears to have a change of heart. Claiming that the various contracts were
made by her because of machinations and inducements practiced by him, she now
directed her executor to secure the annulment of the contracts.

ISSUE:

Whether the contracts involving Wong were valid

HELD:

No, the contracts show nothing that is necessarily illegal, but considered
collectively, they reveal an insidious pattern to subvert by indirection what the
Constitution directly prohibits. To be sure, 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.

But 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 but also of the right to dispose of it— rights the sum total of which
make up ownership. If this can be done, then the Constitutional ban against alien
landholding in the Philippines, is indeed in grave peril.