The State seeks in this Petition for Review on Certiorari[1] to secure the cancellation of title and reversion of a

real property granted to Mabelle Ravelo under a sales patent. Title to the property has passed on to parties who
now claim that they are innocent purchasers in good faith; thus their claim cannot be defeated by any defect in
the title of the original grantee.

The records show the pertinent facts summarized below.
n September !"# !$%$# &ose 'ernando filed a miscellaneous sales application over (ot )o. !%# *lock
+ (subject lot) situated in Mabayuan ,-tension# .ordon/eights# longapo 0ity. n &une !1# !$"1# he
relin2uished his right over the sub3ect lot to 4ictoriano Mortera# &r.# who submitted his own patent
application. n &une !5# !$65# one Severino Muyco also filed a miscellaneous sales application for the same
property.

The 7epartment of ,nvironment and )atural Resources 8DENR9:Region ;;; investigated the conflict
between the two applications. n May 5!# !$6$# it issued an order in favor of &ose 'ernando and 4ictoriano
Mortera# &r.

Prior to the 7,)R<s action# specifically on 'ebruary !%# !$6$# the 7irector of (ands issued Sales Patent
)o. !+=>6 covering the same sub3ect lot to respondent Mabelle *. Ravelo 8Ravelo9. She was subse2uently
issued riginal 0ertificate of Title 8OCT9 )o. P:=>!" registered with the Registry of 7eeds of longapo 0ity. ;n
effect# the 7,)R:;;;<s rder of May 5!# !$6$ in the 'ernando:Mortera:Muyco dispute was not enforced;
on ?ugust =# !$6$ &ose 'ernando filed a protest against Ravelo<s title.

The petitioner Republic of the Philippines 8petitioner9# through the 7,)R:;;; ,-ecutive 7irector# filed a
complaint[2] for cancellation of title against Ravelo before the longapo Regional Trial
0ourt (RTC) on )ovember %# !$$+. ?ssisted by the ffice of the Solicitor .eneral 8OSG9# the petitioner asked
for the cancellation of Ravelo<s 0T )o. P:=>!" and Sales Patent )o. !+=>6 on the allegation that the issuance
of the patent by the 7irector of (ands violated 7,)R ?dministrative rder 8A.O.9 )o. +1 dated May 51#
!$$6. This ?.. mandates that applications for sales patent should be filed with the 7,)R regional office that
has 3urisdiction over the land applied for# not with the 7irector of (ands in Manila. Ravelo<s application was filed
with the 7irector of (ands in Manila although the sub3ect lot is located in longapo 0ity; the application should
have been filed with 7,)R:;;; in San 'ernando# Pampanga. The government also accused Ravelo of fraud for
asserting in her application that the land was not occupied and was a part of the public domain.

n March +=# !$$=# a notice of lis pendens 8indicating the pendency of the petitioner<s complaint9 was inscribed
as ,ntry )o. "+!$ on Ravelo<s 0T )o. P:=>!".

;n a separate development# one ?ntonio 0hieng filed on 7ecember !5# !$6$ a collection suit against Ravelo
before the RT0 of longapo 0ity# which suit led to a 3udgment against Ravelo and the issuance of a writ of
e-ecution. The )otice of (evy was registered with the Register of 7eeds on March !"# !$$5. ;n the auction sale
that followed# @ilson 0hieng 8Chien9# ?ntonio 0hieng<s son# won as highest bidder. ? certificate of sale was
issued to 0hieng and the sale was registered with the longapo Registry of 7eeds on May +># !$$5.

The respondent:spouses ,mmanuel and Perlita Redondo 8Redondos9# who own and reside in a property
ad3acent to the sub3ect lot# subse2uently bought the sub3ect lot from 0hieng. The parties first signed an
agreement for the purchase of the sub3ect lot on May !!# !$$5# and upon payment of the agreed purchase price#
e-ecuted on 7ecember +1# !$$5 a deed of absolute sale.

n September +5# !$$=# the final deed of sale 8dated &une +%# !$$=9 covering the sub3ect lot in favor of 0hieng
was inscribed as ,ntry )o. +=!$ on 0T )o. P:=>!". n the same date# Transfer 0ertificate of Title 8T0T9 )o.
T:"+1$ covering the sub3ect lot was issued to 0hieng. ,ntry )o. "+!$ 8the petitioner<s complaint for cancellation
and reversion9 was carried at the back of 0hieng<s T0T )o. T:"+1$.

0hieng and the Redondos entered into another deed of sale in the Redondos< favor on )ovember +!#
!$$=. This deed was inscribed as ,ntry )o. ">>= at the back of T0T T:"+1$ on 7ecember +1# !$$=. n the
same day# T0T )o. T:"+%! covering the sub3ect lot was issued to the Redondos.

;n her ?nswer# Ravelo insisted that her application passed through the regular process; that she had been
in possession of the property from the time of her application; and that Mortera was never in possession of the
land.

The trial court received the government<s evidence e!"parte after Ravelo failed to attend the trial.

n &anuary %# !$$># the Redondos intervened# alleging that they ac2uired the sub3ect lot in good faith and
for value. ,mmanuel Redondo testified that ?ntonio 0hieng<s son @ilson e-ecuted a deed of sale
dated 7ecember +1# !$$5 in his and his wife Perlita<s favor. ?fter their purchase# they secured a certification
from the *ureau of 'orestry declaring the land for ta-ation purposes.

The Trial Court Decision

n May !+# !$$6# the RT0 decided in the petitioner<s favor and cancelled Ravelo<s Sales Patent )o. !+=>6 and
0T )o. P:=>!"# 0hieng<s T0T )o. T:"+1$# and the Redondos< T0T )o. T:"+%!. The court also ordered the
reversion of the land to the mass of the public domain#[3] relying on the *ureau of (and<s recommendation to
cancel Ravelo<s title and patent for being fraudulently obtained. ;t e-plained that the intervenors were not buyers
in good faith because they failed to in2uire with the trial court whether other cases have been filed against
Ravelo. ;t agreed with the S. that the land should revert to petitioner pursuant to 0ommonwealth ?ct 8C.A.9
)o. !=! or the Public (and ?ct# as amended by Republic ?ct 8R.A.9 )o. %>!%[4] because it was sold in a public
auction within the period when the alienation of lands granted through sales patent is prohibited.

The Court of Appeals Decision

The 0ourt of ?ppeals# on the Redondos< appeal docketed as 0?:..R. 04 )o. %1%%>#[5] reversed and set
aside the trial court<s ruling and declared the Redondos as innocent purchasers in good faith. The appellate
court also declared the Redondos< T0T )o. T:"+%! valid.[6]

The appellate court ruled that the Redondos were buyers in good faith because they and 0hieng entered
their agreement for the purchase of the sub3ect lot on May !!# !$$5 and e-ecuted their 7eed of Sale on
7ecember +1# !$$5# prior to the annotation of the notice of lis pendens on March +=# !$$=# and prior as well to
any awareness by the Redondos of the e-istence of any flaw in the vendor<s title. ;t e-plained that the
Redondos< conduct carried all the badges of propriety and regularity as they verified the regularity of the title to
the property with the proper registry of deeds before buying it. Ravelo<s title# even if tainted with fraud# may be
the source of a completely legal and valid title in the hands of an innocent purchaser for value.

The Petition and the Parties Positions

The petitioner comes to this 0ourt in the present petition to assail the
0ourt of ?ppeals decision and submits the following assigned errorsA

;.

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T/?T ? 'R?B7B(,)T T;T(, M?F )T *, T/, *?S;S ' ? 4?(;7 T;T(,.

;;.

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R,SP)7,)TS R,7)7 SPBS,S ?R, ;))0,)T PBR0/?S,RS ;) .7 '?;T/
?)7 'R 4?(B, ' T/, PRP,RTF.[7]


The petitioner argues that the innocent purchaser for value doctrine is inapplicable because the mother
title was procured through fraud. Specifically# Ravelo<s title could not have been the source of valid titles for
0hieng and the Redondos because it was void in the first place. Ravelo<s failure to disclose in her patent
application that 4ictoriano Mortera# &r. was in possession of the sub3ect lot constituted fraud and
misrepresentation :: grounds for the annulment of her title. ;f a public land is ac2uired by an applicant through
fraud and misrepresentation# the State may institute reversion proceedings even after the lapse of one year.

The petitioner likewise contends that the Redondos as vendees cannot rely solely on the face of the title
as they did not transact directly with the registered owner; they transacted with 0hieng whose right to the
property was based on a certificate of sale. Thus# the Redondos merely relied on the certificate of sale instead
of e-amining the title covering the sub3ect lot. To be deemed a buyer in good faith and for value# the vendee
must at least see the registered owner<s duplicate copy of the title and must have relied on it in e-amining the
factual circumstances and in determining if there is any flaw in the title. Petitioner finally notes that lis
pendens was already annotated on the title at the time the deed of sale was registered.

The respondent Redondos spouses counter they are not obliged by law to go beyond the certificate of
registration to determine the condition of the property. ?ny alleged irregularity in the issuance of Ravelo<s 0T
)o. P:=>!" cannot affect them since a patent issued administratively has the force and effect of a Torrens Title
under ?ct )o. =$% 8the (and Registration ?ct9 and partakes of the nature of a certificate of title issued in 3udicial
proceedings. ?t the time they purchased the property from 0hieng with the e-ecution of their ?greement
dated May !!# !$$5# there was no encumbrance on 0T )o. P:=>!" e-cept the notice of levy and certificate of
sale in favor of 0hieng. They had full notice of the physical condition of the land# and no adverse claim of
ownership or possession e-isted when they inspected the records of the Register of 7eeds and of the 0ity
?ssessor. Since their residence ad3oins the sub3ect lot# they could attest that no one used the sub3ect lot and no
improvement has been introduced showing that there was adverse possession by any party.[8]

Respondent Ravelo failed to file a comment.

Two issues are effectively submitted to us for resolution# namelyA

1 !hether there is "asis for the cancellation of #a$elos ori%inal title and the re$ersion of
the su"&ect lot to the pu"lic do'ain( and

2 !hether the #edondos are innocent purchasers in %ood faith and for $alue) *hose title
o$er the su"&ect lot that could defeat the petitioners cause of action for cancellation of title
and re$ersion


The Courts #ulin%

!e find the petition 'eritorious

The #e$ersion +ssue,
-isrepresentation in the Application

Bnder .ection /1 of CA 0o 141# the Gstate#ents #ade in application shall be considered essential
conditions and parts o$ an% concession& title or per#it issued on the basis o$ such application& and an% $alse
state#ent therein or o#ission o$ $acts alterin or chanin or #odi$%in the consideration o$ the $acts set $orth in
such state#ents . . . shall ipso facto produce the cancellation of the concession, title, or permit
granted.' This provision is reinforced by 3urisprudential rulings that stress in no uncertain terms the
conse2uences of any fraud or misrepresentation committed in the course of applying for a land patent.[9]

The record shows that Ravelo# the grantee# limited herself in her ?nswer to the position that the application
passed through the regular process; that she had been in possession of the property from the time of her
application; and that Mortera was never in possession of the land. Thereafter# Ravelo failed to attend trial and
present evidence so that the lower court received the government<s evidence e!"parte. The Redondos# who
intervened after title to the property passed on to them# did not touch at all the misrepresentation aspect of the
complaint on the theory that# as purchasers in good faith# the misrepresentation of Ravelo cannot affect their
title.[10] Thus# the presence of fraud or misrepresentation was practically an issue that the Ravelo and the
Redondos conceded to the government.

This legal situation# notwithstanding# the 0ourt of ?ppeals practically disregarded the misrepresentation issue
and followed the Redondos< argument that the flaw in Ravelo<s title is immaterial because they were purchasers
in good faith of a titled property. This reasoning brings to the fore the issues of good faith and of the annotations
in the original certificate of title including the notice of lis pendens that was registered on March +=# !$$=.

The 1ood 2aith +ssue

The 0ourt of ?ppeals approached the issue of good faith based mainly on its view that there had been a
perfected sale prior to the annotation of the notice of lis pendens. To the appellate court# the Redondos
purchased the sub3ect lot prior to the annotation of the notice of lis pendens by the petitioner# and were thus
without knowledge or notice of any flaw in the title. To 2uote the appellate courtA

@ilson 0hieng and the intervenors entered into said agreement prior to the
annotation of the notice of lis pendens on March +=# !$$=. The consensual contract of sale
was# therefore# perfected on May !!# !$$5# prior to any awareness on the part of the intervenors
as the e-istence of any flaw in the vendor<s title. Said agreement has been duly
notarized. There was a meeting of the minds between @ilson 0hieng and spouses Redondo;
there is a determinate sub3ect which is the land covered by 0T P:=>!" and a price certain in
the sum of P6>#111.11 which intervenors agreed to pay @ilson 0hieng. ;ntervenors are# thus#
buyers in good faith and for value under the contemplation of our laws. )o evidence was
presented by the other parties to refute said fact. )either was there any evidence introduced to
assail the genuineness and due e-ecution of the agreement. ;t is a public instrument which
en3oys the presumption of regularity.


@e find this approach to be simplistic as it disregards# among others# the nature of a sale of registered real
property# as well as other material and undisputed developments in the case. 'or e-ample# while the appellate
court was correct in its general statement about the perfection of a contract of sale# it did not take into account
that the sub3ect matter of the sale was a re%istered land to which special rules apply in addition to the general
rules on sales under the 0ivil 0ode. Section >! of Presidential 7ecree )o. !>+$ which governs conveyances of
registered lands providesA
Sec. >!. Conveyance and other dealings by registered owner. ?n owner of
registered land may convey# mortgage# lease# charge or otherwise deal with the same in
accordance with e-isting laws. /e may use such forms of deeds# mortgages# leases or other
voluntary instruments as are sufficient in law. *ut no deed# mortgage# lease or other voluntary
instrument# e-cept a will purporting to convey or affect registered land# shall take effect as a
conveyance or bind the land# but shall operate only as a contract between the parties and
as evidence of authority to the Register of Deeds to make registration.

The act of registration shall be the operative act to convey or affect the land in so
far as third persons are concerned& and in all cases under this 7ecree# the registration shall
be made in the office of the Register of 7eeds for the province or city where the land lies.

Thus# bereft of registration# any sale or transaction involving registered land operates only as a contract
between the parties and shall not affect or bind the registered property.

ne material development that affected the sub3ect lot as a reistered propert% was the notice of levy that the
sheriff caused to be annotated in Ravelo<s 0T )o. P:=>!" on March !"# !$$5 pursuant to the order of the court
in the collection case filed by ?ntonio 0hieng against Ravelo. This was followed by the 0ertificate of Sale that
was again annotated in Ravelo<s title on May +># !$$5.

?nother material development was the annotation of a notice of lis pendens on March +=# !$$= at the
instance of the government# to reflect the pendency of the State<s claim for cancellation of title and the reversion
of the sub3ect lot against Ravelo.

;nterestingly# the annotation of the levy in e-ecution and the certificate of sale did not merit any consideration in
the decisions of both the trial and the appellate courts. @e# however# consider these developments material as
they embody notices to the whole world of transactions affecting the registered sub3ect lot; they should be the
starting point of any consideration of the e-istence of good or bad faith of the parties dealing with the
land. These annotations signify that 0hieng<s purchase of the sub3ect lot in the e-ecution sale constituted a prior
and superior claim in ti#e over the sub3ect lot by any of the dra#atis personae in the present case.

Thus# barring any defect in the sale itself and assuming that 0hieng did not have any prior knowledge#
constructive or otherwise# of any defect in Ravelo<s title# 0hieng has a prior claim to the property that is protected
by the fact of registration and by his status as an innocent buyer in good faith and for value. The legal protection
offered by registration under the Torrens system compels us to recognize the validity of the claim of an innocent
purchaser for value despite any defect in the vendor<s title.[11] (ikewise# it does not matter that the final deed of
sale and transfer of registration of the title to 0hieng# as innocent purchaser for value at an auction sale#
occurred subse2uent to the annotation of the intervening notice of lis pendens# as the final deed of sale and
transfer are the necessary conse2uences of the previously registered notice of levy and certificate of sale.[12]

The Redondos came into the picture when they contracted with 0hieng for their purchase of the sub3ect
property. Their inspection of the records at the Registry of 7eeds should have confirmed to them that the
sub3ect lot was a registered land and that 0hieng# their seller# was not yet the registered owner# but one who
merely had a sheriff<s 0ertificate of Sale. 0ontrary to the lower courts< reading of the May !!# !$$5 transaction
between 0hieng and the Redondos# what 0hieng sold was not the sub3ect lot because he was not yet a
registered owner who could effectively convey the property at that point. @hat 0hieng sold was Ghis rihts under
a Certi$icate o$ Sale on the propert% covered b% Oriinal Certi$icate o$ Title No. (")*+,.'[13] Significantly#
this May !!# !$$5 agreement was not registered nor annotated in 0T )o. P:=>!" because it was technically a
side agreement relating to but not directly affecting the registered property# and was thus enforceable only
between the parties H 0hieng and the Redondos. Thus# the government cannot be effectively put on notice of
the May !!# !$$5 agreement when it registered its notice of lis pendens on March +=# !$$=. 0onse2uently# too#
the Redondos are differently situated in terms of the determination of their good faith and cannot simply claim
what 0hieng can personally claim as innocent purchaser for value of the sub3ect lot at an e-ecution sale.

To complete the whole picture of the series of developments involved# it was not until September +5# !$$= that
the final *ill of Sale dated &une +%# !$$= in favor of 0hieng was inscribed as ,ntry )o. +=!$ on 0T )o. P:
=>!". 0T )o. P:=>!" was thereafter cancelled and T0T )o. T:"+1$ in 0hieng<s name was issued 8carrying
the government<s notice of lis pendens as ,ntry )o. "+!$9. -t .as onl% at this point that Chieng, as registered
owner& could have sold or could have done an act bindin the subject lot. ? deed of sale dated )ovember +!#
!$$= in favor of the Redondos was inscribed at the back of 0hieng<s T0T )o. T:"+1$ on7ecember +1#
!$$=. n the same day# T0T )o. T:"+%! in the Redondos< name was issued# still carrying the lis pendens ,ntry
)o. "+!$.[14]

'rom these perspectives# we cannot see how the Redondos could have been purchasers in good faith in May
!$$5 .hen the% .ere not even purchasers o$ the subject lot at that point. Specifically# it was not until 0hieng
and the Redondos e-ecuted their )ovember +!# !$$= deed of sale over the sub3ect lot that they had a contract
of sale that would have served as evidence o$ authorit% to the Reister o$ Deeds to #a/e reistration. ;t was
only then when a sale o$ real propert% b% a reistered o.ner was concluded where good faith or bad faith on the
part of the buyer would have mattered H but at that point a notice of lis pendens had already been annotated.


The 0otice of 3is Pendens

Lis pendens literally means Ga pending suit#I while a notice of lis pendens# inscribed in the certificate of title# is
an announcement to the whole world that the covered property is in litigation# serving as a warning that one who
ac2uires interest in the property does so at his own risk and sub3ect to the results of the litigation.[15] This is
embodied in Section "% of Presidential 7ecree 8P.7.9 )o. !>+$ which provides that no action to recover
possession o$ real estate& or to 0uiet title thereto& or to re#ove clouds upon the title thereo$& or $or partition& or
other proceedins o$ an% /ind in court directl% a$$ectin the title to land or the use or occupation thereo$ or the
buildins thereon& and no jud#ent& and no proceedin to vacate or reverse an% jud#ent& shall have an% e$$ect
upon reistered land as aainst persons other than the parties thereto& unless a #e#orandu# or notice statin
the institution o$ such action or proceedin and the court .herein the sa#e is pendin& as .ell as the date o$ the
institution thereo$& toether .ith a re$erence to the nu#ber o$ the certi$icate o$ title& and an ade0uate description
o$ the land a$$ected and the reistered o.ner thereo$& shall have been $iled and reistered. The notice that this
provision speaks of H the notice of lis pendens H is not a lien or encumbrance on the property# but simply a
notice to prospective buyers or to those dealing with the property that it is under litigation.[16]

?s our above discussion shows# the government<s notice of lis pendens came after the e-ecution sale
and thus cannot affect 0hieng and the conveyance to him of the sub3ect lot. /owever# the notice affects all
transactions relating to 0T )o. P:=>!" subse2uent to its registration date H March +=# !$$=. 'rom that date#
there was a binding notice to the whole world that any subse2uent claim on 0T )o. P:=>!" would be sub3ect to
the annotated pending action. Specifically# the sale by 0hieng to the Redondos of the sub3ect lot on 7ecember
+1# !$$= was sub3ect to the notice of lis pendens duly annotated on 0hieng<s title.


Cancellation and #e$ersion


Separately from the misrepresentation that tainted Ravelo<s sales patent# the RT0 decision points to a
supervening cause for cancellation and reversion that transpired after the filing of the petitioner<s complaint
on )ovember %# !$$+ H the sale on e-ecution of the sub3ect lot. ?ccording to the RT0# this was sale prohibited
under Section +$ of the 0? )o. !=! since it was made within ten years from the grant of the patent[17] and
should have the legal effect of voiding the sale on e-ecution of the sub3ect lot.

@e disagree with this conclusion as the applicable law in the sale of land of the public domain for residential
purposes is R.?. )o. "51#[18] as amended by P.7. )o. +11=.[19] @hile R.?. )o."51 originally carried the
same prohibition that Sec. +$ of 0? )o. !=! has# P.7. )o. +11= dated 7ecember 51# !$6> removed this
prohibition for lands sold for residential purposes under R.?. )o. "51. Thus# the e-ecution sale of the sub3ect lot
in !$$5 was undertaken without any attendant legal impediment.

Conclusion

;n sum# we hold that the 0ourt of ?ppeals erred in concluding that the Redondos were buyers in good
faith. They purchased the sub3ect lot from 0hieng sub3ect to the government<s notice of lis pendens; hence# their
purchase was at the risk of the outcome of the State<s complaint for cancellation and reversion which we find to
be meritorious. The sub3ect lot must therefore revert back to the public domain.

!45#526#5# premises considered# we 1#A0T the petition. @e #575#.5 the decision of the 0ourt of
?ppeals in 0?:..R. 04 )o. %1%%> and accordingly D5C3A#5 76+D respondent Mabelle *. Ravelo<s
Miscellaneous Sales Patent )o. !+=>6 and 0T )o. P:=>!". @e likewise order theCA0C533AT+60 of
Transfer 0ertificate of Title )o. T:"+%! issued in the name of ,mmanuel and Perlita Redondo and
the #575#.+60 to the mass of the public domain of the property it covers H (ot !%# *lock +# located in
Mabayuan ,-tension# .ordon /eights# longapo 0ity.