G.R. No. L-3676 January 31, 1955
SOCORRO VASQUEZ, plaintiff-appellant, vs. LI SENG GIAP and LI SENG GIAP & SONS, defendants-appellees.

FACTS

The plaintiff-appellant, Socorro Vasquez, sold a parcel of land with improvements in Manila to the defendant-appellee Li Seng Giap, a Chinese citizen, on January 22, 1940. On August 21, 1940, Li Seng Giap sold and transferred the same property to the defendant-appellee Li Seng Giap & Sons, Inc., a corporation whose shareholders were then Chinese citizens. Li Seng Giap was naturalized as a Filipino citizen on May 10, 1941. At the time the action was filed, Li Seng Giap & Sons, Inc. was a Filipino corporation, with 96.67% of its stock owned by Filipinos. The plaintiff filed an action to rescind the sale on the ground that the vendee was an alien constitutionally incapable of owning land.

ISSUE

Whether the sale of land to an alien, who later becomes a naturalized Filipino citizen, can be annulled or rescinded by the vendor.

RULING

No. The Supreme Court affirmed the dismissal of the complaint. The Court ruled that the vendor, having willingly sold the land to an alien, divested herself of title and cannot sue for annulment based on the vendee’s incapacity. The applicable principle is that parties to an illegal contract are in pari delicto, and the courts will not afford relief to either. Furthermore, the State’s right to escheat the property is the primary remedy for violations of the constitutional prohibition. The subsequent naturalization of the alien vendee cured the initial disability, making his title lawful and valid from the date of the conveyance. Consequently, the title of the corporation, which became a Filipino-controlled entity, is also valid. The action was not one for rescission based on lesion but for annulment based on a defect, and the vendor cannot avail herself of the vendee’s initial incapacity.