REPUBLIC OF THE PHILIPPINES vs.

HEIRS OF FELIPE ALEJAGA SR

G.R. No. 146030 December 3, 2002

FACTS:

On December 28, 1978, [Respondent] Felipe Alejaga, Sr. filed with the District Land Office, Roxas City, a
Free Patent Application covering a parcel of land. It appears that on December 27, 1978, when the
application was executed under oath, Efren L. Recio, Land Inspector, submitted a report of his
investigation and verification of the land to the District Land Office, Bureau of Lands, City of Roxas. On
March 14, 1979, the District Land Officer of Roxas City approved the application and the issuance of [a]
Free Patent to the applicant. On March 16, 1979, the patent was also ordered to be issued and the patent
was forwarded to defendant Register of Deeds, City of Roxas, for registration and issuance of the
corresponding Certificate of Title. Thereafter, an Original Certificate of was issued to [respondent] by
defendant Register of Deeds.

"On April 4, 1979, the heirs of Ignacio Arrobang, through counsel in a letter-complaint requested the
Director of Lands, Manila, for an investigation of the District Land Officer for irregularities in the issuance
of the title of a foreshore land in favor of [respondent]. The Chief, Legal Division, Land Management
Bureau, Manila, recommended to the Director of Lands the appropriate civil proceeding for the
cancellation of Free Patent Title and the corresponding Original Certificate of Title in the name of
[respondent].

In the meantime, [respondent] obtained a NACIDA loan from the defendant Philippine National Bank
(hereinafter referred to as PNB) executed in Cebu City in the amount of P100,000.00 on August 18, 1981.
The loan was secured by a real estate mortgage in favor of defendant PNB.

On April 18, 1990, the government through the Solicitor General instituted an action for
Annulment/Cancellation of Patent and Title and Reversion against [respondent], the PNB of Roxas City
and defendant Register of Deeds of Roxas City covering Free Patent Application.

ISSUE I: Whether or not there was fraud in procuring the patent.

HELD II: Yes. A preponderance of evidence showed manifest fraud in procuring the patent.

First, the issuance of the free patent was not made in accordance with the procedure laid down by
Commonwealth Act No. 141, otherwise known as the Public Land Act. Under Section 91 thereof, an
investigation should be conducted for the purpose of ascertaining whether the material facts set out in the
application are true.

Further, after the filing of the application, the law requires sufficient notice to the municipality and the
barrio where the land is located, in order to give adverse claimants the opportunity to present their
claims. 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.

In this case, however, Felipe Alejaga Sr.s Application for Free Patent was dated and filed on December
28, 1978. On the other hand, the Investigation & Verification Report prepared by Land Inspector Elfren L.
Recio of the District Land Office of the Bureau of Lands of Roxas City was dated December 27, 1978. In
that Report, he stated that he had conducted the "necessary investigation and verification in the presence
of the applicant." Even if we accept this statement as gospel truth, the violation of the rule cannot be
condoned because, obviously, the required notice to adverse claimants was not served.

Evidently, 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. As correctly pointed out by the trial court,
investigation and verification should have been done only after the filing of the application. Hence, it
would have been highly anomalous for Recio to conduct his own investigation and verification on
December 27, 1998, a day before Felipe Alejaga Sr. filed the Application for Free Patent. It must also be
noted that while the Alejagas insist that an investigation was conducted, they do not dispute the fact that it
preceded the filing of the application.

Second, the claim of the Alejagas that an actual investigation was conducted is not sustained by the
Verification & Investigation Report itself, which bears no signature. Their reliance on the presumption of
regularity in the performance of official duty is thus misplaced. Since Recios signature does not appear
on the December 27, 1978 Report, there can be no presumption that an investigation and verification of
the parcel of land was actually conducted.

Based on the foregoing badges of fraud, we sustain petitioners contention that the free patent granted to
Felipe Alejaga Sr. is void. Such fraud is a ground for impugning the validity of the Certificate of Title. The
invalidity of the patent is sufficient basis for nullifying the Certificate of Title issued in consequence

thereof, since the latter is merely evidence of the former. Verily, we must uphold petitioners claim that the
issuance of the Alejagas patent and title was tainted with fraud.

ISSUE II: Indefeasibility of Title

Once a patent is registered and the corresponding certificate of title issued, the land covered by them
ceases to be part of the public domain and becomes private property. Further, the Torrens Title issued
pursuant to the patent becomes indefeasible a year after the issuance of the latter. However, this
indefeasibility of a title does not attach to titles secured by fraud and misrepresentation. Well-settled is the
doctrine that the registration of a patent under the Torrens System does not by itself vest title; it merely
confirms the registrants already existing one. Verily, registration under the Torrens System is not a mode
of acquiring ownership.

Therefore, under Section 101 of Commonwealth Act No. 141, the State -- even after the lapse of one year
-- may still bring an action for the reversion to the public domain of land that has been fraudulently
granted to private individuals. Further, this indefeasibility cannot be a bar to an investigation by the State
as to how the title has been acquired, if the purpose of the investigation is to determine whether fraud has
in fact been committed in securing the title.
In the case before us, the indefeasibility of a certificate of title cannot be invoked by the Alejagas, whose
forebear obtained the title by means of fraud. Public policy demands that those who have done so should
not be allowed to benefit from their misdeed. Thus, prescription and laches will not bar actions filed by the
State to recover its own property acquired through fraud by private individuals. This is settled law.

ISSUE III: Prohibition Against Alienation or Encumbrance

Assuming arguendo that the Alejagas title was validly issued, there is another basis for the cancellation of
the grant and the reversion of the land to the public domain. Section 118 of Commonwealth Act No.
141 proscribes the encumbrance of a parcel of land acquired under a free patent or homestead within five
years from its grant. The prohibition against any alienation or encumbrance of the land grant is a proviso
attached to the approval of every application.

Further, corporations are expressly forbidden by law to have any right or title to, or interest in, lands that
are granted under free or homestead patents; or any improvements thereon. They are forbidden from
enjoying such right, title or interest, 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, charity, or easement of way.

In the case at bar, the Free Patent was approved and issued on March 14, 1979. Corresponding Original
Certificate of Title was issued on the same date. On August 18, 1981, or two (2) years after the grant of
the free patent, Felipe Alejaga Sr. obtained from Respondent PNB a loan. 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, a real estate mortgage was nonetheless constituted on the land

Thus, the mortgage executed by Respondent Felipe Alejaga Sr. falls squarely within the term
encumbrance proscribed by Section 118 of the Public Land Act. A mortgage constitutes a legal limitation
on the estate, and the foreclosure of the mortgage would necessarily result in the auction of the property.

To comply with the condition for the grant of the free patent, within five years from its issuance, Felipe
Alejaga Sr. should not have encumbered the parcel land granted to him. The mortgage he made over the
land violated that condition. Hence, the property must necessarily revert to the public domain, pursuant to
Section 124 of the Public Land Act.