In Jose Abelgas, Jr. and Letecia Jusayan de Abelgas v. Servillano Comia, Rural Bank of Socorro Inc. and Rural Bank of Pinamalayan, Inc., the Supreme Court ruled that a Deed of Relinquishment, Renunciation of Rights, and Quitclaim is not an alienation or encumbrance prohibited under the Public Land Act if the property in question already belonged to the grantee before the issuance of a free patent. This decision clarifies the scope of restrictions on alienating land acquired through free patents and protects the rights of individuals who rightfully owned land before its inclusion in another person’s title. The Court emphasized that the Public Land Act aims to keep gratuitously given public land within the family of the patentee and shield them from temptations to dispose of their landholding.

When Does a “Quitclaim” Really Mean? Unpacking Land Ownership and Free Patents

This case revolves around a dispute over land ownership in Pinamalayan, Oriental Mindoro. In 1971, Servillano Comia obtained a free patent over Lot No. 919-B, which was then registered under Original Certificate of Title (OCT) No. P-8553 in 1976. Subsequently, Comia executed a Deed of Relinquishment, Renunciation of Rights, and Quitclaim, conveying a 3,000-square-meter portion of the lot to spouses Jose and Letecia Abelgas. The deed stated that this portion belonged to the spouses and was only included in Comia’s title because it adjoined his land. This situation led to the cancellation of Comia’s original title and the issuance of a new Transfer Certificate of Title (TCT) No. T-46030 in the names of Comia and the Abelgas spouses as co-owners. The Abelgas spouses then subdivided their portion, securing loans from Rural Bank of Pinamalayan, Inc. (RBPI) and Rural Bank of Socorro, Inc. (RBSI) using the subdivided lots as collateral.

Comia contested these transactions, claiming sole ownership of Lot No. 919-B and alleging that the Deed of Relinquishment was fictitious. He sought the recovery of the land and the cancellation of subsequent titles, arguing that the mortgages to the banks were void because they were executed within the five-year prohibition period for alienating lands subject to a free patent under Section 118 of the Public Land Act (CA 141). Section 118 of CA 141 states:

Section 118. Except in favor of the Government or any of its branches, units, or institutions, lands acquired under free patent or homestead provisions shall not be subject to encumbrance or alienation from the date of the approval of the application and for a term of five years from and after the date of issuance of the patent or grant, nor shall they become liable to the satisfaction of any debt contracted prior to the expiration of said period, but the improvements or crops on the land may be mortgaged or pledged to qualified persons, associations, or corporations.

The Regional Trial Court (RTC) initially dismissed Comia’s complaint, upholding the validity of the Deed of Relinquishment and the mortgages. However, the Court of Appeals (CA) reversed this decision, declaring the Deed of Relinquishment and the mortgages null and void, citing the prohibition under CA 141. The CA ruled that the deed was an attempt to circumvent the law, and the mortgages were invalid due to the banks’ lack of exemption under Commonwealth Act 456, which amended Section 118 of CA 141. The Supreme Court had to determine whether the CA erred in declaring the Deed of Relinquishment and the mortgages null and void.

The Supreme Court reversed the CA’s decision, holding that the Deed of Relinquishment was not an alienation or encumbrance prohibited by the Public Land Act. The Court emphasized that the prohibition in Section 118 applies only if there is an alienation or encumbrance of land acquired under a free patent or homestead. In this case, Comia did not transfer, convey, or cede the property. Instead, he relinquished, renounced, and quitclaimed the property because it already belonged to the spouses Abelgas. The voluntary renunciation by Comia was not an act of alienation but an act of correcting the inclusion of the property in his free patent.

The Court found that the spouses Abelgas owned the property before Comia was granted the free patent. This was supported by the testimony of Jose Abelgas, Jr., who stated that he had purchased the property from Comia before 1971. This testimony was not contested by Comia, and he did not provide evidence that he sold the property during the prohibition period, which would have violated the law. Furthermore, Comia failed to dispute the presumption that the spouses owned the property before the grant of his free patent. The Deed of Relinquishment, which was annotated in a public document (the original certificate of title), recognized the ownership of the spouses.

The Court also addressed the issue of the mortgages, noting that the 3,000-square-meter portion subdivided into twelve lots was not shown to be under a free patent. What was submitted to the mortgagee banks were TCTs not derived from a free patent. Therefore, the encumbrances were not null and void, as they did not fall within the ambit of the prohibition in Section 118 of CA 141. The Court also noted that at the time of the mortgage, the Rural Banks Act (Republic Act No. 720), as amended by Republic Act No. 5939, already allowed banks to accept free patents as security for loan obligations. The Supreme Court has consistently held that the purpose of the Public Land Act is to protect the rights of individuals who have legitimately acquired land through homestead or free patent.

FAQs

What was the key issue in this case?	The key issue was whether the Deed of Relinquishment, Renunciation of Rights, and Quitclaim executed by Comia in favor of the Abelgas spouses constituted an alienation prohibited under Section 118 of the Public Land Act.
What is a free patent?	A free patent is a grant of public land to a qualified applicant, subject to certain conditions and restrictions, including a prohibition on alienation or encumbrance for a specified period.
What does alienation mean in the context of land law?	In land law, alienation refers to the transfer of property and possession of lands from one person to another, typically through a voluntary act such as a sale or donation.
What is the purpose of the prohibition on alienating land acquired through a free patent?	The prohibition aims to keep the land within the family of the patentee, shielding them from the temptation to dispose of their landholding and ensuring that they can continue to benefit from the land.
When does the prohibition on alienation apply?	The prohibition applies from the date of the approval of the application for a free patent and for a term of five years from and after the date of issuance of the patent or grant.
What was the basis for the Supreme Court’s decision?	The Supreme Court based its decision on the finding that the spouses Abelgas already owned the property before Comia obtained the free patent, and therefore, the Deed of Relinquishment was not an alienation but a correction of the title.
Did the Supreme Court find the mortgages in favor of the banks to be valid?	Yes, the Supreme Court found the mortgages to be valid because the subject property was not shown to be under a free patent and because the Rural Banks Act allowed banks to accept free patents as security for loan obligations.
What is the significance of annotating the Deed of Relinquishment on the original certificate of title?	The annotation serves as prima facie evidence of the facts stated in the deed, including the recognition of the spouses Abelgas’ ownership of the property.
What is the implication of this ruling for banks accepting land as collateral?	This ruling reinforces the ability of banks to accept land as collateral, provided they act in good faith and follow the appropriate legal procedures, including verifying the origin of the title and ensuring compliance with relevant regulations.

The Supreme Court’s decision in this case provides important clarification on the application of the Public Land Act, particularly regarding the prohibition on alienating land acquired through free patents. It underscores the importance of examining the circumstances surrounding land ownership and the intent behind transactions to ensure that the law is applied fairly and consistently. The decision also offers valuable guidance for banks and other institutions dealing with land as collateral, emphasizing the need for due diligence and compliance with relevant regulations.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Jose Abelgas, Jr. and Letecia Jusayan de Abelgas, vs. Servillano Comia, Rural Bank of Socorro Inc. and Rural Bank of Pinamalayan, Inc., G.R. No. 163125, April 18, 2012