Abelgas v. Comia
REITERATIONFacts
The Antecedents: Servillano Comia obtained a free patent over Lot No. 919-B. By virtue of a Deed of Relinquishment, Renunciation of Rights and Quitclaim dated May 1, 1971, Comia conveyed a 3,000-square-meter portion of Lot No. 919-B to spouses Jose Abelgas, Jr. and Letecia Jusayan de Abelgas, stating that this portion was the spouses' sole property and had only been included in Comia's title because it adjoined his land. Subsequently, OCT No. P-8553 was cancelled, and TCT No. T-46030 was issued in the names of "CO-OWNERS, (1) SERVILLANO COMIA... and (2) SPS. JOSE ABELGAS, JR. AND LETECIA JUSAYAN DE ABELGAS." The spouses Abelgas subdivided their 3,000-sqm portion and used the resulting TCTs to secure loan obligations with Rural Bank of Pinamalayan, Inc. (RBPI), Rural Bank of Socorro, Inc. (RBSI), and Philippine National Bank (PNB). The spouses defaulted on their loans, leading to the foreclosure and auction sale of some lots, with RBPI and RBSI emerging as winning bidders. Procedural History: Comia filed a Complaint for cancellation and recovery of title, and/or quieting of title against the Abelgas spouses and the banks, claiming he was the sole owner of Lot No. 919-B and that the Deed of Relinquishment was fictitious. The Regional Trial Court (RTC) dismissed Comia's complaint, upholding the validity of the Deed and the mortgages, and finding that the spouses Abelgas were the rightful owners and possessors. The Court of Appeals (CA) reversed the RTC's decision, declaring the Deed of Relinquishment null and void as an alienation prohibited by Commonwealth Act No. 141 (CA 141), and consequently nullifying the mortgages. The CA ordered the cancellation of subsequent titles and the reinstatement of OCT No. P-8553 in Comia's name, while ordering the spouses Abelgas to pay their indebtedness to the banks. The Petition: The spouses Abelgas filed a Petition for Review on Certiorari, questioning the CA's ruling that the Deed of Relinquishment and the mortgages were null and void for being contrary to CA 141.
Issue(s)
Whether the Deed of Relinquishment, Renunciation of Rights and Quitclaim executed by Servillano Comia in favor of the spouses Abelgas is null and void for being contrary to Section 118 of Commonwealth Act No. 141. Whether the mortgages executed by the spouses Abelgas in favor of the Rural Banks are null and void for being contrary to Section 118 of Commonwealth Act No. 141.
Ruling
The Petition is GRANTED. The assailed Decision and Resolution of the Court of Appeals are REVERSED and SET ASIDE. The Deed of Relinquishment, Renunciation of Rights and Quitclaim is declared valid, and consequently, the subsequent titles and mortgages are also declared valid.
Ratio Decidendi
On the validity of the Deed of Relinquishment, Renunciation of Rights and Quitclaim: The Supreme Court held that the Deed of Relinquishment, Renunciation of Rights and Quitclaim executed by Comia in favor of the spouses Abelgas did not constitute an alienation prohibited by Section 118 of Commonwealth Act No. 141. The Court reasoned that Comia did not transfer, convey, or cede the property but rather relinquished, renounced, and quitclaimed it because it already belonged to the spouses. The evidence, including Jose Abelgas, Jr.'s uncontested testimony and the annotation on the original certificate of title, indicated that the spouses already owned the 3,000-square-meter portion prior to the grant of Comia's free patent. The Deed was an act of correcting the erroneous inclusion of the property in Comia's free patent, not an act of alienation. The Court emphasized that the private ownership of land is not affected by the issuance of a free patent if the title covers a portion not belonging to the grantee. Therefore, the prohibition under Section 118 of CA 141 was not applicable as there was no alienation to begin with. On the validity of the mortgages: The Supreme Court ruled that the encumbrances (mortgages) made by the spouses Abelgas in favor of the Rural Banks were not null and void. The Court found that the 3,000-sqm portion, which was subsequently subdivided into twelve lots, was not shown to be under a free patent. The TCTs submitted to the mortgagee banks were not derived from a free patent, thus falling outside the ambit of the prohibition in Section 118 of CA 141. Consequently, the banks could not be considered to have acted in bad faith. Furthermore, at the time of the mortgages, the Rural Banks Act, as amended, already allowed banks to accept free patents as security for loan obligations. Absent any finding of nullity, the RTC's ruling that the alienations and encumbrances were valid was sustained.
Main Doctrine
A Deed of Relinquishment, Renunciation of Rights and Quitclaim executed by a free patent holder, wherein the holder acknowledges that a portion of the land was already owned by another and was included in the patent only because it adjoined the holder's land, does not constitute an alienation prohibited by Section 118 of Commonwealth Act No. 141, especially when the transfer or relinquishment occurred prior to the grant of the free patent or was merely a correction of an erroneous inclusion.