The Supreme Court has affirmed that any sale or encumbrance of land acquired through a free patent within five years of its issuance is null and void. This ruling protects the original intent of the Public Land Act, which seeks to provide landless citizens with a place to live and cultivate. Consequently, contracts violating this restriction are unenforceable, and the land may revert to the original grantee’s heirs, ensuring the law’s purpose is upheld.

From Homestead to Dispute: Can Land Acquired via Free Patent Be Sold Within Five Years?

The case of Spouses Virgilio de Guzman, Jr. v. Court of Appeals revolves around a parcel of land in Misamis Oriental originally acquired by Leoncio Bajao through Free Patent No. 400087 in 1968. Within the five-year restriction period, Bajao sold portions of the land to Spouses de Guzman in two separate transactions in 1969 and 1970. Years later, a dispute arose when Lamberto Bajao, Leoncio’s heir, included the sold property in an extrajudicial settlement and obtained a title in his name. The De Guzmans filed a complaint for reconveyance, arguing they were innocent purchasers for value. However, the Supreme Court examined the legality of the initial sales, focusing on the Public Land Act’s restrictions.

At the heart of the matter is Section 118 of Commonwealth Act No. 141, also known as the Public Land Act, which explicitly prohibits the alienation or encumbrance of lands acquired under free patent or homestead provisions within five years from the issuance of the patent. This provision is designed to ensure that land granted to citizens for their home and cultivation remains with them and their families, preventing its quick disposal due to financial pressures or lack of foresight. The Supreme Court emphasized the importance of upholding this provision, stating:

“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 improvements or crops on the land may be mortgaged or pledged to qualified persons, associations, or corporations.”

The Court underscored that this prohibition is a cornerstone of the homestead laws, which aim to distribute agricultural lands to landless citizens for their home and cultivation. This policy ensures that the land remains within the homesteader’s family, preventing its alienation to others who might exploit it for commercial purposes. To reinforce this, Section 124 of the Public Land Act stipulates the consequences of violating Sections 118 to 123:

“Any acquisition, conveyance, alienation, transfer, or other contract made or executed in violation of Sections 118 to 123 of the Public Land Act shall be unlawful and null and void from its execution. The violation shall also produce the effect of annulling and cancelling the grant, title, patent or permit originally issued, recognized or confirmed actually or presumptively. The violation shall also cause the reversion of the property and its improvements to the State.”

In light of these provisions, the Supreme Court declared the Deeds of Absolute Sale executed in 1969 and 1970 between the Spouses Bajao and Spouses de Guzman as null and void. Since these transactions occurred within the prohibited five-year period from the issuance of the free patent, they were deemed to have no legal effect. The Court rejected any claims of ignorance regarding the free patent grant, asserting that the date of issuance is a matter of public record and therefore, accessible to all parties involved. Despite the nullity of the sales, the Court recognized that the action for reversion of the land to the State can only be initiated by the Solicitor General, not by private individuals. Therefore, while the De Guzmans could not claim ownership, Lamberto Bajao, as heir of the vendors, had a better right to possess the property until the State initiated reversion proceedings.

The Supreme Court also addressed the issue of whether the principle of pari delicto (equal fault) should apply, which would typically prevent parties to an illegal contract from seeking relief. However, the Court ruled that this principle does not apply in cases involving violations of the Public Land Act, as applying it would undermine the law’s policy of preserving the grantee’s right to the land. To ensure fairness, the Court ordered Lamberto Bajao to return the purchase price of P2,400 to the De Guzmans, along with legal interest from the filing of the complaint. This decision aimed to balance the need to uphold the Public Land Act with the equitable consideration of compensating the De Guzmans for the money they had paid for the land.

Even if the five-year restriction did not apply, the Court noted that the De Guzmans’ action for reconveyance would still be barred by prescription. An action for reconveyance based on an implied trust, which arises when property is acquired through fraud or mistake, generally prescribes in 10 years from the date of registration of the title. The Court found that the De Guzmans filed their complaint long after this prescriptive period had lapsed. While there is an exception for cases where the plaintiff is in possession of the land, which transforms the action into one for quieting of title (which is imprescriptible), the Court determined that the De Guzmans failed to prove their actual possession of the property.

The Court scrutinized the evidence presented by the De Guzmans to support their claim of possession, including allegations of fencing the property and planting trees. However, the Court found these claims unsubstantiated. They testified that they did not live on the property, and the timing of the fence construction was unclear. In contrast, Lamberto Bajao presented evidence of his tax declarations and payments, which the Court considered as indicia of possession in the concept of owner. Based on this assessment, the Court concluded that the De Guzmans were not in actual possession of the property, and therefore, their action could not be considered an imprescriptible action for quieting of title.

FAQs

What is the key issue in this case?	The key issue is whether the sale of land acquired under a free patent is valid if it occurs within five years of the patent’s issuance, as prohibited by the Public Land Act. The case also examines whether the action for reconveyance has prescribed and whether the petitioners were in actual possession of the property.
What does Section 118 of the Public Land Act prohibit?	Section 118 prohibits the alienation or encumbrance of lands acquired under free patent or homestead provisions within five years from the date of the patent’s issuance. This restriction aims to ensure that the land remains with the original grantee and their family.
What happens if land is sold within the prohibited five-year period?	If land is sold within the prohibited period, the sale is considered null and void from its execution, according to Section 124 of the Public Land Act. This means the sale has no legal effect and does not transfer ownership.
Can a private individual bring an action for reversion of the land to the State?	No, only the Solicitor General or an officer acting in their stead can bring an action for reversion of land to the State. Private individuals do not have the legal standing to initiate such an action.
What is the principle of pari delicto?	The principle of pari delicto states that when two parties are equally at fault in an illegal transaction, neither can seek relief from the courts. However, this principle does not apply in cases involving violations of the Public Land Act.
What is an action for reconveyance based on implied trust, and what is its prescriptive period?	An action for reconveyance based on implied trust is a legal remedy to transfer property back to the rightful owner when it was acquired through fraud or mistake. Generally, it prescribes in 10 years from the date of registration of the title.
What is an action for quieting of title, and when is it imprescriptible?	An action for quieting of title is a legal action to remove any cloud or doubt over the title to real property. It is imprescriptible (meaning it has no time limit) when the plaintiff is in possession of the property.
What evidence is considered when determining possession of property?	Evidence considered includes tax declarations, payment of real property taxes, construction of fences, planting of trees, and whether the party resides on the property. However, tax declarations and payments are not conclusive evidence of ownership but are good indicators of possession.
What was the outcome of the case for Spouses de Guzman?	The Supreme Court denied their petition, affirming the Court of Appeals’ decision. While the Deeds of Absolute Sale were declared void, Lamberto Bajao was ordered to return the purchase price of P2,400 to the De Guzmans with legal interest.

In conclusion, this case reinforces the strict adherence to the Public Land Act, particularly the prohibition on alienating land acquired through free patent within five years of its issuance. The decision underscores the importance of protecting the rights of original grantees and their families, while also ensuring fairness by requiring the return of the purchase price.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Spouses Virgilio de Guzman, Jr. vs. Court of Appeals, G.R. No. 185757, March 2, 2016