CONCEPTS OF PUBLIC LAND ACT

Republic v. TAN Properties, Inc.,G.R. No.154953, 26 June 2008

 FACTS:

T.A.N. Properties, Inc. (TAN) filed for an application for Original Registration of Title of a portion
(Lot 10705-B) of Lot 10705. When the trial court called the case for initial hearing, after notice of such
hearing was published in the Official Gazette and People’s Journal Taliba, and was posted on the bulletin
board of the Municipal Building and in the land, there was no oppositor other than the Republic of the
Philippines represented by the Director of Lands (DIR).

During the hearings, TAN presented three witnesses whose testimonies showed that Prospero
Dimayuga (Kabesang Puroy) had peaceful, adverse, open, and continuous possession of the land in the
concept of an owner since 1942. Upon his death, Antonio Dimayuga (Antonio), his son, succeeded him.
On 27 Sept 1960, Antonio executed a Deed of Donation covering the land in favor of one of his children,
Fortunato Dimayuga (Fortunato).

Later, however, Antonio gave Fortunato another piece of land. The land in question was
adjudicated to one of Antonio’s children, Prospero Dimayuga (PORTING). On 8 Aug. 1997, Porting sold
the land to TAN. Summary: Kabesang Puroy -> Antonio -> Porting -> TAN

RTC: In favor of TAN. Republic: Appealed. It alleged that RTC was wrong in granting the
application for registration absent clear evidence that the applicant (TAN) and its predecessors-in-
interest have complied with the period of possession and occupation as required by law. CA: Affirmed
RTC.

ISSUE:

Whether TAN (a private corporation) is qualified to apply for registration of a public land under
the Public Land Act

HELD:

No.The 1987 Constitution (Art. XII, Sec. 3) absolutely prohibits private corporations from
acquiring any kind of alienable land of the public domain. Private corporations are allowed to hold
alienable lands of the public domain only through lease.

In actual practice, the constitutional ban strengthens the constitutional limitation on individuals
from acquiring more than the allowed area of alienable lands of the public domain. Without the
constitutional ban, individuals who already acquired the maximum area of alienable lands of the public
domain could easily set up corporations to acquire more alienable public lands.

The corporation is a convenient vehicle to circumvent the constitutional limitation on acquisition

by individuals of alienable lands of the public domain. To enable a corporation to file for registration of
alienable and disposable land (and only land not more than 12 hectares), the corporation must have
acquired the land when its transferor had already a vested right to a judicial confirmation of title to the
land by virtue of his open, continuous and adverse possession of the land in the concept of an owner for
at least 30 years since 12 June 1945. (In short, the land was already a private property at the time it was
acquired by the corporation).

In this case, TAN acquired the land on 8 August 1997 from Porting, who, along with his
predecessors-in-interest, has not shown to have been, as of that date, in open, continuous, and adverse
possession of the land for 30 years since 12 June 1945. Hence, TAN failed to prove that any portion of
the land was already private land when it acquired it from Porting in 1997.

Lee Hong Hok v. David, 150 Phil 542

FACTS:

This is regarding a piece of land which Aniano David acquired lawful title thereto, pursuant to his
miscellaneous sales application. After approval of his application, the Director of Lands issued an order
of award and issuance of sales patent, covering said lot by virtue of which the Undersecretary of
Agriculture and Natural Resources issued a Miscellaneous Sales Patent. The Register of Deeds then
issued an original certificate of title to David.

During all this time, Lee Hong Kok did not oppose nor file any adverse claim. In this case the land
in question is not a private property as the Director of Lands and the Secretary of Agriculture and
Natural Resources have always sustained the public character thereof for having been formed by
reclamation.

The only remedy therefore, available to the appellants is an action for reconveyance on the
ground of fraud. In this case we do not see any fraud committed by defendant-appellant Aniano David in
applying for the purchase of the land involved through his Miscellaneous Sales Application No. MSA-V-
26747, entered in the records of the Bureau of Lands, because everything was done in the open. The
notices regarding the auction sale of the land were published, the actual sale and award thereof to
Aniano David were not clandestine but open and public official acts of an officer of the Government. The
application was merely a renewal of his deceased wife's application, and the said deceased occupied the
land since 1938.

ISSUE:

Whether Lee Hong Kok may question the government grant

HELD:
No. Only the Government, represented by the Director of Lands or the Secretary of Agriculture
and Natural Resources, can bring an action to cancel a void certificate of title issued pursuant to a void
patent. This was not done by said officers but by private parties like the plaintiffs, who cannot claim that
the patent and title issued for the land involved are void since they are not the registered owners
thereof nor had they been declared as owners in the cadastral proceedings after claiming it as their
private property.

The fact that the grant was made by the government is undisputed. Whether the grant was in
conformity with the law or not is a question which the government may raise, but until it is raised by the
government and set aside, the defendant cannot question it. The legality of the grant is a question
between the grantee and the government.

Petitioners cannot reconcile themselves to the view that respondent David's title is impressed
with the quality of indefeasibility. In thus manifesting such an attitude, they railed to accord deference
to controlling precedents.

HOMESTEAD PATENT

Lopez v. Court of Appeals, G.R. No. 127827, 6 March 2003

FACTS:
Fermin Lopez occupied, possessed, and declared for taxation purposes a parcel of public land
situated in Makatubong, Barrio De la Paz, Antipolo, Rizal. He filed a homestead application over the
land, but his application was not acted upon until his death in 1934.

Following Fermin's death, Hermogenes, being the eldest child, worked and introduced
additional improvements on the land. In 1936, he inquired from the Bureau of Lands the status of his
late father's application for a homestead grant. He was informed that the application remained unacted
upon and suggested that he file a new application. Following the suggestion, Hermogenes filed a
homestead application in his own name. After ascertaining that the land was free from claim of any
private person, the Bureau approved his application.

In 1939, Hermogenes submitted his final proof of compliance with the residency and cultivation
requirements of the law. The land was surveyed and a resulting plan, was approved by the Director of
Lands, who thereafter ordered the issuance of the homestead patent. The patent was later transmitted
to the Register of Deeds of Rizal for transcription and issuance of the corresponding certificate of title in
his name.
Unaware that he has been awarded a homestead patent, Hermogenes executed on February 11,
1956 an Extra-judicial Partition of the disputed land with his brothers — petitioner Eleuterio, Juan, and
Nazario. On September 12, 1958, however, the three executed a Deed of Absolute Sale of their share in
the land in favor of Hermogenes.
The succeeding year, Hermogenes applied with the Land Registration Commission for the
registration of the property in his name. To his surprise, he found that the land has been registered in
the names of Fernando Gorospe, Salvador de Tagle, Rosario de Tagle, Beatriz de Suzuarrequi and
Eduardo Santos, who collectively opposed his application.
 In December 1959, Hermogenes filed a complaint for the annulment of the free patent and title
against these persons. Some of the defendants moved for its dismissal alleging that Hermogenes was
not a real party in interest since he previously sold his right to the land to one Ambrocio Aguilar on July
31, 1959.

The case was dismissed.

Aguilar instituted on November 18, 1976 a new civil action. On April 15, 1982, the lower court
declared Aguilar as the absolute owner of the land and all subsequent certificates of title emanating
therefrom as void ab initio. This decision was affirmed in toto by the Court of Appeals.

ISSUE:

Whether Fermin has complied with all the requirements of the Public Land Act pertaining to a
homestead grant, and is therefore entitled to a patent as a matter of right

HELD:

No. The application of Fermin unfortunately remained unacted upon up to the time of his death.
It was neither approved nor denied by the Director, as the Bureau failed to process it. Hence, he could
not have acquired any vested rights as a homestead applicant over the property because his application
was never acted upon.

Reliance on the cases of Davao Grains, Inc. v. IAC and Balboa v. Farrales by the petitioners is
misplaced. Those two had different factual backdrops. In both Davao Grains, Inc. and Balboa, the
disputed lots were subject of valid applications for public land grants.

The valid applications became our bases for ruling that once an applicant has complied with the
cultivation, residency and other requirements of Act No. 2874, which entitle him to a patent for a
particular tract of land, "he is deemed to have already acquired by operation of law not only a right to a
grant, but a grant of the government for it is not necessary that a certificate of title be issued in order
that said grant may be sanctioned by the courts — an application therefor being sufficient under the
provisions of Section 47 of Act No. 2874."

A valid application is sadly lacking in the case of Fermin. This circumstance prevented him from
acquiring any vested right over the land and fully owning it at the time of his death. Conformably, his
heirs did not inherit any property right from him. 31
Balboa v. Farrales, G.R. No.27059, 14 February1928

FACTS:

In the year 1913, the plaintiff Buenaventura Balboa filled with the Bureau of Lands an
application for homestead, No. 10619, under the provisions of Act No. 926, covering a tract of land
situated in the barrio of Culis, municipality of Hermosa, Province of Bataan, containing 14 hectares, 49
ares and 77 centares.

Five years thereafter, or in 1918, Balboa submitted proof, showing his residence upon, and
cultivation of said land, as well as his compliance with all of the other requirements of section 3 of said
Act No. 926, which final proof was approved by the Director of Lands on February 15, 1918. On July 1,
1919, said Act No. 926 was repealed by Act No. 2874.

On September 10, 1920, or over a year after Act No. 2874 had gone into effect, the homestead
patent for said land, otherwise known as certificate of title No. 91 was issued in favor of Buenaventura
Balboa by the Governor-General of the Philippine Islands.

On August 11, 1924, said Buenaventura Balboa, for and in consideration of the sum of P950,
sold said land to the defendant Cecilio L. Farrales; and on October 16, 1924, the latter secured in his
name transfer certificate of title No. 650 of said land.

On March 6, 1926, the plaintiff commenced the present action for the purpose of having said
sale declared null and void on the ground of lack of consent on his part and fraud on the part of the
defendant, and on the further ground that said sale was contrary to, and in violation of the provisions of
section 116 of Act No. 2874.

The lower court Judge rendered a decision on the basis that the said sale was null and void
since, The sale was done before the lapse of five years upon the issuance of the certificate, which in
accordance with act no. 2874.

ISSUE:
Whether or not Act 2874 and not act 926 shall be applicable to Balboa.

HELD:
No, Since the acquisition of the land and final completion of the requirements was done by
Balboa prior to the repeal of Act 926 by act no. 2874, also upon the submission of the final requirement
by Balboa, he acquire vested right over the patent granted unto him.

The fact the homestead patent or certificate of title No. 91 was issued on September 10, 1920,
after the repeal of Act No. 926, and under the provisions of section 116 of the repealing Act No. 2874,
cannot prejudice the vested right acquired by Balboa under the provisions of the former Act. The
issuance of the certificate of title was a mere ministerial act.

The only prohibition contained in Act No. 926 against alienation of homestead acquired under
said law, appears in section 4 thereof, which reads as follows: "No lands acquired under the provisions
of this chapter shall in any event become liable to the satisfaction of any debt contracted prior to the
issuance of a patent therefor." It follows, therefore that the sale of the land in question by the plaintiff
Balboa to the defendant Farrales does not infringe said prohibition and consequently said sale is valid
and binding, and should be given full force and effect of law.

Section 116 of Act No. 2874, which prohibits the sale of homestead land during the period of
five years subsequent to the issuance of the patent or certificate of title upon which rests the decision of
the court a quo, cannot be invoked to annul the sale in question. Said prohibition, if applied in the
present case, would impair and diminish the vested rights, hence the court reversed the decision of the
lower court.

SALES PATENT

De la Rosa v. Valdez, G.R. No.159101, 27 July 2011

FACTS:

MCDC in substance states that: thru its President, Honor P. Moslares, the subject property
consisting an area of 103 hectares was acquired by virtue of the Deed of Absolute Sale executed on
January 16, 1996. It is further stated that Juan Valdez and Apolinaria Valdez were awarded with Sales
Patent after compliance with corresponding requirements. Plaintiff MCDC and its predecessor-in-
interest Juan Valdez have been in continuous, adverse and open possession of the property in the
concept of owners.

However, plaintiff MCDC has been unlawfully deprived of the possession and enjoyment of the
property because of the continuing acts of dispossession committed and perpetuated by the spouses
Gonzales and Cristeta dela Rosa as well as the other defendants and other occupants who have no
property right at all. As a MCDC has suffered and continues to suffer grave and irreparable damages and
injuries; thus, the writ of preliminary injunction is urgently necessary to prevent further acts of
dispossession of MCDC.

While in the Complaint-in-intervention of Intervenor North East Property Ventures, Inc. it is

substantially alleged that It is the co-owner to the extent of one half or fifty percent (50%) of the subject
parcel of land according to a Deed of Absolute Conveyance/Transfer for valuable services to be
rendered.
 Whereas, in the subsequent complaint-in-intervention, intervenors Valdez spouses state that
they are the absolute owners of the subject parcel of land being the vendees/grantees of Sales Patent
dated September 5, 1983 which was preceded by Sales Application dated July 21, 1968 and Order of
Sales Patent issued on August 31, 1983, and paid. On the other hand, intervenors Malvar spouses allege
that they are the grantees/assignees under the Deed of Absolute Transfer/Conveyance executed on
September 6, 2001 by the intervenor’s spouses Valdez.

RTC granted the joint prayer for the issuance of a writ of preliminary mandatory injunction of
the spouses Valdez and spouses Malvar

On June 10, 2003, the Court of Appeals rendered its Decision dismissing the spouses Dela Rosa’s
Petition for Certiorari and, thus, upholding the RTC Orders.

ISSUE:

Whether RTC committed grave abuse of discretion, amounting to lack or excess of jurisdiction, in issuing
a writ of preliminary mandatory injunction, which placed the spouses Valdez and spouses Malvar in
possession of the subject property during the pendency of Civil Case.

HELD:

There is no reason for the Court to deviate from the foregoing findings of the RTC, as affirmed
by the Court of Appeals. It is worth stressing that the assessment and evaluation of evidence in the
issuance of the writ of preliminary injunction involves findings of facts ordinarily left to the trial court for
its conclusive determination. The Court has time and again ruled that conclusions and findings of fact of
the trial court are entitled to great weight and should not be disturbed on appeal, unless strong and
cogent reasons dictate otherwise. This is because the trial court is in a better position to examine the
real evidence, as well as to observe the demeanor of the witnesses while testifying in the case.

There is likewise no merit in the spouses Dela Rosa’s contention that the RTC Orders dated
December 16, 2002 and February 28, 2003 amounted to a prejudgment of the case, there being no trial
on the merits of Civil Case No. 00-6015 as yet. In Levi Strauss (Phils.) Inc. v. Vogue Traders Clothing
Company, the Court already explicated that:

Indeed, a writ of preliminary injunction is generally based solely on initial and incomplete
evidence adduced by the applicant. The evidence submitted during the hearing of the incident is not
conclusive, for only a "sampling" is needed to give the trial court an idea of the justification for its
issuance pending the decision of the case on the merits. As such, the findings of fact and opinion of a
court when issuing the writ of preliminary injunction are interlocutory in nature.

Moreover, the sole object of a preliminary injunction is to preserve the status quo until the
merits of the case can be heard. Since Section 4 of Rule 58 of the Rules of Civil Procedure gives the trial
courts sufficient discretion to evaluate the conflicting claims in an application for a provisional writ
which often involves a factual determination, the appellate courts generally will not interfere in the
absence of manifest abuse of such discretion. A writ of preliminary injunction would become a
prejudgment of a case only when it grants the main prayer in the complaint or responsive pleading, so
much so that there is nothing left for the trial court to try except merely incidental matters.

SPECIAL PATENTS

Chavez v. PEA, G.R. No.133250, 9 July 2002

FACTS:
President Marcos through a presidential decree created PEA, which was tasked with the
development, improvement, and acquisition, lease, and sale of all kinds of lands.  The then president
also transferred to PEA the foreshore and offshore lands of Manila Bay under the Manila-Cavite Coastal
Road and Reclamation Project.   
 
Thereafter, PEA was granted patent to the reclaimed areas of land and then, years later, PEA
entered into a JVA with AMARI for the development of the Freedom Islands. These two entered into a
joint venture in the absence of any public bidding.
 
Later, a   privilege speech was given by Senator President Maceda denouncing the JVA as the
grandmother of all scams.  An investigation was conducted and it was concluded that the lands that PEA
was conveying to AMARI were land of the public domain; the certificates of title over the
Freedom Islands were void; and the JVA itself was illegal.  This prompted Ramos to form an investigatory
committee on the legality of the JVA.
 
Petitioner now comes and contends that the government stands to lose
billions by the conveyance or sale of the reclaimed areas to AMARI. He also asked for the full disclosure
of the renegotiations happening between the parties.   

ISSUE:

Whether the act of conveying the ownership of the reclaimed lands to public respondent PEA
transformed such lands of the public domain to private lands.

HELD:

In the instant case, the only patent and certificates of title issued are those in the name of PEA, a
wholly government owned corporation performing public as well as proprietary functions. No patent or
certificate of title has been issued to any private party. No one is asking the Director of Lands to cancel
PEA's patent or certificates of title. In fact, the thrust of the instant petition is that PEA's certificates of
title should remain with PEA, and the land covered by these certificates, being alienable lands of the
public domain, should not be sold to a private corporation.

Registration of land under Act No. 496 or PD No. 1529 does not vest in the registrant private or
public ownership of the land. Registration is not a mode of acquiring ownership but is merely evidence
of ownership previously conferred by any of the recognized modes of acquiring ownership. Registration
does not give the registrant a better right than what the registrant had prior to the registration. 102 The
registration of lands of the public domain under the Torrens system, by itself, cannot convert public
lands into private lands.

Jurisprudence holding that upon the grant of the patent or issuance of the certificate of title the
alienable land of the public domain automatically becomes private land cannot apply to government
units and entities like PEA. The transfer of the Freedom Islands to PEA was made subject to the
provisions of CA No. 141 as expressly stated in Special Patent No. 3517 issued by then President Aquino,
to wit:
"NOW, THEREFORE, KNOW YE, that by authority of the Constitution of the Philippines and in
conformity with the provisions of Presidential Decree No. 1084, supplemented by Commonwealth Act
No. 141, as amended, there are hereby granted and conveyed unto the Public Estates Authority the
aforesaid tracts of land containing a total area of one million nine hundred fifteen thousand eight
hundred ninety four (1,915,894) square meters; the technical description of which are hereto attached
and made an integral part hereof."

Thus, the provisions of CA No. 141 apply to the Freedom Islands on matters not covered by PD
No. 1084. Section 60 of CA No. 141 prohibits, "except when authorized by Congress," the sale of
alienable lands of the public domain that are transferred to government units or entities. Section 60 of
CA No. 141 constitutes, under Section 44 of PD No. 1529, a "statutory lien affecting title" of the
registered land even if not annotated on the certificate of title. Alienable lands of the public domain held
by government entities under Section 60 of CA No. 141 remain public lands because they cannot be
alienated or encumbered unless Congress passes a law authorizing their disposition. Congress, however,
cannot authorize the sale to private corporations of reclaimed alienable lands of the public domain
because of the constitutional ban. Only individuals can benefit from such law.

The grant of legislative authority to sell public lands in accordance with Section 60 of CA No. 141
does not automatically convert alienable lands of the public domain into private or patrimonial lands.
The alienable lands of the public domain must be transferred to qualified private parties, or to
government entities not tasked to dispose of public lands, before these lands can become private or
patrimonial lands. Otherwise, the constitutional ban will become illusory if Congress can declare lands of
the public domain as private or patrimonial lands in the hands of a government agency tasked to dispose
of public lands. This will allow private corporations to acquire directly from government agencies
limitless areas of lands which, prior to such law, are concededly public lands.
PROHIBITION ON ALIENATION

Pascua v. Talens, G.R. No.L-348,30 April 1948

FACTS:

Sinforoso Pascua obtained ownership of a homestead of about twenty-two hectares in

Bongabon, Nueva Ecija by Patent No. 32910 dated June 3, 1935, duly registered in the provincial register
of deeds as original certificate of title No. 2736.

On March 23, 1936, Florentino Pascua acquired said homestead by inheritance, a transfer
certificate of title No. 11253 having been issued to him.

On August 2, 1940, Florentino Pascua sold the above-mentioned land to Jose Talens for the
sum of P1,180.00

In 1943, plaintiff demanded reconveyance of the land pursuant to section 117 of Act No. 2874.
The defendant having refused, this action was interposed in the Court of First Instance of Nueva Ecija.

That court found for the plaintiff and rendered appropriate orders.

ISSUE:

Whether section 117 is not applicable to the situation.

HELD:

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 widow or heirs. This construction is clearly deducible from the terms of the statute.

Beniga v. Bugas, G.R. No.L-28918, 29 September1970

FACTS:

Free Patent No. 232966 was issued on 3 May 1963. The patentee, Antonio Mabascog, died on 5
September 1966. Before his death, however, he donated inter vivos, on 22 September 1965, the
controverted portion of the parcel of land to the defendant Rufina Bugas, who, thenceforth, book
possession of the property. 2 At the time of the donation, both donor and donee did not know about the
issuance of the patent.

The deceased Antonio Mabascog was a widower at the time of the donation. 3 He died without
a descendant or ascendant, leaving as his heirs the herein plaintiffs Paciencia Beniga, Anselmo Burlat,
Dionisia Malon, Buenaventura Vale, Agapito Vale, Alfonso Vale, Matea Vale and Manuel Vale, who are
the children of the four deceased sisters of Antonio Mabascog.

Upon the foregoing facts, the court a quo held that the donation was null and void, being in
violation of the 5-year prohibitory period against alienation of lands acquired under free patent,
pursuant to Section 118 of Commonwealth Act 141, as amended by Commonwealth Act 496 and,
therefore, the donation transferred no right to defendant Rufina Bugas, but held her possession and
enjoyment of the property in litigation as made in good faith and, therefore, not accountable for the
fruits that she had gathered therefrom.

Appellant-defendant’s theory is that the 5-year prohibitory period should begin to run from the
date of inscription of the patent in the Registry Book, which was on 13 January 1966, in cases where the
contracting parties had no prior knowledge of the issuance of the patent at the time they executed their
contract; and pursuant to this theory, she avers that the donation of 22 September 1965 does not fall
within the prohibited period, hence, the donation is not invalid.

ISSUE:

Whether the donation is void

HELD:

It proceeds on the unstated assumption that alienations by patentees to persons or entities not
excepted by law are invalidated only if made within the five-year period from and after the issuance of
the patent. This is incorrect, for Section 118 of the Public Land Act
 "SEC. 118. Except in favor of the Government or any of its branches, units, or institutions, or
legally constituted banking corporations, lands acquired under 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 on the land may be mortgaged or pledged to qualified persons, associations, or corporations.

No alienation, transfer, or conveyance of any homestead after five years and before twenty-five
years after issuance of title shall be valid without the approval of the Secretary of Agriculture and
Natural Resources, which approval shall not be denied except on constitutional and legal
grounds."cralaw virtua1aw library

It is clear from the language of the law that the alienation of lands acquired by homestead or
free patent grants is forbidden "from the date of approval of the application" up to and including the
fifth year "from and after the date of the issuance of the patent or grant." Otherwise, the provision
makes no sense, for the prohibition starting from the date of approval of the application would have no
terminal date. Since the 1965 donation in favor of defendant-appellant was clearly within the period of
prohibited alienation, whether the same be deemed to end five years counted from the issuance of the
patent or grant, or five years counted from its registration or recording with the Register of Deeds, said
donation is plainly void.

REVERSION

Eagle Realty Corporation v. Republic, G.R. No.151424, 4 July 2008

FACTS:

Eagle Realty Corporation, a company engaged in the real estate business, bought a parcel of
land from a certain Reyes in 1984 via a Deed of Sale. This Reyes acquired the land from a certain Medina
who earlier acquired the said land via surreptitiously entering a false record in the records of the Land
Registration Commission.

Eventually, the true owners of the said land, the de Leons, discovered that another title was
fraudulently issued to Medina over the same parcel of land. De Leon was able to have the said title
annulled as well as the TCT issued to Eagle Realty by virtue of the Deed of Sale.

ISSUE: 

Whether or not Eagle Realty is an innocent purchaser.

HELD: 

No. Indeed, the general rule is that a purchaser may rely on what appears on the face of a
certificate of title. He may be considered a purchaser in good faith even if he simply examines the latest
certificate of title. An exception to this rule is when there exist important facts that would create
suspicion in an otherwise reasonable man (and spur him) to go beyond the present title and to
investigate those that preceded it. 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 as
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, hence, does not merit the protection of
the law.

As correctly observed by the public respondent, the property covered by the void titles was
transferred from Medina to petitioner with unusual haste. Only 8 months lapsed since OCT No. 129 was
issued on July 7, 1983 until it was transferred to petitioner on February 22, 1984. The property was
transferred to petitioner from Reyes only more than five months after she herself acquired the property.
These circumstances, plus the fact that the subject property is a vast tract of land in a prime location,
should have, at the very least, triggered petitioner’s curiosity.

Moreover, petitioner is a corporation engaged in the real estate business. A corporation

engaged in the buying and selling of real estate is expected to exercise a higher standard of care and
diligence in ascertaining the status and condition of the property subject of its business transaction.
Similar to investment and financing corporations, it cannot simply rely on an examination of a Torrens
certificate to determine what the subject property, looks like as its condition is not apparent in the
document.

Petitioner’s claim against the Assurance Fund must necessarily fail. Its situation does not come
within the ambit of the cases protected by the Assurance Fund. It was not deprived of land in
consequence of bringing it under the operation of the Torrens system through fraud or in consequence
of any error, omission, mistake or misdescription in the certificate of title It was simply a victim of
unscrupulous individuals. More importantly, it is a condition sine qua non that the person who brings
the action for damages against the Assurance Fund be the registered owner and, as the holders of
transfer certificates of title, that they be innocent purchasers in good faith and for value. And we have
already established that petitioner does not qualify as such.