G.R. No. 181623; December 5, 2012
Alejandro Binayug and Ana Ugaddan Binayug, Petitioners, vs. Eugenio Ugaddan, Norberto Ugaddan, Pedro Ugaddan, Angelina Ugaddan, Tereso Ugaddan, Dominga Ugaddan, Geronima Ugaddan, and Basilia Lacambra, Respondents.

FACTS

Gerardo Ugaddan acquired two parcels of land via a homestead patent, with Original Certificate of Title (OCT) No. P-311 issued in his name on March 5, 1951. Upon Gerardo’s death, his heirs (respondents) discovered that the title had been cancelled. Records indicated that Gerardo, with his wife Basilia’s consent, sold the properties to Juan Binayug on July 10, 1951, leading to the issuance of Transfer Certificate of Title (TCT) No. T-106394 in Juan’s name. The properties eventually passed to Juan’s son, petitioner Alejandro Binayug, and his wife, Ana.
Respondents filed a complaint to annul the title and the deed of sale. They alleged the 1951 Absolute Deed of Sale was forged, as the signatures were mere thumbmarks despite Gerardo and Basilia being literate. They further contended the sale violated the five-year prohibition on alienation under the Public Land Act (Commonwealth Act No. 141), as the patent was granted in January 1951 and the sale occurred in July 1951. Petitioners defended the sale’s validity and claimed they reported the owner’s duplicate copy of OCT No. P-311 as lost after respondents refused to surrender it for registration.

ISSUE

Whether the Court of Appeals erred in affirming the trial court’s declaration of nullity of the 1951 deed of sale and the subsequent TCT, and its recognition of respondents’ ownership.

RULING

The Supreme Court denied the petition and affirmed the lower courts’ rulings. The legal logic rests on the mandatory and prohibitive character of Section 118 of the Public Land Act. The law explicitly forbids the alienation or encumbrance of homestead lands within five years from the issuance of the patent. The purpose is to preserve the grant for the homesteader and their family. The patent was issued on January 12, 1951, and the disputed sale was executed on July 10, 1951—well within the prohibited period. Consequently, the sale was void ab initio for being contrary to law. A void contract produces no legal effect and cannot be ratified. Since the root transaction was void, the resulting TCT in Juan Binayug’s name was also void. The Court found no merit in the factual challenge, as the issue of the sale’s validity under the law was a question of law appropriately reviewed. The respondents, as heirs of the original homestead grantee, rightfully retained ownership. The alleged forgery, while noted, became secondary given the primary legal infirmity of the sale violating a prohibitive statute.