RESTITUTO DE LEON, PETITIONER, VS. COURT OF APPEALS, JUANITA RAMOS AND MAXIMO PEREZ, RESPONDENTS.

De Leon versus Court of Appeals

The Case

This is a petition brought by Restituto de Leon against the Court of Appeals, Juanita Ramos, and Maximo Perez. The petitioner claims two parcels of land by right of inheritance and challenges their purported sale to the private respondents. The lands formed part of the Buenavista Estate, which the Republic of the Philippines had purchased for distribution among landless tenants and farmers. The case matters because it fixes the reach of the restrictions written into government land grants: who may invoke them, what happens to a sale made without the required consent, and where possession lies while the State has not yet acted.

Procedural History

The private respondents filed a complaint for partition of the lands and for accounting before the Court of First Instance of Bulacan. After trial, the trial judge sustained the private respondents. The petitioner appealed, and the Court of Appeals affirmed the trial court. The Court of Appeals held that the Tuluyang Bilihan was genuine and valid, and that the lack of the stipulated written consent could be invoked only by the Republic of the Philippines and not by the petitioner, who was not a party to the instrument. It added that the stipulations did not apply to cases of hereditary succession, and that Maria de los Santos, who sold the lands, was the heir of her husband, Manuel de Leon. Reconsideration was denied. The petitioner then came to the Supreme Court for relief.

Facts

The properties were part of the Buenavista Estate, purchased by the Republic of the Philippines for distribution among landless tenants and farmers. On April 1, 1955, one lot covering over 14,200 square meters was sold to Manuel de Leon by the Department of Agriculture on behalf of the Republic. On August 5, 1969, a second lot consisting of 11,847 square meters was sold by the Republic, through the Land Authority, to the heirs of Manuel de Leon, represented by the petitioner, his grandson.

Both deeds of sale carried limitations on disposition. The first prohibited any sale, assignment, encumbrance, mortgage, or transfer within five years from the date of the deed without first obtaining the written consent of the Secretary of Agriculture and Natural Resources, and forbade any conveyance, except by hereditary succession, in favor of a person who is not landless and disqualified to acquire or own land in the Philippines. The second imposed a similar condition, barring any subdivision, sale, or transfer within fifteen years from execution without the written consent of the Governor of the Land Authority, and only to persons qualified to purchase under the cited statutes or to banking institutions.

On March 18, 1959, Maria de los Santos, the widow of Manuel de Leon, executed a Tuluyang Bilihan over one half of the lands in favor of the private respondents. She died on February 5, 1960, without delivering possession. The petitioner, who succeeded her in the lands, resisted the private respondents' demands for accounting of the income. The private respondents then sued for partition and accounting. The petitioner answered that the properties belonged to him as the sole heir of Manuel de Leon, and that the Tuluyang Bilihan was a nullity because Maria de los Santos had no authority to convey the properties during the prohibited period without the written consent of the appropriate authorities. No such consent was ever obtained.

Issues

• Whether or not the Tuluyang Bilihan is void for having been executed without the written consent required by the conditions in the two deeds of sale.
• Whether or not the petitioner, a private individual and heir, may invoke the violation of those conditions, or whether only the Republic of the Philippines may do so.
• Whether or not the private respondents are entitled to retain the lands, or at least to recover the purchase price they paid.

Applicable Provisions

The first deed of sale in favor of Manuel de Leon provided:

That it shall not be sold, assigned, encumbered, mortgaged or transferred, within the period of five (5) years from the date hereof without first obtaining the written consent of the Secretary of Agriculture and Natural Resources.

This condition fixes the prohibited period and the official whose written consent was indispensable to any sale by the heir.

The same deed further provided:

That except by hereditary succession, it shall not be conveyed, transferred or assigned in favor of any person who is not landless and disqualified to acquire or own land in the Philippines.

This condition marks hereditary succession as the only mode of transfer exempt from the restriction.

The second deed of sale provided:

That except by hereditary succession it shall not be subdivided, sold or in any manner transferred or encumbered, within the period of FIFTEEN (15) years from the date of execution hereof, without first obtaining the written consent of the Governor of the Land Authority and only to persons who are qualified to purchase said land under Commonwealth Act No. 539, Republic Act No. 1162, as amended, Republic Act No. 1400 as amended and/or Republic Act No. 3844 or to government banking institutions or agencies or to any private banking institutions.

This condition supplies the fifteen-year period and the consent of the Governor of the Land Authority for the second lot.

The Court also relied on the following statutory rule from the Public Land Act, quoted in the Egao case:

Section 124 of the Public Land is Act provided (sic) that any acquisition, conveyance, alienation, transfer or other contract made or executed in violation of any of the provisions of Sections 118, 121, 120, 122 and 123 of this Act shall be unlawful, null and void from its execution and shall produce the effect of annulling and cancelling the grant, title, patent or permit originally issued, recognized or confirmed, actually or prescriptively, and cause the reversion of the property and its improvements to the state.

This provision supplies the consequence of nullity from execution and the reversion of the land to the State.

Ruling

On the first issue, the Court held that the stipulations in the first deed of sale were binding on the heirs of Manuel de Leon, and that the heirs were bound directly by the similar stipulations in the second deed. The purpose of these stipulations was to keep within the family the property which the government had sold to the tenant or farmer for a minimal cost to enable him to acquire his own land. Hence, before selling to the private respondents, Maria de los Santos had first to secure the written consent of the Secretary of Agriculture and Natural Resources for the first lot and of the Governor of the Land Authority for the second lot. The only exception is when the land is acquired by or transferred to another person by hereditary succession. When the lands were inherited by Maria de los Santos as surviving spouse, no consent was needed. But consent was still necessary when she later sold them, because the lands passed to the private respondents by virtue of the Tuluyang Bilihan and not by hereditary succession. No such consent was ever obtained. The Court disagreed with the Court of Appeals that, because she acquired the lands by hereditary succession, she was released from the conditions. As heir, she should not be treated less strictly than her predecessor in interest in the disposition of the lands during the prohibited period. The Court applied the homestead and free patent doctrine to the case at bar, since the distribution and sale of the Buenavista Estate likewise promoted the distribution of land for the landless, and the purchase price was intentionally minimal. The first lot was sold for only 177 pesos and 50 centavos and the second for only 236 pesos and 94 centavos, for a total area of more than two and a half hectares. The Court quoted with approval:

Deeds of sale of patented lands, perfected within the prohibited five (5) year period are null and void (Sec. 124, Public Land Act). No title passed from the Egaos to Marfori which could be validly transferred to herein respondents Bontilao and Dignos. Nemo dat quod non habet (nobody can dispose of that which does not belong to him).

On the second issue, the Court noted that the Court of Appeals was supported by ample jurisprudence holding that only the Republic may question the validity of the grant, and that a third person cannot question the legality of the concession. On the other hand, Manresa expressed the contrary view, based on the public policy that an heir cannot be prevented from inheriting property rightfully belonging to his predecessor. The Court resolved the matter by holding that, as the Tuluyang Bilihan was null and void from the beginning, ownership was not transferred to the private respondents but remained with Maria de los Santos. The Republic, if not the petitioner, may still ask for reversion of the properties for violation of the conditions. Meanwhile, the petitioner has preferential rights of possession as against the private respondents, who rely only on the void Tuluyang Bilihan. As the Court held in the Egao case:

While the government has not taken steps to assert its title, by reversion, to a homestead sold in violation of the Public Land Act, the vendor or his heirs is better entitled to the possession of the land, the vendee being in no better situation than any intruder.

On the third issue, the Court held it only fair that the private respondents recover the purchase price of the land, with legal interest from the execution of the Tuluyang Bilihan until refund is actually made. This rests on the finding that the instrument, although deficient for lack of the required consent, was validly executed. The Court sustained that finding because the petitioner was ambivalent in assailing its authenticity, first doubting its genuineness because it was only thumbprinted and later alleging that its contents should have been explained to Maria de los Santos as she was illiterate. The other objections were no longer examined.

Doctrine

A sale of land acquired under a government land grant, made within the prohibited period and without the written consent of the designated official, is null and void from the beginning, and no title passes to the buyer. The principle that deeds of sale of patented lands perfected within the prohibited period are null and void, and that nobody can dispose of that which does not belong to him, applies by analogy to lands distributed from an estate such as the Buenavista Estate, because the purpose is the same: to preserve the land grant within the family of the grantee. The exception for hereditary succession covers only the acquisition by inheritance; it does not license the heir to sell during the prohibited period without the required consent. While the State has not moved for reversion, the vendor or the vendor's heirs are better entitled to possession than the buyer under the void sale, who is in no better situation than an intruder. The buyer may recover the purchase price with legal interest.

Disposition

The Court reversed the decision of the Court of Appeals and rendered a new judgment declaring the Tuluyang Bilihan null and void from the beginning, recognizing the petitioner's preferential right to possession without prejudice to the State's right to ask for reversion, and requiring the petitioner to refund to the private respondents 2,300 pesos with legal interest from March 18, 1959, until fully paid.

Remember This

The one line to memorize: a sale within the prohibited period without the required written consent is void from the beginning, and the heir of the grantee may invoke that nullity to claim preferential possession, subject to the State's right of reversion. Examiners use this case to test the analogy between homestead and free patent restrictions and distributed estate lands, the limits of the hereditary succession exception, and who may question a void sale.