JUAN SALA, PETITIONER, VS. COURT OF FIRST INSTANCE OF NEGROS ORIENTAL (BRANCH V), HON. ALEJANDRO BONCAROS, PRESIDING JUDGE, AND CRISPIN SALVERON, RESPONDENTS.

The issue in this
petition is whether or not a judgment creditor who bought at a public auction,
a land covered by a free patent,
can recover possession thereof from
another buyer to whom the same
was conveyed by the grantee and judgment debtor, in violation of Section 118 of
CA 141, as amended.

On April 15, 1967,
Daniel Junco was granted by the President
of the Philippines homestead patent no. 255492 over a parcel of land known as
lot numbers 4 and 5, Psu-117884 of the cadastral survey of Basay,
Negros Oriental, with a total area of 72,941 square
meters.

Without knowing said issuance, he conveyed by way of a deed of sale dated June 16,
1967, 7,500 square
meters of the lots to herein
private respondent.  Sometime in 1968, he
received information of the issuance.  He
registered the patent only on December 19, 1968, and he was issued by the Register of Deeds
of the province, OCT No. 7936 covering the same lots.

Private respondent, on the other hand, registered the deed of
sale but he was never issued any title thereto. 
His grandfather, however, paid the real estate taxes of the portion sold
to him up to 1974.  On February 24, 1974, the entire lots
were sold at a public auction held by the provincial sheriff.  The latter on that same day, executed in
favor of petitioner Juan Sala as judgment creditor
and being the highest bidder thereat, a certificate of sale and subsequently,
OCT No. 7936 was cancelled and TCT No. 1300 was issued to petitioner.  Since he bought the lots, petitioner had been
in possession thereof except the portion sold to private respondent.  Petitioner made demands from private
respondent for the surrender of the portion sold to him but he refused.  Petitioner then filed with the then Court of
First Instance of Negros Oriental an action for
recovery of possession docketed as Civil Case No. 5966 against private
respondent.

Petitioner’s evidence consisted mainly of TCT No. FV-1300 issued
to him by the Registry of Deeds and the testimony of his daughter Lourdes Sala Napigkit who declared that
they have advised private respondent to vacate the area sold to him but he
refused and that they have never harvested the fruits from the 130 coconut
trees thereon.  For private respondent,
his evidence was the deed of sale executed in his favor by Daniel Junco.  After trial on the merits, the trial court
rendered a decision dismissing petitioner’s complaint.^[1]
In so ruling, the trial court relied on the decision of this Court in Dagupan Trading v. Macam,
L-18497, May 31, 1965, 4
SCRA 179.  In that case, the Court held
and this the trial court reiterated:

“x x x
where one of two conflicting sales of a piece of land executed before the land
was registered, while the other one was an execution sale in favor of the
judgment creditor of the owner made after the same property had been
registered, what should determine the issue are the provisions of the last paragraph of Sec. 35, Rule 39 of the Rules of Court to the effect
that, upon the execution and delivery of the final certificate of sale in
favor of the purchaser of land sold in an execution sale, such
purchaser ‘shall be substituted to and acquire all the rights, title, interest
and claim of the judgment debtor to the property as of the time of the levy,’
‘wherefore (sic) a considerable time prior to the levy on execution interest of the owner of the land levied upon had already been conveyed to another
who took possession thereof and introduced improvements thereon the aforesaid
levy is void.  The prior sale, albeit
unregistered cannot be deemed automatically (sic) cancelled upon the subsequent
issuance of the Torrens Title over the land. 
‘x x x.” (p. 37, Rollo)

In addition, it considered private respondent a buyer in good
faith.  In this regard, it said that the
auction sale where petitioner was buyer was on February 21, 1974 while the sale to the private respondent
by Daniel Junco was on June 26, 1967.  It reasoned out that the patent was issued on
April 15, 1967 and the prohibition to alienate
or encumber under Section 118 of Commonwealth Act No. 141 is within 5 years
from the date of issuance of the
patent but the above section of
Commonwealth Act No. 141 makes no “reference to a buyer in good faith like
the defendant who has no knowledge as to when his seller was granted a patent
upon whom devolves the strict observance of” said section, hence,
concluded that “the sale by Daniel Junco to defendant Crispin Salveron is VALID.”

Petitioner raised the following errors:

I

RESPONDENT COURT OF FIRST
INSTANCE ERRED IN DECLARING THE SALE OF THE LAND IN QUESTION BY DANIEL T. JUNCO TO PRIVATE RESPONDENT VALID
ALTHOUGH SAID SALE IS CLEARLY IN VIOLATION
OF SECTION 118 OF THE PUBLIC LAND ACT; and

II

RESPONDENT COURT OF FIRST
INSTANCE ERRED IN FINDING THAT WHAT PETITIONER HAS BOUGHT IN THE SHERIFF’S
AUCTION SALE WAS THE REMAINING
INTEREST OF DANIEL T. JUNCO ON THE
LAND EXCLUDING THE 7,500 SQUARE METERS EARLIER SOLD TO PRIVATE RESPONDENT UNDER
THE QUESTIONED DEED OF SALE.

(p. 21, Rollo)

Petitioner alleged that the sale made by Daniel Junco to private respondent is void by
reason of Sec. 118 of Commonwealth Act No. 141, as amended and so private
respondent never acquired any right over the land subject thereof; that
respondent court’s theory of equity and private respondent being a buyer in
good faith is erroneous because Section 118 does not exempt patentees and their
purported transferees who had no knowledge of the issuance of the patent from
the prohibition against alienation. 
Petitioner further asserts that our ruling in Dagupan
Trading Co., v. Macam, supra, is not
applicable because in that case, there were two valid sales – one, executed
before the land was registered; and the other, an execution sale after the land
was registered.  Moreover, the land
involved therein presumably was not covered by a patent.

Private respondent, on the
other hand, maintains that respondent court correctly applied our pronouncement
in the above cited case.

Section 118 of Commonwealth Act No. 141, as amended by
Commonwealth Act No. 456, provides as follows:

“Except in favor of the Government or any of its branches,
units or institutions, lands acquired under free patent or homestead provisions shall not be subject to
encumbrance or alienation from the date of the approval of the application and
for a term of five years from and after the date of issuance of
the patent or grant nor shall they become liable to the satisfaction of any
debt contracted prior to the expiration of said period, but the improvement or
crops on the land may be mortgaged or pledged to qualified persons,
associations, or corporations.” (p. 22, Rollo)

As was held in several cases, the prohibition has the avowed
purpose of giving the homesteader or patentee every chance to preserve for
himself and his family the land that the State had gratuitously given him as a reward for his labor in cleaning and
cultivating it.^[2]

Prohibition to alienate commences to run from the date the
application is approved which may
be a date earlier than the date of issuance of the patent.  The period of five years within which the alienation or
encumbrance of a homestead is restricted, starts to be computed from the latter
date.^[3]

In the case at bar, it is not disputed that the sale made by the
grantee, Daniel Junco to private respondent, of the 7,500 square meters portion
of lots 4 and 5, was made barely one month and eleven days from the issuance of
the patent to him.  The sale was,
therefore, null and void and without effect because it was in violation of the
above provision of law.  The nullity of
the sale of only a portion of the
lots, extended to the entire lots.^[4]
The sale produced the effect of annulment and cancellation of the title issued
to Daniel Junco and causes the reversion of the lots and its improvements to the State (Sec. 124, CA 141, as
amended).  Although the sheriff’s sale
was conducted after five years from the issuance of the patent and that
petitioner, although in good faith, was subsequently issued title over lots 4 and 5, the
proceedings had did not cure the nullity of the first sale.  The provision against alienation is mandatory.  Thus, where a grantee is found not entitled to hold and possess in fee
simple the land, by reason of his having
violated Section 118 of the Public Land Law, the Court may properly order its reconveyance to the grantor, although the property has already
been brought under the operation of the Torrens System.  And, this right of the government to bring an
appropriate action for reconveyance (or reversion) is
not barred by the lapse of time; the Statute of Limitations does not run
against the State.^[5]

The principle of conclusiveness of title, though sound, as
applied to lands registered under the Land Registration Act through judicial
proceedings, cannot defeat the express policy of the State prohibiting the
alienation or encumbrance of lands of the public domain acquired under the
provision of the Public Land Act within five years from and after the date of
the patent.^[6]

The reliance placed by respondent court on the case of Dagupan Trading Co., v. Macam, supra,
is erroneous.  The land involved therein is
not covered by a free patent.

ACCORDINGLY, the judgment appealed from is AFFIRMED
insofar as it dismissed the complaint for recovery of possession.  Let a copy of the decision be furnished the
Office of the Solicitor General for appropriate action.

SO ORDERED.

Narvasa, (Chairman), Cruz, Gancayco, and Griño-Aquino, JJ., concur.

^[1]
p. 18, Rollo.

^[2]
Simeon v. Pena, G.R. No. L-29049, December 29, 1970, 36 SCRA 610; Pascua v. Talens et al.,
80 Phil. 792; Isaac v. Tan Chuan Leong, et
al., 69 Phil. 24; Lasud v. Lasud,
G.R. No. 19242, February 29, 1964, 10 SCRA 425; Sagucio
v. Bulos, G.R. Nos. L-17608-09, July 31, 1962, 5 SCRA 798.

^[3]
Amper v. Presiding Judge, Br. III, CFI, Misamis Oriental, No. L-35595, May 17,
1983, 122 SCRA 327;
Registry of Deeds of Nueva Ecija v. Director of
Lands, 72 Phil 313; Motos v. Soler, et al., 109 Phil. 481.

^[4]
Republic of the Phil. v. Garcia,
105 Phil. 826; Francisco v. Rodriguez,
No L-31083, September 30, 1975, 67 SCRA 212.

^[5]
Republic v. Ruiz, No. L-23712, April
29, 1968, 23 SCRA 348.

^[6]
Companero, et al. v. Caloma,
106 Phil. 993.