G.R. No.

71285 November 5, 1987

REPUBLIC OF THE PHILIPPINES, petitioner,
vs.
THE INTERMEDIATE APPELLATE COURT, ESTEBAN MENDOZA and LEON
PASAHOL, respondents.

GUTIERREZ, JR., J.:

This petition for review by way of certiorari questions the decision of the then
Intermediate Appellate Court which affirmed the decision of the then Court of First
Instance of Bataan granting the private respondents' petition to reopen the cadastral
registration proceeding of the lot in dispute and ordering its registration in the names
of the respondents.
The facts are undisputed. As found by the appellate court, they are as follows:
On December 18, 1968, a petition was filed by Esteban Mendoza and Leon Pasahol
with the then Court of First Instance of Bataan, Branch I, alleging ownership of the
land in question (Lot 444) by purchase from its original owners (Annex "A") and
thereafter, actual, continuous, public and adverse possession by them tacked on to
their predecessors-in-interest for a period exceeding 30 years.
Petitioners' predecessors-in-interest failed to answer in the cadastral court for lack of
knowledge of the existence of an ongoing cadastral proceeding because of which Lot
No. 444 was declared public land. Notwithstanding, admittedly it has not been
alienated, reserved, leased or otherwise disposed of by the government. Basic
petition reopens cadastral proceedings insofar as this lot is concerned and prays for
issuance of a decree/title in petitioners' name.
Traversing the foregoing, Solicitor General opposed denying adequate basis for grant
of prayer; that neither documentary evidence nor nature of possession would warrant;
that lot 444 is of public domain.
Evidence of ownership and possession show petitioner Esteban Mendoza and his copetitioner, his brother-in-law Leon Pasahol, bought Lot 444 from the heirs of Maria
Nunez and Feliciano Ignacio on December 1, 1957 as shown by a deed of sale
(Exhibit "A"); that after acquiring the land, they planted it to various fruit-bearing trees;
that from December 1, 1957, petitioners had possessed the land peacefully, openly
and continuously under claim of ownership, as had their predecessors-in-interest
before them; that before the purchase of the land, it had been declared for taxation
purposes in the name of Maria Nunez since 1932 (Exhibit "E"); that in 1962, he and
Leon Pasahol had agreed that the property was to be declared for taxation in
Pasahol's name only (Exhibit "F"); that petitioners were informed before the sale by
their vendors that the latter did not claim the land in the cadastral proceedings Rec.
No. 1097, Cad. Case No. 19 because they were "totally ignorant" of said

proceedings, not having been notified of the same; and that the land subject of the
petition was not covered by any government or forest reservation.
Mendoza's testimony was corroborated by witnesses Arsenio Amante, Eliseo Reyes
(one of the vendors), and Cresencio Abuzman.
Petitioners likewise presented other documentary evidence namely:
Exhibit "B" Certification of the Land Registration Commission
dated December 23, 1968 that the lot in question had been declared
public land.
Exhibit "C" Plan of Lot 444 of the Mariveles Cadastre prepared by
Geodetic Engineer Victor Clamor, Jr. and certified by Carlos G.
Reyes, Chief of the Surveys Division of the Bureau of Lands.
Exhibit "D" Technical description of Lot 444 certified as correct by
the Surveys Division Chief acting for the Director of Lands.
Exhibit "G" Certification dated December 10, 1968 by the
Municipal Treasurer of Mariveles, Bataan that payment of land taxes
for Lot 444 was up to date.
Exhibit "H" Certification by the Acting District Land Officer dated
April 15, 1969 that the land had been cadastrally surveyed for the
heirs of Feliciano Iglesia, predecessors- in-interest of the petitioners.
Exhibit "J" Report of the District Forester, Bureau of Forestry,
Balanga, Bataan recommending approval of the petition considering
that the land being applied for was not needed for forestry purposes.
On the part of the State, the Solicitor General did not present evidence of any kind
but relied only on the petitioners' own evidence.
Initially, the court a quo denied registration observing, that Exhibit "C", the plan of the
property sought to be registered, "does not appear to have been approved by the
Director of Lands." Furthermore, although Esteban Mendoza and Leon Pasahol were
the petitioners in the case, the latter had not appeared "to corroborate the oral
testimony of Mendoza that Pasahol has agreed with him to have the land declared for
taxation purposes only in the latter's name."
On motion for reconsideration, the court a quo reconsidered and ordered a new
hearing on the petition.
In the new trial, the previous deficiencies were rectified by the petitioners. Leon
Pasahol took the witness stand to corroborate Esteban Mendoza's testimony; Exhibit
"C" was presented anew in evidence, this time with the required approval of the
Director of Lands. As a consequence, the court a quo granted the petition for
registration of Lot 444. (pp. 1-3, Decision-Intermediate Appellate Court)

On appeal, the Intermediate Appellate Court affirmed the trial court's decision and
held:
In this appeal, the Solicitor General contests, alleging Exhibit "A" shows that
petitioners' possession began only in 1957, they could not tack their possession to
their predecessors-in-interest because of the failure of the latter to lay claim to the
property in question either during the cadastral survey of the area in 1927 or in the
original cadastral proceedings held thereafter.
We do not agree.
Record shows Feliciano Iglesia, original owner of the property, died before herein
cadastral proceedings were instituted. His heirs who succeeded to his rights over the
land lived in a remote part thereof and only infrequently visited the provincial capital
where the courts were located. Under these circumstances, it is quite credible
petitioners'predecessors-in-interest did not receive any notice of the cadastral
proceedings, Moreover, there is nothing in the record to show that either the
petitioners' possession or that of their predecessors was ever disrupted or interrupted
by third-parties, much less by the government. Petitioners after the sale had
zealously cultivated the property and religiously paid the taxes thereon for a good
number of years. We find possession of the land by both parties was in good faith and
that petitioners herein should not, as a consequence, be held strictly accountable for
the lapse of their predecessors to file a cadastral yo to the property. Petitioners may
tack their period of possession with that of their vendors totalling to more than thirty
years.
The Solicitor General points out, however, that under Section 1 of Republic Act 391,
as amended by Republic Act 2061, reopening cadastral proceedings is allowable
"only with respect to such of said parcels of land as have not been alienated,
reserved, leased, granted, or otherwise provisionally or permanently disposed of by
the Government." Applying said provision to the lot in question, it is claimed that
registration is not possible as said land is actually already forest land and/or part of a
military reservation. In support of this contention, the Solicitor General cites the
Report of Forest Guard Crescensio Abuzman to the District Forester (Exhibit "J")
which states that "the area involved is a portion of former Military Reservation (US)
turned over to Philippine government." Hence, not disposable under any
circumstances.
We disagree.
The land may have been a military reservation in the past, but no longer. The same
report Exhibit "J" relied upon by the Solicitor General goes on to state that this
"former Military Reservation" had already been "delimited and classified by our
bureau (Forestry) as alienable and disposable block under the Proposed Land
Classification Project No. 4-C of Mariveles, Bataan." Additionally, the Report in fact
recommended the titling of the property in the petitioners' name as the same was no
longer needed for forestry purposes and the government would not be adversely
affected.
Contributing to the view as to the disposable character of the land is the approval by
the Director of Lands himself of Exhibit "C", the plan of the land to be registered.

Such approval would hardly be forthcoming were the property really non-disposable
as claimed by the State.
Finally, We note from the record as well that all the other adjoining lots (Nos. 443,
447, 446, 438, etc.) were already registered and titled in the names of private
individuals, a circumstance hard to reconcile with the position of the Solicitor General
that registration of the area was simply not possible. (pp. 4-6, Decision-Intermediate
Appellate Court).

In this instant petition, the petitioner challenges the decision of the appellate court as
being contrary to law on the ground that it held that the subject land is agricultural
and alienable land of the public domain and that the same can be subject to
acquisitive prescription of thirty (30) years of open, continuous and uninterrupted
possession under a bona fide claim of ownership by the private respondents as to
entitle them to registration and title over the land.
The petitioner maintains that Exhibit "J" which is the report of the District Forester
recommending approval of the private respondents' petition is a mere proposal
contained in the Proposed Land Classification Project No. 4 of Mariveles, Bataan,
which has not yet been approved by the President of the Philippines; and that unless
the President upon the recommendation of the Minister (Secretary) of Natural
Resources, reclassifies and declares a particular land as agricultural or disposable,
its status as military reservation or forest land remains unaltered and no amount of
physical occupation and cultivation thereof can change it to agricultural land and
bring it within the provisions of the Public Land Act. Therefore, it was error on the
part of the appellate court to rule that the land in dispute has been in the open,
continuous and uninterrupted possession of the private respondents for more than
thirty years as to entitle them to register the same and procure a title thereto
because possession of an inalienable land, however long, cannot ripen into private
ownership.
On the other hand, the private respondents argue that even though Exhibit "J" was a
mere proposal, such proposal had been honored and implemented when the land in
dispute had been recommended for titling in their favor. Furthermore, the
recommendation for such titling was made by the same office or branch of the
government authorized and empowered to classify and dispose of the property.
Moreover, the subject property has no more use for any government purpose and for
which reason, the Bureau did not object but instead recommended that it be titled in
favor of the private respondents. In fact, the Director of Lands himself approved the
plan Exhibit "C" covering the land sought to be registered.
We find merit in the instant petition.
While it may be true that as ruled by the appellate court, the private respondents
could tack their possession of the land to that of their predecessors-in-interest as a
result of which they now have more than thirty (30) years' possession of the same,

the fact remains that the subject land has not yet been released from its
classification as part of the military reservation zone and still has to be reclassified as
alienable public land with the approval of the President of the Philippines as required
by the Public Land Act (Commonwealth Act No. 141) and Republic Act No. 1275. As
we have ruled in Republic v. Court of Appeals (148 SCRA 480, 489):
Thus, even if the reopening of the cadastral proceedings was at all possible, private
respondents have not qualified for a grant under Sec- 48(b) of Commonwealth Act
141, the facts being that private respondents could only be credited with 1 year, 9
months and 20 days possession and occupation of the lots involved, counted from
July 6, 1965, the date when the land area in sitio San Jose, barrio Cabraban
Mariveles, Bataan, known as Bataan PMD No. 267, which includes the lots claimed
by respondents, had been segregated from the forest zone and released by the
Bureau of Forestry as an agricultural land for disposition under the Public Land Act
(Record on Appeal, p. 19). Consequently, under the above mentioned jurisprudence,
neither private respondents nor their predecessors-in-interest could have possessed
the lots for the requisite period of thirty (30) years as disposable agricultural land.
(Emphasis supplied).

We, therefore, cannot sustain the appellate court's ruling that the land in dispute is
no longer part of the military reservation on the basis of a mere proposal to classify
the same as alienable and disposable land of the public domain. A proposal cannot
take the place of a formal act declaring forest land released for disposition as public
agricultural land. To sustain the appellate ruling would be to pre-empt the executive
branch of the government from exercising its prerogative in classifying lands of the
public domain. We ruled in the case of Director of Lands v. Court of Appeals, (129
SCRA 689, 692-693) that:
In effect, what the Court a quo has done is to release the subject property from the
unclassified category, which is beyond their competence and jurisdiction. The
classification of public lands is an exclusive prerogative of the Executive Department
of the Government and not of the Courts. In the absence of such classification, the
land remains as unclassified land until it is released therefrom and rendered open to
disposition (Sec. 8, Commonwealth Act No. 141, as amended: Yngson v. Secretary of
Agriculture and Natural Resources, 123 SCRA 441 [1983]; Republic v. Court of
Appeals, 99 SCRA 742 [1980]. This should be so under time-honored Constitutional
precepts. This is also in consonance with the Regalian doctrine that all lands of the
public domain belong to the State (Secs. 8 & 10, Art. XIV, 1973 Constitution), and that
the State is the source of any asserted right to ownership in land and charged with
the conservation of such patrimony (Republic v. Court of Appeals, 89 SCRA 648
[1979])
The recommendation of the District Forester for release of subject property from the
unclassified region is not the ultimate word on the matter. And the fact that BF Map
LC No. 637 dated March 1, 1927 showing subject property to be within the
unclassified region was not presented in evidence will not operate against the State
considering the stipulation between the parties and under the well-settled rule that the
State Cannot be estopped by the omission, mistake or error of its officials or agents.
(Republic v. Court of Appeals, 89 SCRA 648 [1979]) if omission there was, in fact.

While it may be that the Municipality of Obando has been cadastrally surveyed in
1961, it does not follow that all lands comprised therein are automatically released as
alienable. A survey made in a cadastral proceeding merely Identifies each lot
preparatory to a judicial proceeding for adjudication of title to any of the lands upon
claim of interested parties. Besides, if land is within the jurisdiction of the Bureau of
Forest Development, it would be beyond the jurisdiction of the Cadastral Court to
register it under the Torrens System.
Since the subject property is still unclassified, whatever possession Applicant may
have had, and, however long, cannot ripen into private ownership.

We are not unmindful, however of the plight of the private respondents who have in
good faith possessed and occupied the disputed land for more than (30) years. If
what is needed is only the formal release of the property from its classification as a
military reservation and its reclassification to disposable agricultural land, the
petitioner should, for equitable reasons, take the necessary steps towards the
declassification of the same. As we have held in the same case of Director of Lands
v. Court of Appeals (supra):
The conversion of subject property into a fishpond by Applicants, or the alleged titling
of properties around it, does not automatically render the property as alienable and
disposable. Applicants' remedy lies in the release of the property from its present
classification. In fairness to Applicants, and it appearing that there are titled lands
around the subject property, petitioners-officials should give serious consideration to
the matter of classification of the land in question.

The attempts of humble people to have disposable lands they have been tilling for
generations titled in their names should not only be viewed with an understanding
attitude but should, as a matter of policy be encouraged. (Director of Lands v.
Funtillar 142 SCRA 57, 69). Apart from strongly opposing an obviously improper
method of securing title to public land, the Solicitor General should also take positive
steps to help the private respondents remedy the situation in which they find
themselves.
WHEREFORE, the petition is GRANTED and the decision of the respondent
appellate court is ANNULLED and SET ASIDE. The application for cadastral
registration of title of the private respondents is hereby DISMISSED, without
prejudice to their recourse to the proper administrative remedy.
SO ORDERED.
Fernan (Chairman), Bidin and Cortes, JJ., concur.
Feliciano, J., is on leave.

G.R. No. 141325

July 31, 2006

PELBEL MANUFACTURING CORPORATION, Substituted by Pelagia Beltran, and

Virginia Malolos, petitioners,
vs.
HON. COURT OF APPEALS, and THE REPUBLIC OF THE PHILIPPINES,
respondents.
x-------------------------------x
G.R. No. 141174

July 31, 2006

ALADDIN F. TRINIDAD and AQUILINA C. BONZON, petitioners,

vs.
REPUBLIC OF THE PHILIPPINES (LAGUNA LAKE DEVELOPMENT
AUTHORITY), respondent.
DECISION
PUNO, J.:
Before us are the consolidated cases of "Pelbel Manufacturing Corporation, Substituted by
Pelagia Beltran, and Virginia Malolos v. Court of Appeals and the Republic of the
Philippines" and "Aladdin F. Trinidad and Aquilina C. Bonzon v. Republic of the Philippines
(Laguna Lake Development Authority)," appealing the Court of Appeals' November 14, 1997
Decision1 in CA-G.R. CV No. 23592 and December 22, 1999 Resolution,2 which reversed the
Regional Trial Court's (RTC's) Decision3 dated September 12, 1988 in Land Registration
Case No. 243-A. The RTC granted the application of petitioners Pelagia Beltran, Aladdin F.
Trinidad and Virginia Malolos to have the parcels of land situated in San Juan, Taytay, Rizal,
and indicated in Psu-240345 to be registered in their names.
The facts, narrated by the Court of Appeals, are as follows:
The original applicants for registration are Pelbel Manufacturing Corporation, Aladdin
Trinidad and Virginia Malolos. The lots sought to be registered are two parcels of land
covered by Plan Psu-240345, the first parcel having an area of 28,181 square meters,
more or less and the second parcel having an area of 2,070 square meters, more or
less. Both parcels of land are situated [in] San Juan, Taytay, Rizal.
The case was set for initial hearing on April 1, 1985 and after fulfillment by the
applicants of the jurisdictional requirements of notice, posting and publication, initial
hearing took place as scheduled. There being no formal opposition on record, an
Order of general default was issued and Applicants were allowed to present evidence
ex-parte before the Acting Clerk of Court who was commissioned to receive evidence.

Earlier on March 28, 1985 however, the Laguna Lake Development Authority filed a
Manifestation (Record, pp. 30-31) stating that, as per projections of the subject lots in
the topographic map prepared by the Bureau of Coast and Geodetic Survey using
technical description of the lots approved by the Bureau of Lands, subject lots are
situated below the elevation of 12.50 meters, thus forming part of the bed of the
Laguna Lake in accordance with Sec. 41 (paragraph 11) of Republic Act No. 4850 as
amended by P.D. No. 813.
On April 22, 1985, the Office of the Solicitor General filed its Opposition (Record, p.
40) alleging that neither the applicants nor their predecessors-in-interest have been in
open, continuous, exclusive and notorious possession and occupation of the land since
June 12, 1945 or prior thereto; that the applicants' claim of ownership in fee simple on
the basis of Spanish Title or grant can no longer be availed of for failure to file the
appropriate application for registration within six (6) months from February 16, 1976
as required by P.D. No. 892; and that applicant Pelbel Manufacturing Corporation is
disqualified, being a private corporation, to hold lands of the public domain except by
lease pursuant to Section 11, Article XIV of the 1973 Constitution.
On May 3, 1985, a Motion For Substitution of Party Applicant was filed by Pelbel to
substitute Pelagia P. Beltran in its place as applicant with respect to 17,500 square
meters of the lot applied for, which Motion was granted by the lower court (Record, p.
48).
On May 4, 1985, the lower court rendered the assailed Decision (Record, p. 49)
adjudicating the parcels of land applied for in favor of the following: Pelagia Beltran
17,500 square meters; Aladdin Trinidad 2,500 square meters; Virginia Malolos
10,251 square meters (Appellant's Brief, p. 3; Rollo, p. 260), based on the following
findings:
The aforecited established facts support the application for registration of the
two parcels of land subject of the present application. The applicants have
satisfactorily proven their peaceful, continuous, and public possession of the
said parcels of land for over a period of thirty years and no person or persons
had/have disturbed their possession thereof nor interposed any formal
opposition to the instant application. The subject parcels of land being within
the disposable portion of the public domain, the applicants are therefore
entitled to the registration of their titles to the parcels of land subject of this
case. The Provincial Engineer of Rizal attested to the effect that the subject
property will not be affected by any government highway as shown in the
clearance marked as Exh.[s] H and H-1 of the applicant corporation.
WHEREFORE, premises considered, this court confirms and declares the
applicants as the true and absolute owners of the parcels of land subject of this
application, situated [in] San Juan, Taytay, Rizal and let therefore an order be

as it is hereby ordered issued for the registration of the titles to the subject land
in the following proportions in favor and in the names of:
a) 17,500 square meters unto Pelagia Beltran, 60 years old, married to
Geronimo Beltran, Filipino citizen, and a resident of Gen. Segundo St.,
Pasig, Metro Manila;
b) 2,500 square meters unto Aladdin F. Trinidad, 54 years old, married
to Perfecta Trinidad, Filipino citizen, and residing at Valle Verde,
Pasig, Metro Manila; and
c) 10,251 square meters unto Virginia Malolos, 50 years old, married
to Eliseo Malolos, Filipino [c]itizen[,] and residing [on] Macopa St.,
Quezon City.
as pro-indiviso owners in fee simple of the parcels of land indicated in Psu1445109 (Exh. G), particularly described in the corresponding technical
description (Exh[s]. G-1 and G-2) upon payment of the required fees therefor.
(Record, pp. 56-57)
A Motion to Amend Order of General Default and Set Aside Decision dated May 4,
1985 (Record, pp. 64-[6]7) was filed by Laguna Lake Development Authority on the
ground that LLDA had already established by preliminary investigations that the lots
are below elevation of 12.50 meters, hence are of public dominion. On June 26,
1985[,] the lower court directed the Office of the Solicitor General to file comment on
the motion.
On August 29, 1985, applicant Aladdin F. Trinidad, in his Motion to Segregate the
land applied for by him from Plan PSU-[240345] stated that the LLDA's position was
untenable based on Supreme Court decisions in Republic of the Philippines vs. Court
of Appeals and Santos del Rio, 131 SCRA 532 and Bautista vs. Court of Appeals and
Santos del Rio, 131 SCRA 532 which held that parts around Laguna de Bay which
become covered with water four to five months a year, not due to tidal action, but due
to rains cannot be considered a part of the bed or basin of Laguna de Bay nor as a
foreshore land. LLDA filed an Opposition stating that in the aforementioned cases the
Supreme Court failed to apply Sec. 41 (paragraph 11) of R.A. 4850 as amended by
P.D. 813 in resolving the issue of whether or not subject lots are public land.
Paragraph 11 of R.A. 4850 as amended states:
(11) Laguna Lake or Lake. Whenever Laguna Lake or lake is used in this Act,
the same shall refer to Laguna de Bay which is that area covered by the lake
water when it is at the average annual maximum lake level of elevation 12.50
meters, as referred to a datum 10.00 meters below mean lower low water

(m.L.L.W.). Lands located at and below such elevation are public lands which
form part of the bed of said lake. (Underlining supplied.)
In his Rejoinder, [Aladdin] Trinidad contended that the enactment of R.A. No. 4850 in
1966 did not retroact to make the subject lots public.
On September 17, 1985, the OSG filed its Comment supporting the LLDA's position
that lakes and their beds such as the lots sought to be registered are, under Article 502,
par. 4 of the [N]ew Civil Code, considered public domain. Invoking Article XV,
Section II of the 1972 Constitution, the OSG further argued that applicant Pelbel,
being a corporation, is disqualified from acquiring lands of the public domain and that
applicants are not entitled to registration for lack of the requisite number of years of
possession before June 12, 1945.
Acting upon LLDA's Motion, the lower court in an Order dated October 3, 1985
reopened the case to enable the government to present its evidence. On November 25,
1985[,] Geodetic Engineer Joel G. Merida was presented as government witness.
Merida testified that upon LLDA's verification and actual inspection of the subject
lots conducted in November, the highest observed vertical elevation of the subject lots
was determined to be at elevation 12.19 meters.
On October 17, 1988, the OSG filed a Motion to Dismiss applicants-appellees'
application on the ground that there was no valid amendment and republication of the
application relative to the substitution by Beltran as applicant in lieu of Pelbel
[C]orporation which the court denied in an Order dated January 12, 1987, stating:
After going over the above-mentioned arguments set forth by Oppositor
Republic of the Philippines, the Court finds that the ground [set forth] by the
Oppositor is devoid of merit.
The record disclose[d] that acting on a Motion for Substitution of PartyApplicant, dated April 29, 1985 filed by Applicant Pelbel Manufacturing
Corporation, the Court in its Order dated May 3, 1985 granted the substitution
of applicant, Pelbel Manufacturing Corporation with Applicant Pelagia
Beltran.
Being a private person, Applicant is not covered by the constitutional
prohibition invoked by Oppositor Republic of the Philippines which applies
only to private corporation.
On the claim of Oppositor Republic of the Philippines, that the substitution
was an attempt to circumvent the constitutional prohibition against private
corporations, the Court can just add that the applicant Pelbel Manufacturing
Corporation in conveying the property applied for by it has in its favor the
disputable presumption that private transactions have been fair and regular

pursuant to the provisions of Rule 131, Section 5, sub par. (p) of the Rules of
Court. Said presumption is deemed satisfactory if uncontradicted but may be
contradicted and overcome by other evidence. The record disclose[d] that no
evidence was ever presented to contradict said disputable presumption in favor
of the applicant private corporation.
The alleged failure to notify Oppositor Republic of the Philippines of the
substitution of applicant Pelbel Manufacturing Corporation by Applicant
Pelagia Beltran is just a procedural defect and not a jurisdictional defect which
would affect the validity of the Amended Application.
On the second ground for the dismissal of the Amended Application for failure
to republish the same, the Court agrees with Applicant Trinidad that
considering that the amendment on the application does not affect any increase
or alteration of the area of the property applied for but pertains only to an
amendment of the joinder or discontinuance of the parties, no republication of
the Amended Application is necessary.
(Record, p. 192)
On September 12, 1988[,] the lower court rendered the questioned decision which
substantially affirmed its May 4, 1985 decision.
In this appeal, the Office of the Solicitor General assigns the following as errors:
1. THE LOWER COURT ERRED IN HOLDING THAT THE LOTS 1 & 2
OF PSU 240345 (EXH. G) SOUGHT TO BE REGISTERED BY
APPELLEES ARE NOT PART OF LAGUNA LAKE, HENCE,
REGISTRABLE.
2. THE LOWER COURT ERRED IN NOT FINDING THAT APPELLEES
FAILED TO ADDUCE ADEQUATE AND SUBSTANTIAL PROOF THAT
THEY AND THEIR PREDECESSORS[-]IN-INTEREST HAVE BEEN IN
OPEN[,] CONTINUOUS, EXCLUSIVE AND NOTORIOUS POSSESSION
OF THE LOTS SOUGHT TO BE REGISTERED SINCE JUNE 12, 1945 OR
PRIOR THERETO.
3. THE LOWER COURT ERRED IN NOT DISMISSING THE INSTANT
APPLICATION FOR REGISTRATION OF TITLE.
During the pendency of this appeal, the Spouses Abraham and Aquilina Bonzon filed
an Intervention over Lot No. 2 of PSU-242343 included in the land being applied for
in the name of Virginia Malolos (Rollo, pp. 324-334). The instant case was declared
submitted for decision with intervenors' brief as well as that of Pelbel Manufacturing
Corporation.4

On November 14, 1997, the Court of Appeals reversed and set aside the decision of the trial
court. It dismissed the applications for land registration of petitioners Pelagia Beltran,
Aladdin F. Trinidad and Virginia Malolos.
On December 22, 1999, the appellate court denied the motion for reconsideration of
petitioner Pelbel Manufacturing Corporation, as substituted by Pelagia Beltran.
Hence, this appeal.
Petitioners Pelbel Manufacturing Corporation, substituted by Pelagia Beltran, and Virginia
Malolos base their appeal on the following grounds:
I.
THE LOTS IN QUESTION ARE ALIENABLE AND DISPOSABLE5
A. The conclusion of the Court of Appeals that the lots in question are not alienable
and disposable because of the absence of a certification from the Government that the
lots are alienable and disposable is not supported by the evidence, and is clearly
contrary to the undisputed evidence on record.6
B. The conclusion of the Court of Appeals that the lots in question are part of the
Laguna Lake is not supported by substantial evidence and negated by applicable law
and jurisprudence.7
C. Elementary logic dictates that if the lots with houses and the roads between the
subject lots are alienable and disposable, then the subject lots are alienable and
disposable.8
D. The findings and conclusions of the trial [c]ourt are in accord with the facts, the
law and the evidence.9
II.
THE COURT OF APPEALS ERRED AS A MATTER OF LAW IN REVERSING
THE HOLDING OF THE TRIAL COURT THAT THE PETITIONERS AND THEIR
PREDECESSORS-IN-INTEREST HAD BEEN IN OPEN, PUBLIC AND ADVERSE
POSSESSION OF THE PROPERTY IN THE CONCEPT OF OWNERS FOR MORE
THAN 30 YEAR IS BASED ON MERE CONJECTURES[,] SPECULATIONS AND
GENERALIZATION.10
A. The findings of facts of the trial [c]ourt on the credibility of witnesses are binding
on the Court of Appeals.11

B. There are no substantial reasons of the Court of Appeals for reversing the
conclusion and finding of the trial [c]ourt.12
C. The ruling of the trial [c]ourt ought to be re-instated and upheld, as a matter of law
and established jurisprudence.13
On the other hand, petitioners Aladdin F. Trinidad and Aquilina C. Bonzon cite the grounds
for their appeal in the following manner:
FIRST GROUND
Is the Questioned Decision And Resolution Of The Hon. Court Of Appeals Supported
By Evidence And Which Is Contradicted By The Evidence Of The Petitioners In The
Record (Tolentino vs. De Jesus, et al., L-32797, 27 March 1974).
SECOND GROUND
Has The Hon. Court Of Appeals Disregarded The Applicable Laws And Decisions Of
The Hon. Supreme Court in the below cases:
1. Director of Lands vs. Hon. Court of Appeals, et al.[,] G.R. No. L-43105, August 31,
1984.
2. Aurora Bautista, et al. vs. Hon. Court of Appeals, et al., G.R. No. 43190, August 31,
1984.
in deciding this case which cases interpreted the laws applicable to this case on the
basis of the facts established by the evidence in the records.14
In sum, the two consolidated petitions raise the following issues:
(1) Whether the subject parcels of land are public land; and
(2) If they are not public land, whether applicants-petitioners have registrable title to the land.
We uphold the ruling of the Court of Appeals.
Petitioners, in this case, applied for registration of title to two parcels of land covered by Plan
Psu-240345. Both parcels of land are located in San Juan, Taytay, Rizal, near the shore of
Laguna de Bay. The controlling law in the instant case is Commonwealth Act No. 141, as
amended, otherwise known as the Public Land Act. It governs what were used to be known as
public agricultural lands, or what are otherwise known as alienable and disposable lands of
the public domain. Under the Public Land Act, there is a presumption that the land applied for
belongs to the state, and that the occupants and possessors can only claim an interest in the
land by virtue of their imperfect title or continuous, open, and notorious possession thereof15

for a period prescribed by law. This principle is rooted in the Regalian doctrine, under which
the State is the source of any asserted right to ownership of land. The basic doctrine is that all
lands not otherwise appearing to be clearly within private ownership are presumed to belong
to the State.16 Any applicant for judicial confirmation of an imperfect title has the burden of
proving, by incontrovertible evidence,17 that the (a) land applied for is alienable and
disposable public land; and, (b) the applicant, by himself or through his predecessors-ininterest had occupied and possessed the land, in the concept of owner, openly, continuously,
exclusively, and adversely since June 12, 1945, or earlier.18
We hold that petitioners failed to show that the parcels of land subject of their application are
alienable and disposable. The government, through the Laguna Lake Development Authority,
established that the areas sought to be registered are below the statutory minimum elevation
of 12.50 meters, hence formed part of the bed of Laguna Lake under Republic Act (R.A.) No.
4850, as amended. In a Report dated November 19, 1985, Laguna Lake Development
Authority Geodetic Engineer Joel G. Merida stated that one-half of the area of Lot 1 and the
entire area of Lot 2, Psu-240345, are covered by mud and lake water at an elevation of 11.77
meters, and the highest observed elevation is 12.19 meters.19 This means that the subject lots
form part of the lake bed or basin of Laguna Lake. Sec. 41(11) of R.A. No. 4850 sets the
minimum water elevation at 12.50 meters. Lands located at and below such elevation are
public lands which form part of the bed of said lake. Art. 502 of the Civil Code enumerates
the bodies of water that are properties of public dominion, as follows:
The following are of public dominion:
(1) Rivers and their natural beds;
(2) Continuous or intermittent waters of springs and brooks running in their natural
beds and the beds themselves;
(3) Waters rising continuously or intermittently on lands of public dominion;
(4) Lakes and lagoons formed by Nature on public lands, and their beds;
xxx
(Emphases supplied.)
Petitioners invoke the case of Bautista v. Court of Appeals,20 claiming that the inundation
was merely due to the rains, and that the water elevation should be determined from the
highest ordinary depth during dry season. They cite Art. 74 of the Law of Waters of 1866
which defines the extent of a lake bed as "the ground covered by their waters when at their
highest ordinary depth," and the case of Government of the Philippine Islands v. Colegio
de San Jose21 which defines the phrase "highest ordinary depth" as the highest depth of the
waters (the Laguna Lake, in this case) during the dry season, such depth being the regular,
common, natural depth which occurs always or most of the time during the year. It is

contended that the measurement of Laguna Lake Development Authority Geodetic Engineer
Merida of 12.19 meters as the highest observed elevation of the subject lots was made in
November,22 which is still rainy season. We disagree for while November is not part of the
summer season, it is not part of the rainy season either. It still is part of the dry season during
which the waters are at their "highest ordinary depth."
Further, we agree with the ruling of the appellate court that the fact that a few of the other
estates in the vicinity had succeeded in being registered, and that there are already existing
houses and roads between Laguna Lake and the subject lots, does not prove that the subject
lots are not part of the Laguna Lake bed. Mr. Ananias Mariano registered 6,993 square meters
of land in his name under Original Certificate of Title (OCT) No. 8906 which land appears to
be even located farther from the lake than the subject lots, while Juvencio Ortaez registered
84,238 square meters of land in his name under OCT No. 55351 which land is situated near
the margins of the Laguna Lake. The land titles of these two individuals only prove that they
are the owners in fee simple of the respective real properties described therein, free from all
liens and encumbrances except such as may be expressly noted thereon or otherwise reserved
by law.23 They do not prove petitioners' title to the subject lots. Further, in Ledesma v.
Municipality of Iloilo,24 this Court held that "simple possession of a certificate of title, under
the Torrens System, does not make the possessor the true owner of all the property described
therein. If a person obtains a title, under the Torrens System, which includes by mistake or
oversight land which cannot be registered under the Torrens System, he does not, by virtue of
said certificate alone, become the owner of the lands illegally included." It is basic principle
that prescription does not run against the government. In Reyes v. Court of Appeals,25 we
held:
When the government is the real party in interest, and is proceeding mainly to assert
its own rights and recover its own property, there can be no defense on the ground of
laches or limitation. . .
Public land fraudulently included in patents or certificates of title may be recovered or
reverted to the State in accordance with Section 101 of the Public Land Act.
Prescription does not lie against the State in such cases for the Statute of Limitations
does not run against the State. The right of reversion or reconveyance to the State is
not barred by prescription.
We further uphold the Court of Appeals in ruling that petitioners-applicants presented no
substantial evidence that they and their predecessors-in-interest have been in open,
continuous, exclusive, and notorious possession and occupation of the entire area in question,
in the concept of owner since June 12, 1945, or prior thereto.
Petitioners presented Pedro Bernardo, their common predecessor-in-interest, as witness.
Bernardo testified, as follows:

Q Before this land was sold to Potenciana Espiritu, how long have you owned this
land before you sold this to Potenciana Espiritu?
A I have been the owner of this property for 25 years.
Q Before the same was sold to Potenciana Espiritu what did you do with the land
when you were still the owner of the land?
A The land is devoted to planting of palay.
Q Do you have a tenant who till[s] the land for you?
A The tenant died.
Q Did he die before you sold the property or after?
A After I sold the property to Potenciana Espiritu, the tenants died, however, he was
able to work as tenant for Potenciana for a period of about 4 or 5 years.
Q When you were in possession of this property for about a period of 25 years do you
know of any other person who have claimed right or interest?
A None that I know.
Q Can you tell us if you were in possession of the property continuously, publicly,
adversely to the whole world?
A Yes, sir, peaceful because there is no adverse claimant. It is continuous and public
and adverse to the whole world.26
The above-quoted testimony of Pedro Bernardo is clearly insufficient. No other proof was
presented to establish Bernardo's possession and occupation of the more than three (3)
hectares of land sought to be registered. Possession is open when it is visible and apparent to
a common observer.27 Continuous possession consists of uninterrupted acts of nonpermissive
possession of property by the current occupants and their predecessors.28 To be notorious,
possession must be so conspicuous that it is generally known and talked of by the public29 or
at least by the people in the vicinity of the premises.30 Mere possession of land31 and the
making of vague assertions to the public that a possessor is claiming the land32 are not
sufficient to satisfy the requirement of open and notorious possession. Bernardo failed to
show that his alleged possession and occupation were of the nature and duration required by
law. Bare and general allegations, without more, do not amount to preponderant evidence that
would shift the burden to the oppositor, in this case, the Republic.33 Further, it militates
against the claim of actual possession under a claim of ownership since June 1945, that the
subject properties were declared for taxation purposes only in 1980, or five (5) years before
the filing of the application.34

IN VIEW WHEREOF, the Petitions of Pelbel Manufacturing Corporation, substituted by

Pelagia Beltran, and Virginia Malolos, and Aladdin F. Trinidad and Aquilina C. Bonzon are
DENIED. The Court of Appeals' November 14, 1997 Decision in CA-G.R. CV No. 23592
and December 22, 1999 Resolution are AFFIRMED.
Costs against petitioners.
SO ORDERED.
Sandoval-Gutierrez, Corona, Azcuna, Garcia, J.J., concur.
G.R. No. 130174

July 14, 2000

REPUBLIC OF THE PHILIPPINES, petitioner,

vs.
COURT OF APPEALS AND TABANGAO REALTY, INC., represented by Rodolfo
Perez, respondents.
DECISION
PARDO, J.:
The case is an appeal1 via certiorari from a decision of the Court of Appeals2 affirming that
of the Regional Trial Court, Branch 07, Batangas City decreeing the registration under the
Property Registration Decree, P. D. No. 1529, of three (3) parcels of land situated in
Tabangao, Batangas City in favor of respondent corporation.3
The facts, as found by the Court of Appeals, are as follows:
"On January 8, 1991, Tabangao Realty, Inc. filed an application for Original Registration of
Title over three parcels of land, more particularly described as follows:
"Lot 9895 Plan Ap-4A-001136, containing an area of 4,596 square meters, situated in the
Barrio of Tabangao, City of Batangas;
"Lot 10155 Plan Ap-4A-001221, containing an area of 4, 031 square meters, situated in the
Barrio of Libjo, City of Batangas;
"Lot 10171 Plan Ap-4A-001157, containing an area of 8,224 square meters, situated in the
Barrio of Tabangao, City of Batangas.
"Applicant Tabangao Realty, Inc. alleged in its application that it acquired the abovementioned lots by purchase from its previous owners as evidenced by the corresponding
Deeds of Sale; that it is the owner of all adjoining lots; that it had been in actual possession of
the lots since the time it acquired the same from the previous owners up to the present; and

that its possession and occupation as owners including that of its predecessor-in-interest has
been open, peaceful, continuous, adverse to the whole world and in the concept of an owner.
"The applicant further alleged that the plant of the Liquefied Petroleum Gas (LPG) Company
is partly erected on the subject lots which improvements are owned by it (applicant). It also
claims that the subject lots are not subject of any lien or encumbrance; that no adverse
interests exist with respect to the subject lots; and that there are no military or forest
reservation or any pending litigation affecting said subject lots.
"Should the property registration decree invoked not be allowed, the applicant in the
alternative applied for the benefits under CA No. 141 as amended and thus alleged that
together with its predecessors-in-interest it had been in open, continuous, public, peaceful and
adverse possession of the subject lots for more than 30 years. It also declared that the lots are
not tenanted nor subject of an agricultural leasehold relationship.
"Applicant Tabangao Realty, Inc. attached to its application its Articles of Incorporation, the
tracing cloth plan of the lots, blue print copies of said plan, technical descriptions of the lots,
Deeds of Sale, Assessment Certificate, Tax Declarations for the three lots and Tax Clearances.
"On August 12, 1991, the application was ordered archived by the Regional Trial Court for
the applicants failure to comply with the requirements called for in the Report dated
February 22, 1994 by the Office of the Land Registration Authority. On June 2, 1994, the
applicant filed a motion to revive the application and to set the case for initial hearing. The
motion was granted by the Regional Trial Court on June 7, 1994 and initial hearing was set
on September 1994.
"At the hearing, only the Assistant City Prosecutor appeared to oppose the application on
behalf of the Republic of the Philippines. Counsel for the applicant thereupon presented all
the necessary evidence to satisfy the jurisdictional requirements. Thereafter, upon motion of
the application, the Regional Trial Court issued an order of special default against the whole
world with the exception of the government. The court also issued an order designating and
authorizing Mr. Rodolfo G. Serrano, Legal Researcher of Regional Trial Court, Branch 7, to
receive evidence.
"At the reception of evidence, the applicant presented Romeo Geron, the Consultant and
Project Controller of applicant Tabangao Realty, Inc. Geron testified that he is a resident of
Tabangao and was a member of the Task Force responsible for negotiating with the numerous
landowners and the subsequent acquisition by sale of the properties of Tabangao Realty, Inc.
in Tabangao and Libjo, Batangas. He testified that the applicant-corporation was duly
organized and registered with the Securities and Exchange Commission and is authorized to
acquire land by purchase and develop, subdivide, sell, mortgage, exchange, lease and hold for
investment or otherwise, real estate of all kinds.

"He also testified that Lot 9895 was acquired by the applicant-corporation on March 31, 1980
by virtue of a Deed of Absolute Sale executed in its favor by the previous owners; the
spouses Santiago and Cristina Dimaano (Exh. "L"); that Lot 10155 was acquired by
applicant-corporation by virtue of a Deed of Sale executed on April 25, 1980 in its favor by
the former owner Mr. Perpetuo Almario married to Felisa Magpantay who owned the lot
since 1945 (Exh. "L-1"); and that Lot 10171 was purchased by applicant-corporation on
March 31, 1980 from Anita Clear de Jesus who had been the owner of said lot since 1945
(Exh. "L-2").
"The witness presented the tax declarations for the three parcels of land and tax receipts
showing full payment of all taxes due. (Exh. "P, P-1, P-2" and "Q") He testified that there is
no pending litigation involving the subject properties or any adverse claims filed against the
applicants; that they are free from any liens or encumbrances; that there are no tenants or
agricultural leasehold contracts involving the subject properties; and that there are no mineral
deposits in said lots.
"Geron also testified that the properties are presently under Lease Contract with Shell Gas
Philippines for 25 years from 1981 up to 2006 as evidenced by a Lease Contract executed on
May 18, 1991 (Exh. "M").
"The applicants also presented Crecencio Marasigan. He is an employee at the Office of the
Register of Deeds of Batangas since June 1971. He testified that he has been a resident of
Barangay Malitan, Batangas City even before 1937 up to the present and that he knew the
applicant Tabangao Realty, Inc. and the areas surrounding the lots subject of the application.
He mentioned that he was the Chairman of the Task Force that was responsible for the
negotiations that were done with the previous owners of the subject lots, and was therefore
personally aware of the specific dealing regarding the lots subject of the application. He said
that he knew the previous owners since he started residing in Batangas; and that their
possessions had been open, public, peaceful, continuous, adverse and in the concept of
owners.
"Marasigan corroborated the testimony of Romeo Geron with regard to the ownership,
possession and the status of the lots subject of the application.
"In opposition, the City Prosecutor of Batangas offered the testimonies of Rodolfo Fernandez
of the Bureau of Lands and Loida Maglinao of the Bureau of Forest Development.
"Rodolfo Fernandez testified that the three parcels of land subject of the application are not
covered by any kind of public land application or patent; that they are not within the
reservation area nor within the forest zone; that they are not reserved for any government
purposes; and that the entire areas are within the Alienable and Disposable Zone as Classified
under Project No. 13, Map No. 718 and certified on March 26, 1928. Fernandez presented the
Investigation Report made by the Bureau of Lands dated April 24, 1991 (Exh. "1" to "1-b").

"Loida Maglinao testified that the subject properties are within the alienable and disposable
area of the public domain and no forestry interest is adversely interposed by the Bureau of
Forest Development.
"On the basis of all the evidence presented, the Regional Trial Court rendered a decision on
March 31, 1995 granting the application for registration. It held:
"From the credible testimony and documentary evidence adduced establishing applicantcorporation that the latter and its predecessors-in-interest have been in open, public,
continuous, peaceful, uninterrupted and adverse possessions of the parcels of land applied
for up to the present, for the requisite period of time, under bona fide claim of ownership,
and considering, that no evidence has been presented by the government in support of its
Opposition, and even presented the favorable testimonies of Mr. Rodolfo Fernandez, of the
Bureau of Lands and Miss Loida Y. Maglinao, of the Bureau of Forest Development, both
CENRO, Batangas City Branch, Batangas City, supported by their respective official
Reports, the Court is convinced that the applicant-corporation Tabangao Realty
Incorporated had sufficiently established its rights to the grant of title over the three (3)
parcels of land subject of this case."
In due time, petitioner appealed the decision of the trial court to the Court of Appeals.4
On July 30, 1997, the Court of Appeals promulgated its decision affirming the appealed
decision.5
Hence, this appeal.6
The issue raised is whether respondent Tabangao Realty, Inc. has registerable title over three
(3) parcels of land situated in Tabangao, Batangas City applied for.
The Court of Appeals ruled that the applicant Tabangao Realty, Inc. is entitled to registration
of title over the three (3) parcels of land applied for. The ruling is erroneous.
An applicant seeking to establish ownership over land must conclusively show that he is the
owner thereof in fee simple,7 for the standing presumption is that all lands belong to the
public domain of the State, unless acquired from the Government either by purchase or by
grant, except lands possessed by an occupant and his predecessors since time immemorial,
for such possession would justify the presumption that the land had never been part of the
public domain or that it had been private property even before the Spanish conquest.8
The land in question is admittedly public. The applicant has no title at all.1wphi1 Its claim
of acquisition of ownership is solely based on possession. In fact, the parcels of land applied
for were declared public land by decision of the Cadastral Court.9 Such being the case, the
application for voluntary registration under P. D. No. 152910 is barred by the prior judgment
of the Cadastral Court. The land having been subjected to compulsory registration under the
Cadastral Act and declared public land can no longer be the subject of registration by

voluntary application under Presidential Decree No. 1529. The second application is barred
by res-judicata.11 As previously held, "[W]here the applicant possesses no title or ownership
over the parcel of land, he cannot acquire one under the Torrens System of registration."12
Nonetheless, applicant anchors its application for registration of title on the provisions of P.
D. No. 1529 or in the alternative Com. Act No. 141, Section 48 (b), as amended by Rep. Act
No. 1942, which allows "those who by themselves or through their predecessors in interest
have been in open, continuous, exclusive and notorious possession and occupation of
agricultural lands of the public domain, under a bona fide claim of acquisition of ownership,
for at least thirty years immediately preceding the filing of the application" to apply for
judicial confirmation and registration of title.13
However, the evidence is inconclusive that applicant and its predecessors in interest had been
in open, continuous, exclusive and notorious possession of the land in question, en concepto
de dueo, or a bona fide claim of acquisition of ownership for at least thirty (30) years
immediately preceding the filing of the application,14 or since June 12, 1945,15 or earlier,16 or
since time immemorial.17
Analyzing the evidence submitted, we note that the applicant failed to prove the fact of
possession by itself and its predecessors in interest for at least thirty (30) years before the
filing of the application.
Witness Romeo Geron, a consultant of applicant Tabangao Realty, Inc. testified that in the
year 1945, he knew that the land designated as Lot 9895, with an area of 4,596 square meters
was owned by Santiago Dimaano, who sold the lot to applicant corporation on March 31,
1980 and that the parcel of land designated as Lot 10155 with an area of 4,031 square meters
was owned by Perpetuo Almario way back in 1945, and that he possessed the lot up to the
time he sold the same to applicant corporation on April 25, 1980 because he was in charge of
negotiation with the numerous landowners for acquisition of their property by Tabangao
Realty, Inc.18 However, in 1945, witness Geron was only seven (7) years old, and obviously
could not competently testify on the ownership and possession of the subject land.
Applicant failed to prove specific acts showing the nature of its possession and that of its
predecessors in interest.19 "The applicant must present specific acts of ownership to
substantiate the claim and cannot just offer general statements which are mere conclusions of
law than factual evidence of possession."20 "Actual possession of land consists in the
manifestation of acts of dominion over it of such a nature as a party would naturally exercise
over his own property."21
The bare assertion of witnesses that the applicant of land had been in the open, adverse and
continuous possession of the property for over thirty (30) years is hardly "the well-nigh
incontrovertible" evidence required in cases of this nature.22 In other words, facts constituting
possession must be duly established by competent evidence.

Consequently, the lower court gravely erred in granting the application.

WHEREFORE, the Court REVERSES the decision of the Court of Appeals, DENIES the
application for registration of title filed by applicant Tabangao Realty, Inc. and declares the
subject parcels of land to be public land belonging to the public domain.
No costs.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Puno, Kapunan, and Ynares-Santiago, JJ., concur.
G.R. No. 119714 May 29, 1997
SALVADOR S. ESQUIVIAS and ALICIA DOMALAON-ESQUIVIAS, petitioners,
vs.
COURT OF APPEALS, JOSE G. DOMALAON, ELENA G. DOMALAON and
REGISTER OF DEEDS OF SORSOGON, respondents.

BELLOSILLO, J.:
A 6,270-SQUARE METER PARCEL OF LAND in the poblacion of Gubat, Sorsogon, 1
is the subject of this action for reconveyance and damages.
Julia Galpo de Domalaon was the owner of a piece of land with an area of 1,260
square meters and the two-storey house standing thereon. In 1950 she
extrajudicially constituted this property into a family home. Alicia DomalaonEsquivias, Elena G. Domalaon and Jose G. Domalaon, among other children, were
named beneficiaries thereof. 2
On 11 March 1974 a Deed of Absolute Sale was executed by Julia Galpo de
Domalaon in favor of her son-in-law, Atty. Salvador Esquivias, husband of Alicia
Domalaon. Subject matter of the deed was the property constituting the family home
the two-storey house and the residential lot on which it stood, more particularly
described in the deed as
. . . containing an area corresponding to the ground floor area of the house (136 sq.
m.) plus and including its outside surrounding area of land measuring three (3)
meters from the outside walls on all on all sides of said house, and including the
whole width and length of the driveway leading from the house to Manook Street. This
is likewise part and parcel of the family home declared in the name of Julia Galpo de
Domalaon under Tax Declaration No. 9021 containing an original area of 1,260
square meters, more or less, and assessed at P1,070. 3

On 30 March 1977 the family home was dissolved by Julia Galpo de Domalaon with
the conformity of all her children. Afterwards, another deed of sale was executed by
her dated 12 April 1977 transferring to Jose G. Domalaon the house and lot which
once constituted the family home. The deed indicated that the property being sold
was the entire 1,260 square meters. 4 However, in the Affidavit of Confirmatory
Waiver of Rights, 5 the area was increased to 2,456 square meters.
Prior to the sale of the property to him, or on 21 October 1976, Jose already filed two
(2) applications for Free Patent in his name covering the entire property. When his
first application was approved, a certificate of title 6 was issued on 11 February 1981.
His rights over the other application covering the rest of the property were
relinquished by him in favor of his sister Elena. 7 It turned out later that Elena G.
Domalaon also succeeded in her application for Free Patent and a certificate of title
was issued in her name on 18 March 1985. 8
Alleging that it was only in 1981 that she came to know that the document she
signed in favor of Atty. Salvador S. Esquivias in 1974 was actually a deed of sale,
Julia Galpo de Domalaon filed a disbarment case against Atty. Esquivias. According
to her, being a son-in-law and lawyer of the Domalaons, Atty. Esquivias took
advantage of her trust and confidence and poor eyesight by representing that the
document was a sale of her land in favor of all her children. But the Solicitor General,
who investigated the case, recommended its dismissal for lack of merit thus
xxx xxx xxx
The claim of the complainant that respondent took advantage of her trust and
confidence and presented to her for signature a prepared document which he
represented as a distribution of her lands to her children is not credible . . . It is
inconceivable that from March 1974 up to January 1981, complainant had never
informed her children that she had already signed a document transferring her
ricelands to them . . . And what is more, it is too much of a coincidence that Elena
Domalaon discovered the document at the Office of the Register of Deeds of
Sorsogon in January 1981 . . . The only reasonable conclusion is that Elena knew all
along about the existence of said document, which is a genuine deed of sale in favor
of respondent, and she and her mother (complainant herself) only concocted the
alleged misrepresentation committed by respondent just to get even with him . . . The
settled rule is that the serious consequences of disbarment or suspension should
follow only where there is a clear preponderance of evidence against the respondent.
The presumption is that the attorney is innocent of the charges proffered and has
performed his duty as a lawyer in accordance with his oath.
Complainant's evidence is obviously insufficient to prove dishonesty on the part of
respondent. Complainant's version is not credible, and respondent has adduced
sufficient evidence to prove motive for the filing of the instant complaint . . . . 9

This Court adopted the above Recommendation and dismissed the case.

10

Upon discovering that the subject lands were already titled in the names of Jose and
Elena, Atty. Esquivias and his wife filed an action for reconveyance and damages
before the Regional Trial Court of Sorsogon. In their complaint they claimed the
entire 6,270 square meters and not just the house and lot they acquired by purchase
from Julia. According to them, when Silvestre Domalaon, husband of Julia, was still
alive he promised to transfer the entire property in their names as payment of his
accumulated debts to them. Thus, they declared the property in their names and
paid the taxes thereon.
After trial, the court ruled in favor of plaintiffs thus
WHEREFORE, premises considered, this Court hereby orders:
1. That plaintiff Salvador Esquivias and Alicia Domalaon-Esquivias be declared the
owners of the house and the portion of the land it is standing on, with an area of 136
sq. m., plus and including its outside surrounding area of land measuring three (3)
meters from the outside walls on all sides of the house, and including the whole width
and length of the driveway leading from the house to Manook Street;
2. That Jose Domalaon should reconvey to the plaintiffs that property mentioned
above; and for the purpose, a licensed surveyor be commissioned to set off that
particular portion of the property. The fee of such surveyor should be paid by
defendant Jose Domalaon;
3. That the property identified as Lot No. 453 be partitioned by the heirs of Julia G.
Domalaon, and as a consequence, the Register of Deeds of Sorsogon is ordered to
cancel OCT No. P-22729 in the name of Elena Domalaon and issue the
corresponding titles to the portions owned by each heir;
4. That defendants Jose Domalaon and Elena Domalaon should pay to the plaintiffs,
jointly and severally, the sum of P5,000 as moral damages, and P5,000 as attorney's
fees;
5. That defendants, likewise, jointly and severally, should pay the costs of this suit.

Not satisfied with the decision, respondents Jose G. Domalaon and Elena G.
Domalaon elevated the case to the Court of Appeals which reversed the decision of
the trial court and dismissed the case on the basis of its finding that there was no
compliance with the mandatory requirements of Art. 222 of the New Civil Code;
hence, the instant petition.
Three (3) issues need to be resolved: (a) Was the appellate court correct in holding
that no earnest effort towards a compromise between members of the same family
was made, in contravention of Art. 222 of the Civil Code? (b) Did the
Report/Recommendation of the Solicitor General in the disbarment case, which was
adopted by the Supreme Court, rule on the validity of the sale executed by Julia
Domalaon? (c) Who has a better right over the subject property, the Esquiviases or
the Domalaons?

Petitioners contend that Atty. Esquivias is only a brother-in-law of Jose and Elena
Domalaon. Atty. Esquivias is not a member of the family of his wife and is outside the
scope and coverage of the law requiring that the same members of a family should
exert efforts to bring about a compromise before the commencement of a litigation.
We agree with petitioners. Article 222 of the Civil Code provides that no suit shall be
filed or maintained between members of the same family unless it should appear that
earnest efforts towards a compromise have bee made but the same have failed. The
reason for the law is that a lawsuit between family members generates deeper
bitterness than one between strangers. Hence, it is necessary that every effort
should be made towards a compromise before a litigation is allowed to breed hate
and passion in the family. 11
But this requirement in Art. 222 of the Civil Code applies only to suits between or
among members of the same family. The phrase "between members of the same
family" should be construed in the light of Art. 217 of the Civil Code 12 under which
"family relations" include only those (a) between husband and wife, (b) between
parent and child, (c) among other ascendants and their descendants, and (d) among
brothers and sisters.
As correctly pointed out by petitioners, Atty. Salvador S. Esquivias is not included in
the enumeration of who are members of the same family, as he is only a brother-inlaw of respondents Jose and Elena by virtue of his marriage to their sister Alicia. His
relationship with respondents is based on affinity and not on consanguinity.
Consequently, insofar as he is concerned, he is a stranger with respect to the family
of his wife and, as such, the mandatory requirement of "earnest effort toward a
compromise" does not apply to him. In Magbaleta v. Gonong 13 we ruled that "efforts
to compromise" are not a jurisdictional prerequisite for the maintenance of an action
whenever a stranger to the family is a party thereto, whether as necessary or
indispensable one. An alien to the family may not be willing to suffer the
inconvenience of, much less relish, the delay and the complications that wranglings
between and among relatives more often than not entail. Besides, it is neither
practical nor fair that the rights of a family be made to depend on a stranger who just
happens to have innocently acquired some interest in a property by virtue of his
affinity to the parties. Contrary to the ruling of the Court of Appeals, we find no
reason to give Art. 222 a broader scope than its literal import.
On the second issue, petitioner Salvador S. Esquivias postulates that the validity of
the deed of sale in his favor had already been sustained in the disbarment
proceedings against him. As a consequence, the facts established therein have
become the law of the case and can no longer be disturbed by the Court of Appeals.
The argument is flawed. In the case of In re Almacen 14 we ruled

. . . Disciplinary proceedings against lawyers are sui generis. Neither purely civil nor
purely criminal, they do not involve a trial of an action or a suit, but are rather
investigations by the Court into the conduct of one of its officers. Not being intended
to inflict punishment, it is in no sense a criminal prosecution. Accordingly, there is
neither a plaintiff nor a prosecutor therein. It may be initiated by the Court motu
proprio. Public interest is its primary objective, and the real question for determination
is whether or not the attorney is still a fit person to be allowed the privileges as such.
Hence, in the exercise of its disciplinary powers, the Court merely calls upon a
member of the Bar to account for his actuations as an officer of the Court with the end
in view of preserving the purity of the legal profession and the proper and honest
administration of justice by purging the profession of members who by their
misconduct have proved themselves no longer worthy to be entrusted with the duties
and responsibilities pertaining to the office of an attorney. In such posture, there can
thus be no occasion to speak of a complainant or a prosecutor.

For this reason, whatever has been decided in the disbarment case cannot be
a source of right that may be enforced in another action, like this case before
us.
Moreover, what was decided in the disbarment proceedings was the issue of
whether Atty. Esquivias violated his oath by defrauding and deceiving the
complainant into conveying to him the properties in question, and not the issue of the
validity of the deed of sale. When the Solicitor General made a declaration that the
deed was valid, it was only because the same was incidentally necessary for the
prompt resolution of the case. Indeed, in matters involving questions of genuineness
and due execution of documents purporting to convey properties of considerable
value, no less than an action instituted for that purpose before a court of competent
jurisdiction is necessary, rather than a mere administrative proceeding, like a
disbarment case, where the procedure followed is, more often than not, summary,
and where the question on validity of the instrument is merely a collateral and not the
main issue.
Consequently, the judgment on the disbarment proceedings, which incidentally
touched on the issue of the validity of the deed of sale, cannot be considered
conclusive in another action where the validity of the same deed of sale is merely
one of the main issues. At best, such judgment may only be given weight when
introduced as evidence, but in no case does it bind the court in the second action.
We are convinced, however, that the sale in favor of Atty. Esquivias was made by
Julia with full knowledge of the facts and there appears nothing on record to warrant
a declaration of nullity of the deed from the standpoint of fraud.
It must be emphasized that the bare existence of confidential relation between
grantor and grantee does not, standing alone, raise the presumption of fraud. A deed
will not be set aside merely because the grantor and grantee sustained a confidential
relationship where the evidence shows no fraud or abuse of confidence. 15 Besides, if

Julia really had a cause of action against Atty. Esquivias, why did she file only a
disbarment case instead of the more appropriate action for annulment of contract?
As regards the third issue, this Court notes the glaring irregularities that attended the
transfer of the land in question to Jose G. Domalaon and Elena G. Domalaon: First,
the land was sold by Julia to Jose on 12 April 1977. 16 But even prior to that date, or
on 21 October 1976 , Jose already applied for Free Patent in his name covering the
land; 17 Second, during the disbarment proceedings against Atty. Esquivias, Elena
admitted on cross-examination that she went to the Register of Deeds of Sorsogon
to register another deed of sale one executed by her mother in favor of her
brother Jose over the same house and lot ahead of the deed of sale executed in
favor of Atty. Esquivias.
She succeeded in doing so by using the tax receipt paid by Atty. Esquivias himself; 18
Third, in the deed of sale of Jose, what was sold to him was 1,260 square meters.
However, in the Affidavit of Confirmatory Waiver of Rights the area was increased to
2,456 square meters; Fourth, Jose relinquished to Elena Lot No. 453 with an area of
3,814 square meters. Surprisingly, the records contain no deed or evidence showing
that Julia likewise sold to Jose Lot No. 453. What was sold was 1,260 square meters
if we go by the deed of sale, or 2,456 square meters if we base it on the Affidavit of
Confimatory Waiver of Rights. As aptly observed by the trial court, how could Jose
relinquish to Elena something which he did not own? Fifth, Julia executed an affidavit
19
dated 17 July 1986 wherein she ceded her rights and interests over Lot No. 453 in
favor of Jose. But it will be observed that such affidavit was not sufficient to transfer
ownership of the subject lot. Even if it did, it was executed only after more than four
(4) years from the date Jose relinquished to Elena his alleged rights over Lot No.
453.
These circumstances confirm the belief that there indeed was collusion among the
Domalaons to defeat the valid and legitimate claim of the Esquiviases by
consolidating the ownership of the entire property in the names of Jose G. Domalaon
and Elena G. Domalaon. They likewise belie the Domalaons' profession of ignorance
with respect to the existence of the first sale.
Logically, while the deed of sale in favor of Jose G. Domalaon was registered earlier,
the same cannot prevail over the deed of sale in favor of Atty. Esquivias because
private respondent knew of the prior sale to petitioners, and such knowledge tainted
his registration with bad faith. 20 To merit protection under Art. 1544, second par., 21
the second buyer must act in good faith in registering his deed.
While we are sustaining petitioners' rights over the house and lot subject of the 11
March 1974 deed of sale, we cannot find any justification to likewise award to them
the rest of the property. They presented no evidence other than their self-serving
assertion that the entire property was promised to them by the late Silvestre
Domalaon. The fact that such promise was not contradicted by private respondents

does not prove that their claim over the entire property is valid and subsisting.
Furthermore, although the entire property was declared by petitioners in their names
for taxation purposes, it does not by itself constitute conclusive evidence of
ownership. 22
Finally, while the certificates of title in the names of Jose G. Domalaon and Elena G.
Domalaon are indefeasible, unassailable and binding against the whole world,
including the government itself, they do not create or vest title. They merely confirm
or record title already existing and vested. They cannot be used to protect a usurper
from the true owner, nor can they be used as a shield for the commission of fraud;
neither does they permit one to enrich himself at the expense of others. 23
Although a review of the decree of registration is no longer available on account of
the expiration of the one-year period from entry thereof, an equitable remedy is still
available to the Esquiviases who were wrongfully deprived of their property, i.e., to
compel Jose G. Domalaon in whose name the house and lot in question had been
wrongfully registered, to reconvey the property to the Esquiviases, provided that the
same has not yet been transferred to innocent persons for value. 24
The registered property is deemed to be held in trust for the real owners by the
person in whose name it has been registered. In this action for reconveyance, the
decree of registration is respected as incontrovertible. What is sought instead is the
transfer of the property, in this case, the title thereof, which has been wrongfully or
erroneously registered in another person's name, to its rightful and legal owners. 25
WHEREFORE, the Decision of respondent Court of Appeals reversing that of the
Regional Trial Court, Branch 54, Gubat, Sorsogon, is REVERSED and SET ASIDE,
and the Decision of the latter court in favor of petitioners as quoted in pages four (4)
and five (5) hereof is REINSTATED and AFFIRMED. Costs against private
respondents.
SO ORDERED.
Vitug, Kapunan and Hermosisima Jr., JJ., concur.
Padilla, J., is on leave.
G.R. No. 132644 November 19, 1999
ERNESTO DAVID, RICARDO DAVID, NELIA DAVID, EMILIA DAVID, LOLITA
DAVID, BASILIO LEMQUE, NICANOR LEMQUE, FELIX LEMQUE, NORMA
LEMQUE, WILFREDO LEMQUE, RODOLFO LEMQUE, ROGELIO LEMQUE,
VICTORIA LEMQUE, ESTATE OF MARIA ESPIRITU and ANDRES ADONA,
MILAGROS DE UBAGO-UMALI, FELISA GUBALLA DE UBAGO, VANESSA DE
UBAGO-UMALI, ANTONIO DE UBAGO, JR., JOSEPH GUBALLA DE UBAGO,

MARIETTA DE UBAGO-TAN, and REGISTER OF DEEDS OF ZAMBALES,

petitioners,
vs.
CRISTITO MALAY and NORA MALAY, DIONISIO MALAY, FRANCISCA T.
CAPACILLO, PEPITO ALCANTARA, NICOLAS SORIANO and JUAN MORA,
respondents.

VITUG, J.:
The instant case is an appeal from a decision of the Court of Appeals reversing that
of the Regional Trial Court on an action for reconveyance of property. The issues
submitted by the parties may not really be all that novel.
The spouses Andres Adona and Leoncia Abad, husband and wife for a good number
of years, were blessed with five children among them being Carmen Adona. Carmen
married Filomeno Malay; three children were begotten by the marriage, namely,
Cristito, Nora and Dionisio (among the herein private respondents). Following the
death of Leoncia Abad in 1923, Andres Adona cohabited with Maria Espiritu, herself
a widow, apparently without the benefit of marriage. Andres and Maria sired two
children, Esperanza, represented herein by her heirs all surnamed David, and
Vicente Adona. Maria Espiritu likewise had a child by her previous marriage,
Fulgencio Lemque, now herein represented also by his own heirs.
During his lifetime, Andres Adona applied for a homestead patent over a parcel of
agricultural land located at Dirita, Iba, Zambales, containing an area of 22.5776
hectares. After Andres Adona had died, Maria Espiritu, predecessor-in-interest of
herein petitioners, succeeded in obtaining Original Certificate of Title No. 398 over
the land in her name. After Maria Espiritu had died in 1945, the children, as well as
descendants, of Andres Adona by his marriage with Leoncia Abad, continued to be in
peaceful and quiet possession of the subject land.
Sometime in 1989 petitioners executed a deed of "Extrajudicial Settlement with Sale"
over the subject property in favor of Mrs. Venancia Ungson. Private respondents
protested the sale claiming that they were the true owners of the land. Ultimately, in
any event, the sale in favor of Mrs. Ungson was rescinded in view of the latter's
failure to pay in full the consideration agreed upon. Subsequently petitioners
executed another deed of Extrajudicial Settlement with Sale. In this new instrument,
dated 15 December 1990, petitioners divided the land equally among themselves
and sold their respective shares to their co-petitioners herein. Antonio de Ubago, Jr.,
Milagros de Ubago-Umali, Felisa Guballa de Ubago, Vanessa de Ubago-Umali and
Marietta de Ubago-Tan and Joseph Guballa de Ubago. On 27 November 1992
Transfer Certificate of Title No. T-42320 was issued in favor of the de Ubagos.

Less than a month later or on 07 December 1992 private respondents filed a

complaint docketed Civil Case No. RTC-905-1 for "Annulment of Sale with
Restraining Order Injunction and Damages" against petitioners before Branch 71 of
the Regional Trial Court of Zambales. In their complaint private respondents averred
that the disputed land sold by the heirs of Maria Espiritu to the de Ubagos was the
subject of a homestead application by their great grandfather. Andres Adona, but that
Original Certificate of Title No. 398 was instead fraudulently issued to Maria Espiritu,
on 04 December 1933, upon her false representation that she was the widow of
Andres Adona.
In its decision of 25 July 1995 after a hearing on the merits of the case, the trial court
dismissed the complaint for lack of cause of action and on the ground of prescription.
It opined that the action being one for annulment of sale anchored on a fraudulent
titling of the subject property, the cause of action constituted a collateral attack on
the Torrens Certificate of Title. The court a quo added that even if the action were to
be treated as being one for reconveyance, the suit would still have to fail since an
action for reconveyance could only be brought within ten (10) years counted from the
date of issuance of the certificate of title (in 1933).
On appeal, the Court of Appeals, in its judgment of 11 February 1998, 1 set aside the
order of dismissal of the case decreed by the trial court and directed the cancellation
of Transfer Certificate of Title No. T-42320 in the name of the de Ubagos and the
reconveyance of the property to the estate of Andres Adona. Petitioners were
additionally ordered to pay damages and attorney's fees to private respondents. The
appellate court, more particularly, ruled.
The evidence on record shows that OCT No. 398 issued in favor of Maria Espiritu
was obtained by her fraudulent concealment of the existence of Adona's first marriage
to Leoncia Abad, as shown by the affidavit she executed on September 21, 1928 and
filed with the Director of Lands.
Consequently, Maria Espiritu's fraudulent concealment of material facts created an
implied or constructive trust in favor of the plaintiffs, the excluded co-heirs and actual
possessors of the subject land. Article 1456 of the Civil Code reads:
If property is acquired through mistake or fraud, the person obtaining
it is by force of law, considered a trustee of an implied trust for the
benefit of the person from whom the property comes.
Although it is true that after the lapse of one year, a decree of registration is no longer
open to review or attack, although its issuance was tainted with fraud; however, the
aggrieved party is not without a remedy at law. Notwithstanding the irrevocability of
the Torrens Title already issued in favor of Maria Espiritu, she and her successors-ininterest, although the registered owner under the Torrens system, may still be
compelled under the law to reconvey the subject property to the real owners. The
Torrens system was not designed to shield and protect one who had committed fraud
or misrepresentation and thus holds title in bad faith (Amerol vs. Bagumbaran, 154
SCRA 396, 404 [1987]);

In an action for reconveyance, the decree of registration is respected as

incontrovertible. What is sought instead is the transfer of the property, which has been
wrongfully or erroneously registered in another person's name, to its rightful and legal
owner, or to one with a better right. (Amerol, supra.)
However, the right to seek reconveyance based on an implied or constructive trust is
not absolute. It is subject to existence prescription. (Amerol, supra.; Caro vs. Court of
Appeals, 180 SCRA 401, 405-407 [1989]; Ramos vs. Court of Appeals, 112 SCRA
542, 550 [1982]; Ramos vs. Ramos, 61 SCRA 284, 299-300 [19741])
An action for reconveyance of a parcel of land based on an implied trust prescribes in
ten years, the point of reference being the date of registration of the deed or the date
of the issuance of the certificate of title over the property. (Amerol, supra., Caro,
supra., Casipit vs. Court of Appeals, 204 SCRA 684, 694 [1991]). This rule applies
only when the plaintiff or the person enforcing the trust is not in possession of the
property. If a person claiming to be the owner thereof is in actual possession of the
property, the right to seek reconveyance does not prescribe. The reason for this is
one who is in actual possession of a piece of land claiming to be the owner thereof
may wait until his possession is disturbed or his title is attacked before taking steps to
vindicate his right. His undisturbed possession gives him the continuing right to seek
the aid of a court of equity to ascertain the nature of the adverse claim of third party
and its effect on his title, which right can be claimed only by one who is in possession.
(Vda. de Cabrera vs. Court of Appeals, G.R. 108547, February 3, 1997).
Hence, the undisturbed possession by plaintiffs and their predecessors-in-interest
gave them the continuing right to resort to judicial intervention once their claim to
ownership was challenged. It was therefore the defendant. Heirs act of executing the
"Extrajudicial Settlement of Estate with Sale" which constituted the express act of
repudiation of the constructive trust which gave rise to plaintiffs cause of action. 2

Aggrieved, petitioners have come to this Court and seek to dispute the judgment of
the Court of Appeals ordering the cancellation of Original Certificate of Title No. 398
issued on 16 November 1933. It is the contention of petitioners that to allow private
respondents to question Original Certificate of Title No. 398 fifty-nine years after its
issuance would undermine the Torrens system and sanctity of the certificate of title.
Private respondents, upon the other hand, ask this Court to sustain the decision of
the Court of Appeals on the thesis that the property in question indubitably belongs
to the estate of Andres Adona whose incontestable right to it is derived from the
perfected homestead application two years prior to his death as so admitted by
Maria Espiritu herself in her affidavit submitted to the Director of Lands.
The Court rules for the affirmance of the challenged decision.
A certificate of title issued under an administrative proceeding pursuant to a
homestead patent covering a disposable public land within the contemplation of the
Public Land Law or Commonwealth Act No. 141 is as indefeasible as a certificate of
title issued under a judicial registration proceeding. Under the Land Registration Act,
title to the property covered by a Torrens certificate becomes indefeasible after the

expiration of one year from the entry of the decree of registration. Such decree of
registration is incontrovertible and becomes binding on all persons whether or not
they were notified of, or participated in, the in rem registration process. 3 There is no
specific provision in the Public Land Law or the Land Registration Act (Act 496), now
Presidential Decree 1529, fixing a similar one-year period within which a public land
patent can be considered open to review on the ground of actual fraud, such as that
provided for in Section 38 of the Land Registration Act, and now Section 32 of
Presidential Decree 1529, and clothing a public land patent certificate of title with
indefeasibility. Nevertheless, this Court has repeatedly applied Section 32 of
Presidential Decree 1529 to a patent issued in accordance with the law by the
Director of Lands, approved by the Secretary of Natural Resources, under the
signature of the President of the Philippines. 4 The date of the issuance of the patent
corresponds to the date of the issuance of the decree in ordinary cases. Just as the
decree finally awards the land applied for registration to the party entitled to it, so
also, the patent issued by the Director of Lands equally and finally grants and
conveys the land applied for to the applicant. 5
Original Certificate of Title No. 398 was issued in the name of Maria Espiritu on 04
December 1933 and would have become indefeasible a year thereafter had not its
issuance been attended with fraud. The attendance of fraud created an implied trust
in favor of private respondents and gave them the right of action to seek the remedy
of reconveyance of the property wrongfully obtained. 6 In Javier vs. Court of Appeals 7
this Court ruled:
. . . The basic rule is that after the lapse of one (1) year, a decree of registration is no
longer open to review or attack although its issuance is attended with actual fraud.
This does not mean however that the aggrieved party is without a remedy at law. If
the property has not yet passed to an innocent purchaser for value, an action for
reconveyance is still available. The decree becomes incontrovertible and can no
longer be reviewed after one (1) year from the date of the decree so that the only
remedy of the landowner whose property has been wrongfully or erroneously
registered in another's name is to bring an ordinary action in court for reconveyance,
which is an action in personam and is always available as long as the property has
not passed to an innocent third party for value. If the property has passed into the
hands of an innocent purchaser for value, the remedy is an action for damages. 8

The caption of the case before the court a quo while denominated as being one for
"Annulment of Sale with Damages" is in reality an action for reconveyance since the
ultimate relief sought by private respondents would be for the property covered by
Original Certificate of Title No. 398 to be reconveyed to the estate of Andres Adona.
In this jurisdiction, the dictum adhered to is that the nature of an action is
determined, more importantly, by the body of the pleading or complaint itself than by
its title or heading. The Court of Appeals did not err in treating the action brought by
private respondents as one for reconveyance or as one that seeks the transfer of the
property, wrongfully registered by another, to its rightful and legal owner. 10 It would
seem that Andres Adona did perfect his homestead application prior to his death, 11

the right to the issuance of the patent on which vests after complying with all the
requirements of the law. 12
The next crucial issue focuses on the ruling of the Court of Appeals to the effect that
if a person who claims to be the owner of the property is in actual possession
thereof, the right to seek reconveyance does not prescribe.
There is no doubt about the fact that an action for reconveyance based on an implied
trust ordinarily prescribes in ten years. 13 This rule assumes, however, that there is an
actual need to initiate that action, for when the right of the true and real owner is
recognized, expressly or implicitly such as when he remains undisturbed in his
possession, the statute of limitation would yet be irrelevant. An action for
reconveyance, if nonetheless brought, would be in the nature of a suit for quieting of
title, or its equivalent, an action that is imprescriptible. In Faja vs. Court of Appeals, 14
the Court has held that a person in actual possession of a piece of land under claim
of ownership may wait until his possession is disturbed or his title is attacked before
taking steps to vindicate his right, and that his undisturbed possession gives him the
continuing right to seek the aid of a court of equity to ascertain and determine the
nature of the adverse claim of a third party and its effect on his title. In the words of
the Court
. . . There is settled jurisprudence that one who is in actual possession of a piece of
land claiming to be owner thereof may wait until his possession is disturbed or his title
is attacked before taking steps to vindicate his right, the reason for the rule being, that
his undisturbed possession gives him a continuing right to seek the aid of a court of
equity to ascertain and determine the nature of the adverse claim of a third party and
its effect on his own title, which right can be claimed only by one who is in
possession. No better situation can be conceived at the moment for Us to apply this
rule on equity than that of herein petitioners whose mother, Felipa Faja, was in
possession of the litigated property for no less than 30 years and was suddenly
confronted with a claim that the land she had been occupying and cultivating all these
years, was titled in the name of a third person. We hold that in such a situation the
right to quiet title to the property, to seek its reconveyance and annul any certificate of
title covering it, accrued only from the time the one in possession was made aware of
a claim adverse to his own and it is only then that the statutory period of prescription
commences to run against such possessor. 15

The same dictum is reiterated in Heirs of Jose Olviga vs. Court of Appeals; 16
thus
With regard to the issue of prescription, this Court has ruled a number of times before
that an action for reconveyance of a parcel of land based on implied or constructive
trust prescribes in ten years, the point of reference being the date of registration of
the deed or the date of the issuance of the certificate of title over the property (Vda.
de Portugal vs. IAC, 159 SCRA 178). But this rule applies only when the plaintiff is not
in possession of the property, since if a person claiming to be the owner thereof is in
actual possession of the property, the right to seek reconveyance, which in effect
seeks to quiet title to the property, does not prescribe. 17

Finally, this Court sees no cogent reasons to disturb the finding of the Court of
Appeals that the de Ubagos may not be considered buyers in good faith. Said the
Appellate Court:
. . . An innocent purchaser for value is one who buys property of another, without
notice that some other person has a right to, or interest in, such property and pays a
full and fair price for the same, at the time of such purchase, or before he has notice
of the claim or interest of some other persons in the property. He buys the property
with the belief that the person from whom he receives the thing was the owner and
could convey title to the property. A purchaser can not close his eyes to facts which
should put a reasonable man on his guard and still claim he acted in good faith
(Sandoval vs. Court of Appeals, 260 SCRA 283, 296 [1996]).
It is well settled that one who deals with property registered under the Torrens system
need not go beyond the same, but only has to rely on the title. He is charged with
notice only of such burdens and claims as are annotated on the title. (Sandoval,
supra., at p. 295).
The aforestated principle admits of an unchallenged exception: that a person dealing
with registered land has a right to rely on the Torrens certificate of title and to
dispense with the need of inquiring further except when the party has actual
knowledge of facts and circumstances that would impel a reasonably cautious man to
make such inquiry or when the purchaser has some knowledge of a defect or the lack
of title in his vendor or of sufficient facts to induce a reasonably prudent man to
inquire into the status of the title of the property in litigation. The presence of anything
which excites or arouses suspicion should then prompt the vendee to look beyond
the certificate and investigate the title of the vendor appearing on the face of said
certificate. One who falls within the exception can neither be denominated an
innocent purchaser for value nor a purchaser in good faith and hence does not merit
the protection of the law. (Sandoval, supra.) (Emphasis supplied)
Applying the aforequoted jurisprudence, the defendant buyers can not be considered
as innocent purchasers for value. A perusal of defendant buyers' TCT No. 42320
reveals that it contains an entry by the Register of Deeds which provides that their
ownership over the land is subject to prospective claims by any possible heirs and
creditors who might have been deprived of their lawful participation in the estate. The
said entry reads as follows:
Entry No. 102385 Section 4
The property described in this
certificate of title is subject to the
provisions of Section 4, Rule 74 of
the Rules of Court for the period of
two years in favor of in any other
possible heir or heirs and creditors
who might have been deprived of his
or their lawful participations in the
said estate.
Date of Instrument December 15,
1990

Date of Inscription November 27,

1992 at 2:00 p.m. (Exh. "E"; Rollo, p.
137)
Sec. 4, Rule 74 of the Rules of Court reads, in part, as follows:
Sec. 4. Liability of distributees and estate. If it shall appear at any
time within (2) years after the settlement and distribution of an estate
in accordance with the provisions of either of the first two sections of
this rule, that an heir or other person has been unduly deprived of his
lawful participation in the estate, such heir or such other person may
compel the settlement of the estate in the courts in the manner
hereinafter provided for the purpose of satisfying such lawful
participation . . .
The record shows that the "Extrajudicial Settlement of Estate with Sale" was executed
on December 15, 1990. Plaintiffs' complaint for Reconveyance was filed on
December 7, 1992. Hence, the two-year period has not yet elapsed.
It likewise appears that the subject land was the object of a sale between the
defendant Heirs and one Mrs. Venancia Ungson which was subsequently aborted
due to the intervention of defendant Vicente Adona and plaintiff Cristito Malay. (Exhs.
"K", "K-1" and "L") However, defendant Heirs nevertheless executed another sale in
favor of defendant buyers who are admittedly relatives of Mrs. Venancia Ungson.
(TSN, January 23, 1995, p. 14) Plaintiff Cristito Malay's intervention in the previous
sale should have put defendant buyers on their guard.
Moreover, it is unbelievable that the defendant buyers would not have noticed the
plaintiffs who were in possession of the land when the defendant buyers inspected
the same. Had they made further investigations, they would have discovered that
plaintiffs were in possession of the land under a claim of ownership.
The rule is settled that a buyer of real property which is in the possession of persons
other than the seller must be wary and should investigate the rights of those in
possession. Otherwise, without such inquiry, the buyer can hardly be regarded as a
buyer in good faith. The buyer who has failed to know or discover that the land sold to
him is in the adverse possession of another buyer in bad faith. (Embrado vs. Court of
Appeals, 233 SCRA 335, 347 [1994]). 18

Altogether, the Court sees no reversible error on the part of the Court of Appeals in
its assailed decision.
WHEREFORE, the decision of the Court of Appeals is AFFIRMED Costs against
petitioners.
SO ORDERED.
Melo, Panganiban, Purisima and Gonzaga-Reyes, JJ., concur.

G.R. No. 159494

July 31, 2008

ROGELIO, GEORGE, LOLITA, ROSALINDA, and JOSEPHINE, all surnamed

PASIO, represented by their father and attorney-in-fact JOSE PASIO Petitioners,
vs.
DR. TEOFILO EDUARDO F. MONTERROYO, ROMUALDO MONTERROYO,
MARIA TERESA MONTERROYO, and STEPHEN MONTERROYO, Respondents.
DECISION
CARPIO, J.:
The Case
Before the Court is a petition for review1 assailing the 31 January 2003 Decision2 and the 5
August 2003 Resolution3 of the Court of Appeals in CA-G.R. CV No. 63199. The Court of
Appeals affirmed the Decision4 dated 2 February 1999 of the Regional Trial Court of Iligan
City, Branch 6 (trial court), in Civil Case No. 06-3060.
The Antecedent Facts
This case originated from an action for recovery of possession and damages, with prayer for
the issuance of a temporary restraining order or writ of preliminary mandatory injunction,
filed by Rogelio, George, Lolita, Rosalinda and Josephine, all surnamed Pasio, represented
by their father and attorney-in-fact Jose Pasio (petitioners) against Dr. Teofilo Eduardo F.
Monterroyo (Dr. Monterroyo), later substituted by his heirs Romualdo, Maria Teresa and
Stephen, all surnamed Monterroyo (respondents).
Cad. Lot No. 2139 of Cad. 292, Iligan Cadastre (Lot No. 2139), with an area of 19,979 square
meters, located at Panul-iran, Abuno, Iligan City, was part of a 24-hectare land occupied,
cultivated and cleared by Laureano Pasio (Laureano) in 1933. The 24-hectare land formed
part of the public domain which was later declared alienable and disposable. On 18 February
1935, Laureano filed a homestead application over the entire 24-hectare land under
Homestead Application No. 205845.5 On 22 April 1940, the Bureau of Forestry wrote
Laureano and informed him that the tract of land covered by his application was not needed
for forest purposes.6 On 11 September 1941, the Director of Lands issued an Order7
approving Laureanos homestead application and stating that Homestead Entry No. 154651
was recorded in his name for the land applied for by him.
Laureano died on 24 March 1950. On 15 April 1952, the Director of Lands issued an Order8
for the issuance of a homestead patent in favor of Laureano, married to Graciana Herbito9
(Graciana). Laureanos heirs did not receive the order and consequently, the land was not
registered under Laureanos name or under that of his heirs. In 1953, the property was
covered by Tax Declaration No. 1110210 in the name of Laureano with Graciana11 as
administrator.

Between 1949 and 1954, a Cadastral Survey was conducted in Iligan City. The surveyor
found that a small creek divided the 24-hectare parcel of land into two portions, identified as
Lot No. 2138 and Lot No. 2139.
Petitioners claimed that Laureanos heirs, headed by his son Jose, continuously possessed and
cultivated both lots. On 16 October 1962, Joses co-heirs executed a Deed of Quitclaim
renouncing their rights and interest over the land in favor of Jose. Jose secured a title in his
name for Lot No. 2138. Later, Jose alienated Lot No. 2139 in favor of his children
(petitioners in this case) who, on 8 January 1994, simultaneously filed applications for grant
of Free Patent Titles over their respective shares of Lot No. 2139 before the Land
Management Bureau of the Department of Environment and Natural Resources (DENR). On
22 August 1994, the DENR granted petitioners applications and issued Original Certificate
of Title (OCT) No. P-1322 (a.f.) in favor of Rogelio Pasio, OCT No. P-1318 (a.f.) in favor
of George Pasio, OCT No. P-1317 (a.f.) in favor of Lolita Pasio, OCT No. P-1321 (a.f.) in
favor of Josephine Pasio, and OCT No. P-1319 (a.f.) in favor of Rosalinda Pasio.
Petitioners alleged that their possession of Lot No. 2139 was interrupted on 3 January 1993
when respondents forcibly took possession of the property.
Respondents alleged that they had been in open, continuous, exclusive and notorious
possession of Lot No. 2139, by themselves and through their predecessors-in-interest, since
10 July 1949. They alleged that on 10 July 1949, Rufo Larumbe (Larumbe) sold Lot No.
2139 to Petra Teves (Petra). On 27 February 1984, Petra executed a deed of sale over Lot No.
2139 in favor of Vicente Teves (Vicente). On 20 February 1985, Vicente executed a pacto de
retro sale over the land in favor of Arturo Teves (Arturo). In 1992, Arturo sold Lot No. 2139
in favor of respondents father, Dr. Monterroyo, by virtue of an oral contract. On 5 January
1995, Arturo executed a Deed of Confirmation of Absolute Sale of Unregistered Land in
favor of Dr. Monterroyos heirs.
Respondents alleged that Jose was not the owner of Lot No. 2139 and as such, he could not
sell the land to his children. They alleged that petitioners OCTs were null and void for
having been procured in violation of the Public Land Act. They further alleged that the Land
Management Bureau had no authority to issue the free patent titles because Lot No. 2139 was
a private land.
The Ruling of the Trial Court
In its 2 February 1999 Decision, the trial court ruled, as follows:
WHEREFORE, judgment is rendered in favor of all the defendants and against the plaintiffs:
1. Dismissing the complaint;
2. Declaring Lot No. 2139, Iligan Cadastre 292, located at Panul-iran, Abuno, Iligan
City to have acquired the character of a private land over which the Land
Management Bureau has been divested of jurisdiction;

3. Declaring the defendants to be the owners and possessors of the said lot;
4. Declaring OCT Nos. P-1322 (a.f.) of Rogelio Pasio, P-1318 (a.f.) of George
Pasio, P-1317 (a.f.) of Lolita Pasio, P-1321 (a.f.) of Josephine Pasio and P-1319
(a.f.) of Rosalinda Pasio to be null and void for having been procured by fraud and
for having been issued by the Land Management Bureau which has been divested of
jurisdiction over said lot;
5. Declaring the defendants to be entitled to the sum of P6,000.00 deposited with the
Office of the Clerk of Court under O.R. No. 1487777;
6. Dismissing the defendants counterclaim for attorneys fees.
Costs against the plaintiffs.
SO ORDERED.12
The trial court ruled that as of January 1994, Lot No. 2139 had already acquired the character
of a private land by operation of law. Since Lot No. 2139 had already ceased to be a public
land, the Land Management Bureau had no power or authority to dispose of it by issuing free
patent titles.
The trial court ruled that respondents counterclaim stands on the same footing as an
independent action. Thus, it could not be considered a collateral attack on petitioners titles.
The trial court further ruled that respondents filed their counterclaim within one year from the
grant of petitioners titles, which was the reglementary period for impugning a title.
The trial court ruled that the order for the issuance of a patent in favor of Laureano lapsed and
became functus officio when it was not registered with the Director of Deeds. The trial court
ruled that while Laureano was the original claimant of the entire 24 hectares, he ceded the
right to possession over half of the property, denominated as Lot No. 2139, to Larumbe
sometime in 1947. The trial court found that Laureano offered to sell half of the land to his
tenant Gavino Quinaquin (Gavino) but he did not have money. Later, Gavino learned from
Larumbe that he (Larumbe) acquired half of the land from Laureano. Gavino then started
delivering the owners share of the harvest to Larumbe. Laureano never contested Gavinos
action nor did he demand that Gavino deliver to him the owners share of the harvest and not
to Larumbe. When Lot No. 2139 was sold, Gavino and his successors delivered the owners
share of the harvest to Petra, Vicente, Arturo, Dr. Monterroyo, and Dindo Monterroyo,
successively. The trial court also found that the other tenants had never given any share of the
harvest to Jose. The trial court ruled that petitioners had failed to present convincing evidence
that they and their predecessors-in-interest were in possession of Lot No. 2139 from 1947 to
1994 when they filed their application for free patent. The trial court ruled that petitioners
committed actual fraud when they misrepresented in their free patent applications that they
were in possession of the property continuously and publicly.

Petitioners appealed from the trial courts Decision.

The Ruling of the Court of Appeals
In its 31 January 2003 Decision, the Court of Appeals affirmed the trial courts Decision.
The Court of Appeals ruled that the trial court did not err in allowing respondents
counterclaim despite the non-appearance of Dr. Monterroyo, the original defendant, at the
barangay conciliation proceedings. The Court of Appeals ruled that petitioners themselves did
not personally appear. They were represented by their attorney-in-fact although they were all
of legal age, which was a violation of the Katarungang Pambarangay proceedings requiring
the personal appearance of the parties. Hence, the Court of Appeals ruled that there was never
a valid conciliation proceeding. However, while this would have been a ground for the
dismissal of the complaint, the issue was deemed waived because respondents did not raise it
in their answer before the trial court.
The Court of Appeals ruled that the validity of petitioners titles could be attacked in a
counterclaim. The Court of Appeals ruled that respondents counterclaim was a compulsory
counterclaim.
The Court of Appeals sustained the trial courts ruling that the Land Management Bureau had
been divested of jurisdiction to grant the patent because the land already acquired the
character of a private land. While the homestead patent was issued in favor of Laureano, the
issuance of patent order became functus officio when it was not registered. The Court of
Appeals further sustained the trial courts finding that respondents were in physical, open,
public, adverse and continuous possession of Lot No. 2139 in the concept of owner for at
least 30 years prior to petitioners application for free patent titles over the land.
Petitioners filed a motion for reconsideration.
In its 5 August 2003 Resolution, the Court of Appeals denied petitioners motion for
reconsideration.
Hence, the petition before this Court.
The Issue
Petitioners raised the sole issue of whether the Court of Appeals erred in sustaining the trial
courts Decision declaring respondents as the rightful owners and possessors of Lot No.
2139.13
The Ruling of this Court
The petition has no merit.

Land Management Bureau Had No Jurisdiction

To Issue Free Patent Titles
In Director of Lands v. IAC,14 the Court ruled:
[A]lienable public land held by a possessor, continuously or through his predecessors-ininterest, openly, continuously and exclusively for the prescribed statutory period (30 years
under The Public Land Act, as amended) is converted to private property by the mere lapse or
completion of the period, ipso jure.15
In Magistrado v. Esplana,16 the Court ruled that so long as there is a clear showing of open,
continuous, exclusive and notorious possession, and hence, a registrable possession, by
present or previous occupants, by any proof that would be competent and admissible, the
property must be considered to be private.
In this case, the trial court found that the preponderance of evidence favors respondents as the
possessors of Lot No. 2139 for over 30 years, by themselves and through their predecessorsin-interest. The question of who between petitioners and respondents had prior possession of
the property is a factual question whose resolution is the function of the lower courts.17 When
the factual findings of both the trial court and the Court of Appeals are supported by
substantial evidence, they are conclusive and binding on the parties and are not reviewable by
this Court.18 While the rule is subject to exceptions, no exception exists in this case.
Respondents were able to present the original Deed of Absolute Sale, dated 10 July 1949,
executed by Larumbe in favor of Petra.19 Respondents also presented the succeeding Deeds of
Sale showing the transfer of Lot No. 2139 from Petra to Vicente20 and from Vicente to
Arturo21 and the Deed of Confirmation of Absolute Sale of Unregistered Real Property
executed by Arturo in favor of respondents.22 Respondents also presented a certification23
executed by P/Sr. Superintendent Julmunier Akbar Jubail, City Director of Iligan City Police
Command and verified from the Log Book records by Senior Police Officer Betty
Dalongenes Mab-Abo confirming that Andres Quinaquin made a report that Jose, Rogelio
and Luciana Pasio, Lucino Pelarion and Nando Avilo forcibly took his copra. This belied
petitioners allegation that they were in possession of Lot No. 2139 and respondents forcibly
took possession of the property only in January 1993.
Considering that petitioners application for free patent titles was filed only on 8 January
1994, when Lot No. 2139 had already become private land ipso jure, the Land Management
Bureau had no jurisdiction to entertain petitioners application.
Non-Registration of Homestead Patent Rendered it
Functus Officio
Once a homestead patent granted in accordance with law is registered, the certificate of title
issued by virtue of the patent has the force and effect of a Torrens title issued under the land
registration law.24 In this case, the issuance of a homestead patent in 1952 in favor of

Laureano was not registered. Section 103 of Presidential Decree No. 152925 mandates the
registration of patents, and registration is the operative act to convey the land to the patentee,
thus:
Sec. 103. x x x x. The deed, grant, patent or instrument of conveyance from the Government
to the grantee shall not take effect as a conveyance or bind the land but shall operate only as a
contract between the Government and the grantee and as evidence of authority to the Register
of Deeds to make registration. It is the act of registration that shall be the operative act to
affect and convey the land, and in all cases under this Decree, registration shall be made in
the office of the Register of Deeds of the province or city where the land lies. The fees for
registration shall be paid by the grantee. After due registration and issuance of the certificate
of title, such land shall be deemed to be registered land to all intents and purposes under this
Decree. (Emphasis supplied)1avvphi1
Further, in this case, Laureano already conveyed Lot No. 2139 to Larumbe in 1947 before the
approval of his homestead application. In fact, Larumbe already sold the land to Petra in
1949, three years before the issuance of the homestead patent in favor of Laureano. The trial
court found that since 1947, the tenants of Lot No. 2139 had been delivering the owners
share of the harvest, successively, to Larumbe, Petra, Vicente and Arturo Teves, Dr.
Monterroyo and Dindo Monterroyo. The trial court found no instance when the owners share
of the harvest was delivered to Jose Pasio.
Hence, we sustain the trial court that the non-registration of Laureanos homestead patent had
rendered it functus officio.
A Counterclaim is Not a Collateral Attack on the Title
It is already settled that a counterclaim is considered an original complaint and as such, the
attack on the title in a case originally for recovery of possession cannot be considered as a
collateral attack on the title.26 Development Bank of the Philippines v. Court of Appeals27 is
similar to the case before us insofar as petitioner in that case filed an action for recovery of
possession against respondent who, in turn, filed a counterclaim claiming ownership of the
land. In that case, the Court ruled:
Nor is there any obstacle to the determination of the validity of TCT No. 10101. It is true that
the indefeasibility of torrens title cannot be collaterally attacked. In the instant case, the
original complaint is for recovery of possession filed by petitioner against private respondent,
not an original action filed by the latter to question the validity of TCT No. 10101 on which
petitioner bases its right. To rule on the issue of validity in a case for recovery of possession
is tantamount to a collateral attack. However, it should not [b]e overlooked that private
respondent filed a counterclaim against petitioner, claiming ownership over the land and
seeking damages. Hence, we could rule on the question of the validity of TCT No. 10101 for
the counterclaim can be considered a direct attack on the same. A counterclaim is considered
a complaint, only this time, it is the original defendant who becomes the plaintiff... It stands

on the same footing and is to be tested by the same rules as if it were an independent action.
x x x.28
As such, we sustain both the trial court and the Court of Appeals on this issue.
Principle of Constructive Trust Applies
Under the principle of constructive trust, registration of property by one person in his name,
whether by mistake or fraud, the real owner being another person, impresses upon the title so
acquired the character of a constructive trust for the real owner, which would justify an action
for reconveyance.29 In the action for reconveyance, the decree of registration is respected as
incontrovertible but what is sought instead is the transfer of the property wrongfully or
erroneously registered in anothers name to its rightful owner or to one with a better right.30 If
the registration of the land is fraudulent, the person in whose name the land is registered
holds it as a mere trustee, and the real owner is entitled to file an action for reconveyance of
the property.31
In the case before us, respondents were able to establish that they have a better right to Lot
No. 2139 since they had long been in possession of the property in the concept of owners, by
themselves and through their predecessors-in-interest. Hence, despite the irrevocability of the
Torrens titles issued in their names and even if they are already the registered owners under
the Torrens system, petitioners may still be compelled under the law to reconvey the property
to respondents.32
WHEREFORE, we DENY the petition. We AFFIRM the 31 January 2003 Decision and the
5 August 2003 Resolution of the Court of Appeals in CA-G.R. CV No. 63199. Costs against
petitioners.
SO ORDERED.
G.R. No. L-33307 August 30, 1973
VICENTE E. KAYABAN and FLORENTINA LAGASCA-KAYABAN, petitioners,
vs.
THE REPUBLIC OF THE PHILIPPINES and HONORABLE VICENTE M.
SANTIAGO, JR., as Presiding Judge of Branch V, CFI of Pangasinan,
respondents.
Edilberto Ga. Esguerra for petitioners.
Office of the Solicitor General Felix Q. Antonio, Assistant Solicitor General Hector C.
Fule and Solicitor General Felix J. Bautista for respondents.

MAKALINTAL, Actg., C.J.:

The present case started with an action for illegal detainer filed in the municipal court
of Alcala Pangasinan on April 20, 1967 and docketed therein as Civil Case No. 246.
The plaintiff was Vicente Kayaban, one of the petitioners herein, the other petitioner
being his wife Florentina Lagasca-Kayaban; and the defendants were the spouses
Benjamin Orpindo and Leonila Aguilar-Orpindo. The property involved was Lot No. 9,
one of several lots covered by O.C.T. No. P-1214 in the plaintiff's name. Another title,
O.C.T. No. P-1215, covering other lots, was in the name of his wife Florentina, and
both were issued way back on September 22, 1956 as a result of free patent
applications filed by them in 1955.
On July 12, 1967, just before the hearing of the illegal detainer case was terminated
in the municipal court, the Orpindo spouses, together with Ruea Whiting Vds. de
Kayaban and her children, filed a complaint against the Kayaban spouses in the
Court of First Instance of Pangasinan for reconveyance of Lot No. 9, which complaint
was docketed as Civil Case No. U-1022. Sometime later the illegal detainer case
was decided adversely to the plaintiff, who thereupon appealed to the Court of First
Instance, where the case was docketed as Civil Case No. U-1034.
Still later, upon a letter-complaint to the Solicitor General's Office by the lawyer for
the Orpindos, the said Office filed, on December 17, 1968, an action for annulment
of the two free patent titles of the Kayabans and for reversion of the lands covered
thereby to the State. The case was docketed as Case No. U-2080.
The three cases U-1022, U-1034 and U-2080 were consolidated and tried
jointly before respondent court, which rendered its decision on July 31, 1970. Case
No. U-1022, for reconveyance, was dismissed and the property involved therein was
declared to be the "absolute and exclusive property of defendant Vicente Kayaban."
Case No. U-2034, for illegal detainer, was decided in favor of the plaintiff therein
Vicente Kayaban and the defendants were ordered to vacate the land and to pay
monthly rentals thereon until possession was finally restored to the plaintiff. The
losing parties in those two cases did not appeal from the decision, which
consequently became final.
The petition now before Us is by the spouses Vicente Kayaban and Florentina
Lagasca-Kayaban for review of the decision insofar as Civil Case No. U-2080 is
concerned. The dispositive portion of that decision is as follows:
xxx xxx xxx
3. In Civil Case No. 2080, Original Certificates of Title Nos. P-1214 and P-1215
subject-matter thereof and under the names of Vicente Kayaban and Florentina
Lagasca-Kayaban are hereby declared null and void; however, they are hereby
declared to be the rightful and exclusive owners and possessors of all the properties

therein covered, with the right to apply for the confirmation of their titles thereto in a
proper judicial proceedings. The Philippine National Bank * having acted in good faith
is absolved of any liability, and its right to recover on the mortgage loan may be
enforced. Without pronouncement as to attorney's fees and costs.

The facts as found by the respondent court on the basis of the evidence submitted
by the petitioners are as follows: The lands covered by the two titles were inherited
by Vicente Kayaban and his co-heirs from their father and common predecessor-ininterest, Gabriel Kayaban, whose last will was admitted to probate in 1923. After the
properties were partitioned, Vicente Kayaban acquired the shares of his co-heirs by
purchase and afterwards he and his wife applied for and obtained the two free patent
titles in question.
The respondent court recognized and declared the petitioners to be the rightful and
exclusive owners of the properties covered by the said titles and denied the Solicitor
General's prayer that they be reverted to the State, but nevertheless declared the
titles null and void on the ground that since the owners had acquired the properties
partly by inheritance from their father and the rest by purchase from their co-heirs,
and their father had been in possession thereof for many years before them, the
lands were no longer public and hence not subject to disposition by the government
under the Public Land Act. The procedure that should have been followed, said the
court, was judicial confirmation of an imperfect title and not administrative
legalization thereof through patent application.
We find the present appeal meritorious. We note in the first place that nowhere in the
record is it shown that the complaint in Case No. U-2080 for annulment of the
appellants' titles and for reversion of the lands covered thereby to the State was filed
at the behest of the Director of Lands. What does appear in the stipulation of facts
submitted by the parties below is as follows:
xxx xxx xxx
6. That this instant case praying primarily to declare "null and void" the Original
Certificates of Titles Nos. P-1214 and P-1215, has been initiated by Atty. Nestor C.
Fernandez upon his letter complaint to the Solicitor General's Office;
7. That Atty. Nestor C. Fernandez is neither a claimant, possessor, nor does he have
any right whatsoever over any portion of the lands covered by the Original
Certificates of Titles Nos. P-1214 and P-1215.

Since it was the Director of Lands who processed and approved the applications of
the appellants and who ordered the issuance of the corresponding free patents in
their favor in his capacity as administrator of the disposable lands of the public
domain, the action for annulment should have been initiated by him, or at least with
his prior authority and consent.

In the second place, the dictum of the lower court that the appellants chose the
wrong remedy in applying for free patents instead of obtaining a judicial confirmation
of their imperfect titles involves a technicality that is of no material consequence now
in view of the declaration by the same court that the appellants are the rightful and
exclusive owners of the lands covered by said titles. Indeed, insofar as the kind of
land that may be the subject of one or the other remedy is concerned, there is no
difference between them. Both refer to public lands suitable for agricultural purposes;
both require continuous occupation and cultivation either by the applicant himself or
through his predecessors-in-interest for a certain length of time; and both are modes
of confirming an imperfect or incomplete title one judicially and the other
administratively. * The fact that the appellants inherited part of the lands in question
from their father and acquired the rest by purchase from their co-heirs does not
necessarily imply that they had become private lands in the sense of being no longer
subject to disposal under the provisions of the Public Land Act. What is not to be
denied is that in connection with their free patent applications the appellants, as well
as the Director of Lands, considered the lands as still part of the public domain,
although the appellants had an imperfect title to them. The following statement in the
decision of this court in the case of Antonio vs. Barroga, 23 SCRA 360 (April 29,
1968) is apropos:
It is true that by filing the application for a free patent Barroga impliedly admitted
either the invalidity of insufficiency of Titulo Real No. 12479 issued in the name of his
predecessor-in-interest on July 22, 1894, but neither the allegation made in his
answer that his aforesaid predecessor-in-interest was the absolute owner of the
property covered by said Titulo Real nor his implied admission of the latter's invalidity
or insufficiency are grounds for the annulment of the free patent and original
certificate of title in question. Evidently, it was Barroga's privilege to rely or not to rely
upon his claim of private ownership in favor of his predecessor-in-interest and
whatever the latter's Titulo Real was worth. He decided not to rely upon them and to
consider instead that the property covered by the Titulo Real was still a part of the
public domain. Acting accordingly he applied for a free patent and was successful. It
must be borne in mind that its holder still had to prove that he possessed the land
covered by it without interruption during a period of ten years by virtue of a good title
and in good faith (Royal Decree of June 25, 1880). We may well presume that
Barroga felt that he had no sufficient evidence to prove this, for which reason he
decided to acquire the land as part of the public domain. (Emphasis supplied)

Finally, whether the titles in question were obtained through judicial or administrative
legalization of imperfect or incomplete title is of no practical importance. The
certificates of title in either case is the same, namely, that provided for in Section 122
of Act No. 496, which, except for some restrictions as to alienability within entitled to
all the protection afforded by the Torrens System of registration.
WHEREFORE, the decision appealed from (Case No. U-2080) is reversed insofar as
it declares null and void Original Certificates of Title Nos. P-1214 and P-1215 in the
names of Vicente Kayaban and Florentina Lagasca-Kayaban, respectively. No
pronouncement as to costs.

Zaldivar, Castro, Fernando, Teehankee, Barredo, Makasiar and Esguerra, JJ.,

concur.
Antonio, J., took no part.
G.R. No. L-50685 December 4, 1991
ROBERTO AGURA, CESAR ALIB, TOMAS STA. RITA, ALFREDO CORDOVA,
VICTOR DE LOS REYES, and MARINA SERFINO, petitioners,
vs.
FEDERICO SERFINO, SR., FEDERICO SERFINO, JR., The Honorable RONALDO
B. ZAMORA, Presidential Assistant for Legal Affairs, Office of the President;
The Honorable JOSE J. LEIDO, JR., Minister of the Department of Natural
Resources, and The Court of First Instance of Manila, Branch XXI, respondents.
Francisco B. Cruz and Gruba, Tanlimco, Lamson & Burgos for petitioners.

DAVIDE, JR., J.:

In this petition for review on certiorari, petitioners seek to nullify the decision dated
30 April 1979 of the then Court of First Instance (now Regional Trial Court) of Manila,
Branch XXI, in Civil Case No. 113897, which affirmed the decisions of the
Presidential Assistant for Legal Affairs and the then Minister of Natural Resources
giving due course to the Miscellaneous Sales Applications filed by private
respondents with the Bureau of Lands.
The relevant factual and procedural antecedents which gave rise to this petition as
gathered from the pleadings are as follows:
On 10 December 1965, private respondent Federico Serfino, Sr., filed with the
Bureau of Lands Miscellaneous Sales Application (MSA) No. (V-3)2 over a 4,172
square meter parcel of land located at San Patricia Bacolod City. On 18 February
1966, his son, respondent Serfino, Jr., filed MSA No. (V-3)1 over an adjoining lot with
an area of 1,358 square meters. Subsequently, the Director of Lands approved the
survey plans of these two (2) MSAs.
On 21 February 1966, Land Investigator Rodolfo Magbanua conducted a preliminary
investigation of the parcels of land covered by the above MSAs. He reported that
Serfino, Sr. had introduced improvements consisting of a residential house, a piggery
house and a bodega all valued at P25,500.00; Serfino, Jr. had introduced an
improvement consisting of a residential house valued at P15,000.00; and that they
have been occupying the parcels applied for since 1947. Magbanua recommended
that the MSAs be given further due course.

The MSAs were referred to the Director of Public Works, the Commissioner of Public
Highways, the Bacolod City Engineer and the Bacolod City Collector of Customs.
These officials did not interpose any objections. The Director of Lands approved the
surveys of the parcels applied for on 26 July 1966.
On 28 September 1967, notices for the sale through public auction of the lots in
question were posted at the required places and published in the 13 and 20
November 1967 issues of the Official Gazette. The auction sale was set for 27
December 1967 at 10:00 o'clock in the morning. The Undersecretary of Natural
Resources pegged the price of the lots in question at P5.00 per square meter.
At the auction sale, private respondents were the only qualified bidders. Serfino, Sr.'s
bid was P20,860.00 while that of Serfino, Jr.'s was P6,790.00. They paid the required
10% of their respective bids. While the purchase price and the corresponding annual
real estate taxes have already been fully paid, the Bureau of Lands has yet to issue
an Order awarding the lots in question to them.
On 11 March 1968, District Land Officer Pedro C. Reyes ordered an investigation of
an alleged conflict (docketed as D.L.O Conflict No. (V-3)220 (N)) between Serfino,
Sr.'s MSA No. (V3)2 and that of an unnumbered Revocable Permit Application
(VRAP) of a certain Primitive Donozo. On 2 April 1968, another investigation of an
alleged conflict (docketed as B.L. Conflict No. 217(N)) between Serfino, Jr.'s MSA
No. (V-3)1 and the RPAs of petitioners Agura, Alib, and Sta. Rita and a certain
Domingo Natividad was ordered.
Land Investigator Ernesto Siriban conducted a preliminary investigation of B.L.
Conflict No. 217(N). In his report dated 2 April 1968, he stated:
That the land subject hereof used to be foreshore but is now dryland
and is being used for residential purposes by the party litigants and
their respective tenants and relatives;
That upon verification of the premises, it was found out that the area
applied for and occupied by the Applicants-Contestants are inside the
area applied for and surveyed for the Applicant-Respondent ... 1
In his report, Siriban made no mention of D.L.O. Conflict No. (V-3)220(N). He
advised the contending parties in B.L. Conflict No. 217(N) to submit to a formal
investigation so that their respective claims can be threshed out.
A formal investigation was then conducted by Ramon Villamarzo of the Bacolod City
District Land Office. Three (3) formal hearings were held in May, June and 19
September 1969. Unfortunately, however, Villamarzo failed to submit either the
stenographic notes or the report on what transpired during these hearings, except
the one held on 19 September 1969 wherein he stated that for failure of herein

respondents to appear, he had to reset the hearings of 27, 28, and 29 of November
1969.
Meanwhile, petitioners Agura, Alib, Sta. Rita and 106 others sent to the President of
the Philippines a petition dated 22 August 1969 requesting that the small parcels of
land located in the areas covered by private respondents' MSAs which they have
been occupying for thirty (30) years be awarded to them. In view of this petition,
Regional Land Officer Cipriano Zabala of Region V, Iloilo City was ordered to
conduct an investigation. On 13 October 1969, Zabala submitted the following
preliminary report:
The land subject of the present controversy is now a dry land which
has been formed by accretions from the sea (Guimaras strait) for
many, many years. It could not be reached anymore by sea water
during ordinary high tide. The land is between the Bacolod Cadastre on
the east and foreshore area on the west.
About 314 of the land in question extending towards the south was
surveyed under approved survey plans msi-(V-3)3-D in the name of
Federico Serfino, Sr. and Serfino, Jr. The remaining 1/4 portion of the
land in question is not covered by an approved survey plan and is
being claimed by Mr. Serfino, Sr.
The Serfinos have houses on the land in question. Likewise, all other
portions of the said in question are covered with houses mostly of nipa
roofing and of light materials belonging to the petitioners. There is an
well now being used by the people therein. Several old coconut trees
are found in the area and the consensus of the People with me
(including Atty. Drilon, Jr., Serfino Sr. and Barrio Captain Deoma) is that
these coconut trees have been planted by Candido Cordova and/or his
predecessors, owners of a cadastral lot not very far south of the land in
question. 2
On 3 December 1969, Zabala submitted a "final" report:
As stated in my progress report dated October 13, 1969, transit and
stadia sketching of the area in question was made by Surveyor I
Ponciano Bautista of the Bacolod City District Land Office. Enclosed
herewith, marked as Annex "J" is a sketch tracing plan prepared
therefor. From the herein sketch plan, the fint lot on the south is that
covered by M.S.A. No. (V-3)1 of Federico Serfim, Jr. with an area of
1,358 squam meters. There are thirty four (34) persons (petitioners)
with houses therein very close to each other occupying the area.
Someof these houses are indicated on the tracing plan. The site of the

proposed artesian well to he constructed is also indicated and circled

with red ink on the sketch.
The sand lot involved in this case with an area of 4,172 square meters
is the one applied for by Federico Serfino, Sr. Aside from the residential
house of the Serfinos and the bodega (of) the West Visayan Shipping
Co., there are thirty-eight (38) houses also close to each other of the
petitioners. Some of these houses are indicated on the sketch.
xxx xxx xxx
The third lot on the north is not covered by any public land application
by the Serfinos as verified from the records in the District Land Office
at Bacolod City. The area is approximately 3,650 square meters. There
are fifty-eight (58) houses of the petitioner(s) within the lot all close to
each other. Some of the houses are indicated on the sketch. The site of
another artesian well proposed to be constructed by the petitioners is
marked and circled in red ink. 3
Zabala likewise stated in his report that three (3) ejectment cases (Civil Cages Nos.
6633, 6534, and 6674) were filed with the City Court of Bacolod by private
respondents against certain individuals including petitioners herein. He
recommended that, in view of these pending cases, further action on private
respondents MSAs be held in abeyance.
On 7 January 1970, the City Court of Bacolod rendered decision in Civil Case No.
6533 ordering the ejectment of the defendants therein from the lots in question for
"failure to pay rentals." On 22 August 1970, Civil Cases Nos. 6534 and 6674 were
dismissed on the ground that "the question of who has a better right to the areas
claimed by the parties will be determined by the Bureau of Lands who (sic) has
charge of the disposal of public lands." 4
On 10 February 1971, Land Investigator Villamarzo submitted a report
recommending that the petitioners herein be given "preferential right" over the
portions occupied by them. Acting on this recommendation, the Director. of Lands on
6 July 1971 issued an Order, the dispositive part of which reads:
WHEREFORE, it is ordered that the Miscellaneous Sales Applications
No. (V-3)2 and (V-3)1 of Pederico Serfino, Sr. and Federico Serfino, Jr.,
respectively, be, as hereby they are, amended by excluding therefrom
the portions occupied by the petitioners, and as thus amended said
applications shall be given due course for the re portions after they are
surveyed at the applicant's own expense. The excluded portions shall
be subdivided into home-sized lots in accordance, as much as

possible, with the actual occupation of the petitioners who shall,

thereafter, be required to file appropriate public land applications
therefor. 5
On 7 August 1971, private respondents moved for a reconsideration alleging that
they were not given the opportunity to introduce evidence in their behalf. On 16
August 1974, the Assistant Director of Lands denied the motion stating, inter alia,
that:
Records also disclosed that the proceedings in the City Court of
Bacolod in the aforesaid civil cases were adopted during the
investigation of the above-noted case conducted by a representative of
this office. Thus, the records of the transcript of stenographic notes
taken down during the hearing in the two (2) aforesaid civil cases are
attached to the record of this case as part hereto.
Records further show that the petitioners-claimants are in actual
possession of the portions respectively claimed by them. The foregoing
facts and circumtances have clearly established that the petitionersclaimants have preferential right to the portions they actually occupy. 6
On appeal by herein private respondents, the Secretary of Natural Resources set
aside the foregoing orders in a decision dated 7 October 1976, the dispositive part of
which reads:
WHEREFORE, the Order of the Director of Lands dated July 6, 1971,
is hereby SET ASIDE, and the appellees are hereby ordered to vacate
the two lots in question within thirty (30) days from receipt of their
copies of the decision hereof and leave the appellants in peaceful
possession of the same. Accordingly, the Miscellaneous Sales
Application No. (V-3)1 of appellant Federico Serfino, Jr. and
Miscellaneous Sales Application No. (V-3)2 of appellant Federico
Serfino, Sr. shall be given further due course.7
In support of this disposition, the Secretary made the following findings of facts and
conclusions:
The principal issue is whether or not the sales of the lots in question in
favor of the appellants (private respondents) should be revoked in view
of the alleged conflicts and adverse claims of the appellees
(petitioners).
We find no basis for an affirmative answer to this issue considering that
the basic facts remain uncontroverted.

The records show that the required notices were posted in accordance
with law on September 28,1967, at the required places for the sale
through public auction of the lots in question on December 27, 1967.
The notices were likewise published in the Official Gazette on
November 13, 1967, and on November 20, 1967. On December 27,
1967, no other bids having been admitted, except those of the
appellants, their bids were accepted. Since then, the appellants have
fully paid the amounts respectively bedded by them: P20,860.00 for
Federico Serfino, Sr., and P6,790.00 for Federico Serfino, Jr.
Appellants have also declared the said lots for taxation purposes with
the City Assessor of Bacolod and have been religiously paying their
taxes thereon.
Ordinarily, the Order of award and the corresponding authority to enter
follow. But no such order of award in favor of the appellants has yet
been issued. Were there supervening events that could have
prevented the Bureau from giving the award to the appellants? If so,
did these supervening events constitute a bar to an award of the
contested lots?
From the records of this case, there were allegedly two supervening
events. First, there were the alleged conflicts between the
Miscellaneous Sales Applications of the appellants and Revocable
Permit Applications of the five appellees. The second were the adverse
claims of these five appellees and 105 others filed on August 22, 1969.
Under Land Administrative Order No. 6, a conflict refers to a protest
made by a public land applicant who believes that another applicant or
any other person is encroaching upon the land applied for by him. In
other words, it is essential that the protestant must be a public land
applicant. Appellees never filed any regular land application. They did,
however, file revocable permit applications, but these were never
approved by the Bureau of Lands as reflected in the questioned Order
of the Director of Lands. ... The appellees therefore have not acquired
any right whatsoever over the Iota in question. Beside (sic) such mere
filing did not create an obligation on the part of the Bureau of Lands to
grant their applications. ... It is discretionary on the part of said officials
to grant or not to grant such applicants. (Aureus vs. Secretary of
Agriculture and Natural Resources, 85 Phil. 1, November 11, 1949).
The case took on a different aspect when the five applees and 105
others sent a letter-protest to the President of the Philippines on August
22, 1969, requesting that the contested areas, which they have
allegedly occupied for more than thirty (30) years, be awarded to them.

This was done even while the formal investigation before Villamarzo on
the alleged conflicts will still pending. In fact, no investigation at all was
ever done by Villamarzo. In effect, the appellees turned the alleged
conflicts into adverse claims.
Again under Lands Administrative Order No. 6, an adverse claim refers
to the verified protest filed whereby a person asserts a right over a land
covered by a public land application, based on his alleged ownership or
on his prior right to apply for the same.
Obviously, appellees cannot base their adverse claim on the ground of
ownership once the contested lots belong to the public domain. Well
settled is the rule that no public land can be acquired by private
persons without a grant, express or implied, from the Government
(Padilla vs. Reyes, 60 Phil. 967), ... However, a mere allegation by the
appellees that they have been in occupation of certain portions of the
public domain for more than 30 years is not sufficient to confer
ownership on (sic) said public lands.
xxx xxx xxx
Appellees herein failed to protest when the appellants filed their
respective sales applications. Neither did they protest when the land
was surveyed nor did they contest or participate in the public bidding.
Appellees took nearly two years after the bidding to file their alleged
adverse claims.
The basic facts remain. The Bureau decided to sell the contested lots
through public auction. And the public bidding was indeed held. Prior
possession is immaterial. In proceedings for the sale of public lands for
residential purposes, adjudication shall be made to the highest
bidder. ...
Appellants herein have substantially complied with the sales provisions
of the Public Land Act, whereas the appellees failed to exercise their
rights when they did not participate in the public bidding. They
therefore could not invoke preferential right over the contested lots
under Section 95 of the Public Land Act since the lots were already
regularly sold at public auction in favor of the appellants. 8
On appeal by herein petitioners, the Presidential Assistant for Legal Affairs on 20
September 1977 affirmed in toto the foregoing decision.
In affirming the Secretary's decision, the Office of the President held as without merit
the contentions of petitioners that the land in question is foreshore and cannot

therefore be disposed of by sale but only by lease pursuant to Section 61, in relation
to Section 59 of the Public Land Act, and that if at all it could be disposed of by sale,
purchasers are limited to 1,000 square meters pursuant to R.A. No. 730, and that the
decision appealed from renders nugatory the social justice policy of the New Society
as it would result in the eviction and dislocation of more than 100 occupants of the
area who have been there for more than thirty (30) years. The order of the Director
of Lands of 6 July 1971 favoring the petitioners characterized the land as having
been formed by accretion from the sea, hence it is not foreshore land. The sales in
question were perfected by public auction, held and conducted pursuant to Section
60, in relation to Section 26 of the Public Land Act, and not through private sales;
hence, R.A. No. 730 has no application. As to the third contention, the Office of the
President concluded that from the facts established, the petitioners were able to
enter the land after the Serfinos purchased the land by public bidding. The social
justice policy of the New Society does not condone, much less countenance, entry
upon public lands already applied for and purchased at public auction; otherwise, it
would be placing a premium on squatting. 9
Petitioners' motion for reconsideration of the above decision having been denied,
they filed with the respondent trial court a special civil action for certiorari and asked
for the nullification of the decisions of the Presidential Assistant for Legal Affairs and
the Secretary of Natural Resources. On 30 April 1979, the trial court 10 affirmed the
questioned decisions and dismissed the petition. 11
On 20 July 1979, petitioners filed the petition at bar. 12
Petitioners urge Us to reverse the decision of the trial court because it erred:
I
... IN NOT DECLARING THAT THE FINDINGS OF THE
RESPONDENTS PUBLIC OFFICIALS WERE MADE WITH
ARBITRARINESS AND WITH GRAVE ABUSE OF DISCRETION.
II
... IN REFUSING TO REVIEW, AND IN BASING ITS DECISION ON,
THE FINDINGS OF FACT OF THE RESPONDENT PUBLIC OFFICE.
III
... IN NOT HOLDING THAT SEC. 1 OF RA. NO. 730 HAS AMENDED
THE PROVISIONS OF SECS. 61 AND 67 OF THE PUBLIC LAND ACT
REGARDING THE SALE OF PUBLIC LANDS FOR RESIDENTIAL
PURPOSES TO BONA FIDE OCCUPANTS.

IV
... IN NOT HOLDING THAT THE SALE TO THE RESPONDENTS
SERFINOS AT PUBLIC AUCTION OF MORE THAN 1,000 SQUARE
METERS OF RESIDENTIAL PUBLIC LAND VIOLATED THE
PROVISIONS OF R.A. NO. 730 AND IS THEREFORE VOID.
We required the respondents to comment 13 on the petition which public respondents
complied with on 31 August 1979,14 and private respondents on 12 October 1979. 15
A Reply was subsequently filed by the petitioners. On 13 February 1980, this Court
gave due course to the petition 16 and the parties consequently filed their Briefs.
The petition is devoid of merit.
Decisive of the first and second assigned errors is the rule We enunciated in Pajo, et
al. vs. Ago, et al ., 17 thus:
In the case of Espinosa, et al. vs. Makalintal, et al. [79 Phil. 134; 45 Off.
Gaz. 7121 we held that the powers granted to the Secretary of
Agriculture and Commerce (Natural Resources) by law regarding the
disposition of public lands such as granting of licenses, permits, leases,
and contracts or approving, rejecting, reinstating, or cancelling
applications, or deciding conflicting applications, are all executive and
administrative in nature. It is a well-recognized principle that purely
administrative and discretionary functions may not be interfered with by
the courts [Coloso vs. Board of Accountancy, 92 Phil. 938 and cases
therein cited]. In general, courts have no supervising power over the
proceedings and actions of the administrative departments of the
government. This is generally true with respect to acts involving the
exercise of judgment or discretion, and findings of fact [54 Am. Jur.
558-559]. Findings of fact by an administrative board or officials,
following a hearing, are binding upon the courts and will not be
disturbed except where the board or official has gone beyond his
statutory authority, exercised unconstitutional powers or clearly acted
arbitrarily and without regard to his duty or with grave abuse of
discretion. And we have repeatedly held that there is grave abuse of
discretion justifying the issuance of the writ of certiorari only when there
is capricious and whimsical exercise of judgment as is equivalent to
lack of jurisdiction [Abad Santos vs. Province of Tarlac, 67 Phil. 480;
Tan vs. People, 88 Phil. 6091, as where the power is exercised in an
arbitrary or despotic manner by reason of passion, prejudice, or
personal hostility amounting to an evasion of positive duty, or to a
virtual refusal to perform the duty enjoined, or to act at all in
contemplation of law [Tavera-Luna, Inc. vs. Nable, 67 Phil. 340; Alafriz

vs. Nable, 72 Phil. 278; Liwanag vs. Castillo, 106 Phil. 375; 57 Off.
Gaz. [111 (1962)]. ...
and reiterated in many cases, among which is Lacuesta vs. Herrera.18
In Lacuesta vs. Herrera, this Court categorically declared:
The petition must therefore be granted on the strength of the
established doctrine that where as in this case at bar there is no
showing that there was fraud, collusion, arbitrariness, illegality,
imposition or mistake on the part of the Office of the President or a
department head, (such as the Secretary of Agriculture and Natural
Resources in the present case), in rendering their questioned decisions
or of a total lack of substantial evidence to support the same, such
administrative decisions are entitled to great weight and respect and
will not be interfered with by the courts.
In the instant case, both the Secretary of Natural Resources and the Office of the
President made a thorough and painstaking analysis and evaluation of the facts and
their respective decisions are clearly supported by substantial evidence. There is
nothing in their actuations that would bring their findings and decisions within the
above exceptions to the principle of conclusiveness of finding of facts of
administrative bodies. Accordingly, the trial court, which nevertheless patiently and
carefully summarized the facts, did not commit the first and second alleged errors.
The third and fourth assigned errors are likewise untenable.
We agree with the ruling of the respondent court that R.A. No. 730 does not repeal
or amend Sections 61 and 67 of C.A. No. 141 (The Public Land Act); it merely
establishes an exception to said sections.
Section 61 of the Public Land Act provides:
The lands comprised in classes (a), (b), and (c) of section fifty-nine
shall be disposed of to private parties by lease only and not otherwise,
as soon as the President, upon recommendation by the Secretary of
agriculture, shall declare that the same are not necessary for the public
service and are open to disposition under this chapter. The lands
included in class (d) may be disposed of by sale or lease under the
provisions of this Act.
Section 67 provides:
The lease or sale shall be made through oral bidding, and adjudication
shag be made to the highest bidder, However, where an applicant has

made improvements on the land by virtue of a permit issued to him by

competent authority, the sale or lease shall be made by sealed bidding
as prescribed in section twenty-six of this Act, the provisions of which
shall be applied wherever applicable. If all or part of the lots remain
unleased or unsold, the Director of Lands shall from time to time
announce in the Official Gazette or in any other newspapers of general
circulation, the lease or sale of those lots if necessary.
Section 59 reads:
The lands disposable under this title shall be classified as follows:
a) Lands reclaimed by the Government by dredging,
filling, or other means;
b) Foreshore;
c) Marshy lands or lands covered with water bordering
upon the shores or banks of navigable lakes or rivers;
d) Lands not included in any of the foregoing classes.
The land in question belongs to class (d).
On the other hand, Section I of Republic Act No. 730 ("An Act To Permit The Sale
Without Public Auction of Public Lands Of The Republic Of The Philippines For
Residential Purposes To Qualified Applicants Under Certain Conditions") provides
that:
Notwithstanding the provisions of sections sixty-one and sixty seven of
Commonwealth Act Numbered One Hundred Forty-one, as amended
by Republic Act Numbered Two Hundred Ninety-three, any Filipino
citizen of legal age who is not the owner of a home lot in the
municipality or city in which he resides and who has in good faith
established his residence on a parcel of the public land of the Republic
of the Philippines which is not needed for the public service, shall be
given preference to purchase at a private sale of which reasonable
notice shall be given to him not more than one thousand square meters
at a price to be fixed by the Director of the Lands with approval of the
Secretary of Agriculture and Natural Resources. It shall be an essential
condition of this sale that the occupant has constructed his house on
the land and actually resided therein. Ten percent of the purchase price
shall be paid upon the approval of the sale and the balance may be
paid in full, or in ten equal annual installments.
while Section 3 reads:

The provisions of the Public Land Act with respect to the sale of lands
for residential purposes which are not inconsistent herewith shall be
applicable.
From the title alone of R.A. No. 730, it is quite obvious that indeed, as seen by the
respondent court, it merely provides an exception to Sections 61 and 67 of C.A. No.
141. We quote with approval the pertinent portions of the disquisition of the
respondent court, thus:
The contention of the petitioners that the sale to the Serfinos is void
because under Rep. Act No. 730 public land for residential purposes
must be sold by private sale and for not more than 1,000 square
meters is not meritorious either. Sec. 59 of commonwealth Act No. 141
has classified public lands which can be sold for residential,
commercial, or industrial purposes into: (a) lands reclaimed by the
government; (b) foreshore; (c) marshy lands; and (d) lands not included
in any of the foregoing classes. Under Sec. 60 of the Act, these public
lands may be leased or sold to any person qualified to purchase public
lands for agricultural purposes, provided that the area shall not exceed
144 hectares, as may be determined by the Secretary of Agriculture
and Natural Resources. Under See. 61, the lands under (a), (b) and (c)
classifications can be disposed of-by lease only, while those under (d)
classification may either be leased or sold, Sec. 67 provides that the
lease or sale shall be made by oral bidding to the highest bidder. Secs.
61 and 67 of Commonwealth Act No. 141 were amended by Rep. Act
No. 730 in the following manner:
xxx xxx xxx
The petitioners contend that after the passage of Rep. Act No. 730, the
sale of public lands for residential purposes has been limited to 1,000
square meters only, and that the sale must be effected by private sale
only. A close examination of the law cited by the petitioners, however,
shows that it is only applicable when the conditions specified therein
are present, i.e., that preference shall be given to the applicant if he is
not the owner of a home lot in the municipality or city in which he
resides; if he has established his residence in good faith on a parcel of
public land, which is not needed for the public services; and if the area
applied for does not exceed one thousand square meters. In other
words, Sec. 1 of Rep. Act No. 730 does not repeal Secs. 61 and 67 of
Commonwealth Act No. 141 entirely, but merely establishes an
exception. It does not repeal Sec. 60, either expressly or by implication.
xxx xxx xxx

In short, R.A. No. 730 authorizes a sale by private sale, as an exception to the
general rule that it should be by bidding, if the area applied for does not exceed
1,000 square meters, and that the applicant has in his favor the conditions specified
for in Section 1 thereof. Hence, if the area applied for is in excess of 1,000 square
meters, as in the instant case, the sale must be done only through bidding.
WHEREFORE, the instant petition is DISMISSED and the decision of the respondent
court of 30 April 1979 in Civil Case No. 113897 is AFFIRMED, with costs against
petitioners.
IT IS SO ORDERED.
Gutierrez, Jr., Bidin and Romero, JJ., concur.
Fernan, C.J., is on leave.
G.R. No. 77541 November 29, 1988
HEIRS OF GREGORIO TENGCO, petitioners,
vs.
HEIRS OF JOSE and VICTORIA ALIWALAS and COURT OF APPEALS,
respondents.
Jorge A. Pascua for petitioners.
Perpetuo C. Travino for private respondents.
Daniel C. Florida collaborating counsel for private respondents.

CORTES, J.:
The instant case stemmed from an action to quiet title instituted by the late Victoria
L. Vda. de Aliwalas against the Heirs of Gregorio Tengco, the Director of Lands and
the Register of Deeds of Pampanga.
The facts as found by the Court of First Instance of San Fernando, Pampanga,
Branch VI, in Civil Case No. 4308, are as follows:
The evidence adduced by the parties in this case shows that Lot No. 3563 of the
Arayat Cadastre was originally a part of the public domain and it was so declared on
October 12, 1933 (Exh. "A-2"). Thereafter, Dr. Jose Aliwalas applied with the Bureau
of Lands for the issuance of a homestead patent covering this lot. On December 12,
1936, the Director of Lands granted this application and issued in favor of Jose
Aliwalas Homestead Patent No. 38588 (Exh. "E"). This patent was duly registered in

the Register of Deeds of Pampanga on April 8, 1937 after the corresponding fees
thereon were paid (Exhs. "D-5" and "D-6"). On the same day, the Register of Deeds
of Pampanga issued OCT No. 159 (Exh. "D") in the name of Jose Aliwalas. From that
time on, Dr. Aliwalas did the corresponding land taxes thereon (Exh. "I", "I-1 " to "I25") after having declared the land for taxes (sic) purposes in his name (Exh. "F", "G"
and "H").
As owner of this property, Jose Aliwalas, thru his overseer Espiridion Manaul, had this
parcel fenced and vegetables were planted in some portions thereof. Other portions
were dedicated initially to cattle raising until the last war broke out.
After the war, palay was planted on some. portions of this land, by the tenants of Jose
Aliwalas who gave the owner's share to him, thru his caretaker and overseer
Espiridion Manaul. Other crops were also planted on the land as well as ipil-ipil trees
for firewood purposes. There were also planted mango trees which ultimately bore
fruit which were harvested by the caretaker of Aliwalas in this property and who
delivered them to Jose Aliwalas until he died in 1962 when the administration and
management was assumed by Jose Aliwalas, Jr., a son of Dr. Aliwalas.
When the properties left by Dr. Jose Aliwalas were petitioned among his surviving
heirs, the lot in question was alloted in favor of the plaintiff Victoria L. Vda. de Aliwalas
as indicated in the amended project of partition (Exh. "B") executed by her mind her
nine children, one of whom is Jose Aliwalas, Jr.
After this amended project of partition was approved (Exh. "C") and registered with
the Register of Deeds of Pampanga, OCT No. 52526-R (Exh. "A") was issued in the
name of the plaintiff on November 14, 1966 (Exh. "A-1"). Thereafter, the tax
declaration pertaining to this parcel of land was also transferred to her name (Exhs.
"O", "P" and "A"). She also paid the real estate taxes thereon (Exhs. "N", "N-1 " to "N14", Exhs. "R-1" to "R-53").
On the other hand, the evidence further show that on October 31, 1973, the
defendant Ponciano Tengco in representation of the defendants Heirs of Gregorio
Tengco filed an application with the Bureau of Lands, thru its District Land Office here
in San Fernando, Pampanga. Among other things, he alleged in his application that
this parcel of land had been occupied and cultivated originally and continuously
thereafter by Gregorio Tengco. After being given due course, this application was
approved by the Director of Lands who issued Free Patent No. 557692 covering this
lot on February 5, 1974 (Exh. "3" Tengco; Exh. "6" Dir. of Lands).
This free patent issued in favor of the Heirs of Gregorio Tengco was predicated on the
assumption that the lot still formed part of the public domain and on the findings of the
Public Land Inspector Romeo Buenaventura who conducted an investigation thereon
and who also reported that the land in question was possessed and occupied by the
applicant, Heirs of Gregorio Tengco (Exh. "2"-Tengco and Exh. "5"-Dir of Lands ) who
had planted different kinds of trees on the land aside from rice and corn.
The defendants Heirs of Gregorio Tengco also adduced evidence tending to show
that their late grandfather Gregorio Tengco had occupied this parcel of land
exclusively years before the last (sic) and after he died in 1934, his children
succeeded him in its possession and enjoying the fruits from the different trees

planted thereon, and that the possession of Gregorio Tengco and his successors-ininterest have not been disturbed by anyone including the Aliwalas family.
On rebuttal, the plaintiff adduced evidence showing that the prewar records of the
Bureau of Lands pertaining to public land applications were burned during the war as
indicated in the certification issued by the Chief of the Records Management Division
of the Bureau of Lands. This is to explain why the Bureau has no more record
pertaining to the Homestead Patent issued in favor of Jose Aliwalas in i936 which
gave rise to the issuance of OCT No. 159 of the Register of Deeds of Pampanga on
April 8, 1937. The certification also attests that what is now found in the files of the
Bureau of Lands is Free Patent V-557692 issued on February 5, 1974 in favor of the
Heirs of Gregorio Tengco pertaining to Lot No. 3563. (Rollo, pp. 1820.)

On the basis of the evidence, the trial court rendered judgment as follows:
WHEREFORE, and in view of all the foregoing, judgment is hereby rendered:
1. Declaring the herein plaintiff Victoria Vda. de Aliwalas as the true
owner of Lot No. 3563 of Arayat Cadastre embraced in TCT No.
52526-R of the Register of Deeds of Pampanga in her name;
2. Ordering the Register of Deeds of Pampanga to cancel TCT Nos.
132263-R, 132264-R and 132349-R in the name of Cipriano Tengco,
Ponciano Tengco, et al., and Eugenia Tengco, respectively, covering
portions of this Lot No. 3563;
3. Ordering the herein defendants-Heirs of Gregorio Tengco to vacate
the land in question and to pay the amount of P 5,000.00 a year to
the plaintiff beginning from the year 1974 until the land is vacated by
them and turned over to the plaintiff; and
4. Ordering the defendants-Heirs of Gregorio Tengco to pay the
plaintiff the sum of P 2,000.00 as attorney's fees, plus costs. [Rollo,
p. 17-18.]

Dissatisfied with the trial court's judgment, the Heirs of Gregorio Tengco interposed
an appeal to the Court of Appeals, docketed as CA-G. R. CV No. 69706. The
appellate court, adopting the trial court's findings of fact, affirmed the latter's
judgment [Rollo, pp. 17-24.] Petitioners moved for reconsideration but their motion
was denied [Rollo, pp. 25-26.] Hence, the instant petition.
Private respondents filed a comment to the petition, to which petitioners replied. On
September 16, 1987, the Court resolved to give due course to the petition and the
parties were required to submit their respective memoranda. After the petitioner filed
a reply to private respondent's memorandum, the case was deemed submitted for
decision.

In their petition the Heirs of Gregorio Tengco have ascribed several errors to the
Court of Appeals, which involved mixed questions of fact and law [Rollo, p. 4.] But,
as stated in their memorandum, the issues may be limited to the following:
(a) Whether or not the court of origin and/or, subsequently, the
respondent Honorable Court of Appeals, had jurisdiction to take
cognizance of, and pass upon, the instant case;
(b) Whether or not the claim or contention of the private respondents
will hold true and prosper before a proper forum; and
(c) Whether or not the private respondents, assuming for the sake of
argument, that they have proprietary rights on and to the land in
question, have not long lost such rights by laches and/or prescription.
[Memorandum for Petitioners, p. 6.]

1. Petitioners contend that the trial court (and, consequently, the Court of Appeals)
had no jurisdiction to take cognizance of and pass upon the instant case as private
respondents have failed to exhaust administrative remedies. They point out that
instead of bringing her case to the Bureau of Lands, Victoria Vda. de Aliwalas went
directly to the court.
On the other hand, private respondents argue that since a homestead patent and an
original certificate of title had already been issued to their predecessor-in-interest,
the land had ceased to be part of the public domain and, hence, the Bureau of Lands
had no jurisdiction over the controversy. Private respondents add that since an
original certificate of title had been issued pursuant to the homestead patent, their
title to the property had become conclusive, absolute, indefeasible and
imprescriptible.
In rebuttal, petitioner contend that private respondents' title had not acquired said
qualities as it was derived from a homestead patent. Petitioners advanced the view
that only titles based upon a judicial declaration can be vested with the attributes of
conclusiveness, indefeasibility and imprescriptibility.
Petitioners' theory is not supported by the jurisprudence on the matter. The rule is
well-settled that an original certificate of title issued on the strength of a homestead
patent partakes of the nature of a certificate of title issued in a judicial proceeding, as
long as the land disposed of is really part of the disposable land of the public
domain, and becomes indefeasible and incontrovertible upon the expiration of one
year from the date of the promulgation of the order of the Director of Lands for the
issuance of the patent. [Republic v. Heirs of Carle, 105 Phil. 1227 (1959); Ingaran v.
Ramelo 107 Phil. 498 (1960); Lopez v. Padilla, G.R. No. L-27559, May 18, 1972, 45
SCRA 44.] A homestead patent, once registered under the Land Registration Act,
becomes as indefeasible as a Torrens title. [Pamintuan v. San Agustin, 43 Phil. 558

(1982); El Hogar Filipino v. Olviga, 60 Phil. 17 (1934); Duran v. Oliva, 113 Phil. 144
(1961); Pajomayo v. Manipon, G.R. No. L-33676, June 30, 1971, 39 SCRA 676.]
The contention of non-exhaustion of administrative remedies, on the theory that the
case should have been brought before the Director of Lands, had already been
rejected by the Court in earlier decisions. Thus, while the Director of Lands has the
power to review homestead patents, he may do so only so long as the land remains
part of the public domain and continues to be under his exclusive control; but once
the patent is registered and a certificate of title is issued, the land ceases to be a part
of public domain and becomes private property over which the Director of Lands has
neither control nor jurisdiction [Sumail v. Judge of Court of First Instance, 96 Phil.
946 (1955); Republic v. Heirs of Carle, supra.]
2. Anent the second issue, petitioners contend that petitioners' title to the property
was defective for the following reasons: (a) Dr. Jose Aliwalas was not qualified to be
a homesteader being a rich landed person; and (b) private respondents and their
predecessors-in-interest have never been in actual or physical possession of the
property, unlike petitioners and their predecessor-in-interest who have been in
continuous and open possession of the property since 1918. Thus, petitioners rely
on a report prepared by a certain Librado B. Luna, hearing officer of the Bureau of
Lands, attesting to such facts [Memorandum for Petitioners, p. 13.]
But, as correctly pointed out by the respondent Court of Appeals, Dr. Aliwalas' title to
the property having become incontrovertible, such may no longer be collaterally
attacked. If indeed there had been any fraud or misrepresentation in obtaining the
title, an action for reversion instituted by the Solicitor General would be the proper
remedy [Sec. 101, C.A. No. 141; Director of Lands v. Jugado, G.R. No. L-14702,
May 21, 1961, 2 SCRA 32; Lopez v. Padilla, supra.]
3. Finally, petitioners contend that private respondent have lost their title to the
property through laches and prescription. They assert that private respondents and
their predecessors-in-interest have never actually possessed the property while
petitioners and their predecessor-in-interest have been in actual, open, uninterrupted
and adverse possession of the property since 1918.
But as stated above, title acquired through a homestead patent registered under the
Land Registration Act is imprescriptible. Thus, prescription cannot operate against
the registered owner.
Moreover, as found by the Court of Appeals:
... The allegation of defendants-appellants (petitioners herein) that plaintiff-appellee
(Victoria L. Vda. de Aliwalas) and her predecessor-in-interest slept on their rights for
over 40 years, since 1936 when the patent was issued to Aliwalas is untenable. It has
been established that Jose Aliwalas through his overseer Espiridion Manaul planted

the subject land to vegetables and raised cattle therein until the last war broke out.
After the war, the land was planted with palay, seasonal crops, ipil-ipil trees and
mango trees. When Jose Aliwalas died in 1962, the administration and management
of the farm was assumed by his son, Jose Aliwalas, Jr. Upon the partition of the
properties left by the late Jose Aliwalas, the subject property was allotted to and
registered in the name of plaintiff-appellee. It was in 1974 when the defendants-Heirs
of Gregorio Tengco wrested possession of the subject land from plaintiff-appellee's
caretaker and deprived her of its produce. On October 14, 1976, the plaintiff filed her
second amended complaint. The foregoing facts show that plaintiff-appellee and her
predeccessor-in-interest occupied, possessed and exercised rights of ownership over
the subject land prior to the filing of the instant suit [Rollo, pp. 23-24.]

The Court finds no cogent reason to disturb the appellate court's findings, in the
absence of a clear showing that the facts have been misapprehended.
WHEREFORE, finding no reversible error, the petition is DENIED and the decision of
the Court of Appeals in CA-G.R. CV No. 69706 is AFFIRMED.
SO ORDERED.
Fernan C.J., Gutierrez, Jr., Feliciano and Bidin, JJ., concur.
G.R. No. 149221

April 7, 2009

PHILIPPINE NATIONAL BANK, Petitioner,

vs.
MARCELINO BANATAO, ROSA BANATAO, VICTORINA B. CADANGAN,
AVELINO BANATAO, ROSALINDA B. GUMABAY, EDNA B. CALUCAG,
CATALINA BANATAO, ABDON BANATAO, GELACIO BANATAO, CONSTANCIO
BANATAO, DOMINGO BANATAO, RICHARD BANATAO, ARNOLD BANATAO,
SALVACION BANATAO, LANIE BANATAO, VIVIAN BANATAO, ALVIN
BANATAO, ROLAND BANATAO, FE SACQUING, MAXIMO SACQUING,
POMPEO BANTAO, ANNIE MALUPENG, BONG MALUPENG, EDILBERTO
BANGAYAN, EVANGELINE BANGAYAN, ELPIDIO BANGAYAN, MARLIN
PAMITTAN, LOIDA PAMITTAN, VICENTE PAMITTAN, MICHAEL PAMITTAN,
EDGARDO PAMITTAN, LORINA BANATAO, ASSISTED BY HUSBAND WILLY
BANATAO, MARAVITA BANATAO, PAULINA BANATAO ASSISTED BY HUSBAND
DOMINGO CUNTAPAY, JULIETA BANATAO, ROSITA PAMITTAN ASSISTED BY
HUSBAND SALVADOR BANATO, AND ELENA BANATAO, Plaintiffs-Respondents,
and MARCIANO CARAG, EUGENIO SORIANO, MARIA CAUILAN, PEDRO
SORIANO, PAZ TACACAY, BENJAMIN TACACAY, FAUSTA AGUSTIN,
MILAGAROS B. CARAG, Defendants-Respondents.
DECISION
BRION, J.:
This petition for review on certiorari1 brings into focus: (1) the effect of a compromise
agreement entered into by some, but not all, of the parties to a litigation, and its effect on the

non-participating litigants; and (2) the prohibition against the encumbrance, within the same
periods prescribed by law, of lands granted under homestead patent.
The facts as culled from the records are outlined below.
On November 16, 1962, Banatao, et al. (plaintiffs-respondents) initiated an action docketed
as Civil Case No. 1600 against Marciano Carag (one of the defendants-respondents) before
the Regional Trial Court (RTC), Branch IV, Tuguegarao, Cagayan.2 The action was for the
recovery of real property (disputed property) situated at Malabac, Iguig, Cagayan. The
disputed property was a new land formation on the banks of the Cagayan River an
accretion to Lot 3192 of the Iguig Cadastre that the plaintiffs-respondents claimed as the
owners of the adjoining Lot 3192. The defendants-respondents, on the other hand, were the
occupants of the disputed property.
The records show that while the case was pending, the defendants-respondents (particularly
the spouses Pedro Soriano and Paz Tagacay, the spouses Eugenio Soriano and Maria Cauilan,
the spouses Benjamin Tagacay and Fausta Agustin, and Milagros B. Carag wife of
Marciano Carag) were able to secure homestead patents evidenced by Original Certificates of
Title (OCTs) issued in their names, denominated as OCT Nos. 24800, 24801, 25217, and
25802, respectively.3 The OCTs were issued in 1965 and 1966, and all bear the proviso that,
in accordance with the Public Land Act, the patented homestead shall neither be alienated nor
encumbered for five (5) years from the date of the issuance of the patent.4
Armed with their OCTs, the defendants-respondents separately applied for loans with the
Philippine National Bank (PNB or the bank) secured by real estate mortgages on their
respective titled portions of the disputed property. The bank approved the mortgages, relying
solely on the OCTs which, at the time, did not contain any notice of lis pendens or annotation
of liens and encumbrances. The PNB mortgages were annotated on the defendantsrespondents' respective OCTs also in the years 1965 and 1966.5
On February 22, 1968, the trial court decided the case in favor of the plaintiffs-respondents
and against defendant-respondent Carag, and ordered the return of the disputed property to
the plaintiffs-respondents.6 Carag appealed the trial court decision to the Court of Appeals
(CA).
While the appeal was pending, the appellate court discovered that the disputed property had
been subject of homestead patents issued in the names of defendants-respondents Carag, et
al. Hence, in its Resolution dated April 16, 1969, the Special Fourth Division of the CA set
aside the February 22, 1968 decision of the RTC and ordered the remand of the records to the
trial court for further proceedings.7 The appellate court likewise ordered the necessary
amendment of the complaint to implead the defendants-respondents who were deemed
indispensable parties to the case.1avvphi1
The plaintiffs-respondents filed on October 14, 1970 the required amended complaint,
impleading as party defendants Eugenio Soriano, Maria Cauilan, Pedro Soriano, Paz Tagacay,
Benjamin Tagacay, Fausta Agustin, and Milagros B. Carag, as well as the bank.8 The
plaintiffs-respondents also added two (2) additional causes of action, or a total of three (3)
causes of action, namely: (1) recovery of real property; (2) cancellation of the OCTs; and (3)
annulment of real estate mortgage. The bank was made a party to the case in view of the suit
for annulment of mortgage.

The records disclose that on March 29, 1973, while the case was pending before the trial
court, the bank extrajudicially foreclosed the property covered by OCT No. 24800 issued to
the spouses Pedro Soriano and Paz Tagacay. The bank was declared the highest bidder in the
ensuing public auction. The spouses Soriano failed to redeem the foreclosed property,
resulting in the consolidation of title in the banks name; hence, the issuance on October 3,
1985 of TCT No. T-65664 in the name of the bank.9
On February 28, 1991, the plaintiffs-respondents and the defendants-respondents entered into
a compromise agreement whereby ownership of virtually the northern half of the disputed
property was ceded to the plaintiffs-respondents, while the remaining southern half was given
to the defendants-respondents.10 In the same compromise agreement, the defendantsrespondents acknowledged their indebtedness to petitioner PNB and bound themselves to pay
their respective obligations to the bank, including the interests accruing thereon. Petitioner
PNB, however, was not a party to the compromise agreement which reads:
COMPROMISE AGREEMENT11
Plaintiffs and defendants, by counsels, enter into and submit the following compromise
agreement:
xxx
(b) That the defendant, PEDRO SORIANO, acknowledges the plaintiffs as the lawful
owners of the NORTHERN PORTION of the land covered by Original Certificate of
Title No. P-24800, with an area of 85,348 square meters more or less and is more
particularly described in the technical description hereto attached as Annex "A" and
forming part hereof;
(c) That the defendant, BENJAMIN TAGACAY, acknowledges the plaintiffs to be the
owners of the NORTHERN PORTION of the land covered by Original Certificate of
Title No. P-25217, with an area of 98,790 square meters more or less and is more
particularly described in the technical description hereto attached as Annex "B" and
forming part hereof;
(d) That the defendant, MILAGROS B. CARAG, acknowledges the plaintiffs to be
the owners of the NORTHERN PORTION of the land covered by Original Certificate
of Title No. P-24802, with an area of 58,378 square meters more or less and is more
particularly described in the technical description attached hereto as Annex "C" and
forming part hereof;
(e) That the defendant Pedro Soriano acknowledges indebtedness to the Philippine
National Bank and binds himself to pay his loan together with the interest and other
charges;
(f) That the defendant Benjamin Tagacay acknowledges indebtedness to the Philippine
National Bank and binds himself to pay his loan together with the interest and other
charges;

(g) That the defendant Milagros B. Carag acknowledges indebtedness to the

Philippine National Bank and binds himself to pay his loan together with the interest
and other charges;
(h) That the private defendants acknowledge the plaintiffs to be the owners and
possessors of the motherland otherwise known as Lot 3192 and the area ceded to the
plaintiffs by the private defendants;
(i) That the parties hereto submit the foregoing compromise agreement as basis for the
decision in the above-entitled case by the Honorable Court.
Tuguegarao, Cagayan, December 26, 1990.
On March 15, 1991, the trial court rendered its decision, approving and adopting in toto the
compromise agreement, and ordering the participating parties to strictly comply with its
terms.12 The bank moved for reconsideration of the trial courts decision and for the setting
aside of the compromise agreement. The trial court denied the motion in its Resolution of
February 7, 1992, thus, compelled the bank to elevate the case to the CA.13
The appellate court dismissed the appeal in its decision of March 30, 2001, ruling that the
bank is not an indispensable party to the compromise agreement that only settles the actions
for: (1) recovery of property; and (2) cancellation of OCTs.14 On the third cause of action for
annulment of mortgage, the court held the bank is only a necessary party and "the issue
could be dealt with in a separate and distinct action." The appellate court in the same decision
proceeded to strike down the mortgages as void because the mortgagors (defendantsrespondents), not being the absolute owners of the disputed parcels of land as agreed upon in
the compromise agreement, did not have the right to constitute a mortgage on these
properties.
The PNB sought reconsideration of the dismissal of its appeal, but the appellate court denied
its motion in a Resolution dated July 27, 2001;15 hence, this petition for review on certiorari.
The PNB raises the following legal issue:
WHETHER THE COMPROMISE AGREEMENT ENTERED INTO BY AND BETWEEN
THE HEREIN PLAINTIFFS-RESPONDENTS AND DEFENDANTS-RESPONDENTS
AND APPROVED BY THE TRIAL COURT LEGALLY BINDS PETITIONER PNB
WHICH IS NOT A PARTY THERETO AND CONSTITUTES SUFFICIENT LEGAL BASIS
TO NULLIFY PNB'S MORTGAGE LIEN ON THE REALTY IN QUESTION.
In attacking the compromise agreement between the plaintiffs-respondents and the
defendants-respondents, the PNB argues that it is an indispensable, not merely a necessary,
party to all three causes of action, namely, for (1) recovery of real property; (2) cancellation
of the OCTs; and (3) annulment of mortgages. Arguing that the causes of action are closely
intertwined and intimately related, and that the compromise was entered into precisely to put
an end to the case, the PNB submits that its consent to the compromise agreement is
necessary to secure a final and complete determination of the claims and defenses of all the
parties to the case.

The PNB further argues that when the appellate court approved in toto the trial court's
judgment on the compromise agreement, it failed to consider that the bank was a mortgagee
in good faith. The bank claims good faith on the position that the OCTs presented to it were
all clean on their faces at the time the mortgages were applied for; that there were no notices
of lis pendens or any annotation of liens or encumbrances on all of them; and that it had no
knowledge, actual or constructive, of facts or circumstances to warrant further inquiry into
the titles of the defendants-respondents.
THE COURTS RULING
We resolve to dismiss the petition for the reasons discussed below.
The compromise agreement disposed of the first two causes of action filed by plaintiffsrespondents Banatao, et al. against defendants-respondents Carag, et al., namely, the actions
for (1) recovery of real property; and (2) cancellation of the OCTs, thereby settling the
question of ownership between them. The trial court approved the compromise agreement in
toto. The appellate court, in turn, upheld the trial court, but it proceeded to discuss on the
third cause of action (for annulment of mortgage), concluding that the mortgages were void
because the mortgagors were not the absolute owners of the mortgaged properties.1avvphi1
In the words of the appellate court:
The main cause of action here is the "Recovery of Realty and Reconveyance," the
"Annulment of Mortgage" is only an ancillary cause of action. In the decision approving the
compromise agreement it disposes and finally determined the "Recovery of Realty and
Reconveyance."
The moment ownership of the disputed real property was clearly proven to be that of
the [plaintiffs-respondents], the question of the validity of the mortgage made by the
[defendants-respondents] with [petitioner PNB] could easily be determined.
xxx
The [defendants-respondents], not being the absolute owners and not having been
authorized to mortgage the subject real property, could not validly mortgage the said real
property with [petitioner PNB]. However, we are not unmindful of the [defendantsrespondents'] liability to [the bank]. But such issue could be dealt with in a separate and
distinct action. [Emphasis supplied.]
With the above ruling, the bank who was not a party to the agreement was therefore affected;
it was a mortgagee of a part of the disputed property, and had in fact foreclosed the portion
covered by OCT No. 24800.
It is basic in law that a compromise agreement, as a contract, is binding only upon the parties
to the compromise, and not upon non-parties. This is the doctrine of relativity of contracts.
Consistent with this principle, a judgment based entirely on a compromise agreement is
binding only on the parties to the compromise the court approved, and not upon the parties
who did not take part in the compromise agreement and in the proceedings leading to its
submission and approval by the court. Otherwise stated, a court judgment made solely on the
basis of a compromise agreement binds only the parties to the compromise, and cannot bind a

party litigant who did not take part in the compromise agreement. In the case of Castaeda v.
Heirs of Maramba,16 we held that:
Judgment based on a compromise affects only participating litigantsA partial decision,
stemming from an amicable settlement among two of several parties to an action, binds only
the parties so participating in the settlement. This decision never becomes final with
respect to the parties who did not take part in the settlement confirmed by the partial
decision aforesaid. [Emphasis supplied.]
Following Castaeda, the judgment on compromise rendered by the trial court in this case,
and later affirmed by the appellate court, is final with respect only to the plaintiffsrespondents and defendants-respondents, but not with respect to the PNB. Hence, the trial
court's judgment on compromise which settles the issue of ownership over the properties in
question is but a partial decision that does not completely decide the case and cannot bind the
PNB.
In its assailed decision, the CA, while recognizing the liability of the defendants-respondents
to the PNB, declared that the mortgagors, not being the absolute owners of the mortgaged
properties as agreed upon in the compromise agreement, do not have the right to constitute
the mortgage. This conclusion is legally incorrect as the CA capitalized on the ownership
issue settled between the plaintiffs-respondents and the defendants-respondents in
invalidating the PNB mortgages, without hearing the side of the PNB as mortgagee, and later,
co-owner of the disputed property. As discussed above, the compromise agreement cannot
bind the bank, a non-party to the agreement; necessarily, the ownership issue which was
settled by the compromise agreement cannot be made applicable to the bank without hearing
it.
Our own review of the records of the case shows that the appellate court was not without
basis to properly dispose of all the causes of action, including the annulment of mortgage
issue, had it fully scrutinized the records of the case. A glaring fact that escaped the scrutiny
of both the trial and appellate courts, and which would have led them to the quick and correct
disposition of the annulment issue (and of the entire case, given the compromise agreement),
is the proviso against alienation or encumbrance of lands granted by homestead patent a
fact plainly evident upon a facial examination of the OCTs involved.
We conclude from our own examination of these OCTs that the mortgages cannot but be void
ab initio. On the faces of all the OCTssecured through homestead patentsare inscribed
the following words that echo the mandatory provisions of law:
TO HAVE AND TO HOLD the said tract of land with the appurtenances thereunto x x x
subject to the provisions of Sections 118, 121, 122 and 124 of Commonwealth Act No. 141,
as amended, which provide that except in favor of the Government or any of its branches,
units or institutions, THE LAND HEREBY ACQUIRED SHALL BE INALIENABLE
AND SHALL NOT BE SUBJECT TO [E]NCUMBRANCE FOR A PERIOD OF FIVE
(5) YEARS NEXT FOLLOWING THE DATE OF THIS PATENT, and shall not be liable
for the satisfaction of any debt contracted prior to the expiration of that period; x x x.17
[Emphasis supplied.]
This inscription reproduces Section 11818 of the Public Land Act,19 as amended, which
contains a proscription against the alienation or encumbrance of homestead patents within

five years from issue. The rationale for the prohibition, reiterated in a line of cases, first laid
down in Pascua v. Talens20 states that "x x x homestead laws were designed to distribute
disposable agricultural lots of the State to land-destitute citizens for their home and
cultivation. Pursuant to such benevolent intention the State prohibits the sale or encumbrance
of the homestead (Section 116, now Section 118) within five years after the grant of the
patent. x x x. It aims to preserve and keep in the family of the homesteader that portion of
public land which the State had gratuitously given to him."
In the present case, the annotation of the mortgage liens occurred only months after the
date of the issuance of the homestead patents. The pertinent facts as seen on the faces of
the OCTs are illustrated below:
OCT
No.

Mortgagors

Date of
Homestead
Patent

Date of Annotation /
Inscription of
Mortgage

Period from
Date of
Patent21

P-24800

Pedro Soriano/ Paz

Tagacay

28 Apr 1965

17 Sep 1965

5 Months

P-24801

Eugenio Soriano/
Maria Cauilan

28 Apr 1965

27 Oct 1965

6 Months

P-24802

Milagros B. Carag/
Marciano Carag

28 Apr 1965

13 Oct 1965

6 Months

P-25217

Benjamin Tagacay/
Fausta Agustin

15 Feb 1966

25 Mar 1966

1 Month

This situation is similar to that of Republic v. Heirs of Alejaga, Sr.22 where the respondent
obtained a loan of P100,000.00 in 1981 from the PNB, secured by a real estate mortgage on
the patented land. The 1981 encumbrance was contracted two years from date of issuance of
the patent in 1979, for which reason the Court cited a violation of Section 118 of the Public
Land Act which proscribes the alienation or encumbrance of the patented land within five
years from the date of the patent, and which proscription clearly appears as a proviso in the
OCT issued in the name of the respondent in the case. Consequently, the PNB mortgage was
declared void.
The present case deserves exactly the same treatment, and the PNB cannot claim that it is a
mortgagee in good faith. The proscription against alienation or encumbrance is unmistakable
even on a cursory reading of the the OCTs. Thus, one who contracts with a homestead
patentee is charged with knowledge of the law's proscriptive provision that must necessarily
be read into the terms of any agreement involving the homestead. Under the circumstances,
the PNB simply failed to observe the diligence required in the handling of its transactions and
thus made the fatal error of approving the loans secured by mortgages of properties that
cannot, in the first place, be mortgaged.
Both the defendants-respondents and the bank are to be faulted for the invalidity of the
mortgages. We cannot, however, apply the doctrine of pari delicto in accordance with the
ruling that the doctrine does not apply when the contract is prohibited by law.23 A saving
factor for the bank under the situation is that a mortgage is merely an accessory agreement
and does not affect the principal contract of loan. The mortgages, while void, can still be

considered as instruments evidencing the indebtedness of defendants-respondents to the PNB

in a proper case for the collection of the defendants-respondents loans.
Our conclusion on the nullity of mortgage issue renders it unnecessary to decide the question
of whether the compromise agreement between the plaintiffs-respondents and the defendantsrespondents should be set aside for its effect on the bank. With the mortgages invalidated, the
PNB no longer has any interest that the compromise agreement can affect. In the absence of
any other reason to impugn the lower court decisions approving the compromise agreement,
we affirm the approval of the compromise agreement and the disposition of the case on the
basis of compromise. Given our ruling on the invalidity of the mortgages, a remand of this
issue is no longer necessary. The parties liabilities to PNB on the loans they obtained are not
issues before us for disposition, and are for the parties to act upon as matters outside the
coverage of this case.1avvphi1
WHEREFORE, we hereby DECLARE the mortgages constituted on OCT Nos. 24800,
24801, 25217 and 25802 VOID and, for this reason, we DISMISS the petition. We AFFIRM
the approval of the compromise agreement by the Court of Appeals and the disposition of the
case on the basis of compromise. The order to remand the case to the Regional Trial Court,
Branch IV, Tuguegarao, Cagayan, for further proceedings is therefore REVERSED.
Costs against petitioner PNB.
SO ORDERED.
G.R. No. L-27455 June 28, 1973
ANA GONZAGA, SERVILLANO IGNACIO and ANASTACIA SAN JUAN,
petitioners-appellants,
vs.
COURT OF APPEALS, BONIFACIO EVANGELISTA, JOSE EVANGELISTA CHUA,
PAULINO EVANGELISTA, PEDRO TRINIDAD, FORTUNATA TRINIDAD,
RUPERTA DE ROSAS, ANASTACIA DE ROSAS, PATRICIA EVANGELISTA, and
JUANA EVANGELISTA, respondents-appellees.
Eustaquio P. Sto. Domingo, Severino C. Domiguez and Manolo E. Tolentino for
petitioners-appellants.
Isabelo V. Gandionco & Teresita Gandionco Oledan for respondents-appellees.

FERNANDO, J.:
It must have been well-founded doubts about the strength on the original position
taken by petitioners both in the Court of First Instance of Rizal and subsequently in
respondent Court Appeals, that in this appeal by certiorari from the decision of the
latter tribunal, a novel aspect is sought to be introduced them. It represents a last-

ditch effort in their thus far hopeless quest for excluding private respondents,
nephews and nieces of the late Juan Evangelista, from any share in that portion of
his estate sold by his widow, petitioner Ana Gonzaga, to the other petitioners. The
point raised by them, not previously passed upon by this Court, is that the
requirement in Section 20 of the Public Land Act, 1 couched in absolute terms, of the
previous approval of the Secretary of Agriculture and Natural Resources for the
proposed sale of the rights of one seeking a free patent, does not apply unless the
application deals with a homestead. 2 It is their contention that if such interpretation
be adopted, then the decision adverse to them, both in the lower court as well as in
respondent Court of Appeals, should be reversed. We do not feel called upon to rule
squarely on such an issue, as the factual basis thereof is completely lacking, not only
as shown in the decision of respondent Court sought to be reviewed, but also as
reflected in the answer of petitioners in the lower court as well as in their brief with
the respondent Court. Such an commission has consequences fatal to their belated
claim. What is more, the approach followed by petitioners is not in conformity with
our past pronouncements, with had indicated the fullness of the power of the state as
to how public lands may be acquired and under what conditions, as well as the
restrictions imposed on original applicants, who could thus legally be prevented from
being victimized as a result of improvidence or even poor judgment, by requiring
such approval. As thus viewed, it would clearly appear that this appeal by way of
certiorari lacks merit. We affirm.
There was a stipulation of facts before the lower court which was quoted in the
decision of the Court of Appeals. Thus: "1. That on October 13, 1958, Juan
Evangelista died intestate leaving among others, a parcel of land situated in Barrio
Darangan, [Municipality] of Binangonan, [Province] of Rizal covered by [Original
Certificate] of Title No. 183 of the Register of Deeds of Rizal and Tax [Declaration]
No. 12131 of the [Provincial] Assessor of Rizal, which parcel is now the subject of
this litigation; 2. That said Juan Evangelista was survived by the defendant, Ana
Gonzaga and plaintiffs, the latter being the sons and daughters of the brothers an
sisters of the deceased; 3. That during the lifetime of Juan Evangelista, he and said
Ana Gonzaga on April 21, 1956 sold for valuable consideration several parcels of
land to the spouses, Anastacia San Juan and Servillano Ignacio (defendants herein)
including that parcel of land describe in the foregoing paragraph (1) and as a
consequence which sale, the corresponding tax declaration was transferred (to) said
vendees; that at the time of said sale, there was a pending application of Juan
Evangelista an Ana Gonzaga over the land in question with the Bureau Lands, but
the title thereto was not issued until November 28, 1958, i.e., after the death of Juan
Evangelista; 4. That on April 21, 1962, defendant Ana Gonzaga alleging to (be) the
surviving spouse of the deceased Juan Evangelista, executed an Extra-Judicial
Partition and Sale of the sum parcel of land in question in favor of the same
vendees, herein defendants, Servillano Ignacio and Anastasia San Juan; 5. That in a
series of subsequent transfers and conveyances, the same parcel of land was sold
on March 6, 1963 by the spouses Servillano Ignacio and Anastacia San Juan to the

defendant R & R Realty Co., Inc. and the latter, together with other properties owned
by it, mortgaged the same to the Continental Bank; that it was by reason of these
subsequent conveyances that defendants Filipinas Agricultural & Realty Co., Inc.
and the Continental Bank were impleaded as party defendants." 3 On the above facts,
the lower court relying on the aforesaid Section 20, declared he 1956 sale void and
consequently ruled in favor of the successional rights of private respondents as heirs
of the deceased, Juan Evangelista. Respondent Court of Appeals affirmed.
As set forth at the outset, there is no legal basis for reversing the decision of
respondent Court.
1. Petitioners are well aware and therefore cannot deny that unless the sale made by
the deceased Juan Evangelista in his lifetime of the disputed lot was valid, then the
rights of private respondents as his heirs should be respected. Both the lower court
and respondent Court of Appeals were agreed that considering the express and
categorical language of Section 20 of the Public Land Act, such sale "shall be null
and void" there being no "previous approval" of the Secretary of Agriculture and
Natural Resources. It could not have been otherwise, for there is nothing in the
stipulation of facts that would, in any way, take this transaction out of the operation of
that legal provision. It has been repeated time and time again that where the
statutory norm speaks unequivocally, there is nothing for the courts to do except to
apply it. The law, leaving no doubt as to the scope of its operation, must be obeyed.
Our decisions have consistently been to that effect. 4 Now petitioners before this
Court apparently would try to extricate themselves from what for them is an
untenable situation by alleging that it was not a homestead that was applied for by
the deceased. Such a contention does not carry persuasion. There was no such
allegation in their answer filed before the lower court. 5 There was nothing to that
effect in the stipulation of facts. After losing in the lower court, there was not even a
motion for reconsideration filed. The matter was immediately taken respondent Court
of Appeals. In their brief before respondent Court of Appeals, again, such a defense
now interposed is conspicuous by its absence, the two paragraphs devoted to the
point merely confining itself to the assertion that the Public Land Act does not
prohibit an applicant from selling his right and interests during his application for a
free patent. 6
Apparently realizing the weakness that characterized their vain effort to prevent
private respondents from enjoying their successional rights, an attempt is made by
petitioners in the appeal by way of certiorari as well as in their brief, to mitigate its
shortcoming by raising what in effect is a new matter, namely, that the application
was not for a homestead. Outside of such an assertion lacking support in the facts
as found by respondent Court, to which we must accord deference, there is another
obstacle to its being considered. Such an issue was not raised before the lower
court. It was not even brought to the attention of respondent Court of Appeals. What
was said, therefore, in the recent case of Arangco v. Baloso 7 has relevance. Thus:

"As far back as 1904, in Tan Machan v. Trinidad, for the appellate tribunal to consider
a legal question, it must be raised in the court below. Such a principle has been
consistently adhered to. As was categorically announced in City of Manila v. Roxas
by Justice Hull, 'the rule is almost universal, and it has been repeatedly followed by
this court ....'" 8 It cannot be said then that respondent Court erred in affirming the
decision of the lower court, declaring the nullity of the sale dated April 21, 1956
executed without the approval of the Secretary of Agriculture and Natural Resources.
Thus is the first assigned error disposed of.
2. The principal argument, thus exposed as devoid of any persuasive force, was
sought to be strengthened in the second assignment of error by an attempted
distinction between the limitation placed on the grantee after the free patent is issued
and the absence thereof prior thereto, except if the application is for a homestead.
That, in effect, is the error imputed to respondent Court under this category.
Petitioners again labor under a misapprehension. Section 118 of the Public Land Act
9
reads: "Except in favor of the Government or any of its branches, units, or
institutions, or legally constituted banking corporations, lands acquired under the free
patent or homestead provisions shall not be subject to encumbrance or alienation
from the date of the approval of the application and for a term of five years from and
after the date of issuance of the patent or grant, nor shall they become liable to the
satisfaction of any debt contracted prior to the expiration of said period; but the
improvements or crops of the land may be mortgaged or pledged to qualified
persons, associations, or corporations." Is it not a clear expression then of the state
policy to assure that the original grantee, even if he were minded otherwise, is
deprived for a period of five years of his freedom of disposition? Thus is he protected
from his own weaknesses or temptation to sell, or lack of business acumen, the
purpose being, in the language of Justice J.B.L. Reyes in Artates v. Urbi, 10 to keep
and preserve for him "or his family the land given to him gratuitously by the State, so
that being a property owner, he may become and remain a contented and useful
member of our society." 11 Considering that such is policy, does it not logically follow
that he is precluded disposing of his rights prior even to his obtaining the patent?
Both policy and reason, therefore, unite in conclusion that no such distinction should
be made. Then, it is not to be forgotten that the state is possessed of plenary power
as the persona in law to determine who shall the favored recipients of public lands,
as well as under what terms they may be granted such privilege, not excluding
placing of obstacles in the way of their exercising what otherwise would be ordinary
acts of ownership? 12
3. The third assigned error impugning the judgment respondent Court of Appeals in
favor of appellees before now private respondents, being a logical consequence of
the foregoing, need not be discussed at all.
WHEREFORE, the decision of February 24, 1967 affirmed. With costs against
petitioners.

Makalintal, Zaldivar, Castro, Teehankee, Barredo, Makasiar, Antonio and Esguerra,

JJ., concur.
G.R. No. L-32749 January 22, 1988
SABAS H. HOMENA and ILUMINADA JUANEZA, plaintiffs-appellants,
vs.
DIMAS CASA AND MARIA CASTOR and the REGISTER OF DEEDS FOR THE
PROVINCE OF COTABATO, defendants-appellees.

YAP, J.:
This is an appeal from the order of the Court of Flint Instance of Cotabato dated
January 4,1968 dismissing plaintiffs-appellants' complaint and from its order dated
May 8,1968, denying their motion for reconsideration.
The complaint, filed by plaintiffs-appellants against the spouses Dimas Casa and
Maria Castor, the defendants-appellees herein, was for alleged unlawful acts of
dispossession disturbing plaintiffs peaceful, continuous, open, uninterrupted adverse
and public possession of the property in question. In their complaint, plaintiffs also
sought to annull the original certificate of title issued by the Register of Deeds for the
province of Cotabato in favor of defendant spouses pursuant to a Homestead Patent
on the ground that said patent was obtained by defendant spouses through fraud
and misrepresentation by stating, among others, in their application, that the lot was
not claimed and occupied by another person. Plaintiffs alleged that on June 15,
1967, they purchased from the defendants two (2) hectares of the aforementioned
parcel of land, it being agreed in the deed of sale that the said portion would be
reconveyed to plaintiffs after the five-year prohibitory period, as provided for in the
Homestead Patent Law, shall have elapsed, and that defendants failed to abide by
said agreement.
The defendants moved to dismiss the complaint, based on the following grounds: (1)
the complaint is barred by prescription, since thirteen years had elapsed from the
issuance of the homestead patent before the action was filed; (2) plaintiff has no
cause of action, since the deed of sale executed on June 15, 1952 or prior to the
approval of the application and issuance of the homestead patent was null and void
and inoperative to convey the land in question, which was at that time still public
land; and (3) plaintiff is not the proper party to institute the action to annul the
homestead patent.
In their opposition to the motion to dismiss, plaintiffs averred that they were not
assailing the validity of the patent as a whole, but only with respect to that portion of
two (2) hectares owned by them which defendants, through fraud, were able to

register in their name. Because of such fraud, the action of the plaintiffs cannot be
deemed to have prescribed, since such action can be brought within four (4) years
from discovery of the fraud. Moreover, the defense of prescription can not be set up
in an action to recover property held in trust by a person for another. On January 4,
1968, the court a quo issued the questioned order dismissing the complaint. The
plaintiffs appealed the case to the Court of Appeals, assigning the following errors:
1. The lower court erred in holding that the allegations in the complaint do not
conform with the terms and conditions of the contract as to amount to a justifiable
cause of action.
2. The lower court erred in holding that the plaintiffs-appellants have no personality to
bring the present action as they do not seek the land for themselves but for the
government.
3. The lower court erred in holding that the present action based on fraud is barred by
the statute of limitations.
4. Finally, the lower court erred in holding that the deed of sale is not lawful as the
same was made to circumvent the provisions of the Public Land Act.

The Court of Appeals certified the case to this Court as it involved only questions of
law.
We find no merit in the petition. The lower court committed no reversible error in
dismissing the complaint.
Basically, the plaintiffs' supposed cause of action rests upon the deed of sale
executed by defendants in their favor on June 15, 1962 wherein the latter sold a twohectare portion of the homestead which they were applying for to the plaintiffs on the
understanding that the actual conveyance of the said portion to plaintiffs would be
made only after the lapse of the five-year period during which, under the Public Land
Act, the homestead owner was prohibited from transferring his rights. The agreement
is clearly illegal and void ab initio; it is intended to circumvent and violate the law. As
parties to a void contract, the plaintiffs have no rights which they can enforce and the
court can not lend itself to its enforcement. Plaintiffs can neither invoke the doctrine
of implied trust based on an illegal contract. The issue of prescription or laches
becomes irrelevant in a case such as this, where plaintiffs clearly have no cause of
action.
WHEREFORE, the petition is hereby DENIED and the orders appealed from are
AFFIRMED.
SO ORDERED.
Melencio-Herrera, Paras, Padilla and Sarmiento, JJ., concur.

G.R. No. L-35537 December 27, 1979

FRANCISCO SANTANA and JOSE H. PANGANIBAN, petitioners,
vs.
SOTERO MARIAS, respondent.
Rafael Dinglasan for petitioners.
Cruz B. Carbon for respondent.

SANTOS, J.:
This is a petition for review by certiorari under Rule 45 of the Revised Rules of Court
of the decision dated September 5, 1972 of the Special Sixth Division of the Court of
Appeals-composed of Justice E. Soriano, M. Barcelona and L.B. Reyes in CA-G.R.
37292-R, entitled "Sotero Marias vs. Francisco Santana and Jose H. Panganiban",
Soriano, J., ponente, which (1) reversed the decision 1 of the Court of First Instance
of Rizal dismissing the complaint of Sotero Marias-plaintiff below and private
respondent herein for recovery of the property in litigation under Section 119 of
Com. Act No. 141, otherwise known as Public Land Law and (2) ordered Francisco
Santana and Jose H. Panganiban defendants below and now herein petitioners
to reconvey the aforesaid property to respondent Marias upon payment by him
of the repurchase price in the amount of P4,128.60, without special pronouncement
as to costs. 2
Required to comment in the resolution of September 28, 1972, 3 private respondent
did so on October 20, 1972. 4 Considering the allegations contained, the issues
raised and the arguments adduced in the petition, as well as the comment of private
respondent, the Court denied the petition for lack of merit in its resolution of October
31, 1972. 5 In due time, petitioners filed their motion for reconsideration 6 of the
aforesaid resolution denying their petition for review. In the resolution of November
23, 1972, 7 private respondent was required to comment on the motion for
reconsideration. The required comment was filed by private respondent on
December 15, 1972. 8
On February 9, 1973, the Court resolved: (a) to reconsider its October 31, 1972
resolution of denial and (b) to give due course to the petition. 9 Accordingly, the
parties filed their respective briefs. 10
The procedural, as well as the factual, antecedents that spawned the present case
are not in dispute. On April 21, 1960, private respondent Sotero Marias - as plaintiff
- filed in the Court of First Instance of Rizal a complaint to recover a real property
alleging, insofar as material to this petition, (1) that he acquired, on May 22, 1929,

under free patent and covered by Original Certificate of Title (OCT) No. 217, Rizal
Registry, a parcel of land containing an area of four hectares, twelve ares and eightysix centares (41,286 sq. m.); that on January 16, 1956, he sold the above parcel of
land to petitioner Francisco Santana - one of the defendants below - for a sum of ?
4,128,60; that the other petitioner Jose H. Panganiban - also a co-defendant below was included in the complaint because he is a subsequent lienholder and/or
encumbrancer, the property having been sold to him by Santana on March 25, 1956
for the same amount of P4,128.60; that the land has an annual produce worth
P400.00; and praying (2) that judgment be rendered: (a) allowing him to repurchase
the property for the sum of P4,128.60 and (b) awarding to him P400.00 annually
from date of filing of the complaint until the property is delivered to him, with costs. 11
On May 26, 1960, herein petitioners, defendants below, filed their respective
answers admitting some material factual allegations in the complaint; but denied the
right of private respondent to repurchase the property, and interposed the following
affirmative defenses: (1) that at the time the absolute sales were entered into, they
were totally ignorant of and had no knowledge whatsoever to any encumbrance or
right to repurchase by private respondent, who assured petitioner Francisco Santana
that he (Santana) could sell the land in question absolutely and free from any
encumbrance and is not subject to any right of repurchase as he (respondent
Marias) had been in possession of the property for over twenty-five (25) years; (2)
that they (petitioners) have always been of the honest belief that they acquired
absolute ownership of the property, free from any Hen or encumbrances whatsoever
and, hence, are purchasers in good faith; (3) that being innocent purchasers for
value, they acquired absolute ownership over the property and private respondent
cannot enforce against them any right of repurchase of whatever nature; (4) that as
absolute owners and possessors in good faith, they (petitioners) incurred necessary
and useful expenses thereon in the total amount of not less than Pl0,000.00; and (5)
that the property in question now a residential area with real estate subdivisions and
roads in front and at the back thereof and its present increased value is no less than
P2.50 a square meter. Petitioners interposed a counterclaim for moral damages in
the amount of P10,000.00 and attorney's fees and litigation expenses in the total
sum of P5,000.00. In their prayer petitioners asked for the rendition of judgment
absolving them completely from the complaint, with costs, and sentencing private
respondent to pay them moral damages of P10,000.00 and attorney's fees and
litigation expenses in the amount of P5,000.00; or in the remote possibility that
repurchase by private respondent were allowed, to require the latter to pay the
reasonable market value of not less than P2.50 per square meter. 12
As stated at the outset, the trial court ruled out private respondent's right to
repurchase the property and dismissed the complaint but on appeal, the Court of
Appeals Special Sixth Division reversed the trial court's decision of dismissal
and ordered petitioners to reconvey th eland to private respondent upon payment to

the former of :the repurchase price thereof in the amount of P4,128.60, without
special pronouncement as to costs. " 13
Not satisfied with the appellate court's decision, petitionners filed the instant petition,
contending that the Court of Appeals erred:
(1) IN NOT FINDING THAT RESPONDENT ACTED IN DELIBERATE BAD FAITH
WHEN HE SOLD THE LAND IN QUESTION TO PETITIONER-APPELLANT
SANTANA BY DECEITFULLY CONCEALING FROM HIM THE FACT THAT IT WAS
ORIGINALLY REGISTERED UNDER ORIGINAL CERTIFICATE OF TITLE NO. 217,
PURSUANT TO A FREE PATENT GRANTED UNDER ACT NO. 2874, AND THAT
PETITIONER SANTANA PURCHASED SAID LAND IN GOOD FAITH IN VIRTUE OF
A DEED OF ABSOLUTE SALE AND SIGNED BY HIMSELF, WHEREIN IT WAS
FALSELY STATED THAT THE VENDOR IS THE REGISTERED OWNER OF SAID
LAND "IN ACCORDANCE WITH THE LAND REGISTRATION ACT NO. 496;" AND
IN NOT HOLDING THAT THEREFORE SAID VENDOR COULD NOT
REPURCHASE SAID LAND. (p. 11, rollo).
(2) IN NOT HOLDING, AS HELD BY THE TRIAL COURT, THAT UNDER ALL THE
CIRCUMSTANCES OF THE CASE, "THE REPURCHASE OF THE LAND IN
QUESTION BY PLAINTIFF-APPELLANT IS NOT PROPER; IT IS NOT IN
CONSONANCE WITH REASON AND PURPOSE OF THE LAW; IT IS REPUGNANT
TO JUSTICE AND EQUITY.(p. 11 rollo).
(3) IN ORDERING PETITIONERS-APPELLANTS (DEFENDANTS BELOW) TO
RECONVEY TO RESPONDENT (PLAINTIFF BELOW) THE LAND DESCRIBED IN
THE COMPLAINT UPON PAYMENT BY HIM TO THE SAID PETITIONERS ONLY
OF THE PURCHASE PRICE THEREOF IN THE AMOUNT OF P4,128.60. 14
And now to consider and/or resolve the foregoing issues, seriatim.
1. Petitioners' contention under the first assigned error i.e. that private respondent
acted in deliberate bad faith when he sold the land to petitioner Santana who acted
in good faith in buying it-need not detain Us long. For this raises a question of fact
which this Court is not at liberty to review at this stage. It is elementary that the
findings of facts of the Court of Appeals are not subject to review by this Court. 15
Stated in another way, the findings of fact of the Court of Appeals are binding upon
this Court. 16
At any rate, We see no point in the argument of petitioners that respondent Marias
acted in bad faith for having falsely stated in the deed of sale that he is the registered
owner of the land in accordance with the Land Registration Act. For indeed, a free
patent or a homestead patent must be registered under the Land Registration Act in
order that the land covered thereby is brought under the operation of the Torrens

system and thus becomes a registered land. 17 Neither did respondent Marias
misrepresent that the land is not subject to redemption, because the right of the
patentee and his heirs to effect such redemption is statutory and, therefore, the law
allowing it formed part of and was deemed incorporated in the deed of conveyance.
It is settled that an existing law enters into and forms part of a valid contract without
the need for the parties expressly making reference to it. 18
2. Petitioners next assail the order of the appellate court directing them to reconvey
the subject land to private respondent. Put thus in issue is the proper construction
and application of Section 119 of the Public Land Law, Com. Act No. 141, which
provides:
Every conveyance of land acquired under the free patent or homestead provisions,
when proper, shall be subject to repurchase by the applicant, his widow, or legal
heirs, within a period of five years from the date of conveyance.

Petitioners' specific contention that it could not have been the intention of the
Legislature to subject to the right of repurchase a free patent or homestead
conveyed 25 years after the issuance of the title is without legal basis and is contrary
to jurisprudence laid down on the matter. Thus, in Isaac, et al. v. Tan Chuan Leong,
et al. 20 the sale took place more than 27 years after the issuance of the original title;
while in Francisco v. Certeza Sr., 21 one of the 2 lots was sold more than 41 years
after it was acquired. The right to repurchase was upheld in both cases despite the
fact that the above lots were acquired under Act No. 296 which contained no
provision on the right of redemption. For the right of repurchase was provided for
only later, under Section 117 of Act No. 2874, approved on Nov. 29, 1919, and
incorporated in Com. Act No. 141 as Section 1 19. 22
However, We uphold petitioners' proposition that to allow the repurchase of the
subject land, under the peculiar circumstances obtaining herein, would be repugnant
to the philosophy behind Section 119 of C.A. No. 141 and the i jurisprudence laid
down on the matter.
The findings of fact of the trial court the then CFI Judge, Cecilia Muoz Palma,
later a member of this Court, presiding are clear and duly supported by the
evidence. We quote:
Evidence has been adduced by the defendants that this property of Sotero Marias
has ceased to be in the nature of a homestead, and that instead it has been
transformed into a growing commercial and residential area. The vicinity of the
property is now a vast expanding business empire, the lands having (been) converted
into subdivisions which are sold to the public at fantastic prices. Close to this
particular property of Sotero Marias the subdivision being developed by a son of the
plaintiff who has extensive business interests centered on construction of buildings
such as the Rizal Provincial Capitol and development of subdivisions. (See Exhs. "l"
to "l-G"). By plaintiff's own admission on cross-examination he is 78 years old and
sick with a lung ailment: while from the testimony of his sort, Antonio Marias, it is

shown that the sons of plaintiff are all financially independent from the latter and have
their respective properties and means of livelihood. Under these circumstances it is
evident that to grant plaintiff the right to repurchase the property at this time would be
not for the purpose of giving him back the back the land for his house and cultivation
but for him to exploit it for business purposes at the expense of the defendants who
are innocent purchaser in good faith and for value. 23

In Simeon vs. Pea. We analyzed the various cases previously decided, 24 and
arrived at the conclusion that the plain intent, the raison d'tre, of Section 119, C.A.
No. 141"... is to give the homesteader or patentee every chance to preserve for
himself and his family the land that the state had gratuitously given to him as a
reward for his labor in cleaning and cultivating it. 25 In the same breath. We agreed
with the trial court, in that case, that "it is in this sense that the provision of law in
question becomes unqualified and unconditional. And in keeping with such reasons
behind the passage of the law, its basic objective is to promote public policy, that is,
to provide home and decent living for destitutes, at promoting a class of in
dependent small landholders which is the bulwark of peace and order. " 26
As it was in Simeon v. Pea, respondent Marias' intention in exercising the right of
repurchase "is not for the purpose of preserving the same within the family fold' , 27
but "to dispose of it again for greater profit in violation of the law's policy and spirit." 28
The foregoing conclusions are supported by the trial court's findings of fact already
cited, culled from evidence adduced. Thus respondent Marias was 71 years old and
a widower at the time of the sale in 1956; that he was 78 when he testified on Oct.
24, 1963 (or over 94 years old today if still alive); that ... he was not living on the
property when he sold the same but was residing in the poblacion attending to a
hardware store; 29 and that the property was no longer agricultural at the time of the
sale, but was a residential and commercial lot in the midst of many subdivisions. 30
The profit motivation behind the effort to repurchase was conclusively shown when
the then plaintiff's counsel, in the case below, Atty. Loreto Castillo, in his presence,
suggested to herein petitioners' counsel, Atty. Rafael Dinglasan," ... to just add to the
original price so the case would be settled." Moreover, Atty. Castillo manifested in
court that an amicable settlement was possible, for which reason he asked for time
"within which to settle the terms thereof" and that "the plaintiff '... Mr. Marias has
manifested to the Court that if the defendants would be willing to pay the sum of One
Pesos and Fifty Centavos (P1.50) per square meter, he would be willing to accept
the offer and dismiss the case. 31
Respondent Marias admission is on record that the money with which he would
repurchase the property was not his but belonged to his children one of whom is
Felix Marias owner of Cristimar Subdivision. 32 Furthermore, the trial court found
that Marias ones are all financially independent from the latter and have their
respective properties and means of livelihood. 33

The respondent Court of Appeals anchors respondent-appellee Marias' right of

repurchase on "old age and tuberculosis having caught up with appellant, and the
land in question being his only property." Allowing the repurchase would, thus, "help
tide over the needs of his remaining days, " 34 according to respondent court.
It could be true that the land in question is the only land owned by respondentappellee. But this is not the determinant factor in allowing the repurchase of land
acquired through homestead or free patent. The doctrine in Simeon v. Pea, supra,
is explicit that what is "unqualified and unconditional" is the right of the homesteader
or patentee to preserve the land "for himself and his family." We can, therefore
properly inquire into the motives behind the repurchase and convinced as We are in
the instant case, that the intention is not so, but to exploit it for business purposes or
greater profit, We can deny the repurchase. To sustain respondent-appellee's claim
under the circumstances would put a premium on speculation contrary to the
philosophy behind Sec. 119 of Com. Act No. 141, otherwise known as the Public
land law. Thus, this Court, speaking through Mr. Justice J.B.L. Reyes, held in
Santander, et al. v. Villanueva 35 that the law discourages homesteaders from taking
advantage of the "salutary policy behind the Public Land Law to enable them to
recover the land in question from (vendees) only to dispose of it again at much
greater profit to themselves.
3. In view of Our holding above, disallowing the repurchase of the homestead
property, it is unnecesary to resolve this assigned error.
ACCORDINGLY, the Court of Appeals decision appealed from, directing the
reconveyance of the subject homestead lot to respondent Sotero Marias is hereby
REVERSED, without special pronouncement as to costs.
SO ORDERED.
Barredo (Chairman), Antonio, Aquino, Concepcion Jr. and Abad Santos, JJ., concur.
G.R. No. 55336 May 4, 1989
BENJAMIN VALLANGCA, RODOLFO VALLANGCA and ALFREDO VALLANGCA,
petitioners
vs.
HON. COURT OF APPEALS and NAZARIO RABANES, respondents.
Hernegildo G. Rapanan for petitioners.
Eriberto A. Aricheta for private respondent.

PADILLA, J.:
Involved in this appeal by certiorari from a decision** of the Court of Appeals, is a
controversy over possession of a parcel of land, the proper resolution of which calls
for a determination of the ownership thereof.
The more than eleven (11) hectares of agricultural land in dispute is located in
Buguey, Cagayan, originally registered on 28 December 1936 in the name of "Heirs
of Esteban Billena", and covered by Original Certificate of Title (OCT) No. 1648. In
1940, said certificate of title was cancelled and, in lieu thereof, Transfer Certificate of
Title (TCT) No. 1005 was issued in the name of Maximiniana Crisostomo and Ana
Billena, wife and daughter, respectively of the deceased Esteban Billena. Each of the
then new owners owned an undivided one-half (1/2) portion of, or interest in the land.
Maximiniana Crisostomo died during the Japanese occupation, leaving behind her
only child Ana Billena, then married to Fortunate Vallangca with whom she had three
(3) children, namely, Benjamin, Rodolfo and Alfredo, all surnamed Vallangca who are
the petitioners herein.
According to the petition at bar, the following events led to the present controversy:
Upon Fortunate Vallangca's death in 1944, his widow Ana Billena, together with her
eldest son Benjamin, went to Centro, Buguey, Cagayan and mortgaged the land in
dispute to her cousin Nazario Rabanes (private respondent herein) for Eight
Hundred Pesos (P800.00) in Japanese war notes, to cover the burial expenses of
her deceased husband Fortunato Vallangca. There being no notary public in the
place at the time, the agreement was not reduced to writing. At the time of said
mortgage of the land to Nazario Rabanes, the land was already mortgaged to the
Philippine National Bank (PNB), said first mortgage having been executed on 16
November 1940, and annotated on said TCT No. 1005.
After the Pacific war, Nazario Rabanes went to the residence of Ana Billena on 2
February 1946 and made the latter sign a document which Rabanes represented to
Ana Billena as a mortgage contract written in the Ilocano dialect. Billena, being an
illiterate and trusting in her cousin Rabanes affixed her signature on the document in
the space indicated to her.
In that same year, 1946, Billena was informed by a cousin of Rabanes and another
witness to the document that the alleged mortgage contract which she had signed
was actually a deed of absolute sale to Rabanes of the land covered by TCT No.
1005. Ana Billena and her son Benjamin, thereupon, went to Rabanes' place for the
purpose of redeeming the land and actually tendered to him the loan amount of
P800.00, this time, in genuine and legal Philippine currency. However, Rabanes told
them that the land could no longer be redeemed and he drove them out of his house.

Since Ana Billena and her three (3) sons were in possession and actual cultivation of
the land in question, Rabanes filed against them on 7 July 1971 an injunction suit
before the Court of First Instance of Cagayan (Civil Case No. II-14). 1 At the pretrial of
said injunction suit, plaintiff Rabanes was advised by the trial court that injunction
was not the proper cause of action, because injunction was merely an ancillary or
provisional remedy to a main action. On 11 September 1972, another complaint
entitled "Recovery of Possession" (Civil Case No. 1139) 2 was lodged by Rabanes
before the same court against the same defendants in the action for injunction. Two
(2) days later, or on 13 September 1972, the action for injunction was ordered
dismissed by the trial court. The order of dismissal reads as follows:
ORDER
As prayed for, the above-entitled case is hereby dismissed.
SO ORDERED. 3

Respondent Nazario Rabanes (later substituted by his heirs) had another version of
the events. According to him, Ana Billena knowingly signed a deed of absolute sale
in his favor on 2 February 1946 as she had actually sold and not merely mortgaged
the land in controversy for P800.00. Rabanes alleged that from then on, his tenants,
Serapio dela Cruz and Fernando Dagmante cultivated the land, until they were
driven out by the three (3) sons of Ana Billena sometime in 1962.
After trial in the second action involving recovery of possession, the Court of First
Instance of Cagayan, on 24 September 1976, rendered judgment declaring plaintiff
Rabanes (herein respondent) as the rightful owner of the land and ordered the
defendants (herein petitioners) to vacate the same . 4 The trial court reasoned thus
. . . . The only witness of the defendants to prove this vital point is their co-defendant
Benjamin Vallangca who is a son of Ana Villena [sic]. He testified that he was only 14
years old when his mother signed the document under the alleged influence of the
plaintiff. He also signed it as a witness. With that tender age, we doubt if he
understood the meaning or difference between a mortgage and a sale of real
property, so how can he say now that his mother was influenced into signing Exhibit
'F'. He did not say how Nazario Rabanes influenced his mother. He merely stated that
Nazario Rabanes was his uncle, being the cousin of his mother. They were not living
in the same house and there is no evidence that he was giving them money, food or
in any manner supporting them so as to exercise influence over her. He did not state
the nature of the influence exerted over his mother, whether it was moral, physical,
spiritual or religious. So the court is at a loss to see how this undue influence over his
mother existed.

xxx
. . . . The testimonies of Serapio de la Cruz and Fernando Dagmante are stronger
and more convincing than the lone testimony of Benjamin Vallangca. . . . .

The decretal part of the judgment reads-WHEREFORE. judgment is hereby rendered in favor of the plaintiff and against the
defendants and ordering the defendants to leave the land in question, referring to the
parcel of land described in paragraph 2 of the complaint and declaring herein the
plaintiff as the rightful owner of said parcel of land; 2) Ordering the defendants to pay
the plaintiff the amount of P640.00 corresponding to the value of the owner's share of
the land for four (4) years and to pay the costs.'

From the above judgment, the defendants appealed to the Court of Appeals 5 where
the appeal was docketed as CA-G.R. No. 61133-R. On 18 September 1980, the
appellate court rendered judgment, affirming in toto the trial court's judgment, after
finding no reversible error therein.
Hence this petition. 6
Petitioners, invoking the rule on "res judicata contend that the dismissal of the
"Injunction" case filed on 7 July 1971 by Rabanes against them, barred the filing by
Rabanes against them of the second action for "Recovery of Possession."
Petitioners maintain that the first suit, although styled as for "Injunction", had for its
actual primary purpose the recovery of the land in dispute and, therefore, after its
dismissal, no other action for recovery of possession of the same land and against
the same parties (herein petitioners) could be pursued by the same complainant
(Rabanes). In this connection, petitioners would stress the fact that the dismissal of
the suit for injunction was not made without prejudice.
It is also petitioners' contention that the respondent's complaint for injunction had
already prescribed, before its filing on 7 July 1971, under Section 40 of Act 190,
which provides that:
Sec. 40. Period of Prescription as to real estate An action for recovery of title to, or
possession of real property, or an interest therein, can only be brought within 10
years after the cause of such action accrues. (italics supplied)

According to petitioners, from the date private respondent claims to have bought the
land, that is, 2 February 1946, more than ten (10) years had elapsed when Rabanes
filed on 7 July 1971 his action for injunction which, in effect, was an action for
recovery of possession of the disputed land. Hence, the action was barred by
prescription.
It is further urged by petitioners that it was not likely that their mother Ana Billena
would consent to sell the land to Rabanes for only Eight Hundred (P800.00) Pesos,
for the entire eleven (11) hectares, forty one (41) area and thirty three (33) centares
comprising its total area, considering that the land was then assessed already at Two
Thousand Six Hundred Twenty (P2,620.00) Pesos as indicated in Tax Declaration
No. 7957. 7 And, even assuming arguendo that there was indeed a sale, petitioners

postulate that since the land is registered in the name of both Maximiniana
Crisostomo and Ana Billena, the latter could not outrightly dispose of the undivided
one-half share of the former (Crisostomo), without first accomplishing an affidavit of
adjudication of Crisostomo's interest or share, and registering said affidavit of
adjudication.
During this appeal before the Court, Nazario Rabanes died in 1982. An order for his
substitution by his legal heirs was issued.
The heirs of private respondent Rabanes in turn aver, among others, that the Court
of Appeals was correct in finding petitioners' reliance on res judicata as untenable.
We sustain the Rabanes heirs on this point.
In an impressive line of cases, 8 the requisites for res judicata have long been
established. They are: (a) that there be an earlier final judgment; (b) that the court
which rendered it had jurisdiction over the subject matter and the parties; (e) that it is
a judgment on the merits; and (d) that there is between the first and the second
actions, Identity of parties, subject matter and causes of action.
When the issue of res judicata is raised, at least two (2) actions before a competent
court are necessarily involved; one, still pending and the other, already decided with
finality. It is the final judgment that ends the controversy and precludes a relitigation
of the same causes of action.
Coming to the case at bar, it is to be noted that the first action for injunction was filed
on 7 July 1971, while the second action for recovery of possession was filed on 11
September 1972. The order of dismissal of the injunction suit was issued on 13
September 1972. The defense of res judicata was invoked by herein petitioners (as
defendants) in their "Answer" dated 6 November 1972 in the action for Recovery of
Possession. 9 Given the above mentioned dates, it is clear that, while the Injunction
suit had not yet been disposed of with finality when the second action was filed, yet,
at the time the defendants interposed res judicata as an affirmative defense in their
"Answer" in the second action, the order of dismissal in the injunction case had
already become final. The dismissal order assumed the character of finality, there
being no showing that there was an appeal of the order when the "Answer" in the
second action was filed on 6 November 1972.
The Court of Appeals in holding that the date of the filing of the second complaint
determines whether or not there existed at that time a prior final judgment,
overlooked the date when res judicata was actually set up as a defense in the
second action. The latter date may also be a proper determining point. In other
words, when the law says that a prior final judgment is a requisite for res judicata to
validly apply as a defense, it may refer to a judgment that has become final and
executory before the second action is instituted or to a judgment that has become

final and executory only after the second action is filed but before the defense is
actually set up in the Answer.
Despite the above oversight, the ruling of the Court of Appeals is nonetheless correct
when it held that the defense of res judicata was unavailing to the petitioners,
because the prior injunction suit against them, which was dismissed, was merely an
ancillary and not a main action. Sections 1 & 3, Rule 58 of the Rules of Court,
provide:
Sec. 1. Preliminary Injunction defined; classes. A preliminary injunction is an order
granted at any stage of an action prior to the final judgment, . . . (italics supplied)
Sec. 3. Grounds for issuance of preliminary injunction. A preliminary injunction
may be granted at any time after the commencement of the action and before
judgment, when it is established: (Emphasis supplied)
"x x x"

From the above provisions, it can be clearly deduced that a writ of injunction
presupposes the pendency of a principal or main action. There being no main action
when the 7 July 1971 suit for injunction was filed, the latter was correctly dismissed.
Accordingly, there could be no prior judgment on the merits to speak of that resulted
in res judicata, from such dismissal of the injunction suit on 13 September 1972.
Petitioners would also like to impress that the dismissal order of 13 September 1972,
in the injunction suit, not having been made without prejudice, bars the second
action for recovery of possession. Under Sec. 2, Rule 17 of the Rules of Court which
provides:
Sec. 2. Dismissal by order of the court.--Except as provided in the preceding section,
an action shall not be dismissed at the plaintiffs instance save upon order of the court
and upon such terms and conditions as the court deems proper. If a counterclaim has
been pleaded by a defendant prior to the service upon him of the plaintiffs motion to
dismiss, the action shall not be dismissed against the defendant's objection unless
the counterclaim can remain pending for independent adjudication by the court.
Unless otherwise specified in the order, a dismissal under this paragraph shall be
without prejudice.

a dismissal order is generally deemed to be without prejudice to the filing of another

action. The only instance when dismissal of an action is with prejudice is, when the
order itself so states. Stated differently, when the court issues, upon the plaintiff's
instance, a dismissal order that is silent as to whether it is with or without prejudice,
such as in the case at bar, the presumption is, that it is without prejudice. The cases
cited 10 by petitioners to support their contention cannot be made to apply here as
they deal with dismissal orders issued as a result of plaintiff's failure to prosecute,
and are covered by Section 3, and not Section 2, Rule 17 which provides:

Sec. 3. Failure to prosecute. If plaintiff fails to appear at the time of the trial, or to
prosecute his action for an unreasonable length of time, or to comply with these rules
or any order of the court, the action may be dismissed upon motion of the defendant
or upon the court's own motion. This dismissal shall have the effect of an adjudication
upon the merits, unless otherwise provided by court.

Dismissals of actions (under Section 3) which do not expressly state whether they
are with or without prejudice are held to be with prejudice or on the merits.
Next, the respondent Court of Appeals was correct in holding that the action for
recovery of possession of the land in question was timely filed citing Art. 1141 of the
Civil Code which provides that real actions over immovables prescribe after thirty
(30) years. Here, the Court of Appeals found that Rabanes was dispossessed by the
petitioners in 1962, and the action for recovery of possession was filed on 11
September 1972, or more or less ten (10) years after dispossession. 11
Coming now to the main issue as to who is the rightful owner of the property in
question, the parties to this case have presented two (2) entirely different versions of
the antecedents. We will not weigh all over again the entire evidence, because in a
petition for review, such as the case at bar, generally, this Court's duty is to accept
the findings of fact of the Court of Appeals and pass only on questions of law.
The trial court and the Court of Appeals arrived at the conclusion that the deed of
sale of 2 February 1946 was indeed one of sale and not of mortgage. We, however,
conclude differently. Under Art. 1602 and Art. 1604 of the Civil Code, a contract shall
be presumed to be an equitable mortgage in any of the following cases:
Art. 1602
1) When the price of a sale with right to repurchase is unusually inadequate;
2) When the vendor remains in possession as lessee or otherwise;
xxx xxx
Art. 1604. The provisions of Art. 1602 shall also apply to a contract purporting to be
an absolute sale.

These articles embody decisional rules laid down even before the effectivity of the
Civil Code (30 August 1950) so that it is of no moment that the 2 February 1946
deed of sale was executed 12 before the effectivity of the Civil Code. 12
There was gross inadequacy of price, because the land was sold for P800.00 in
Japanese war notes at that, or for barely thirty percent (30%) of its total assessed
value of P2,620.00. The Court can take judicial notice of the fact that real estate,
including agricultural land, usually commands a market value much higher than
assessed value.

The other factor to consider is the continuous physical possession by the petitioners
of the property for almost nine (9) long years, or from 1962 to the filing of the
injunction case by respondent Rabanes in 1971. Even assuming for the sake of
argument, as the Court of Appeals believed, that Rabanes acquired possession of
the land thru his tenants in 1946 and continued such possession till 1962, when they
were allegedly dispossessed by the petitioners, one nevertheless can not ignore the
unrefuted fact that, from 1962 until the filing of said injunction case in 1971, it was
the petitioners Vallangcas who were in actual and physical possession of the
property. Why did it take Rabanes nine (9) years more or less to take action to
recover possession of the property he claimed to have been forcibly and unlawfully
taken from his tenants?
Apart from the foregoing considerations is still one fact that the trial court and the
Court of Appeals failed to appreciate. We refer to the fact that the land in dispute was
acquired under a free patent in the year 1936 as shown on Transfer Certificate of
Title No. 1005, its covering title, which states
It is further certified that said land was originally registered on 28th day of December,
in the year nineteen hundred and thirty-six, in Registration Book No. 1-7, page 55, of
the Province of Cagayan, pursuant to a Free patent granted by the President of the
Philippines, on the 5th day of December in the year nineteen hundred and thirty-six,
under Act Nos. 2874 & 496. 13

Consequently, not to be ignored are the provisions of Act No. 2874 (an Act to amend
and compile the laws relative to lands of the public domain) and Act No. 496 (The
Land Registration Act), which govern the said free patent. Sections 116 and 117 of
Act No. 2874 provide:
Section 116. Lands acquired under the free patent or homestead provisions shall
not be subject to encumbrance or alienation from the date of the approval of the
application and for a term of five years from and after the date of issuance of the
patent or grant, nor shall they become hable to the satisfaction of any debt contracted
prior to the expiration of said period; . . . 14
Section 117. Every conveyance of land acquired under the free patent or
homestead provisions, when proper, shall be subject to repurchase by the applicant,
his widow or legal heirs, for a period of five years from the date of the conveyance. 15

Restrictions are thus imposed on the conveyance of patented lands within five (5)
years from the date of the issuance of the free patent; the owner of the land is
precluded from subjecting the same to any encumbrance or alienation. After the
lapse of five (5) years, such prohibition is lifted, but the owner-vendor is entitled to
repurchase the property from the vendee within five (5) years from the date of the
execution of the deed of sale or conveyance.
Applying the foregoing rules in the instant case, it is to be noted that the free patent
was issued to the heirs of Esteban Billena on 5 December 1936. From this date and

until 5 December 1941, any transfer, conveyance or alienation of the property

covered by TCT 1005 was not allowed. Assuming then that what Ana Billena and
Nazario Rabanes actually agreed upon in 1944 was indeed a sale of the land, which
transaction was formally put in writing on 2 February 1946, the said sale, while
valid--because it occurred after the period of five (5) years when sale was
prohibited--yet, the sale was subject to Billena's right to repurchase within five (5)
years from 2 February 1946. For, notwithstanding the absence of any stipulation in
the deed of sale of the vendor's right to repurchase the land, Billena or her heirs are
granted such right by operation of law. The restrictions and qualifications attached to
every alienation of these lands are mandatory, with the primordial aim to preserve
land grants to the family of the applicant for free patent. 16
Now, did Ana Billena repurchase in time the land in dispute? It is worth noting that
private respondents did not refute petitioners' averment that Billena, together with
her son Benjamin, went to Rabanes' residence in 1946 to redeem the property and
tendered to him (Rabanes) the amount of P800.00 in Philippine I currency, but the
latter made a statement that the land could no longer be redeemed. By Ana Billena's
act of tendering to Rabanes the P800.00, she had in effect exercised her right to
repurchase. In fact, in Peralta, et al. vs. Alipio, 17 it was held that since the Public
Land Law is silent as to the form and manner in which the right to repurchase a
homestead or land acquired under a free patent may be exercised, any act which
amounts to a demand for reconveyance should be sufficient.
In effect, if the 2 February 1946 deed was actually intended to evidence a sale of the
disputed land, made by Ana Billena to Nazario Rabanes, as found by the trial court
and the Court of Appeals, it was a sale with pacto de retro wherein title of the
vendees Rabanes to the property was to become absolute and irrevocable only upon
the failure of Billena or her heirs to repurchase the same within five (5) years from 2
February 1946. As earlier stated, Billena exercised her right to repurchase the land,
also in 1946, and her heirs are up to the present time in actual and physical
possession of the land. With these as premises, it can be said that Rabanes' title to
the property remains to this date revocable and unconsolidated.
WHEREFORE, the appealed decision of the Court of Appeals in CA-G.R. No. 61133R is REVERSED and SET ASIDE. Petitioners may redeem the property covered by
TCT No. 1005 upon the return of the amount of Eight Hundred Pesos (P800.00) to
private respondents, with interest at the rate of twelve percent (12%) per annum from
1 January 1962 until fully paid.
SO ORDERED.
Melencio-Herrera (Chairperson), Paras, Sarmiento and Regalado, JJ., concur.
G.R. No. 75080 February 6, 1991

CRISOSTOMO SUCALDITO and the HEIRS OF FELISA DE GUZMAN, petitioners,

vs.
THE HON. JUAN MONTEJO, PRESIDING JUDGE OF THE REGIONAL TRIAL
COURT OF DAVAO DEL SUR, BRANCH XX, BLAS B. LABAD AND PACIENCIA
L. LABAD, respondents.
Edgar D. Rabor for petitioners.
Occeita Law Office for private respondents.

PADILLA, J.:p
This is a petition for review on certiorari seeking to annul and set aside the
resolutions of the RTC, Davao del Sur, Branch XX, dated 8 October 1984, 19 August
1985 and 14 May 1986, and to allow petitioners to repurchase the lots in question
and vest upon them ownership thereof.
Petitioners Crisostomo Sucaldito and Felisa de Guzman, spouses, were grantees, by
way of free patent, of two (2) parcels of public agricultural land identified as Lot No.
1, F-20-9368 with an area of 162,309 square meters and Lot No. 2, F-20-9368 with
an area of 15,166 square meters. Both lots are situated in Barrio Ponpong,
Municipality of Sta. Maria (formerly Malalag), Province of Davao del Sur (formerly
Davao). An Original Certificate of Title, No. P-18659, covering the two (2) lots was
issued in favor of said petitioners.
On 14 March 1972, in the City of Davao, petitioner Crisostomo Sucaldito and his
spouse Felisa de Guzman (herein represented by her heirs) sold to the private
respondents Blas Labad and Paciencia Labad the above-mentioned lots together
with their improvements for the amount of P65,000.00, as evidenced by a Deed of
Absolute Sale.
After the sale, respondents took possession of the lots. They fenced the area,
planted trees thereon, harrowed the soil, and cultivated the lands.
On 20 June 1975, petitioners wrote the respondents informing the latter that they
desired to repurchase the lots and that they had the necessary amount representing
the repurchase price. A reply from respondents within five (5) days from their receipt
of the letter was requested by petitioners, for otherwise, they would be constrained to
file a court action for reconveyance.
Respondents sent a reply dated 2 July 1975. The reply letter, however, was not
received by petitioners. Thus, on 10 July 1975, petitioner-spouses brought an action
for reconveyance before the RTC of Davao del Sur, docketed as Civil Case No. 952

entitled "Crisostomo Sucaldito and Felisa de Guzman v. Blas Labad and Paciencia
Labad" seeking the repurchase and reconveyance of the two (2) above-mentioned
parcels of land.
On 1 October 1976, the trial court rendered a decision in favor of petitioners and
against the respondents. Petitioners were declared to have the right to repurchase
the two (2) parcels of land within thirty (30) days from the date the decision becomes
final, provided that the petitioners paid to the respondents the amount of P73,103.79.
Respondents appealed the trial court's decision to the Court of Appeals in CA-G.R.
No. 61298-R entitled "Crisostomo Sucaldito, et al. vs. Blas Labad, et al.". On 14 May
1981, the Court of Appeals rendered decision reversing and setting aside the
decision of the court a quo and dismissing the complaint of the petitioners for lack of
offer to repurchase.
A motion to reconsider the decision of the Court of Appeals was filed by petitioners.
On 26 February 1982, the Court of Appeals issued a resolution granting the motion
for reconsideration, thus setting aside its 14 May 1981 decision and entering another
one which affirmed the trial court's decision of 14 October 1976. Respondents filed a
motion for reconsideration of the resolution of the Court of Appeals dated 26
February 1982. The motion was denied.
Thereafter, respondents filed a petition for certiorari with this Court, docketed as G.R.
No. 61286, entitled "Blas Labad, et al. v. Crisostomo Sucaldito, et al.". On 4 October
1982, this Court issued a resolution dismissing the petition. A motion for
reconsideration was filed by respondents. On 8 December 1982, the motion was
denied with finality.
On 20 April 1983, petitioners filed with the Court of Appeals an Omnibus Motion
asking for a copy of the Supreme Court's Entry of Judgment in G.R. No. 61286 and a
copy of the Court of Appeals Resolution dated 26 February 1982, in order to furnish
the trial court with copy each thereof. On 10 May 1983, the Court of Appeals granted
the motion and resolved to furnish the petitioners the aforesaid Supreme Court Entry
of Judgment and the Clerk of Court of the RTC a copy of the Court of Appeals
Resolution of 26 February 1982.
On 13 July 1983, petitioners again wrote the respondents of their desire to
repurchase the aforesaid lands. On 14 July 1983, respondents answered stating that
the petitioners' right of repurchase had terminated on 19 September 1982, and, at
the latest, on 7 January 1983.
On 5 August 1983, the petitioners filed with the court a quo an Omnibus Motion
asking that they be allowed to deposit the repurchase price in any reputable bank in
Digos, Davao del Sur.

On 8 October 1984, the regional trial court issued a resolution dismissing the
petitioners' Omnibus Motion for having failed to pay, tender payment, or consign the
amount of P73,103.79 within thirty (30) days from the date the Supreme Court
decision dated 8 December 1982 in G.R. No. 61286 became final, which was on 26
March 1983. 1
Petitioners filed a motion for reconsideration of the Resolution dated 8 October 1984.
On 9 November 1984, petitioners also filed a manifestation with the regional trial
court informing it of the consignation in court of the repurchase price of P73,103.79,
evidenced by the corresponding official receipt. On 19 August 1985, the regional trial
court denied the motion for reconsideration. A second motion for reconsideration was
filed by petitioners which was denied on 14 May 1986.
Hence, the petitioners' present recourse.
The issue raised is whether or not the regional trial court committed a reversible
error when:
a) it ruled that the period to be followed for the petitioners to exercise their right of
redemption is the period specified in the decision of the trial court and not the period
provided in Sec. 119 of CA 141, as amended; and
b) it did not rule that there was a valid tender of payment made by petitioners within
the period provided for under Sec. 119 of CA 141, as amended.

Sec. 119, Commonwealth Act No. 141 (the Public Land Act) provides:
Sec. 119. Every conveyance of land acquired under the free patent or homestead
provisions, when proper, shall be subject to repurchase by the applicant, his widow or
legal heirs, within a period of five years from the date of the conveyance.

Under the above section, the five (5) year period for legal redemption starts from the
date of the execution of the deed of sale, even if full payment of the purchase price is
not made on said date, unless there is a stipulation in the deed that ownership shall
not vest in the vendee until full payment of the price. 2 On 14 March 1972, petitioners
sold to the respondents the two (2) parcels of land in question, which had been
acquired by said petitioners under Commonwealth Act No. 141, by way of free
patent. The sale was evidenced by a deed of absolute sale.
Petitioners informed the respondents of their desire to repurchase the abovementioned lands on 20 June 1975. As no reply was received by petitioners regarding
their offer to repurchase, they were prompted to file an action for reconveyance on
10 July 1975.
It appears that petitioners have sufficiently complied with the requirements thus
qualifying them to avail of the rule that land acquired by free or homestead patent

under Commonwealth Act No. 141 and later sold, may be repurchased within five (5)
years from the date of conveyance. Sec. 119, Commonwealth Act No. 141 clearly
grants them the right to repurchase the subject property covered by a free patent
within five (5) years from the date of its conveyance. 3
It has been repeatedly declared by this Court that where the law speaks in clear and
categorical language, there is no room for interpretation. There is only room for
application. 4 The RTC in its 14 October 1976 decision, erred in ruling that petitioners
had the right to repurchase the two (2) parcels of land but only within thirty (30) days
from the date the aforesaid decision became final. The right to repurchase being
granted by law (Sec. 119, Commonwealth Act No. 141), no other legal restriction
could be added thereto. To hold otherwise would sanction judicial legislation. 5 Stated
differently, the RTC amended what is expressly provided for in the law. And, while
the law speaks of five (5) years from the date of conveyance within which to exercise
the right to repurchase, we regard the filing by petitioners of the action for
reconveyance on 10 July 1975 as having suspended the running of the redemption
period and to have kept them within the protective mantle of Sec. 119 of
Commonwealth Act No. 141.
In an action to enforce the right to repurchase public land covered by free patent or a
homestead within five (5) years from the sale thereof, it is of no consequence what
exactly might be the motive of the plaintiff, and it is unnecessary for the court to
inquire beforehand into his financial capacity to make the repurchase. The reason is
that such question will resolve itself should he fail to make the corresponding tender
of payment within the prescribed period. 6
On 14 March 1972, petitioners sold to respondents the parcels of land in dispute. On
10 July 1975, they filed the action for reconveyance to be declared to have the right
to repurchase the lands, in the face of respondents' refusal to reconvey. From such
date of conveyance (14 March 1972) to the date of the filing of the action for
reconveyance (10 July 1975), only three (3) years and one hundred eighteen (118)
days had lapsed out of the five-year repurchase period granted petitioners by law.
The filing by petitioners of the action for reconveyance had the effect of suspending
the running of the period to repurchase. This period commenced to run again only on
26 March 1983 when the Supreme Court resolution in G.R. No. 61286 denying
respondents' motion for reconsideration with finality, had itself become final.
On 9 November 1984, petitioners deposited with the Clerk of Court of the RTC the
repurchase price of P73,103.79. From the date the Supreme Court decision in G.R.
No. 61286 became final (26 March 1983) to the date when petitioners deposited the
repurchase price with the court a quo (9 November 1984), a total of one (1) year and
two hundred twenty eight (228) days had lapsed. It is, therefore, clear that the
repurchase price was paid within a cummulated period of four (4) years and three
hundred forty six (346) days. Verily, the 9 November 1984 deposit with the court a

quo by petitioners was a valid payment of the repurchase price within the five (5)
year period provided for under Sec. 119 of Commonwealth Act No. 141.
WHEREFORE, the present petition is GRANTED. The RTC resolutions dated 8
October 1984, 19 August 1985 and 14 May 1986 are SET ASIDE. The respondents
are directed to execute the deed of reconveyance in favor of petitioners within ten
(10) days from the finality of this decision simultaneously with their withdrawal from
the RTC of the amount deposited therein by petitioners. In case of failure of
respondents to execute such deed of reconveyance within the aforesaid ten (10) day
period, the Clerk of Court is directed to do so, upon a simultaneous delivery by him
of the said deposited amount to the respondents. No costs.
SO ORDERED.
Melencio-Herrera, Paras, Sarmiento and Regalado, JJ., concur.
G.R. No. 83992 January 27, 1993
RURAL BANK OF DAVAO CITY, INC. petitioner,
vs.
THE HONORABLE COURT OF APPEALS and GABRIEL ABELLANO and
FRANCISCO SEQUITAN, respondents.
Bernardo T. Castro for petitioner.
Garsilaso F. Vega for respondents.

DAVIDE, JR., J.:

Two (2) issues are presented for Our resolution in this petition for review under Rule
45 of the Rules of Court, viz:(1) whether or not the two-year redemption period fixed
by the Rural Banks' Act 1 in a foreclosure sale of property acquired through a
homestead patent superseded or repealed the
five-year repurchase period prescribed in Section 119 of the Public Land Act 2 and (2)
if it did not, whether, in the event of the expropriation by the Government of the
subject property during the redemption or repurchase period, a homesteader, who
thereafter exercised his right to redeem or repurchase, is entitled to the
compensation for such expropriation less the redemption or repurchase amount. The
trial court ruled in the negative for the first issue and in the affirmative for the second.
The respondent Court of Appeals affirmed the trial court. Hence, We have the instant
petition seeking for a contrary ruling.
The undisputed facts generative of this controversy are as follows:

On 18 April 1978, private respondents Gabriel Abellano and Francisca Sequitan

obtained a loan in the amount of P45,000.00 from the petitioner, a rural bank
organized and existing under the Rural Banks' Act. The terms thereof called for
payment of the loan in two (2) equal installments on 21 October 1978 and 21 April
1979.
As security for the loan, the private respondents mortgaged with the petitioner a
parcel of land, belonging to them, with an area of one (1) hectare, more or less,
located at Matina, Davao City and covered by Original Certificate of Title No. P-7392.
The land was acquired through a homestead patent.
On 1 July 1978, the National Housing Authority (NHA) filed with the then Court of
First Instance (CFI) of Davao City a complaint for the expropriation of several parcels
of land located in Davao City to carry out its Slum Improvement and Resettlement
Program; said action was directed against the private respondents, with respect to
the mortgaged property, and fifteen (15) other persons. The case was docketed as
Special Civil Case No. 11157 and was raffled off to Branch II of said court. As
mortgagee, the petitioner filed therein a motion to intervene, which the court granted.
Upon arrival of the loan's maturity dates, private respondents failed to pay their
obligation to the petitioner. The latter therefore caused the extrajudicial foreclosure of
the subject property in accordance with Act No. 3135, as amended. During the
foreclosure sale held on 9 November 1979, the petitioner submitted the highest bid;
consequently, the Deputy Sheriff executed in its favor a certificate of sale for the total
amount of P54,883.00 which included the unpaid interest and other charges.
The certificate of sale was registered in the Registry of Deeds of Davao City on 7
December 1979. Private respondents, however, failed to redeem the foreclosed
property within the period of two (2) years from the date of registration, or up to 7
December 1981, as provided for in Section 5 of the Rural Banks' Act. Despite such
failure, the petitioner extended the period to October 1982. The private respondents
still failed to redeem the property. Petitioner then asked for the consolidation of its
title over the same. In due course, the private respondents' certificate of title was
canceled and in lieu thereof, Transfer Certificate of Title No. T-92487 in the name of
the petitioner was issued on 3 November 1982.
On 24 February 1983, Branch II of the CFI of Davao City issued an order in Special
Civil Case No. 11157 requiring the NHA to pay the amount of P85.00 per square
meter for the properties sought to be expropriated, which included the
aforementioned foreclosed property. This amount was subsequently reduced to
P49.00 per square meter. Thus, the price to be paid for the foreclosed property was
P490,000.00.

On 9 November 1983, private respondents notified the petitioner of their desire to

repurchase the foreclosed property pursuant to Section 119 of the Public Land Act
(C.A. No. 141). Rebuffed by the latter, private respondents filed on 9 February 1984
with the Regional Trial Court (RTC) of Davao City a complaint for reconveyance of
their foreclosed property under said Section 119. The case was docketed as Civil
Case No. 16693 and was raffled off to Branch XIII of the said court.
In its Affirmative Defenses set up in the Answer to the complaint, petitioner claimed
that the private respondents' action will no longer prosper because their right to
repurchase had become moot and academic as the property could no longer be
physically, materially and actually recovered or repurchased. This is so because no
less than the sovereign state needed the same pursuant to its socialized housing
program under P.D. No. 875, as amended to be divided into smaller lots for
distribution to a greater number of recipients, and that "the right to repurchase
cannot be exercised without the actual, material and physical recovery of the
property itself, otherwise such an action, as the instant action of the plaintiffs, is
purely speculative, which our Supreme Court, in a series of decisions, had frowned
upon and disallowed." 3
After the issues were joined, the trial court conducted a pre-trial conference on 3
May 1984. On the same date, it issued an order requiring the private respondents to
deposit the sum of P54,883.00 as repurchase price which they complied with.
On 2 July 1984, private respondents filed a Motion to Amend the Complaint and File
Supplemental Pleading alleging therein, inter alia, that since "there is a seeming
impossibility for the plaintiffs now to reacquire the property by reason of the order of
expropriation, justice also demands that the said amount of P490,000.00 must be
given to the plaintiffs, in lieu of the property expropriated." Despite the petitioner's
opposition, the trial court issued on 2 August 1984 an order granting the motion and
admitting the amended complaint.
The trial court decided the case on 1 February 1985 on the basis of the stipulation of
facts submitted by the parties. The dispositive portion of the decision reads:
WHEREFORE, decision is hereby rendered, declaring plaintiffs entitled to the price
paid by the National Housing Authority for the property in question and ordering the
defendant:
1. To pay or remit the (sic) plaintiffs the sum of P435,117.00, the remaining balance of
said price of the property paid by NHA after deducting the obligation of plaintiffs in the
sum of P54,883.00;
2. To pay plaintiff's interest on the P435,117.00 at the rate defendant grants to its
depositor commencing on the date when defendant received the sum of P490,000.00
from NHA in payment of the property in question until the whole obligation is fully
paid;

3. To pay plaintiffs the sum of P10,000.00 as attorney's fee plus costs.

SO ORDERED. 4

Petitioner seasonably appealed this decision to the then Intermediate Appellate

Court on both questions of fact and law. The case was docketed as CA-G.R. CV No.
07689.
On 30 March 1988, the respondent Court of Appeals, as the successor of the
Intermediate Appellate Court, promulgated, through a division of five (5) (Sixteenth
Division), its decision in CA-G.R. No. 07689 affirming the decision of the trial court in
Civil Case No. 16693. 5
In affirming the trial court's decision, the respondent Court held that Section 5 of the
Rural Banks' Act, as amended, did not reduce the period of redemption of
homestead lands from the five (5) years prescribed in Section 119 of C.A. No. 141,
as amended, to two (2) years from the date of registration of the foreclosure sale as
fixed in the former; in support of such conclusion, it summoned Oliva vs. Lamadrid 6
wherein this Court, speaking through then Chief Justice Concepcion, held:
It should be noted that the period of two (2) years granted for the redemption of
property foreclosed under Section 5 of Republic Act No. 720, as amended by
Republic Act No. 2670, refers to lands "not covered by a Torrens Title, a homestead
or free patent," or to owners of lands "without torrens title," who can "show five years
or more of peaceful, continuous and uninterrupted possession thereof in the concept
of an owner, or of homesteads or free patent lands pending the issuance of titles but
already approved," or of "lands pending homestead or free patent titles." Plaintiff,
however, had, on the land in question, a free patent and a Torrens title, which were
issued over 26 years prior to the mortgage constituted in favor of the Bank.
Accordingly, there is no conflict between Section 119 of Commonwealth Act No. 141
and Section 5 of Republic Act. No. 720, as amended, and the period of two (2) years
prescribed in the latter is not applicable to him.
Moreover, the legislative history of the bills which later became said Republic Act No.
2670, amending Republic Act No. 720, shows that the original proposal was to give
homesteaders or free patent holders a period of ten (10) years within which to
redeem their property foreclosed by rural banks; that this proposal was eventually
found to be unwise, because its effect would have been to dissuade rural banks from
granting loans to homesteaders or free patent holders which were (sic) sought to
be liberalized said period of redemption being too long, from the viewpoint of said
banks; and that, consequently, the proposal was given up, with the specific intent and
understanding that homesteaders or holders of free patent (sic) would retain the right
to redeem within five (5) years from the conveyance of their properties, as provided in
the general law, that is to say the Public Land Act, or Commonwealth Act No. 141.
It is, therefore, our considered view that plaintiff herein has the right to repurchase the
property in question within five (5) years from the date of the conveyance or
foreclosure sale, or up to February 4, 1966, and that having exercised such right and

tendered payment long before the date last mentioned, defendants herein are bound
to reconvey said property to him.

In said case, the mortgaged property involved was sold at a public auction by the
Sheriff on 4 February 1961.
Respondent Court further ruled that C.A. No. 141 is a special law and must prevail.
Thus:
Neither could it readily be concluded that the Rural Banks Act is a special law and
that the Public Law (sic) Act is general. The Rural Bank Act deals with all kinds of land
while the Public Land Act relates to a specific class of properties.
In Cassion v. Banco Nacional Filipino, 89 Phil. 560, the sole question for decision is
which of the conflicting provisions ought to prevail? Section 32 and Section 6 of Act
No. 2938, which amended Act No. 2717 (sic) creating the Philippine National Bank,
which allows the debtor only one year to redeem property sold under a mortgage
foreclosure whether judicial or extra-judicial, or Section 117 of Act No. 2874 known as
the Public Land Act, as amended, which provides that "every conveyance of land
acquired under free (sic) patent or homestead provisions, when proper, shall be
subject to repurchase by the applicant, his widow, or legal heirs for a period of five
years from the date of conveyance," the Supreme Court held:
Now then, it seems plain that Section 32 of Act No. 2938 and Section
6 of Act No. 3135 are wider in scope or more comprehensive than
Section 117 of Act No. 2874. They comprehend all kinds of property
brought within the relations and circumstances provided thereby,
while Section 117 of Act No. 2874 relates to a specific class of
property. Stated otherwise, the property on which the Philippine
National Bank's Charter and Act No. 3135 are operative is any
property mortgaged to the Bank, whereas, as already stated, Act No.
2874 by its own terms is operative only on lands acquired under the
free patent or homestead provisions. Section 32 of Act No. 2938 and
Section 6 of Act No. 3l35 standing alone would include homestead or
free patented lands, while Section 117 of Act No. 2874 would not
embrace any property other than that mentioned therein even if Acts
Nos. 2938 and 3135 did not exist. To use the words of Act No. 190
and the Rules of Court, Act No. 2874 manifests "a particular intent,"
the intent to promote the spread of small land ownership and the
preservation of public land grants in the hands of the underprivileged
for whose benefit they are specially intended and whose welfare is a
special concern of the State.
We therefore hold that Act No. 2874 is controlling, that homestead
constitute an exception of Acts No. 2938 and 3135, and that the
appealed decision should be affirmed. It is so ordered with costs
against the appellant. (p. 562)
The Homestead Act is a social legislation enacted for the welfare and protection of
the poor (Patricio vs. Bayog, 112 SCRA 42). A construction which would carry into
effect the evident policy of the law should be adopted in favor of that interpretation

which would defeat it. A decent respect for the policy of the law must save the Court
from imputing to it a self defeating, if not disingeneous purpose (p. 65, Agpalo,
Supra).
Since the mortgaged property is a homestead covered by a Torrens Title, the fiveyear period of repurchase should be from the foreclosure sale on November 9, 1979
or up to November 9, 1984. NHA filed the eminent domain proceedings on July 1,
1978 while appellees were still the owners of the land. For this reason, they were the
ones who were made defendants therein. Although the land was foreclosed and sold
to the Rural Bank on November 9, 1979, the latter did not become the absolute owner
thereof. It never did. Under Section 119 of the Public Land Law, plaintiff has up to
November 9, 1984 within which to repurchase the property. Thus on November 9,
1983 appellees notified appellant bank of their desire to repurchase said property
under Section 119, CA 141, but was (sic) refused. On February 9, 1984, appellees
filed with the Regional Trial Court of Davao City, Branch XIII, an action for
reconveyance and on May 3, 1984, the lower court issued an order requiring
appellees to deposit the amount of P54,883.00 as the amount of repurchase price
which was complied with by the latter, well within the period of five years from the
date of foreclosure sale. 7

As to the fact that the land had already been expropriated by the NHA, the
respondent Court observed that:
While it is true that the land in question has been expropriated by the NHA who paid
the total amount of P490,000.00 as the just compensation for the taking of the
property, it is but fair, fitting and proper, that this amount be paid to plaintiffs-appellees
as the just compensation for their property. To hand over this amount to the Rural
Bank would be to unjustly enrich the rural bank at the expense of the plaintiffs who
have less in life. 8

Its motion for reconsideration of the above decision having been denied by the
respondent Court in the Resolution of 17 May 1988, 9 the petitioner availed of this
recourse and reiterates the same errors it had raised before the respondent Court, to
wit:
1. THE LOWER COURT ERRED IN DECLARING THAT PLAINTIFFS-APPELLEES
ARE ENTITLED TO THE PRICE PAID BY THE NATIONAL HOUSING AUTHORITY
FOR THE PROPERTY IN QUESTION AND IN ORDERING THE DEFENDANTAPPELLANT TO PAY OR REMIT TO PLAINTIFFS-APPELLEES THE SUM OF
P435,117.00, THE REMAINING BALANCE OF SAID PRICE OF THE PROPERTY
PAID BY THE NATIONAL HOUSING AUTHORITY AFTER DEDUCTING THE
OBLIGATION OF PLAINTIFFS-APPELLEES IN THE SUM OF P54,883.00.
2. THE LOWER COURT ERRED IN NOT HOLDING THAT PLAINTIFFSAPPELLEES' RIGHT TO REPURCHASE UNDER SECTION 119 OF
COMMONWEALTH ACT NO. 141, AS AMENDED, OTHERWISE KNOWN AS THE
PUBLIC LANDS (sic) ACT, IS ONLY LIMITED TO THE LAND ITSELF.
3. THE LOWER COURT ERRED IN NOT HOLDING THAT THE ACT OF
PLAINTIFFS-APPELLEES IN TRYING TO REPURCHASE THE PROPERTY IN
QUESTION, OR, IN THE ALTERNATIVE, IN TRYING TO RECOVER THE

PROCEEDS OF THE SALE OR PRICE THEREOF, IS PURELY SPECULATIVE IN

NATURE.
4. THE LOWER COURT ERRED IN FINDING DEFENDANT-APPELLANT LIABLE
FOR INTEREST, ATTORNEY'S FEES AND COSTS. 10

which may be reduced to the two (2) principal issues adverted to in the exordium of
this ponencia.
After the filing of the private respondents' Comment to the petition, the petitioner's
reply thereto and the former's rejoinder to the reply, this Court gave due course to
the petition and required the parties to submit their respective memoranda which
they complied with.
The petition is devoid of any merit. Respondent Court of Appeals committed no
reversible error.
Section 119 of the Public Land Act (C.A. No. 141) provides:
Sec. 119. Every conveyance of land acquired under the free patent or homestead
provisions, when proper, shall be subject to repurchase by the applicant, his widow,
or legal heirs, within a period of five years from the date of the conveyance. 11

The policy of homestead laws and the reason behind the foregoing provision are
expressed by this Court in Pascua vs. Talens 12 in this wise:
It is well-known that the homestead laws were designed to distribute disposable
agricultural lots of the State to land-destitute citizens for their home and cultivation.
Pursuant to such benevolent intention the State prohibits the sale or encumbrance of
the homestead (Section 116) within five years after the grant of the patent. After that
five-year period the law impliedly permits alienation of the homestead; but in line with
the primordial purpose to favor the homesteader and his family the statute provides
that such alienation or conveyance (Section 117) shall be subject to the right of
repurchase by the homesteader, his widow or heirs within five years. This Section 117
is undoubtedly a complement of Section 116. It aims to preserve and keep in the
family of the homesteader that portion of public land which the State had gratuitously
given to him. It would, therefore, be in keeping with this fundamental idea to hold, as
we hold, that the right to repurchase exists not only when the original homesteader
makes the conveyance, but also when it is made by his widows or heirs. This
construction is clearly deducible from the terms of the statute.

As pointedly stated earlier in Jocson vs. Soriano, 13 in connection with homestead

statutes:
Acts Nos. 1120 and 926 were patterned after the laws granting homestead rights and
special privileges under the laws of the United States and the various states of the
Union. The statutes of the United States as well as of the various states of the Union
contain provisions for the granting and protection of homesteads. Their object is to
provide a home for each citizen of the Government, where his family may shelter and

live beyond the reach of financial misfortune, and to inculcate in individuals those
feelings of independence which are essential to the maintenance of free institutions.
Furthermore, the state itself is concerned that the citizens shall not be divested of a
means of support, and reduced to pauperism. (Cook and Burgwall vs. McChristian, 4
Cal., 24; Franklin vs. Coffee, 70 Am. Dec., 292; Richardson vs. Woodward, 104 Fed.
Rep., 873; 2l Cyc., 459).
The conservation of a family home is the purpose of homestead laws. The policy of
the state is to foster families as the factors of society, and thus promote general
welfare. The sentiment of patriotism and independence, the spirit of free citizenship,
the feeling of interest in public affairs, are cultivated and fostered more readily when
the citizen lives permanently in his own home, with a sense of its protection and
durability. (Waples on Homestead and Exemptions, p. 3)

Because of such underlying policy and reason, the right to repurchase under Section
119 cannot be waived by the party entitled thereto, and applies with equal force to
both voluntary and involuntary conveyances. 14 And, as early as 1951, in Cassion vs.
Banco Nacional Filipino, 15 this Court declared that such right is available in
foreclosure sales of lands covered by a homestead or free patent. Consistently
therewith, We have ruled in a number of cases that said Section 119 prevails over
statutes which provide for a shorter period of redemption in extrajudicial foreclosure
sales. We thus have consistent pronouncements in Paras vs. Court of Appeals, 16
Oliva vs. Lamadrid, 17 Belisario vs. Intermediate Appellate Court 18 and Philippine
National Bank vs. De los Reyes. 19 These cases, with the exception of Oliva, involved
the question of which between the five (5) year repurchase period provided in
Section 119 of C.A. No. 141 20 or the one (1) year redemption period under Act No.
3135 should prevail. While Oliva is the only case, among those cited, that involves
the Rural Banks' Act, the other cases reveal the clear intent of the law on redemption
in foreclosure sales of properties acquired under the free patent
or homestead statutes which have been mortgaged to banks or banking institutions
i.e., to resolutely and unqualifiedly apply the 5-year period provided for in Section
119 of C.A. No. 141 and, as categorically stated in Paras and Belisario, to reckon the
commencement of the said period from the expiration of the one-year period of
redemption allowed in extrajudicial foreclosures. If such be the case in foreclosure
sales of lands mortgaged to banks other than rural banks, then, by reason of the
express policy behind the Rural Banks' Act, 21 and following the rationale of Our ruling
in Oliva, it is with greater reason that the 2-year redemption period in Section 5 of the
Rural Banks' Act should yield to the period prescribed in Section 119 of C.A. No. 141.
Moreover, if this Court is to be consistent with Paras and Belisario, the 5-year
repurchase period under C.A. No. 141 should begin to run only from the expiration of
the 2-year period under the Rural Banks' Act. It may be observed in this connection
that Oliva was decided in 31 October 1967, before the Rural Banks' Act, as amended
by R.A. No. 2670, was further amended by R.A. No. 5939. 22 As amended by R.A.
No. 2670, the pertinent portion of Section 5 only reads as follows:

Sec. 5. . . . Provided, That when a land not covered by a Torrens Title, a homestead
or free patent land is foreclosed, the homesteader or free patent holder, as well as
their heirs shall have the right to redeem the same within two years from the date of
foreclosure: . . .

As amended later by R.A. No. 5939, it reads:

Sec. 5. . . . Provided, That when a homestead or free patent land is foreclosed, the
homesteader or free patent holder, as well as their heirs shall have the right to
redeem the same within two years from the date of foreclosure in case of a land not
covered by a Torrens title or two years from the date of the registration of the
foreclosure in the case of a land covered by a Torrens title: . . . .

The amendment clarifies the rather vague language of Section 5 as amended by

R.A. No. 2670. The ambiguity lies in the fact that although the latter seems to speak
of three (3) classes of lands, namely (a) those not covered by a Torrens title, (b)
homestead lands and (c) free patent lands, the two-year redemption period may only
be enjoyed by the homesteader, the free patent holder or their heirs. Moreover, the
clause does not clarify whether the land not covered by a Torrens title refers to
unregistered land merely, or includes land acquired by a homestead or free patent
not yet issued certificates of title under the Torrens system. As amended, however,
by R.A. No. 5939, land acquired under the free patent or homestead patent statutes
may be redeemed within a two-year period; however, the commencement of said
period is reckoned from the date of foreclosure, if such land is not yet covered by the
Torrens title, or from the registration of the foreclosure meaning, the certificate of
sale if it is already covered by a Torrens title.
Thus, following the clear intent of Oliva, since private respondents' foreclosed
property was acquired under the homestead laws, they had two (2) years from 7
December 1979 when the certificate of sale was registered or until 7 December
1981, within which to redeem the land. And, pursuant to Section 119 of C.A. No. 141,
they had five (5) years from 7 December 1981 within which to repurchase it. Since
the private respondents' offer to repurchase was made well within the said 5-year
period, the two (2) courts below correctly ruled in their favor.
Furthermore, We wish to stress here that We are unable to read in Section 5 of R.A.
No. 720, as amended, any legislative intent to modify or repeal Section 119 of the
Public Land Act. Each speaks of and deals with a different right. Specifically, the
former merely liberalizes the duration of an existing right of redemption in
extrajudicial foreclosure sales by extending the period of one (1) year fixed in Act No.
3135, as amended by Act No. 4118, to two (2) years insofar as lands acquired under
free patent and homestead statutes are concerned. The second speaks of the right
to repurchase and prescribes the period within which it may be exercised. These two
(2) rights are by no means synonymous. Under Act No. 3135, the purchaser in a
foreclosure sale has, during the redemption period, only an inchoate right and not
the absolute right to the property with all the accompanying incidents. 23 He only

becomes an absolute owner of the property if it is not redeemed during the

redemption period. 24 Upon the other hand, the right to repurchase is based on the
assumption that the person under obligation to reconvey the property has the full title
to the property because it was voluntarily conveyed to him or that he had
consolidated his title thereto by reason of a redemptioner's failure to exercise his
right of redemption. Thus, in Paras vs. Court of Appeals, 25 this Court, adverting to
Gonzalez vs. Calimbas, 26 stated:
After a careful study of the point raised in the present appeal by certiorari, we agree
with the Court of Appeals that the five-year period within which a homesteader or his
widow or heirs may repurchase a homestead sold at public auction or foreclosure
sale under Act 3135 as amended, begins not at the date of the sale when merely a
certificate is issued by the Sheriff or other official, but rather on the day after the
expiration of the period of repurchase, 27 when deed of absolute sale is executed and
the property formally transferred to the purchaser. As this Court said in the case of
Gonzales (sic) vs. Calimbas and Poblete, 51 Phil., 355, the certificate of sale issued
to the purchaser at an auction sale is intended to be a mere memorandum of the
purchase. It does not transfer the property but merely identifies the purchaser and the
property, states the price paid and the date when the right of redemption expires. The
effective conveyance is made by the deed of absolute sale executed after the
expiration of the period of redemption.

As a consequence of the inchoate character of the right during the redemption

period, Act No. 3135 allows the purchaser at the foreclosure sale to take possession
of the property only upon the filing of a bond in an amount equivalent to the use of
the property for a period of twelve (12) months, to indemnify the mortgagor in case it
be shown that the sale was made without violating the mortgage or without
complying with the requirements of the Act. That bond is not required after the
purchaser has consolidated his title to the property following the mortgagor's failure
to exercise his right of redemption for in such a case, the former has become the
absolute owner thereof. 28
Thus, the rules on redemption in the case of an extrajudicial foreclosure of land
acquired under free patent or homestead statutes may be summarized as follows: If
the land is mortgaged to a rural bank under R.A. No. 720, as amended, the
mortgagor may redeem the property within two (2) years from the date of foreclosure
or from the registration of the sheriff's certificate of sale at such foreclosure if the
property is not covered or is covered, respectively, by a Torrens title. If the mortgagor
fails to exercise such right, he or his heirs may still repurchase the property within
five (5) years from the expiration of the two (2) year redemption period pursuant to
Section 119 of the Public Land Act (C.A. No. 141). If the land is mortgaged to parties
other than rural banks, the mortgagor may redeem the property within one (1) year
from the registration of the certificate of sale pursuant to Act No. 3135. If he fails to
do so, he or his heirs may repurchase the property within five (5) years from the
expiration of the redemption period also pursuant to Section 119 of the Public Land
Act.

The expropriation of the land in question by the NHA is of no moment. The

expropriation case was begun before the foreclosure sale and was brought against
the private respondents, among other parties. The court's order for the payment of
compensation was entered and the compliance thereof by the NHA was made within
the private respondents' 5-year repurchase period. Although the petitioner had a
Transfer Certificate of Title over the lot at the time of payment, its right thereto was
subject to the private respondents' right to repurchase. Since the private respondents
seasonably exercised said right, the petitioner was under the obligation to restore to
the former the compensation paid by the NHA, which in effect replaced or substituted
for the land. From such amount should be subtracted, however, the repurchase
price. The argument that the petitioner was under no obligation to deliver the above
portion of the compensation because the property was acquired by the NHA and
therefore it was legally impossible for the former to convey the land to the private
respondent, is without merit. This is so because if, instead of having been
expropriated, the land was sold to other parties, the private respondents could still
have repurchased the same from the subsequent vendees. 29 But since the land was
expropriated by the Government, and the private respondents could no longer
repurchase the same, reason, justice and equity demand that they receive the
compensation therefor less the amount adverted to above, for such compensation
merely substitutes for the land they are entitled to.
WHEREFORE, the instant petition is DENIED, with costs against petitioner.
The decision is immediately executory.
SO ORDERED.
Gutierrez, Jr., Bidin, Romero and Melo, JJ., concur.
G.R. No. L-36410 April 13, 1973
FELIX FERRER, plaintiff-appellee,
vs.
ABRAHAM MANGENTE, defendant-appellant.
Victoriano, Yap and Hernando for plaintiff-appellee.
Ramon H. Garaygay for defendant-appellant.

FERNANDO, J.:
Defendant, Abraham Mangente, could not have been unaware that in raising the
issue of whether a son could exercise the right to repurchase a piece of land

acquired under a homestead patent, both at the stage of trial and now on appeal, he
was running the risk of an adverse decision. The law being what it is, a legal heir, no
less than the applicant or his widow, is certainly entitled to do so. 1 He did seek to
impart an element of plausibility, not to say novelty, to the question by the allegation
that the father in this case was not the original applicant to such homestead but
another son who predeceased him. That certainly was not enough to turn the tide of
fortune. The lower court faithful to the oft-reiterated policy of the law of according the
benefits of the Public Land Act, not only to the individual who applied for a
homestead but also to the family of which he formed part, resolved the issue in favor
of plaintiff Felix Ferrer. His action for reconveyance grounded under the above
applicable legal provision met with success. As will be more fully shown, the decision
reached has support in law. We affirm.
The case was decided on a stipulation of facts. There it was shown that the disputed
property, Lot No. 53, located in Manjuyud, Negros Oriental, was originally acquired
by one Rolando Ferrer, under a homestead patent issued on January 17, 1941,
covering an area of 19 hectares. Upon his dying, single and intestate on February
14, 1945, without debts and liabilities, his father, Segundo Ferrer, executed an
extrajudicial settlement of his estate adjudicating unto himself such lot to which a
homestead patent had previously been issued. The father likewise obtained a new
transfer certificate of title. He then sold such lot, already thus registered in name to
defendant, Abraham Mangente, on July 2, 1963. In a little over two years, August 15,
1965 to be exact, he met his death. Plaintiff, who is his son, sought to repurchase
such property on June 28, 1968, the offer being sent by registered mail and received
by defendant on July 3, 1968. 2
On the above facts, plaintiff Felix Ferrer, who filed the action for reconveyance, did
prevail. In the well-written decision of the lower court, presided by Judge Macario P.
Santos, there is discernible the commendable effort to deal justly with the respective
claims of plaintiff and defendant. Thus the judgment was rendered by him "ordering
the defendant to reconvey and deliver the possession of the land in question to the
plaintiff and upon payment by the latter to him of the sum of three thousand five
hundred (P3,500.00) pesos as repurchase money, plus the additional sum of one
thousand (P1,000.00) pesos spent by him for removing the stamps of the trees
thereon." 3 The matter was elevated by defendant to the Court of Appeals, but in a
resolution of November 15, 1972, copy of which was filed with this Court only on
February 22 of this year, the case was forwarded to this Court as the principal errors
assigned are legal in character. As set forth at the outset, there is no warrant for the
reversal of the decision on appeal.
1. The principal error assigned by appellant is that plaintiff is devoid of any right to
step into the shoes of his deceased father, as if he were not a legal heir falling within
the terms of Section 119 of the Public Land Act. It has already been intimated in the
opening paragraph of this opinion that such an approach is at war with the cardinal

postulate that the land in question having been acquired by homestead patent inures
to the benefit, not only of the applicant, but of his family included in which are both
the deceased father Segundo Ferrer and his son, appellee Felix Ferrer. Thus
deference to such a fundamental principle consistently adhered to in our past
decisions rules out any other conclusion except that of affirmance. It would be a
deviation, both inexplicable and unjustified, if appellant were to be upheld. Plaintiff,
belonging as he does to the Ferrer family, comes within the terms of the statutory
provision. The land in question was originally acquired through a homestead patent.
It did not lose such character by the mere fact of the original grantee, his brother
Rolando, having died in the meanwhile with the title passing to their father. The
applicant for a homestead is to be given all the inducement that the law offers and is
entitled to its full protection. Its blessings, however, do not stop with him. This is
particularly so in this case as the appellee is the son of the deceased. There is no
question then as to his status of being legal heir. The policy of the law is not difficult
to understand. The incentive for a pioneer to venture into developing virgin land
becomes more attractive if he is assured that his effort will not go for naught should
perchance his life be cut short. This is merely a recognition of how closely bound
parents and children are in a Filipino family. Logic, the sense of fitness and of right,
as well as pragmatic considerations thus call for a continued adherence to the policy
that not the individual applicant alone but those so closely related to him as are
entitled to legal succession may take full advantage of the benefits the law confers.
Even in the United States where perhaps the degree of unit in a family is not as
marked, this Court in Jocson v. Soriano, 4 the opinion by Justice Johnson citing
American cases, could state: "The conservation of a family home is the purpose of
homestead laws. The policy of the state is to foster families as the factors of society,
and thus promote general welfare. The sentiment of patriotism and independence,
the spirit of free citizenship, the feeling of interest in public affairs, cultivated and
fostered more readily when the citizen lives permanently in his own home, with a
sense of its protection and durability." 5 The last paragraph of his opinion reads
"Under the statutory and constitutional provisions of various states of the Union it has
been held that 'homestead privilege does not terminate on the husband's death but
transmitted to his widow and children.'" 6 The same thought finds expression in
Soriano v. Ong Hoo, 7 where Justice Labrador as ponente stated: "The evident
purpose of the Public Land Law, especially the provisions thereof in relation to
homesteads, is to conserve ownership of lands acquired as homesteads in the
homesteader or his heirs. ... This is evident from the provisions of the law, such as
the prohibition against the sale of the homestead within a period of five years from
and after the date of the issuance of the patent or grant, after five years and before
25 years after issuance of it without the consent of the Secretary of Agriculture and
Natural Resources. ... and the permission granted the homesteader or his legal heirs
to repurchase the land within five years from the date of the conveyance ... ." 8

There is likewise Umengan v. Butacan, 9 with the opinion of Justice Makalintal setting
forth the following: "The case is now before us on appeal by plaintiff and by
defendants Manuel Manzano and Ramona S. Pablo. The first question is whether,
with respect to the shares of Florentina Umengan in the two parcels of land which
were sold at public auction to Angeles Umengan on February 22, 1958 and in turn
sold by the latter to Ramona S. Pablo on the following June 3, the period redemption
is one year pursuant to section 26 of Rule 39, or five years under Section 119 of
Commonwealth Act No. 141. Defendant Ramona S. Pablo contends that the cited
provision of the Public Land Act does not apply despite the fact that the lands in
question were originally acquired as homesteads, because the right of redemption
within five years given to the homesteader himself, his widow or legal heirs, refers
exclusively to voluntary conveyance and not to involuntary ones, such as the sale on
execution of Florentina's shares to satisfy the judgment against her. The contention
is without merit. The law does not distinguish between the two kinds of conveyances.
The reason for allowing redemption within five years which cannot even be waived
by the party entitled thereto, obtains with equal force in both. Those who are
permitted to acquire public lands by working them as homesteads, being hardly in a
position to become property owners otherwise, are afforded the additional protection
that in case their acquisitions are sold they or their heirs shall have enough time to
effectuate the repurchase." 10 It is to be noted that Justice Makalintal in support of the
conclusion reached cited Cassion v. Banco Nacional Filipino. 11 In that case, this
Court, speaking through Justice Tuason, referring to the purpose of the Public Land
Act stressed "the intent to promote the spread of small land ownership and the
preservation of public land grants in the hands of the underprivileged for whose
benefit they are specially intended and whose welfare is a special concern of the
State." 12 While the case is not on all fours, the ruling announced in Rivera v.
Curamen, 13 a relatively recent case, through Justice Dizon, speaks to the same
effect: "The law clearly grants them the right to repurchase the property covered by a
free patent or a homestead title within five years from the date of the conveyance.
Speaking specifically of the present case, that right is not limited to the repurchase of
the share corresponding to their father only, because the latter is already dead, but
refers to the repurchase of the property meaning the whole of it. This, in our
opinion, is the only logical meaning to be given to the law which because its
purpose is to enable the family of the applicant or grantee to keep their homestead ...
must be liberally construed in order to carry out that purpose." 14 Nothing can be
clearer therefore than that the first error assigned is devoid of any merit.
2. With the disposition of the crucial issue posed, the other two errors assigned could
be summarily disposed of. How could appellant raise the issue that the offer to
repurchase was not on time when well within such period, appellee did through the
registered mail? The courts of the land, including this Tribunal, allow parties the full
benefit of filing the pleadings that way as long as the period given to them has not
expired. Appellant would want to be placed on a higher plane, ignoring that to sustain
his contention could lead to nullification of a statutory right. How could it elicit

sympathetic response? If, as had been shown above, the legal norm requires that
the protection accorded an applicant as well as his family should be vitalized and not
emasculated, certainly would be at war with such a basic policy to accept the view
set forth by appellant in the second assignment of error. If suffices to mention the
error last assigned to the effect that the lower court should have dismissed plaintiff's
complaint for reconveyance to make evident that it does not need any refutation at
all.
WHEREFORE, the decision of Judge Macario P. Santos of the Court of First
Instance of Negros Oriental dated February 28, 1970 is affirmed. With costs against
appellant Abraham Mangente.
Makalintal, Zaldivar, Castro, Teehankee, Barredo, Makasiar, Antonio and Esguerra,
JJ., concur.
Concepcion, C.J., took no part.
G.R. No. 73503 August 30, 1988
BENJAMIN BELISARIO, PACITA B. PINAR, VICTORIA BELISARIO, SILVERIO
BELISARIO, FRANCISCO BELISARIO, ANATOLIA B. JACULAN, FELIPE
BELISARIO and TERESITA B. ALKUINO petitioners,
vs.
THE INTERMEDIATE APPELLATE COURT, LOURDES CABRERA, VICENTE
CABRERA, JR., ROBERTO CABRERA, MANUEL CABRERA and PNB, Cagayan
de Oro Branch, respondents.
Abundio L. Okit for petitioners.
Maximo G. Rodriguez and Rufus B. Rodriguez for private respondents.

MEDIALDEA, J.:
This is a petition review on orari of a decision of the Intermediate Appellate Court
(now the Court of Appeals) in AC-GR No. 63407-R affirming the decision of the Court
of First Instance of Bukidnon in Civil Case No. 715 entitled, "Benjamin Belisario, et
al., vs. Philippine National Bank, et al", dismissing herein petitioners' complaint for
Repurchase of Homestead.
The undisputed facts of the case are as follows:
The subject matter of this case is a piece of land originally covered by Original
Certificate of Title No. 366, pursuant to Homestead Patent No. 45183 issued in the

names of Rufino Belisario and Felipa Lauga located in Valencia, Bukidnon, and
consisting of an area of 23, 2210 hectares.
On August 3, 1948, upon the death of Rufino Belisario, the ownership of the land
was extra-judicially settled among his children (petitioners herein), namely:
Benjamin, Pacita, Victoria Silverio, Francisco, Anatolia Felipe and Teresita, all
surnamed Belisario and his widow, Felipa Lauga and in whose names Transfer
Certificate of Tittle No. T-124 was issued.
Sometime in 1950, on the strenght of a special power of attorney executed by some
of the petitioners in favor of petitioner, Benjamin Belisario, said land was mortgaged
to the Philippine National Bank (PNB) to secure a promissory note in the sum of
P1,200.00.
Petitioners-mortgagors defaulted in the payment of the loan. Consequently, the
mortgage was extra-judicially foreclosed and on January 31, 1963 the land was sold
at public auction for P3,134.76 with respondent PNB as the highest bidder.
On April 21, 1971, petitioners wrote to respondent PNB making known their "desire
to redeem and/or repurchase the said property for and in the same price as the
auction sale, P3,134.76," and enclosed therein a postal money order in the amount
of P630.00 as partial payment, with the balance to be paid in twelve equal monthly
installments. At the time petitioners offered to redeem the subject property, the
Sheriff's Certificate of Sale covering the sale at public auction to the respondent PNB
was not yet registered.
Having been apprised of the non-registration, the respondent PNB caused the
registration of the Sheriff's Certificate of Sale with the Register of Deeds of Bukidnon
on July 22, 1971 and Transfer Certificate of Title No. T-6834 was later issued in the
name of respondent bank.
On August 24, 1971, respondent PNB sent a reply letter to petitioners, refusing the
tender of P630.00 as partial payment of the total obligations of P7,041.41 due from
petitioners (which included the amount of P2,027.02 allegedly paid by respondent
Vicente Cabrera to respondent PNB) and stating further that under existing
regulations of the bank, payment by way of redemption must be paid in full and not
by installments. It cannot, however, be determined from the records of the case why
the amount of P2,027.02 was received from respondent Cabrera by respondent PNB
on December 12, 1967 and why the same was included in the statement of accounts
sent by respondent PNB to petitioners.
On February 8, 1973, respondent PNB sold the land in question to respondent
Cabrera for P5,000.00 and the corresponding TCT No. 7264 was issued in his name.

On November 20, 1974, respondent Cabrera filed an action for Recovery of

Possession and Damages against herein petitioners, together with their tenants, who
were actual possessors of the land, with the Court of First Instance (now Regional
Trial Court) of Bukidnon and docketed as Civil Case No. 708. In turn, petitioners filed
on January 9, 1975, an action for Repurchase of Homestead against the
respondents PNB and Cabrera with the Court of First Instance of Bukidnon and
docketed as Civil Case 715. Being interrelated, the two cases were heard jointly.
After pre-trial but before trial on the merits, respondent Cabrera (as defendant in Civil
Case No. 715), filed a Motion to Dismiss the petitioners' action for Repurchase of
Homestead, Civil Case No. 715, on two (2) grounds:
1. No tender ofpayment of the redemption price and/or consignation of the
redemption was made by plaintiff.
2. Complaint states no cause of action.

The petitioners herein (as plaintiffs in Civil Case No. 715) opposed the motion
contending that they offered to repurchase the property from respondent PNB (one
of the defendants in the same Civil Case) within the five-year redemption period and
tendered payment which was, however, refused by the respondent PNB. Petitioners
also manifested that on August 1 and 4, 1917, they consigned with the Clerk of Court
of Bukidnon the amount of P5,000.00 as repurchase price.
On September 15, 1977, the trial court granted the Motion to Dismiss. After their
motion for reconsideration and/or new trial was denied by the trial court, petitioners
appealed to the Intermediate Appellate Court (now Court of Appeals), assigning the
following errors:
I. The lower court erred in giving due course to the Motion to Dismiss, without
receiving evidence and/or in ignoring the tender of payment made by plaintiffs to
defendant bank.
II. The lower court erred in declaring that because plaintiffs never bothered to attend
to that letter (letter of bank addressed to the plaintiffs) for a long time it was obliged to
sell the land to its codefendant Vicente Cabrera on February 8, 1973.
III. The lower court erred in holding that the plaintiffs made no pretense whatever in
their opposition to the motion that Vicente Cabrera disallowed the repurchase of the
land and in holding that tender of payment to defendant Cabrera was necessary to
preserve their right to repurchase.
IV. The lower court erred in holding that the consignation of the amount of P5,000.00
was conceivably made to cure the deficiency of plaintiffs' position and was made
beyond the redemption period of five years.
V. The lower court erred in not considering the motion filed out of time and the
conduct of the defendants especially Atty. Cabrera a waiver of their right to a

preliminary hearing on the defense of lack of tender or that defendants are guilty of
estoppel or bad faith. (Rollo, p. 25.)

Respondent appellate court affirmed the lower court's decision in toto. Hence, the
instant petition with the petitioner assigning the following errors:
I. That the Honorable Intermediate Appellate Court cited in holding that appellants
never bothered to tender the payment of redemption and that the filing of judicial
action to redeem did not preserve appellants' right to redeem. It cited out of context
the doctrine enunciated in Tolentino vs. Court of Appeals, 106 SCRA 513.
II. The Honorable Intermediate Appellate Court erred in holding that appellants'
posture that they have offered to repurchase the property from the appellee bank and
tendered payment of redemption price within the redemption period is unmeritorious.
III. The Honorable Intermediate Appellate Court erred in considering long inaction or
laches in deciding the case, the said defense not having been raised in the answers
of defendants-appellees not even in the motion to dismiss or appellees' memoranda.
(Rollo, p. 9)

The subject piece of land was sold at public auction to respondent PNB on January
31, 1963. However, the Sheriff's Certificate of Sale was registered only on July 22,
1971. The redemption period, for purposes of determining the time when a formal
Deed of Sale may be executed or issued and the ownership of the registered land
consolidated in the purchaser at an extrajudicial foreclosure sale under Act 3135,
should be reckoned from the date of the registration of the Certificate of Sale in the
Office of the Register of Deeds concerned and not from the date of public auction
(PNB vs. CA et al., G.R. L-30831 and L-31176, Nov. 21, 1979, 94 SCRA 357, 371).
In this case, under Act 3135, petitioners may redeem the property until July 22, 1972.
In addition, Section 119 of Commonwealth Act 141 provides that every conveyance
of land acquired under the free patent or homestead patent provisions of the Public
Land Act, when proper, shall be subject to repurchase by the applicant, his widow or
legal heirs, within the period of five years from the date of conveyance. The five-year
period of redemption fixed in Section 119 of the Public Land Law of homestead sold
at extrajudicial foreclosure begins to run from the day after the expiration of the oneyear period of repurchase allowed in an extrajudicial foreclosure. (Manuel vs. PNB,
et al., 101 Phil. 968). Hence, petitioners still had five (5) years from July 22, 1972
(the expiration of the redemption period under Act 3135) within which to exercise
their right to repurchase under the Public Land Act.
The general rule in redemption is that in making a repurchase, it is not sufficient that
a person offering to redeem makes manifestation of his desire to repurchase; this
statement of intention must be accompanied by an actual and simultaneous tender
of payment, which constitutes the legal use or exercise of the right to repurchase
(Angao vs. Clavano, 17 Phil. 152). Likewise, in several cases decided by this Court
(Fructo vs. Fuentes, 15 Phil. 362; Retes vs. Suelto, 20 Phil. 394; Rosales vs. Reyes,
et al., 25 Phil. 495, Canuto vs. Mariano, 37 Phil. 840; Dela Cruz, et al. vs

Resurreccion, et al., 98 Phil. 975) where the right to repurchase was held to have
been properly exercised, there was a definite finding of tender of payment having
been made by the vendor. The tender of payment must be for the full amount of the
repurchase price, otherwise the offer to redeem will be held ineffectual. (Rumbaoa
vs. Arzaga, 84 Phil. 812) Bona fide redemptio necessarily imports a reasonable and
valid tender of the entire repurchase price. There is no cogent reason for requiring
the vendee to accept payment by installments from the redemptioner, as it would
ultimately result in an indefinite extension of the redemption period (Conejero, et al.
vs. Court of Appeals, et al., L-21812, April 29, 1966, 16 SCRA 775, 780).
The rule that tender of payment of the repurchase price is necessary to exercise the
right of redemption finds support is civil law. Articles 1616 of the Civil Code of the
Philippines, in the absence of an applicable provision in Commonwealth Act No. 141,
fumishes the guide, to wit: "The vendor cannot avail himself of the right to
repurchase without returning to the vendee the price of the sale ... " (Uy Lee vs.
Court of Appeals, L-28126, November 28, 1975, 68 SCRA 196, 204).
However, the filing of a complaint to enforce repurchase within the period for
redemption is equivalent to an offer to redeem and has the effect of preserving the
right to redemption (Reoveros vs. Abel and Sandoval, 48 O.G. 5318). In the case of
Tolentino vs. Court of Appeals, L-50405- 06, August 5, 1981, 106 SCRA 513, 526'),
this Court expounded:
And in this connection, a formal offer to redeem, accompanied by a bona fide tender
of the redemption price, although proper, is not essential where, as in the instant
case, the right to redeem is exercised thru the filing of judicial action, which as noted
earlier was made simultaneously with the deposit of the redemption price within the
period of redemption. The formal offer to redeem, accompanied by a bona fide tender
of the redemption price within the period of redemption prescribed by law, is only
essential to preserve the right of redemption for future enforcement even beyond
such period of redemption. The filing of the act-on itself, within the period of
redemption, is equivalent to a formal offer to redeem. Should the court allow
redemption, the redemptioners should then pay the amount already adverted to.

In a later case, Tioseco vs. Court of Appeals, (G.R.-66597, August 29, 1986, 143
SCRA 705), this Court reiterated the rule that the filing of the action itself, within the
period of redemption, is equivalent to a formal offer to redeem.
For purposes of determining whether petitioners exercised their right to repurchase
effectively, We have only to consider their filing of the action for Repurchase of
Homestead on January 9,1975, against respondent PNB and Cabrera, which was
filed well within the five-year period to repurchase. The question of timeliness of the
tender of payment by petitioners on August 1 and 4, 1977 of the amount of
P5,000.00 had become insignificant in view of the filing of the action for Repurchase
of Homestead which has been held equivalent to an offer to redeem and has the
effect by itself of preserving their right of recovering the property.

This case is different from Uy Lee vs. Court of Appeals, supra where the action to
compel redemption was filed after the lapse of the period of redemption. Thus, the
Court held in said case, to wit:
It is clear that the mere sending of letters by vendor Simeon expressing his desire to
repurchase the property without an accompanying tender of redemption price fell
short of the requirements of law. Having failed to properly exercise his right of
redemption within the statutory five-year period, the right is lost and the same can no
longer be revived by the filing of an action to compel redemption after the lapse of the
period.

The same factual antecedent obtained in Conejero, et al. vs. Court of Appeals, supra
where the complaint seeking to be declared entitled to redeem wag filed after the
expiration of the statutory period of redemption. What was proper for determination
then in said cases was whether or not the right of redemption sans judicial action
was validly exercised. In said cases, the Court applied the general rule that bona
fide redemption necessarily imports a reasonable and valid tender of the entire
purchase price. The respondent Court of Appeals thus erred in citing Tolentino vs.
Court of Appeals out of context and in applying the doctrine in Uy Lee vs. Court of
Appeals, and Coneiero vs. Court of Appeals, supra where the circumstances of said
cases are different from the case at bar. The respondent Court of Appeals likewise
erred in holding that the action is barred by long inaction. The right of redemptiola
under Commonwealth Act 141 legally began to accrue only on June 22, 1972.
Certainly, an action for Repurchase of Homestead filed on January 9, 1975 cannot
be held to be barred.
ACCORDINGLY, the decision of the Court of Appeals in the instant case is hereby
REVERSED and SET ASIDE. Judgment is hereby rendered authorizing petitioners
to redeem the property subject matter hereof, within thirty (30) days from entry of
judgment, and ordering private respondent Cabrera to execute a deed of absolute
conveyance thereof in favor of the petitioners upon payment by the latter of the
purchase price thereof at the auction sale, with 1% per month interest thereon in
addition, up to the time of redemption, together with the amount of any taxes or
assessments which respondent Cabrera may have paid thereon after purchase, if
any, minus the P5,000.00 consigned in the court a quo. No pronouncement as to
costs at this instance.
SO ORDERED.
Narvasa, Cruz, Gancayco and Aquino, JJ., concur.
G.R. Nos. L-46898-99 November 28, 1989
PHILIPPINE NATIONAL BANK, petitioner,
vs.

HON. RUSTICO DE LOS REYES, AMANDO ARANA and JULIA REYES,

respondents.
The Chief Legal Counsel, for petitioner.
Alegre Law Office for private respondents.

REGALADO, J.:
Assailed in this petition for review on certiorari are (1) the decision 1 of the then Court
of First Instance of Sorsogon, Branch I, dated May 11, 1976 in Civil Case No. 2677,
entitled "Amando Arana et al. vs. Philippine National Bank," and Special Proceeding
No. 2679, entitled "Philippine National Bank, Petitioner-Appellant, Re: Properties of
Spouses Amando Arana and Julia Reyes;" and (2) the resolution 2 of the same court,
dated January 17, 1977, denying petitioner's motion for reconsideration of said
decision.
The records show that on August 30, 1966, respondent spouses mortgaged six (6)
parcels of land located at Cantilla, Sorsogon to petitioner bank (PNB) to secure the
payment of a loan of P10,000.00. Two (2) of the six (6) parcels of land are covered
by free patent titles while the other four (4) are untitled and covered only by tax
declarations.
For failure of respondent spouses to pay the loan after its maturity, petitioner bank,
pursuant to a special power of attorney in the mortgage deed, effected the
extrajudicial foreclosure of the mortgage under Act No. 3135, as amended, and
purchased the same at public auction for P12,735.30 which amount included the
expenses of sale, interest and attorney's fees. The certificate of sale, dated July 1,
1969, was duly registered with the Register of Deeds on July 8, 1970. 3
After the one-year redemption period provided in said law expired without
respondent spouses having exercised their right or redemption, petitioner executed
and registered an affidavit of consolidation of ownership over the six (6) parcels of
land on July 9, 1970 and new titles were issued in its name for the two (2) parcels
covered by free patent titles and the corresponding tax declarations for the four (4)
parcels were placed in its name. 4
On May 12, 1971, Jose Barrameda, then the manager of petitioner's Sorsogon
Branch, sent a letter to respondent spouses informing them of the consolidation of
title and inviting them to repurchase the lands not later than June 15, 1971.
Respondent spouses replied on October 28, 1971 through a letter written and signed
by Alejandro Liadones, Municipal Mayor of Castilla, Sorsogon, requesting petitioner
to extend the period of repurchase to November 5, 1971. On December 19, 1971,

petitioner sent another letter to respondent spouses reminding them of the projected
repurchase and informing them that petitioner would take actual possession of the
lands unless the repurchase would be effected on or before November 30, 1971. 5
On May 9, 1972, petitioner entered into a contract to sell the six (6) parcels of land to
one Gerardo Badong for P27,000.00, with P5,400.00 as down payment upon the
execution of the contract. Petitioner informed respondent spouses of the transaction
in a letter dated May 31, 1972. 6
On July 12, 1972, respondent spouses instituted Civil Case No. 2677 for legal
redemption of the six (6) parcels of land, invoking Section 119 of the Public Land Act,
with damages. 7 Petitioner filed its answer on August 15, 1972, conceding to
respondent spouses the right to repurchase the two (2) parcels of land covered by
free patent titles, but refused the redemption of the other four (4) lots covered by tax
declarations. 8
Gerardo Badong, on the other hand, could not take possession of the two lots
covered by Tax Declarations Nos. 7245 and 7246 (formerly Tax Declarations Nos.
5824 and 5825) as respondent spouses refused to surrender possession of the
premises, and he forthwith informed petitioner of such fact in a letter dated July 3,
1972. On July 24, 1972, petitioner filed ex parte petition in Special Proceeding No.
2679 for the issuance of a writ of possession over the aforesaid two (2) lots, which
writ was granted by the court in its order of July 27, 1972. 9
The trial court noted in its decision in Civil Case No. 2677 that when the aforesaid
order was issued, said case had already been filed on July 12, 1972 by Amando
Arana and his wife, Julia Reyes.
Due to the refusal of respondent spouses to relinquish posession of the two (2) lots
in defiance of the writ of possession by the court, petitioner filed in Special
Proceeding No. 2679 a motion to hive respondent spouses cited for contempt of
court. 10
Civil Case No. 2677 and the motion to cite respondent spouses for contempt of court
in Special Proceeding No. 2679 were beard jointly by agreement of the parties. At
the pre-trial thereof on December 27, 1973, the parties stipulated as follows:
1. That parcels 1 and 2 in the complaint are title lands and bear Free Patent Titles P123 and P-130;
2. That parcels 3, 4, 5, and 6 are not titled but plaintiffs have filed the proper
application for the issuance of free patent titles to the lands;
3. That the Philippine National Bank instituted extrajudicial foreclosure proceedings
against the lands upon failure of the plaintiffs to redeem the original mortgage in the

sum of P10,000.00 and that at the time of foreclosure the claim of the bank was Pl
2,735.30;
4. That there was no judicial confirmation of the consolidation of title in favor of the
bank;
5. That the plaintiffs deposited the sum of P12,500.00 on account of the redemption
with the Legaspi Branch of the Philippine National Bank which deposit is intended for
the Sorsogon Branch;
6. That the Philippine National Bank is willing to have the two parcels of titled land
redeemed but not the untitled parcels. Plaintiffs counsel advanced the view that the
mortgage is indivisible and therefore the plaintiffs have the right to redeem all the
parcels, the titled as well as the untitled. 11

It further appears that during the pendency of the suit, private respondents deposited
the sum of P12,500.00 with the clerk of court of the trial court. 12
After trial on the merits, the lower court rendered its aforesaid decision of May 11,
1976 holding that respondent spouses are entitled to redeem the six (6) parcels of
land on the theory of "indivisibility of mortgage" and dismissing the petition in Special
Proceeding No. 2679 to declare the respondent spouses in contempt of court. The
dispositive portion of said decision reads as follows:
WHEREFORE, in view of the foregoing considerations, judgment is hereby rendered
as follows:
a IN CIVIL CASE NO. 2677 the Court finds that the plaintiff (sic) have the right to
redeem the six (6) parcels of land which are the subject of the original contract of
mortgage for the sum of TWELVE THOUSAND SEVEN HUNDRED THIRTY FIVE
PESOS AND THIRTY CENTAVOS (P12,735.30). The plaintiffs having already
deposited the sum of TWELVE THOUSAND FIVE HUNDRED PESOS (P12,500.00)
with the Legaspi Branch of the Bank on account of the redemption, the deficiency
shall be paid and upon receipt of payment, the Bank is directed to execute a release
of mortgage in favor of the plaintiffs;
b The contract of promise to sell executed between the Bank and Gerardo Badong
is rescinded and cancelled and the Bank is directed to return the amount paid by
Badong on the contract without interest. Both defendants are also ordered to turn
over the possession of the parcels of land of about four (4) hectares now in their
possession to the plaintiffs;
c In SPECIAL PROCEEDING NO. 2679, the petition to declare the respondents in
contempt of court is dismissed;
d Without pronouncement as to costs in both instances.

13

Acting on petitioner's motion of May 27, 1976 for the reconsideration of said
decision, the lower court issued its challenged resolution of January 17, 1977
modifying the ratio decidendi of its decision by ruling that the applicability of the

doctrine of "indivisibility of mortgage" was deemed to have been waived by petitioner

when it agreed to the redemption of the two (2) titled lots, and holding that the period
of redemption for the four (4) untitled parcels of land is one (1) year, not five (5)
years. However, it allowed the redemption of said four (4) lots for reasons of equity. 14
Considering that the disputed issues raised by the parties involve only questions of
law, a direct appeal by certiorari was made to this Court. Thereafter, in a resolution
dated March 24, 1980, the Court considered the case submitted for decision without
respondents' brief for failure of the latter to file the same within the required period. 15
On its part, petitioner's assignment of errors faults the court a quo for holding that
respondent spouses are entitled to redeem the four (4) parcels of land not covered
by free patent upon a so-called "equitable ground," that in the foreclosure of
mortgage under Act No. 3135, as amended, judicial confirmation of the sale is
necessary to vest in the purchaser absolute ownership and the corollary right to take
actual possession of the foreclosed property; and that the issuance of a writ of
possession ex parte is null and void as violative of due process. 16
Petitioner accedes to the redemption by respondents of the two (2) parcels covered
by free patent titles, pursuant to the provisions of the Public Land Act, the period of
five (5) years after the grant of the patents not having expired. This is correct since
pursuant to Section 119 of Commonwealth Act No. 141, the Public Land Act which is
the applicable law in this case, the mortgagor had five (5) years from the date of
conveyance within which to redeem the property. 17 It is not even necessary for the
preservation of such right to repurchase to make an offer to redeem, or tender
payment of the purchase price within said period of five (5) years. The filing of an
action to redeem within that period is equivalent to a formal offer to redeem. There is
not even a need for the consignation of the redemption price. 18
Petitioner, however, denies such right to redeem in the case of the four (4) untitled
parcels due to the failure of private respondents to effect the redemption within the
period of one (1) year after the auction sale. This contention is premised on the
theory that private respondents had only one (1) year from the foreclosure sale to
redeem the untitled properties, pursuant to Section 6 of Act No. 3135, as amended
by Act No. 4118, and Section 20 of the PNB charter, Republic Act No. 4300, as
amended.
Upon the other hand, the theory of private respondents is that the mortgage is
indivisible, hence the right to redeem the titled parcels necessarily includes the
untitled ones. They further contend that having applied for the issuance of free
patents on the four (4) untitled parcels of land which applications were then pending
consideration in the Bureau of Lands, the five-year period in the Public Land Act also
applies to these particular parcels.

The parties were accordingly embroiled in a hermeneutic disparity on their aforesaid

contending positions. Yet, the rule on the indivisibility of mortgage finds no
application to the case at bar. The particular provision of the Civil Code referred to
provides:
Art. 2089. A pledge or mortgage is indivisible, even though the debt may be divided
among the successors in interest of the debtor or of the creditor.
Therefore, the debtor's heir who has paid a part of the debt cannot ask for the
proportionate extinguishment of the pledge or mortgage as long as the debt is not
completely satisfied.
Neither can the creditor's heir who received his share of the debt return the pledge or
cancel the mortgage, to the prejudice of the other heirs who have not been paid.
From these provisions is excepted the case in which, there being several things given
in mortgage or pledge, each one of these guarantees only a determinate portion of
the credit.
The debtor, in this case, shall have a right to the extinguishment of the pledge or
mortgage as the portion of the debt for which each thing is specially answerable is
satisfied.

From the foregoing, it is apparent that what the law proscribes is the foreclosure of
only a portion of the property or a number of the several properties mortgaged
corresponding to the unpaid portion of the debt where before foreclosure
proceedings partial payment was made by the debtor on his total outstanding loan or
obligation. This also means that the debtor cannot ask for the release of any portion
of the mortgaged property or of one or some of the several lots mortgaged unless
and until the loan thus, secured has been fully paid, notwithstanding the fact that
there has been a partial fulfillment of the obligation. Hence, it is provided that the
debtor who has paid a part of the debt cannot ask for the proportionate
extinguishment of the mortgage as long as the debt is not completely satisfied. 19
That the situation obtaining in the case at bar is not within the purview of the
aforesaid rule on indivisibility is obvious since the aggregate number of the lots
which comprise the collaterals for the mortgage had already been foreclosed and
sold at public auction. There is no partial payment nor partial extinguishment of the
obligation to speak of. The aforesaid doctrine, which is actually intended for the
protection of the mortgagee, specifically refers to the release of the mortgage which
secures the satisfaction of the indebtedness and naturally presupposes that the
mortgage is existing. Once the mortgage is extinguished by a complete foreclosure
thereof, said doctrine of indivisibility ceases to apply since, with the full payment of
the debt, there is nothing more to secure.
Neither does the instant case fall within the exception contemplated in the last two
paragraphs of Article 2089 in which, there being several things given in mortgage,

each of them guarantees only a determinate portion of the account. There is no proof
or any averment to that effect.
Noteworthy, however, is an overriding consideration that should not be overlooked in
the solution of this dispute. It is admitted that applications for free patent covering the
four (4) unregistered parcels of land had been filed by respondent spouses, and
were then still pending action, which thus gives rise to the admission that said
properties involved in the aforestated cases were public lands. 20 This presumption
was never rebutted by petitioner. Hence, the right of petitioner to foreclose its
mortgage on the subject properties virtually depends on whether the deed of
mortgage is at all valid and enforceable since the four (4) lots mortgaged apparently
still formed part of the public domain when the mortgage thereon was constituted.
It is an essential requisite to the validity of a mortgage that the mortgagor be the
absolute owner of the property, mortgaged. 21 Consequently, private respondents, not
being owners as yet of the subject lots when the same were supposedly mortgaged,
they could not have validly made any disposition of or created an encumbrance on
said four (4) lots to which they had neither title nor any vested right. At most, what
they had was a mere right of expectancy dependent on the continuance of the
circumstances then existing or a contingent right dependent on the performance of
some conditions, 22 but which could not be the proper object of a valid mortgage
contract. Since the mortgage is absolutely null and void and ineffective from its
inception, petitioner, as mortgagee, acquires no better rights, the registration of the
mortgage notwithstanding. 23 Nor would the subsequent acquisition by the mortgagor
of title over said properties through the issuance of free patents thereover validate
and legalize the mortgage thereon under the doctrine of estoppel, 24 since upon the
issuance of said patents, the lots in question are thereby brought under the operation
of the Public Land Act which prohibits the taking of said properties for the satisfaction
of debts contracted prior to the expiration of five (5) years from the date of the
issuance of the patents. 25
Consequently, there was no need for private respondents to repurchase the four (4)
parcels from petitioner. That aspect of the case actually calls for mutual restitution as
an equitable remedy, especially since the records before us are barren of the factual
background, or the mode of acquisition by petitioners, of their possession of said lots
and the circumstances under which the mortgage in question was arranged between
the parties. Therefore, incident to the nullity ab initio of the mortgage, 26 mutual
restitution by the parties of what they had respectively received from each other
under the contract in connection with the four (4) lots must be made and is hereby
ordered to be effected by them.
While the law bars recovery in a case where the object of the contract is contrary to
law and one or both parties acted in bad faith, we cannot here apply the doctrine of
in pari delicto 27 which admits of an exception, namely, that when the contract is

merely prohibited by law, not illegal per se, and the prohibition is designed for the
protection of the party seeking to recover, he is entitled to the relief prayed for
whenever public policy is enhanced thereby. 28 Under the Public Land Act, the
prohibition to alienate is predicated on the fundamental policy of the State to
preserve and keep in the family of the homesteader that portion of public land which
the State has gratuitously given to him, 29 and recovery is allowed even where the
land acquired under the Public Land Act was sold and not merely encumered, within
the prohibited period. 30 This is without prejudice to such appropriate action as the
Government may take should it find that violations of the public land laws were
committed or involved in said transaction and sanctions are in order.
WHEREFORE, under the considerations as amplified above and with the
modification with respect to the four (4) parcels of land not covered by free patent
titles, the proper disposition whereof we have hereinbefore directed, the judgment
appealed from is AFFIRMED.
SO ORDERED.
Paras, Padilla and Sarmiento, JJ., concur.
Melencio-Herrera (Chairperson), J., is on leave.

G.R. No. L-60685 June 29, 1982

REPUBLIC OF THE PHILIPPINES, represented by the Director of
lands,
plaintiff-appellant,
vs.
AUGUSTO MINA and Register of Deeds of Bulacan, defendantsappellees.

RELOVA, J.:p
Petition to review the order of the Court of First Instance of Bulacan,
Branch III in Valenzuela, dated December 29, 1977, dismissing the
complaint in its Civil Case No. 292-V-75, entitled "Republic of the
Philippines, Plaintiff, vs. Augusto Mina and Register of Deeds of
Bulacan", instituted by the plaintiff to declare null and void Free
Patent No. 467702 and Original Certificate of Title No. P-1382 issued in
the name of defendant Augusto Mina; to order the aforesaid
defendant to surrender the owner's duplicate or Original Certificate of

Title No. P-1382 and the defendant Register of Deeds to cancel the
same; to decree the reversion of Lot No. 3745, Cad. 3375, situated in
Meycauayan, Bulacan to the mass of public domain and to grant such
further relief as may be just and equitable in the premises.
The complaint, among others, alleged that:
xxx xxx xxx
3. On July 7, 1967, defendant August Mina filed with the Bureau of
Lands Free Patent Application No. (III-1) 4471-A for tract of land
designated and identified as lot No. 3745, Cad. 337, Meycauayan,
Bulacan, with an area of 2 hectares, 69 ares and 47 centares; ...
4. Relying on the information supplied and/or affirmations made,
by defendant Mina in his aforesaid free patent application (Annex
'A' her Relying on the information supplied free patent application
(Annex 'A' hereof), and after routinary field investigation and
processing, the Director of Lands on August 14,1969 issued an
order approving said free patent application and also directing the
issuance of patent to defendant Mina and, pursuant thereto, Free
Patent No. 467702 was correspondingly issued to said defendant
on February 6, 1970;
5. Said patent was transmitted to the defendant Register of Deeds
who registered the same pursuant to section 122 of the Land
Registration Act and issued Original Certificate of Title No. P-1382
therefor in the name of defendant Augusto Mina;
6. Subsequently, however, on December 16, 1972, Montano F.
Esguerra Jr. filed with the Bureau of Lands a petition assailing the
validity of the patient issued to defendant Augusto Mina claiming
that the latter obtained the same by means of fraud and
misrepresentation
7. Acting on the aforementioned petition by Montano F. Esguerra,
Jr, an investigation was conducted by the Bureau of Lands which
revealed that neither defendant Augusto Mina's free patient
application aforesaid had been fraudulently obtained hereby
prompting the Director of Land to issue an order on April 2, 1973,
the proper court action be initialized for the cancellation of the
patent and the corresponding certificate title issued, ands for the
reversion of the covered thereby to the state.

8. Defendant Augusto Mina filed for Motion Reconsideration of the

aforesaid Order of the Director Of Lands dated April 2, 1973
requesting for an investigation thereof but before said
investigation could be commenced. defendant Mina executed an
affidavit as Annex "B") manifesting that he is no longer interested
in pursuing his claim over the land in question and that he is
willing to surrender his claim over the land in question and that he
is willing to surrender Free Patent No 4677702 issued by the
Director of Land;
9. Defendant Augusto Mina committed fraud in his free Patent
Application No (III-1) 4471-A (E-V471160) Annex "A" that he and
his alleged predecessor -in -interest had been in continuous
possessing and had cultivated the land in question since 1943, to
his filing of the application in 1976, when in truth and in fact
neither he nor his predecessor-in-interest had occupied in
violation of Section 1, Republic Act No. 782.
xxx xxx xxx

On September 12, 1977, defendant Augusto Mina filed a motion to

dismiss stating among others that inasmuch as the free patent was
issued to him on February 109, 1975, plaintiff is now barred by the
statute of limitation from asking for reversion; that plaintiff has no
more cause of action against him for the reason that the property had
already been sold to spouses Narciso del Rosario and Teresita Zuniga
on February 11, 1976, that is six (6) years after the original issuance of
the title.
The Court a quo granted the motion to dismiss in an Order dated
December 29, 1977, stating that "the title of the defendant Augusto
Mina has become inconvertible and indefeasible after the one year
period." The dispositive portion of the order reads.
In view of the above the Court hereby grants defendant's motion
to dismiss. For the same reason the motion for leave to amend
complaint for the purpose of including the spouses Narciso del
Rosario and Teresita Zuniga becomes unnecessary to resolve.
The same is true with respect to the motion for leave to intervene
filed by Serafin R. Santos who under the same ruling in the case
of "Republic of the Philippines v. Carle, supra" is not left without a
remedy since he can file the corresponding action for
reconveyance. The motion for cancellation of lis pendens is

likewise granted in view of the dismissal of this case as a logical

and necessary consequence thereof. (Order, pp. 68-73, Rec. on
Appeal).

The allegations in the complaint that neither defendant Augusto Mina

nor his predecessor-in-interest had ever occupied or worked in
subject property, and that Mina's free patent application had been
fraudulently obtained, are indicative of fraud in the filing of the
application and obtaining title to the land, if proven, would override
the order of the trial court dismissing the case without hearing. The
alleged misrepresentation of the applicant that he had been
occupying and cultivating the land are sufficiently grounds to nullify
the patent and title under Section 91 of the Public Land Law which
provides as follows:
That statement made in the application shall be considered as
essential conditions or parts of any concession, title or permit
issued on the basis of such application, and any false statement
thereon or omission of facts, changing or modifying the
consideration of the facts set forth in such statement, and any
subsequent modification, alteration, or change of the material
facts set forth in the application shall ipso facto produce the
cancellation of the concession, title or permit granted ...

A certificate of title that is void may be ordered canceled. And, a title

will be considered void if it is procured through fraud, as when a
person applies for registration of the land on the claim that he has
been occupying and cultivating it. In the case of disposable public
lands, failure on the part of the grantee to comply with the conditions
imposed by law is a ground for holding such title void. (Director of
Lands vs. CA, 17 SCRA 71). The lapse of the one (1) year period within
which a decree of title may be reopened for fraud would not prevent
the cancellation thereof for the hold that a little may become in
defeasible by registration, even if such title had been secured through
fraud or in violation of the law would be the height of absurdity.
Registration should not be a shield of fraud in securing title (Republic
vs. Animas, 56 SCRA 499).
A title founded on fraud may be canceled, notwithstanding the
lapse of one year from the issuance thereof, through a petition
filed in court by the Solicitor General, (Sumail vs. Court of First

Instance of Cotabato, 51 O.G. p. 2414 Phil. L-8278, 96 Phil. 946;

Eugenio, et al., vs. Period, et al., G.R. No. l-7083, May 19, 1955; De
los Santos vs. Roman Catholic Church of Midsayap, G.R. No. L6088, Feb. 24, 1954, 94 Phil. 405
The complaint in the present case was brought by the Republic of
the Philippines not as a nominal party but in the exercise of its
sovereign functions, to protect the interests of the State over a
public property. This Court has held that the statutes of limitations
does not run against the right of action of the Government of the
Philippines. (Republic vs. Grijaldo, 15 SCRA 681)
Prescription, both acquisitive and extinctive, does not run against
the state. It has been held that the statute of limitations does not
run against the right of action of the Government of the
Philippines (31 SCRA 219)

Thus, the right of reversion or reconveyance to the state is not barred

by prescription. (Republic vs. Ramona Ruiz, et al., 23 SCRA 348)
WHEREFORE, the order dated December 29, 1977 of the Court of first
Instance of Bulacan granting the motion to dismiss and canceling the
notice of lis pendens is declared annulled and set aside; and the court
a quo is ordered to grant the motion to admit amended complaint for
the purpose of including the spouses Narciso del Rosario and
Teresita Zuiga, and the motion for leave to intervene filed by Serafin
R. Santos, and therefore to hear Civil Case No. 292-V-75 on the merits
and render judgment thereof accordingly.
SO ORDERED.
Teehankee (Chairman), Makasiar, Plana, Vasquez and Gutierrez, Jr.,
JJ., concur.
Melencio-Herrera, J., is on leave.
G.R. No. L-31681

July 31, 1987

THE DIRECTOR OF LANDS, petitioner,

vs.
COURT OF FIRST INSTANCE OF RIZAL, BR. XII, HON. FERNANDO A. CRUZ,
PRESIDING JUDGE; and PABLO, ANGELITA, JUAN, BARCELISA, ISRAEL,
REBECCA and PEDRO, Jr., all surnamed CASAJE, respondents.

PARAS, J.:
This is a Petition for Review (Appeal by Certiorari) filed by the Director of Lands from the
Orders dated January 4, 1969 and July 14, 1969 of respondent Court of First Instance of
Rizal, Branch XII Caloocan City, in Land Registration Case No. C-72, L.R.C. Record No. N30167. Said order of January 4, 1969 denied the Petition for Review filed by the Director of
Lands and the order of February 3, 1969 denied the motion for reconsideration.
Briefly, the facts of the case are as follows:
On February 22, 1966, respondents Pablo, Angelita, Juan, Barcelisa, Israel, Rebecca and
Pedro, Jr., all surnamed Casaje, filed with the Court of First Instance of Rizal, Land
Registration Case No. C-72, L.R.C. Record No. N-30167, for the confirmation and
registration of their title to a parcel of land situated in Barrio San Roque, Municipality of
Navotas, Province of Rizal, more particularly described on plan PSU-214300 with an area of
986 square meters. They alleged that they are the owners in fee simple and in possession of
the aforementioned land and that their possession together with their predecessors-in-interest
has been from time immemorial and for a period of more than thirty (30) years, public
continuous, adverse to the whole world, and in the concept of absolute owners thereof.
The Director of Lands, thru the Solicitor General, filed an Opposition dated July 18, 1966
stating that neither the applicants nor their predecessors-in-interest possess sufficient title to
the parcel of e land sought to be registered, the same not having been acquired by them by
composition title from the Spanish government or by possessory information title under the
Royal Decree of February 13, 1894; that neither the applicants nor their predecessors-ininterest have been in open, continuous, exclusive and notorious possession and occupation of
the land in question for at least 30 years immediately preceding the filing of the application
and that the same is a portion of the public domain belonging to the Republic of the
Philippines.
Notice of the initial hearing scheduled on September 8, 1966 was furnished the Director of
lands. The corresponding publication was made in the official Gazette and the required
posting of Sheriff's notice was duly complied with.
At the said scheduled initial hearing, however, the Director of Lands did not appear. Instead,
counsel for the applicants presented to the court, the second and third indorsements of the
District Land Officer dated August 7, 1966, manifesting that the Bureau of Lands is no longer
interested in opposing the application for registration, because after due investigation the land
was found to be of private ownership as certified to by the land investigator Mr. Jose Sison,
C/O District Land Officer III-1. The third indorsement, dated August 7, 1966 and signed by
Mr. Arturo Pascual, recommend that in view of the above findings as per investigation
conducted by a representative of the Bureau of Lands, no opposition be filed. A copy of the
said 2nd Indorsement is hereinbelow reproduced as follows

SUBJECT:
Land. Reg. Case No. C-72
L.R.C. Rec. No. N-30167
Pablo Casaje, et al.
San Roque, Navotas,
Rizal
2nd Indorsement
August 1, 1966
Respectfully returned to the Director of Lands thru the District Land Officer, DLO III-1,
Bureau of Lands, Manila, submitting hereunder the findings and report of the undersigned on
the above-noted Registration Case, to wit:
That the parcel of land sought to be registered is a residential lot located in San Roque,
Navotas, Rizal which was originally owned and possessed by Leonardo Casaje, deceased and
father of the herein registration applicants;
That the land subject of this registration was declared for taxation purposes under Tax Dec..
No, 8800 in the names of the applicants and the taxes were paid for and the latest is covered
by O.R. No. D-1865945 dated May 31, 1966 with an assessed value of P990.00;
That during the ocular investigation of the premises of the land subject of this registration, it
has been ascertained that a camarin and a residential house are found thereon. The 3-meter
legal easement has been set aside and unoccupied for embankment of the Navotas, River:
That it has been ascertained further that the subject of this registration case is abutting Lot 12
of Psu-64860 of Leonardo Casaje which is a titled or private property;
That the land has been found that the same is not covered by any public land applications or
patent neither it is within any public or quasi public improvements;
That the undersigned has finally ascertained that the applicants are Filipino citizens and no
person, corporation, or association is either directly or indirectly interested in the land sought
to be registered; and
That the applicants thru their predecessors-in-interest and in concept of owners have been in
actual, open, adverse, public and continuous occupation and possession for more than thirty
(30) years which is believed to be not later than July 4, 1926.

In view of the foregoing, and in as much as the applicants have satisfactorily met all the
conditions essential to entitle them to a Judicial legalization of their imperfect claims over the
land applied for under the provisions of Section 48(b) of Com. Act No. 141, as amended by
R.A. No. 1942, it is recommended that no opposition be interposed on the instant Registration
Case as far as our Office is concern.
(SGD.) JOSE SISON
Land Investigator
Also on September 8, 1966, respondent Court, for failure of the Oppositors to appear despite
due notice, entered an order of general default against the whole world, with the exception of
the provincial government of Rizal and the municipal government of Navotas, thereby
authorizing the applicants to present their evidence before the Deputy Clerk of Court, who
was commissioned to receive the same.
On September 13, 1966, respondent court rendered a decision declaring the applicants, the
true and absolute owners of the land in question, and ordering the registration thereof in their
names but reserving for public easement a 3.00 meter strip of the land along the Navotas
River.
On August 26, 1967, the private oppositors Roberto Lusterio, et al., filed a Petition for
Review from the order of general default and from the judgment alleging fraud and evident
bad faith. The petition was denied by respondent court for failure on the part of private
oppositors to prove their allegations of fraud and evident bad faith allegedly employed by the
applicants. No appeal was interposed by the private oppositors from the said order.1avvphi1
On his part, the Director of Lands filed on October 11, 1967, a Petition for review, pursuant
to Sec. 38 of Act No. 496, alleging fraud in obtaining the decree of registration and that the
one (1) year period has not elapsed from the issuance of the decree (the decrees was issued on
June 5, 1967).
The applicants (the Casajes) filed an opposition contending among other things, that the said
petition for review "represents the interest of Eusebia Cruz, Roberto Lusterio and Evangelina
Laquindanum who were the original oppositors represented by private counsel Atty. Artemio
L. Agcaoili;" that since the decree of registration was issued on June 5, 1967 and since the
corresponding certificate of title has already been issued by the Register of Deeds, said
petition for review is a mere harassment, and that the land in dispute, as may be seen from the
investigation report and indorsement of the District Land Officer, is the private property of
Leonardo Casaje: and that the aforementioned Eusebia Cruz, Roberto Lusterio and
Evangelina Laquindanum were merely their tenants.
The petition for review was set for hearing on December 19, 1968. On January 4, 1969,
respondent court issued its Order denying the petition for lack of evidence to support the

same. From this order, after its motion for reconsideration had been denied, herein petitioner
interposed this petition.
The primordial question to be resolved in the case at bar is whether or not respondent court
erred in denying petitioner's petition for review filed pursuant to Sec. 38 of Act 496, (Land
Registration Act) which provides:
Section 38. Decree of registration, and remedies after entry of decree.
If the court after hearing finds that the applicant or adverse claimant has title as stated
in his application or adverse claim and proper for registration, a decree of
confirmation and registration shall be entered. Every decree of registration shall bind
the land, and quiet title thereto, subject only to the exceptions stated in the following
section. It shall be conclusive upon and against an persons, including the Insular
Government and an the branches thereof, whether mentioned by name in the
application, notice of citation, or included in the general description "To all whom it
may concern." Such decree shall not be opened by reason of the absence, infancy, or
other disability of any person affected thereby, nor by any proceeding in any court for
reversing judgments or decrees; subject, however, to the right of any person deprived
of land or of any estate or interest therein by decree of registration obtained by fraud
to file in the competent Court of First Instance a petition for review within one year
after entry of the decree provided no innocent purchaser for value has acquired an
interest. ...
The essential elements for the allowance of the reopening or review of a decree are: (a) that
the petitioner has a real and dominical right; (b) that he has been deprived thereof; (c) through
fraud; (d) that the petition is filed within one year from the issuance of the decree; and (e) that
the property has not as yet been transferred to an innocent purchaser.
However, for fraud to justify the review of a decree, it must be extrinsic or collateral and the
facts upon which it is based have not been controverted or resolved in the case where the
judgment sought to be annulled was rendered. The following ruling spells out the difference
between extrinsic and intrinsic fraud:
Extrinsic or collateral fraud, as distinguished from intrinsic fraud, connotes any
fraudulent scheme executed by a prevailing litigant "outside the trial of a case against
the defeated party, or his agents, attorneys or witnesses, whereby said defeated party,
is prevented from presenting fully and fairly his side of the case." But intrinsic fraud
takes the form of "acts of a party in a litigation during the trial, such as the use of
forged instruments or perjured testimony, which did not affect the present action of
the case, but did present a fair and just determination of the case." (Libudan vs. Gil,
45 SCRA 17)
In other words, extrinsic fraud is one that affects and goes into the jurisdiction of the Court.

In its Petition for Review filed before the respondent court, petitioner alleged that the Casajes
committed fraud in obtaining said decree of registration in the following manner:
(a) By falsely alleging and misrepresenting that they have been in peaceful, open,
adverse and continuous possession of the land described in paragraph 1 hereof for
more than 30 years, the truth being that said land had been in the actual and exclusive
possession of Eusebia Cruz, Roberto Lusterio and Evangelina Laquindanum who are
not and have never been in such possession as tenants or representatives of the
registration applicants;
(b) By falsely representing that the land was formed by alluvia and is thus an
accretion to their private property, the truth being that the entire land has always been
part of the public domain, formed as it was by the intervention of human hands; and
(c) By misrepresenting that no other person, including the state, has any interest
whatsoever in the land in question. (pp. 47-48, Rollo)
Clearly, the foregoing allegations, even if proved, do not constitute extrinsic fraud as would
warrant a reopening of the decree.
The person(s) contemplated under Section 38 of Act 496, to be entitled to a review of a
decree of registration, are those who were fraudulently deprived of their opportunity to be
heard in the original registration case. Such is not the situation of the petitioner here. It was
not denied a day in court by fraud, which the law provides as the sole ground for reopening of
the decree of registration. In fact, it opposed the application but failed to substantiate its
opposition because it did not appear at the hearing of the registration case despite proper
notice. In Solomon et al., vs. Bocauto et al., 71 Phil. 363, 365, cited in Crisolo vs. Court of
Appeals, 68 SCRA 435, 441, a petition for review of a decree of registration was properly
denied for "both petitioners had notice of the original registration proceedings; but failed to
put up any claim and to show title in themselves. " Significantly, petitioner failed to explain
why it failed to appear at the hearing. Mere allegation of fraud is not enough. Specific,
intentional acts to deceive and deprive another of his right, or in some manner injure him
must be alleged and proved. There must be actual or positive fraud as distinguished from
constructive fraud to entitle one to the reopening of a decree of registration. And it must be
extrinsic and not intrinsic fraud (Greg Alba vs. de la Cruz, 17 Phil. 49, 57). This is necessary
to maintain the stability of judicial decisions and save the precious time of the courts from
being wasted by unnecessary proceedings. Moreover, the fact that the District Land Officer of
the Bureau of Land conducted the corresponding inspection and investigation of the land in
question with its findings and report submitted in court, renders the present appeal interposed
by the Director of Lands without valid basis. It cannot just simply deny the report of its own
investigator. Besides, there is always that presumption of regularity in the performance of
official function.

WHEREFORE, this petition is DENIED for lack of merit. The order of respondent judge
denying the petition for review and/or to reopen the decree of registration in Land
Registration Case No. C-72, L.R.C. Record No. N-30167 is hereby AFFIRMED.
SO ORDERED.
Teehankee, C.J., Narvasa, Cruz and Gancayco, concur.
G.R. No. L-58823 March 18, 1985
THE DIRECTOR OF LANDS (Republic of the Philippines), petitioner,
vs.
HON. COURT OF FIRST INSTANCE OF MISAMIS ORIENTAL, BRANCH I,
CAGAYAN DE ORO CITY; PROVINCIAL SHERIFF, Misamis Oriental; and
GRACIANO B. NERI, JR., JOSEFINA V. VDA. DE NERI, VICTORIA N.
FERNANDEZ, RAMON V. NERI, MA. THERESA N. YRASTORZA, respondents.

ABAD SANTOS, J.:

The Director of Lands in his petition for certiorari, prohibition with preliminary
injunction ex-parte prays that:
After due hearing, judgment be rendered: (a) declaring null and void the proceedings
in Land Registration Case No. N-531, LRC Cad Rec. No. 1561, Lot No. 2821,
Cagayan de Oro Cadastre; (b) cancelling original certificate of Title (OCT) No. 0662;
and (c) issuing the writs of certiorari and prohibition, prayed for against
aforementioned respondents; and making the writ of injunction permanent (Rollo, p.
21.)

The factual background is as follows:

In Land Registration Case No. 17 of the defunct Court of First Instance of Misamis
Oriental, Graciano B. Neri, Jr., et al. applied for judicial confirmation of their title to a
piece of land situated in Cagayan de Oro City. The application was later amended by
adding the addresses of the two persons who were said to be legal occupants of the
land in the concept of tenants.
In an Order dated September 5, 1975, the land registration court said in part:
It appearing that the only ground relied upon by the oppositors in their opposition to
the application of Graciano B. Neri, Jr., et al., is that the same is a public land and it
likewise appear that the Bureau of Lands has not filed any opposition in the aboveentitled petition the opposition of the oppositors represented by Attorneys Benjamin
Tabique and Borja is hereby dismissed. (Rollo, p. 46.)

Subsequently, the court rendered a decision dated February 5, 1976, the dispositive
portion of which reads as follows:
WHEREFORE, rectifying and confirming herein the order of general default entered
in this case, and applicants having conclusively established to the satisfaction of this
court their ownership of the parcel of land subject matter of this application, and that
the opposition being not substantial, Lot No. 2821 of the Cagayan Cadastre should
be as it is hereby adjudicated in equal shares to the following, to wit: JOSEFINA B.
VDA. DE NERI, a widow; GRACIANO B. NERI, JR., married to Victoria Babiera;
VICTORIA NERI, married to Mario P. Fernandez; RAMON B. NERI, single; and
TERESA NERI, married to Alberto Yrastorza, all of legal age, Filipinos and residents
of the City of Cagayan de Oro, subject, however, to road-rights-of-way in favor of the
City of Cagayan de Oro. (Rollo, P. 48.)

On August 20, 1976, Decree No. N-161749 was issued by the Commissioner of
Land Registration. And on September 26, 1976, the Register of Deeds of Misamis
Oriental issued Original Certificate of Title No. 0662 in favor of the applicants.
In a Motion dated October 16, 1976, the registered owners (Graciano B. Neri, Jr., et
al.) alleged that squatters who had built shacks before the issuance of the decree
refused to vacate the land for which reason they prayed for the issuance of a writ of
possession and a writ of demolition. The court granted the motion in an Order dated
October 22, 1976. (Rollo, pp. 49-52.) After several motions for reconsideration, the
court issued an Order dated August 8, 1980, the dispositive portion of which reads:
WHEREFORE, as stated by the applicants, there is no more legal obstacle for the
issuance of the writ of possession and demolition. Let a writ of possession and a writ
of demolition issue in the case. (Rollo, p. 69.)

On August 18, 1980, the writ of possession and demolition was actually issued.
(Rollo, p. 69.) However, on October 22, 1980, Petronilo R. Bullecer as President of
the Taguanao Settlers Association asked for a 90-day stay in the enforcement of the
writ. (Rollo, pp. 71-72.) The Director of Lands, thru the Solicitor General also asked
that the execution of the writ "be stayed or held in abeyance pending the result of the
Annulment proceedings which this Office is filing with the proper court." (Rollo, pp.
73-76.)
The motions to stay execution of the writ were opposed by the registered owners.
(Rollo, p. 80.) On January 20, 1981, the court denied the motions to stay "for lack of
indubitable merit." (Rollo, p. 81.) On January 2 3, 1981, the court issued an Order
which reads: "Resolution of the motion for issuance of an alias writ is hereby
deferred after the Order of January 20, 1981 has become final." (Rollo, p. 82.) The
Director of Lands on July 10, 1981, moved to reconsider, i.e. for a stay in the
enforcement of the writ. (Rollo, pp. 83-92.) The record does not show the action
taken on the Motion.

In the meantime, to be precise on January 5, 198 1, the Director of Lands filed Civil
Case No. 7514 in the Court of First Instance of Misamis Oriental for annulment of
Original Certificate of Title No. 0662 and reversion. The defendants are the private
respondents in the instant petition. (Rollo, pp. 94-100.)
The instant petition was filed on November 19, 1981, long after the filing of Civil
Case No. 7514. The prayer in the instant petition as stated above is similar to the
prayer in Civil Case No. 7514 which reads:
1. Declaring as null and void the decision rendered by the court in Land Registration
Case No. N-531, which adjudicating the land surveyed as plan (LRC) Swo-150,
Cagayan de Oro City, in favor of the private defendants;
2. Declaring as null and void the corresponding Decree No. N-361749 and Original
Certificate of Title No. 0662 issued by the same court in favor of the private
defendants;
3. Ordering the Register of Deeds of Cagayan de Oro City to cancel Original
Certificate of Title No. 0662 issued hi the name of the private defendants;
4. Ordering the reversion of the land covered by Original Certificate of Title No. 0662
to the State and declaring the same as owned and belonging to the latter; and
5. Awarding such further reliefs and remedies as may be just and equitable in the
premises. (Rollo, pp. 98-99.)

The cause of action in both the instant petition and in Civil Case No. 7514 is that the
land registration court lacked jurisdiction to adjudicate title to the land in question for
lack of (a) notices to the person affected; and (b) compliance with other legal
requirements.
To summarize: in the instant petition and in Civil Case No. 7514 which was
previously instituted, there is substantial Identity of parties, cause of action and relief.
The petition at bar has to be denied for the following reasons:
1. Original Certificate of Title No. 0662 was issued on September 20, 1976-, it cannot
be collaterally attacked in a petition filed on November 19, 1981. (See Magay vs.
Estiandan, L-28975, Feb. 27, 1976, 69 SCRA 456.)
2. The issue in respect of the validity of OCT No. 0662 has been previously and
directly raised in Civil Case No. 7514 which is the proper action. Resolution of the
same issue in this Court will displace a tribunal which can best ascertain the veracity
of the factual allegations and which first acquired jurisdiction over an action which
exclusively pertains to it. There should be no multiplicity of suits.

WHEREFORE, the petition is hereby dismissed for lack of merit. The temporary
restraining order issued in this case is hereby lifted. No costs.
SO ORDERED.
Makasiar, (Chairman), Aquino, Concepcion, Jr., Escolin and Cuevas, JJ., concur.
G.R. No. L-56077 February 28, 1985
REPUBLIC OF THE PHILIPPINES, petitioner,
vs.
COURT OF APPEALS, SPOUSES PRUDENCIO MAXINO and TARCIANA
MORALES, PEDRO GONZALES, ROGELIO AQUINO, Minor represented by his
father, Manuel Aquino, and ALEJANDRO, SOCORRO, MERCEDES, CONCHITA,
REMEDIOS and FLORA, all surnamed CONSOLACION, respondents.
Silvestre Loreria, Jr. for respondent spouses Prudencio Maxino and Tarciana
Morales.

AQUINO, J.:
This case is about the validity of the registration of 885 hectares of public forestal
land located in Mulanay, Quezon.
In Land Registration Case No. 81-G of the Court of First Instance at Gumaca,
Quezon, Judge Vicente del Rosario on March 21, 1961 rendered a decision,
ordering the registration of said land, Lot 1, allegedly located at Barrio Cambuga
(Anonang), Mulanay, in the names of the spouses Prudencio Maxino and Tarciana
Morales, less 200 hectares which should be registered in the names of the Heirs of
Lorenzo Consolacion (72, Record on Appeal). The decision became final and
executory. A decree and an original certificate of title were issued.
More than eight years later, or on June 20, 1969, the Republic of the Philippines filed
with the Gumaca court an amended petition to annul the decision, decree and title on
the ground that they are void because the land in question was still a part of the
unclassified public forest. Moreover, the possessory information title relied upon by
the Maxino spouses covered only 29 hectares of land and not 885 hectares. The
petition was verified by the Acting Director of Forestry.
The Maxinos opposed the petition. After a hearing on the merits, Judge Agana
denied the petition in his order of September 8, 1970. That order was served upon
the assistant provincial fiscal on September 16, 1970 and on the special counsel,
Jaime Dispo of the Bureau of Forestry, on November 26, 1970.

A copy of the order was transmitted by the fiscal to the Solicitor General's Office only
on September 2, 1971 or nearly one year from the issuance of the order. Twenty-two
days thereafter or on September 24 the Solicitor General appealed from that order
and filed a motion for extension of time within which to submit a record on appeal.
The appeal was given due course.
In its decision dated October 24, 1980 the Appellate Court through Justices
Asuncion, Porfirio V. Sison and Sundiam dismissed the petition because the 1970
order had allegedly long become final and unappealable. The Solicitor General
appealed to this Court.
That is the issue to be resolved first: whether the appeal of the State from the trial
court's 1970 order of denial was seasonably made. The Appellate Court held that the
service of the order on Dispo, as special attorney, was binding on the Solicitor
General's Office. Consequently, the record on appeal, which was filed after thirty
days from the service of the order upon Dispo, was filed out of time.
We hold that the reglementary thirty-day period for appeal should be reckoned from
the time the Solicitor General's Office was apprised of the 1970 order of denial and
not from the time the special counsel or the fiscal was served with that order. These
representatives of the Solicitor General had no power to decide whether an appeal
should be made. They should have referred the matter to the Solicitor General.
In the designation of Dispo as special counsel by Solicitor General Barredo,
approved by Secretary of Justice Teehankee, it was specified that he should consult
the Solicitor General on all questions, legal and factual, regarding the case. The
question of whether an appeal should be made could only be decided by the Solicitor
General's Office.
The 1969 petition to annul the decision, decree and titles was filed by Solicitor
General Felix V. Makasiar, Assistant Solicitor General Antonio A. Torres and Solicitor
Alicia Sempio-Diy. Consequently, the Solicitor General's Office should be served with
the final order disposing of the petition and should not be bound by the service on his
surrogates, the special counsel and the fiscal (Republic vs. Polo, L-49247, March 13,
1979, 89 SCRA 33; Republic vs. Mendoza, L-49891, October 31, 1983, 125 SCRA
539).
The fact that after the record on appeal was filed on time, the Solicitor General's
Office was late in filing the amendments to it is of no moment. In exceptional cases,
like the instant case, the interest of justice may warrant waiver of the rules (Republic
vs. Court of Appeals, L-31303-04, May 31, 1978, 83 SCRA 453).
In this case, where it is contended that the registration is void allegedly because
public forestal land was registered and the State sought to declare the decision void,

the Government should not be estopped by the mistakes or errors of its agents
(Gov't. of the U. S. vs. Judge of 1st Inst. of Pampanga, 50 Phil. 975, 980; Bachrach
Motor Co. vs. Unson, 50 Phil. 981, 990; Go Tian An vs. Republic, 124 Phil. 472, 475;
Republic vs. Aquino, L-33983, January 27, 1983, 120 SCRA 186, 191-192).
Now, as to the merits of the case. It is incontestable that Lot 1, the 885-hectare area
registered by the Maxinos, is within the public forest, not alienable and disposable
nor susceptible of private appropriation. Its inclusion in the public forest was certified
by Director of Forestry Florencio Tamesis on July 6, 1940, as per Land Classification
Map No. 1386, Tayabas Project No. 16-E of Mulanay, Exhibit C-Annulment, and as
shown in the report and testimony of Lorenzo R. Tria, a forest station warden (Exh.
B-Annulment; 7, 10-15 tsn March 5, 1970). Tria recommended that the title of the
Maxino spouses be annulled (Exh. B-Annulment).
The certification was reiterated by the Director of Forestry on May 20, 1948 as per
Land Classification Map No. 1516, No. 16-E of Mulanay, Quezon, Exhibit 1-ADirector of Forestry, and as shown in paragraph 6 of the report of Forester Emerson
B. Abraham who recommended that the opposition to the registration entered by the
Director be sustained (Exh. 1-Director of Forestry; Exh. Q, Report of Land
Investigator Serapion Bauzon).
The basis of the claim of the Maxinos is a Spanish title, Exhibit G, a gratuitous
composition title or adjustment title issued on July 30, 1888 to Prudencio Tesalona
pursuant to the Royal Decree of December 26, 1884 for 29 hectares of pasture land
(pasto de animales) allegedly bounded by the Yamay and Campalacio Creeks. *
There is a monstrous and bewildering discrepancy between the area of 29 hectares
and the actual area of the land bounded by the Yamay and Campalacio Creeks
which is 970 hectares as surveyed in 1959 (Exh. D). We have no hesitation in saying
that the composition title erred in stating the boundaries. The trial court grievously
erred in applying to this case the rule that the area comprised in the boundaries
should prevail over that stated in the moniments of title.
Tria averred in his report and testimony that the Yamay and Campalacio Creeks
mentioned in the composition title really refer to the Banguian and Mamba creeks.
This would mean that the actual area claimed by Maxino was only 371 hectares, not
970 (Exh. B-Annulment; 27-30 tsn March 5, 1970).
That would also explain why in the document, Exhibit H, presented by the Maxinos,
mention is made of "paligawang 'Manba' ".
The unreliability or dubiousness of the composition title is evident from the sale
executed by the heirs of Prudencio Tesalona in favor of Tarciana Morales-Maxino
(Exh. F).

Prudencio Tesalona died in 1905. He was survived by his two children Maria and
Lucila. On September 24, 1935 the two heirs, without executing an extrajudicial
settlement of Prudencio's estate and adjudicating the said 29-hectare land to
themselves, executed an " absolute sale" of the land in favor of Tarciana MoralesMaxino (Exh. F), the wife of applicant Prudencio Maxino who was Maria's son and
the grandson of Prudencio Tesalona.
That curious document is not a sale at all. It is a "quit-claim". It is stated therein that
in consideration of P200 the Tesalona sisters "releases and forever quitclaim unto
the said Vendee" the 29-hectare land described in the composition title (Exh. F).
As an indication that the Tesalona "vendors" were not certain that their title was
good, it was stipulated as an "express condition" that the said vendors had no
obligation of warranty for "the premises hereby sold by them, the Vendee hereby
expressly releasing the Vendor(s) from all duty of defending the Vendee against all
persons now claiming, or who may hereafter claim, to have a better right and title
thereto, and assuming all the risk of eviction by superior title" (Exh. F).
It was further stipulated "that in the event that any third person shall succeed in
establishing right or title to said premises or to any portion thereof superior to that of
the grantor and in lawfully dispossessing the Vendee therefrom the Vendee shall not
be entitled to reimbursement from the Vendor of the sum of TWO HUNDRED
PESOS which constitutes the consideration for these presents, or of any part
thereof, or to damages" (Exh. F).
The Maxinos contend that Tesalona's gratuitous adjustment or composition title (as
distinguished from an onerous adjustment title) should prevail in determining the
Identity of the disputed land. This assertion is untenable in the light of the notorious
discrepancy between the area of 29 hectares stated in the title and the 970 hectares
now claimed as the real area (885 hectares for Lot 1 and 84 hectares for Lot 2 which
is not involved in this case).
The most that can be said for Tesalona is that his gratuitous adjustment title granted
him possessory rights over pasture land with an area of 29 hectares but not
ownership over 970 hectares of grazing land. As to the requirements for an
adjustment proceeding under the Royal Decree of December 26, 1884, where the
area in hectares, not the boundaries, is important, see Ventura, Land Registration
and Mortgages, pp. 1719.
The Maxinos have the burden of proving that the title justified the considerable
increase in area. They have not shown that a title for 29 hectares could be a valid
title for 970 hectares. The boundaries and areas stated in Tesalona's tax declarations
reveal that a different land was covered thereby. The title states that the 29-hectare

land was located in Barrio Yamay. In his tax declarations it is stated that the land was
located in Barrio Cambuga, now Anonang.
His 1906 tax declaration is for a parcel of land whose boundaries are not the Yamay
and Campalacio Creeks but it was bounded by the Yamay Creek and the lands of
Maximo Tesalona, Emiterio Tesalona and Felix Aguilles, with an area of 120 hectares
(Exh. I). On the other hand, his 1919 and 1921 tax declarations are for land with the
same boundaries but with an area of 36 hectares only (Exh. I-2 and I-3).
The 1948, 1958 and 1961 tax declarations use the boundaries Campalacio and
Yamay Creeks but the area of the pasture land is 100 hectares only, a far cry from
the 970 hectares as surveyed (Exh. I-4, I-5 and I-6).
It is axiomatic that public forestal land is not registerable. Its inclusion in a title,
whether the title be issued during the Spanish regime or under the Torrens system,
nullifies the title (Director of Lands vs. Reyes, L-27594 and Alinsunurin vs. Director of
Lands, L-28144, November 28, 1975, 68 SCRA 177, 194-5; Director of Lands vs.
Salazar, G. R. No. 50340, December 26, 1984).
Possession of public forestal lands, however long, cannot ripen into private
ownership (Director of Forestry vs. Munoz, L-24796, June 28, 1968, 23 SCRA 1183,
1199; Director of Lands vs. Salazar, supra).
The oral evidence does not bolster the case at all for the applicants. Applicant
Prudencio Maxino testified that the lot he was seeking to register has an area of
more than seventy hectares (8 tsn Jan. 11, 1961). He purchased the lot from his aunt
and mother, as shown in the deed of September 24, 1935, Exhibit F (9).
He testified that the Mamba Creek is also known as Yamay Creek (13). The land was
grazing or pasture land (15). Thirty-one squatters occupied the land (5 tsn March 6,
1961). He did not know that the land had an area of 29 hectares in 1935 when he
bought it (6). He came to know the area of the land when it was surveyed. He was
not present when it was surveyed (6).
Another witness, Fortunato Naadiego, 76, testified that the land was possessed
during the Spanish regime by his stepfather, Pedro Tesalona, the owner, not
Prudencio Tesalona, the holder of the adjustment title (11).
Spanish titles are not indefeasible (Director of Forestry vs. Munoz, supra, p. 1198).
The instant case bears similarities to Ramirez and Bayot de Ramirez vs. Director of
Lands, 60 Phil. 114, where an adjustment title issued in 1896 was held to be void
because it was fraudulent and it covered public forestal land not subject to
registration. As to void composition or patent issued in 1898, see Testagorda vs.
Commanding General, 6 Phil. 573.

Incidentally, it may be mentioned that Presidential Decree No. 892 effective February
16, 1976 discontinued the use of Spanish titles as evidence in land registration
proceedings.
WHEREFORE, the order of Judge Agana, the decision of the Appellate Court and
the decision of Judge Del Rosario dated March 21, 1961 are reversed and set aside.
The application for registration of Lot 1, Psu-175880 is dismissed. No costs.
SO ORDERED.
Concepcion, Jr., Abad Santos, Escolin and Cuevas, JJ., concur.
Makasiar, J., took no part.
G.R. No. L-40399 February 6, 1990
MARCELINO C. AGNE, FELIX ORIANE, AGATON TAGANAS, HILARIO
ESCORPIZO, ISABELO MAURICIO, HEIRS OF ROMAN DAMASO, NAMELY:
JORGE DAMASO and ALEJANDRO DAMASO, HEIRS OF FRANCISCO RAMOS,
NAMELY: ENCARNACION R. LEANO and DOMINGA R. MEDRANO, HEIRS OF
SABINA GELACIO AGAPITO, NAMELY: SERAPIO AGAPITO, and NICOLASA
AGAPITO, FELISA DICCION AGNE, ESTANISLAO GOROSPE, LIBRADO
BADUA, NICOLAS VILLANUEVA, HEIRS OF CARLOS PALADO, NAMELY:
FORTUNATA PALADO and ISABELITA PALADO, PRIMITIVO TAGANAS,
PANFILO SOINGCO, BERNARDO PALATTAO, MARCELINO S. SANTOS and
PAULINO D. AGNE JR. (Minor), represented by his mother FELISA DICCION
AGNE, petitioners,
vs.
THE DIRECTOR OF LANDS, PRESENTACION AGPOON GASCON, JOAQUIN
GASCON and HON. ROSALIO C. SEGUNDO, Presiding Judge, Court of First
Instance of Pangasinan, Branch V, respondents.
G.R. No. L-72255 February 6,1990
MARCELINO C. AGNE, FELIX ORIANE, AGATON TAGANAS (deceased),
represented by FLORENTINO C. TAGANAS, FELISA DICCION AGNE, HILARIO
ESCORPIZO, NICOLAS VILLANUEVA, ISABELO MAURICIO, ESTANISLAO
GOROSPE (deceased), represented by ELIZABETH G. BADUA and SILVINA G.
VALERIO, LIBRADO BADUA, JOSE ALSISTO, SERAPIO AGAPITO, NICOLASA
AGAPITO, JORGE DAMASO, ALEJANDRO DAMASO, ENCARNACION RAMOS,
DOMINGA RAMOS and CARLOS PALADO, petitioners,
vs.
HON. INTERMEDIATE APPELLATE COURT, PRESENTACION AGPOON
GASCON and JOAQUIN GASCON, respondents.

Espiritu Taganas for petitioners.

Adriatico T. Bruno for private respondents.

REGALADO, J.:
Before us are two separate petitions for review on certiorari of the order of the
defunct Court of First Instance of Pangasinan, Branch V, in Civil Case No. 2649,
entitled "Marcelino Agne et al. vs. The Director of Lands, et al.," dismissing the
complaint filed by herein petitioners in said case; 1 and the decision of the then
Intermediate Appellate Court in AC-G.R. CV No. 60388-R, entitled "Presentacion
Agpoon Gascon vs. Marcelino C. Agne et al.," promulgated on January 30, 1985,
affirming in toto the decision of the trial court in favor of herein private respondents
which cases are docketed herein as G.R. No. L-40399 and G.R. No. 72255,
respectively.

These two petitions, arising from the same facts and involving the same parties and
common questions of law, were ordered consolidated in our resolution of August 9,
1989.
As found by respondent court and disclosed by the records, the land subject matter
of this case was originally covered by Free Patent No. 23263 issued on April 17,
1937 in the name of Herminigildo Agpoon. On May 21, 1937, pursuant to the said
patent, the Register of Deeds of Pangasinan issued to said Herminigildo Agpoon
Original Certificate of Title No. 2370. 3 Presentacion Agpoon Gascon inherited the
said parcel of land upon the death of her father, Herminigildo, and was issued
Transfer Certificate of Title No. 32209 on April 6,1960. Respondent Presentacion
declared the said land for taxation purposes in her name under Tax Declaration No.
11506 and taxes were paid thereon in her name. 4
On April 13, 1971, private respondent spouses filed Civil Case No. U-2286 in the
then Court of First Instance of Pangasinan for recovery of possession and damages
against petitioners. Their complaint states that they are the registered owners under
the aforesaid Transfer Certificate of Title No. 32209 of the parcel of land situated in
Barrio Bantog, Asingan, Pangasinan which is now in the possession of petitioners;
that during the Japanese occupation, petitioners, taking advantage of the abnormal
conditions then obtaining, took possession of said land by means of fraud, stealth,
strategy and intimidation; that private respondents repeatedly demanded the
surrender of the physical possession of said property but the latter refused. 5
Petitioners, in answer to said complaint, alleged that the land in question was
formerly a part of the river bed of the Agno-Chico River; that in the year 1920, a big
flood occurred which caused the said river to change its course and abandon its

original bed; that by virtue of the provisions of Article 370 of the Spanish Civil Code
which was then the law in force, petitioners, by operation of law, became the owners
by accession or accretion of the respective aliquot parts of said river bed bordering
their properties; that since 1920, they and their predecessors in interest occupied
and exercised dominion openly and adversely over said portion of the abandoned
river bed in question abutting their respective riparian lands continuously up to the
present to the exclusion of all other persons, particularly Herminigildo Agpoon; that
they have introduced improvements thereon by constructing irrigation canals and
planting trees and agricultural crops thereon 6 and converted the land into a
productive area.
In their joint stipulation of facts, the parties agreed as follows:
1. That the parties admit the identity and area of the land in question, which forms
part of the river bed of the Agno-Chico River, and further admit that the said river bed
was abandoned as a result of a flood in 1920 and opened a new bed. The location
and course of the aforesaid abandoned river bed as well as the relative position of the
lands bordering the same can be gleaned from Cadastral Survey Plan of Asingan,
Pangasinan, Street No. 49 thereof, as approved by the Director of Lands on October
12, 1912, a photostat copy of which is hereto attached and made an integral part
hereof a Annex "A".
2. That the parties admit that the defendants are the riparian owners of the area in
question and further admit that the defendants are in possession thereof but that
each of them is in possession only of an aliquot part of the said area proportionate to
the length of their respective lands. (As amended).
3. That the parties likewise admit that a Free Patent No. 23263 in the name of
Herminigildo Agpoon covering the area in question was issued on April 17, 1937 and
that they admit O.C.T. No. 2370 of the Register of Deeds of Pangasinan covering the
same parcel of land was issued to the same Herminigildo Agpoon on May 21, 1937, a
photostat copy of said O.C.T. is hereto attached as Annex "B".
4. That the parties admit that the property in controversy is now covered by T.C.T. No.
32209 in the name of Presentacion Agpoon Gascon and by Tax Declaration No.
11506 in the name of said Presentacion Agpoon Gascon, a photostat reproduction of
said T.C.T. No. and Tax Declaration are hereto attached and marked as Annexes "C"
and "F", respectively. 7

On March 6, 1974, while the above-mentioned case was still pending, petitioners
filed a complaint against the respondents Director of Lands and spouses Agpoon
with the former Court of First Instance of Pangasinan for annulment of title,
reconveyance of and/or action to clear title to a parcel of land, which action was
docketed as Civil Case No. U-2649. Petitioners alleged in their said complaint that
the land in question, which was formerly a portion of the bed of Agno-Chico river
which was abandoned as a result of the big flood in 1920, belongs to them pursuant
to the provision of Article 370 of the old Civil Code; that it was only on April 13, 1971,
when respondent spouses filed a complaint against them, that they found out that

the said land was granted by the Government to Herminigildo Agpoon under Free
Patent No. 23263, pursuant to which Original Certificate of Title No. 2370 was issued
in the latter's name; and that the said patent and subsequent titles issued pursuant
thereto are null and void since the said land, an abandoned river bed, is of private
ownership and, therefore, cannot be the subject of a public land grant. 8
On June 21, 1974, the trial court rendered a decision in Civil Case No. U-2286, the
dispositive part of which reads as follows:
WHEREFORE, IN VIEW OF ALL THE FOREGOING, the Court renders judgment:
1. Ordering the defendants to surrender to the plaintiffs the physical possession of the
land in question described in paragraph 3 of the amended complaint;
2. Ordering the defendants to pay jointly and severally to the plaintiff the produce of
the land in question in the total sum of P5,000.00 per year from the date of the filing
of the present action at the rate of 6% interest per annum until fully paid;
3. Ordering the defendants to pay jointly and severally the amount of P800.00
representing attorney's fees;
4. And to pay the costs.
SO ORDERED. 9

Not satisfied with said decision, petitioners appealed to respondent court. As earlier
stated, on January 30, 1985 the former Intermediate Appellate Court affirmed in toto
in AC-G.R. CV No. 60388-R the said decision of the court a quo, 10 and with the
denial of petitioner's motion for reconsideration, 11 the case came up to us as G.R.
No. 72255.
On June 24, 1974, the aforesaid Court of First Instance of Pangasinan, acting on the
motion to dismiss filed by respondents Director of Lands and spouses Agpoon,
issued an order dismissing Civil Case No. U-2649 for annulment of title by merely
citing the statement in the case of Antonio, et al. vs. Barroga, et al. 12 that an action
to annul a free patent many years after it had become final and indefeasible states
no cause of action . 13 Petitioners' motion for the reconsideration of said order was
denied on September 11, 1974, 14 hence the recourse to us in G.R. No. L-40399.
In these petitions, petitioners raise the following issues:
1. Whether or not the lower court is justified in dismissing the complaint by simply
invoking the ruling in the aforestated case of Antonio although the facts and
circumstances set forth in the complaint show that the land in question was private
land under Article 370 of the old Civil Code and that the subsequent derivative
certificates of title in question were null and void ab initio because the said land was

not within the authority of the government to dispose of in favor of any party and
must be ordered annulled, cancelled or rescinded; 15
2. Whether or not the trial court and the former Intermediate Appellate Court were
justified in not basing their judgments on the judicial admissions of private
respondents in the stipulation of facts of the parties, since such admissions have the
legal force and effect of precluding private respondents from disputing such
admission;
3. Whether or not respondent court can presume that private respondents or their
predecessor had prior possession of the land in dispute in the light of provisions of
law which oblige them to prove such possession, as well as the stipulated facts and
other facts and circumstances on record showing that private respondents or their
predecessor were not in actual occupancy of the said land, and without appreciating
the evidence put up by petitioners to prove their prior possession thereof;
4. Whether or not respondent court was justified in its application of Section 41 of the
Code of Civil Procedure in favor of private respondents, although the private
respondents did not invoke said law in this case and did not adduce any evidence or
proof that all the essential requisites of acquisitive prescription under the said law
were present in their favor;
5. Whether or not the Government had the right to convey by way of free patent to
any party the land in dispute which belonged to the riparian owners as decreed by
Article 370 of the old Civil Code, the law then in force, and despite the fact that the
patentee herein never occupied the said land during the period prescribed by Act No.
2874; and
6. Whether or not private respondents are guilty of laches for not having attempted to
file suit to recover the land in dispute during an interval of 50 or 30 years. 16
The issues and arguments raised by the proponents in these petitions are well taken.
We agree with petitioners that the lower court erred in ordering the dismissal of Civil
Case No. U-2649. The aforesaid case of Antonio relied upon by the lower court in its
dismissal order is not controlling. In that case, the complaint was dismissed for
failure to state a cause of action, not only because of the delay in the filing of the
complaint but specifically since the ground relied upon by the plaintiff therein, that is,
that the land was previously covered by a titulo real, even if true, would not warrant
the annulment of the free patent and the subsequent original certificate of title issued
to defendant. Thus:
It is true that by filing the application for a free patent Barroga impliedly admitted
either the invalidity or insufficiency of Titulo Real No. 12479 issued in the name of his
predecessor in interest on July 22, 1894, but neither the allegation made in his

answer that his aforesaid predecessor in interest was the absolute owner of the
property covered by said Titulo Real nor his implied admission of the latter's invalidity
or insufficiency are grounds for the annulment of the free patent and original
certificate of title in question. Evidently, it was Barroga's privilege to rely or not to rely
upon his claim of private ownership in favor of his predecessor in interest and of
whatever the latter's Titulo Real was worth. He decided not to rely upon them and to
consider that the property covered by the Titulo Real was still part of the public
domain. Acting accordingly he applied for a free patent and was successful. It must
be borne in mind that the Titulo Real was not an indefeasible title and that its holder
still had to prove that he had possessed the land covered by it without interruption
during a period of ten years by virtue of a good title and in good faith (Royal Decree
of June 25,1880). We may well presume that Barroga felt that he had no sufficient
evidence to prove this, for which reason he decided to acquire the land as part of the
public domain.

In the case at bar, the facts alleged in the complaint, which are deemed
hypothetically admitted upon the filing of the motion to dismiss, constitute a sufficient
cause of action against private respondents. Petitioners in their complaint in Civil
Case No. U-2649 alleged, among others, that the disputed area was formerly an
abandoned river bed formed due to natural causes in 1920; that the riparian owners
of the lands abutting said abandoned river bed were the plaintiffs and/or their
predecessors in interest; that since then and up to the present, they have been
occupying and cultivating aliquot portions of the said land proportionate to the
respective lengths of their riparian lands; that they are the real and lawful owners of
the said land as decreed by Article 370 of the old Civil Code, the law then in force;
that since the said area was a private land, the same could not have been the
subject matter of an application for free patent; and that all these facts were known
to the private respondents and their predecessor in interest.
If the said averments are true, and the factual recitals thereon have been admitted in
the stipulation of facts hereinbefore quoted, then the land in question was and is of
private ownership and, therefore, beyond the jurisdiction of the Director of Lands.
The free patent and subsequent title issued pursuant thereto are null and void. The
indefeasibility and imprescriptibility of a Torrens title issued pursuant to a patent may
be invoked only when the land involved originally formed part of the public domain. If
it was a private land, the patent and certificate of title issued upon the patent are a
nullity. 17
The rule on the incontrovertibility of a certificate of title upon the expiration of one
year, after the entry of the decree, pursuant to the provisions of the Land
Registration Act, does not apply where an action for the cancellation of a patent and
a certificate of title issued pursuant thereto is instituted on the ground that they are
null and void because the Bureau of Lands had no jurisdiction to issue them at all,
the land in question having been withdrawn from the public domain prior to the
subsequent award of the patent and the grant of a certificate of title to another

person. Such an action is different from a review of the decree of title on the ground
of fraud. 18
Although a period of one year has already expired from the time a certificate of title
was issued pursuant to a public grant, said title does not become incontrovertible but
is null and void if the property covered thereby is originally of private ownership, and
an action to annul the same does not prescribe. 19 Moreover, since herein petitioners
are in possession of the land in dispute, an action to quiet title is imprescriptible. 20
Their action for reconveyance which, in effect, seeks to quiet title to property in one's
possession is imprescriptible. Their undisturbed possession for a number of years
gave them a continuing right to seek the aid of a court of equity to determine the
nature of the adverse claims of a third party and the effect on her title. 21 As held in
Caragay-Layno vs. Court of Appeals, et al., 22 an adverse claimant of a registered
land, undisturbed in his possession thereof for a period of more than fifty years and
not knowing that the land he actually occupied had been registered in the name of
another, is not precluded from filing an action for reconveyance which, in effect,
seeks to quiet title to property as against the registered owner who was relying upon
a Torrens title which could have been fraudulently acquired. To such adverse
claimant, the remedy of an action to quiet title is imprescriptible. In actions for
reconveyance of property predicated on the fact that the conveyance complained of
was void ab initio, a claim of prescription of the action would be unavailing. 23
The resolution of the other assigned errors hinges on the issue of who, as between
the riparian owner presently in possession and the registered owner by virtue of a
free patent, has a better right over the abandoned river bed in dispute.
We rule in favor of petitioners.
The claim of ownership of herein petitioners is based on the old Civil Code, the law
then in force, which provides:
The beds of rivers which remain abandoned because the course of the water has
naturally changed belong to the owners of the riparian lands throughout their
respective lengths. If the abandoned bed divided estates belonging to different
owners, the new dividing line shall run at equal distance therefrom. 24

It is thus clear under this provision that once the river bed has been abandoned, the
riparian owners become the owners of the abandoned bed to the extent provided by
this article. The acquisition of ownership is automatic. 25 There need be no act on the
part of the riparian owners to subject the accession to their ownership, as it is subject
thereto ipso jure from the moment the mode of acquisition becomes evident, without
the need of any formal act of acquisition. 26 Such abandoned river bed had fallen to
the private ownership of the owner of the riparian land even without any formal act of
his will and any unauthorized occupant thereof will be considered as a trespasser.
The right in re to the principal is likewise a right in re to the accessory, as it is a mode

of acquisition provided by law, as the result of the right of accretion. Since the
accessory follows the nature of the principal, there need not be any tendency to the
thing or manifestation of the purpose to subject it to our ownership, as it is subject
thereto ipso jure from the moment the mode of acquisition becomes evident. 27
The right of the owner of land to additions thereto by accretion has been said to rest
in the law of nature, and to be analogous to the right of the owner of a tree to its
fruits, and the owner of flocks and herds to their natural increase. 28 Petitioners
herein became owners of aliquot portions of said abandoned river bed as early as
1920, when the Agno River changed its course, without the necessity of any action
or exercise of possession on their part, it being an admitted fact that the land in
dispute, prior to its registration, was an abandoned bed of the Agno River and that
petitioners are the riparian owners of the lands adjoining the said bed.
The failure of herein petitioners to register the accretion in their names and declare it
for purposes of taxation did not divest it of its character as a private property.
Although we take cognizance of the rule that an accretion to registered land is not
automatically registered and therefore not entitled or subject to the protection of
imprescriptibility enjoyed by registered property under the Torrens system. 29 The
said rule is not applicable to this case since the title claimed by private respondents
is not based on acquisitive prescription but is anchored on a public grant from the
Government, which presupposes that it was inceptively a public land. Ownership
over the accession is governed by the Civil Code. Imprescriptibility of registered land
is a concern of the Land Registration Act.
Under the provisions of Act No. 2874 pursuant to which the title of private
respondents' predecessor in interest was issued, the President of the Philippines or
his alter ego, the Director of Lands, has no authority to grant a free patent for land
that has ceased to be a public land and has passed to private ownership, and a title
so issued is null and void. 30 The nullity arises, not from the fraud or deceit, but from
the fact that the land is not under the jurisdiction of the Bureau of Lands. 31 The
jurisdiction of the Director of Lands is limited only to public lands and does not cover
lands privately owned. 32 The purpose of the Legislature in adopting the former Public
Land Act, Act No. 2874, was and is to limit its application to lands of the public
domain, and lands held in private ownership are not included therein and are not
affected in any manner whatsoever thereby. Land held in freehold or fee title, or of
private ownership, constitute no part of the public domain and cannot possibly come
within the purview of said Act No. 2874, inasmuch as the "subject" of such freehold
or private land is not embraced in any manner in the title of the Act 33 and the same
are excluded from the provisions or text thereof.
We reiterate that private ownership of land is not affected by the issuance of a free
patent over the same land because the Public Land Act applies only to lands of the
public domain. 34 Only public land may be disposed of by the Director of Lands. 35

Since as early as 1920, the land in dispute was already under the private ownership
of herein petitioners and no longer a part of the lands of the public domain, the same
could not have been the subject matter of a free patent. The patentee and his
successors in interest acquired no right or title to the said land. Necessarily, Free
Patent No. 23263 issued to Herminigildo Agpoon is null and void and the subsequent
titles issued pursuant thereto cannot become final and indefeasible. Hence, we ruled
in Director of Lands vs. Sisican, et al. 36 that if at the time the free patents were
issued in 1953 the land covered therein were already private property of another
and, therefore, not part of the disposable land of the public domain, then applicants
patentees acquired no right or title to the land.
Now, a certificate of title fraudulently secured is null and void ab initio if the fraud
consisted in misrepresenting that the land is part of the public domain, although it is
not. As earlier stated, the nullity arises, not from the fraud or deceit but, from the fact
that the land is not under the jurisdiction of the Bureau of Lands. 37 Being null and
void, the free patent granted and the subsequent titles produce no legal effects
whatsoever. Quod nullum est, nullum producit effectum. 38
A free patent which purports to convey land to which the Government did not have
any title at the time of its issuance does not vest any title in the patentee as against
the true owner. 39 The Court has previously held that the Land Registration Act and
the Cadastral Act do not give anybody who resorts to the provisions thereof a better
title than what he really and lawfully has.
. . . The Land Registration Act as well as the Cadastral Act protects only the holders
of a title in good faith and does not permit its provisions to be used as a shield for the
commission of fraud, or that one should enrich himself at the expense of another
(Gustilo vs. Maravilla, 48 Phil. 838). The above-stated Acts do not give anybody, who
resorts to the provisions thereof, a better title than he really and lawfully has. If he
happened to obtain it by mistake or to secure, to the prejudice of his neighbor, more
land than he really owns, with or without bad faith on his part, the certificate of title,
which may have been issued to him under the circumstances, may and should be
cancelled or corrected (Legarda and Prieto vs. Saleeby, 31 Phil., 590). . . . 40

We have, therefore, to arrive at the unavoidable conclusion that the title of herein
petitioners over the land in dispute is superior to the title of the registered owner
which is a total nullity. The long and continued possession of petitioners under a valid
claim of title cannot be defeated by the claim of a registered owner whose title is
defective from the beginning.
The quality of conclusiveness of a Torrens title is not available for use to perpetrate
fraud and chicanery. To paraphrase from Angeles vs. Samia, supra, the Land
Registration Act does not create or vest title. It only confirms and records title already
existing and vested. It does not protect a usurper from the true owner. It cannot be a
shield for the commission of fraud. It does not permit one to enrich himself at the
expense of another. Stated elsewise, the Torrens system was not established as a

means for the acquisition of title to private land. It is intended merely to confirm and
register the title which one may already have on the land. Where the applicant
possesses no title or ownership over the parcel of land, he cannot acquire one under
the Torrens system of registration. 41 Resort to the provisions of the Land Registration
Act does not give one a better title than he really and lawfully has. 42 Registration
does not vest title. It is not a mode of acquiring property. It is merely evidence of
such title over a particular property. It does not give the holder any better title than
what he actually has, especially if the registration was done in bad faith. The effect is
that it is as if no registration was made at all. 43
Moreover, the failure of herein private respondents to assert their claim over the
disputed property for almost thirty 30 years constitute laches 44 and bars an action to
recover the same. 45 The registered owners' right to recover possession of the
property and title thereto from petitioners has, by long inaction or inexcusable
neglect, been converted into a stale demand. 46
Considering that petitioners were well within their rights in taking possession of the
lot in question, the findings of respondent court that herein petitioners took
advantage of the infirmities and weakness of the preceding claimant, Herminigildo
Agpoon, in taking possession of said land during the Japanese occupation is neither
tenable in law nor sustained by preponderant evidence in fact.
Where the evidence show that the plaintiff is the true owner of the land subject of the
free patent and title granted to another and that the defendant and his predecessor
in interest were never in possession thereof, the Court, in the exercise of its equity
jurisdiction and without ordering the cancellation of said title issued upon the patent,
may direct the defendant registered owner to reconvey the property to the plaintiff. 47
Further, if the determinative facts are before the Court and it is in a position to finally
resolve the dispute, the expeditious administration of justice will be subserved by
such a resolution and thereby obviate the needless protracted proceedings
consequent to the remand of the case of the trial court. 48 On these considerations,
as well as the fact that these cases have been pending for a long period of time, we
see no need for remanding Civil Case No. 2649 for further proceedings, and we hold
that the facts and the ends of justice in this case require the reconveyance by private
respondents to petitioners of the disputed lot.
WHEREFORE, the assailed decision of respondent court in its AC-G.R. CV No.
60388-R and the questioned order of dismissal of the trial court in its Civil Case No.
2649 are hereby REVERSED and SET ASIDE and judgment is hereby rendered
ORDERING private respondents to reconvey the aforesaid parcel of land to
petitioners.
SO ORDERED.

Melencio-Herrera, Paras, Padilla and Sarmiento, JJ., concur.