G.R. No. 175792 - Spouses Magtoto vs. Court of Appeals

On April 15, 1967, Daniel Junco was granted homestead patent No. 255492 over a parcel identified as lot numbers 4 and 5 in the cadastral survey of Basay, Negros Oriental, totaling 72,941 square meters.
Unbeknownst to Daniel Junco regarding the issuance of the patent, he conveyed by way of a deed of sale dated June 16, 1967 a 7,500-square meter portion of the lots to the private respondent, Crispin Salveron.

Daniel Junco registered the patent only on December 19, 1968, and was issued OCT No. 7936 covering the entire lots.
The private respondent registered the deed of sale executed in his favor; however, he was never issued a title. Notably, his grandfather paid the real estate taxes on the 7,500-square meter portion up to 1974.

On February 24, 1974, the entire lots in dispute were sold at a public auction conducted by the provincial sheriff.
Petitioner Juan Sala, acting as judgment creditor, became the highest bidder on that day, received a certificate of sale, and was subsequently issued TCT No. 1300.
After the auction, petitioner took possession of the entire lots except for the 7,500-square meter portion that had previously been sold to the private respondent.

Petitioner demanded that the private respondent surrender possession of the disputed 7,500-square meter area, but the private respondent refused to vacate.
Consequently, petitioner filed an action for recovery of possession (Civil Case No. 5966) against the private respondent.
Evidence from petitioner included TCT No. 1300 and testimony from his daughter, Lourdes Sala Napigkit, regarding efforts to secure vacatur and non-utilization of the coconut trees on the property. In contrast, private respondent relied on the deed of sale executed by Daniel Junco.

The trial court dismissed petitioner’s complaint by relying on the precedent set in Dagupan Trading v. Macam, emphasizing the principle that an execution sale following registration may override a prior sale executed before registration in certain instances.
The case involved the operative provision of Section 118 of Commonwealth Act No. 141 (as amended), which prohibits alienation or encumbrance of lands acquired under free patent or homestead provisions for a period of five years from and after the issuance date of the patent.
The chronology showed that the sale to the private respondent occurred on June 16, 1967—barely one month and eleven days after the patent issuance—thus potentially violating the statutory prohibition, while the sheriff’s auction sale occurred significantly later, on February 24, 1974.

Whether the sale of the 7,500-square meter portion of the land by Daniel Junco to the private respondent, executed within the prohibited period as per Section 118 of Commonwealth Act No. 141, is void and without effect.
Whether, despite the invalidity of the earlier sale, the subsequent sheriff’s auction sale in which petitioner acquired the remaining interest cures or operates independently of the prior nullity.
Whether the private respondent qualifies as a buyer in good faith such that his purported rights, developed through possession and registration of the deed of sale, are upheld despite the statutory prohibition.