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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 Assessors 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)

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However, aside from allegations that defendant Galang is not in possession of the
property and that the property was part of a dried creek, no other sufficient
evidence of fraud was presented by the plaintiffs. They have, thus, remained
allegations, which cannot defeat the defendants title. 10
The RTC added that the land, having been acquired through a homestead patent,
was presumably public land. Therefore, only the State can institute an action for
the annulment of the title covering it.
It further opined that because the Reyeses claimed to have acquired the property
by right of accretion, they should have filed an action for reconveyance, explaining
"[t]hat the remedy of persons whose property had been wrongly or erroneously
registered in anothers name is not to set aside the decree/title, but an action for
reconveyance, or if the property has passed into the hands of an innocent
purchaser for value, an action for damages." 11
The Court of Appeals Decision
In its Decision, dated April 9, 2008, the CA reversed and set aside the RTC
decision and ordered the cancellation of OCT No. P-928 and the reconveyance of
the land to the Reyeses.
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, which had now traversed a portion of
Ponderosa. As owners of the land occupied by the new course of the creek, the
Reyeses had become the owners of the abandoned creek bed ipso facto. Inasmuch
as the subject land had become private, a free patent issued over it was null and
void and produced no legal effect whatsoever. A posteriori, the free patent
covering the subject land, a private land, and the certificate of title issued
pursuant thereto, are null and void.12
The Galangs moved for a reconsideration, 13 but their motion was denied in a
Resolution dated October 6, 2008.
Hence, this petition.
Issues
The Galangs present, as warranting a review of the questioned CA decision, 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, NOT THE
PRIVATE RESPONDENTS, HAS THE SOLE AUTHORITY TO FILE [CASES
FOR] ANNULMENT OF TITLE INVOLVING PUBLIC LAND.
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 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.14
A reading of the records discloses that these can be synthesized into two principal
issues, to wit: (1) whether the Reyeses can file the present action for annulment
of a free patent title and reconveyance; and (2) if they can, whether they were
able to prove their cause of action against the Galangs.
The Courts Ruling
Regarding the first issue, the Galangs state that the property was formerly a
public land, titled in their names by virtue of Free Patent No. 045802-96-2847
issued by the DENR. Thus, 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, through the Office of the Solicitor
General.15
In this regard, the Galangs are mistaken. The action filed by the Reyeses seeks
the transfer to their names of the title registered in the names of the Galangs. In
their Complaint, they alleged that: first, they are the owners of the land, being the
owners of the properties through which the Marigman creek passed when it
changed its course; and second, the Galangs illegally dispossessed them by
having the same property registered in their names. 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 distinction between the two actions was elucidated in the
case of Heirs of Kionisala v. Heirs of Dacut,16 where it was written:

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An ordinary civil action for declaration of nullity of free patents and

certificates of title is not the same as an action for reversion. The
difference between them lies in the allegations as to the character of ownership of
the realty whose title is sought to be nullified. In an action for reversion, the
pertinent allegations in the complaint would admit State ownership of the
disputed land. Hence in Gabila v. Barriga where the plaintiff in his complaint
admits that he has no right to demand the cancellation or amendment of the
defendants 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, we ruled that the action was for
reversion and that the only person or entity entitled to relief would be the Director
of Lands.
On the other hand, a cause of action for declaration of nullity of free patent
and certificate of title would require allegations of the plaintiffs
ownership of the contested lot prior to the issuance of such free patent
and certificate of title as well as the defendants fraud or mistake; as the
case may be, in successfully obtaining these documents of title over the
parcel of land claimed by plaintiff. In such a case, 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. 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. In Heirs of Marciano Nagano v. Court of Appeals we ruled

x x x x from the allegations in the complaint x x x private respondents claim

ownership of the 2,250 square meter portion for having possessed it in the
concept of an owner, openly, peacefully, publicly, continuously and adversely since
1920. This claim is an assertion that the lot is private land x x x x Consequently,
merely on the basis of the allegations in the complaint, 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. Hence, the dismissal of private
respondents complaint was premature and trial on the merits should have been
conducted to thresh out evidentiary matters. It would have been entirely different
if the action were clearly for reversion, in which case, it would have to be
instituted by the Solicitor General pursuant to Section 101 of C.A. No. 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. Clearly, 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, 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. That plaintiffs
became absolute and exclusive owners of the abovesaid parcels of land by virtue
of inheritance from their late father, Honorio Dacut, who in turn acquired the same
from a certain Blasito Yacapin and from then on was in possession thereof
exclusively, adversely and in the concept of owner for more than thirty (30) years
x x x x 4. That recently, plaintiff discovered that defendants, without the
knowledge and consent of the former, 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. P-19819 in the name of the Hrs. of
Ambrocio Kionisala, and No. P- 20229 in the name of Isabel Kionisala x x x x 5.
That the patents issued to defendants are null and void, the same having been
issued fraudulently, 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, and, 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.
The allegations to the effect that they were so preceding the issuance of the free
patents and the certificates of title, i.e., "the Department of Environment and
Natural Resources not having any jurisdiction on the properties the same not
being anymore public but already private property," are unquestionably adequate
as a matter of pleading to oust the State of jurisdiction to grant the lots in
question to petitioners. If at all, 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. 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.
With respect to the purported cause of action for reconveyance, it is settled that
in this kind of action the free patent and the certificate of title are respected as
incontrovertible. What is sought instead is the transfer of the property, in
this case the title thereof, which has been wrongfully or erroneously
registered in the defendants name. 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, namely, (1) that the

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plaintiff was the owner of the land and, (2) that the defendant had
illegally dispossessed him of the same.
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, more specifically, one which is based on implied trust. 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. In the complaint, 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. These allegations certainly measure up to the requisite statement of
facts to constitute an action for reconveyance.17 [Emphases supplied]
In this case, the complaint instituted by the Reyeses before the RTC was for the
annulment of the title issued to the Galangs, and not for reversion. Thus, 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. Although the Reyeses have the right to file an action for
reconveyance, they have failed to prove their case. Thus, on the second issue, 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.
The CA reversed the RTC decision giving the reason that the property was the
former bed of Marigman Creek, which changed its course and passed through
their Ponderosa property, thus, ownership of the subject property was
automatically vested in them.
The law in this regard is covered by Article 461 of the Civil Code, which provides:
Art. 461. 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. However, the owners of the lands
adjoining the old bed shall have the right to acquire the same by paying the value
thereof, which value shall not exceed the value of the area occupied by the new
bed.
If indeed a property was the former bed of a creek that changed its course and
passed through the property of the claimant, then, pursuant to Article 461, the

ownership of the old bed left to dry by the change of course

wasautomatically acquired by the claimant.18 Before such a conclusion can be
reached, the fact of naturalabandonment of the old course must be shown, that is,
it must be proven that the creek indeed changed its course without artificial or
man-made intervention. Thus, the claimant, in this case the Reyeses, must prove
three key elements by clear and convincing evidence. These are: (1)
the old course of the creek, (2) the new course of the creek, and (3) the change
of course of the creek from the old location to the new location
by naturaloccurrence.
In this regard, the Reyeses failed to adduce indubitable evidence to prove the old
course, its natural abandonment and the new course. In the face of a Torrens title
issued by the government, which is presumed to have been regularly issued, the
evidence of the Reyeses was clearly wanting. 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, it commented:
In the case at bar, it is not clear whether or not the Marigman Creek driedup naturally back in 1980. Neither did private respondents submit any findings
or report from the Bureau of Lands or the DENR Regional Executive Director, who
has the jurisdiction over the subject lot, regarding the nature of change in the
course of the creeks waters. Worse, what is even uncertain in the present
case is the exact location of the subject matter of dispute. 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.
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, or
had already been converted into a private land, the identification of the actual
portion of the land subject of the controversy becomes necessary and
indispensable in deciding the issues herein involved.
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.

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Indeed, 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.
These factual issues could properly be resolved by the DENR and the Land
Management Bureau, which have the authority to do so and have the duty to
carry out the provisions of the Public Land Act, after both parties have been fully
given the chance to present all their evidence.19 [Emphases supplied]

A: Yes.

Moreover, during cross-examination, Conrado S. Reyes admitted that the plan

surveyed for Fe de Castro Reyes and Jose de Castro, marked before the RTC as
Exhibit "A-2," 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. This plan was prepared by the geodetic engineer without
conducting actual survey on the ground, is it not?
A: I cannot agree to that question.
Q: But based on the certification of the geodetic engineer, who prepared this it
appears that this plan was plotted only based on the certification on this plan
marked as Exhibit "A-2", is it not?
A: Yes, sir.
Q: So, 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, sir.20
At some point, Mr. 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, that property which at
present is titled in the name of Fe de Castro Reyes married to Conrado Reyes,
et.al. is that correct?

Q: The subject matter of this case now is the adjoining lot of this TCT 185252, is
that correct?
A: I do not know.

A: I do not know whether it really exists.

Q: Just answer the question, you do not know?
A: Yes.21
The conflicting claims here are (1) the title of the Galangs issued by the DENR,
through the PENRO, and (2) the claim of the Reyeses, based on unsubstantiated
testimony, that the land in question is the former bed of a dried up creek. As
between these two claims, this Court is inclined to decide in favor of the Galangs
who hold a valid and subsisting title to the property which, in the absence of
evidence to the contrary, the Court presumes to have been issued by the PENRO
in the regular performance of its official duty.
The bottom line here is that, fraud and misrepresentation, as grounds for
cancellation of patent and annulment of title, should never be presumed, but must
be proved by clear and convincing evidence, with mere preponderance of evidence
not being adequate. Fraud is a question of fact which must be proved. 22
In this case, the allegations of fraud were never proven. There was no evidence at
all specifically showing actual fraud or misrepresentation. Thus, the Court cannot
sustain the findings of the CA.
WHEREFORE, the petition 1s GRANTED. The April 9, 2008 Decision and the
October 6, 2008 Resolution .of the Court of Appeals, in CA-G.R. CV. No. -85660,
are hereby REVERSED and SET ASIDE. Civil Case No. 97-4560 of the Regional
Trial Court of Anti polo City, Branch 73, is hereby ordered DISMISSED for lack of
merit.
SO ORDERED

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G.R. No. 181359

August 5, 2013

SPOUSES CLEMENCIO C. SABITSANA, JR. and MA. ROSARIO M.

SABITSANA, Petitioners,
vs.
JUANITO F. MUERTEGUI, represented by his Attorney-in-Fact DOMINGO
A. MUERTEGUI, JR., Respondent.
DECISION
DEL CASTILLO, J.:
A lawyer may not, for his own personal interest and benefit, gamble on his client's
word, believing it at one time and disbelieving it the next. He owes his client his
undivided loyalty.
Assailed in this Petition for Review on Certiorari 1 are the January 25, 2007
Decision2 of the Court of Appeals (CA) which denied the appeal in CA-G.R. CV No.
79250, and its January 11, 2008 Resolution 3 denying petitioners Motion for
Reconsideration.4
Factual Antecedents
On September 2, 1981, Alberto Garcia (Garcia) executed an unnotarized Deed of
Sale5 in favor of respondent Juanito Muertegui 6 (Juanito) over a 7,500-square
meter parcel of unregistered land (the lot) located in Dalutan Island, Talahid,
Almeira, Biliran, Leyte del Norte covered by Tax Declaration (TD) No. 1996 issued
in 1985 in Garcias name.7
Juanitos father Domingo Muertegui, Sr. (Domingo Sr.) and brother Domingo Jr.
took actual possession of the lot and planted thereon coconut and ipil-ipil trees.
They also paid the real property taxes on the lot for the years 1980 up to 1998.
On October 17, 1991, Garcia sold the lot to the Muertegui family lawyer, petitioner
Atty. Clemencio C. Sabitsana, Jr. (Atty. Sabitsana), through a notarized deed of
absolute sale.8 The sale was registered with the Register of Deeds on February 6,
1992.9 TD No. 1996 was cancelled and a new one, TD No. 5327, 10 was issued in
Atty. Sabitsanas name. Although Domingo Jr. and Sr. paid the real estate taxes,
Atty. Sabitsana also paid real property taxes in 1992, 1993, and 1999. In 1996,

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he introduced concrete improvements on the property, which shortly thereafter

were destroyed by a typhoon.
When Domingo Sr. passed away, his heirs applied for registration and coverage of
the lot under the Public Land Act or Commonwealth Act No. 141. Atty. Sabitsana,
in a letter11 dated August 24, 1998 addressed to the Department of Environment
and Natural Resources CENRO/PENRO office in Naval, Biliran, opposed the
application, claiming that he was the true owner of the lot. He asked that the
application for registration be held in abeyance until the issue of conflicting
ownership has been resolved.

was still in the name of Garcia; that given the foregoing revelations, he concluded
that the Muerteguis were merely bluffing, 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; that he then
proceeded to purchase the lot from Garcia; that after purchasing the lot, he wrote
Caseldita in October 1991 to inform her of the sale; that he then took possession
of the lot and gathered ipil-ipil for firewood and harvested coconuts and calamansi
from the lot; and that he constructed a rip-rap on the property sometime in 1996
and 1997.
Ruling of the Regional Trial Court

On April 11, 2000, Juanito, through his attorney-in-fact Domingo Jr., filed Civil
Case No. B-109712 for quieting of title and preliminary injunction, against herein
petitioners Atty. Sabitsana and his wife, Rosario, claiming that they bought the lot
in bad faith and are exercising acts of possession and ownership over the same,
which acts thus constitute a cloud over his title. The Complaint 13 prayed, among
others, that the Sabitsana Deed of Sale, the August 24, 1998 letter, and TD No.
5327 be declared null and void and of no effect; that petitioners be ordered to
respect and recognize Juanitos title over the lot; and that moral and exemplary
damages, attorneys fees, and litigation expenses be awarded to him.
In their Answer with Counterclaim,14 petitioners asserted mainly that the sale to
Juanito is null and void absent the marital consent of Garcias wife, Soledad Corto
(Soledad); that they acquired the property in good faith and for value; and that
the Complaint is barred by prescription and laches. They likewise insisted that the
Regional Trial Court (RTC) of Naval, Biliran did not have jurisdiction over the case,
which involved title to or interest in a parcel of land the assessed value of which is
merely P1,230.00.
The evidence and testimonies of the respondents witnesses during trial reveal
that petitioner Atty. Sabitsana was the Muertegui familys lawyer at the time
Garcia sold the lot to Juanito, and that as such, he was consulted by the family
before the sale was executed; that after the sale to Juanito, Domingo Sr. entered
into actual, public, adverse and continuous possession of the lot, and planted the
same to coconut and ipil-ipil; and that after Domingo Sr.s death, his wife
Caseldita, succeeded him in the possession and exercise of rights over the lot.
On the other hand, Atty. Sabitsana testified that before purchasing the lot, he was
told by a member of the Muertegui family, Carmen Muertegui Davies (Carmen),
that the Muertegui family had bought the lot, but she could not show the
document of sale; that he then conducted an investigation with the offices of the
municipal and provincial assessors; that he failed to find any document, record, or
other proof of the sale by Garcia to Juanito, and instead discovered that the lot

On October 28, 2002, the trial court issued its Decision15 which decrees as follows:
WHEREFORE, in view of the foregoing considerations, this Court finds in favor of
the plaintiff and against the defendants, 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. 5327 in the name of Atty. Clemencio C.
Sabitsana, Jr. are VOID and of no legal effect.
The Provincial Assessor and the Municipal Assessor of Naval are directed to cancel
Tax Declaration No. 5327 as void and done in bad faith.
Further, Atty. Clemencio C. Sabitsana, Jr. is ordered to pay plaintiff Juanito
Muertigui, represented by his attorney-in-fact Domingo Muertigui, Jr. the amounts
of:
a) P30,000.00 as attorneys fees;
b) P10,000.00 as litigation expenses; and
c) Costs.
SO ORDERED.16
The trial court held that petitioners are not buyers in good faith. Petitioner Atty.
Sabitsana was the Muertegui familys lawyer, and was informed beforehand by
Carmen that her family had purchased the lot; thus, he knew of the sale to
Juanito. After conducting an investigation, he found out that the sale was not
registered. With this information in mind, Atty. Sabitsana went on to purchase the
same lot and raced to register the sale ahead of the Muerteguis, expecting that his
purchase and prior registration would prevail over that of his clients, the

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Muerteguis. Applying Article 1544 of the Civil Code, 17 the trial court declared that
even though petitioners were first to register their sale, the same was not done in
good faith. And because petitioners registration was not in good faith, preference
should be given to the sale in favor of Juanito, as he was the first to take
possession of the lot in good faith, and the sale to petitioners must be declared
null and void for it casts a cloud upon the Muertegui title.

Finally, the CA declared that Juanito, as the rightful owner of the lot, possessed
the requisite cause of action to institute the suit for quieting of title and obtain
judgment in his favor, and is entitled as well to an award for attorneys fees and
litigation expenses, which the trial court correctly held to be just and equitable
under the circumstances.
The dispositive portion of the CA Decision reads:

Petitioners filed a Motion for Reconsideration 18 but the trial court denied19 the
same.
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; that the sale to them is valid; that the lower court
erred in applying Article 1544 of the Civil Code; that the Complaint should have
been barred by prescription, laches and estoppel; that respondent had no cause of
action; that respondent was not entitled to an award of attorneys fees and
litigation expenses; and that they should be the ones awarded attorneys fees and
litigation expenses.
The CA, through its questioned January 25, 2007 Decision, 21 denied the appeal
and affirmed the trial courts Decision in toto. It held that even though the lot
admittedly was conjugal property, the absence of Soledads signature and consent
to the deed did not render the sale to Juanito absolutely null and void, but merely
voidable. Since Garcia and his wife were married prior to the effectivity of the
Family Code, Article 173 of the Civil Code 22should apply; and under the said
provision, the disposition of conjugal property without the wifes consent is not
void, but merely voidable. In the absence of a decree annulling the deed of sale in
favor of Juanito, the same remains valid.
The CA added that the fact that the Deed of Sale in favor of Juanito was not
notarized could not affect its validity. As against the notarized deed of sale in favor
of petitioners, the CA held that the sale in favor of Juanito still prevails. Applying
Article 1544 of the Civil Code, the CA said that the determining factor is
petitioners good faith, or the lack of it. It held that even though petitioners were
first to register the sale in their favor, they did not do so in good faith, for they
already knew beforehand of Garcias prior sale to Juanito. By virtue of Atty.
Sabitsanas professional and confidential relationship with the Muertegui family,
petitioners came to know about the prior sale to the Muerteguis and the latters
possession of the lot, and yet they pushed through with the second sale. Far from
acting in good faith, petitioner Atty. Sabitsana used his legal knowledge to take
advantage of his clients by registering his purchase ahead of them.

WHEREFORE, premises considered, the instant appeal is DENIED and the Decision
dated October 28, 2002 of the Regional Trial Court, 8th Judicial Region, Branch 16,
Naval, Biliran, is hereby AFFIRMED. Costs against defendants-appellants.
SO ORDERED.23
Issues
Petitioners now raise the following issues for resolution:
I. 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 P1,230.00 (AND STATED MARKET VALUE OF ONLY P3,450.00).
II. THE COURT OF APPEALS ERRED IN APPLYING ART. 1544 OF THE CIVIL
CODE INSTEAD OF THE PROPERTY REGISTRATION DECREE (P.D. NO.
1529) CONSIDERING THAT THE SUBJECT LAND WAS UNREGISTERED.
III. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE
COMPLAINT WAS ALREADY BARRED [BY] LACHES AND THE STATUTE OF
LIMITATIONS.
IV. THE COURT OF APPEALS ERRED IN AFFIRMING THE DECISION OF THE
REGIONAL TRIAL COURT ORDERING THE PETITIONERS TO PAY
ATTORNEYS FEES AND LITIGATION EXPENSES TO THE RESPONDENT.24
Petitioners Arguments
Petitioners assert that the RTC of Naval, Biliran did not have jurisdiction over the
case. They argue that since the assessed value of the lot was a mere P1,230.00,
jurisdiction over the case lies with the first level courts, pursuant to Republic Act
No. 7691,25 which expanded their exclusive original jurisdiction to include "all civil

LTD| MARCH 11,2016 9

actions which involve title to, or possession of, real property, or any interest
therein where the assessed value of the property or interest therein does not
exceed Twenty thousand pesos (P20,000.00) or, in civil actions in Metro Manila,
where such assessed value does not exceed Fifty thousand pesos (P50,000.00)
exclusive of interest, damages of whatever kind, attorneys fees, litigation
expenses and costs."26 Petitioners thus conclude that the Decision in Civil Case No.
B-1097 is null and void for lack of jurisdiction.
Petitioners next insist that the lot, being unregistered land, is beyond the coverage
of Article 1544 of the Civil Code, and instead, the provisions of Presidential Decree
(PD) No. 1529 should apply. This being the case, the Deed of Sale in favor of
Juanito is valid only as between him and the seller Garcia, pursuant to Section 113
of PD 1529;27 it cannot affect petitioners who are not parties thereto.

buyers, and the bottom line thereof lies in petitioners lack of good faith in
entering into the subsequent sale. On the issue of laches/estoppel, respondent
echoes the CAs view that he was persistent in the exercise of his rights over the
lot, having previously filed a complaint for recovery of the lot, which unfortunately
was dismissed based on technicality.
On the issue of attorneys fees and litigation expenses, respondent finds refuge in
Article 2208 of the Civil Code, 28 citing three instances which fortify the award in
his favor petitioners acts compelled him to litigate and incur expenses to protect
his interests; their gross and evident bad faith in refusing to recognize his
ownership and possession over the lot; and the justness and equitableness of his
case.
Our Ruling

On the issue of estoppel, laches and prescription, petitioners insist that from the
time they informed the Muerteguis in writing about their purchase of the lot, or in
October 1991, the latter did not notify them of their prior purchase of the lot, nor
did respondent interpose any objection to the sale in their favor. It was only in
1998 that Domingo Jr. showed to petitioners the unnotarized deed of sale.
According to petitioners, 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. As such, their action
to quiet title should be deemed barred by laches and estoppel.
Lastly, petitioners take exception to the award of attorneys fees and litigation
expenses, claiming that since there was no bad faith on their part, such award
may not be considered just and equitable under the circumstances. Still, an award
of attorneys fees should remain the exception rather than the rule; and in
awarding the same, there must have been an express finding of facts and law
justifying such award, a requirement that is absent in this case.
Petitioners thus pray for the reversal of the questioned CA Decision and
Resolution; the dismissal of the Complaint in Civil Case No. B-1097; the deletion
of the award of attorneys fees and litigation expenses in respondents favor; and
a declaration that they are the true and rightful owners of the lot.
Respondents Arguments
Respondent, on the other hand, counters that a suit for quieting of title is one
whose subject matter is incapable of pecuniary estimation, and thus falls within
the jurisdiction of the RTC. 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.

The Regional Trial Court has jurisdiction over the suit for quieting of title.
On the question of jurisdiction, it is clear under the Rules that an action for
quieting of title may be instituted in the RTCs, regardless of the assessed value of
the real property in dispute. Under Rule 63 of the Rules of Court, 29 an action to
quiet title to real property or remove clouds therefrom may be brought in the
appropriate RTC.
It must be remembered that the suit for quieting of title was prompted by
petitioners August 24, 1998 letter-opposition to respondents application for
registration. Thus, in order to prevent 30 a cloud from being cast upon his
application for a title, respondent filed Civil Case No. B-1097 to obtain a
declaration of his rights. In this sense, the action is one for declaratory relief,
which properly falls within the jurisdiction of the RTC pursuant to Rule 63 of the
Rules.
Article 1544 of the Civil Code does not apply to sales involving unregistered land.
Both the trial court and the CA are, however, wrong in applying Article 1544 of the
Civil Code. Both courts seem to have forgotten that the provision does not apply
to sales involving unregistered land. Suffice it to state that the issue of the buyers
good or bad faith is relevant only where the subject of the sale is registered land,
and the purchaser is buying the same from the registered owner whose title to the
land is clean. In such case, the purchaser who relies on the clean title of the
registered owner is protected if he is a purchaser in good faith for value. 31

LTD| MARCH 11,2016 10

Act No. 3344 applies to sale of unregistered lands.

What applies in this case is Act No. 3344, 32 as amended, which provides for the
system of recording of transactions over unregistered real estate. Act No. 3344
expressly declares that any registration made shall be without prejudice to a third
party with a better right. The question to be resolved therefore is: who between
petitioners and respondent has a better right to the disputed lot?

Petitioners defense of prescription, laches and estoppel are unavailing since their
claim is based on a null and void deed of sale. The fact that the Muerteguis failed
to interpose any objection to the sale in petitioners favor does not change
anything, nor could it give rise to a right in their favor; their purchase remains
void and ineffective as far as the Muerteguis are concerned.
The award of attorneys fees and litigation expenses is proper because of
petitioners bad faith.

Respondent has a better right to the lot.

The sale to respondent Juanito was executed on September 2, 1981 via an
unnotarized deed of sale, while the sale to petitioners was made via a notarized
document only on October 17, 1991, or ten years thereafter. Thus, Juanito who
was the first buyer has a better right to the lot, while the subsequent sale to
petitioners is null and void, because when it was made, the seller Garcia was no
longer the owner of the lot. Nemo dat quod non habet.
The fact that the sale to Juanito was not notarized does not alter anything, since
the sale between him and Garcia remains valid nonetheless. Notarization, or the
requirement of a public document under the Civil Code, 33 is only for convenience,
and not for validity or enforceability.34 And because it remained valid as between
Juanito and Garcia, the latter no longer had the right to sell the lot to petitioners,
for his ownership thereof had ceased.
Nor can petitioners registration of their purchase have any effect on Juanitos
rights. The mere registration of a sale in ones favor does not give him any right
over the land if the vendor was no longer the owner of the land, having previously
sold the same to another even if the earlier sale was unrecorded. 35 Neither could it
validate the purchase thereof by petitioners, which is null and void. Registration
does not vest title; it is merely the evidence of such title. Our land registration
laws do not give the holder any better title than what he actually has. 36
Specifically, we held in Radiowealth Finance Co. v. Palileo 37 that:
Under Act No. 3344, registration of instruments affecting unregistered lands is
without prejudice to a third party with a better right. The aforequoted phrase has
been held by this Court to mean that the mere registration of a sale in ones 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.

Petitioners actual and prior knowledge of the first sale to Juanito makes them
purchasers in bad faith. It also appears that petitioner Atty. Sabitsana was remiss
in his duties as counsel to the Muertegui family. 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, he did exactly
the opposite: taking advantage of the situation and the information he gathered
from his inquiries and investigation, he bought the very same lot and immediately
caused the registration thereof ahead of his clients, thinking that his purchase and
prior registration would prevail. The Court cannot tolerate this mercenary attitude.
Instead of protecting his clients interest, Atty. Sabitsana practically preyed on
him.
Petitioner Atty. Sabitsana took advantage of confidential information disclosed to
him by his client, using the same to defeat him and beat him to the draw, so to
speak. He rushed the sale and registration thereof ahead of his client. 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; this is too convenient an excuse to be
believed. As the Muertegui family lawyer, he had no right to take a position, using
information disclosed to him in confidence by his client, that would place him in
possible conflict with his duty. He may not, for his own personal interest and
benefit, gamble on his clients word, believing it at one time and disbelieving it the
next. He owed the Muerteguis his undivided loyalty. He had the duty to protect the
client, at all hazards and costs even to himself.38
Petitioner Atty. Sabitsana is enjoined to "look at any representation situation from
the point of view that there are possible conflicts, and further to think in terms of
impaired loyalty, that is, to evaluate if his representation in any way will impair his
loyalty to a client."39
Moreover, as the Muertegui familys lawyer, Atty. Sabitsana was under obligation
to safeguard his client's property, and not jeopardize it. Such is his duty as an
attorney, and pursuant to his general agency.40

LTD| MARCH 11,2016 11

Even granting that Atty. Sabitsana has ceased to act as the Muertegui family's
lawyer, he still owed them his loyalty.1wphi1 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. The client's
confidence once reposed should not be divested by mere expiration of professional
employment.41 This is underscored by the fact that Atty. Sabitsana obtained
information from Carmen which he used to his advantage and to the detriment of
his client.
from the foregoing disquisition, 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. Moreover, petitioner Atty. Sabitsana has exhibited a lack of
loyalty toward his clients, the Muerteguis, and by his acts, jeopardized their
interests instead of protecting them. Over and above the trial court's and the CA's
findings, this provides further justification for the award of attorney's fees,
litigation expenses and costs in favor of the respondent.
Thus said, judgment must be rendered in favor of respondent to prevent the
petitioners' void sale from casting a cloud upon his valid title.
WHEREFORE, premises considered, the Petition is DENIED. The January 25, 2007
Decision and the January 11, 2008 Resolution of the Court of Appeals in CA-G.R.
CV No. 79250 are AFFIRMED. Costs against petitioners.
SO ORDERED.

LTD| MARCH 11,2016 12

G.R. No. 146030

December 3, 2002

REPUBLIC OF THE PHILIPPINES, represented by the Department of

Environment
and
Natural
Resources,petitioner,
vs.
HEIRS OF FELIPE ALEJAGA SR., represented by ROQUETA ALEJAGA,
FELIPE ALEJAGA JR., MARIA DULLA ALEJAGA, FELIPE ALEJAGA III,
ROQUETA
ALEJAGA,
JENNIFER
ALEJAGA,
EVERETTE CAPUNDAN, AND LYNETTE ALEJAGA; THE PHILIPPINE
NATIONAL
BANK
and
THE
REGISTER
OF
DEEDS
OF
ROXAS
CITY, respondents.
DECISION
PANGANIBAN, J.:
We reiterate the familiar doctrine that a free patent obtained through fraud or
misrepresentation is void. Furthermore, 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.
Statement of the Case
Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court,
assailing the November 15, 2000 Decision 1 of the Court of Appeals (CA) in CA-GR
CV No. 44568. The decretal portion of the challenged Decision reads as follows:
"WHEREFORE, the appealed decision is hereby REVERSED, SET ASIDE and
RECALLED."2
The Facts
The factual antecedents of the case are summarized by the CA thus:
"On December 28, 1978, [Respondent] Felipe Alejaga, Sr. x x x filed with
the District Land Office, Roxas City, Free Patent Application No. (VI-2)
8442 covering a parcel of land identified as Lot 1, Mli-06-000020-D, with

an area of .3899 hectares, more or less located at Dumolog, Roxas City

(Exh. "A"; Exh "9"). 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, Original Certificate of
Title No. P-15 Free Patent No. (VI-2) 3358 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, Roxas City, and the Regional
Office, Region VI, Iloilo City, for irregularities in the issuance of the title of
a foreshore land in favor of [respondent]. Isagani Cartagena, Supervising
Special Investigator, Legal Division, Land Management Bureau (formerly
Bureau of Lands) submitted his Report dated April 17, 1989. The Chief,
Legal Division, Land Management Bureau, Manila, recommended to the
Director of Lands appropriate civil proceeding for the cancellation of Free
Patent Title No. (VI-2) 3358 and the corresponding Original Certificate of
Title No. P-15 in the name of [respondent].
"In the meantime, [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 P100,000.00 on August 18, 1981. The loan was secured by
a real estate mortgage in favor of defendant PNB. The promissory note of
appellant was annotated at the back of the title.
"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 (VI-2)
8442 of the parcel of land with an area of .3899 hectares more or less
located at Dumolog, Roxas City.
"On November 17, 1990, while the case is pending hearing, [respondent]
died. He was substituted by his wife Roqueta Alejaga and his children,
namely: Everette Alejaga, Lynnette Alejaga, Felipe Alejaga, Jr., Maria
Dulla Alejaga. Roqueta Alejaga, Jennifer Alejaga and Felipe Alejaga III.

LTD| MARCH 11,2016 13

xxx

xxx

xxx

"After hearing, the [trial] court in its dispositive portion decreed as

follows:
WHEREFORE, judgment is rendered declaring that the approval of Free
Patent Application No. 3358 and issuance of Original Certificate of Title
No. P-15 in the name of Felipe Alejaga is by means of fraud hence, 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.5
Further, the CA brushed aside as hearsay Isagani Cartagenas testimony that Land
Inspector Efren L. Recio had not conducted an investigation on the free patent
application of Felipe Alejaga Sr.6 The CA added that petitioner had failed to support
its claim that the lot covered by respondents free patent and title was foreshore
land.7
Hence, this Petition.8

a) the cancellation of the approval of the application No. (VI-2)

8442 covering Lot No. 1, Mli-06-000020-D with an area of .3899
hectares, more or less, located at Dumulog, Roxas City;

Issues
Petitioner raises the following issues for this Courts consideration:

b) the cancellation of Original Certificate of Title No. P-15, Free

Patent No. (VI-2) 3358 in the name of Felipe Alejaga;

"I

c) the land covered thereby as above described is reverted to the

mass of the public domain;

The Honorable Court of Appeals erred in not finding that the case is already final
and executory as against respondent PNB.

d) the defendants, Heirs of Felipe Alejaga Sr. or defendant,

Philippine National Bank, Roxas City Branch, to surrender the
owners duplicate copy of above described Original Certificate of
Title No. P-15 to the Register of Deeds (now Registries of Land
Titles and Deeds), Roxas City;

"II

e) the defendant, Register of Deeds, Roxas City, to cancel

Original Certificate of Title No. P-15 and the owners duplicate
copy of said title surrendered by above stated defendants;
f) defendants, Philippine National Bank, cross-claim is dismissed.
"Costs against the defendants Heirs of Felipe, Alejaga, Sr."3

The Court of Appeals erred in not considering that petitioner has proven the
allegations to the Complaint.
"III
The Honorable Court of Appeals erred in declaring that the action for reversion is
unavailing."9
Simply stated, 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.

Ruling of the Court of Appeals

This Courts Ruling

In reversing the RTC, 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.4 The appellate court likewise held that, assuming there
was misrepresentation or fraud as claimed by petitioner, the action for reversion

The Petition is meritorious.

First Issue:
Efficacy of the Grant

LTD| MARCH 11,2016 14

Petitioner argues that it has proven fraud in the issuance of Respondent Alejagas
free patent and Certificate of Title. 10 It also avers that Respondent PNB has failed
to file a timely Notice of Appeal.
On the other hand, the Alejagas contend that they have acquired a vested right
over the parcel of land covered by OCT No. P-15 by virtue of their proven open,
actual, exclusive and undisputed possession of the land for more than 30 years. 11
At the outset, we must immediately clarify that the records show receipt by
Respondent PNB of a copy of the Decision on October 27, not on October 3, 1993
as alleged by petitioner.12 Further, the bank filed its Notice of Appeal on November
9, 1993, within the 15-day reglementary period.
In addition, we must point out that the essential issue raised in this Petition -- the
presence of fraud -- is factual. As a general rule, this Court does not review
factual matters.13 However, the instant case falls under one of the exceptions,
because the findings of the CA conflict with those of the RTC and with the
evidence on record.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. 15 The
circumstances evidencing fraud are as varied as the people who perpetrate it in
each case.16 It may assume different shapes and forms; it may be committed in as
many different ways.17 Thus, the law requires that it be established by clear and
convincing evidence.18
In the case before us, we find that petitioner has adduced a preponderance of
evidence before the trial court, showing manifest fraud in procuring the
patent.19 This Court agrees with the RTC that in obtaining a free patent over the
lot under scrutiny, petitioner had resorted to misrepresentation or fraud, signs of
which were20 ignored by the Court of Appeals.21
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.22 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.23

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. 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.
In this case, however, Felipe Alejaga Sr.s Application for Free Patent 25 was dated
and filed on December 28, 1978. On the other hand, the Investigation &
Verification Report26 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.27 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.28 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.29
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.30 Their reliance on the presumption of regularity in the performance of
official duty31 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. Strangely,
respondents do not proffer any explanation why the Verification & Investigation
Report was not signed by Recio. Even more important and as will later on be
explained, this alleged presumption of regularity -- assuming it ever existed -- is
overcome by the evidence presented by petitioner.
Third, the report of Special Investigator Isagani P. Cartagena has not been
successfully rebutted. In that report, Recio supposedly admitted that he had not
actually conducted an investigation and ocular inspection of the parcel of land.
Cartagenas statement on Recios alleged admission may be considered as
"independently relevant." A witness may testify as to the state of mind of another
person -- the latters knowledge, belief, or good or bad faith -- and the formers

LTD| MARCH 11,2016 15

statements may then be regarded as independently relevant without violating the

hearsay rule.32
Thus, because Cartagena took the witness stand and opened himself to crossexamination, the Investigation Report33 he had submitted to the director of the
Bureau of Lands constitutes part of his testimony. Those portions of the report
that consisted of his personal knowledge, perceptions and conclusions are not
hearsay.34 On the other hand, the part referring to the statement made by Recio
may be considered as independently relevant.35

True, 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.46 However, this indefeasibility of
a title does not attach to titles secured by fraud and misrepresentation. 47 Wellsettled 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.48

The doctrine on independently relevant statements holds that conversations

communicated to a witness by a third person may be admitted as proof that,
regardless of their truth or falsity, they were actually made. Evidence as to the
making of such statements is not secondary but primary, for in itself it (a)
constitutes a fact in issue 36 or (b) is circumstantially relevant to the existence of
such fact.37

Therefore, under Section 101 of Commonwealth Act No. 141, 49 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.50 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. 51

Since Cartagenas testimony was based on the report of the investigation he had
conducted, his testimony was not hearsay and was, hence, properly admitted by
the trial court.38

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. 52 Public
policy demands that those who have done so should not be allowed to benefit
from their misdeed.53 Thus, prescription and laches will not bar actions filed by the
State to recover its own property acquired through fraud by private
individuals.54 This is settled law.55

Based on the foregoing badges of fraud, we sustain petitioners contention that

the free patent granted to Felipe Alejaga Sr. is void. 39 Such fraud is a ground for
impugning the validity of the Certificate of Title. 40 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.41 Verily, we must uphold
petitioners claim that the issuance of the Alejagas patent and title was tainted
with fraud.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. 43 On the other
hand, the Alejagas claim that, pursuant to Section 32 of PD 1529 44 -- otherwise
known as the Property Registration Decree -- the one-year period for reversion
has already lapsed.45 Thus, the States Complaint for reversion should be
dismissed.
We agree with petitioner.

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 56 proscribes the encumbrance
of a parcel of land acquired under a free patent or homestead within five years
from its grant.57The prohibition against any alienation or encumbrance of the land
grant is a proviso attached to the approval of every application. 58
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.59

LTD| MARCH 11,2016 16

In the case at bar, Free Patent No. (VI-2) 3358 60 was approved and issued on
March 14, 1979. Corresponding Original Certificate of Title No. P-15 61 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 62 in the
amount of P100,000. 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 parcel of land
covered by OCT No. P-15. 63 In his testimony, Gabriel D. Aranas Jr., then Cashier
III of respondent bank, even admitted that the PNB was aware of such restriction.

As early as Pascua v. Talens, 67 we have explained the rationale for the prohibition
against the encumbrance of a homestead -- its lease and mortgage included -- an
encumbrance which, by analogy, applies to a free patent. We ruled as follows:

"COURT You testified Mr. Aranas that you inspected the title also when
you credit investigated the loan applicant Felipe Alejaga and you have
personally examined this?

Further, an encumbrance on a parcel of land acquired through free patent

constitutes sufficient ground for the nullification of such grant, as provided under
Commonwealth Act No. 141, which we quote:

A Yes, your Honor.

"SEC. 124. Any acquisition, conveyance, alienation, transfer, or other contract

made or executed in violation of any of the provisions of sections one hundred and
eighteen, one hundred and twenty, one hundred and twenty-one, one hundred
and twenty-two, 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, title, patent, or permit originally issued, recognized or
confirmed, actually or presumptively, and cause the reversion of the property and
its improvements to the State."

COURT Do you conclude that this Original Certificate of Title is a [free]

patent?
A Yes, your Honor.
COURT And this [free] patent was granted on March 19, 1979.
A Yes, your honor.
COURT And as such [free] patent it cannot be alienated except [to] the
government or within five years from its issuance?
A Yes, your honor.
COURT Why did you recommend the loan?
A Because it is just a mortgage."64
Thus, the mortgage executed by Respondent Felipe Alejaga Sr. falls squarely
within the term encumbrance proscribed by Section 118 of the Public Land Act. 65 A
mortgage constitutes a legal limitation on the estate, and the foreclosure of the
mortgage would necessarily result in the auction of the property.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. 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."

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, as we
held in Republic v. 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. Furthermore, such encumbrance results in the cancellation of the
grant and the reversion of the land to the public domain." 69
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.70 Hence, the property must necessarily revert to the public domain,
pursuant to Section 124 of the Public Land Act.
WHEREFORE, the Petition is GRANTED and the assailed Decision SET ASIDE. The
Decision of the RTC of Roxas City (Branch 15) dated October 27, 1993 is
REINSTATED. No costs.

LTD| MARCH 11,2016 17

SO ORDERED.