Not a Fairy Tale Ending (Version 2)

The post of March 8, 2009 began this way:

We have heard the story so many times. Foreigner goes to the Philippines. Foreigner meets Filipina girl.

They fall in love. They get married (or live together).  They buy a house and lot.

We wish it could always be a happy ending and they will live happily ever after. For some, the fairy tale becomes reality. For other couples, the ending is not what they have hoped for.

They fight. They go their separate ways. They fight over property.

Philip Matthews vs. Benjamin A. Taylor and Joselyn C. Taylor, G.R. No. 164584, June 22, 2009, involves a similar story, but this time, the Filipina wife prevailed.

Here, the husband (Benjamin Taylor, a British national) supposedly funded the purchase of the parcel of land in Boracay and the construction of the improvements thereon. The title to the parcel of land was placed in the name of his Filipina wife (Joselyn Taylor).

The spouses separated and Joselyn subsequently leased the parcel of land (together with the improvements) to a Philip Matthews for a period of 25 tears. Benjamin signed as a witness to the lease agreement.

Claiming that the Agreement was null and void since it was entered into by Joselyn without his (Benjamin’s) consent, Benjamin instituted an action for Declaration of Nullity of Agreement of Lease with Damages against Joselyn and Philip. Benjamin claimed that his funds were used in the acquisition and improvement of the Boracay property, and coupled with the fact that he was Joselyn’s husband, any transaction involving said property required his consent.

The Regional Trial Court (RTC) considered the Boracay property as community property of Benjamin and Joselyn. Hence, the RTC concluded that the consent of the spouses was necessary to validate any contract involving the property. Benjamin’s right over the Boracay property was bolstered by the court’s findings that the property was purchased and improved through funds provided by Benjamin. Although the Agreement was evidenced by a public document, the trial court refused to consider the alleged participation of Benjamin in the questioned transaction primarily because his signature appeared only on the last page of the document and not on every page thereof.

On appeal to the Court of Appeals (CA), the CA affirmed the conclusions made by the RTC. The appellate court was of the view that if, indeed, Benjamin was a willing participant in the questioned transaction, the parties to the Agreement should have used the phrase “with my consent” instead of “signed in the presence of.” The CA noted that Joselyn previously prepared an SPA in favor of Benjamin involving the Boracay property; it was therefore unnecessary for Joselyn to participate in the execution of the Agreement. Taken together, these circumstances yielded the inevitable conclusion that the contract was null and void having been entered into by Joselyn without the consent of Benjamin.

The Supreme Court did not agree with the RTC and the CA. The Supreme Court ruled:

. . . we find and so hold that Benjamin has no right to nullify the Agreement of Lease between Joselyn and petitioner. Benjamin, being an alien, is absolutely prohibited from acquiring private and public lands in the Philippines. Considering that Joselyn appeared to be the designated “vendee” in the Deed of Sale of said property, she acquired sole ownership thereto. This is true even if we sustain Benjamin’s claim that he provided the funds for such acquisition. By entering into such contract knowing that it was illegal, no implied trust was created in his favor; no reimbursement for his expenses can be allowed; and no declaration can be made that the subject property was part of the conjugal/community property of the spouses. In any event, he had and has no capacity or personality to question the subsequent lease of the Boracay property by his wife on the theory that in so doing, he was merely exercising the prerogative of a husband in respect of conjugal property. To sustain such a theory would countenance indirect controversion of the constitutional prohibition. If the property were to be declared conjugal, this would accord the alien husband a substantial interest and right over the land, as he would then have a decisive vote as to its transfer or disposition. This is a right that the Constitution does not permit him to have.

In fine, the Agreement of Lease entered into between Joselyn and petitioner cannot be nullified on the grounds advanced by Benjamin. Thus, we uphold its validity.

The situation here can be distingusihed from the situation in Borromeo vs. Descallar, G.R. No. 159310, February 24, 2009. In Borromeo, the ex-boyfriend (who is a non-Philippine national and who funded the purchase of the parcel of land) already sold the land to a qualified Philippine national; thus, the Supreme Court reiterated its earlier rulings that the while the acquisition of land by a foreigner violates the Constitution, its subsequent transfer to a qualified Philippine national cured the defect in the original transaction.