REGISTER OF DEEDS vs. CHINABANK (1962)Petitioner: Register of Deeds of ManilaRespondent: China Banking CorporationPonente: J. DizonBy: Vida, John Michael

FACTS:Alfonso Pangilinan (an employee of Chinabank) and Guillermo Chua were charged in an information before the CFI Manila for qualified theft on the 16 th of June, 1953, involving money amounting to ₱275,000.00. Pangilinan and his wife Belen eventually admitted their civil liability in favor of Chinabank, and in doing so, executed a Deed of Transfer in favor of Chinabank, transferring a parcel of land in Manila, registered in the name of Belen.

Chinabank presented the Deed to the Register of Deeds on the 24th of October for registration. However, because Chinabank as transferee was “alien-owned” and therefore barred from acquiring lands in the Philippines by virtue of Section 5 (should be Section 1), Article XIII of the 1935 Constitution, the Register submitted the matter to the Land Registration Commission, which decided against Chinabank, holding that the Deed of Transfer in favor of Chinabank, an “alien-owned” bank, is unregisterable for being in contravention of the 1935 Constitution.

Chinabank argues that:(a) The temporary holding of land by an alien-owned commercial bank under a public instrument such as the Deed of Transfer "bears no reasonable connection with the constitutional purpose" of Section 1, Article XIII of the 1935 Constitution, and therefore such holding or acquisition "was not within the contemplation of the framers of the Constitution";

(b) The constitutional prohibition against alien landholding does not preclude enjoyment by aliens of temporary rights and land, and;

(c) Under the provisions of Section 25 (c) and (d) of RA 337 (the General Banking Act) an alien or an alien-owned commercial bank may acquire land in the Philippines subject to the obligation of disposing of it within 5 years from the date of its acquisition.

SEC. 25. Any commercial bank may purchase, hold, and convey real estate for the following purposes:

(c) Such shall be conveyed to it in satisfaction of debts previously contracted in the course of its dealings;

(d) Such as it shall purchase at sales under judgments, decrees, mortgages, or trust deeds held by it and such as it shall purchase to secure debts due to it.

But no such bank shall hold the possession of any real estate under mortgage or trust deed, or the title and possession of any real estate purchased to secure any debt due to it, for a longer period than five years.

The Land Registration Commission, on the other hand argues that:The privilege of acquiring real estate granted to commercial banks under the provisions of the General Banking Act was

not intended as an amendment or a nullification of the constitutional prohibition against alien acquisition of lands in the Philippines, as the same provides only for an exception to the general rule, under existing banking and corporation laws, that banks and corporations can engage only in the particular business for which they were specifically created. A mere statute like the GBA cannot amend the Constitution

Therefore, it is the character and nature of the possession — whether in strict ownership or otherwise — and not the length of possession that is material. If real property is to be held in ownership, an alien may not legally do so even for a single day.

ISSUE:WON an “alien-owned” bank can acquire ownership of residential lots such as the lot presented by Pangilinan? NO. Chinabank is prohibited from holding lands by virtue of the 1935 Constitution.

RATIO:The Court stated that Section 25(c) of the GBA does allow a commercial bank to purchase and hold such real estate conveyed to it in satisfaction of debts previously contracted in the course of its dealings. The "debts" referred to in this provision are only those resulting from previous loans and other similar transactions made or entered into by a commercial bank in the ordinary course of its business as such. The "civil liability" arising from Pangilinan’s crime of qualified theft admitted in favor of Chinabank, was not a debt resulting from a loan or a similar transaction between two parties in the ordinary course of banking business.

Neither do the provisions of Section 25(d) apply to the case because the Deed of Transfer can’t be considered as a sale made by virtue of a judgment, decree, mortgage, or trust deed held by appellant bank. It cannot be said that the real property was purchased by Chinabank "to secure debts due to it", considering that the term “debt” used in the provision can logically refer only to debts as may become payable to Chinabank as a result of a banking transaction.

Lastly, the Court does not agree with Chinabank’s contention that the provision of the 1935 Constitution on foreign ownership of lands must be given a liberal interpretation. The cases of Ong Sui Si Temple vs. The Register of Deeds of Manila and Smith Bell & Co. vs. Register of Deeds of Davao state that the Constitution prohibits transfer of ownership over land to foreign persons/corporations, even for a limited period of time, due to the manifest desire and purpose of the Constitution to place and keep ownership over private lands in the hands of Filipinos in order not to endanger the integrity of the Philippines.

DISPOSITION:WHEREFORE, the resolution appealed from is hereby affirmed, with costs.

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