EGAO vs. CA

 

APOLONIO EGAO AND BEATRIZ EGAO, petitioners vs. THE HONORABLE COURT OF APPEALS (NINTH DIVISION), SEVERO DIGNOS AND SEVERO BONTILAO, respondents

G.R. No. L-79787 |  June 29, 1989

 

FACTS:

Private respondents Severo Dignos and Severo Bontilao filed a verified complaint for Quieting of Title and/or Recovery of Possession and Ownership before the RTC of Manolo Fortich, Bukidnon, against petitioners Apolonio and Beatriz Egao.

 

Private respondents alleged that they are the legitimate owners and possessors of two (2) parcels of land (Lot Nos. 661 and 662) situated at Lonocan, Manolo Fortich, Bukidnon. The deed of absolute sale contained the following information:

 

1.                  Lot No. 662 is covered by OCT No. P-3559 Free Patent No. 298112 registered in the name of Apolonio Egao married to Beatriz Menosa

2.                  Lot No. 661 is covered by OCT No. P-3558 Free Patent No. 303249 registered in the name of Raulita Conejos married to Pedro Conejos

3.                  Lot No. 662 has been transferred by Beatriz Menosa Egao in favor of Roberto N. Marfori through a Deed of Absolute Sale

4.                  Lot No. 661 has been transferred by Raulita Conejos in favor of Roberto N. Marfori

5.                  Both transfers (3 and 4) were executed before Tommy C. Pacana, Notary Public of Cagayan de Oro

6.                  The vendees are aware that the Certificate of Title over the subject parcels of land have not yet been transferred in favor of Roberto N. Marfori, but the tax declarations were in his name

7.                  The vendor is in actual, physical, continuous, uninterrupted and adverse possession of the subject parcels of land

 

Allegedly, upon purchase of Lot No. 662 from Roberto Marfori, improvements were introduced and taxes paid by private respondents. Sometime in June 1983, herein petitioners allegedly occupied illegally portions of the land.

 

Petitioners asserted that (1) Apolonio Egao is the registered owner of Lot. 662, evidenced by OCT No. P-3559 issued by the RD of Bukidnon pursuant to Free Patent No. 298112, (2) he and his family have been in actual, physical, adverse, open and continuous possession thereof even before the issuance to him of the free patent, (3) the land has never been sold by reason of the prohibition against alienation under CA No. 141 and (4) the instant case was the fourth in a series filed against the Egaos and is part of respondents' scheme to grab said parcel of land from the petitioners.

 

The RTC ruled in favor of the Egaos (petitioners) ordering respondent Severo Bontilao to immediately deliver to the Egaos the owner's duplicate copy of OCT No. P-3559.

 

The CA set aside the RTC decision holding that the main point of issue is whether defendants could validly sell the land to Marfori who in turn transferred ownership thereof to the plaintiffs. Marfori and Egao were both held by the CA in pari delicto for violating the 5-year restriction under Sec. 118, CA No. 141 as amended by Act No. 496 against encumbrance or alienation of lands acquired under a free patent or homestead.

 

The respondents were declared innocent purchasers for value who obtained the owner's duplicate copy of the OCT (still in the name of the Egaos) from Marfori who transferred to them (respondents) physical possession of the property.

 

ISSUE: Whether or not the Deeds of Sale executed between the petitioners and Marfori were valid thus validly transferring title to private respondents.

 

 

RULING:

No, the Deeds of Sale executed between the petitioners and Marfori were not valid thus validly transferring title to private respondents.

 

It is undisputed that Free Patent No. 298112 was issued to petitioner Apolonio Egao over Lot No. 662 on 12 August, 1965. Sec. 118 of Commonwealth Act No. 141, as amended, prohibits the alienation or encumbrance, within a period of five (5) years from the date of issuance of the patent, of lands acquired under free patent or homestead. Assuming, arguendo, the authenticity of the Deeds of Sale executed by the Egaos in favor of Marfori over portions of Lot No. 662 (the land in question), dated 7 May 1964, 14 January and 6 October 1965, it clearly appears that all deeds were executed within the prohibited period of five (5) years. As correctly found by the appellate court —

 

"Section 124 of the Public Land 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 actually or prescriptively, and cause the reversion of the property and its improvements to the state."

 

Petitioners deny the authenticity and due execution of the notarized deeds of sale in favor of Marfori, asserting continued ownership over the land by virtue of a Torrens Certificate of Title issued in their name. While the Court is not satisfied with respondents' explanation of their failure to present the notaries public (who were residents of a neighboring province) to affirm their participation in the preparation of the Deeds, the Court also finds as insufficient the mere denials by petitioners as to due execution and authenticity of said Deeds of Sale. A notarial document is evidence of the facts in clear unequivocal manner therein expressed. It has in its favor the presumption of regularity. To contradict all these, there must be evidence that is clear, convincing and more than merely preponderant. The question of authenticity being one of fact, the Court win not disturb the conclusions of the Court of Appeals on the matter.

 

Original Certificate of Title No. P-3559 over the land in dispute was issued on 1 March 1966, a few months after the execution by the Egaos of the last Deed of Sale in favor of Marfori. The OCT is registered in the name of the Egaos, herein petitioners.

 

A Torrens title, once registered, cannot be defeated, even by adverse open and notorious possession. A registered title under the Torrens system cannot be defeated by prescription. The title, once registered, is notice to the world. All persons must take notice. No one can plead ignorance of the registration.

 

Contrary to the appellate court's conclusion, respondents are not innocent purchasers for value. An "innocent purchaser for value" is deemed, under the Torrens system, to include an innocent lessee, mortgagee or other encumbrancer for value. Where a purchaser neglects to make the necessary inquiries and closes his eyes to facts which should put a reasonable man on his guard as to the possibility of the existence of a defect in his vendor's title, and relying on the belief that there was no defect in the title of the vendor, purchases the property without making any further investigation, he cannot claim that he is a purchaser in good faith for value.

 

Furthermore, a private individual may not bring an action for reversion or any action which would have the effect of cancelling a free patent and the corresponding certificate of title issued on the basis thereof, with the result that the land covered thereby will again form part of the public domain, as only the Solicitor General or the officer acting in his stead may do so.

 

The rule of pari delicto non oritur actio (where two persons are equally at fault neither party may be entitled to relief under the law), admits of exceptions and does not apply to an inexistent contract, such as, a sale void ab initio under the Public Land Act, when its enforcement or application runs counter to the public policy of preserving the grantee's right to the land under the homestead law.

 

Sec. 51, par. 2 of the Property Registration Decree (PD 1529), formerly Sec. 50 of the Land Registration Act (Act No. 496) expressly provides that the registration of the Deed is the operative act that binds or affects the land insofar as third persons are concerned. The law requires a higher degree of prudence from one who buys from a person who is not the registered owner, when the land object of the transaction is registered land. While one who buys from the registered owner need not look behind the certificate of title, one who buys from another who is not the registered owner is expected to examine not only the certificate of title but all factual circumstances necessary for him to determine if there are any flaws in the title of the transferor, or in his capacity to transfer the land. Failing to exercise caution of any kind whatsoever is tantamount to bad faith.

 

 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).

 

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.

 

Accordingly, respondents who are not innocent purchasers for value have no standing to question petitioners' right to the land and to file an action for quieting of title.

 

WHEREFORE, the appealed decision of the Court of Appeals in CA G.R. CV No. 09539 is REVERSED and SET ASIDE. Meanwhile, petitioners as registered owners are entitled to remain in physical possession of the disputed property. Respondents are ordered to deliver the owner's duplicate copy of the OCT (No. P-3559) to petitioners, without prejudice to an action for reversion of the land, which may be instituted by the Solicitor General for the State.