G.R. No. L-17587 - Philippine Banking Corp. vs. Lui She

Justina Santos y Canon Faustino and her sister Lorenza co-owned a 2,582.30 m² lot in Manila, fronting Rizal Avenue, with rear and side entrances on Florentino Torres and Katubusan streets; it contained two residences and the Hen Wah Restaurant.
Sister Lorenza died on September 22, 1957, intestate and without heirs, leaving Justina sole owner; then 90 years old, blind, crippled and invalid, she lived with 17 dogs and 8 maids.

Wong, a long-time lessee paying ₱2,620 monthly, handled Justina’s deposits (including rentals from other properties), household expenses, taxes, legal fees, funeral and security costs.
In gratitude, Justina on November 15, 1957 executed a 50-year lease (Plff Exh. 3) of 1,124 m² at ₱3,120 monthly, subject to a lessee’s unilateral withdrawal clause; on November 25 amended (Plff Exh. 4) to cover the entire lot at an additional ₱360 monthly.

December 21, 1957: conditional option to buy at ₱120,000, payable over 10 years (₱1,000 monthly), conditioned on Wong’s Philippine citizenship, with additional care-allowance for dogs and maids (Plff Exh. 7).
October 28 – November 18, 1958: attempted adoption (abandoned); two Tagalog contracts extending lease to 99 years (Plff Exh. 5) and fixing the option term at 50 years (Plff Exh. 6).
August 24 & 29, 1959: wills upholding contracts; November 4, 1959: codicil directing annulment for alleged fraud and undue influence.

November 18, 1959: plaintiff sought annulment of all contracts, cancellation of registration, and recovery of additional rent (alleged reasonable rent ₱6,240); Wong counterclaimed ₱9,210.49 for advances.
June 9, 1960: amended complaint added claims for delivery of sums from November 1957 to August 1959 (totaling ₱70,007.19) and accounting of rentals.
Juvenile Court guardianship: Security Bank & Trust Co. for property; Ephraim G. Gochangco for person.
Lower Court (1959): declared contracts Plff Exhs. 4–7 void; upheld Nov 15 lease; condemned Wong to pay ₱55,554.25 plus rent of ₱3,120 monthly from November 15, 1959; costs against defendant.

Both original parties died (Wong Oct 21, 1962; Justina Dec 28, 1964).
Substitutions: Philippine Banking Corporation for Justina’s estate; Lui She (Wong’s widow) for Wong.
On appeal, plaintiff reasserted annulment grounds as to lease and other contracts; Wong maintained validity and sought recovery of trust deposits.

Does the withdrawal clause (resolutory condition) offend Civil Code art. 1308 (mutuality)?
Was the lease invalid because (a) part of the land was in custodia legis, (b) breach of fiduciary duty, (c) undue influence or fraud, or (d) simulation?

Were amendments, options and extensions void for want of consideration or because they clandestinely transferred ownership to an alien, thus violating the constitutional ban on alien landholding?
Should the doctrine of pari delicto bar recovery?

Are plaintiff’s claims for sums delivered (₱70,007.19) and excess rentals recoverable?
Is Wong entitled to ₱9,210.49 under his counterclaim for household expense deficits?