G.R. No. 79787 June 29, 1989
APOLONIO EGAO AND BEATRIZ EGAO, petitioners, vs. THE HONORABLE COURT OF APPEALS (NINTH DIVISION), SEVERO DIGNOS AND SEVERO BONTILAO, respondents.

FACTS

Private respondents Severo Dignos and Severo Bontilao filed a complaint for Quieting of Title and/or Recovery of Possession and Ownership against petitioners Apolonio and Beatriz Egao over Lot No. 662. Respondents claimed ownership by virtue of a 1979 deed of absolute sale from Roberto Marfori, who allegedly acquired the lot from the petitioners. They asserted they had introduced improvements and paid taxes. Petitioners, however, were the registered owners under Original Certificate of Title (OCT) No. P-3559 issued pursuant to a Free Patent granted in 1965. They denied selling the land, arguing any such sale violated the five-year prohibition against alienation under the Public Land Act ( Commonwealth Act No. 141 ), and maintained their continuous possession since 1950.
The Regional Trial Court ruled in favor of the Egaos, upholding their registered title and ordering the surrender of the owner’s duplicate certificate. The Court of Appeals reversed this decision. It found that a sale to Marfori did occur, violating the legal restriction. Applying the principle of in pari delicto, it held both Egaos and Marfori in equal fault and thus barred from seeking relief. However, it declared respondents as innocent purchasers for value, awarding them ownership and possession, and ordering the cancellation of the Egaos’ title.

ISSUE

The core issue is whether private respondents, who derived their claim from a sale that violated the statutory prohibition on alienating a homestead within five years, can maintain an action to quiet title and recover possession against the registered patentees.

RULING

The Supreme Court reversed the Court of Appeals and reinstated the trial court’s decision in favor of the Egaos. The legal logic is anchored on the indisputable nullity of the sale and the consequent failure of respondents’ claim to constitute a valid cloud on the title. The Court clarified that Section 118 of the Public Land Act explicitly prohibits any alienation or encumbrance of a homestead within five years from the grant of the patent. A contract executed in violation of this prohibition is not merely voidable; it is void ab initio. Consequently, Marfori acquired no rights whatsoever from the void sale.
The principle of nemo dat quod non habet applies: one cannot give what one does not have. Since Marfori acquired no title, he could transfer none to the respondents. The Court of Appeals erred in declaring respondents innocent purchasers for value, as their claim originates from a void transaction. A purchaser cannot be in good faith when the vendor’s title is patently defective or non-existent. Therefore, respondents have no legal or equitable interest in the property that could support an action to quiet title against the registered owners. The Egaos, as holders of a valid certificate of title, are entitled to remain in possession. The State, represented by the Solicitor General, retains the right to institute an action for reversion, but private respondents have no standing to assert ownership derived from a void contract.