Voiding Land Sales: The Public Land Act's Five-Year Prohibition and Reversionary Rights

The sale of agricultural land covered by a free patent within the five-year prohibitory period under the Public Land Act is void. This rule protects homesteaders and their families from losing land the State granted them for their home and cultivation. In Maltos v. Heirs of Borromeo (G.R. No. 172720, September 14, 2015), the Supreme Court clarified what happens when such a sale occurs—and who has the right to recover the property.

The Facts of the Case

Eusebio Borromeo was issued Free Patent No. 586681 over agricultural land in Agusan del Sur on February 13, 1979. On June 15, 1983—well within the five-year prohibitory period—he sold the land to Eliseo Maltos. After Borromeo's death in 1991, his heirs filed a complaint for nullity of title and reconveyance against the Maltos spouses.

The trial court dismissed the complaint, ruling the sale was void but noting the heirs failed to prove their status. The Court of Appeals reversed, ordering Maltos to reconvey the property to the heirs upon refund of the purchase price. The Maltos spouses appealed to the Supreme Court.

The Five-Year Prohibitory Period

Section 118 of the Public Land Act (Commonwealth Act No. 141) prohibits the alienation or encumbrance of lands acquired under free patent or homestead provisions for five years from the date of patent issuance, except in favor of the government or banking institutions.

The Supreme Court explained the policy behind this rule: the main purpose of granting a free patent or homestead is to preserve and keep in the family of the grantee that portion of public land the State has given so they may have a place to live and become useful members of society. Any sale made in violation of this provision is void and produces no effect whatsoever.

The Effect of the Void Sale

Section 124 of the Public Land Act provides that any conveyance made in violation of the prohibitory period is unlawful and null and void from its execution. It produces the effect of annulling and cancelling the grant, title, or patent originally issued, and causes the reversion of the property and its improvements to the State.

However, the Court emphasized that reversion is not automatic. Under Section 101 of the Public Land Act, all actions for reversion must be instituted by the Office of the Solicitor General in the proper courts. A private individual may not bring an action for reversion or any action that would have the effect of canceling a free patent and the corresponding certificate of title.

The In Pari Delicto Exception

The Maltos spouses argued that both parties were equally at fault, so under the doctrine of in pari delicto (Articles 1411 and 1412 of the Civil Code), neither party should recover from the other. The Supreme Court rejected this argument.

The Court cited Santos v. Roman Catholic Church of Midsayap, which held that the in pari delicto rule is not absolute. It admits exceptions when its application runs counter to an avowed fundamental public policy or public interest. Because the subject of the transaction is public land, public policy requires that the heirs not be prevented from re-acquiring it, as it was given by law to their family for home and cultivation.

Who Has Better Right to the Property?

Applying the ruling in Santos and Binayug v. Ugaddan, the Court held that the purchaser has no better right to remain in possession of the property against the heirs. Upon annulment of the sale, the purchaser's claim is reduced to the purchase price and its interest. As against the vendor or his heirs, the purchaser is no more entitled to keep the land than any intruder.

The Court also ruled on the claim for reimbursement of improvements. Citing Angeles v. Court of Appeals and Arsenal v. Intermediate Appellate Court, the Court held that while in pari delicto does not apply to the sale itself, it does apply to improvements. The value of improvements made by the buyer is compensated by the fruits received from long possession of the homestead.

Practical Takeaways

• Sales within five years are void. Any sale or encumbrance of free patent or homestead land within the five-year prohibitory period is null and void from its execution.
• Reversion requires government action. Only the Office of the Solicitor General may file an action for reversion. Until then, the property should be returned to the grantee or his heirs.
• The in pari delicto defense fails. Buyers cannot hide behind mutual fault when public policy favors preserving homestead rights for the grantee's family.
• Heirs can recover the property. Upon annulment of the sale, the purchaser's right is reduced to the purchase price, while the heirs may re-acquire the land.
• Improvements are forfeited. Buyers who introduced improvements during their possession are deemed compensated by the fruits they received from the land.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.