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LTD| MARCH 11,2016 1

G.R. No. 184746

August 8, 2012

SPOUSES
CRISPIN
GALANG
and
CARlOAD
GALANG, Petitioners,
vs.
SPOUSES CONRADO S. REYES AND FE DE KASTRO REYES (As substituted
by their legal heir: Hermenigildo K. Reyes), Respondents.
REYES,*
DECISION
MENDOZA, J.:
This petition for review on certiorari under Rule 45 seeks to reverse and set aside
the April 9, 2008 Decision1 of the Court of Appeals (CA) and its October 6, 2008
Resolution,2 in CA-G.R. CV. No. 85660.
The Facts
On September 4, 1997, spouses Conrado S. Reyes and Fe de Kastro Reyes (the
Reyeses) filed a case for the annulment of Original Certificate of Title (OCT) No. P928 against spouses Crispin and Caridad Galang (the Galangs) with the Regional
Trial Court, Antipolo, Rizal (RTC),docketed as Civil Case No. 97-4560.
In their Complaint,3 the Reyeses alleged that they owned two properties: (1) a
subdivision project known as Ponderosa Heights Subdivision (Ponderosa), and (2)
an adjoining property covered by Transfer Certificate of Title(TCT) No. 185252,
with an area of 1,201 sq.m.; 4 that the properties were separated by the Marigman
Creek, which dried up sometime in 1980 when it changed its course and passed
through Ponderosa; that the Galangs, by employing manipulation and fraud, were
able to obtain a certificate of title over the dried up creek bed from the
Department of Environment and Natural Resources (DENR), through its Provincial
Office (PENRO); that, specifically, the property was denominated as Lot 5735, Cad
29 Ext., Case-1, with an area of 1,573 sq.m. covered by OCT No. P-928; that they
discovered the existence of the certificate of title sometime in March 1997 when
their caretaker, Federico Enteroso (Enteroso), informed them that the subject
property had been fraudulently titled in the names of the Galangs; that in 1984,
prior to such discovery, Enteroso applied for the titling of the property, as he had
been occupying it since 1968 and had built his house on it; that, later, Enteroso
requested them to continue the application because of financial constraints on his
part;5 that they continued the application, but later learned that the application
papers were lost in the Assessor’s Office; 6 and that as the owners of the land

where the new course of water passed, they are entitled to the ownership of the
property to compensate them for the loss of the land being occupied by the new
creek.
The Galangs in their Answer 7 denied that the land subject of the complaint was
part of a creek and countered that OCT No. P-928 was issued to them after they
had complied with the free patent requirements of the DENR, through the PENRO;
that they and their predecessor-in-interest had been in possession, occupation,
cultivation, and ownership of the land for quite some time; that the property
described under TCT No. 185252 belonged to Apolonio Galang, their predecessorin-interest, under OCT No. 3991; that the property was transferred in the names
of the Reyeses through falsified document; 8 that assuming ex gratia
argumenti that the creek had indeed changed its course and passed through
Ponderosa, the Reyeses had already claimed for themselves the portion of the
dried creek which adjoined and co-existed with their property; that Enteroso was
able to occupy a portion of their land by means of force, coercion, machinations,
and stealth in 1981; that such unlawful entry was then the subject of an Accion
Publiciana before the RTC of Antipolo City (Branch 72); and that at the time of the
filing of the Complaint, the matter was still subject of an appeal before the CA,
under CA-G.R. CV No. 53509.
The RTC Decision
In its Decision,9 dated July 16, 2004, the RTC dismissed the complaint for lack of
cause of action and for being an erroneous remedy. The RTC stated that a title
issued upon a patent may be annulled only on grounds of actual and intrinsic
fraud, which much consist of an intentional omission of fact required by law to be
stated in the application or willful statement of a claim against the truth. In the
case before the trial court, the Reyeses presented no evidence of fraud despite
their allegations that the Galangs were not in possession of the property and that
it was part of a dried creek. There being no evidence, these contentions remained
allegations and could not defeat the title of the Galangs. The RTC wrote:
A title issued upon patent may be annulled only on ground of actual fraud.
Such fraud must consist [of] an intentional omission of fact required by law to be
stated in the application or willful statement of a claim against the truth. It must
show some specific facts intended to deceive and deprive another of his right. The
fraud must be actual and intrinsic, not merely constructive or intrinsic; the
evidence thereof must be clear, convincing and more than merely preponderant,
because the proceedings which are being assailed as having been fraudulent are
judicial proceedings, which by law, are presumed to have been fair and regular.
(Libudan v. Palma Gil 45 SCRA 17)

16 where it was written: . Hence. they are the owners of the land. the Reyeses had become the owners of the abandoned creek bed ipso facto. dated April 9. are null and void. The CA found that the Reyeses had proven by preponderance of evidence that the subject land was a portion of the creek bed that was abandoned through the natural change in the course of the water. They have. NOT THE PRIVATE RESPONDENTS. thus. Issues The Galangs present. no other sufficient evidence of fraud was presented by the plaintiffs. remained allegations. being the owners of the properties through which the Marigman creek passed when it changed its course. which had now traversed a portion of Ponderosa. THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN HOLDING THAT PRIVATE RESPONDENTS HAVE [A] CAUSE OF ACTION AGAINST PETITIONERS EVEN WITHOUT EXHAUSTION OF ADMINISTRATIVE REMED[IES]. the Galangs illegally dispossessed them by having the same property registered in their names. The distinction between the two actions was elucidated in the case of Heirs of Kionisala v. A posteriori. P-928 and the reconveyance of the land to the Reyeses. It further opined that because the Reyeses claimed to have acquired the property by right of accretion. As owners of the land occupied by the new course of the creek. HAS THE SOLE AUTHORITY TO FILE [CASES FOR] ANNULMENT OF TITLE INVOLVING PUBLIC LAND. explaining "[t]hat the remedy of persons whose property had been wrongly or erroneously registered in another’s name is not to set aside the decree/title. It was not an action for reversion which requires that the State be the one to initiate the action in order for it to prosper. THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN DEVIATING FROM THE FINDINGS OF FACT OF THE TRIAL COURT AND INTERPRETING ARTICLE 420 IN RELATION TO ARTICLE 461 OF THE CIVIL CODE OF THE PHILIPPINES BY SUBSTITUTING ITS OWN OPINION BASED ON ASSUMPTION OF FACTS. was presumably public land. or if the property has passed into the hands of an innocent purchaser for value.15 In this regard. an action for damages. the CA reversed and set aside the RTC decision and ordered the cancellation of OCT No.14 A reading of the records discloses that these can be synthesized into two principal issues. they should have filed an action for reconveyance. through the Office of the Solicitor General. and (2) if they can. The Court’s Ruling Regarding the first issue. this petition. but an action for reconveyance. 13 but their motion was denied in a Resolution dated October 6. the Galangs are mistaken. the following grounds: THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN NOT RESOLVING THAT THE OFFICE OF THE SOLICITOR GENERAL. a private land. having been acquired through a homestead patent.12 The Galangs moved for a reconsideration. aside from allegations that defendant Galang is not in possession of the property and that the property was part of a dried creek. the Galangs state that the property was formerly a public land. a free patent issued over it was null and void and produced no legal effect whatsoever. Thus. Inasmuch as the subject land had become private." 11 The Court of Appeals Decision In its Decision. which cannot defeat the defendants title. In their Complaint. only the State can institute an action for the annulment of the title covering it. 2008. titled in their names by virtue of Free Patent No. The action filed by the Reyeses seeks the transfer to their names of the title registered in the names of the Galangs. whether they were able to prove their cause of action against the Galangs. the free patent covering the subject land.LTD| MARCH 11. Heirs of Dacut. and second. they posit that the Reyeses do not have the personality and authority to institute any action for annulment of title because such authority is vested in the Republic of the Philippines. and the certificate of title issued pursuant thereto.2016 2 However. 10 The RTC added that the land. to wit: (1) whether the Reyeses can file the present action for annulment of a free patent title and reconveyance. 2008. 045802-96-2847 issued by the DENR. Therefore. as warranting a review of the questioned CA decision. they alleged that: first.

Court of Appeals we ruled – x x x x from the allegations in the complaint x x x private respondents claim ownership of the 2. the same having been issued fraudulently. in this case the title thereof. who in turn acquired the same from a certain Blasito Yacapin and from then on was in possession thereof exclusively. In Heirs of Marciano Nagano v. It would have been entirely different if the action were clearly for reversion. Honorio Dacut. No. P-19819 in the name of the Hrs.A. of Ambrocio Kionisala. What is sought instead is the transfer of the property. In such a case. The allegations to the effect that they were so preceding the issuance of the free patents and the certificates of title. plaintiff discovered that defendants. (1) that the . in which case. In an action for reversion. it is settled that in this kind of action the free patent and the certificate of title are respected as incontrovertible. it would have to be instituted by the Solicitor General pursuant to Section 101 of C. Hence. That the patents issued to defendants are null and void. i. continuously and adversely since 1920. the Department of Environment and Natural Resources not having any jurisdiction on the properties the same not being anymore public but already private property x x x x It is not essential for private respondents to specifically state in the complaint the actual date when they became owners and possessors of Lot 1015 and Lot 1017. as the case may be. the lot in question is apparently beyond the jurisdiction of the Director of the Bureau of Lands and could not be the subject of a Free Patent. the pertinent allegations in the complaint would admit State ownership of the disputed land. which has been wrongfully or erroneously registered in the defendant’s name..250 square meter portion for having possessed it in the concept of an owner. peacefully. publicly. the dismissal of private respondents’ complaint was premature and trial on the merits should have been conducted to thresh out evidentiary matters. Barriga where the plaintiff in his complaint admits that he has no right to demand the cancellation or amendment of the defendant’s title because even if the title were cancelled or amended the ownership of the land embraced therein or of the portion affected by the amendment would revert to the public domain. openly. That plaintiffs became absolute and exclusive owners of the abovesaid parcels of land by virtue of inheritance from their late father.2016 3 An ordinary civil action for declaration of nullity of free patents and certificates of title is not the same as an action for reversion. namely.e. the oversight in not alleging the actual date when private respondents’ ownership thereof accrued reflects a mere deficiency in details which does not amount to a failure to state a cause of action. Clearly. Hence in Gabila v. This claim is an assertion that the lot is private land x x x x Consequently. a cause of action for declaration of nullity of free patent and certificate of title would require allegations of the plaintiff’s ownership of the contested lot prior to the issuance of such free patent and certificate of title as well as the defendant’s fraud or mistake. and No. On the other hand. the nullity arises strictly not from the fraud or deceit but from the fact that the land is beyond the jurisdiction of the Bureau of Lands to bestow and whatever patent or certificate of title obtained therefor is consequently void ab initio. without the knowledge and consent of the former. hence the latter could only have committed fraud in securing them – x x x x That plaintiffs are absolute and exclusive owners and in actual possession and cultivation of two parcels of agricultural lands herein particularly described as follows [technical description of Lot 1017 and Lot 1015 x x x x 3. The remedy for such deficiency would not be a motion to dismiss but a motion for bill of particulars so as to enable the filing of appropriate responsive pleadings. P.20229 in the name of Isabel Kionisala x x x x 5. merely on the basis of the allegations in the complaint. "the Department of Environment and Natural Resources not having any jurisdiction on the properties the same not being anymore public but already private property. If at all. That recently. The difference between them lies in the allegations as to the character of ownership of the realty whose title is sought to be nullified. they are the real parties in interest in light of their allegations that they have always been the owners and possessors of the two (2) parcels of land even prior to the issuance of the documents of title in petitioners’ favor. fraudulently applied for patent the said parcels of land and as a result thereof certificates of titles had been issued to them as evidenced by certificate of title No. With respect to the purported cause of action for reconveyance. 141 x x x x It is obvious that private respondents allege in their complaint all the facts necessary to seek the nullification of the free patents as well as the certificates of title covering Lot 1015 and Lot 1017. All that must be alleged in the complaint are two (2) facts which admitting them to be true would entitle the plaintiff to recover title to the disputed land.LTD| MARCH 11. The real party in interest is not the State but the plaintiff who alleges a pre-existing right of ownership over the parcel of land in question even before the grant of title to the defendant." are unquestionably adequate as a matter of pleading to oust the State of jurisdiction to grant the lots in question to petitioners. in successfully obtaining these documents of title over the parcel of land claimed by plaintiff. defendants not having been and/or in actual possession of the litigated properties and the statement they may have made in their application are false and without basis in fact. adversely and in the concept of owner for more than thirty (30) years x x x x 4. and. we ruled that the action was for reversion and that the only person or entity entitled to relief would be the Director of Lands.

which value shall not exceed the value of the area occupied by the new bed. Worse. thus. Thus. the fact of naturalabandonment of the old course must be shown. ownership of the subject property was automatically vested in them. River beds which are abandoned through the natural change in the course of the watersipso facto belong to the owners whose lands are occupied by the new course in proportion to the area lost. Although the Reyeses have the right to file an action for reconveyance. xxx Notably. private respondents failed to submit during trial any convincing proof of a similar declaration by the government that a portion of the Marigman Creek had already dried-up and that the same is already considered alienable and disposable agricultural land which they could acquire through acquisitive prescription.2016 4 plaintiff was the owner of the land and. (2) the new course of the creek. If indeed a property was the former bed of a creek that changed its course and passed through the property of the claimant. An implied trust arises where the defendant (or in this case petitioners) allegedly acquires the disputed property through mistake or fraud so that he (or they) would be bound to hold and reconvey the property for the benefit of the person who is truly entitled to it. more specifically. Thus. In the face of a Torrens title issued by the government. private respondents clearly assert that they have long been the absolute and exclusive owners and in actual possession and cultivation of Lot 1015 and Lot 1017 and that they were fraudulently deprived of ownership thereof when petitioners obtained free patents and certificates of title in their names. This is evident from the decision of the Regional Trial Court which failed to specify which portion of the land is actually being disputed by the contending parties. These allegations certainly measure up to the requisite statement of facts to constitute an action for reconveyance. In this regard. in this case the Reyeses. These are: (1) the old course of the creek.17 [Emphases supplied] In this case. (2) that the defendant had illegally dispossessed him of the same. the complaint instituted by the Reyeses before the RTC was for the annulment of the title issued to the Galangs. xxx Since the propriety of the remedy taken by private respondents in the trial court and their legal personality to file the aforesaid action depends on whether or not the litigated property in the present case still forms part of the public domain. the claimant. The law in this regard is covered by Article 461 of the Civil Code. and (3) the change of course of the creek from the old location to the new location by naturaloccurrence. the Court agrees with the RTC that the Reyeses failed to adduce substantial evidence to establish their allegation that the Galangs had fraudulently registered the subject property in their names. We rule that private respondents have sufficiently pleaded (in addition to the cause of action for declaration of free patents and certificates of title) an action for reconveyance.18 Before such a conclusion can be reached. what is even uncertain in the present case is the exact location of the subject matter of dispute. Uncorroborated testimonial evidence will not suffice to convince the Court to order the reconveyance of the property to them. This failure did not escape the observation of the Office of the Solicitor General. Thus. the Reyeses failed to adduce indubitable evidence to prove the old course. which is presumed to have been regularly issued. on the second issue. its natural abandonment and the new course. the ownership of the old bed left to dry by the change of course wasautomatically acquired by the claimant. which provides: Art. or had already been converted into a private land.LTD| MARCH 11. it must be proven that the creek indeed changed its course without artificial or man-made intervention. that is. the real party in interest here is not the State but the Reyeses who claim a right of ownership over the property in question even before the issuance of a title in favor of the Galangs. it commented: In the case at bar. who has the jurisdiction over the subject lot. The CA reversed the RTC decision giving the reason that the property was the former bed of Marigman Creek. Neither did private respondents submit any findings or report from the Bureau of Lands or the DENR Regional Executive Director. and not for reversion. it is not clear whether or not the Marigman Creek driedup naturally back in 1980. regarding the nature of change in the course of the creek’s waters. Thus. they have failed to prove their case. the owners of the lands adjoining the old bed shall have the right to acquire the same by paying the value thereof. must prove three key elements by clear and convincing evidence. the identification of the actual portion of the land subject of the controversy becomes necessary and indispensable in deciding the issues herein involved. then. the evidence of the Reyeses was clearly wanting. one which is based on implied trust. In the complaint. However. 461. which changed its course and passed through their Ponderosa property. pursuant to Article 461. .

22 In this case. is that correct? A: I do not know." was prepared by a geodetic engineer without conducting an actual survey on the ground: Q: You mean you do not know the lot subject matter of this case? COUNSEL FOR DEFENDANTS: I am showing to you Exhibit "A-2" which is a plan surveyed for Fe de Kastro Reyes and Jose de Kastro. is that correct? Q: The subject matter of this case now is the adjoining lot of this TCT 185252.21 The conflicting claims here are (1) the title of the Galangs issued by the DENR. the allegations of fraud were never proven. the Court cannot sustain the findings of the CA. Reyes admitted that he was not sure that the property even existed: COUNSEL FOR DEFENDANTS: The subject matter of this document Exhibit I is that.20 At some point.R. that property which at present is titled in the name of Fe de Castro Reyes married to Conrado Reyes. as grounds for cancellation of patent and annulment of title. Civil Case No. sir. the petition 1s GRANTED. and (2) the claim of the Reyeses. Thus. is hereby ordered DISMISSED for lack of merit. There was no evidence at all specifically showing actual fraud or misrepresentation. These factual issues could properly be resolved by the DENR and the Land Management Bureau. Mr. As between these two claims. in CA-G. through the PENRO. -85660. you do not know? A: Yes. WHEREFORE. Q: But based on the certification of the geodetic engineer. fraud and misrepresentation.2016 5 Indeed. 97-4560 of the Regional Trial Court of Anti polo City. Fraud is a question of fact which must be proved. No. Branch 73. based on this certification that the geodetic engineer conducted the survey of this plan based on the technical description without conducting actual survey on the ground? A: Yes.al. who prepared this it appears that this plan was plotted only based on the certification on this plan marked as Exhibit "A-2". Q: Just answer the question. the Court presumes to have been issued by the PENRO in the regular performance of its official duty. a thorough investigation is very imperative in the light of the conflicting factual issues as to the character and actual location of the property in dispute. with mere preponderance of evidence not being adequate. 2008 Decision and the October 6. are hereby REVERSED and SET ASIDE. CV. this Court is inclined to decide in favor of the Galangs who hold a valid and subsisting title to the property which. should never be presumed. Reyes admitted that the plan surveyed for Fe de Castro Reyes and Jose de Castro. after both parties have been fully given the chance to present all their evidence. This plan was prepared by the geodetic engineer without conducting actual survey on the ground. et. is it not? A: I cannot agree to that question. in the absence of evidence to the contrary.of the Court of Appeals. 2008 Resolution . but must be proved by clear and convincing evidence. that the land in question is the former bed of a dried up creek. which have the authority to do so and have the duty to carry out the provisions of the Public Land Act. Q: So. during cross-examination. SO ORDERED . sir.19 [Emphases supplied] A: Yes. based on unsubstantiated testimony.LTD| MARCH 11. marked before the RTC as Exhibit "A-2. Moreover. Conrado S. The April 9. The bottom line here is that. A: I do not know whether it really exists. is it not? A: Yes.

MUERTEGUI. ROSARIO M. 79250. They also paid the real property taxes on the lot for the years 1980 up to 1998. J.R. 2007 Decision2 of the Court of Appeals (CA) which denied the appeal in CA-G. CV No. and 1999. Jr. and Sr. Sabitsana.: A lawyer may not. JR.. Sabitsana’s name. JUANITO F. Sr. 1996 issued in 1985 in Garcia’s name. SABITSANA. gamble on his client's word. petitioner Atty.8 The sale was registered with the Register of Deeds on February 6. 1991. 2013 SPOUSES CLEMENCIO C. (Atty. through a notarized deed of absolute sale. SABITSANA. On October 17. vs. 181359 August 5. 5327. represented by his Attorney-in-Fact DOMINGO A. Sabitsana). DECISION DEL CASTILLO. Alberto Garcia (Garcia) executed an unnotarized Deed of Sale5 in favor of respondent Juanito Muertegui 6 (Juanito) over a 7. Leyte del Norte covered by Tax Declaration (TD) No. and its January 11.2016 6 G. No. took actual possession of the lot and planted thereon coconut and ipil-ipil trees. paid the real estate taxes. Assailed in this Petition for Review on Certiorari 1 are the January 25. Respondent. 1992. He owes his client his undivided loyalty. Almeira. Sabitsana also paid real property taxes in 1992. 10 was issued in Atty. Talahid. (Domingo Sr. for his own personal interest and benefit.) and brother Domingo Jr.LTD| MARCH 11. 1993. Clemencio C.4 Factual Antecedents On September 2. TD No. 2008 Resolution 3 denying petitioner’s Motion for Reconsideration. Biliran.9 TD No. Although Domingo Jr. MUERTEGUI.500-square meter parcel of unregistered land (the lot) located in Dalutan Island. Petitioners.R. 1981. believing it at one time and disbelieving it the next. Atty.7 Juanito’s father Domingo Muertegui. 1996 was cancelled and a new one. . In 1996. and MA. JR. Garcia sold the lot to the Muertegui family lawyer.

the amounts of: a) P30. that he then conducted an investigation with the offices of the municipal and provincial assessors. he found out that the sale was not registered.2016 7 he introduced concrete improvements on the property. that the Muertegui family had bought the lot. b) P10. passed away. in view of the foregoing considerations. which shortly thereafter were destroyed by a typhoon. thus. through his attorney-in-fact Domingo Jr. 5327 in the name of Atty. Atty. Ruling of the Regional Trial Court On April 11. Soledad Corto (Soledad). Atty. expecting that his purchase and prior registration would prevail over that of his clients. which acts thus constitute a cloud over his title.’s death. After conducting an investigation. Clemencio C. Atty. he concluded that the Muerteguis were merely bluffing. that he then took possession of the lot and gathered ipil-ipil for firewood and harvested coconuts and calamansi from the lot. succeeded him in the possession and exercise of rights over the lot. but she could not show the document of sale. was still in the name of Garcia. He asked that the application for registration be held in abeyance until the issue of conflicting ownership has been resolved. They likewise insisted that the Regional Trial Court (RTC) of Naval. that after purchasing the lot.LTD| MARCH 11. B-109712 for quieting of title and preliminary injunction. 1998 addressed to the Department of Environment and Natural Resources’ CENRO/PENRO office in Naval. 1998 letter. Sabitsana was the Muertegui family’s lawyer at the time Garcia sold the lot to Juanito. and litigation expenses be awarded to him. 2002. The Complaint 13 prayed.. Sabitsana testified that before purchasing the lot. that he failed to find any document. attorney’s fees. 2000. his heirs applied for registration and coverage of the lot under the Public Land Act or Commonwealth Act No. entered into actual. that petitioners be ordered to respect and recognize Juanito’s title over the lot. Biliran did not have jurisdiction over the case. he wrote Caseldita in October 1991 to inform her of the sale. hereby declaring the Deed of Sale dated 2 September 1981 as valid and preferred while the Deed of Absolute Sale dated 17 October 1991 and Tax Declaration No.230.000. filed Civil Case No. are VOID and of no legal effect. he was consulted by the family before the sale was executed. Jr. 5327 as void and done in bad faith. that given the foregoing revelations. Petitioner Atty. Sabitsana was the Muertegui family’s lawyer.00 as litigation expenses. and planted the same to coconut and ipil-ipil. the trial court issued its Decision15 which decrees as follows: WHEREFORE. When Domingo Sr. or other proof of the sale by Garcia to Juanito. and that moral and exemplary damages. 141. the . and TD No. SO ORDERED. adverse and continuous possession of the lot. Domingo Sr. Sabitsana. Atty. Sabitsana went on to purchase the same lot and raced to register the sale ahead of the Muerteguis. and that they probably did not want him to buy the property because they were interested in buying it for themselves considering that it was adjacent to a lot which they owned. among others. and c) Costs. Further. represented by his attorney-in-fact Domingo Muertigui. this Court finds in favor of the plaintiff and against the defendants. against herein petitioners Atty. and that after Domingo Sr.000. opposed the application. which involved title to or interest in a parcel of land the assessed value of which is merely P1. and instead discovered that the lot On October 28. that the Sabitsana Deed of Sale. Sabitsana. his wife Caseldita. Biliran. The Provincial Assessor and the Municipal Assessor of Naval are directed to cancel Tax Declaration No. claiming that he was the true owner of the lot. that after the sale to Juanito. In their Answer with Counterclaim. Jr. Rosario. record. and that as such. Jr. Sabitsana. and that the Complaint is barred by prescription and laches.14 petitioners asserted mainly that the sale to Juanito is null and void absent the marital consent of Garcia’s wife. claiming that they bought the lot in bad faith and are exercising acts of possession and ownership over the same. Sabitsana and his wife. Carmen Muertegui Davies (Carmen). he was told by a member of the Muertegui family. that they acquired the property in good faith and for value. 5327 be declared null and void and of no effect. public. With this information in mind.00 as attorney’s fees. On the other hand. the August 24. and that he constructed a rip-rap on the property sometime in 1996 and 1997.00. Juanito. that he then proceeded to purchase the lot from Garcia. Clemencio C. in a letter11 dated August 24.16 The trial court held that petitioners are not buyers in good faith. and was informed beforehand by Carmen that her family had purchased the lot. The evidence and testimonies of the respondent’s witnesses during trial reveal that petitioner Atty. is ordered to pay plaintiff Juanito Muertigui. he knew of the sale to Juanito.

THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE REGIONAL TRIAL COURT DID NOT HAVE JURISDICTION OVER THE CASE IN VIEW OF THE FACT THAT THE ASSESSED VALUE OF THE SUBJECT LAND WAS ONLY P1. Costs against defendants-appellants. but merely voidable. premises considered. that respondent had no cause of action. 17 the trial court declared that even though petitioners were first to register their sale. the CA declared that Juanito. Branch 16. petitioners came to know about the prior sale to the Muerteguis and the latter’s possession of the lot. THE COURT OF APPEALS ERRED IN APPLYING ART. The dispositive portion of the CA Decision reads: Petitioners filed a Motion for Reconsideration 18 but the trial court denied19 the same. WHEREFORE. II. and yet they pushed through with the second sale. the same remains valid. and under the said provision. 8th Judicial Region. petitioner Atty. By virtue of Atty. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE COMPLAINT WAS ALREADY BARRED [BY] LACHES AND THE STATUTE OF LIMITATIONS. preference should be given to the sale in favor of Juanito. the instant appeal is DENIED and the Decision dated October 28. Sabitsana used his legal knowledge to take advantage of his clients by registering his purchase ahead of them. which the trial court correctly held to be just and equitable under the circumstances. possessed the requisite cause of action to institute the suit for quieting of title and obtain judgment in his favor. that respondent was not entitled to an award of attorney’s fees and litigation expenses. They argue that since the assessed value of the lot was a mere P1.00).D. pursuant to Republic Act No. THE COURT OF APPEALS ERRED IN AFFIRMING THE DECISION OF THE REGIONAL TRIAL COURT ORDERING THE PETITIONERS TO PAY ATTORNEY’S FEES AND LITIGATION EXPENSES TO THE RESPONDENT. as he was the first to take possession of the lot in good faith. Finally.450.23 Issues Petitioners now raise the following issues for resolution: I. Applying Article 1544 of the Civil Code. 21 denied the appeal and affirmed the trial court’s Decision in toto.00. Since Garcia and his wife were married prior to the effectivity of the Family Code. that the sale to them is valid. and is entitled as well to an award for attorney’s fees and litigation expenses. 2007 Decision. that the lower court erred in applying Article 1544 of the Civil Code. that the Complaint should have been barred by prescription. It held that even though the lot admittedly was conjugal property. the disposition of conjugal property without the wife’s consent is not void. IV. laches and estoppel. Naval. 1529) CONSIDERING THAT THE SUBJECT LAND WAS UNREGISTERED. Biliran did not have jurisdiction over the case. the CA held that the sale in favor of Juanito still prevails. and the sale to petitioners must be declared null and void for it casts a cloud upon the Muertegui title. and that they should be the ones awarded attorney’s fees and litigation expenses. As against the notarized deed of sale in favor of petitioners. Biliran. The CA. 1544 OF THE CIVIL CODE INSTEAD OF THE PROPERTY REGISTRATION DECREE (P. they did not do so in good faith. And because petitioners’ registration was not in good faith.230. is hereby AFFIRMED. It held that even though petitioners were first to register the sale in their favor. the CA said that the determining factor is petitioners’ good faith. 2002 of the Regional Trial Court. NO.LTD| MARCH 11. Article 173 of the Civil Code 22should apply.2016 8 Muerteguis.00 (AND STATED MARKET VALUE OF ONLY P3. the same was not done in good faith. 7691. The CA added that the fact that the Deed of Sale in favor of Juanito was not notarized could not affect its validity. III. Ruling of the Court of Appeals Petitioners appealed to the CA20 asserting that the sale to Juanito was null and void for lack of marital consent. jurisdiction over the case lies with the first level courts.25 which expanded their exclusive original jurisdiction to include "all civil . but merely voidable. through its questioned January 25. or the lack of it. SO ORDERED.230. Sabitsana’s professional and confidential relationship with the Muertegui family. as the rightful owner of the lot.24 Petitioners’ Arguments Petitioners assert that the RTC of Naval. the absence of Soledad’s signature and consent to the deed did not render the sale to Juanito absolutely null and void. In the absence of a decree annulling the deed of sale in favor of Juanito. Applying Article 1544 of the Civil Code. Far from acting in good faith. for they already knew beforehand of Garcia’s prior sale to Juanito.

in civil actions in Metro Manila. the action is one for declaratory relief. 28 citing three instances which fortify the award in his favor – petitioners’ acts compelled him to litigate and incur expenses to protect his interests.00) exclusive of interest. In this sense. This being the case. respondent filed Civil Case No. their action to quiet title should be deemed barred by laches and estoppel. and the bottom line thereof lies in petitioners’ lack of good faith in entering into the subsequent sale. The Regional Trial Court has jurisdiction over the suit for quieting of title. Both courts seem to have forgotten that the provision does not apply to sales involving unregistered land. real property. Lastly. the deletion of the award of attorney’s fees and litigation expenses in respondent’s favor. and the purchaser is buying the same from the registered owner whose title to the land is clean. such award may not be considered just and equitable under the circumstances. litigation expenses and costs. buyers. pursuant to Section 113 of PD 1529. the purchaser who relies on the clean title of the registered owner is protected if he is a purchaser in good faith for value. damages of whatever kind. It was only in 1998 that Domingo Jr. showed to petitioners the unnotarized deed of sale. the latter did not notify them of their prior purchase of the lot. petitioners insist that from the time they informed the Muerteguis in writing about their purchase of the lot. regardless of the assessed value of the real property in dispute. counters that a suit for quieting of title is one whose subject matter is incapable of pecuniary estimation. On the issue of laches/estoppel. it is clear under the Rules that an action for quieting of title may be instituted in the RTCs. which unfortunately was dismissed based on technicality. According to petitioners. On the question of jurisdiction. and in awarding the same.00) or. the provisions of Presidential Decree (PD) No. on the other hand. which properly falls within the jurisdiction of the RTC pursuant to Rule 63 of the Rules. It must be remembered that the suit for quieting of title was prompted by petitioners’ August 24. nor did respondent interpose any objection to the sale in their favor. or any interest therein where the assessed value of the property or interest therein does not exceed Twenty thousand pesos (P20.27 it cannot affect petitioners who are not parties thereto. Respondent’s Arguments Respondent. Still. respondent echoes the CA’s view that he was persistent in the exercise of his rights over the lot. Article 1544 of the Civil Code does not apply to sales involving unregistered land. having previously filed a complaint for recovery of the lot. respondent finds refuge in Article 2208 of the Civil Code. B-1097 to obtain a declaration of his rights.2016 9 actions which involve title to. claiming that since there was no bad faith on their part. is beyond the coverage of Article 1544 of the Civil Code. 1998 letter-opposition to respondent’s application for registration.LTD| MARCH 11. Thus. He likewise insists that Article 1544 applies to the case because there is a clear case of double sale of the same property to different The Petition must be denied. or in October 1991. an award of attorney’s fees should remain the exception rather than the rule.000. their gross and evident bad faith in refusing to recognize his ownership and possession over the lot. laches and prescription. Our Ruling On the issue of estoppel. attorney’s fees. On the issue of attorney’s fees and litigation expenses. and the justness and equitableness of his case. the dismissal of the Complaint in Civil Case No. wrong in applying Article 1544 of the Civil Code. and instead."26 Petitioners thus conclude that the Decision in Civil Case No. the Deed of Sale in favor of Juanito is valid only as between him and the seller Garcia. Under Rule 63 of the Rules of Court. In such case. B-1097. Petitioners thus pray for the reversal of the questioned CA Decision and Resolution. Petitioners next insist that the lot. a requirement that is absent in this case. where such assessed value does not exceed Fifty thousand pesos (P50. Suffice it to state that the issue of the buyer’s good or bad faith is relevant only where the subject of the sale is registered land. 1529 should apply. petitioners take exception to the award of attorney’s fees and litigation expenses. however. and a declaration that they are the true and rightful owners of the lot. in order to prevent 30 a cloud from being cast upon his application for a title. or possession of. and thus falls within the jurisdiction of the RTC.000. As such. there must have been an express finding of facts and law justifying such award. being unregistered land. this seven-year period of silence and inaction on the Muerteguis’ part should be taken against them and construed as neglect on their part to assert their rights for an unreasonable length of time. B-1097 is null and void for lack of jurisdiction. Both the trial court and the CA are. 29 an action to quiet title to real property or remove clouds therefrom may be brought in the appropriate RTC. 31 .

It also appears that petitioner Atty. The mere registration of a sale in one’s favor does not give him any right over the land if the vendor was no longer the owner of the land. He may not be afforded the excuse that he nonetheless proceeded to buy the lot because he believed or assumed that the Muerteguis were simply bluffing when Carmen told him that they had already bought the same. registration of instruments affecting unregistered lands is ‘without prejudice to a third party with a better right. Palileo 37 that: Under Act No. he had no right to take a position. He owed the Muerteguis his undivided loyalty. nor could it give rise to a right in their favor.’ The aforequoted phrase has been held by this Court to mean that the mere registration of a sale in one’s favor does not give him any right over the land if the vendor was not anymore the owner of the land having previously sold the same to somebody else even if the earlier sale was unrecorded. it is merely the evidence of such title. as the Muertegui family’s lawyer. v. using information disclosed to him in confidence by his client. having previously sold the same to another even if the earlier sale was unrecorded. 3344. Thus. Such is his duty as an attorney. and not for validity or enforceability. 1991. Notarization. and not jeopardize it. Sabitsana was remiss in his duties as counsel to the Muertegui family. The question to be resolved therefore is: who between petitioners and respondent has a better right to the disputed lot? Petitioners’ defense of prescription. Juanito who was the first buyer has a better right to the lot.34 And because it remained valid as between Juanito and Garcia. 32 as amended. this is too convenient an excuse to be believed. Petitioner Atty. and pursuant to his general agency. to evaluate if his representation in any way will impair his loyalty to a client. while the sale to petitioners was made via a notarized document only on October 17. Our land registration laws do not give the holder any better title than what he actually has. Sabitsana is enjoined to "look at any representation situation from the point of view that there are possible conflicts. Sabitsana took advantage of confidential information disclosed to him by his client. which is null and void. The award of attorney’s fees and litigation expenses is proper because of petitioners’ bad faith. 35 Neither could it validate the purchase thereof by petitioners. and further to think in terms of impaired loyalty. using the same to defeat him and beat him to the draw. 33 is only for convenience. Atty."39 Moreover. Respondent has a better right to the lot. Nor can petitioners’ registration of their purchase have any effect on Juanito’s rights. He had the duty to protect the client. believing it at one time and disbelieving it the next. so to speak.38 Petitioner Atty. What applies in this case is Act No. for his ownership thereof had ceased. thinking that his purchase and prior registration would prevail.40 . As the Muertegui family lawyer. laches and estoppel are unavailing since their claim is based on a null and void deed of sale. 1981 via an unnotarized deed of sale. Instead of protecting his client’s interest. gamble on his client’s word. or ten years thereafter. The sale to respondent Juanito was executed on September 2. The Court cannot tolerate this mercenary attitude. he bought the very same lot and immediately caused the registration thereof ahead of his clients. Sabitsana practically preyed on him. He may not. Petitioners’ actual and prior knowledge of the first sale to Juanito makes them purchasers in bad faith. the latter no longer had the right to sell the lot to petitioners. for his own personal interest and benefit. because when it was made. since the sale between him and Garcia remains valid nonetheless. Registration does not vest title. we held in Radiowealth Finance Co. 3344 expressly declares that any registration made shall be without prejudice to a third party with a better right. the seller Garcia was no longer the owner of the lot. 36 Specifically. 3344 applies to sale of unregistered lands.2016 10 Act No. The fact that the Muerteguis failed to interpose any objection to the sale in petitioners’ favor does not change anything. Nemo dat quod non habet. their purchase remains void and ineffective as far as the Muerteguis are concerned. at all hazards and costs even to himself.LTD| MARCH 11. which provides for the system of recording of transactions over unregistered real estate. Instead of advising the Muerteguis to register their purchase as soon as possible to forestall any legal complications that accompany unregistered sales of real property. Act No. He rushed the sale and registration thereof ahead of his client. 3344. or the requirement of a public document under the Civil Code. Atty. The fact that the sale to Juanito was not notarized does not alter anything. Sabitsana was under obligation to safeguard his client's property. that would place him in possible conflict with his duty. he did exactly the opposite: taking advantage of the situation and the information he gathered from his inquiries and investigation. that is. while the subsequent sale to petitioners is null and void.

Sabitsana obtained information from Carmen which he used to his advantage and to the detriment of his client.41 This is underscored by the fact that Atty. SO ORDERED.2016 11 Even granting that Atty. Costs against petitioners. The January 25. . Moreover. premises considered. jeopardized their interests instead of protecting them. the Petition is DENIED. 2008 Resolution of the Court of Appeals in CA-G. petitioner Atty. CV No. it can be seen that petitioners are guilty of bad faith in pursuing the sale of the lot despite being apprised of the prior sale in respondent's favor.LTD| MARCH 11. WHEREFORE. he still owed them his loyalty. the Muerteguis. litigation expenses and costs in favor of the respondent. Thus said. this provides further justification for the award of attorney's fees. 2007 Decision and the January 11. judgment must be rendered in favor of respondent to prevent the petitioners' void sale from casting a cloud upon his valid title.1âwphi1 The termination of attorney-client relation provides no justification for a lawyer to represent an interest adverse to or in conflict with that of the former client on a matter involving confidential information which the lawyer acquired when he was counsel. and by his acts.R. 79250 are AFFIRMED. Over and above the trial court's and the CA's findings. from the foregoing disquisition. Sabitsana has ceased to act as the Muertegui family's lawyer. Sabitsana has exhibited a lack of loyalty toward his clients. The client's confidence once reposed should not be divested by mere expiration of professional employment.

Lynnette Alejaga. [Respondent] Felipe Alejaga. for an investigation of the District Land Officer. P-15 Free Patent No. Thereafter. Legal Division. more or less located at Dumolog.petitioner. SET ASIDE and RECALLED. FELIPE ALEJAGA III. the appealed decision is hereby REVERSED. the heirs of Ignacio Arrobang. The Chief. HEIRS OF FELIPE ALEJAGA SR. MARIA DULLA ALEJAGA. . On March 14. DECISION PANGANIBAN. [respondent] obtained a NACIDA loan under the Cottage Industry Guarantee and Loan Fund by the defendant Philippine National Bank (hereinafter referred to as PNB) executed in Cebu City in the amount of P100.00 on August 18. Land Management Bureau (formerly Bureau of Lands) submitted his Report dated April 17. "On November 17. He was substituted by his wife Roqueta Alejaga and his children. "A". Manila. for irregularities in the issuance of the title of a foreshore land in favor of [respondent]. Roxas City (Exh. Roxas City. City of Roxas. 1990. represented by ROQUETA ALEJAGA. It appears that on December 27. Recio.R. Maria Dulla Alejaga. P-15 in the name of [respondent]. 1979.3899 hectares. EVERETTE CAPUNDAN. Region VI. 1978. and the Regional Office. 1979. Roxas City. assailing the November 15. Iloilo City. Felipe Alejaga. (VI-2) 3358 and the corresponding Original Certificate of Title No. recommended to the Director of Lands appropriate civil proceeding for the cancellation of Free Patent Title No. ROQUETA ALEJAGA. for registration and issuance of the corresponding Certificate of Title. Legal Division. vs. Land Management Bureau. Manila. "On April 18."2 The Facts The factual antecedents of the case are summarized by the CA thus: "On December 28. 1979. Roqueta Alejaga.3899 hectares more or less located at Dumolog. J. x x x filed with the District Land Office. Jr. "In the meantime. through counsel in a letter-complaint requested the Director of Lands. 1989. Exh "9"). represented by the Department of Environment and Natural Resources. City of Roxas. No. 2000 Decision 1 of the Court of Appeals (CA) in CA-GR CV No. the one-year prescriptive period provided in the Public Land Act does not bar the State from asking for the reversion of property acquired through such means. submitted a report of his investigation and verification of the land to the District Land Office. Bureau of Lands. 1978. the government through the Solicitor General instituted an action for Annulment/Cancellation of Patent and Title and Reversion against [respondent]. 146030 December 3.000.LTD| MARCH 11.. On March 16. Mli-06-000020-D. Supervising Special Investigator. namely: Everette Alejaga. Efren L. Jennifer Alejaga and Felipe Alejaga III. (VI-2) 8442 covering a parcel of land identified as Lot 1. Statement of the Case Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court. Isagani Cartagena. AND LYNETTE ALEJAGA. with an area of . the District Land Officer of Roxas City approved the application and the issuance of [a] Free Patent to the applicant. The promissory note of appellant was annotated at the back of the title. The decretal portion of the challenged Decision reads as follows: "WHEREFORE. when the application was executed under oath. Free Patent Application No.2016 12 G. 1981. Original Certificate of Title No.. 1990. respondents. "On April 4. the PNB of Roxas City and defendant Register of Deeds of Roxas City covering Free Patent Application (VI-2) 8442 of the parcel of land with an area of . (VI-2) 3358 was issued to [respondent] by defendant Register of Deeds. 2002 REPUBLIC OF THE PHILIPPINES. Furthermore. Roxas City. the patent was also ordered to be issued and the patent was forwarded to defendant Register of Deeds. FELIPE ALEJAGA JR. Land Inspector.: We reiterate the familiar doctrine that a free patent obtained through fraud or misrepresentation is void. JENNIFER ALEJAGA. THE PHILIPPINE NATIONAL BANK and THE REGISTER OF DEEDS OF ROXAS CITY. The loan was secured by a real estate mortgage in favor of defendant PNB. [respondent] died. while the case is pending hearing. 44568.. Sr.

judgment is rendered declaring that the approval of Free Patent Application No. Roxas City. Philippine National Bank."9 Simply stated. P-15. Register of Deeds. the issues can be summed up into two: (1) the efficacy of the grant of the free patent and (2) the indefeasibility of the Certificate of Title issued in consequence thereof. Roxas City Branch. Roxas City.6 The CA added that petitioner had failed to support its claim that the lot covered by respondent’s free patent and title was foreshore land. "II ‘e) the defendant. to surrender the owner’s duplicate copy of above described Original Certificate of Title No.2016 13 xxx xxx xxx "After hearing.4 The appellate court likewise held that. P-15 in the name of Felipe Alejaga is by means of fraud hence. "III The Honorable Court of Appeals erred in declaring that the action for reversion is unavailing. P-15 and the owner’s duplicate copy of said title surrendered by above stated defendants. the CA ruled that petitioner failed to prove its allegation that respondents had obtained the free patent and the Certificate of Title through fraud and misrepresentation. the [trial] court in its dispositive portion decreed as follows: ‘WHEREFORE. Philippine National Bank. "I ‘c) the land covered thereby as above described is reverted to the mass of the public domain. located at Dumulog.3899 hectares.LTD| MARCH 11. cross-claim is dismissed. 3358 and issuance of Original Certificate of Title No. First Issue: Efficacy of the Grant . Ruling of the Court of Appeals This Court’s Ruling In reversing the RTC. (VI-2) 3358 in the name of Felipe Alejaga.7 Hence. Recio had not conducted an investigation on the free patent application of Felipe Alejaga Sr. the action for reversion The Petition is meritorious. 1. P-15 to the Register of Deeds (now Registries of Land Titles and Deeds). or defendant. to cancel Original Certificate of Title No.5 Further. "Costs against the defendants Heirs of Felipe. assuming there was misrepresentation or fraud as claimed by petitioner. ‘f) defendant’s. the CA brushed aside as hearsay Isagani Cartagena’s testimony that Land Inspector Efren L. (VI-2) 8442 covering Lot No. Sr. Heirs of Felipe Alejaga Sr. Roxas City. Alejaga. more or less. this Petition. Free Patent No.’"3 The Court of Appeals erred in not considering that petitioner has proven the allegations to the Complaint. Mli-06-000020-D with an area of . null and void ab initio and the court orders: should have been brought within one (1) year from the registration of the patent with the Registry of Deeds. ‘d) the defendants. Issues Petitioner raises the following issues for this Court’s consideration: ‘b) the cancellation of Original Certificate of Title No.8 ‘a) the cancellation of the approval of the application No. The Honorable Court of Appeals erred in not finding that the case is already final and executory as against respondent PNB.

13 However. Felipe Alejaga Sr.LTD| MARCH 11. the law requires that it be established by clear and convincing evidence.and the former’s . 1998.2016 14 Petitioner argues that it has proven fraud in the issuance of Respondent Alejagas’ free patent and Certificate of Title. this alleged presumption of regularity -. in order to give adverse claimants the opportunity to present their claims. however.14 We begin our resolution of this issue with the well-settled rule that the party alleging fraud or mistake in a transaction bears the burden of proof. 1993 as alleged by petitioner. petitioner had resorted to misrepresentation or fraud.the latter’s knowledge. the filing of the application and the verification and investigation allegedly conducted by Recio were precipitate and beyond the pale of the Public Land Act.the presence of fraud -. signs of which were20 ignored by the Court of Appeals. Hence. the issuance of the free patent was not made in accordance with the procedure laid down by Commonwealth Act No. 1978. exclusive and undisputed possession of the land for more than 30 years. we must immediately clarify that the records show receipt by Respondent PNB of a copy of the Decision on October 27.17 Thus. showing manifest fraud in procuring the patent. it would have been highly anomalous for Recio to conduct his own investigation and verification on December 27.18 In the case before us. 141. a day before Felipe Alejaga Sr.assuming it ever existed -.is overcome by the evidence presented by petitioner. As a general rule. the bank filed its Notice of Appeal on November 9. the report of Special Investigator Isagani P.21 First. or good or bad faith -. filed the Application for Free Patent. the Alejagas contend that they have acquired a vested right over the parcel of land covered by OCT No. the violation of the rule cannot be condoned because. Cartagena has not been successfully rebutted." Even if we accept this statement as gospel truth. obviously. the law requires sufficient notice to the municipality and the barrio where the land is located. Evidently. an investigation should be conducted for the purpose of ascertaining whether the material facts set out in the application are true.27 As correctly pointed out by the trial court. we must point out that the essential issue raised in this Petition -. Cartagena’s statement on Recio’s alleged admission may be considered as "independently relevant.12 Further. 1993. Recio of the District Land Office of the Bureau of Lands of Roxas City was dated December 27. this Court does not review factual matters. it may be committed in as many different ways. 10 It also avers that Respondent PNB has failed to file a timely Notice of Appeal. actual.30 Their reliance on the presumption of regularity in the performance of official duty31 is thus misplaced. there can be no presumption that an investigation and verification of the parcel of land was actually conducted.28 It must also be noted that while the Alejagas insist that an investigation was conducted. In that Report. 1978.19 This Court agrees with the RTC that in obtaining a free patent over the lot under scrutiny. In that report. the claim of the Alejagas that an actual investigation was conducted is not sustained by the Verification & Investigation Report itself. Third. after the filing of the application. the instant case falls under one of the exceptions. Recio supposedly admitted that he had not actually conducted an investigation and ocular inspection of the parcel of land.29 Second.is factual. Strangely. within the 15-day reglementary period. P-15 by virtue of their proven open. we find that petitioner has adduced a preponderance of evidence before the trial court. Even more important and as will later on be explained. because the findings of the CA conflict with those of the RTC and with the evidence on record. On the other hand.’s Application for Free Patent 25 was dated and filed on December 28. 11 At the outset. respondents do not proffer any explanation why the Verification & Investigation Report was not signed by Recio. 24 Note that this notice and the verification and investigation of the parcel of land are to be conducted after an application for free patent has been filed with the Bureau of Lands. he stated that he had conducted the "necessary investigation and verification in the presence of the applicant." A witness may testify as to the state of mind of another person -. In addition.22 Under Section 91 thereof.23 Further. not on October 3. On the other hand. 15 The circumstances evidencing fraud are as varied as the people who perpetrate it in each case. 1978 Report. belief. In this case. the Investigation & Verification Report26 prepared by Land Inspector Elfren L. investigation and verification should have been done only after the filing of the application. Since Recio’s signature does not appear on the December 27. otherwise known as the Public Land Act.16 It may assume different shapes and forms. the required notice to adverse claimants was not served. they do not dispute the fact that it preceded the filing of the application. which bears no signature.

46 However. corporations are expressly forbidden by law to have any right or title to. regardless of their truth or falsity. if they have not secured the consent of the grantee and the approval of the secretary of the Department of Agriculture and Natural Resources. and if such lands are to be devoted to purposes other than education. hence. the Alejagas claim that. the land covered by them ceases to be part of the public domain and becomes private property. or easement of way. Section 118 of Commonwealth Act No. it merely confirms the registrant’s already existing one.53 Thus. lands that are granted under free or homestead patents. there is another basis for the cancellation of the grant and the reversion of the land to the public domain. 39 Such fraud is a ground for impugning the validity of the Certificate of Title. or interest in.59 .the one-year period for reversion has already lapsed.2016 15 statements may then be regarded as independently relevant without violating the hearsay rule. is void. properly admitted by the trial court. we must uphold petitioner’s claim that the issuance of the Alejagas’ patent and title was tainted with fraud.LTD| MARCH 11.34 On the other hand.57The prohibition against any alienation or encumbrance of the land grant is a proviso attached to the approval of every application. title or interest. 43 On the other hand. 40 The invalidity of the patent is sufficient basis for nullifying the Certificate of Title issued in consequence thereof.may still bring an action for the reversion to the public domain of land that has been fraudulently granted to private individuals. registration under the Torrens System is not a mode of acquiring ownership.otherwise known as the Property Registration Decree -.35 True.50 Further. They are forbidden from enjoying such right.32 Thus.38 In the case before us. pursuant to Section 32 of PD 1529 44 -. under Section 101 of Commonwealth Act No. perceptions and conclusions are not hearsay. for in itself it (a) constitutes a fact in issue 36 or (b) is circumstantially relevant to the existence of such fact. the indefeasibility of a certificate of title cannot be invoked by the Alejagas. prescription and laches will not bar actions filed by the State to recover its own property acquired through fraud by private individuals. they were actually made. We agree with petitioner. Further. 58 Further.41 Verily. Evidence as to the making of such statements is not secondary but primary. this indefeasibility cannot be a bar to an investigation by the State as to how the title has been acquired.42 Second Issue: Indefeasibility of Title Petitioner contends that the State has an imprescriptible right to cause the reversion of a piece of property belonging to the public domain.even after the lapse of one year -. since the latter is merely evidence of the former. the part referring to the statement made by Recio may be considered as independently relevant. the Torrens Title issued pursuant to the patent becomes indefeasible a year after the issuance of the latter. 141 56 proscribes the encumbrance of a parcel of land acquired under a free patent or homestead within five years from its grant. this indefeasibility of a title does not attach to titles secured by fraud and misrepresentation. 49 the State -.37 Therefore.45 Thus. charity. 52 Public policy demands that those who have done so should not be allowed to benefit from their misdeed. his testimony was not hearsay and was. or any improvements thereon. if the purpose of the investigation is to determine whether fraud has in fact been committed in securing the title. 141. because Cartagena took the witness stand and opened himself to crossexamination.48 The doctrine on independently relevant statements holds that conversations communicated to a witness by a third person may be admitted as proof that. once a patent is registered and the corresponding certificate of title issued. the Investigation Report33 he had submitted to the director of the Bureau of Lands constitutes part of his testimony.54 This is settled law. Those portions of the report that consisted of his personal knowledge. whose forebear obtained the title by means of fraud. the State’s Complaint for reversion should be dismissed. 51 Since Cartagena’s testimony was based on the report of the investigation he had conducted.55 Based on the foregoing badges of fraud. we sustain petitioner’s contention that the free patent granted to Felipe Alejaga Sr. Verily. 47 Wellsettled is the doctrine that the registration of a patent under the Torrens System does not by itself vest title. Prohibition Against Alienation or Encumbrance Assuming arguendo that the Alejagas’ title was validly issued.

" 69 To comply with the condition for the grant of the free patent. Gabriel D. by analogy. or other contract made or executed in violation of any of the provisions of sections one hundred and eighteen.70 Hence. your Honor. Any acquisition. pursuant to Section 124 of the Public Land Act. should not have encumbered the parcel land granted to him. On August 18. falls squarely within the term encumbrance proscribed by Section 118 of the Public Land Act. 141.LTD| MARCH 11. Court of Appeals:68 "The foregoing legal provisions clearly proscribe the encumbrance of a parcel of land acquired under a free patent or homestead within five years from the grant of such patent. WHEREFORE. one hundred and twenty-two. P-15. within five years from its issuance. Furthermore. No costs. 1979. your Honor. actually or presumptively. 1993 is REINSTATED. transfer. one hundred and twenty-one.. such encumbrance results in the cancellation of the grant and the reversion of the land to the public domain. 1981. COURT And as such [free] patent it cannot be alienated except [to] the government or within five years from its issuance? A Yes. then Cashier III of respondent bank. COURT Why did you recommend the loan? A Because it is just a mortgage. or permit originally issued. Despite the statement on the title certificate itself that the land granted under the free patent shall be inalienable for five (5) years from the grant. the mortgage executed by Respondent Felipe Alejaga Sr. Talens." COURT Do you conclude that this Original Certificate of Title is a [free] patent? A Yes. Free Patent No. conveyance. The Decision of the RTC of Roxas City (Branch 15) dated October 27. Corresponding Original Certificate of Title No. or two (2) years after the grant of the free patent. title. which we quote: A Yes. . applies to a free patent. and one hundred and twenty-three of this Act shall be unlawful and null and void from its execution and shall produce the effect of annulling and canceling the grant. even admitted that the PNB was aware of such restriction.2016 16 In the case at bar. one hundred and twenty. an encumbrance on a parcel of land acquired through free patent constitutes sufficient ground for the nullification of such grant. as we held in Republic v. a real estate mortgage was nonetheless constituted on the parcel of land covered by OCT No. Felipe Alejaga Sr. the property must necessarily revert to the public domain. alienation. 124. your honor. "SEC. 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.an encumbrance which." Mortgage over a parcel of land acquired through a free patent grant nullifies the award and constitutes a cause for the reversion of the property to the state. Felipe Alejaga Sr. patent.000. 1979."64 Thus. Aranas Jr. your honor. The mortgage he made over the land violated that condition. 65 A mortgage constitutes a legal limitation on the estate. COURT And this [free] patent was granted on March 19. recognized or confirmed. 63 In his testimony. as provided under Commonwealth Act No. Aranas that you inspected the title also when you credit investigated the loan applicant Felipe Alejaga and you have personally examined this? Further. obtained from Respondent PNB a loan 62 in the amount of P100.its lease and mortgage included -. and the foreclosure of the mortgage would necessarily result in the auction of the property. As early as Pascua v. A Yes. We ruled as follows: "COURT You testified Mr. (VI-2) 3358 60 was approved and issued on March 14.66 "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. P-15 61 was issued on the same date. 67 we have explained the rationale for the prohibition against the encumbrance of a homestead -. the Petition is GRANTED and the assailed Decision SET ASIDE. and cause the reversion of the property and its improvements to the State.

LTD| MARCH 11. .2016 17 SO ORDERED.