De Guzman v. Court of Appeals
REITERATIONFacts
The Antecedents: Spouses Virgilio and Lydia de Guzman (petitioners) purchased two parcels of land totaling 480 square meters from Spouses Leoncio and Anastacia Bajao (Spouses Bajao) in 1969 and 1970. The property was part of Lot No. 532, which Leoncio Bajao acquired through Free Patent No. 400087 on May 28, 1968. Spouses Bajao promised to deliver a separate title for the sold portions, but failed to do so. Petitioners executed an Affidavit of Adverse Claim in 1980, which was annotated on the title of Lot No. 532. Petitioners conducted a survey, resulting in Lot 2-A, Psd-10-002692, and allegedly took possession, fenced the area, and introduced improvements. After Leoncio Bajao's death, respondent Lamberto Bajao and Anastacia Bajao executed an Extrajudicial Settlement Among Heirs in 1980, adjudicating Lot No. 532-C, which included the disputed property, to respondent. This settlement was registered, and respondent later obtained Transfer Certificate of Title (TCT) No. T-7133. Respondent refused to deliver the title to petitioners. Procedural History: Petitioners filed a Complaint for Reconveyance with Writ of Preliminary Mandatory Injunction and Damages on January 21, 2000, alleging they were innocent purchasers for value and that respondent acted in bad faith by fraudulently including the property in his share. The Regional Trial Court (RTC) ruled in favor of petitioners, ordering reconveyance and damages. The Court of Appeals (CA) reversed the RTC decision, dismissing the complaint on the grounds of prescription and laches, and finding that petitioners failed to prove actual possession. The CA also noted that the phrase "remaining portion" in the Extrajudicial Settlement could refer to Lot No. 532-C. Petitioners' motion for reconsideration was denied. The Petition: Petitioners filed a Petition for Review on Certiorari, assailing the CA's dismissal of their complaint on the ground of prescription.
Issue(s)
Whether the Court of Appeals erred in dismissing the Complaint for Reconveyance on the ground of prescription, considering the validity of the Deeds of Absolute Sale and the applicability of the Public Land Act. Whether the deeds of absolute sale were valid despite being executed within the five-year prohibitory period under Section 118 of the Public Land Act. Whether petitioners were in actual possession of the property, which would make their action imprescriptible as a suit to quiet title.
Ruling
The Supreme Court denied the petition for lack of merit, affirming the Court of Appeals' dismissal of the complaint. The Court declared the Deeds of Absolute Sale void for being executed in violation of Section 118 of the Public Land Act. However, it ordered the respondent to return the purchase price of P2,400 to the petitioners with legal interest.
Ratio Decidendi
On the validity of the Deeds of Absolute Sale and the applicability of the Public Land Act; and Prescription: The Court ruled that the Deeds of Absolute Sale executed on May 24, 1969, and June 18, 1970, were null and void from their execution because the property was acquired by Leoncio Bajao through Free Patent No. 400087 on May 28, 1968, and Section 118 of Commonwealth Act No. 141 (Public Land Act) prohibits alienation within five years. The Court emphasized the policy of preserving the land for the grantee. While Section 124 provides for reversion to the State, only the Solicitor General can bring such action. Even if the sales were not violative, the action for reconveyance had prescribed, as the complaint was filed more than 10 years after the registration of respondent's title in 1981. As between the parties, the respondent, as heir, has the better right to remain in possession, subject to the return of the purchase price. On the validity of the Deeds of Absolute Sale and the applicability of the Public Land Act: The Court ruled that the Deeds of Absolute Sale executed on May 24, 1969, and June 18, 1970, were null and void from their execution. This is because the property was acquired by Leoncio Bajao through Free Patent No. 400087 on May 28, 1968, and Section 118 of Commonwealth Act No. 141 (Public Land Act) prohibits the alienation or encumbrance of lands acquired under free patent within five years from the date of issuance of the patent. Both sales occurred within this prohibited period. Consequently, these deeds did not convey any right from Spouses Bajao to the petitioners. The Court emphasized that the policy of the law is to preserve the land for the grantee and his family, and such contracts are void and not susceptible of ratification. The Court also noted that while Section 124 of the Public Land Act provides for reversion of the property to the State upon violation, a private individual cannot bring an action for reversion; only the Solicitor General can. On the exception to prescription (actual possession): The Court reiterated that the exception to the ten-year prescriptive period is when the plaintiff is in actual possession of the land, making the action one to quiet title, which is imprescriptible. However, the Court found that petitioners failed to substantiate their claim of actual possession. They testified they do not live on the property, and their alleged fencing was contested by respondent, with pictures showing it was erected only in 1996. The planting of trees was unclear, and they failed to present tax declarations and official receipts for real property taxes from the time of sale, only for the period 2000-2002. The survey plan, while proving identity, did not prove possession. Conversely, respondent presented tax declarations and receipts for the property under his name, which are good indicia of possession in concept of owner. Therefore, the CA's finding that petitioners were not in actual possession was affirmed.
Main Doctrine
Sales of land acquired under free patent within the five-year prohibitory period are void and produce no effect. While such void sales do not convey any right, the heirs of the vendor, in furtherance of public policy to preserve the grantee's right to the land for home and cultivation, can maintain an action to nullify the transaction. However, if the sale is not violative of the Public Land Act, an action for reconveyance based on implied trust prescribes in ten years from registration of title, unless the claimant is in actual possession, in which case the action to quiet title is imprescriptible.