G.R. No. 202086 - Panaligan vs. Phyvita Enterprises Corp.

Case Summary (G.R. No. 202086)

Procedural Posture

The petitioner filed a Complaint for Cancellation of Title/Reversion alleging violations of Sections 118, 121 and 122 of Commonwealth Act No. 141. The private respondents pleaded special and affirmative defenses including laches and equitable estoppel, and adduced evidence in support. The RTC granted the respondents’ special and affirmative defenses and dismissed the complaint on grounds of equitable estoppel and laches. The petitioner’s motion for reconsideration was denied. The petitioner then brought a Petition for Review on Certiorari under Rule 45 to the Supreme Court.

Relevant Dates and Title Transactions (Chronology)

Free Patent (FP) No. (III-12) 17306 issued May 20, 1987; OCT No. P-22-C registered May 25, 1987 in the name of Epifania San Pedro covering Lot No. 3070 (12,108 sq. m.).
After the patentee’s death, Pelagio Francisco executed an Affidavit of Self-Adjudication and was issued TCT No. T-7836 on October 25, 1990.
Pelagio Francisco sold the property to Tanduay Lumber on December 3, 1990, leading to issuance of TCT No. P-8582 in Tanduay’s name.
Tanduay subdivided the lot into 3070-A and 3070-B; subsequent transfers and subdivisions produced multiple titles (TCT Nos. T-24663/T-44191; T-24664; T-55635; T-55636; T-50387 to T-50395; and numerous later TCTs issued to the several private respondents).
A petition to the Office of the Solicitor General (OSG) to seek cancellation of the patent due to alleged sale within five years was sent January 31, 2011; OSG referred it to the RED, DENR Region III for investigation; RED recommended a reversion suit.
Complaint for Cancellation of Title/Reversion filed August 31, 2014.

Applicable Law and Constitutional Basis

Statutes relied upon in the litigation: Commonwealth Act No. 141 (The Public Land Act), specifically Sections 118, 119, 121 and 124 as invoked by the petitioner.
Supervening statute relied upon by the Supreme Court: Republic Act No. 11231 (Agricultural Free Patent Reform Act), particularly Sections 3 and 4 which remove the restrictions imposed under Sections 118, 119 and 121 of CA No. 141 and give the removal retroactive effect subject to a limited saving clause.
Precedent cited on justiciability: David v. Macapagal-Arroyo (moot and academic doctrine).
Constitutional framework: 1987 Philippine Constitution (decision rendered in 2019; accordingly the 1987 Constitution is the governing constitutional reference).

Petitioner's Theory and Claims Below

The petitioner’s complaint asserted that the transfer by Pelagio Francisco to Tanduay Lumber occurred within five years of issuance of the free patent and therefore violated Section 118 of CA No. 141, which proscribed alienation or encumbrance of a free-patented parcel within five years of grant (subject to specified exceptions, including transmission by inheritance). The petitioner contended that, because the five-year prohibition was breached, the sale to Tanduay was null and void ab initio and the titles derived therefrom should be cancelled and the property reverted to the State.

Respondents' Defenses and RTC Ruling

The private respondents raised special and affirmative defenses of laches and equitable estoppel (and prescription). The RTC, after hearing and considering evidence and memoranda, granted those defenses and dismissed the complaint on the basis that the Government’s action was barred by equitable estoppel and laches. The RTC denied the petitioner’s motion for reconsideration.

Issue Presented to the Supreme Court

Whether the petitioner’s Complaint for Cancellation of Title/Reversion is barred by equitable estoppel and laches (i.e., whether the Government’s action is precluded by those defenses), and whether the complaint may proceed in light of statutory and factual circumstances.

Supreme Court's Legal Analysis

The Supreme Court determined that intervening legislation, Republic Act No. 11231, rendered the controversy moot and academic. RA 11231 explicitly removes the restrictions imposed under Sections 118, 119 and 121 of CA No. 141 with respect to agricultural free patents issued under Section 44 of CA No. 141, declaring such agricultural free patents to be titles in fee simple not subject to restrictions on encumbrance or alienation. Section 4 of RA 11231 gives the removal of those restrictions retroactive effect, with a proviso preserving the right of redemption under Section 119 for transactions made in good faith prior to RA 11231’s effectivity. The Court applied the mootness doctrine as articulated in David v. Macapagal-Arroyo: because RA 11231 removed the legal basis underpinning the Governmen

Case Syllabus (G.R. No. 202086)

Case Identification and Procedural Posture

Decision reported at 865 Phil. 941, Second Division, G.R. No. 223822, dated October 16, 2019.
Petition for Review on Certiorari under Rule 45 of the Rules of Court filed by the Republic of the Philippines, represented by the Regional Executive Director (RED), DENR Regional Office No. III (petitioner).
Petition assails: (a) RTC, Third Judicial Region, Branch 13, Malolos, Bulacan, Resolution dated September 3, 2015 in Civil Case No. 622‑M‑2014 (RTC Resolution), which granted respondents' Special and Affirmative Defenses and dismissed the Complaint for Cancellation of Title/Reversion on grounds of equitable estoppel and laches; and (b) RTC Resolution dated March 4, 2016 denying the motion for reconsideration filed by the petitioner.
Rule 45 Petition docketed as G.R. No. 223822 and filed May 23, 2016. Private respondents (except Tanduay Lumber, Inc.) filed comments thereafter.

Parties

Petitioner: Republic of the Philippines, represented by the Regional Executive Director, Department of Environment and Natural Resources (DENR), Regional Office No. III.
Respondents: Tanduay Lumber, Inc.; Verbo Realty and Development Corp.; Spouses Clemente and Ma. Lourdes Garcia; John Michael H. Artienda; Spouses Teodoro D.G. Chan and Angelita G. Chan; Licerio M. Libunao; Maricris A. Melchor; Maricris C. Armado; Winston T. Capati; and the Register of Deeds of Bulacan.
Note: Tanduay Lumber, Inc. was not served because its location was said to be unknown and it was said to have closed.

Nature of Action and Relief Sought

Complaint for Cancellation of Title/Reversion dated August 31, 2014 filed by the OSG on behalf of the Republic (the Complaint).
Relief sought: annulment/cancellation of Free Patent No. (III-12) 17306 and cancellation/reversion of all subsisting derivative titles allegedly issued in violation of Commonwealth Act No. 141 (Public Land Act), specifically Sections 118, 121 and 122, due to alleged unlawful alienation within five years from grant.

Issue Presented

Singular legal issue framed in the Petition: Whether the petitioner’s complaint for reversion and cancellation of titles is barred by estoppel and laches.

Material Facts (as recited in the RTC Resolution)

Free Patent (FP) No. (III-12) 17306 issued May 20, 1987; Original Certificate of Title (OCT) No. P‑22‑C registered May 25, 1987 in name of Epifania San Pedro; covers Lot No. 3070, Cad‑333, San Juan, Balagtas, Bulacan; area 12,108 square meters.
After Epifania San Pedro’s death, Pelagio Francisco, Sr. executed an Affidavit of Self Adjudication declaring himself sole surviving heir; OCT No. P‑22‑C cancelled; Transfer Certificate of Title (TCT) No. T‑7836 issued to Pelagio Francisco on October 25, 1990.
December 3, 1990: Pelagio Francisco sold the subject property to Tanduay Lumber; TCT No. T‑7836 cancelled and TCT No. P‑8582 issued in name of Tanduay Lumber.
Tanduay Lumber caused subdivision of Lot No. 3070 into Lot Nos. 3070‑A and 3070‑B under Plan Psd‑03‑0778111, approved by the Land Management Service, DENR Region III.
- TCT No. T‑24663 [P(M)] issued in name of Nolasco R. Capati, Sr. covering Lot No. 3070‑A by virtue of a Deed of Exchange (Lot No. 3070‑A exchanged with Lot No. 3069‑B‑1).
- TCT No. T‑24664 [P(M)] issued in the name of Tanduay Lumber covering Lot No. 3070‑B.
February 4, 2003: Nolasco R. Capati, Sr. transferred Lot No. 3070‑A to Winston T. Capati; TCT No. T‑24663 [P(M)] cancelled and TCT No. T‑44191 [P(M)] issued in name of Winston T. Capati.
Lot No. 3070‑A further subdivided into Lot Nos. 3070‑A‑1 and 3070‑A‑2 under Subdivision Plan Psd‑03‑124704.
- Lot 3070‑A‑1 registered under TCT No. T‑55635 [P(M)] in name of Verbo Realty (by virtue of a sale).
- Lot 3070‑A‑2 registered under TCT No. T‑55636 [P(M)] in name of Winston T. Capati.
December 31, 2002: Lot 3070‑B further subdivided into Lot Nos. 3070‑B‑1 to 3070‑B‑9 under Subdivision Plan Psd‑03‑125214.
- July 8, 2003 Deed of Conveyance: Tanduay Lumber transferred Lot Nos. 3070‑B‑1, ‑B‑3, ‑B‑5 and ‑B‑6 to Verbo Realty; registered under TCT Nos. T‑50387 [P(M)], T‑50389 [P(M)], T‑50391 [P(M)], and T‑50392 [P(M)], respectively.
- Lot Nos. 3070‑B‑2, ‑B‑4, ‑B‑7, ‑B‑8 and ‑B‑9 remained registered in favor of Tanduay Lumber under TCT Nos. T‑50388 [P(M)], T‑50390 [P(M)], T‑50393 [P(M)], T‑50394 [P(M)], and T‑50395 [P(M)], respectively.
Subsequent transfers and registrations affecting Lots 3070‑B‑1 to 3070‑B‑9:
- Lot 3070‑B‑1 sold to Spouses Clemente and Maria Lourdes Garcia; TCT No. T‑64971 [P(M)] issued to them.
- Lot 3070‑B‑2 sold by Tanduay Lumber to the Garcia spouses; TCT No. T‑54606 [P(M)] issued to them.
- Lot 3070‑B‑4 transferred to Jeffrey B. Miranda; TCT No. T‑59827 [P(M)] issued; thereafter sold to John Michael H. Artienda; TCT No. T‑59827 [P(M)] cancelled and TCT No. T‑75785 [P(M)] issued in Artienda’s name.
- Lot 3070‑B‑5 conveyed to Spouses Ruben and Amalia Nicolas; later sold back to Verbo Realty; TCT No. 040‑2012008381 issued in name of Verbo Realty.
- Lot 3070‑B‑6 transferred to the Garcia spouses; TCT No. T‑54943 [P(M)] issued.
- Lot 3070‑B‑7 transferred to the Garcia spouses; TCT No. T‑52118 [P(M)] issued.
- Lot 3070‑B‑8 conveyed to the Garcia spouses; TCT No. 60193 [P(M)] issued; later sold by the Garcia spouses to Spouses Teodoro and Angelita Chan; TCT No. T‑66304 [P(M)] issued to the Chans.
- Lot 3070‑B‑9 transferred to Licerio M. Libunao; TCT No. T‑54989 [P(M)] issued.
Consolidation: Under Consolidation‑Subdivision Plan Pcs‑03‑015689, the Garcia spouses consolidated Lot Nos. 3070‑B‑1, ‑B‑2, ‑B‑6 and ‑B‑7 with Lot Nos. 3083 and 3084‑C; as a result TCT Nos. 040‑2011005318, 040‑2011005319 and 040‑2011005320 issued in name of the Garcia spouses.
Garcia spouses sold lots covered by TCT No. 040‑2011005319 and TCT No. 040‑2011005320 to Maricris A. Melchor and