REPUBLIC OF THE
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G.R. No. 165114
Present: QUISUMBING, J. Chairperson, * carpio MORALES, VELASCO, JR., and BRION, JJ. Promulgated: August 6, 2008 |
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D E C I S I O N
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BRION, J.: |
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The
State seeks in this Petition for Review on Certiorari[1] to
secure the cancellation of title and reversion of a real property granted to
Mabelle Ravelo under a sales patent.
Title to the property has passed on to parties who now claim that they
are innocent purchasers in good faith; thus their claim cannot be defeated by
any defect in the title of the original grantee.
The
records show the pertinent facts summarized below.
On
The
Department of Environment and Natural Resources (DENR)-Region III
investigated the conflict between the two applications. On
Prior
to the DENR’s action, specifically on February 16, 1989, the Director of Lands
issued Sales Patent No. 12458 covering the same subject lot to respondent
Mabelle B. Ravelo (Ravelo). She was subsequently issued Original
Certificate of Title (OCT) No. P-4517 registered with the Registry of
Deeds of Olongapo City. In effect, the
DENR-III’s Order of
The
On
In a separate development, one
Antonio Chieng filed on
The
respondent-spouses Emmanuel and Perlita Redondo (Redondos), who own and reside in a property adjacent to the subject
lot, subsequently bought the subject lot from Chieng. The parties first signed an agreement for the
purchase of the subject lot on
On
Chieng and the Redondos entered into
another deed of sale in the Redondos’ favor on
In
her Answer, Ravelo insisted that her
application passed through the regular process; that she had been in possession
of the property from the time of her application; and that Mortera was never in
possession of the land.
The
trial court received the government’s evidence ex-parte after Ravelo failed to attend the trial.
On
The Trial Court Decision
On
The Court of Appeals Decision
The
Court of Appeals, on the Redondos’ appeal docketed as CA-G.R. CV No. 60665,[5] reversed
and set aside the trial court’s ruling and declared the Redondos as innocent
purchasers in good faith. The appellate
court also declared the Redondos’ TCT No. T-7261 valid.[6]
The appellate court ruled that the Redondos were buyers in good faith because they and Chieng entered their agreement for the purchase of the subject lot on May 11, 1993 and executed their Deed of Sale on December 20, 1993, prior to the annotation of the notice of lis pendens on March 24, 1994, and prior as well to any awareness by the Redondos of the existence of any flaw in the vendor’s title. It explained that the Redondos’ conduct carried all the badges of propriety and regularity as they verified the regularity of the title to the property with the proper registry of deeds before buying it. Ravelo’s title, even if tainted with fraud, may be the source of a completely legal and valid title in the hands of an innocent purchaser for value.
The Petition and the Parties’ Positions
The petitioner comes to this Court in
the present petition to assail the
Court of Appeals decision and submits the following assigned errors:
I.
the
Court of appeals erred on a question of law in reversing the decision of the
trial court[,]canceling the titles of respondents and reverting [the] subject
land to the mass of public domain[,]on the ground that a fraudulent title may NOT
be the basis of a valid title.
ii.
the
court of appeals erred on a question of law in declaring that RespondentS
Redondo spouses are innocent purchasers in good faith and for value of the property.[7]
The
petitioner argues that the innocent purchaser for value doctrine is
inapplicable because the mother title was procured through fraud. Specifically, Ravelo’s title could not have
been the source of valid titles for Chieng and the Redondos because it was void
in the first place. Ravelo’s failure to
disclose in her patent application that Victoriano Mortera, Jr. was in
possession of the subject lot constituted fraud and misrepresentation -- grounds
for the annulment of her title. If a
public land is acquired by an applicant through fraud and misrepresentation,
the State may institute reversion proceedings even after the lapse of one year.
The
petitioner likewise contends that the Redondos as vendees cannot rely solely on
the face of the title as they did not transact directly with the registered
owner; they transacted with Chieng whose right to the property was based on a
certificate of sale. Thus, the Redondos
merely relied on the certificate of sale instead of examining the title
covering the subject lot. To be deemed a
buyer in good faith and for value, the vendee must at least see the registered
owner’s duplicate copy of the title and must have relied on it in examining the
factual circumstances and in determining if there is any flaw in the
title. Petitioner finally notes that lis pendens was already annotated on the
title at the time the deed of sale was registered.
The
respondent Redondos spouses counter they are not obliged by law to go beyond
the certificate of registration to determine the condition of the
property. Any alleged irregularity in
the issuance of Ravelo’s OCT No. P-4517 cannot affect them since a patent
issued administratively has the force and effect of a Torrens Title under Act
No. 496 (the Land Registration Act) and partakes of the nature of a certificate
of title issued in judicial proceedings.
At the time they purchased the property from Chieng with the execution
of their Agreement dated
Respondent Ravelo failed to file a comment.
Two
issues are effectively submitted to us for resolution, namely:
1.
Whether there is basis
for the cancellation of Ravelo’s original title and the reversion of the
subject lot to the public domain; and
2.
Whether the Redondos
are innocent purchasers in good faith and for value, whose title over the
subject lot that could defeat the petitioner’s cause of action for cancellation
of title and reversion.
The Court’s Ruling
We find the petition meritorious.
The Reversion Issue:
Misrepresentation in the Application
Under
Section 91 of CA No. 141, the “statements
made in application shall be considered essential conditions and parts of any
concession, title or permit issued on the basis of such application, and any
false statement therein or omission of facts altering or changing or modifying
the consideration of the facts set forth in such statements . . . shall ipso facto produce the cancellation
of the concession, title, or permit granted.” This provision is reinforced by jurisprudential
rulings that stress in no uncertain terms the consequences of any fraud or
misrepresentation committed in the course of applying for a land patent.[9]
The record shows that Ravelo, the
grantee, limited herself in her Answer to the position that the application
passed through the regular process; that she had been in possession of the
property from the time of her application; and that Mortera was never in
possession of the land. Thereafter,
Ravelo failed to attend trial and present evidence so that the lower court
received the government’s evidence ex-parte. The
Redondos, who intervened after title to the property passed on to them, did
not touch at all the misrepresentation aspect of the complaint on the theory
that, as purchasers in good faith, the misrepresentation of Ravelo cannot
affect their title.[10] Thus, the presence of fraud or
misrepresentation was practically an issue that the Ravelo and the Redondos
conceded to the government.
This legal situation,
notwithstanding, the Court of Appeals practically disregarded the
misrepresentation issue and followed the Redondos’ argument that the flaw in
Ravelo’s title is immaterial because they were purchasers in good faith of a
titled property. This reasoning brings
to the fore the issues of good faith and of the annotations in the original
certificate of title including the notice of lis pendens that was registered on
The Good Faith Issue
The
Court of Appeals approached the issue of good faith based mainly on its view
that there had been a perfected sale prior to the annotation of the notice of lis pendens. To
the appellate court, the Redondos purchased the subject lot prior to the
annotation of the notice of lis
pendens by the petitioner, and
were thus without knowledge or notice of any flaw in the title. To quote the appellate court:
Wilson Chieng and the
intervenors entered into said agreement prior to the annotation of the notice
of lis pendens on
We find this approach to be
simplistic as it disregards, among others, the nature of a sale of registered
real property, as well as other material and undisputed developments in the
case. For example, while the appellate
court was correct in its general statement about the perfection of a contract
of sale, it did not take into account that the subject matter of the sale was a
registered land to which special
rules apply in addition to the general rules on sales under the Civil Code. Section 51 of Presidential Decree No. 1529
which governs conveyances of registered lands provides:
Sec. 51. Conveyance and other dealings by registered owner. An owner of registered land may convey, mortgage, lease, charge or otherwise deal with the same in accordance with existing laws. He may use such forms of deeds, mortgages, leases or other voluntary instruments as are sufficient in law. But no deed, mortgage, lease or other voluntary instrument, except a will purporting to convey or affect registered land, shall take effect as a conveyance or bind the land, but shall operate only as a contract between the parties and as evidence of authority to the Register of Deeds to make registration.
The act of registration shall be the operative act to convey or affect the land in so far as third persons are concerned, and in all cases under this Decree, the registration shall be made in the office of the Register of Deeds for the province or city where the land lies.
Thus,
bereft of registration, any sale or transaction involving registered land
operates only as a contract between the parties and shall not affect or bind the
registered property.
One material development that
affected the subject lot as a registered
property was the notice of levy that the sheriff caused to be annotated in
Ravelo’s OCT No. P-4517 on March 17, 1993 pursuant to the order of the court in
the collection case filed by Antonio Chieng against Ravelo. This was followed by the Certificate of Sale
that was again annotated in Ravelo’s title on
Another
material development was the annotation of a notice of lis pendens on
Interestingly, the annotation of the
levy in execution and the certificate of sale did not merit any consideration
in the decisions of both the trial and the appellate courts. We, however, consider these developments
material as they embody notices to the whole world of transactions affecting
the registered subject lot; they should be the starting point of any
consideration of the existence of good or bad faith of the parties dealing with
the land. These annotations signify that
Chieng’s purchase of the subject lot in the execution sale constituted a prior
and superior claim in time over the subject lot by any of the dramatis personae in the present
case.
Thus, barring any defect in the sale
itself and assuming that Chieng did not have any prior knowledge, constructive
or otherwise, of any defect in Ravelo’s title, Chieng has a prior claim to the
property that is protected by the fact of registration and by his status as an
innocent buyer in good faith and for value.
The legal protection offered by registration under the
The Redondos came into the picture
when they contracted with Chieng for their purchase of the subject
property. Their inspection of the
records at the Registry of Deeds should have confirmed to them that the subject
lot was a registered land and that Chieng, their seller, was not yet the
registered owner, but one who merely had a sheriff’s Certificate of Sale. Contrary to the lower courts’ reading of the
To complete the whole picture of the
series of developments involved, it was not until September 23, 1994 that the
final Bill of Sale dated June 26, 1994 in favor of Chieng was inscribed as
Entry No. 2419 on OCT No. P-4517. OCT No.
P-4517 was thereafter cancelled and TCT No. T-7209 in Chieng’s name was issued
(carrying the government’s notice of lis
pendens as Entry No. 7219). It was only at this point that Chieng, as registered owner, could have sold or could have done an act
binding the subject lot. A deed of
sale dated
From these perspectives, we cannot
see how the Redondos could have been purchasers in good faith in May 1993 when they were not even purchasers of the
subject lot at that point.
Specifically, it was not until Chieng and the Redondos executed their
The Notice of Lis Pendens
Lis pendens
literally means “a pending suit,” while a notice of lis pendens, inscribed in the certificate of title, is an
announcement to the whole world that the covered property is in litigation,
serving as a warning that one who acquires interest in the property does so at
his own risk and subject to the results of the litigation.[15] This is embodied in Section 76 of
Presidential Decree (P.D.) No. 1529 which provides that no action to recover possession of real estate, or to quiet title
thereto, or to remove clouds upon the title thereof, or for partition, or other
proceedings of any kind in court directly affecting the title to land or the use or occupation thereof or the
buildings thereon, and no judgment, and no proceeding to vacate or reverse any
judgment, shall have any effect upon registered land as against persons other
than the parties thereto, unless a memorandum or notice stating the institution
of such action or proceeding and the court wherein the same is pending, as well
as the date of the institution thereof, together with a reference to the number
of the certificate of title, and an adequate description of the land affected
and the registered owner thereof, shall have been filed and registered. The notice that this provision speaks of –
the notice of lis pendens – is not a
lien or encumbrance on the property, but simply a notice to prospective buyers
or to those dealing with the property that it is under litigation.[16]
As our above discussion shows, the government’s notice of lis
pendens came after the execution sale and thus cannot affect Chieng and the
conveyance to him of the subject lot.
However, the notice affects all transactions relating to OCT No. P-4517
subsequent to its registration date –
Cancellation
and Reversion
Separately
from the misrepresentation that tainted Ravelo’s sales patent, the RTC decision
points to a supervening cause for cancellation and reversion that transpired
after the filing of the petitioner’s complaint on
We disagree with this conclusion as
the applicable law in the sale of land of the public domain for residential
purposes is R.A. No. 730,[18]
as amended by P.D. No. 2004.[19] While R.A. No.730 originally carried the same
prohibition that Sec. 29 of CA No. 141 has, P.D. No. 2004 dated
Conclusion
In
sum, we hold that the Court of Appeals erred in concluding that the Redondos
were buyers in good faith. They
purchased the subject lot from Chieng subject to the government’s notice of lis pendens;
hence, their purchase was at the risk of the outcome of the State’s complaint
for cancellation and reversion which we find to be meritorious. The subject lot must therefore revert back to
the public domain.
WHEREFORE, premises
considered, we GRANT the petition. We REVERSE
the decision of the Court of Appeals in CA-G.R. CV No. 60665 and accordingly declare
void respondent Mabelle B. Ravelo’s Miscellaneous Sales Patent No. 12458
and OCT No. P-4517. We likewise order
the CANCELLATION of Transfer
Certificate of Title No. T-7261 issued in the name of Emmanuel and Perlita
Redondo and the reversion to the mass of the public domain of the
property it covers –
SO ORDERED.
ARTURO D. BRION
Associate Justice
WE
CONCUR:
LEONARDO A. QUISUMBING
Associate Justice Chairperson |
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RENATO C. Associate Justice |
CONCHITA CARPIO MORALES Associate Justice |
PRESBITERO J. VELASCO, JR.
Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision
had been reached in consultation before the case was assigned to the writer of
the opinion of the Court’s Division
LEONARDO
A. QUISUMBING
Associate Justice
Chairperson
CERTIFICATION
REYNATO
S. PUNO
Chief
Justice
*
Designated additional member of the
Second Division per Special Order No. 512 dated
[1] Filed pursuant to Rule 45 of the Revised Rules of Court.
[2] Rollo, pp. 43-48.
[3]
[4] An Act providing for the Sale of Agricultural
Public Lands and Authorizing Land Officers in Every Province of the Bureau of
Lands to Sign Patents or
[5] Dated August 24, 2004, with Associate Justice Arcangelita M. Romilla-Lontok as ponente, and Associate Justice Rodrigo V. Cosico and Associate Justice Danilo B. Pine (both retired), concurring.
[6] Rollo, pp 36-42.
[7]
[8] Respondent-spouses’ Comment; id.,
pp. 67-79.
[9] See Heirs of Carlos Alcaraz v. Republic of the Philippines, et al., G.R. No. 131667, July 28, 2005, 464 SCRA 280; Republic of the Philippines v. Heirs of Felipe Alejaga, Sr., et al., G.R. No. 146030, December 3, 2002, 393 SCRA 361; Republic of the Philippines v. de Guzman, G.R. No. 105630, February 23, 2000, 326 SCRA 267; Baguio v. Republic of the Philippines, G.R. No. 119682, January 21, 1999, 301 SCRA 450.
[10] See RTC Decision, p. 7; rollo, p. 55.
[11] Cruz v. Court of Appeals, G.R. No.
120122,
[12] Prineda
v. Court of Appeals, G.R. No. 114172,
[13] Court of Appeals Decision, p. 5; rollo, p. 40.
[14]
[15] Heirs of Eugenio Lopez, Sr. v. Enriquez, G.R. No. 146262, January 21, 2005, 449 SCRA 173; Legarda v. Court of Appeals, G.R. No. 94457, October 16, 1997, 280 SCRA 642.
[16] People
v. Regional Trial Court of Manila,
G.R. No. 81541,
[17] Section
29. After title has been granted, the
purchaser may not, within a period of ten years from such cultivation or grant,
convey or encumber or dispose said lands or rights thereon to any person,
corporation or association, without prejudice to any right or interest of the
Government in the land; Provided, That
any sale and
encumbrance made in violation of the provisions of this section, shall be null
and void and shall produce the effect of annulling the acquisition and
reverting the property and all rights thereto to the State, and all
payments on the purchase price therefore made to the Government shall be
forfeited (As amended by Rep. Act No.
6516)
[18] 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.
SECTION 1. 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 Lands with the approval of the Secretary of Agriculture and
Natural Resources. It shall be an essential condition of this sale that the
occupants has constructed his house on the land and actually resided therein.
Ten per cent 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.
SECTION 2. Except
in favor of the Government or any of its branches, units, or institutions lands
acquired under the provisions of this Act shall not be subject to encumbrance
or alienation before the patent is issued and for a term of ten years from the
date of the issuance of such patent, nor shall they become liable to the
satisfaction of any debt contracted prior to the expiration of said period. No
transfer or alienation made after the said period of ten years and within
fifteen years from the issuance of such patent except those made by virtue of
the right of succession shall be valid unless when duly authorized by the
Secretary of Agriculture and Natural Resources and the transferee or vendee is
a Filipino citizen. Every conveyance made shall be subject to repurchase by the
original purchaser or his legal heirs within a period of five years from the
date of conveyance.
Any contract or agreement made or executed in
violation of this section shall be void ab initio.
SECTION 3. 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.
SECTION 4. This
Act shall take effect upon its approval.
Approved:
[19] P.D. No. 2004
– Amending Section Two of Republic Act 730 relative to the
WHEREAS, Republic Act No. 730 permits the
sale without public auction of public lands of the Republic of the
WHEREAS, land required thereunder are
subject to onerous restrictions against encumbrance or alienation;
WHEREAS, it is necessary to remove these
onerous restrictions to allow the effective utilization of these lands.
NOW, THEREFORE, I, FERDINAND E. MARCOS,
President of the
SECTION 1. Section
Two of Republic Act Numbered Seven Hundred and Thirty is hereby amended to read
as follows:
"Sec. 2. Lands
acquired under the provisions of this Act shall not be subject to any
restrictions against encumbrance or alienation before and after the issuance of
the patents thereon."
SECTION 2. This Decree shall take effect immediately.
IN WITNESS WHEREOF, I have hereunto set
my hand and caused the seal of the Republic of the
DONE in the City of