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Case digest · Sale of a homestead after the five-year period without the Secretary’s approval (Sec. 118, second paragraph, C.A. No. 141); double sale
Alfredo vs. Borras
In 1970, under a verbal sale, the Borras spouses finished paying ₱15,000 for the Alfredo spouses’ homestead in Hermosa, Bataan, and took possession. In 1994, the Alfredos sold portions of the same land to others, and in the Supreme Court the petitioners argued, for the first time, that the 1970 sale lacked the Secretary’s approval.
Facts
The land
Spouses Godofredo and Carmen Alfredo were the registered owners of an 81,524-square-meter parcel in Hermosa, Bataan, covered by Original Certificate of Title No. 284, issued to them under Homestead Patent No. V-69196. The decision does not say when the patent was issued.
By March 11, 1970
The Alfredos sold the land to Spouses Armando and Adelia Borras for ₱15,000.00, to pay their ₱7,000.00 loan with the Development Bank of the Philippines (DBP): the buyers provided the money for the loan and its interest, and paid the balance in cash. Carmen issued a receipt dated March 11, 1970 for the last installment. The Alfredos turned over the owner’s duplicate of the title and introduced the Borrases to the tenants as the new owners, and the Borrases took possession.
January–February 1994
The Borrases learned that hired persons were cutting trees on the land, and discovered that the Alfredos had re-sold portions of it to several persons. They registered an adverse claim with the Register of Deeds of Bataan on February 8, 1994. The later buyers’ deeds of sale were executed on February 22, 1994, and their transfer certificates of title were issued on February 24, 1994.
March 7, 1994
The Borrases sued the Alfredos for specific performance in the Regional Trial Court of Bataan, and later added the later buyers as defendants. The defendants argued that the action was unenforceable under the Statute of Frauds, since there was no written contract of sale, and that the later buyers had bought in good faith and for value.
1996–2000
On June 7, 1996, the trial court ruled for the Borrases: it declared the later buyers’ deeds of sale and titles void and ordered the Alfredos to execute a deed of absolute sale in favor of the Borrases. On November 26, 1999, the Court of Appeals affirmed the decision in its entirety, with treble costs, and it denied reconsideration on July 26, 2000. In the Supreme Court, the petitioners argued for the first time that the sale, made within 25 years from the homestead title, lacked the approval of the Secretary of Agriculture and Natural Resources.
Issue
Is a sale of a homestead, made after the five-year period but within 25 years of the title, void because the Secretary did not approve it?
Ruling
No. The Court denied the petition and affirmed the Court of Appeals, with treble costs against the petitioners.
The Court first upheld the sale itself. Both lower courts found a meeting of the minds on the land and on the price of ₱15,000.00, and the sale was consummated: the land was delivered and the price fully paid. The receipt dated March 11, 1970 is a memorandum of the sale, and the Statute of Frauds does not apply to a contract already performed. Even if Carmen sold without her husband’s consent, the sale would be merely voidable under the Civil Code, and Godofredo ratified it when he introduced the Borrases to the tenants as the new owners. The Court then took up the Secretary’s approval, although it was raised for the first time on appeal, “to finally put an end to this case.” A sale within five years from the issuance of the patent is void, but that prohibition expires on the fifth year; for the next 20 years, the land may be sold with the Secretary’s approval, which may be denied only on constitutional and legal grounds, and none were apparent here. The decision does not give the patent’s date, but the Court applied the rule for a sale made after the five-year period: without the approval, such a sale is not void, and the approval may be secured later. The action, which the Court treated as one for reconveyance, was filed early within the ten-year prescriptive period and was not barred by laches. Finally, the adverse claim registered on February 8, 1994 gave the later buyers constructive notice, so they were not buyers in good faith when they bought on February 22, 1994.
“The failure to secure the approval of the Secretary does not ipso facto make a sale void.”
Doctrine
Sec. 118 has two periods for a homestead. Within five years from the issuance of the patent, a sale to a private individual is void. After that and until 25 years from the title, a sale needs the Secretary’s approval, but the approval “shall not be denied except on constitutional and legal grounds”, and its absence does not defeat the sale: “The absence of approval by the Secretary does not nullify a sale made after the expiration of the 5-year period, for in such event the requirement of Section 118 of the Public Land Act becomes merely directory or a formality.” And “The approval may be secured later, producing the effect of ratifying and adopting the transaction as if the sale had been previously authorized.”
Compare: within the five years
In Filinvest Land, Inc. vs. Backy, G.R. No. 174715, October 11, 2012, the lots patented on November 24, 1991 were sold in 1995, within the five years, and the Court held the sale void though it was only conditional: “Therefore, the sale, having been consummated on October 28, 1995, or within the five-year prohibition, is as ruled by the CA, void.”
Bar tip
Fix the dates first: the patent, then the sale. Within five years, the sale is void. After five years and before 25 years from the title, a homestead sale needs the Secretary’s approval, but under Alfredo its absence “does not ipso facto make a sale void”: the requirement is merely directory, and the approval may be secured later. Remember that this approval rule in Sec. 118 speaks only of homesteads.
Hear it explained
Land Titles Jurisprudence Ep. 8, at 8:20
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This digest is general legal information for education, not legal advice, and it is not a substitute for reading the decision. Quoted passages are taken word for word from the full text.