SPECIAL TENTH DIVISION

[CA-G.R. CV No. 35566.  December 29, 1995.]

REPUBLIC OF THE PHILIPPINES, Represented by the DIRECTOR OF LANDS, plaintiff-appellee, vs. SPOUSES DIONISIO DELA CRUZ and PAZ E. DE LA CRUZ, ET. AL., defendants-appellants.

D E C I S I O N

LIPANA-REYES, C., J p:

This is an appeal from the decision of the Regional Trial Court of Guagua, Pampanga (Branch 50) in Civil Case No. G-1541, an action for annulment of title and reversion of land to the state filed by the Republic of the Philippines (represented by the Director of Lands) against the spouses Dionisio and Paz de la Cruz, Ruperto San Jose and Marietta Fernando, Ramon San Jose and Julieta de la Cruz, Alfonso Balagtas and Aurelia Sebastian and the Register of Deeds of Pampanga. The case was originally heard by Judge Bayani S. Rivera, who upon his transfer to the Regional Trial Court of Kalookan City, was directed by the Supreme Court to pen the decision. The dispositive portion of the said decision is as follows:

"WHEREFORE, premises considered, judgment is hereby rendered as follows:

"1.     Declaring Free Patent No. V-310847 issued to defendant Dionisio de la Cruz null and void;

"2.     Ordering defendant Register of Deeds of Pampanga to cancel OCT No. 324 in the names of defendant spouses Dionisio de la Cruz and Paz de la Cruz as well as TCT No. 81472 in the names of the answering defendants;

"3.     Ordering the reversion of (sic) the State of Lot No. 1493 of the Sasmuan Cadastre covered by the aforesaid Free Patent and certificates of title;

"4.     Ordering defendant spouses Dionisio de la Cruz and Paz de la Cruz jointly and severally to refund the purchase price of the land in question (P45,000.00) to answering defendants with the legal rate of interest thereon from the date of filing of the complaint (July 9, 1984) until fully paid;

"5.     Ordering defendant spouses Dionisio de la Cruz and Paz de la Cruz jointly and severally to pay to answering defendants and cross-claimants the sum of P10,000.00 as attorney's fees, pursuant to Article 2208 of the Civil Code; and

"6.     Ordering defendant spouses Dionisio de la Cruz and Paz de la Cruz jointly and severally to pay the costs of suit" (Rollo, p. 58).

The antecedents of the case are as follows:

On November 17, 1965, defendant Dionisio de la Cruz filed with the Bureau of Lands Free Patent Application No. (III-4) 284-A for a parcel of land designated as Lot No. 1493 of the Sexmoan Cadastre 306-D (AP-15674) containing an area of .8834 hectares and situated at Barangay Malusac, Sexmoan (now Sasmuan), Pampanga (Exhibit "C", Folder of Exhibits, p. 417). In the said application, Dionisio de la Cruz ("de la Cruz" for brevity) declared that he had been in actual occupation of the area and had been cultivating it prior to July 4, 1945, in accordance with the provisions of Section 44 of the Public Land Law (Commonwealth Act No. 141), as amended by Republic Act No. 782.

On February 22, 1966, the Director of Lands approved the free patent application of de la Cruz (Exhibit "D", Folder of Exhibits, p. 418). The Director of Lands then issued on March 14, 1966, in favor of de la Cruz, Free Patent No. V-310847 covering the land applied for (Exhibit "E", Folder of Exhibits, p. 419). Accordingly on March 18, 1966, the Register of Deeds of San Fernando, Pampanga issued Original Certificate of Title (OCT) No. 324 in the name of Dionisio de la Cruz (Exhibit "F", Folder of Exhibits, p. 420).

On March 19, 1970, de la Cruz sold two (2) parcels of land, including that subject of the instant action, to Ruperto San Jose, Ramon San Jose and Alfonso Balagtas, for the consideration of TWENTY-FIVE THOUSAND PESOS (P25,000.00) (Exhibit "K-1", Folder of Exhibits, p. 428). Thus OCT No. 324 was cancelled; in lieu thereof, the Register of Deeds issued TCT No. 81472-R in the name of the defendants Ruperto San Jose, Ramon San Jose and Alfonso Balagtas, on May 19, 1971 (Exhibit "K-1", Ibid.).

However, even prior to the above sale or on March 10, 1971, Alfredo L. Enriquez , Sr., filed a formal protest with the Bureau of Lands against de la Cruz's free patent application on the ground that Free Patent No. 310847 issued to him was obtained through fraud and misrepresentation because the subject land is allegedly part of the Pampanga River bed and Estaka River (Exhibit "K", Folder of Exhibits, p. 427).

On January 28, 1983, Assistant Director of Lands Narciso Villapando directed District Land Officer Osmundo S. de Ocampo of San Fernando, Pampanga to verify from the Register of Deeds of Pampanga the status of Original Certificate of Title No. 324 (registered in the name of defendant Dionisio de la Cruz issued pursuant to his Free Patent Application No. (III-4) 284 over Lot Nos. 1493 and 3001, Csd, 306-D situated at Sasmuan and to conduct further investigation to determine the physical condition of the land as to whether the same is a foreshore land forming part of the communal fishing ground of the town of Sasmuan and other adjoining towns of Pampanga (Exh. "B", p. 416, ibid.). Pursuant to the aforesaid directive, on February 15, 1983, District Land Officer Osmundo S. de Ocampo instructed Engr. Serafin J. Garcia, Geodetic Engineer of the District Land Office No. VI-1 at San Fernando, Pampanga, to conduct a relocation survey with a view to ascertaining the correct location of existing improvements in relation to the land covered by the Free Patent of de la Cruz (Exh. "1", p. 425, Ibid.).

On March 22, 1983, Geodetic Engineer Serafin J. Garcia submitted his report to District Land Officer Osmundo S. Ocampo in connection with the relocation survey of the subject property of defendant Dionisio de la Cruz, which reads:

"In compliance with the Order dated February 15, 1983 for the verification, relocation survey of the above subject matter, I have the honor to report that on March 3, 1983, the undersigned together with the Survey Team conducted the relocation survey and ascertained the following:

"1.     That during the survey, the principal use of the two (2) subject lots is for fishpond purposes;

"2.     That the fishpond is enclosed by fishpond dikes 3 meters high and 2 meters width with two concrete checkgate (prinsa) with estimated cost of Twenty-five Thousand Pesos (P25,000.00);

"3.     That the house (kubo) is inside Free Patent No. V-310846 (OCT No. 323) of Mr. Dionisio de la Cruz patentee with estimated cost of Fourteen Thousand Pesos (P14,000.00);

"4.     That the lessee of the fishpond is Atty. Norberto Simpao of Hermosa, Bataan" (Exh. "J", p. 426, Ibid.).

On June 6, 1983, District Land Officer Osmundo S. de Ocampo in turn submitted his report to the Assistant Director of Lands in connection with the result of his investigation regarding he properties of defendant Dionisio de la Cruz, situated at Sasmuan (Exhs. "H", "H-1", pp. 423-424, Ibid.). Osmundo Ocampo found that Lot No. 3001, Csd 306-D previously Plan F (III-4) 284-D, is part of the river bed of the Pampanga River and the Estaka River, and that both Lot No. 1493 and Lot No. 3001, Csd, 306-D, Sexmoan, Pampanga are still within the unclassified region per L.C. Map No. 623, certified on November 23, 1926, based on the certification issued by the Bureau of Forest Development, Officer-in-Charge of the District, San Fernando, Pampanga, Martin A. Danao (Exh. "H-1", p. 424, Ibid; Exh. "G", p. 422, Ibid.).

On September 12, 1983, the Director of Lands, Ramon N. Casanova, wrote a memorandum to the Minister of Natural Resources stating the findings of his office pertaining to Free Patent Nos. 310847 and 310846 issued to Dionisio de la Cruz, pursuant to his Free Patent applications Nos. (III-4) 284-A and (III-4) 284, respectively, covering parcels of land situated at Malusac, Sexmoan, Pampanga (Exh. "K", p. 427, Ibid.). It was established therein that the parcels of land in question were segments of the communal fishing ground of the municipality since they were part of the river bed of the Pampanga and Estaka Rivers; that the lots in question were never planted to rice but instead were devoted to fishpond; that defendant Dionisio de la Cruz could not have been in possession thereof since July 4, 1945, for the reason that when the cadastral survey of Sexmoan was conducted in 1956, the lots in question were then noted as live creeks and navigable rivers, hence, he could not have complied with the residence and cultivation requirements of the Public Land Act; and that finally, the Bureau of Forest Development issued a certification that the lots in question are still within the Unclassified Region", per Map No. 623, certified on November 23, 1926 (Exh. "K-1", p. 428, Ibid. ). Accordingly, the Director of Lands recommended that steps be taken in court for the cancellation of Free Patents Nos. 310847 and 310846, and the corresponding certificates of title issued in the name of Dionisio de la Cruz and all subsequent titles derived therefrom covering Lot Nos. 1493 and 3001, both Csd-306-D, situated at Sexmoan, Pampanga (Exh. "K-2", p. 429. Ibid.).

Accordingly, the Republic of the Philippines, duly represented by the Director of Lands, filed the instant action for the annulment of title and reversion of land to the state. On the basis of the evidence presented, the trial court found that the land is within the unclassified region of Sasmuan and a forest zone at that, and thus inalienable; that it was never suited for a free patent grant. It also found that de la Cruz took possession of the land only in 1961 or 1962, and not on or before July 4, 1945, as he had represented in his free patent application. Accordingly, it nullified de la Cruz's title and reverted the land to the state (Rollo, pp. 57-58 ).

In this appeal, the appellants assign the following errors:

"I

"THE LOWER COURT ERRED IN DECLARING FREE PATENT NO. V-310847 ISSUED TO DIONISIO DE LA CRUZ NULL AND VOID;

"II

"THE LOWER COURT ERRED IN ORDERING THE CANCELLATION OF ORIGINAL CERTIFICATE OF TITLE NO. 324 ISSUED IN THE NAME OF DIONISIO DE LA CRUZ AS WELL AS TRANSFER CERTIFICATE OF TITLE NO. 81472 ISSUED IN THE NAMES OF DEFENDANTS-APPELLANTS (Rollo, pp. 38-39).

The appellants contend that the Republic cannot assail OCT No. 324 issued in the name of Dionisio de la Cruz as the same had become indefeasible and incontrovertible upon the expiration of one (1) year from the date of issuance of the patent (citing Ingaram vs. Ramelo, 107 Phil 498; Ybanez vs. Intermediate Appellate Court, 194 SCRA 744); and that neither can TCT No. 81472 in the names of the appellants be cancelled as the latter are buyers in good faith whose rights are duly protected by law (Rollo, pp. 39-40).

The appeal is devoid of merit.

It is not seriously disputed that the subject property is "within the unclassified region of Sasmuan, Pampanga" per LC Map No. 623 certified on November 23, 1926 (Exh. "G", Folder of Exhibits, p. 422; "H", pp. 423-424). This is in accordance with the findings made by the officer-in-charge of the Bureau of Forest Development and the District Land Officer of the Bureau of Lands. Neither is it disputed that the subject property had never been planted to rice but instead had been devoted to fishpond (Exh. "H-1", Folder of Exhibits, p. 424).

As an unclassified land, the subject property cannot be disposed of by the state at will; it requires a positive act from the government converting the same into alienable and disposable land before such land can be disposed of by the state (Cf. Sunbeam Convenience Foods, Inc. vs. Court of Appeals, 181 SCRA 443). In the instant case, no showing had ever been made that the subject property, then as now, unclassified, was made alienable and disposable by the state. For this reason, the defendant Dionisio de la Cruz cannot be said to have acquired any valid title to the disputed property as the state did not have the prerogative to alienate an unclassified land.

Thus, the mere fact that a title was issued by the Director of Lands cannot confer validity on such title if the property covered by the title or patent is inalienable (Cf. Sunbeam Convenience Foods, Inc. vs. Court of Appeals, supra; Republic vs. Court of Appeals, 135 SCRA 165; Republic vs. Court of Appeals, 148 SCRA 488; Vallarta vs. Intermediate Appellate Court, 151 SCRA 679).

Furthermore, the evidence also bears out that Dionisio de la Cruz falsely represented in his application for free patent that he had been in possession of the land since July 4, 1945, as required by the provisions of the Public Land Act, when he occupied the same only in 1961 or 1962 (Exhs. "M" & "N", Folder of Exhibits, pp. 433-439), and that he had planted rice on the disputed property when the said property had always been devoted to fishpond (Exh. "K", Folder of Exhibits, p. 427). There is, therefore, no question that fraud was committed by de la Cruz in securing his free patent and original certificate of title over the subject property.

Section 91 of the Public Land Act makes the following provision:

"Sec. 91.       The statements made in the application (for free patent) shall be considered as 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, changing or modifying the permit issued on the basis of such application and any false statement therein or omission of facts altering, changing or modifying the consideration of the facts set forth in the application shall ipso facto produce the cancellation of the concession, title or permit granted . . ."

It was held in the case of Republic of the Philippines vs. Animas (56 SCRA 499) that misrepresentation of the applicant that he had been occupying and cultivating the land are sufficient grounds for the nullification of the grant of the patent and title under the above provision of law. Accordingly, a certificate of title that is void may be ordered cancelled.

The appellants argue that their title had already become indefeasible and incontrovertible upon the expiration of one (1) year from the issuance of the title; that accordingly, the appellee cannot file an action for cancellation of title and that instead the proper remedy is to bring an action for reconveyance (Rollo, pp. 40-41).

The contention is untenable.

A certificate of title that is void may be ordered cancelled. The lapse of the one-year period within which a decree of title may be reopened for fraud would not prevent the cancellation thereof, for to hold that a title may become indefeasible by registration, even if such title had been secured through fraud or in violation of law would be the height of absurdity. Registration should not be a shield of fraud in securing title (Republic vs. Animas, supra; Republic vs. Mina, 114 SCRA 945).

Additionally, in the case of Piñero vs. Director of Lands, the Supreme Court made the following pronouncement:

"It is true that under Section 122 of the Land Registration Act, a Torrens title issued on the basis of a free patent or a homestead patent is as indefeasible as one judicially secured. And in repeated previous decisions of this Court that indefeasibility has been emphasized by Our holding that not even the Government can file an action for annulment, but at the same time, it has been made clear that an action for reversion may be instituted by the Solicitor General, in the name of the Republic of the Philippines. It is to the public interest that one who succeeds in fraudulently acquiring title to a public land should not be allowed to benefit therefrom, and the State should, therefore, have an even existing authority, thru its duly authorized officers, to inquire into the circumstances surrounding the issuance of any such title, to the end that the Republic, thru the Solicitor General or any other officer who may be authorized by law, file the corresponding action for the reversion of the land involved to the public domain, subject thereafter to disposal to other qualified persons in accordance with law. In other words, the indefeasibility of a title over land previously public is not a bar to an investigation by the Director of Lands as to how such title had been acquired, if the purpose of such investigation is to determine whether or not fraud had been committed in securing such title in order that the appropriate action for reversion may be filed by the Government (57 SCRA 386).

Consonant with the foregoing, the instant action for reversion, duly instituted by the Solicitor General, may be entertained by the courts. Counter to the appellants' contention, reconveyance is not the proper remedy.

The appellants contend that their certificate of title over the disputed property cannot be annulled as they are buyers in good faith with corresponding rights duly protected by law.

The contention cannot be sustained.

It is the rule that where innocent third persons, relying on the correctness of the certificate of title thus issued, acquire rights over the property, the court cannot disregard such rights and order the total cancellation of the certificate. The effect of such outright cancellation would be to impair public confidence in the certificate of title, for everyone dealing with the property registered under the Torrens system would have to inquire at every instance as to whether the title has been regularly issued by the court. This is contrary to the evident purpose of the law (Cf. Sec. 39, Act 496). Every person dealing with registered land may safely rely on the correctness of the certificate of title issued therefor and the law will in no way oblige him to go behind the certificate to determine the condition of the property (Director of Lands vs. Abache, et al., 73 Phil 606).

Nonetheless, the protection that the law gives to an innocent purchaser for value does not apply to a case where the certificate of title covers property of the public domain which is inalienable. Thus, it was held that any title issued on such non-disposable lands, even when the same has come into the hands of an innocent purchaser for value, should be cancelled (Lepanto Consolidated Mining Co. vs. Dumyung 89 SCRA 532). It is, therefore, unavailing for the appellants to seek protection as innocent purchasers for value when the subject property is inalienable in the first place.

On the basis of the foregoing, this Court finds that the lower court did not err in declaring Dionisio de la Cruz's patent and the corresponding titles issued null and void and in ordering the reversion of said lot to the State.

WHEREFORE, in view of the foregoing, the decision appealed from is hereby AFFIRMED.

SO ORDERED.

^* Ibay-Somera and ^** Vasquez, Jr., JJ., concur.

Footnotes

  *        Acting Chairman

**        Vice Justice Benipayo who is on leave