REPUBLIC OF THE
G.R. No. 165114
QUISUMBING, J. Chairperson,
VELASCO, JR., and
August 6, 2008
D E C I S I O N
The State seeks in this Petition for Review on Certiorari to secure the cancellation of title and reversion of a real property granted to Mabelle Ravelo under a sales patent. Title to the property has passed on to parties who now claim that they are innocent purchasers in good faith; thus their claim cannot be defeated by any defect in the title of the original grantee.
The records show the pertinent facts summarized below.
Department of Environment and Natural Resources (DENR)-Region III
investigated the conflict between the two applications. On
to the DENRs action, specifically on February 16, 1989, the Director of Lands
issued Sales Patent No. 12458 covering the same subject lot to respondent
Mabelle B. Ravelo (Ravelo). She was subsequently issued Original
Certificate of Title (OCT) No. P-4517 registered with the Registry of
Deeds of Olongapo City. In effect, the
DENR-IIIs Order of
In a separate development, one
Antonio Chieng filed on
respondent-spouses Emmanuel and Perlita Redondo (Redondos), who own and reside in a property adjacent to the subject
lot, subsequently bought the subject lot from Chieng. The parties first signed an agreement for the
purchase of the subject lot on
Chieng and the Redondos entered into
another deed of sale in the Redondos favor on
In her Answer, Ravelo insisted that her application passed through the regular process; that she had been in possession of the property from the time of her application; and that Mortera was never in possession of the land.
The trial court received the governments evidence ex-parte after Ravelo failed to attend the trial.
The Trial Court Decision
The Court of Appeals Decision
The Court of Appeals, on the Redondos appeal docketed as CA-G.R. CV No. 60665, reversed and set aside the trial courts ruling and declared the Redondos as innocent purchasers in good faith. The appellate court also declared the Redondos TCT No. T-7261 valid.
The appellate court ruled that the Redondos were buyers in good faith because they and Chieng entered their agreement for the purchase of the subject lot on May 11, 1993 and executed their Deed of Sale on December 20, 1993, prior to the annotation of the notice of lis pendens on March 24, 1994, and prior as well to any awareness by the Redondos of the existence of any flaw in the vendors title. It explained that the Redondos conduct carried all the badges of propriety and regularity as they verified the regularity of the title to the property with the proper registry of deeds before buying it. Ravelos title, even if tainted with fraud, may be the source of a completely legal and valid title in the hands of an innocent purchaser for value.
The Petition and the Parties Positions
The petitioner comes to this Court in
the present petition to assail the
Court of Appeals decision and submits the following assigned errors:
the Court of appeals erred on a question of law in reversing the decision of the trial court[,]canceling the titles of respondents and reverting [the] subject land to the mass of public domain[,]on the ground that a fraudulent title may NOT be the basis of a valid title.
the court of appeals erred on a question of law in declaring that RespondentS Redondo spouses are innocent purchasers in good faith and for value of the property.
The petitioner argues that the innocent purchaser for value doctrine is inapplicable because the mother title was procured through fraud. Specifically, Ravelos title could not have been the source of valid titles for Chieng and the Redondos because it was void in the first place. Ravelos failure to disclose in her patent application that Victoriano Mortera, Jr. was in possession of the subject lot constituted fraud and misrepresentation -- grounds for the annulment of her title. If a public land is acquired by an applicant through fraud and misrepresentation, the State may institute reversion proceedings even after the lapse of one year.
The petitioner likewise contends that the Redondos as vendees cannot rely solely on the face of the title as they did not transact directly with the registered owner; they transacted with Chieng whose right to the property was based on a certificate of sale. Thus, the Redondos merely relied on the certificate of sale instead of examining the title covering the subject lot. To be deemed a buyer in good faith and for value, the vendee must at least see the registered owners duplicate copy of the title and must have relied on it in examining the factual circumstances and in determining if there is any flaw in the title. Petitioner finally notes that lis pendens was already annotated on the title at the time the deed of sale was registered.
respondent Redondos spouses counter they are not obliged by law to go beyond
the certificate of registration to determine the condition of the
property. Any alleged irregularity in
the issuance of Ravelos OCT No. P-4517 cannot affect them since a patent
issued administratively has the force and effect of a Torrens Title under Act
No. 496 (the Land Registration Act) and partakes of the nature of a certificate
of title issued in judicial proceedings.
At the time they purchased the property from Chieng with the execution
of their Agreement dated
Respondent Ravelo failed to file a comment.
Two issues are effectively submitted to us for resolution, namely:
1. Whether there is basis for the cancellation of Ravelos original title and the reversion of the subject lot to the public domain; and
2. Whether the Redondos are innocent purchasers in good faith and for value, whose title over the subject lot that could defeat the petitioners cause of action for cancellation of title and reversion.
The Courts Ruling
We find the petition meritorious.
The Reversion Issue:
Misrepresentation in the Application
Under Section 91 of CA No. 141, the statements made in application shall be considered essential conditions and parts of any concession, title or permit issued on the basis of such application, and any false statement therein or omission of facts altering or changing or modifying the consideration of the facts set forth in such statements . . . shall ipso facto produce the cancellation of the concession, title, or permit granted. This provision is reinforced by jurisprudential rulings that stress in no uncertain terms the consequences of any fraud or misrepresentation committed in the course of applying for a land patent.
The record shows that Ravelo, the grantee, limited herself in her Answer to the position that the application passed through the regular process; that she had been in possession of the property from the time of her application; and that Mortera was never in possession of the land. Thereafter, Ravelo failed to attend trial and present evidence so that the lower court received the governments evidence ex-parte. The Redondos, who intervened after title to the property passed on to them, did not touch at all the misrepresentation aspect of the complaint on the theory that, as purchasers in good faith, the misrepresentation of Ravelo cannot affect their title. Thus, the presence of fraud or misrepresentation was practically an issue that the Ravelo and the Redondos conceded to the government.
This legal situation,
notwithstanding, the Court of Appeals practically disregarded the
misrepresentation issue and followed the Redondos argument that the flaw in
Ravelos title is immaterial because they were purchasers in good faith of a
titled property. This reasoning brings
to the fore the issues of good faith and of the annotations in the original
certificate of title including the notice of lis pendens that was registered on
The Good Faith Issue
The Court of Appeals approached the issue of good faith based mainly on its view that there had been a perfected sale prior to the annotation of the notice of lis pendens. To the appellate court, the Redondos purchased the subject lot prior to the annotation of the notice of lis pendens by the petitioner, and were thus without knowledge or notice of any flaw in the title. To quote the appellate court:
Wilson Chieng and the
intervenors entered into said agreement prior to the annotation of the notice
of lis pendens on
We find this approach to be simplistic as it disregards, among others, the nature of a sale of registered real property, as well as other material and undisputed developments in the case. For example, while the appellate court was correct in its general statement about the perfection of a contract of sale, it did not take into account that the subject matter of the sale was a registered land to which special rules apply in addition to the general rules on sales under the Civil Code. Section 51 of Presidential Decree No. 1529 which governs conveyances of registered lands provides:
Sec. 51. Conveyance and other dealings by registered owner. An owner of registered land may convey, mortgage, lease, charge or otherwise deal with the same in accordance with existing laws. He may use such forms of deeds, mortgages, leases or other voluntary instruments as are sufficient in law. But no deed, mortgage, lease or other voluntary instrument, except a will purporting to convey or affect registered land, shall take effect as a conveyance or bind the land, but shall operate only as a contract between the parties and as evidence of authority to the Register of Deeds to make registration.
The act of registration shall be the operative act to convey or affect the land in so far as third persons are concerned, and in all cases under this Decree, the registration shall be made in the office of the Register of Deeds for the province or city where the land lies.
Thus, bereft of registration, any sale or transaction involving registered land operates only as a contract between the parties and shall not affect or bind the registered property.
One material development that
affected the subject lot as a registered
property was the notice of levy that the sheriff caused to be annotated in
Ravelos OCT No. P-4517 on March 17, 1993 pursuant to the order of the court in
the collection case filed by Antonio Chieng against Ravelo. This was followed by the Certificate of Sale
that was again annotated in Ravelos title on
material development was the annotation of a notice of lis pendens on
Interestingly, the annotation of the levy in execution and the certificate of sale did not merit any consideration in the decisions of both the trial and the appellate courts. We, however, consider these developments material as they embody notices to the whole world of transactions affecting the registered subject lot; they should be the starting point of any consideration of the existence of good or bad faith of the parties dealing with the land. These annotations signify that Chiengs purchase of the subject lot in the execution sale constituted a prior and superior claim in time over the subject lot by any of the dramatis personae in the present case.
Thus, barring any defect in the sale
itself and assuming that Chieng did not have any prior knowledge, constructive
or otherwise, of any defect in Ravelos title, Chieng has a prior claim to the
property that is protected by the fact of registration and by his status as an
innocent buyer in good faith and for value.
The legal protection offered by registration under the
The Redondos came into the picture
when they contracted with Chieng for their purchase of the subject
property. Their inspection of the
records at the Registry of Deeds should have confirmed to them that the subject
lot was a registered land and that Chieng, their seller, was not yet the
registered owner, but one who merely had a sheriffs Certificate of Sale. Contrary to the lower courts reading of the
To complete the whole picture of the
series of developments involved, it was not until September 23, 1994 that the
final Bill of Sale dated June 26, 1994 in favor of Chieng was inscribed as
Entry No. 2419 on OCT No. P-4517. OCT No.
P-4517 was thereafter cancelled and TCT No. T-7209 in Chiengs name was issued
(carrying the governments notice of lis
pendens as Entry No. 7219). It was only at this point that Chieng, as registered owner, could have sold or could have done an act
binding the subject lot. A deed of
From these perspectives, we cannot
see how the Redondos could have been purchasers in good faith in May 1993 when they were not even purchasers of the
subject lot at that point.
Specifically, it was not until Chieng and the Redondos executed their
The Notice of Lis Pendens
Lis pendens literally means a pending suit, while a notice of lis pendens, inscribed in the certificate of title, is an announcement to the whole world that the covered property is in litigation, serving as a warning that one who acquires interest in the property does so at his own risk and subject to the results of the litigation. This is embodied in Section 76 of Presidential Decree (P.D.) No. 1529 which provides that no action to recover possession of real estate, or to quiet title thereto, or to remove clouds upon the title thereof, or for partition, or other proceedings of any kind in court directly affecting the title to land or the use or occupation thereof or the buildings thereon, and no judgment, and no proceeding to vacate or reverse any judgment, shall have any effect upon registered land as against persons other than the parties thereto, unless a memorandum or notice stating the institution of such action or proceeding and the court wherein the same is pending, as well as the date of the institution thereof, together with a reference to the number of the certificate of title, and an adequate description of the land affected and the registered owner thereof, shall have been filed and registered. The notice that this provision speaks of the notice of lis pendens is not a lien or encumbrance on the property, but simply a notice to prospective buyers or to those dealing with the property that it is under litigation.
As our above discussion shows, the governments notice of lis
pendens came after the execution sale and thus cannot affect Chieng and the
conveyance to him of the subject lot.
However, the notice affects all transactions relating to OCT No. P-4517
subsequent to its registration date
Cancellation and Reversion
from the misrepresentation that tainted Ravelos sales patent, the RTC decision
points to a supervening cause for cancellation and reversion that transpired
after the filing of the petitioners complaint on
We disagree with this conclusion as
the applicable law in the sale of land of the public domain for residential
purposes is R.A. No. 730,
as amended by P.D. No. 2004. While R.A. No.730 originally carried the same
prohibition that Sec. 29 of CA No. 141 has, P.D. No. 2004 dated
In sum, we hold that the Court of Appeals erred in concluding that the Redondos were buyers in good faith. They purchased the subject lot from Chieng subject to the governments notice of lis pendens; hence, their purchase was at the risk of the outcome of the States complaint for cancellation and reversion which we find to be meritorious. The subject lot must therefore revert back to the public domain.
considered, we GRANT the petition. We REVERSE
the decision of the Court of Appeals in CA-G.R. CV No. 60665 and accordingly declare
void respondent Mabelle B. Ravelos Miscellaneous Sales Patent No. 12458
and OCT No. P-4517. We likewise order
the CANCELLATION of Transfer
Certificate of Title No. T-7261 issued in the name of Emmanuel and Perlita
Redondo and the reversion to the mass of the public domain of the
property it covers
ARTURO D. BRION
LEONARDO A. QUISUMBING
CONCHITA CARPIO MORALES
PRESBITERO J. VELASCO, JR.
I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division
LEONARDO A. QUISUMBING
REYNATO S. PUNO
Designated additional member of the
Second Division per Special Order No. 512 dated
 Filed pursuant to Rule 45 of the Revised Rules of Court.
 Rollo, pp. 43-48.
 An Act providing for the Sale of Agricultural
Public Lands and Authorizing Land Officers in Every Province of the Bureau of
Lands to Sign Patents or
 Dated August 24, 2004, with Associate Justice Arcangelita M. Romilla-Lontok as ponente, and Associate Justice Rodrigo V. Cosico and Associate Justice Danilo B. Pine (both retired), concurring.
 Rollo, pp 36-42.
 Respondent-spouses Comment; id., pp. 67-79.
 See Heirs of Carlos Alcaraz v. Republic of the Philippines, et al., G.R. No. 131667, July 28, 2005, 464 SCRA 280; Republic of the Philippines v. Heirs of Felipe Alejaga, Sr., et al., G.R. No. 146030, December 3, 2002, 393 SCRA 361; Republic of the Philippines v. de Guzman, G.R. No. 105630, February 23, 2000, 326 SCRA 267; Baguio v. Republic of the Philippines, G.R. No. 119682, January 21, 1999, 301 SCRA 450.
 See RTC Decision, p. 7; rollo, p. 55.
 Cruz v. Court of Appeals, G.R. No.
v. Court of Appeals, G.R. No. 114172,
 Court of Appeals Decision, p. 5; rollo, p. 40.
 Heirs of Eugenio Lopez, Sr. v. Enriquez, G.R. No. 146262, January 21, 2005, 449 SCRA 173; Legarda v. Court of Appeals, G.R. No. 94457, October 16, 1997, 280 SCRA 642.
v. Regional Trial Court of Manila,
G.R. No. 81541,
 Section 29. After title has been granted, the purchaser may not, within a period of ten years from such cultivation or grant, convey or encumber or dispose said lands or rights thereon to any person, corporation or association, without prejudice to any right or interest of the Government in the land; Provided, That any sale and encumbrance made in violation of the provisions of this section, shall be null and void and shall produce the effect of annulling the acquisition and reverting the property and all rights thereto to the State, and all payments on the purchase price therefore made to the Government shall be forfeited (As amended by Rep. Act No. 6516)
 Republic Act No. 730 An Act to Permit the Sale without Public Auction of Public Lands of the Republic of the Philippines for Residential Purposes to Qualified Applicants under Certain Conditions.
SECTION 1. Notwithstanding the provisions of sections sixty-one and sixty-seven of Commonwealth Act Numbered One hundred forty-one, as amended by Republic Act Numbered Two hundred ninety-three, any Filipino citizen of legal age who is not the owner of a home lot in the municipality or city in which he resides and who has in good faith established his residence on a parcel of the public land of the Republic of the Philippines which is not needed for the public service, shall be given preference to purchase at a private sale of which reasonable notice shall be given to him not more than one thousand square meters at a price to be fixed by the Director of Lands with the approval of the Secretary of Agriculture and Natural Resources. It shall be an essential condition of this sale that the occupants has constructed his house on the land and actually resided therein. Ten per cent of the purchase price shall be paid upon the approval of the sale and the balance may be paid in full, or in ten equal annual installments.
SECTION 2. Except in favor of the Government or any of its branches, units, or institutions lands acquired under the provisions of this Act shall not be subject to encumbrance or alienation before the patent is issued and for a term of ten years from the date of the issuance of such patent, nor shall they become liable to the satisfaction of any debt contracted prior to the expiration of said period. No transfer or alienation made after the said period of ten years and within fifteen years from the issuance of such patent except those made by virtue of the right of succession shall be valid unless when duly authorized by the Secretary of Agriculture and Natural Resources and the transferee or vendee is a Filipino citizen. Every conveyance made shall be subject to repurchase by the original purchaser or his legal heirs within a period of five years from the date of conveyance.
Any contract or agreement made or executed in violation of this section shall be void ab initio.
SECTION 3. The provisions of the Public Land Act with respect to the sale of lands for residential purposes which are not inconsistent herewith shall be applicable.
SECTION 4. This Act shall take effect upon its approval.
 P.D. No. 2004
Amending Section Two of Republic Act 730 relative to the
WHEREAS, Republic Act No. 730 permits the
sale without public auction of public lands of the Republic of the
WHEREAS, land required thereunder are subject to onerous restrictions against encumbrance or alienation;
WHEREAS, it is necessary to remove these onerous restrictions to allow the effective utilization of these lands.
NOW, THEREFORE, I, FERDINAND E. MARCOS,
President of the
SECTION 1. Section Two of Republic Act Numbered Seven Hundred and Thirty is hereby amended to read as follows:
"Sec. 2. Lands acquired under the provisions of this Act shall not be subject to any restrictions against encumbrance or alienation before and after the issuance of the patents thereon."
SECTION 2. This Decree shall take effect immediately.
IN WITNESS WHEREOF, I have hereunto set
my hand and caused the seal of the Republic of the
DONE in the City of