I.

Rod, the owner of an FX taxi, found in his vehicle an envelope containing TCT No. 65432
over a lot registered in Cesar’s name. Posing as Cesar, Rod forged Cesar’s signature on a Deed of
Sale in Rod’s favor. Rod registered the said document with the Register of Deeds, and obtained a
new title in his name. After a year, he sold the lot to Don, a buyer in good faith and for value,
who also registered the lot in his name. (10 Points)

Answer:

a) Did Rod acquire title to the land? Explain.

SUGGESTED ANSWER:

No, Rod did not acquire title to the land. The inscription in the registry, to be effective, must be
made in good faith. The defense of indefeasibility of a Torrens Title does not extend to a
transferee who takes the certificate of title with notice of a flaw. A holder in bad faith of a
certificate of title is not entitled to the protection of the law, for the law cannot be used as a
shield for frauds. (Samonte v. Court of Appeals, G.R. No. 104223, July 12, 2001)

In the case at bar, Rod only forged Cesar’s signature on the Deed of Sale. It is very apparent that
there was bad faith on the part of Rod from the very beginning. As such, he is not entitled to the
protection of the Land Registration Act.

b) Discuss the rights of Don, if any, over the property.

SUGGESTED ANSWER:

It is a well-known rule in this jurisdiction that persons dealing with registered land have the
legal right to rely on the face of the Torrens Certificate of Title and to dispense with the need to
inquire further, except when the party concerned has actual knowledge of facts and
circumstances that would impel a reasonably cautious man to make such inquiry (Naawan
Community Rural Bank v. Court of Appeals, G.R. No. 128573, January 13, 2003).

In the given problem, the property was already registered in the name of Rod when he bought the
same from the latter. Thus, Don could be considered as a buyer in good faith and for value.
However, since Rod did not actually sell any property to him, Don has no right to retain
ownership over the property. He has only the right to recover the purchase price plus damages.
 ____________________________________________________________________________

II.

Regina has been leasing foreshore land from the Bureau of Fisheries and Aquatic Resources
for the past 15 years. Recently, she learned that Jorge was able to obtain a free patent from the
Bureau of Agriculture, covering the same land, on the basis of a certification by the District
Forester that the same is already “alienable and disposable”. Moreover, Jorge had
already registered the patent with the Register of Deeds of the province, and he was issued an
Original Certificate of Title for the same. Regina filed an action for annulment of Jorge’s title on
the ground that it was obtained fraudulently. Will the action prosper? Give at least five grounds.
(10 Points)

Answer:

An action for the annulment of Jorge’s Original Certificate of Title will prosper on the following
grounds:

(1) Under Chapter IX of C .A, No. 141, otherwise known as the Public Land Act, foreshore
lands are disposable for residential, commercial, industrial, or similar productive purposes, and
only by lease when not needed by the government for public service.

(2) If the land is suited or actually used for fishpond or aquaculture purposes, it comes under the
Jurisdiction of the Bureau of Fisheries and Aquatic Resources (BFAR) and can only be acquired
by lease (P.D. 705).

(3) Free Patent is a mode of concession under Section 41, Chapter VII of the Public Land Act,
which is applicable only for agricultural lands.

(4) The certificate of the district forester that the land is already “alienable and disposable”
simply means that the land is no longer needed for forest purposes, but the Bureau of Lands
could no longer dispose of it by free patent because it is already covered by a lease contract
between BFAR and Regina. That contract must be respected.

(5) The free patent of Jorge is highly irregular and void ab initio, not only because the Bureau
has no statutory authority to issue a free patent over a foreshore area, but also because of the
false statements made in his sworn application that he has occupied and cultivated the land since
July 4, 1945, as required by the free patent law. Under Section 91 of the Public Land Act, any
patent concession or title obtained thru false representation is void ab initio. In cases of this
nature, it is the government that shall institute annulment proceedings considering that the suit
carries with it a prayer for the reversion of the land to the state. However, Regina is a
party in interest and the case will prosper because she has a lease contract for the same land with
the government.

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III

In 1979, Nestor applied for and was granted a Free Patent over a parcel of agricultural land with
an area of 30 hectares, located in General Santos City. He presented the Free Patent to the
Register of Deeds, and he was issued a corresponding Original Certificate of Title (OCT)
No. 375, Subsequently, Nestor sold the land to Eddie. The deed of sale was submitted to the
Register of Deeds and on the basis thereof, OCT No, 375 was cancelled and Transfer Certificate
of Title (TCT) No. 4576 was issued in the name of Eddie. In 1986, the Director of Lands filed a
complaint for annulment of OCT No, 375 and TCT No. 4576 on the ground that Nestor obtained
the Free Patent through fraud. Eddie filed a motion to dismiss on the ground that he was an
innocent purchaser for value and in good faith and as such, he has acquired a title to the property
which is valid, unassailable and indefeasible. Decide the motion. (10 Points)

Answer: The motion of Nestor to dismiss the complaint for annulment of O.C.T. No. 375 and
T.C.T. No. 4576 should be denied for the following reasons:

1) Eddie cannot claim protection as an innocent purchaser for value nor can he
interpose the defense of indefeasibility of his title, because his TCT is rooted on a void title.
Under Section 91 of CA No. 141, as amended, otherwise known as the Public Land Act,
statements of material facts in the applications for public land must be under oath. Section
91 of the same act provides that such statements shall be considered as essential conditions and
parts of the concession, title, or permit issued, any false statement therein, or omission of
facts shall ipso facto produce the cancellation of the concession. The patent issued to Nestor in
this case is void ab initio not only because it was obtained by fraud but also because it covers 30
hectares which is far beyond the maximum of 24 hectares provided by the free patent law.

2) The government can seek annulment of the original and transfer certificates of title and the
reversion of the land to the state. Eddie’s defense is untenable. The protection afforded by
the Torrens System to an innocent purchaser for value can be availed of only if the land has been
titled thru judicial proceedings where the issue of fraud becomes academic after the lapse of one
(1) year from the issuance of the decree of registration. In public land grants, the action of the
government to annul a title fraudulently obtained does not prescribe such action and will not be
barred by the transfer of the title to an innocent purchaser for value.

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IV

In 1950, the Bureau of Lands issued a Homestead patent to A. Three years later, A sold the
homestead to B. A died in 1990, and his heirs filed an action to recover the homestead from B on
the ground that its sale by their father to the latter is void under Section 118 of the Public Land
Law. B contends, however, that the heirs of A cannot recover the homestead from him anymore
because their action has prescribed and that furthermore, A was in pari delicto. Decide. (10
Points)

Answer:

The sale of the land by A to B 3 years after issuance of the homestead patent, being in violation
of Section 118 of the Public Land Act, is void from its inception.

The action filed by the heirs of B to declare the nullity or inexistence of the contract and to
recover the land should be given due course.

B’s defense of prescription is untenable because an action which seeks to declare the nullity
or inexistence of A contract does not prescribe. (Article 1410; Banaga vs. Soler, 28 SCRA 765)

On the other hand, B’s defense of pari delicto is equally untenable. While as a rule, parties who
are in pari delicto have no recourse against each other on the principle that a transgressor cannot
profit from his own wrongdoing, such rule does not apply to violations of Section 118 of
the Public Land Act because of the underlying public policy in the said Act “to conserve the land
which a homesteader has acquired by gratuitous grant from the government for himself and his
family”. In keeping with this policy, it has been held that one who purchases a homestead within
the five-year prohibitory period can only recover the price which he has paid by filing a claim
against the estate of the deceased seller (Labrador vs. Delos Santos 66 Phil. 579) under the
principle that no one shall enrich himself at the expense of another. Applying the pari delicto
ruleto violation of Section 118 of the Public Land Act, the Court of Appeals has ruled that “the
homesteader suffers the loss of the fruits realized by the vendee who in turn forfeits the
improvement that he has introduced into the land.” (Obot vs. Sandadi Uas, 69 OG,April
35,1966}

FIRST ALTERNATIVE ANSWER:

The action to declare the nullity of the sale did not prescribe (Art. 1410}, such sale being one
expressly prohibited and declared void by the Public Lands Act [Art. 1409, par. (7)]. The
prohibition of the law is clearly for the protection of the heirs of A such that their recovering the
property would enhance the public policy regarding ownership of lands acquired by homestead
patent (Art. 1416). The defense of pari delicto is not applicable either, since the law itself
allows the homesteader to reacquire the land even if it has been sold.

SECOND ALTERNATIVE ANSWER:

Prescription does not arise with respect to actions to declare a void contract a nullity (Article
1410). Neither is the doctrine of pari delicto applicable because of public policy. The law is
designed for the protection of the plaintiff so as to enhance the public policy of the Public Land
Act to give land to the landless.

If the heirs are not allowed to recover, it could be on the ground of laches inasmuch as 40 years
had elapsed and the owner had not brought any action against B especially if the latter had
improved the land. It would be detrimental to B if the plaintiff is allowed to recover.

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Way back in 1948, Winda’s husband sold in favor of Verde Sports Center Corp. (Verde) a
10-hectare property belonging to their conjugal partnership. The sale was made without
Winda’s knowledge, much less consent. In 1950, Winda learned of the sale, when she discovered
the deed of sale among the documents in her husband’s vault after his demise. Soon after, she
noticed that the construction of the sports complex had started. Upon completion of the
construction in 1952, she tried but failed to get free membership privileges in Verde. (10 Points)

Winda now files a suit against Verde for the annulment of the sale on the ground that she did not
consent to the sale. In answer, Verde contends that, in accordance with the Spanish Civil Code
which was then in force, the sale in 1948 of the property did not need her concurrence. Verde
contends that in any case the action has prescribed or is barred by laches. Winda rejoins that her
Torrens title covering the property is indefeasible, and imprescriptible.
A. Define or explain the term “laches”. (5 Points)

Answer: negligence in the observance of duty or opportunity

specifically : undue delay in asserting a legal right or privilege.

A. LACHES means failure or neglect, for an unreasonable and unexplained length of

time, to do what, by exercising due diligence, could or should have been done earlier. It is
negligence or omission to assert a right within a reasonable time. (De Vera v. CA, 305 SCRA 624
[1999])

- In common law legal systems, laches is a lack of diligence and activity in making a legal
claim, or moving forward with legal enforcement of a right, particularly in regard to
equity. This means that it is an unreasonable delay that can be viewed as prejudicing the
opposing party.
- A defense to an equitable action, that bars recovery by the plaintiff because of the
plaintiff's undue delay in seeking relief.
- b) The four basic elements of laches are; (1) conduct on the part of the defendant or of
one under whom he claims, giving rise to the situation of which complainant seeks a
remedy; (2) delay in asserting the complainant’s rights, the complainant having had
knowledge or notice of the defendant’s conduct and having been afforded an opportunity
to institute suit; (3) lack of knowledge on the part of the defendant that the complainant
would assert the right on which he bases his suit; and (4) injury or prejudice to the
defendant in the event relief is accorded to the complainant, or the suit is not held to be
barred.

B. Decide the case, stating your reasons for your decision. (5 Points)

B. While Article 1413 of the Spanish Civil Code did not require the consent of the wife for the
validity of the sale, an alienation by the husband in fraud of the wife is void as held in Uy Coque
v. Navas, 45 Phil. 430 (1923). Assuming that the alienation in 1948 was in fraud of Winda and,
therefore, makes the sale to Verde void, the action to set aside the sale, nonetheless, is
already barred by prescription and laches. More than 52 years have already elapsed from her
discovery of the sale in 1950.

ALTERNATIVE ANSWER:
B. Winda’s claim that her Torrens Title covering the property is indefeasible and
imprescriptible [does not hold water] is not tenable. The rule of indefeasibility of a Torrens Title
means that after one year from the date of issue of the decree of registration or if the land has
fallen into the hands of an innocent purchaser for value, the title becomes incontestable and
incontrovertible.

IMPRESCRIPTIBILITY, on the other hand, means that no title to the land in derogation of that
of the registered owner may be acquired by adverse possession or acquisitive prescription or that
the registered owner does not lose by extinctive prescription his right to recover ownership and
possession of the land.

The action in this case is for annulment of the sale executed by the husband over a conjugal
partnership property covered by a Torrens Title. Action on contracts are subject to prescription.

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VI

Distinguish the Torrens system of land registration from the system of recording of evidence of
title. (10 Points)

Answer:

SUGGESTED ANSWER:

a) The TORRENS SYSTEM OF LAND REGISTRATION is a system for the

registration of title to the land. Thus, under this system what is entered in the Registry
of Deeds, is a record of the owner’s estate or interest in the land, unlike the system
under the Spanish Mortgage Law or the system under Section 194 of the Revised
Administrative Code as amended by Act 3344 where only the evidence of such title is
recorded. In the latter system, what is recorded is the deed of conveyance from hence
the owner’s title emanated—and not the title itself.

b) Torrens system of land registration is that which is prescribed in Act 496 (now PD
1529), which is either Judicial or quasi-judicial. System or recording of evidence of
title is merely the registration of evidence of acquisitions of land with the Register of
Deeds, who annotates the same on the existing title, cancels the old one and issues a
new title based on the document presented for registration.

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 VII

In 1970, the spouses Juan and Juana de la Cruz, then Filipinos, bought the parcel of
unregistered land in the Philippines on which they built a house which became their residence. In
1986, they migrated to Canada and became Canadian citizens.

Thereafter, in 1990, they applied, opposed by the Republic, for the registration of the aforesaid
land in their names. Should the application of the spouses de la Cruz be granted over the
Republic’s opposition? Why? (10 Points)

Answer: Yes, the application should be granted. As a rule, the Constitution prohibits aliens from
owning private lands in the Philippines. This rule, however, does not apply to the spouses Juan
and Juana de la Cruz because at the time they acquired ownership over the land, albeit
imperfect, they were still Filipino citizens. The application for registration is a mere
confirmation of the imperfect title which the spouses have already acquired before they
became Canadian citizens. (Republic v. CA, 235 SCRA 567 [1994]).

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