SMITH, BELL & CO V REGISTER OF DEEDS (3) Executors and administrators, the property of the estate under administration;
OCT 27 1954 I PABLO, M (4) Public officers and employees, the property of the State or of any subdivision thereof, or of any
FACTS
SMITH, BELL & CO is a foreign corporation organized under the laws of the PH, with
offices in MANILA
JUN 9 1953 ATLANTIC GULF & PACIFIC CO of Manila, a corporation organized under
the laws of West Virginia, USA licensed to negotiate in the PH, leased to SMITH, BELL &
CO a lot.
"2. That the term of this lease shall be twenty-five years from the date hereof, subject to
renewal or extension for another twenty five years, under such terms and conditions
as the parties hereto may thereupon mutually agree. For the purposes of such renewal or
extension, the LESSEE shall so convey in uniting to the LESSOR at least ninety days
before the expiration of the lease."
JUL 13 SMITH, BELL & CO, through its lawyer, presented the lease deed for registration
to the Registrar of Davao, which expressed doubts about the origin of the registration,
taking into account Circular No 139 of the General Land Registration Office raised the
matter with COFI-MANILA
Lawyer went to the GENERAL LAND REGISTRATION OFFICE, whose head MR.
ATLAVAS issued the following opinion:
"With reference to your letter of the 13th instant, inquiring as to whether or not the
Register of Deeds of Davao was justified in refusing the registration of the lease
agreement over a parcel of land executed by Atlantic, Gulf & Pacific Co. (American
owned) in favor of your client, Smith, Bell & Co., Ltd., an alien corporation, for a
period of 25 years with option to renew for another 25 years, I have the honor to
quote hereunder the dispositive portion of the resolution of the Court of First Instance
of Manila, 4th Branch, to Consulta No. 136 of the Register of Deeds of Camarines
Sur, as follows:
'After a careful study of the facts stated in the above-mentioned transcribed consulta,
the undersigned is of the opinion that, until otherwise fixed by a superior
authority, twenty-five years is a reasonable period of duration for the lease of a
private agricultural land in favor of an alien qualified to acquire and hold such
right, which has been recognized by the Supreme Court in its decision in the case of
Krivenko vs. The Register of Deeds of Manila.'
"In view thereof, the Register of Deeds of Davao, was justified in refusing the
registration of the aforesaid lease as it is in contravention of the said
resolution of the Court which has been circularized to all Register of Deeds. in
our Circular No. 139 dated May 6, 1952."
Circular issued by Secretary of Justice: since it is owned by aliens which is
prescribed, the test in determining the reasonableness of the period should be
whether the lease in effect amounts to a conferment of dominion on the lessee "so
that the period of the lease should not be" such a duration as to vest in the
lessee the possession and enjoyment of land with the permanency which
propriorship ordinarily gives
SMITH, BELL & CO requests an injunction against Register of Deeds of Davao to register
the lease granted to her by ATLANTIC GULF & PACIFICO CO of MANILA
RULING:
ART. 1646. The persons disqualified to buy referred to in articles 1490 and 1491, are also disqualified
to become lessees of the things mentioned therein. ART. 1490. The husband and the wife cannot sell
property to each other, except:
(1) When a separation of property was agreed upon in1 the marriage settlements; or
(2) When there has been a judicial separation of property (in accordance with the provisions of
Chapter VI, Title III, of this book) under article 191.
ART. 1491. The following persons cannot acquire by purchase, even at a public or judicial auction,
either in person or through the mediation of another:
(1) The guardian OR PROTUTOR, the property of the person or persons who may be under his
guardianship;
(2) Agents, the property whose administration or sale may have been intrusted to them, unless the
consent of the principal has been given;
government owned or controlled corporation, or of public institution, the administration of which
has been intrusted to them; this provision shall apply to judges and government experts who, in
any manner whatsoever, take part in the sale;
(5) Justices, judges, prosecuting attorneys, clerks of superior and inferior courts, and other officers
(of such courts) and employees connected with the administration of justice, the property and
rights in litigation or levied upon an execution before the court within whose jurisdiction or
territory they exercise their respective functions; this prohibition includes the act of acquiring by
assignment and shall apply to lawyers, with respect to the property and rights which may be the
object of any litigation in which they may take part by virtue of their profession.
ACTIONS BETWEEN CO-HIERS CONCERNING THE HEREDITARY PROPERTY, ASSIGNMENT IN
PAYMENT OF DEBTS, OR TO SECURE THE PROPERTY OF SUCH PERSONS, SHALL BE
EXCLUDED FROM THIS RULE.
(6) Any others specially disqualified by law
Prohibition of the 5 cases of ART 1491 CC is based on principles of morality.
Does Art 1491 (6) refer to all persons and all goods in general, or only to certain persons
who have a trustee relationship wit the goods whose acquisition by purchase is prohibited?
COURT: It does not refer to all persons in general, national or foreign, but only those
people who, because of the special relationships they have with the goods, should
not be allowed to buy them.
Article 1646 CC says that the people disqualified to buy in accordance with
articles 1490 and 1491 CC are also unable to obtain in lease the things
mentioned there
RATIO FOR ART 1646 CC: The domain is transmitted in the one and in the other the
enjoyment or use of the thing.
The tenant apparently has the same rights as the owner; but between one and the
other there is a very important, substantial difference in domain. The landlord
does not have the possession of the thing, but retains the property, the
domino; the tenant enjoys the use of the property only: he does not exercise
the Sunday right.
The foreigner who buys a land becomes the owner, exercises dominion over it;
but the one who obtains lease does not obtain more than the possession or use
of the land; there is no danger that a tenant will become the owner of the land; the
domain is kept by the landlord. A lease for fifty years does not grant permanent
possession that endangers the security of the territory; the possession only has the
duration stipulated by means of the contract.
BASIS FOR CONSTITUTIONAL PROHIBITION OF SALE TO FOREIGNERS: Need to
preserve the dominion over the national patrimony so as not to endanger the integrity of
the nation.
Prohibiting the leasing of real estate in the Philippines by foreigners is to prevent their
owners from receiving the corresponding benefit. If the leasing of property to
foreigners was prohibited, many would be vacant. It is not difficult to calculate the
damage that would be caused by such a prohibition.
ART 1 TITLE XIII CONSTI - All the agricultural lands, loggers and miners of the
public domain, waters, minerals, coal, oil and other mineral oils, all sources of
potential energy and any other natural resources of the Philippines belong to the
State, exploitation, development or exploitation shall be limited to Filipino citizens or
to corporations or associations of which at least sixty percent shall be the owners of
such citizens, subject to any right, privilege, lease or concession that may exist with
respect to such natural resources on the date of the inauguration of the Government
 established under this Constitution Except for agricultural lands in the public domain,
natural resources shall not be disposed of, and no license shall be granted, lease for
exploitation , development or use of any natural resources, for a period of more
than twenty-five years, renewable for another twenty-five years, except for the use
of waters for purposes. irrigation, supply, or for fisheries or other industrial uses,
other than energy production, for which profitable use may be the measure and the
limit of the concession. "
If the Constitution does not prohibit the leasing of public lands to foreign citizens, why
is Congress going to prohibit them, by means of the new Civil Code, from leasing
property from private property?

Article 193 of Law No. 2711 and article 57 of the Land Registration Law provide that it is
the duty of the Registrar of Securities to register all deeds relating to land registered when
the law requires or permits its registration, The obligation of the Registrar of titles to
register a lease is ministerial.

ART 1643 CC No lease for more than 99 years shall be valid.

The contract, whose registration is the subject of litigation today only lasts 25 years,
extendable in another 25: does not reach 99 years. Therefore, it is in accordance
with the law, it is valid, only the lease is null for more than 99 years.

WHEREFORE, Register of Deeds of Davao is ordered to register the lease granted by

Atlantic Gulf & Pacific Co in favor of Smith, Bell & Co