G.R. No. L-25239 - Calderon vs. Gomez

Plaintiffs – Trinidad Gonzaga de Cabauatan, Lucio Cabauatan, Maria Cabauatan, Constancio Eusebio, Antonio Cabauatan, Primo Cabauatan, Carmen Cabauatan, Evangeuno Nuesa, and Trinidad Cabauatan – sold two parcels of residential land.
Defendants – Uy Hoo, By Siat, Siy Hong, and the Register of Deeds of the City of Manila – were involved in the purchase and subsequent title transfer.

The deed of sale was executed on March 18, 1943, during the Japanese occupation of the Philippines, with the transaction being paid in Japanese war notes.
Consequently, the Register of Deeds of Manila cancelled the former Transfer Certificate of Title No. 63967 and issued a new Transfer Certificate of Title No. 69938 in the name of the defendants.

The Krivenko case (G. R. No. L-630, decided on November 15, 1947) held that the conveyance of residential land to aliens was in direct violation of Section 5, Article XIII of the Constitution.
Following the Krivenko decision, on December 15, 1947, the plaintiffs demanded the restoration of the lands, asserting that the sale was null and void due to its illegality under the Constitution.

Plaintiffs filed an action on January 14, 1948, seeking to annul the alleged void sale.
On January 27, 1948, the defendants moved to dismiss the case on the ground that the complaint lacked sufficient facts to constitute a cause of action.
On February 10, 1948, the Court of First Instance of Manila dismissed the case, noting that in order to preserve agricultural lands and maintain uniformity regarding lands adjudged to foreigners, the action should be held in abeyance until specific legislation was enacted or a government policy established.
A motion for reconsideration filed on March 10, 1948, was denied, prompting the appeal on questions strictly of law.

Although the Krivenko doctrine was invoked by the plaintiffs, the sale occurred when the Constitution of the Philippines was not in force, meaning its provisions did not apply retroactively.
Additionally, during the Japanese occupation, all laws in force prior to the war – including the Civil Code of Spain – were reactivated by the proclamation of the Commander in Chief of the Imperial Japanese Forces on January 3, 1942.
It is an established principle that the law in force at the time of executing the contract governs its interpretation and validity.

Whether the 1943 deed of sale can be declared null and void on the basis of the subsequent constitutional prohibition against conveyance of residential lands to aliens, as established in the Krivenko case.
Whether the plaintiffs may invoke constitutional provisions or the doctrine created in the Krivenko case to recover the land, despite having executed the transaction during a period when different laws were in force.
Whether the principle that "both parties knowing the illegality are barred from recovery" applies to the plaintiffs given their voluntary participation in the transaction.