GR L 29663; (August, 1990) (Digest)
G.R. No. L-29663 August 20, 1990
GREGORIO LLANTINO and BELINDA LLANTINO assisted by husband Napoleon Barba, plaintiffs-appellants, vs. CO LIONG CHONG alias JUAN MOLINA, defendant-appellee.
FACTS
Plaintiffs-appellants Gregorio and Belinda Llantino owned a commercial-residential lot in Virac, Catanduanes. In 1954, they entered into a contract of lease with defendant-appellee Co Liong Chong, then a Chinese national, for a term of sixty (60) years for a total consideration of P6,150.00. Chong took possession and constructed a commercial building on the land. In 1967, as the original thirteen-year period the Llantinos believed was agreed upon was ending, they requested a conference with Chong, who ignored them. Chong instead asserted his right under the sixty-year lease and informed them he had become a naturalized Filipino citizen in 1961, changing his name to Juan Molina. The Llantinos filed an action to quiet title, arguing the sixty-year lease was invalid as it was executed with an alien and effectively constituted a prohibited virtual transfer of ownership.
ISSUE
Whether the contract of lease for sixty (60) years entered into in 1954 between the Filipino owners and an alien lessee is valid.
RULING
The Supreme Court affirmed the trial court’s decision, upholding the validity of the lease contract. The legal logic is clear: the constitutional prohibition against aliens acquiring lands of the public or private domain does not extend to leasehold rights. Aliens may legally enter into lease agreements over private lands, as a lease is merely a temporary right of use and does not constitute ownership. The Court cited precedent establishing that a lease contract is permissible unless it is a mere scheme to circumvent the constitutional ban, such as when coupled with an option to buy that effectively consolidates all ownership rights in the alien over time. No such scheme was present here. Furthermore, the contract’s validity was reinforced by Chong’s subsequent naturalization as a Filipino citizen. The Court also noted that the issue of the contract’s nature was not raised in the pleadings or pre-trial below and could not be raised for the first time on appeal. The contract, being clear and unambiguous, must be interpreted according to its literal terms as the law between the parties.