FIRST DIVISION

[G.R. No. 149615. August 29, 2006.]

IN RE: PETITION FOR SEPARATION OF PROPERTY

ELENA BUENAVENTURA MULLER , petitioner, vs . HELMUT MULLER ,

respondent.

DECISION

YNARES-SANTIAGO , J : p

This petition for review on certiorari 1 assails the February 26, 2001 Decision 2 of the Court
of Appeals in CA-G.R. CV No. 59321 affirming with modification the August 12, 1996
Decision 3 of the Regional Trial Court of Quezon City, Branch 86 in Civil Case No. Q-94-
21862, which terminated the regime of absolute community of property between
petitioner and respondent, as well as the Resolution 4 dated August 13, 2001 denying the
motion for reconsideration.
The facts are as follows:
Petitioner Elena Buenaventura Muller and respondent Helmut Muller were married in
Hamburg, Germany on September 22, 1989. The couple resided in Germany at a house
owned by respondent's parents but decided to move and reside permanently in the
Philippines in 1992. By this time, respondent had inherited the house in Germany from his
parents which he sold and used the proceeds for the purchase of a parcel of land in
Antipolo, Rizal at the cost of P528,000.00 and the construction of a house amounting to
P2,300,000.00. The Antipolo property was registered in the name of petitioner under
Transfer Certificate of Title No. 219438 5 of the Register of Deeds of Marikina, Metro
Manila.
Due to incompatibilities and respondent's alleged womanizing, drinking, and maltreatment,
the spouses eventually separated. On September 26, 1994, respondent filed a petition 6
for separation of properties before the Regional Trial Court of Quezon City.
On August 12, 1996, the trial court rendered a decision which terminated the regime of
absolute community of property between the petitioner and respondent. It also decreed
the separation of properties between them and ordered the equal partition of personal
properties located within the country, excluding those acquired by gratuitous title during
the marriage. With regard to the Antipolo property, the court held that it was acquired
using paraphernal funds of the respondent. However, it ruled that respondent cannot
recover his funds because the property was purchased in violation of Section 7, Article XII
of the Constitution. Thus —
However, pursuant to Article 92 of the Family Code, properties acquired by
gratuitous title by either spouse during the marriage shall be excluded from the
community property. The real property, therefore, inherited by petitioner in
Germany is excluded from the absolute community of property of the herein
spouses. Necessarily, the proceeds of the sale of said real property as well as the
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 personal properties purchased thereby, belong exclusively to the petitioner.
However, the part of that inheritance used by the petitioner for acquiring the
house and lot in this country cannot be recovered by the petitioner, its acquisition
being a violation of Section 7, Article XII of the Constitution which provides that
"save in cases of hereditary succession, no private lands shall be transferred or
conveyed except to individuals, corporations or associations qualified to acquire
or hold lands of the public domain." The law will leave the parties in the situation
where they are in without prejudice to a voluntary partition by the parties of the
said real property. . . .

xxx xxx xxx

As regards the property covered by Transfer Certificate of Title No. 219438 of the
Registry of Deeds of Marikina, Metro Manila, situated in Antipolo, Rizal and the
improvements thereon, the Court shall not make any pronouncement on
constitutional grounds. 7

Respondent appealed to the Court of Appeals which rendered the assailed decision
modifying the trial court's Decision. It held that respondent merely prayed for
reimbursement for the purchase of the Antipolo property, and not acquisition or transfer of
ownership to him. It also considered petitioner's ownership over the property in trust for
the respondent. As regards the house, the Court of Appeals ruled that there is nothing in
the Constitution which prohibits respondent from acquiring the same. The dispositive
portion of the assailed decision reads:
WHEREFORE, in view of the foregoing, the Decision of the lower court dated
August 12, 1996 is hereby MODIFIED. Respondent Elena Buenaventura Muller is
hereby ordered to REIMBURSE the petitioner the amount of P528,000.00 for the
acquisition of the land and the amount of P2,300,000.00 for the construction of
the house situated in Atnipolo, Rizal, deducting therefrom the amount respondent
spent for the preservation, maintenance and development of the aforesaid real
property including the depreciation cost of the house or in the alternative to SELL
the house and lot in the event respondent does not have the means to reimburse
the petitioner out of her own money and from the proceeds thereof, reimburse the
petitioner of the cost of the land and the house deducting the expenses for its
maintenance and preservation spent by the respondent. Should there be profit, the
same shall be divided in proportion to the equity each has over the property. The
case is REMANDED to the lower court for reception of evidence as to the amount
claimed by the respondents for the preservation and maintenance of the property.
TcEaDS

SO ORDERED. 8

Hence, the instant petition for review raising the following issues:
I

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT THE

RESPONDENT HEREIN IS ENTITLED TO REIMBURSEMENT OF THE AMOUNT
USED TO PURCHASE THE LAND AS WELL AS THE COSTS FOR THE
CONSTRUCTION OF THE HOUSE, FOR IN SO RULING, IT INDIRECTLY ALLOWED
AN ACT DONE WHICH OTHERWISE COULD NOT BE DIRECTLY . . . DONE,
WITHOUT DOING VIOLENCE TO THE CONSTITUTIONAL PROSCRIPTION THAT
AN ALIEN IS PROHIBITED FROM ACQUIRING OWNERSHIP OF REAL PROPERTIES
LOCATED IN THE PHILIPPINES.

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 II

THE COURT OF APPEALS GRAVELY ERRED IN SUSTAINING RESPONDENT'S

CAUSE OF ACTION WHICH IS ACTUALLY A DESPERATE ATTEMPT TO OBTAIN
OWNERSHIP OVER THE LOT IN QUESTION, CLOTHED UNDER THE GUISE OF
CLAIMING REIMBURSEMENT.

Petitioner contends that respondent, being an alien, is disqualified to own private lands in
the Philippines; that respondent was aware of the constitutional prohibition but
circumvented the same; and that respondent's purpose for filing an action for separation
of property is to obtain exclusive possession, control and disposition of the Antipolo
property.
Respondent claims that he is not praying for transfer of ownership of the Antipolo
property but merely reimbursement; that the funds paid by him for the said property were
in consideration of his marriage to petitioner; that the funds were given to petitioner in
trust; and that equity demands that respondent should be reimbursed of his personal
funds.
The issue for resolution is whether respondent is entitled to reimbursement of the funds
used for the acquisition of the Antipolo property.
The petition has merit.
Section 7, Article XII of the 1987 Constitution states:
Save in cases of hereditary succession, no private lands shall be transferred or
conveyed except to individuals, corporations, or associations qualified to acquire
or hold lands of the public domain.

Aliens, whether individuals or corporations, are disqualified from acquiring lands of the
public domain. Hence, they are also disqualified from acquiring private lands. 9 The primary
purpose of the constitutional provision is the conservation of the national patrimony. In the
case of Krivenko v. Register of Deeds, 1 0 the Court held:
Under section 1 of Article XIII of the Constitution, "natural resources, with the
exception of public agricultural land, shall not be alienated," and with respect to
public agricultural lands, their alienation is limited to Filipino citizens. But this
constitutional purpose conserving agricultural resources in the hands of Filipino
citizens may easily be defeated by the Filipino citizens themselves who may
alienate their agricultural lands in favor of aliens. It is partly to prevent this result
that section 5 is included in Article XIII, and it reads as follows:
"Sec. 5. Save in cases of hereditary succession, no private agricultural land
will be transferred or assigned except to individuals, corporations, or associations
qualified to acquire or hold lands of the public domain in the Philippines."
This constitutional provision closes the only remaining avenue through which
agricultural resources may leak into aliens' hands. It would certainly be futile to
prohibit the alienation of public agricultural lands to aliens if, after all, they may
be freely so alienated upon their becoming private agricultural lands in the hands
of Filipino citizens. . . .

xxx xxx xxx

If the term "private agricultural lands" is to be construed as not including
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 residential lots or lands not strictly agricultural, the result would be that "aliens
may freely acquire and possess not only residential lots and houses for
themselves but entire subdivisions, and whole towns and cities," and that "they
may validly buy and hold in their names lands of any area for building homes,
factories, industrial plants, fisheries, hatcheries, schools, health and vacation
resorts, markets, golf courses, playgrounds, airfields, and a host of other uses and
purposes that are not, in appellant's words, strictly agricultural." (Solicitor
General's Brief, p. 6.) That this is obnoxious to the conservative spirit of the
Constitution is beyond question.

Respondent was aware of the constitutional prohibition and expressly admitted his
knowledge thereof to this Court. 1 1 He declared that he had the Antipolo property titled in
the name of petitioner because of the said prohibition. 1 2 His attempt at subsequently
asserting or claiming a right on the said property cannot be sustained.
The Court of Appeals erred in holding that an implied trust was created and resulted by
operation of law in view of petitioner's marriage to respondent. Save for the exception
provided in cases of hereditary succession, respondent's disqualification from owning
lands in the Philippines is absolute. Not even an ownership in trust is allowed. Besides,
where the purchase is made in violation of an existing statute and in evasion of its express
provision, no trust can result in favor of the party who is guilty of the fraud. 1 3 To hold
otherwise would allow circumvention of the constitutional prohibition.

Invoking the principle that a court is not only a court of law but also a court of equity, is
likewise misplaced. It has been held that equity as a rule will follow the law and will not
permit that to be done indirectly which, because of public policy, cannot be done directly.
1 4 He who seeks equity must do equity, and he who comes into equity must come with
clean hands. The latter is a frequently stated maxim which is also expressed in the
principle that he who has done inequity shall not have equity. It signifies that a litigant may
be denied relief by a court of equity on the ground that his conduct has been inequitable,
unfair and dishonest, or fraudulent, or deceitful as to the controversy in issue. 1 5
Thus, in the instant case, respondent cannot seek reimbursement on the ground of equity
where it is clear that he willingly and knowingly bought the property despite the
constitutional prohibition. HATICc

Further, the distinction made between transfer of ownership as opposed to recovery of

funds is a futile exercise on respondent's part. To allow reimbursement would in effect
permit respondent to enjoy the fruits of a property which he is not allowed to own. Thus, it
is likewise proscribed by law. As expressly held in Cheesman v. Intermediate Appellate
Court: 1 6
Finally, the fundamental law prohibits the sale to aliens of residential land.
Section 14, Article XIV of the 1973 Constitution ordains that, "Save in cases of
hereditary succession, no private land shall be transferred or conveyed except to
individuals, corporations, or associations qualified to acquire or hold lands of the
public domain." Petitioner Thomas Cheesman was, of course, charged with
knowledge of this prohibition. Thus, assuming that it was his intention that the lot
in question be purchased by him and his wife, he acquired no right whatever over
the property by virtue of that purchase; and in attempting to acquire a right or
interest in land, vicariously and clandestinely, he knowingly violated the
Constitution; the sale as to him was null and void. In any event, he had and has
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 no capacity or personality to question the subsequent sale of the same property
by his wife on the theory that in so doing he is merely exercising the prerogative
of a husband in respect of conjugal property. To sustain such a theory would
permit indirect controversion of the constitutional prohibition. If the property were
to be declared conjugal, this would accord to the alien husband a not
insubstantial interest and right over 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.
As already observed, the finding that his wife had used her own money to
purchase the property cannot, and will not, at this stage of the proceedings be
reviewed and overturned. But even if it were a fact that said wife had used
conjugal funds to make the acquisition, the considerations just set out
to militate, on high constitutional grounds, against his recovering and
holding the property so acquired, or any part thereof. And whether in
such an event, he may recover from his wife any share of the money
used for the purchase or charge her with unauthorized disposition or
expenditure of conjugal funds is not now inquired into; that would be, in
the premises, a purely academic exercise. (Emphasis added)

WHEREFORE, in view of the foregoing, the instant petition is GRANTED. The Decision dated
February 26, 2001 of the Court of Appeals in CA-G.R. CV No. 59321 ordering petitioner
Elena Buenaventura Muller to reimburse respondent Helmut Muller the amount of
P528,000 for the acquisition of the land and the amount of P2,300,000 for the
construction of the house in Antipolo City, and the Resolution dated August 13, 2001
denying reconsideration thereof, are REVERSED and SET ASIDE. The August 12, 1996
Decision of the Regional Trial Court of Quezon City, Branch 86 in Civil Case No. Q-94-21862
terminating the regime of absolute community between the petitioner and respondent,
decreeing a separation of property between them and ordering the partition of the
personal properties located in the Philippines equally, is REINSTATED.
SO ORDERED.
Panganiban, C.J., Austria-Martinez, Callejo, Sr. and Chico-Nazario, JJ., concur.
Footnotes

1. Rollo, pp. 31-50.

2. Id. at 8-13. Penned by Associate Justice Juan Q. Enriquez, Jr. and concurred in by
Associate Justices Ruben T. Reyes and Presbitero J. Velasco, Jr. (who is now a Member
of this Court).

3. Id. at 98-101. Penned by Judge Teodoro A. Bay.

4. Id. at 22.
5. Id. at 58.
6. Id. at 52-57.
7. Id. at 100-101.
8. Id. at 12.
9. Ong Ching Po v. Court of Appeals, G.R. Nos. 113472-73, December 20, 1994, 239 SCRA
341, 346.
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 10. 79 Phil. 461, 473, 476 (1947).

11. Rollo, p. 114.

12. TSN, April 18, 1995, p. 12.
13. Morales v. Court of Appeals, G.R. No. 117228, June 19, 1997, 274 SCRA 282, 299.
14. Frenzel v. Catito, 453 Phil. 885, 905 (2003).
15. University of the Philippines v. Catungal, Jr., 338 Phil. 728, 743-744 (1997).
16. G.R. No. 74833, January 21, 1991, 193 SCRA 93, 103-104.

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