G.R. No. 141296. October 7, 2002.
REPUBLIC OF THE PHILIPPINES, Represented by the Regional Executive Director, Region III, Department of Energy and Natural Resources (DENR), petitioner, vs. HEIRS OF AGUSTIN L. ANGELES, HEIRS OF CARMEN DE LEON Vda. DE ANGELES, LUZ GANCAYCO ALVAREZ and the REGISTER OF DEEDS of BALANGA, BATAAN, respondents.

FACTS

The Republic of the Philippines, through the DENR Regional Executive Director, filed a Complaint for Reversion before the Regional Trial Court (RTC) of Balanga, Bataan, seeking to revert Lot No. 2744, Cadastral 241, Orion Cadastre, to the State. The lot was originally granted through Free Patent No. 265340 issued to Agustin L. Angeles on February 24, 1964, leading to the issuance of Original Certificate of Title (OCT) No. 194. Agustin L. Angeles died on April 16, 1967. Prior to his death, he conveyed one-half of the northern portion of the lot to his sister, Emilia L. Angeles, via a Deed of Absolute Sale postdated January 5, 1970, which was within the five-year prohibitory period against alienation of a free patent. Emilia L. Angeles later sold the same portion to her daughter, respondent Luz Gancayco Alvarez, on January 27, 1973, resulting in the issuance of Transfer Certificate of Title (TCT) No. T-43712. A protest was filed by Samahang Nayon members on November 19, 1976. A DENR investigation found that Agustin L. Angeles or his predecessors never occupied or cultivated the lot, which was in the actual possession of the Samahang Nayon since prewar days; that the lot was residential, not agricultural; and that the conveyance to Emilia L. Angeles violated the five-year prohibition. The Republic filed the complaint for reversion on May 20, 1998. Respondents moved to dismiss on the ground of prescription, which the RTC granted, ruling that the action was filed beyond the four-year prescriptive period from the issuance of the OCT and that Alvarez was an innocent purchaser for value.

ISSUE

Whether or not the trial court committed a grave error of law in dismissing the complaint for reversion on the ground of prescription.

RULING

Yes. The Supreme Court GRANTED the Petition, SET ASIDE the assailed RTC Order, and DIRECTED the RTC to hear the case on the merits. The Court ruled that prescription does not run against the State. The action is for reversion of public land acquired through fraud, not a private action for reconveyance. The rule that prescription and laches do not bar the State from recovering public property fraudulently registered is elementary. The State’s right of reversion under Section 101 of the Public Land Act is imprescriptible. The case cited by the RTC, Esconde v. Barlongay, involving a private action for reconveyance based on fraud with a four-year prescriptive period, is inapplicable. The indefeasibility of a title issued via free patent does not preclude the State from investigating fraud in its acquisition. The questions of whether the land is patrimonial (which could potentially be subject to prescription under Article 1113 of the Civil Code) and whether Alvarez is an innocent purchaser for value are factual issues to be resolved during trial. The only legal issue resolved was that, as a rule, prescription does not run against the State in an action for reversion of public land.