REGISTER OF DEEDS vs.

CHINABANK (1962)
Petitioner: Register of Deeds of Manila
Respondent: China Banking Corporation
Ponente: J. Dizon
By: 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
Pangilinans 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 cant 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 Chinabanks
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.