Maltos v. Heirs of Eusebio Borromeo

3/3/24, 9:36 PM SUPREME COURT REPORTS ANNOTATED VOLUME 770
G.R. No. 172720. September 14, 2015.*
ELISEO MALTOS and ROSITA P. MALTOS, petitioners, vs.

HEIRS OF EUSEBIO BORROMEO, respondents.
Civil Law; Property; Homestead; The five (5)-year period prohibiting

the sale of land obtained under homestead or free patent is provided under
Section 118 of the Public Land Act (PLA).—The five-year period prohibiting
the sale of land obtained under homestead or free patent is provided under
Section 118 of the Public Land Act, which states: SECTION 118. Except in
favor of the Government or any of its branches, units, or institutions, or
legally constituted banking corporations, lands acquired under free patent or
home-
* SECOND DIVISION.
398
398 SUPREME COURT REPORTS ANNOTATED

Maltos vs. Heirs of Eusebio Borromeo
stead provisions shall not be subject to encumbrance or alienation from

the date of the approval of the application and for a term of five years from
and after the date of issuance of the patent or grant, nor shall they become
liable to the satisfaction of any debt contracted prior to the expiration of said
period; but the improvements or crops on the land may be mortgaged or
pledged to qualified persons, associations, or corporations.
Remedial Law; Civil Procedure; Counterclaims; The general rule is
that “a compulsory counterclaim . . . not set up shall be barred.”—The
general rule is that “[a] compulsory counterclaim . . . not set up shall be
barred.” Further, the computation of the value of the improvements on the
land entails findings of fact. In any case, the Court of Appeals did not err
when it stated in its Resolution dated April 7, 2006 that: With respect to
Appellees’ claim for the reimbursement of the improvements on the land in
question, they are hereby declared to have lost and forfeited the value of the
necessary improvements that they made thereon in the same manner that
https://central.com.ph/sfsreader/session/0000018e048d3bcaa87fa891000d00d40059004a/t/?o=False 1/31
Appellants should lose the value of the products gathered by the Appellees
from the said land.
Same; Same; Reversion; The purpose of reversion is “to restore public
land fraudulently awarded and disposed of to private individuals or
corporations to the mass of public domain.”—The purpose of reversion is
“to restore public land fraudulently awarded and disposed of to private
individuals or corporations to the mass of public domain.” The general rule
is that reversion of lands to the state is not automatic, and the Office of the
Solicitor General is the proper party to file an action for reversion.
Same; Same; Same; Since an action for reversion presupposes that the
property in dispute is owned by the state, it is proper that the action be filed
by the Office of the Solicitor General (OSG), being the real party-in-interest.
—We clarify that the remedy of reversion is not the same as the remedy of
declaration of nullity of free patents and certificate of title. In reversion, the
“allegations in the complaint would admit State ownership of the disputed
land[,]” while in an action for the declaration of nullity of free patent and
certificate of title, the allegations would include “plaintiff’s ownership of the
contested lot prior to the issuance of [the] free patent and certificate of
title[.]” Since an action for reversion presupposes that the property
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VOL. 770, SEPTEMBER 14, 2015 399

in dispute is owned by the state, it is proper that the action be filed by

the Office of the Solicitor General, being the real party-in-interest.
PETITION for review on certiorari of the decision and resolution of

the Court of Appeals.
The facts are stated in the opinion of the Court.
Sansaet-Masendo-Cadiz Bañosia Law Offices for petitioners.
Miguel Padilla Paderanga for respondents.
LEONEN, J.:
The sale of a parcel of agricultural land covered by a free patent

during the five-year prohibitory period under the Public Land Act is
void. Reversion of the parcel of land is proper. However, reversion
under Section 101 of the Public Land Act is not automatic. The
Office of the Solicitor General must first file an action for reversion.
On February 13, 1979, Eusebio Borromeo was issued Free Patent
No. 586681 over a piece of agricultural land located in San
Francisco, Agusan del Sur, covered by Original Certificate of Title

No. P-9053.1
On June 15, 1983, well within the five-year prohibitory period,
Eusebio Borromeo sold the land to Eliseo Maltos.2
Eusebio Borromeo died on January 16, 1991. His heirs claimed
that prior to his death, he allegedly told his wife, Norberta
Borromeo,3 and his children to nullify the sale made to Eliseo
Maltos and have the Transfer Certificate of Title No. T-5477
cancelled because the sale was within the five-year prohibitory
period.4
_______________
1 Rollo, p. 22, Court of Appeals’ Decision.

2 Id.
3 Id., at p. 26.
4 Id., at p. 22.
400

On June 23, 1993, Norberta Borromeo and her children (heirs of

Borromeo) filed a Complaint for Nullity of Title and Reconveyance
of Title against Eliseo Maltos, Rosita Maltos, and the Register of
Deeds of Agusan del Sur.5 The case was docketed as Civil Case No.
946.6
Eliseo Maltos and Rosita Maltos (Maltos Spouses) filed their
Answer, arguing that the sale was made in good faith and that in
purchasing the property, they relied on Eusebio Borromeo’s title.
Further, the parties were in pari delicto. Since the sale was made
during the five-year prohibitory period, the land would revert to the
public domain and the proper party to institute reversion
proceedings was the Office of the Solicitor General.7
5 Id.
6 Id., at p. 93, Regional Trial Court’s Decision. A copy of the
trial court Decision is attached to the Rollo on pages 93-118;
however, the specific branch of the Regional Trial Court is not
legible.
The Register of Deeds of Agusan del Sur also filed an Answer,

arguing that the deed of sale was presented for registration after the
five-year prohibitory period, thus, it was ministerial on its part to
register the deed.8
The heirs of Borromeo countered that good faith was not a valid
defense because the prohibitory period appeared on the face of the
title of the property.9
The Regional Trial Court10 of Prosperidad, Agusan del Sur
narrowed down the issues to the following:
1. Whether or not the herein plaintiffs are the legal heirs of the
late Eusebio Borromeo.
_______________
5 Id.
6 Id., at p. 93, Regional Trial Court’s Decision. A copy of the trial court Decision
is attached to the Rollo on pages 93-118; however, the specific branch of the Regional
Trial Court is not legible.
7 Id., at pp. 22-23, Court of Appeals’ Decision.
8 Id., at p. 23.
9 Id.
10 Id., at pp. 93-118, Regional Trial Court’s Decision. The Decision was
promulgated on August 30, 2002 and was penned by Executive Judge Patricio D.
Balite.
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VOL. 770, SEPTEMBER 14, 2015 401

2. Whether or not the sale of the disputed property within the

prohibitory period is valid or binding.11
The trial court dismissed the Complaint on the ground of failure

to state a cause of action.12 Also, the heirs of Borromeo did not have
a right of action because they were unable to establish their status as
heirs of the late Eusebio Borromeo.13 They may have declared
themselves the legal heirs of Eusebio Borromeo, but they did not
present evidence to prove their allegation.14 Further, the
determination of their rights to succession must be established in
special proceedings.15
The trial court also ruled that “[t]he sale was null and void
because it was within the five (5)-year prohibitionary [sic] period”16
under the Public Land Act.17 The defense of indefeasibility of title
was unavailing because the title to the property stated that it was
“subject to the provisions of Sections 118, 119, 121, 122 and 124”18
of the Public Land Act.19 Since the property was sold within the
five-year prohibitory period, such transfer “result[ed] in the
cancellation of the grant and the reversion of the land to the public
domain.”20
As to the defense of in pari delicto, the trial court ruled against
21
its
22
applicability, citing Egao v. Court of Appeals (Ninth Division).
_______________
11 Id., at p. 112.
12 Id.
13 Id.
14 Id., at pp. 112-113.
15 Id., at pp. 113-114.
16 Id., at p. 114.
17 Id., at pp. 114-115. The Public Land Act referred to is Com. Act No. 141
(1936).
18 Id., at p. 115.
19 Id.
20 Id., at p. 116.
21 Id., at p. 117.
22 256 Phil. 243; 174 SCRA 484 (1989) [Per J. Padilla, Second Division].
402

The rule of pari delicto non oritur action (where two persons are equally
at fault neither party may be entitled to relief under the law), admits of
exceptions and does not apply to an inexistent contract, such as, a sale void
ab initio under the Public Land Act, when its enforcement or application
runs counter to the public policy of preserving the grantee’s right to the land
under the homestead law.23 (Citation omitted)
The trial court further held that since the sale was null and void,
no title passed from Eusebio Borromeo to Eliseo Maltos.24 The
dispositive portion of the trial court’s Decision states:
WHEREFORE, for lack of merit, the complaint under consideration is

hereby ordered DISMISSED. No pronouncement as to costs.
SO ORDERED.25
On appeal, the heirs of Borromeo argued that they were able to

prove their status as heirs through the testimony of their mother,
Norberta Borromeo.26
The heirs of Borromeo also argued that the trial court should
have ordered the “revival of [Original Certificate of Title] No. P-
9053 in the name of the Heirs of EUSEBIO BORROMEO.”27
The Court of Appeals28 reversed the Decision of the trial court
and held that since Eusebio Borromeo sold his property
_______________
23 Id., at p. 252; p. 493.

24 Rollo, p. 118, Regional Trial Court’s Decision.
25 Id.
26 Id., at pp. 26-28, Court of Appeals’ Decision.
27 Id., at p. 30.
28 Id., at pp. 21-35. The Decision was penned by Associate Justice Myrna
Dimaranan-Vidal and concurred in by Associate Justices Romulo V. Borja (Chair) and
Ricardo R. Rosario of the Court of Appeals, Mindanao Station, Cagayan de Oro City,
Twenty-Second Division.
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VOL. 770, SEPTEMBER 14, 2015 403

within the five-year prohibitory period, the property should revert to

the state.29 However, the government has to file an action for
reversion because “reversion is not automatic.”30 While there is yet
no action for reversion instituted by the Office of the Solicitor
General, the property should be returned to the heirs of Borromeo.31
The dispositive portion of the Court of Appeals’ Decision states:
WHEREFORE, premises considered, the instant Appeal is GRANTED.

The Decision of the court a quo in Civil Case No. 946 is hereby SET
ASIDE and another one is entered (1) ordering Appellee ELISEO MALTOS
to reconvey the property subject matter of this litigation to Appellants upon
the refund by the latter to Appellee ELISEO MALTOS the sum of
P36,863.00, all expenses for the reconveyance to be borne by the buyer,
ELISEO MALTOS, herein Appellee and (2) ordering the Register of Deeds
of Prosperidad, Agusan del Sur to cancel TCT No. T-5477 and revive OCT
No. P-9053.
Let a copy of this Decision be furnished the Office of the Solicitor
General (OSG) for its information and appropriate action and to inform this
court within a period of thirty (30) days from receipt hereof of the action
done under the premises.
SO ORDERED.32 (Emphasis supplied)
The Maltos Spouses filed a Motion for Reconsideration, arguing

that since the prohibition on transfers of property is provided by law,
only the heirs of Borromeo should be punished.33 Punishment, in
this case, would come in the form of preventing the heirs of
Borromeo from reacquiring the land.34
_______________
29 Id., at p. 31.
30 Id.
31 Id., at p. 32.
32 Id., at pp. 33-34.
33 Id., at p. 36, Court of Appeals Resolution.
34 Id.
404

Instead, the land should revert back to the state.35 The Maltos
Spouses also prayed that they be reimbursed for the improvements
they introduced on the land.36 Assuming that they would be found to
be also at fault, the principle of in pari delicto should apply.37
The Court of Appeals38 denied the Motion for Reconsideration,39
reasoning that it could not rule on the issue of who between the
parties had the better right to the property.40 Also, it was the
government who should decide whether the heirs of Borromeo
“should retain ownership of the land.”41 With regard to the
applicability of the in pari delicto doctrine, the Court of Appeals
held that in pari delicto does not apply in cases where its application
will violate the policy of the state.42
On May 10, 2006, the Maltos Spouses filed a Petition43 for
Review before this court, questioning the Decision and Resolution
of the Court of Appeals in C.A.-G.R. CV No. 77142.44
This court, in a Resolution45 dated July 5, 2006, required the
heirs of Borromeo to file their Comment.
_______________
35 Id.
36 Id., at p. 38.
37 Id., at pp. 36-37.
38 Id., at pp. 36-38. The Resolution was penned by Associate Justice Myrna
Dimaranan-Vidal and concurred in by Associate Justices Romulo V. Borja (Chair) and
Ricardo R. Rosario of the Court of Appeals, Mindanao Station, Cagayan de Oro City,
Twenty-Second Division.
39 Id., at p. 38.
40 Id., at p. 37.
41 Id.
42 Id., citing Arsenal v. Intermediate Appellate Court, 227 Phil. 36, 51; 143
SCRA 40, 54 (1986) [Per J. Gutierrez, Jr., Second Division].
43 Id., at pp. 3-20.
44 Id., at p. 18.
45 Id., at p. 41.
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The heirs of Borromeo filed their Comment,46 which was noted

by this court in a Resolution47 dated September 25, 2006. In the
same Resolution, this court required the Maltos Spouses to file their
Reply.48
In a Resolution49 dated March 28, 2007, this court required Attys.
Ma. Cherell L. De Castro and Gener C. Sansaet, counsels for the
Maltos Spouses, to show cause why they should not be disciplinarily
dealt with for their failure to file a Reply. They were also required to
comply with the Resolution dated September 25, 2006.50
Counsels for the Maltos Spouses filed a Compliance,51 together
with the Reply.52 In a Resolution53 dated August 15, 2007, this court
noted and accepted the Compliance, and also noted the Reply.
I
The Maltos Spouses argue that the heirs of Borromeo did not
present evidence to prove that they are indeed the heirs of Eusebio
Borromeo. The heirs of Borromeo did not present the death
certificate of Eusebio Borromeo, the marriage certificate of Eusebio
Borromeo and Norberta Borromeo, or any of the birth certificates of
the children of Eusebio.54 While Norberta Borromeo and two of her
children testified,55 their tes-
_______________
46 Id., at pp. 42-46.

47 Id., at p. 48.
48 Id.
49 Id., at p. 50.
50 Id.
51 Id., at pp. 51-52.
52 Id., at pp. 51-63.

53 Id., at p. 66.
54 Id., at p. 8, Petition.
55 Id., at pp. 99-105, Regional Trial Court’s Decision. The trial court states that
Norberta Borromeo, Armando Borromeo, and Susan Borromeo Morales testified.
406

timonies should be considered as self-serving.56 The Maltos Spouses

cite Article 17257 of the Family Code, which enumerates how
filiation may be established.58
The Maltos Spouses also contest the Court of Appeals’ ruling
stating that they did not rebut the testimonies of the heirs of
Borromeo because they continuously argued that the heirs of
Borromeo were unable to prove their status as heirs.59
The Maltos Spouses further argue that it was error for the Court
of Appeals not to apply the in pari delicto rule, considering that the
sale violated Section 11860 of the Public Land
_______________
57 Family Code, Art. 172 provides:
ARTICLE 172. The filiation of legitimate children is established by any of the
following:
(1) The record of birth appearing in the civil register or a final judgment; or
(2) An admission of legitimate filiation in a public document or a private
handwritten instrument and signed by the parent concerned.
In the absence of the foregoing evidence, the legitimate filiation shall be proved
by:
(1) The open and continuous possession of the status of a legitimate child; or
(2) Any other means allowed by the Rules of Court and special laws.
58 Rollo, p. 55, Compliance.
60 Com. Act No. 141 (1936), Sec. 118 provides:
SECTION 118. Except in favor of the Government or any of its branches, units,
or institutions, or legally constituted banking corporations, lands acquired under free
patent or homestead provisions shall not be subject to encumbrance or alienation from
the date of the approval of the application and for a term of five years from and after
the date of issuance of the patent or grant, nor shall they become liable to the
satisfaction of any debt contracted prior to the expiration of said period; but the
improvements or crops on the land may be mortgaged or pledged to qualified persons,

associations, or corporations.
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VOL. 770, SEPTEMBER 14, 2015 407

Act.61 Since both parties are at fault, it follows that Article 141262 of
the Civil Code applies.63
In addition, the Maltos Spouses pray for the reimbursement of
the value of the improvements on the property to prevent unjust
enrichment on the part of the heirs of Borromeo.64 The Maltos
Spouses enumerate the following circumstances to show why they
should be reimbursed:
a. EUSEBIO has already long received and enjoyed the
amount of the purchase price of the subject land from
petitioners.
b. The value of the purchase price of Php36,863.00 paid
in 1983 have since then greatly depreciated. If petitioners had
deposited that money in bank or loaned it to another person
instead of purchasing EUSEBIO’s property, it would have at
least earned some interest. However, the Court of Appeals
incorrectly assumed that the return of the purchase price
would be sufficient compensation to the petitioners.
c. The value of the improvements introduced by
petitioners on the subject property is much greater than the
purchase price that they initially paid on the land.
_______________
61 Rollo, p. 13, Petition.

62 Civil Code, Art. 1412 provides:
ART. 1412. If the act in which the unlawful or forbidden cause consists does
not constitute a criminal offense, the following rules shall be observed:
(1) When the fault is on the part of both contracting parties, neither
may recover what he has given by virtue of the contract, or demand
the performance of the other’s undertaking;
(2) When only one of the contracting parties is at fault, he cannot
recover what he has given by reason of the contract, or ask for the
fulfillment of what has been promised him. The other, who is not at
fault, may demand the return of what he has given without any
obligation to comply with his promise.
63 Rollo, p. 13, Petition.
64 Id., at pp. 17-18.
408

Petitioners estimate the value of the improvements, including

hundreds of various fruit-bearing trees and four residential houses,
to be at least Php900,000.00. Because of these improvements, not
only can respondents sell the land at a much higher price, they can
even sell the improvements and profit from them. It would be the
height of injustice if all the petitioners would receive in turning over
the subject property to the respondents is the purchase price that was
previously paid EUSEBIO under the deed of sale.65
On the other hand, the heirs of Borromeo argue that the
testimonies of Norberta Borromeo and Susan Borromeo Morales on
their relationship to Eusebio Borromeo were not refuted by the
Maltos Spouses. Thus, they were able to prove their status as heirs.66
The heirs of Borromeo also argue that the in pari delicto rule is
not applicable because in Santos v. Roman Catholic Church of
Midsayap, et al.,67 this court stated that the in pari delicto rule does
not apply if its application will have the effect of violating public
policy.68
With regard to the claim for reimbursements, the heirs of
Borromeo argue that the Maltos Spouses did not raise their claim for
reimbursement in their Answer to the Complaint. They are now
barred from claiming reimbursement since this was not raised at the
first instance.69
Based on the arguments of the parties, the issues for resolution
are:
First, whether the Court of Appeals erred in reversing the
Decision of the trial court and ordering the reconveyance of the
property from petitioners Spouses Eliseo Maltos and Rosita Maltos
to respondents heirs of Eusebio Borromeo;
_______________
65 Id.
66 Id., at pp. 42-43, Comment.
67 94 Phil. 405, 410-411 (1954) [Per J. Bautista Angelo, En Banc].
68 Rollo, pp. 43-44, Comment.
69 Id., at p. 44.
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VOL. 770, SEPTEMBER 14, 2015 409

Second, whether the Court of Appeals erred in not applying the
doctrine of in pari delicto; and
Finally, whether the Court of Appeals erred in ruling that
petitioners Spouses Eliseo Maltos and Rosita Maltos are not entitled
to reimbursement for the improvements they introduced on the land.
II
The five-year period prohibiting the sale of land obtained under
homestead or free patent is provided under Section 118 of the Public
Land Act, which states:
SECTION 118. Except in favor of the Government or any of its

branches, units, or institutions, or legally constituted banking
corporations, lands acquired under free patent or homestead
provisions shall not be subject to encumbrance or alienation from the
date of the approval of the application and for a term of five years
from and after the date of issuance of the patent or grant, nor shall
they become liable to the satisfaction of any debt contracted prior to
the expiration of said period; but the improvements or crops on the
land may be mortgaged or pledged to qualified persons, associations,
or corporations.
The reason for prohibiting the alienation or encumbrance of

properties covered by patent or grant was explained in Metropolitan
Bank and Trust Company v. Viray.70
In Metropolitan Bank, Edgardo D. Viray and his wife contracted
several loans with Metrobank which they failed to pay.71 Metrobank
filed a Complaint for sum of money before the Regional Trial Court
in Manila.72 In 1982, during the pendency of the case, free patents
over three parcels of land
_______________
70 627 Phil. 398; 613 SCRA 581 (2010) [Per J. Carpio, Second Division].
71 Id., at pp. 400-401; p. 583.
72 Id., at p. 401; p. 584.
410
were issued in favor of Viray.73 The Complaint for sum of money

was decided in 1983 in favor of Metrobank.74 In 1984, the trial court
issued a writ of execution over the parcels of land.75 An auction sale
was held, and Metrobank emerged as the winning bidder.76 Viray
filed an action for annulment of sale.77 This court ruled that the
auction sale was made within the five-year prohibitory period78 and
explained that:
[T]he main purpose in the grant of a free patent of homestead is to

preserve and keep in the family of the homesteader that portion of
public land which the State has given to him so he may have a place
to live with his family and become a happy citizen and a useful
member of the society. In Jocson v. Soriano, we held that the
conservation of a family home is the purpose of homestead laws. The
policy of the state is to foster families as the foundation of society,
and thus promote general welfare . . . .
Section 118 of CA 141, therefore, is predicated on public policy. Its
violation gives rise to the cancellation of the grant and the reversion
of the land and its improvements to the government at the instance of
the latter. The provision that “nor shall they become liable to the
satisfaction of any debt contracted prior to that expiration of the five-
year period” is mandatory and any sale made in violation of such
provision is void and produces no effect whatsoever, just like what
transpired in this case. Clearly, it is not within the competence of any
citizen to barter away what public policy by law seeks to preserve.79
(Citations omitted)
_______________
73 Id., at p. 402; p. 585.

74 Id., at pp. 401-402; p. 585.
75 Id., at p. 403; p. 585.
76 Id.
77 Id.
78 Id., at p. 406; p. 587.
79 Id., at pp. 407-408; pp. 590-591.
411
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In Republic v. Court of Appeals,80 Josefina L. Morato applied for

free patent over a parcel which was granted.81 Morato mortgaged
and leased a portion of the land within the five-year prohibitory
period.82 Later on, it would also be discovered that Morato’s land
formed part of Calauag Bay.83 The Republic filed a Complaint for
cancellation of title and reversion of the parcel of land.84 This court
held that “lease” and “mortgage” were encumbrances on the parcel
of land.85 This court also discussed the policy behind the five-year
prohibitory period:
It is well-known that the homestead laws were designed to distribute

disposable agricultural lots of the State to land-destitute citizens for their
home and cultivation. Pursuant to such benevolent intention the State
prohibits the sale or encumbrance of the homestead (Section 116) within
five years after the grant of the patent. After that five-year period the law
impliedly permits alienation of the homestead; but in line with the
primordial purpose to favor the homesteader and his family the statute
provides that such alienation or conveyance (Section 117) shall be subject to
the right of repurchase by the homesteader, his widow or heirs within five
years. This Section 117 is undoubtedly a complement of Section 116. It aims
to preserve and keep in the family of the homesteader that portion of public
land which the State had gratuitously given to him. It would, therefore, be in
keeping with this fundamental idea to hold, as we hold, that the right to
repurchase exists not only when the original homesteader makes the
conveyance, but also
_______________
80 346 Phil. 637; 281 SCRA 639 (1997) [Per J. Panganiban, Third Division].
81 Id., at pp. 641-642; p. 643.
82 Id., at p. 642; p. 643.
83 Id.
84 Id.
85 Id., at pp. 647-649; pp. 648-650.
412

when it is made by his widow or heirs. This construction is clearly

deducible from the terms of the statute.86
The effect of violating the five-year prohibitory period is

provided under Section 124 of the Public Land Act, which provides:
SECTION 124. Any acquisition, conveyance, alienation, transfer,

or other contract made or executed in violation of any of the
provisions of Sections one hundred and eighteen, one hundred and
twenty, one hundred and twenty-one, one hundred and twenty-two,
and one hundred and twenty-three of this Act shall be unlawful and
null and void from its execution and shall produce the effect of
annulling and cancelling the grant, title, patent, or permit originally
issued, recognized or confirmed, actually or presumptively, and cause
the reversion of the property and its improvements to the State.
In this case, Section 10187 of the Public Land Act is applicable

since title already vested in Eusebio Borromeo’s name. Both the trial
court and the Court of Appeals found that the sale was made within
the five-year prohibitory period. Thus, there is sufficient cause to
revert the property in favor of the state. However, this court cannot
declare reversion of the property in favor of the state in view of the
limitation imposed by Section 101 that an action for reversion must
first be filed by the Office of the Solicitor General.
_______________
86 Id., at p. 649; pp. 650-651, citing Pascua v. Talens, 80 Phil. 792, 793-794
(1948) [Per J. Bengzon, En Banc].
87 Com. Act No. 141 (1936), Sec. 101 provides:
SECTION 101. All actions for the reversion to the Government of lands of the
public domain or improvements thereon shall be instituted by the Solicitor-General or
the officer acting in his stead, in the proper courts, in the name of the Commonwealth
of the Philippines.
413
VOL. 770, SEPTEMBER 14, 2015 413

III
The doctrine of in pari delicto non oritur actio is inapplicable

when public policy will be violated.
The in pari delicto rule is provided under Articles 1411 and 1412
of the Civil Code. Article 1411 pertains to acts that constitute
criminal offenses, while Article 1412 pertains to acts that do not
constitute criminal offenses. These provisions state:
ART. 1411. When the nullity proceeds from the illegality of the
cause or object of the contract, and the act constitutes a criminal
offense, both parties being in pari delicto, they shall have no action
against each other, and both shall be prosecuted. Moreover, the
provisions of the Penal Code relative to the disposal of effects or
instruments of a crime shall be applicable to the things or the price of
the contract.
This rule shall be applicable when only one of the parties is guilty;
but the innocent one may claim what he has given, and shall not be
bound to comply with his promise.
ART. 1412. If the act in which the unlawful or forbidden cause
consists does not constitute a criminal offense, the following rules
shall be observed:
(1) When the fault is on the part of both contracting parties, neither
may recover what he has given by virtue of the contract, or demand
the performance of the other’s undertaking;
(2) When only one of the contracting parties is at fault, he cannot
recover what he has given by reason of the contract, or ask for the
fulfilment of what has been promised him. The other, who is not at
fault, may demand the return of what he has given without any
obligation to comply with his promise.
414

Santos involved the sale of a parcel of land within the five-year

prohibitory period.88 The Roman Catholic Church raised the defense
of in pari delicto.89 It was also argued by the Roman Catholic
Church that the effect of the sale would be the reversion of the
property to the state.90 This court held that:
Section 124 of the Public Land Act indeed provides that any acquisition,
conveyance or transfer executed in violation of any of its provisions shall be
null and void and shall produce the effect of annulling and cancelling the
grant or patent and cause the reversion of the property to the State, and the
principle of pari delicto has been applied by this Court in a number of cases
wherein the parties to a transaction have proven to be guilty of effected the
transaction with knowledge of the cause of its invalidity. But we doubt if
these principles can now be invoked considering the philosophy and the
policy behind the approval of the Public Land Act. The principle underlying
pari delicto as known here and in the United States is not absolute in its
application. It recognizes certain exceptions one of them being when its
enforcement or application runs counter to an avowed fundamental policy or
to public interest. As stated by us in the Rellosa case, “This doctrine is
subject to one important limitation, namely, [‘]whenever public policy is
considered advanced by allowing either party to sue for relief against the
transaction.[’]”
The case under consideration comes within the exception above adverted
to. Here appellee desires to nullify a transaction which was done in violation
of the law. Ordinarily the principle of pari delicto would apply to her
because her predecessor-in-interest has carried out the sale with the
presumed knowledge of its illegality, but because the subject of the
transaction is a piece of public land, public policy requires that she, as heir,
be not pre-
_______________
88 Santos v. Roman Catholic Church of Midsayap, supra note 67 at pp. 406-407.

89 Id., at p. 407.
90 Id.
415
VOL. 770, SEPTEMBER 14, 2015 415

vented from reacquiring it because it was given by law to her family for her
home and cultivation. This is the policy on which our homestead law is
predicated. This right cannot be waived. “It is not within the competence of
any citizen to barter away what public policy by law seeks to preserve.” We
are, therefore, constrained to hold that appellee can maintain the present
action it being in furtherance of this fundamental aim of our homestead law.
91
(Emphasis supplied, citations omitted)
The non-application of the in pari delicto rule where public

policy would be violated has also been applied in other cases.
In Pajuyo v. Court of Appeals,92 this court held that in pari
delicto “is not [a]pplicable to [e]jectment [c]ases”93 and cited Drilon
v. Gaurana,94 which discussed the policy behind ejectment cases:
It must be stated that the purpose of an action of forcible entry and

detainer is that, regardless of the actual condition of the title to the property,
the party in peaceable quiet possession shall not be turned out by strong
hand, violence or terror. In affording this remedy of restitution the object of
the statute is to prevent breaches of the peace and criminal disorder which
would ensue from the withdrawal of the remedy, and the reasonable hope
such withdrawal would create that some advantage must accrue to those
persons who, believing
_______________
91 Id., at pp. 410-411. See Eugenio v. Perdido, 97 Phil. 41, 45 (1955) [Per J.
Bengzon, En Banc]; Arsenal v. Intermediate Appellate Court, supra note 42 at pp. 51-
52; p. 54; Egao v. Court of Appeals (Ninth Division), supra note 22 at p. 252; p. 493;
and Binayug v. Ugaddan, G.R. No. 181623, December 5, 2012, 687 SCRA 260, 274-
275 [Per J. Leonardo-De Castro, First Division].
92 474 Phil. 557; 430 SCRA 492 (2004) [Per J. Carpio, First Division].
93 Id., at p. 584; p. 514.
94 233 Phil. 350, 356; 149 SCRA 342, 348 (1987) [Per J. Paras, Second
Division].
416

themselves entitled to the possession of property, resort to force to gain

possession rather than to some appropriate action in the courts to assert their
claims.95
This court elucidated that:
Clearly, the application of the principle of pari delicto to a case of

ejectment between squatters is fraught with danger. To shut out relief to
squatters on the ground of pari delicto would openly invite mayhem and
lawlessness. A squatter would oust another squatter from possession of the
lot that the latter had illegally occupied, emboldened by the knowledge that
the courts would leave them where they are. Nothing would then stand in
the way of the ousted squatter from reclaiming his prior possession at all
cost.
Petty warfare over possession of properties is precisely what ejectment
cases or actions for recovery of possession seek to prevent. Even the owner
who has title over the disputed property cannot take the law into his own
hands to regain possession of his property. The owner must go to court.96
(Citation omitted)
In Loria v. Muñoz, Jr.,97 Carlos Loria asked Ludolfo Muñoz, Jr.

“to advance [P]2,000,000.00 for a subcontract of a [P]50,000,000.00
river-dredging project in Guinobatan.”98 Loria informed Muñoz that
the project would be awarded to Sunwest Construction and
Development Corporation, and Sunwest would subcontract to
Muñoz.99 Muñoz agreed to Loria’s proposal.100 When the river-
dredging project was fin-
_______________
95 Pajuyo v. Court of Appeals, supra note 92 at p. 585; pp. 515-516.

96 Id.
97 G.R. No. 187240, October 15, 2014, 738 SCRA 397 [Per J. Leonen, Second
Division].
98 Id., at p. 400.
99 Id.
100 Id.
417
VOL. 770, SEPTEMBER 14, 2015 417

ished, Loria did not return the P2,000,000.00 despite Muñoz’s

demand.101 Muñoz filed a Complaint for sum of money.102 Loria
raised the argument that Muñoz “should not be allowed to recover
the money”103 since they were in pari delicto.104 This court held that
under the principle of unjust enrichment, the sum of money should
be returned.105 In so ruling, this court cited Gonzalo v. Tarnate, Jr.106
where it was explained that:
. . . the application of the doctrine of in pari delicto is not always rigid.

An accepted exception arises when its application contravenes well-
established public policy. In this jurisdiction, public policy has been defined
as “that principle of the law which holds that no subject or citizen can
lawfully do that which has a tendency to be injurious to the public or against
the public good.”
Unjust enrichment exists, according to Hulst v. PR Builders, Inc., “when
a person unjustly retains a benefit at the loss of another, or when a person
retains money or property of another against the fundamental principles of
justice, equity and good conscience.” The prevention of unjust enrichment is
a recognized public policy of the State, for Article 22 of the Civil Code
explicitly provides that “[e]very person who through an act of performance
by another, or any other means, acquires or comes into possession of
something at the expense of the latter without just or legal ground, shall
return the same to him.” It is well to note that Article 22 “is part of the
chapter of the Civil Code on Human Relations, the provisions of which were
formulated as basic principles to be observed for the rightful relationship
between human beings and for the stability of the social order; designed to
indicate
_______________
101 Id., at p. 401.

102 Id.
103 Id., at p. 404.
104 Id.
105 Id., at pp. 408-413.
106 G.R. No. 160600, January 15, 2014, 713 SCRA 224 [Per J. Bersamin, First
Division].
418

certain norms that spring from the fountain of good conscience; guides for
human conduct that should run as golden threads through society to the end
that law may approach its supreme ideal which is the sway and dominance
of justice.”107
As the in pari delicto rule is not applicable, the question now

arises as to who between the parties have a better right to possess the
subject parcel of land. This issue was addressed in Santos:
What is important to consider now is who of the parties is the better entitled
to the possession of the land while the government does not take steps to
assert its title to the homestead. 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. Such is the situation of the appellants. Their right to remain in
possession of the land is no better than that of appellee and, therefore, they
should not be allowed to remain in it to the prejudice of appellee during and
until the government takes steps toward its reversion to the State.108
(Emphasis supplied, citation omitted)
In Binayug v. Ugaddan,109 which involved the sale of two

properties covered by a homestead patent,110 this court cited
jurisprudence showing that in cases involving the sale of a
_______________
107 Loria v. Muñoz, Jr., supra note 97 at pp. 412-413, citing Gonzalo v. Tarnate,
Jr., id., at pp. 233-234.
108 Santos v. Roman Catholic Church of Midsayap, supra note 67 at p. 412. See
Eugenio v. Perdido, supra note 91 at p. 45; Arsenal v. Intermediate Appellate Court,
supra note 42 at pp. 50-52; p. 54; Egao v. Court of Appeals (Ninth Division), supra
note 22 at p. 253; p. 494; and Binayug v. Ugaddan, supra note 91 at p. 275.
109 Binayug v. Ugaddan, id., at pp. 274-275.
110 Id., at p. 262.
419
VOL. 770, SEPTEMBER 14, 2015 419

property covered by the five-year prohibitory period, the property

should be returned to the grantee.111
Applying the ruling in Santos and Binayug, this court makes it
clear that petitioners have no better right to remain in possession of
the property against respondents.
Hence, the Court of Appeals did not err in ruling that while there
is yet no action for reversion filed by the Office of the Solicitor
General, the property should be conveyed by petitioners to
respondents.
IV
Petitioners’ argument that respondents failed to establish their

status as heirs is belied by their admissions during trial and in their
pleadings. Petitioners know the identity of Eusebio Borromeo’s
wife. As quoted in the trial court’s Decision, petitioners alleged in
their Answer that:
[I]t was the late Eusebio Borromeo and his wife who came along in
Bayugan 2, San Francisco, Agusan del Sur, requesting the said
defendants to purchase their land because they badly need money and
notwithstanding the fact that they have a little amount and out of pity
bought the said land.112
In the Reply, respondents alleged:
The allegation that the late Eusebio Borromeo and his wife went to
Bayugan II, San Francisco, Agusan del Sur in order to sell the land to
the defendant Eliseo Maltos has no factual basis, the truth of the
matter is that the
_______________
111 Id., at pp. 275-276, citing Arsenal v. Intermediate Appellate Court, supra note
42 at p. 50; pp. 53-54, Menil v. Court of Appeals, 173 Phil. 584, 592; 84 SCRA 413,
417 (1978) [Per J. Guerrero, First Division], and Manzano v. Ocampo, 111 Phil. 283,
291; 1 SCRA 691, 697 (1961) [Per J. J. B. L. Reyes, En Banc].
112 Rollo, p. 95, Regional Trial Court’s Decision.
420

late Eusebio Borromeo, together with defendant Eliseo Maltos went

to Esperanza, Sultan Kudarat to secure the signature of the wife.113
In addition, when petitioner Eliseo Maltos was presented in

court, he identified the signatures of the witnesses on the deed of
sale as the signatures of Eusebio Borromeo’s children, namely,
Susan, Ana, and Nicolas Borromeo.114
Respondents’ allegation that they are the heirs of Borromeo is
admitted by petitioners. Thus, the Court of Appeals did not err in
ruling that “the fact that Appellants [referring to respondents] are the
spouse and children of the late EUSEBIO remains unrebutted.”115
With regard to the claim for reimbursement, respondents argue

that it was not raised as a counterclaim in the Answer to the
Complaint.
During trial, petitioner Eliseo Maltos testified that when he
entered the land, there were around 100 trees, including coconut
trees and a few banana trees. He then planted additional coconut
trees which, at the time of the trial, were already bearing fruit.116
Petitioner Eliseo Maltos’ testimony was not rebutted by respondents.
The general rule is that “[a] compulsory counterclaim . . . not set
up shall be barred.”117 Further, the computation of the value of the
improvements on the land entails findings of fact.
_______________
113 Id., at p. 98.

114 Id., at p. 108.
115 Id., at p. 30, Court of Appeals’ Decision.
116 Id., at p. 109, Regional Trial Court’s Decision.
117 Rules of Court, Rule 9, Sec. 2 provides:
Rule 9. Effect of Failure to Plead
....
421
VOL. 770, SEPTEMBER 14, 2015 421

In any case, the Court of Appeals did not err when it stated in its
Resolution dated April 7, 2006 that:
With respect to Appellees’ claim for the reimbursement of the

improvements on the land in question, they are hereby declared to have lost
and forfeited the value of the necessary improvements that they made
thereon in the same manner that Appellants should lose the value of the
products gathered by the Appellees from the said land.118
The Court of Appeals cited Angeles, et al. v. Court of Appeals, et

al. and Arsenal v. Intermediate Appellate Court.120 In Angeles,
119
this court discussed that:
The question that now poses is whether the return of the value of the
products gathered from the land by the defendants and the expenses incurred
in the construction of the dike — all useful and necessary expenses —
should be ordered to be returned by the defendants to the plaintiffs. While
we believe that the rule of in pari delicto should not apply to the sale of the
homestead, because such sale is contrary to the public policy enunciated in
the homestead law, the loss of the products realized by the defendants and
the value of the necessary improvements made by them on the land should
not be excepted from the application of the said rule because no cause or
reason can be cited to justify an exception. It has been held that the rule of
in pari delicto is inapplicable
_______________
SECTION 2. Compulsory Counterclaim, or Cross-Claim Not Set up Barred.—A

compulsory counterclaim, or a cross-claim, not set up shall be barred.
118 Rollo, p. 38, Court of Appeals’ Resolution, citing Angeles v. Court of Appeals,
102 Phil. 1006, 1012 (1958) [Per J. Labrador, En Banc] and Arsenal v. Intermediate
Appellate Court, supra note 42 at p. 53; p. 55.
119 Angeles v. Court of Appeals, id.
120 Arsenal v. Intermediate Appellate Court, supra note 42.
422

only where the same violates a well-established public policy.

....
We are constrained to hold that the heirs of the homesteader should be

declared to have lost and forfeited the value of the products gathered from
the land, and so should the defendants lose the value of the necessary
improvements that they have made thereon.121
In Arsenal, the property covered by a homestead patent had been

sold to Suralta in 1957,122 while the Complaint was filed before the
trial court in 1974.123 The case was decided by this court in 1986.124
Thus, Suralta had been in possession of the property for
approximately 17 years before a Complaint was filed. This court
held that:
The value of any improvements made on the land and the interests on the
purchase price are compensated by the fruits the respondent Suralta and his
heirs received from their long possession of the homestead.125
Angeles and Arsenal both involved the sale of a parcel of land

covered by a homestead patent within the five-year prohibitory
period. These cases also involved the introduction of improvements
on the parcel of land by the buyer.
Restating the rulings in Angeles and Arsenal, this court finds that
while the rule on in pari delicto does not apply if its effect is to
violate public policy, it is applicable with regard to the value of the
improvements introduced by petitioner Eliseo Maltos. Petitioners
had been in possession of the land for 20
_______________
121 Angeles v. Court of Appeals, supra note 118 at pp. 1011-1012 (1958) [Per J.
Labrador, En Banc].
122 Arsenal v. Intermediate Appellate Court, supra note 42 at
p. 40; p. 45.
123 Id., at p. 42; p. 45.
124 Id., at p. 36; p. 40.
125 Id., at p. 53; p. 55.
423
VOL. 770, SEPTEMBER 14, 2015 423

years before the heirs of Borromeo filed a Complaint. The expenses

incurred by petitioners in introducing improvements on the land for
which they seek reimbursement should already be compensated by

the fruits they received from the improvements.
VI
Reversion is a remedy provided under Section 101 of the Public

Land Act:
SECTION 101. All actions for the reversion to the Government of

lands of the public domain or improvements thereon shall be
instituted by the Solicitor-General or the officer acting in his stead, in
the proper courts, in the name of the Commonwealth of the
Philippines.
The purpose of reversion is “to restore public land fraudulently

awarded and disposed of to private individuals or corporations to the
mass of public domain.”126
The general rule is that reversion of lands to the state is not
automatic, and the Office of the Solicitor General is the proper party
to file an action for reversion.
In Villacorta v. Ulanday,127 defendant-appellee Vicente Ulanday
admitted that his purchase of a parcel of land covered by a
homestead patent was made within the five-year prohibitory period,
but argued that since the sale was in violation of law,128 the property
should automatically revert to the state.129 This court held that
reversion was not automatic,
_______________
126 Estate of the Late Jesus S. Yujuico v. Republic, 563 Phil. 92, 109; 537 SCRA
513, 527 (2007) [Per J. Velasco, Jr., Second Division].
127 73 Phil. 655 (1942) [Per J. Ozaeta, En Banc].
128 The Public Land Act referred to in this case is Act No. 2874, as amended by
Act No. 3517. Act No. 2874 (1919), Sec. 122 is reproduced as Com. Act No. 141
(1936), Sec. 124.
129 Villacorta v. Ulanday, supra at p. 656.
424

and government must file an appropriate action so that the land may
be reverted to the state.130
131
Ortega v. Tan involved the sale and mortgage of a parcel of
land covered by a free patent.132 The series of transactions for the
sale and mortgage of the property had been initiated within the five-
year prohibitory period but was finalized after the prohibitory
period.133 This court held that the sale and mortgage violated Section
118 of the Public Land Act and that reversion was proper.134 This
court also clarified that:
[Reversion] is not automatic. The government has to take action to

cancel the patent and the certificate of title in order that the land involved
may be reverted to it. Correspondingly, any new transaction would be
subject to whatever steps the government may take for the reversion to it.135
(Citation omitted)
Alvarico v. Sola136 involved a miscellaneous sales application

over a parcel of land by Fermina Lopez.137 Subsequently, Lopez
executed a deed of self-adjudication and transfer of rights in favor of
Amelita Sola.138 The Bureau of Lands approved the transfer of
rights, and title was issued in Sola’s name.139 Castorio Alvarico then
filed an action for reconveyance, claiming that the parcel of land was
donated to him.140
_______________
130 Id.
131 260 Phil. 371; 181 SCRA 350 (1990) [Per J. Paras, Second Division].
132 Id., at pp. 373-374; p. 356.
133 Id., at p. 377; p. 356.
134 Id.
135 Id., at p. 379; pp. 358-359.
136 432 Phil. 792; 383 SCRA 232 (2002) [Per J. Quisumbing, Second Division].
137 Id., at p. 794; p. 234.
138 Id.
139 Id., at p. 795; p. 235.
140 Id.
425
VOL. 770, SEPTEMBER 14, 2015 425

He also alleged that Sola acquired the property in bad faith.141 This
court held that Alvarico’s allegation of bad faith was not supported
by evidence and that in any case, “only the State can institute
reversion proceedings under Sec[tion] 101 of the Public Land Act.”

142
This court restated Section 101 of the Public Land Act:
[A] private individual may not bring an action for reversion or any action
which would have the effect of canceling a free patent and the
corresponding certificate of title issued on the basis thereof, such that the
land covered thereby will again form part of the public domain. Only the
Solicitor General or the officer acting in his stead may do so. Since [the]
title originated from a grant by the government, its cancellation is a matter
between the grantor and the grantee.143 (Citations omitted)
The rule in Alvarico was cited in Cawis, et al. v. Hon. Cerilles, et

144
al. In Cawis, the validity of a sales patent and original certificate
of title over a parcel of land in Baguio was questioned.145 This court
denied the Petition146 and ruled that the Complaint was actually a
reversion suit, which can be filed only by the Office of the Solicitor
General or a person acting in its stead.147
It was also discussed in Cawis that:
The objective of an action for reversion of public land is the

cancellation of the certificate of title and the resulting reversion of the
land covered by the title to the State.
_______________
141 Id., at p. 799; p. 239.

142 Id.
143 Id., at p. 800; p. 240.
144 632 Phil. 367, 375; 618 SCRA 357, 362 (2010) [Per J. Carpio, Second
Division].
145 Id., at pp. 370-372; p. 362.
146 Id., at p. 377; p. 367.
147 Id., at p. 375; p. 364.
426

This is why an action for reversion is oftentimes designated as an

annulment suit or a cancellation suit.148
We clarify that the remedy of reversion is not the same as the

remedy of declaration of nullity of free patents and certificate of
title. In reversion, the “allegations in the complaint would admit

State ownership of the disputed land[,]”149 while in an action for the
declaration of nullity of free patent and certificate of title, the
allegations would include “plaintiff’s ownership of the contested lot
prior to the issuance of [the] free patent and certificate of title[.]”150
Since an action for reversion presupposes that the property in
dispute is owned by the state, it is proper that the action be filed by
the Office of the Solicitor General, being the real party-in-interest.
There is, however, an exception to the rule that reversion is not
automatic. Section 29 of the Public Land Act provides:
SECTION 29. After the cultivation of the land has begun, the
purchaser, with the approval of the Secretary of Agriculture and
Commerce, may convey or encumber his rights to any person,
corporation, or association legally qualified under this Act to
purchase agricultural public lands, provided such conveyance or
encumbrance does not affect any right or interest of the Government
in the land: And provided, further, That the transferee is not
delinquent in the payment of any installment due and payable. Any
sale and encumbrance made without the previous approval of the
Secretary of Agriculture and
_______________
148 Id.
149 Heirs of Kionisala v. Heirs of Dacut, 428 Phil. 249, 260; 378 SCRA 206, 214
(2002) [Per J. Bellosillo, Second Division]. See Tancuntian v. Gempesaw, 483 Phil.
459, 467; 440 SCRA 431, 439 (2004) [Per J. Corona, Third Division] and Evangelista
v. Santiago, 497 Phil. 269, 289; 457 SCRA 744, 764 (2005) [Per J. Chico-Nazario,
Second Division].
150 Id.
427
VOL. 770, SEPTEMBER 14, 2015 427

Commerce shall be null and void and shall produce the effect of
annulling the acquisition and reverting the property and all rights to
the State, and all payments on the purchase price theretofore made to
the Government shall be forfeited. After the sale has been approved,
the vendor shall not lose his right to acquire agricultural public lands
under the provisions of this Act, provided he has the necessary
qualifications. (Emphasis supplied)
In Francisco v. Rodriguez, et al.,151 this court differentiated

reversion under Sections 29 and 101 of the Public Land Act.152 This
court explained that reversion under Section 29 is self-operative,
unlike Section 101 which requires the Office of the Solicitor General
to institute reversion proceedings.153 Also, Section 101 applies in
cases where “title has already vested in the individual[.]”154 The
Director of Lands sought to execute the Decision in Francisco v.
Rodriguez which petitioner Ursula Francisco opposed, arguing that
only 29 hectares were reverted to the state since she was in
possession of the remaining four hectares.155 This court held that the
entire prop-
_______________
151 116 Phil. 764; 6 SCRA 443 (1962) [Per J. Regala, En Banc]. This case
involved the sales application of Ursula Francisco which was denied by the Bureau of
Lands and the Secretary of Agriculture because she allowed herself to be used as a
dummy. (Id., at p. 765;
p. 444) Francisco, through counsel Atty. Rodriguez, filed a motion for
reconsideration. (Id.) It appears that during the pendency of the motion for
reconsideration, Francisco conveyed a portion of the property to Atty. Rodriguez in
exchange for a sum of money. (Id., at p. 766; p. 445) This court held that the
conveyance to Atty. Rodriguez was null and void and the property reverted to the
state. (Id., at p. 769;
p. 448) The parties claimed that an action for reversion should first be instituted, as
provided under Section 101. (Id., at p. 770; p. 449) This court then clarified that
reversion under Section 29 is self-operative. (Id.)
152 Id., at pp. 769-770; pp. 448-449.
153 Id., at p. 770; p. 448.
154 Id.
155 Francisco v. Rodriguez, 160-A Phil. 354, 360; 67 SCRA 212, 216 (1975) [Per
J. Martin, First Division].
428

erty reverted to the state.156 This court also explained why Francisco
v. Rodriguez was covered by Section 29 and not Section 101 of the
Public Land Act:
By transgressing the law, i.e., allowing herself to be a dummy in the

acquisition of the land and selling the same without the previous
approval of the Secretary of Agriculture and Natural Resources,
plaintiff-appellant herself [referring to Ursula Francisco] has
eliminated the very source (Sales Application) of her claim to Lot

No. 595, as a consequence of which, she cannot later assert any right
or interest thereon. This is the imperative import of the
pronouncements in No. L-8263 and in No. L-15605 that the
invalidity of the conveyance by plaintiff-appellant “produced as a
consequence the reversion of the property with all rights thereto to
the State.” As a matter of fact, Section 29 of the Public Land Law
(Commonwealth Act No. 141) expressly ordains that any sale and
encumbrance made without the previous approval of the Secretary of
Agriculture and Natural Resources “shall be null and void and shall
produce the effect of annulling the acquisition and reverting property
and all rights thereto to the State, and all payments on the purchase
price theretofore made to the Government shall be forfeited.” . . . .
In fact, even if a sales application were already given due course by
the Director of Lands, the applicant is not thereby conferred any right
over the land covered by the application. It is the award made by the
Director to the applicant (if he is the highest bidder) that confers
upon him a certain right over the land, namely, “to take possession of
the land so that he could comply with the requirements prescribed by
law.” It is at this stage, when the award is made, that the land can be
considered “disposed of by the Government,” since the aforestated
right of the applicant has the effect of withdrawing the land from the
public domain that is “disposable” by the Director of Lands under the
provisions of the Public Land Act.
_______________
156 Id., at p. 362; p. 216.
429
VOL. 770, SEPTEMBER 14, 2015 429

. . . However, the disposition is merely provisional because the

applicant has still to comply with the requirements prescribed by law
before . . . any patent is issued. After the requisites of the law are
complied with by the applicant to the satisfaction of the Director [of]
Lands, the patent is issued. It is then that the land covered by the
application may be considered “permanently disposed of by the
Government.”157 (Citations omitted)
In this case, a free patent over the subject parcel of land was
issued to Eusebio Borromeo. This shows that he already had title to
the property when he sold it to petitioner Eliseo Maltos. Thus,

Section 101 of the Public Land Act applies.
WHEREFORE, the Petition is denied, and the Decision and
Resolution of the Court of Appeals in C.A.-G.R. CV No. 77142 are
AFFIRMED, without prejudice to the appropriate institution of a
case for reversion.
Let a copy of this Decision be furnished the Office of the
Solicitor General for its appropriate action with respect to the
reversion of the land in question.
SO ORDERED.
Carpio (Chairperson), Brion, Del Castillo and Mendoza, JJ.,

concur.
Petition denied, judgment and resolution affirmed.
Notes.—A certificate of title issued pursuant to a homestead

patent becomes indefeasible after one year, is subject to the proviso
that “the land covered by said certificate is a disposable public land
within the contemplation of the Public Land Law.” (Republic-
Bureau of Forest Development vs. Roxas, 712 SCRA 177 [2013])
_______________
157 Id., at pp. 362-364; p. 219.

Reversion is an action where the ultimate relief sought is to

revert the land back to the government under the Regalian doctrine. (
Id.)
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Maltos v. Heirs of Eusebio Borromeo

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3/3/24, 9:36 PM SUPREME COURT REPORTS ANNOTATED VOLUME 770

G.R. No. 172720. September 14, 2015.*

ELISEO MALTOS and ROSITA P. MALTOS, petitioners, vs.

Civil Law; Property; Homestead; The five (5)-year period prohibiting

398 SUPREME COURT REPORTS ANNOTATED

stead provisions shall not be subject to encumbrance or alienation from

VOL. 770, SEPTEMBER 14, 2015 399

in dispute is owned by the state, it is proper that the action be filed by

PETITION for review on certiorari of the decision and resolution of

The sale of a parcel of agricultural land covered by a free patent

Francisco, Agusan del Sur, covered by Original Certificate of Title

1 Rollo, p. 22, Court of Appeals’ Decision.

400 SUPREME COURT REPORTS ANNOTATED

On June 23, 1993, Norberta Borromeo and her children (heirs of

The Register of Deeds of Agusan del Sur also filed an Answer,

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2. Whether or not the sale of the disputed property within the

The trial court dismissed the Complaint on the ground of failure

402 SUPREME COURT REPORTS ANNOTATED

WHEREFORE, for lack of merit, the complaint under consideration is

On appeal, the heirs of Borromeo argued that they were able to

23 Id., at p. 252; p. 493.

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within the five-year prohibitory period, the property should revert to

WHEREFORE, premises considered, the instant Appeal is GRANTED.

The Maltos Spouses filed a Motion for Reconsideration, arguing

404 SUPREME COURT REPORTS ANNOTATED

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The heirs of Borromeo filed their Comment,46 which was noted

46 Id., at pp. 42-46.

52 Id., at pp. 51-63.

406 SUPREME COURT REPORTS ANNOTATED

timonies should be considered as self-serving.56 The Maltos Spouses

improvements or crops on the land may be mortgaged or pledged to qualified persons,

VOL. 770, SEPTEMBER 14, 2015 407

61 Rollo, p. 13, Petition.

408 SUPREME COURT REPORTS ANNOTATED

Petitioners estimate the value of the improvements, including

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SECTION 118. Except in favor of the Government or any of its

The reason for prohibiting the alienation or encumbrance of

410 SUPREME COURT REPORTS ANNOTATED

Maltos vs. Heirs of Eusebio Borromeo

were issued in favor of Viray.73 The Complaint for sum of money

[T]he main purpose in the grant of a free patent of homestead is to

73 Id., at p. 402; p. 585.

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In Republic v. Court of Appeals,80 Josefina L. Morato applied for

It is well-known that the homestead laws were designed to distribute

412 SUPREME COURT REPORTS ANNOTATED

when it is made by his widow or heirs. This construction is clearly

The effect of violating the five-year prohibitory period is

SECTION 124. Any acquisition, conveyance, alienation, transfer,

In this case, Section 10187 of the Public Land Act is applicable

VOL. 770, SEPTEMBER 14, 2015 413

The doctrine of in pari delicto non oritur actio is inapplicable

414 SUPREME COURT REPORTS ANNOTATED

Santos involved the sale of a parcel of land within the five-year

88 Santos v. Roman Catholic Church of Midsayap, supra note 67 at pp. 406-407.

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