“A” was granted a free patent by the Department of Agrarian Reform. An agricultural free patent is where the State, through the DAR, awards agricultural lands to certain beneficiaries. As a condition however, the land should not be sold within five years from the grant. It so happened that the land granted to “A” was sold to a buyer within the proscribed period, which land was subsequently transferred to other buyers, one after the other.

Thereafter, Republic Act 11231 was enacted removing that proscription. The State then filed an action to nullify the transfer of the property on the ground that the sale was made within the prohibited period. Note that the disposition of the land within the prohibited period was done prior to the passage of the said law. So, supposedly that makes the sale of the land still invalid. Or might RA 11231, which came after, have cured the infirmity?

The Supreme Court said: “The passage of Republic Act 11231 or the Agricultural Free Patent Reform Act has rendered this issue moot and academic. Section 3 of RA 11231 provides: Sec. 3. Agricultural public lands alienated or disposed of in favor of qualified public land applicants under Section 44 of Commonwealth Act No. 141, as amended, shall not be subject to restrictions imposed under Sections 118, 119 and 121 thereof regarding acquisitions, encumbrances, conveyances, transfers, or dispositions.

“Agricultural free patent shall now be considered as title in fee simple and shall not be subject to any restriction on encumbrance or alienation. The removal of the restrictions imposed under Sections 118, 119 and 121 of Commonwealth Act No. 141 was given retroactive effect under Section 4 of RA 11231, which provides: Sec. 4. This Act shall have retroactive effect and any restriction regarding acquisitions, encumbrances, conveyances, transfers, or dispositions imposed on agricultural free patents issued under Section 44 of Commonwealth Act No. 141, as amended, before the effectivity of this Act shall be removed and are hereby immediately lifted.

“The Complaint for Cancellation of Title/Reversion dated 31 August 2014 filed by the OSG is anchored on the following allegations: After investigation, the RED of the DENR Regional Office No. III recommended the filing of a reversion suit since the alienation made by Pelagio Francisco in favor of Tanduay Lumber violated Sections 118, 121 and 122 of CA No. 141.

“For failure to comply with the requirements of Section 118, in relation to Section 124, of CA No. 141, the State as the grantor of FP No. (III-12) 17306 has the right to petition the annulment of the patent and the cancellation of titles derived from said patent. Section 118 of CA No. 141 proscribes the alienation and encumbrance of a parcel of land acquired under free patent, within five years from its grant:

“In the case at bar, FP No. (III-12) 17306 was issued on 20 May 1987 and the corresponding OCT No. P-22-C was issued on 25 May 1987. On 24 August 1990, or three years and three months after the grant of the free patent, Pelagio Francisco transferred the subject lot by executing an Affidavit of Self-Adjudication. Nevertheless, this transfer is not covered by the five-year prohibition as Section 118 of CA No. 141 does not cover transmission by inheritance, because the land gratuitously given by the State is preserved and kept in the family of the patentee.

“However, on 3 December 1990 or just after three years and six months from the date of grant of the free patent, Pelagio Francisco transferred the subject land to Tanduay Lumber. This subsequent transfer falls squarely within the five-year prohibition against the alienation or sale of the patented land under Section 118 of CA No. 141. Accordingly, such transfer nullifies the said alienation and constitutes a cause for the reversion of the property to the State.

“The prohibition against any alienation or encumbrance of the land grant is a proviso attached to the approval of every application. Prior to the fulfillment of the requirements of law, a patentee only has an inchoate right to the property; such property remains part of the public domain and, therefore, not susceptible to alienation or encumbrance.

“Here, considering that Pelagio Francisco failed to comply with the statutory requirement to maintain the property for himself and his family within the prescribed period of five years, the grant in their favor did not ripen into ownership. Since the sale of the subject lot by Pelagio Francisco to Tanduay Lumber is null and void ab initio, it produces no legal effect whatsoever.

“Accordingly, Tanduay Lumber could not have transferred title to the subsequent holders of title. Clearly, the State’s complaint for reversion is based solely on Section 118 of CA 141. Since the restriction on the conveyance, transfer or disposition of the patented land subject of this case within five years from and after the issuance of the patent pursuant to Section 118 of CA 141 has been removed and the title of the patentee Epifania San Pedro is, under RA 11231, now considered as title in fee simple, which is not subject to any restriction on alienation or encumbrance, the Government no longer has any legal basis to seek the reversion or reconveyance of the subject land.”

The facts and redacted portion of the decision are from SC G.R. No. 223822 (16 October 2019).