FACTS:

In March 1936, a Chinese citizen named Lee Liong purchased Lot No. 398 located in Roxas City. Lee Liong died intestate in February 1944, leaving behind his widow Ang Chia and his sons Lee Bing Hoo and Lee Bun Ting. Subsequently, the surviving heirs partitioned Lot No. 398 among themselves through extrajudicial settlement.

In a previous case in 1956, it was ruled that the sale of Lot No. 398 violated the constitutional prohibition on land sale to aliens, but cannot be nullified under the doctrine of in pari delicto. Another case in 1967 dismissed a complaint to recover Lot No. 398, citing the doctrine of res judicata.

In September 1993, the wives of Lee Bing Hoo and Lee Bun Ting filed a petition for the reconstitution of title due to the loss of records during the war. The court later declared the order of reconstitution as void.

On January 26, 1995, the Republic of the Philippines filed a complaint for reversion of title against the wives of Lee Bing Hoo and Lee Bun Ting and the Register of Deeds of Roxas City. The complaint sought to nullify the sale of Lot No. 398 and revert it to the public domain.

The wives raised affirmative defenses, arguing that they acquired the land through succession as they were Filipino citizens.

The trial court ruled in favor of reversion, stating that the private respondents did not have a valid title due to the nullity of the sale to Lee Liong and that prescription does not apply to actions for reversion or reconveyance of land to the State.

The Court of Appeals agreed that the State is not barred by prescription but reversed the trial court's decision, recognizing the subsequent transfer to the private respondents as valid and upholding their ownership of Lot No. 398.

ISSUES:

1. Whether the sale of Lot No. 398 to Lee Liong was null and void for violating the constitutional prohibition on the sale of land to an alien.

2. Whether private respondents, as successors, acquired a valid title to Lot No. 398.

RULING:

1. The trial court ordered the reversion of Lot No. 398 to the State, holding that the sale of the lot to Lee Liong was null and void for violating the constitutional prohibition on the sale of land to an alien. The Court of Appeals agreed that the sale was invalid, but held that the subsequent transfer of Lot No. 398 to the private respondents through succession cured the defect. Thus, the Court of Appeals ruled that the transfer to private respondents, who are Filipino citizens qualified to acquire lands, can no longer be impugned based on the invalidity of the initial transfer.

PRINCIPLES:

• The doctrine of in pari delicto bars parties who are equally guilty of a legal transgression from recovering the title to the property (Dinglasan v. Lee Bun Ting).

• The doctrine of res judicata applies when the same parties or their privies, with respect to the same subject matter, have litigated the same issues and a judgment has been rendered on the merits (Lee Bun Ting v. Judge Aligaen).

• Prescription cannot be invoked against the State in actions for reversion or reconveyance of land to the State.

• The transfer of property to a Filipino citizen, even if the initial transfer was invalid, can cure the defect and render the subsequent title valid. The objective of the constitutional prohibition on alien ownership of lands is to keep lands in Filipino hands.