G.R. No. 170023 ; November 27, 2009
KINGS PROPERTIES CORPORATION, Petitioner, vs. CANUTO A. GALIDO, Respondent.

FACTS

The heirs of Domingo Eniceo, Rufina and Maria, were awarded a homestead patent over four parcels of land in Antipolo, Rizal, covered by Original Certificate of Title (OCT) No. 535. The patent contained the standard condition under Commonwealth Act No. 141 that the land could not be alienated without the approval of the Secretary of Agriculture and Natural Resources within five years from the issuance of the patent and before the expiration of twenty-five years. On September 10, 1973, within the prohibitory period, the Eniceo heirs sold the property to respondent Canuto Galido. The required Secretary’s approval was not secured until August 17, 1995. In the interim, the Eniceo heirs, alleging loss of the owner’s duplicate certificate of title, secured a court order for the issuance of a new one. They subsequently sold the same property to petitioner Kings Properties Corporation in 1995. Galido filed an action for cancellation of the titles issued to Kings Properties and for the registration of his 1973 deed of sale.

ISSUE

The core issue is whether the 1973 sale between the Eniceo heirs and respondent Galido is valid and enforceable, thereby vesting ownership in Galido and nullifying the subsequent 1995 sale to petitioner.

RULING

The Supreme Court ruled in favor of respondent Galido, affirming the Court of Appeals’ decision. The legal logic hinges on the nature of the prohibition under the Public Land Act. The Court clarified that the requirement for the Secretary’s approval for an alienation within the 25-year period is not a condition that renders the contract void from the beginning (void ab initio), but merely a suspensive condition. The sale contract itself is valid and binding between the parties from its execution. The absence of prior approval only means the contract cannot produce the effect of transferring ownership until that approval is granted. The approval, when subsequently obtained in 1995, retroacts to the date of the execution of the contract in 1973. Consequently, the perfected 1973 contract, upon fulfillment of the suspensive condition, vested ownership in Galido. Petitioner Kings Properties, which bought the property in 1995, cannot be considered a buyer in good faith. Galido had already annotated an adverse claim on the title before petitioner’s purchase. This annotation served as constructive notice, destroying any claim of good faith. Since the Eniceo heirs had already sold the property to Galido in 1973, they had no more ownership rights to convey to petitioner in 1995. The subsequent sale was therefore null and void.