This a petition for review of the December 27, 1991 Decision of respondent Court of Appeals in CA-G.R. CV No. 27891,1 [Records of the Court of Appeals, pp. 38-53.] which affirmed the April 27, 1990 Decision of the Regional Trial Court of Malolos, Bulacan, Branch 18, in Civil Case No. 978.2 [Records, Vol. I, pp. 531-539.]

The case involves a twenty thousand five hundred thirty-nine (20,539) square meter parcel of land located in Angat, Bulacan, identified as Land Lot 5483. The said land formed part of a tract of friar land titled in the name of the government under Original Certificate of Title No. 798. By virtue of Sales Contract No. 6081, dated June 13, 1938, Mamerto dela Torre bought the subject land from the Bureau of Lands for the sum of One Hundred Ten Pesos (P110.00) payable in ten (10) annual installments.3 [Exhibit "A", Folder of Exhibits, p. 1.] The first installment of Eleven Pesos (P11.00) was paid on the same date under O.R. No. 744721, leaving a balance of Ninety Nine Pesos (P99.00) payable in nine (9) installments every May 1 of each year. Mamerto then occupied the subject land until his death on November 15, 1946. His wife, Maxima, died the following year, on August 19, 1947.

Mamerto left behind three children, petitioners Emilio, Eliseo and Patricio. The latter were asked by their uncle, respondent Isabelo dela Torre, sometime in February 1972, to sign a Deed of Extrajudicial Partition with Absolute Sale in his favor. The three, however, did not sign the deed and instead, on October 27, 1975, sold the same to petitioner Martin Pantaleon,4 [See Exhibit "H", "Kasulatan ng Paghahati at Bilihang Patuluyan", Folder of Exhibits, pp. 11-13.] the owner of a piggery farm in the adjoining land.

Meanwhile, on June 6, 1978, respondent Isabelo Dela Torre obtained from the Director of Lands a Deed of Conveyance executed in his favor covering the subject property, on the strength of a Joint Affidavit, dated October 13, 1948, executed by his father, Feliciano, and then minor nephew, petitioner Emilio dela Torre, certifying that he bought the subject parcel of land from Mamerto for Four Hundred Pesos (P400.00).5 [Exhibit "1", Folder of Exhibits, p. 31.] According to respondent Isabelo dela Torre, Mamerto approached him and offered him half of the land if he could pay the annual amortization thereof starting 1942. When Mamerto died, he shouldered the latter’s burial and funeral expenses in exchange for which the remaining half portion of the subject land was ceded to him. He paid the tax payments of the said land for 1972 and 1978. On November 8, 1978, Transfer Certificate of Title No. T-250534, covering the subject property, was issued in the name of respondent Isabelo dela Torre and his spouse, Librada, by the Register of Deeds of Bulacan. Misoedp

After discovering the existence of said title, petitioner Martin Pantaleon filed an adverse claim for annotation on the title on March 26, 1979.6 [Exhibit "J", id., pp. 15-16.] Thereafter, he filed a Complaint for Annulment of Title, Reconveyance and Damages with the Regional Trial Court of Bulacan7 [Records, Civil Case No. SM-978, pp. 1-9.] on April 4, 1979, as a result of which a Notice of Lis Pendens was annotated by the Register of Deeds of Bulacan on TCT No. T-250534 on April 6, 1979.8 [Exhibit "L" and Exhibit "M-1", id., pp. 18-21.]

Despite the existence of said Notice of Lis Pendens, respondent Isabelo dela Torre was able to sell the subject land for Fifty Five Thousand Pesos (P55,000.00) to respondents Emilio Andres and spouse Lydia Clark, Arsenio Aurelio and spouse Felicidad Andres, Gonzalo Mañalac and spouse Marina Andres and Norberto Andres and spouse Erlinda de Guzman, on May 25, 1979;9 [See Exhibits "N-1" and "5", id., pp. 22 and "35".] leading to the issuance of Transfer Certificate of Title No. T-257086 in the name of respondent Emilio Andres and company.10 [Exhibit "P", id., p. 24.]

On April 27, 1990, the lower court rendered its Decision dismissing the Complaint of petitioners and confirming the validity of the grant by the government to respondent Isabelo dela Torre. On appeal to respondent Court of Appeals, the said Decision was affirmed.

With the denial of petitioners’ Motion for Reconsideration, the instant Petition was filed, raising the following Assignment of Errors –

While respondent Court noted that full payment on the sales contract was made in 1944, it held that Mamerto took possession of the subject land only until 1943, when he fell ill; such that when full payment was made in 1944, Mamerto was no longer a "settler and occupant" thereof as required for purposes of conveyance under Section 12 of Act No. 1120.

Petitioners argue that there is nothing in Act No. 1120 which requires that the purchaser be an actual occupant of the subject land at the time of full payment. Instead, referring to Section 7 thereof, they insist that what is required is that the purchaser be a bona fide settler or occupant at the time of the sale or lease.

We agree with petitioners.

A careful review of Act No. 1120 fails to yield any provision requiring the applicant/purchaser to be an actual occupant of the subject land at the time of the payment of the full purchase price thereon.

On the other hand, the non-payment of the full purchase price is the only recognized resolutory condition in the case of sale of friar lands. Indeed, it has been held that the conveyance executed in favor of a buyer or purchaser, or the so-called certificate of sale, is a conveyance of the ownership of the property, subject only to the resolutory condition that the sale may be cancelled if the price agreed upon is not paid in full.12 [Pugeda vs. Trias, G.R. No. 16925, 4 SCRA 849, 859 (1962); Jovellanos vs. Court of Appeals, G.R. No. 100728, 210 SCRA 126, 135 (1992)]

That actual occupancy of the subject land is not required in the case of friar lands is further underscored in Pugeda vs. Trias, supra, where a distinction was made between the sale of friar lands and the sale of public lands under the Public Lands Act, to wit --

Thus, while in cases of sale under the Public Land Act, cultivation and improvement of the land is a requirement before a sales patent may issue to the applicant, no such similar requirement is found in the case of sale of friar lands. Again, it was reiterated that such sale is "subject only to cancellation (thereof) in case the price agreed upon is not paid."

Petitioners next question respondent Court’s ruling that even if Mamerto was still a bona fide settler and occupant thereof, no final conveyance had been effected in his favor by the government and that without such, his equitable title could not have ripened into a full and valid title over the lot.

Again, we agree with petitioners. On this point, Bacalzo vs. Pacada,13 [G.R. No. 10915, 107 Phil. 520, 524 (1960)] is instructive --

This is well-supported in jurisprudence, which has consistently held that under Act No. 1120, the equitable and beneficial title to the land passes to the purchaser the moment the first installment is paid and a certificate of sale is issued.14 [Director of Lands vs. Rizal, G.R. No. 2925, 87 Phil. 806, 810 (1950); Alvarez vs. Espiritu, G.R. No. 18833, 14 SCRA 892, 897 (1965); Fabian vs. Fabian, G.R. No. 20449, 22 SCRA 231, 235 (1968); Republic vs. Heirs of Felix Caballero, G.R. No. 27473, 79 SCRA 177, 188-189 (1977)] Furthermore, when the purchaser finally pays the final installment on the purchase price and is given a deed of conveyance and a certificate of title, the title, at least in equity, retroacts to the time he first occupied the land, paid the first installment and was issued the corresponding certificate of sale.15 [Director of Lands vs. Rizal, supra.]

All told, notwithstanding the failure of the government to issue the proper instrument of conveyance in favor of Mamerto or his heirs, the latter still acquired ownership over the subject land.

We now come to the rights of Mamerto’s children to the subject land. The pertinent provision covering the status of the purchased friar land upon the death of the applicant or purchaser is Section 16 of Act 1120, as amended by Act 2945, which took effect on February 16, 1921. As amended, Section 16 provides as follows – Sjcj

The said provision being applicable at the time of the death of Mamerto in 1946, his interest descended to his heirs.16 [See Balicudiong vs. Balicudiong, G.R. No. 29603, 39 SCRA 386, 393 (1971)] And with the death of his wife Maxima in 1947, such interest was left solely to his three sons.

Notwithstanding our findings that Mamerto’s heirs rightfully owned the subject land and despite the government’s failure to issue the corresponding instrument of conveyance in their favor, we shall nevertheless discuss the validity of the alleged oral sale of the subject property to respondent Isabelo dela Torre.

Respondent Isabelo dela Torre claims that he obtained the property from Mamerto by (1) paying the amortizations thereon and by (2) purchase. However, there is absolutely no written proof of said sale or assignment. In claiming title to the subject land, respondent Isabelo dela Torre merely presented a Joint Affidavit allegedly executed by his father and nephew. This runs counter to the basic rule of evidence that unless the affiants themselves are placed on the witness stand to testify on their affidavits, such affidavits must be rejected for being hearsay.17 [People’s Bank and Trust Company vs. Leonidas, G.R. No. 47815, 207 SCRA 164 (1992); People vs. Canuzo, G.R. No. 112718, 255 SCRA 498 (1996); Molina vs. People, G.R. No. 70168-69, 259 SCRA 138 (1996)] Stated differently, the declarants of written statements pertaining to disputed facts must be presented at the trial for cross-examination. Without the presentation of the affiants in court, whatever matter the Joint Affidavit contained is hearsay and consequently, without probative value.18 [Osias vs. Court of Appeals, G.R. No. 46148-49, 256 SCRA 101 (1996); Dela Torre vs. Court of Appeals, G.R. No. 102786, 294 SCRA 196 (1998)]

The Joint Affidavit, which was the sole basis for respondent Isabelo dela Torre’s claim over the subject land, cannot and should not have been given credence, being hearsay.19 [People vs. Cabintoy, G.R. No. 107534, 247 SCRA 442 (1995)] Therefore, as between the verbal claim of respondent Isabelo dela Torre and the documented claim of petitioners, the latter should clearly prevail.

Isabelo’s claim that he paid the annual amortizations to the Bureau of Land beginning 1942 and for six years thereafter, as Mamerto could no longer pay the same, is doubtful. All receipts during that period were issued not in his name but in Mamerto’s name,20 [See Exhibits "Q"-"Q-5", Folder of Exhibits, pp. 25-30.] raising the presumption that the payments were made by the latter. We agree with petitioners that, otherwise, the receipts should have been issued in Isabelo’s name for the account of Mamerto. Moreover, Isabelo did not have any original copy of the receipts, only photocopies of the same from the files of the Bureau of Lands. If indeed he had made the payments he claims to have made, the receipts, at the very least, should have been in his possession. Supremeo

Coming now to the last assigned error, we find that the grant made by the government of the subject property in favor of respondent Isabelo dela Torre was invalid.

To begin with, granting that Mamerto did sell or transfer his interest in the subject land to respondent Isabelo dela Torre, it would appear that the requirements under Act No. 1120 for a valid transfer of rights have not been complied with. Section 16 thereof provides as follows –

And in Arayata vs. Joya,21 [G.R. No. 28067, 51 Phil. 654, 662 (1928)] this Court warned that "in order that a transfer of the rights of a holder of a certificate of sale of friar lands may be legally effective, it is necessary that a formal certificate of transfer be drawn up and submitted to the Chief of the Bureau of Public Lands for his approval and registration; and that "the law authorizes no other way of transferring the rights of a holder of a certificate of sale of friar lands."

In the case at bar, no such assignment or formal certificate of transfer was submitted to the Bureau of Public Lands for its approval and registration.

In the light of our finding that the Joint Affidavit relied upon by respondent Isabelo dela Torre in support of his claim is hearsay and has no probative value, the grant of title to him by the government is void.

WHEREFORE, in view of the foregoing, the Petition is GRANTED and the Decisions of respondent Court of Appeals in CA-G.R. CV No. 27891 and the Regional Trial Court of Malolos, Bulacan, Branch 18, in Civil Case No. 978 are SET ASIDE.

Let new judgment issue (1) declaring petitioner Martin Pantaleon as the true owner of the land covered by Transfer Certificate of Title No. T-257086; (2) canceling Transfer Certificate of Title No. T-257086 as well as the owners’ duplicate certificate; (3) directing the Register of Deeds of Bulacan to issue a new certificate of title covering the subject land in the name of Martin Pantaleon; (4) ordering respondent Isabelo dela Torre to return the amount of P55,000.00 paid by respondents Emilio Andres and company as purchase price for the litigated property with 12% interest per annum from May 25, 1979 until fully paid, together with costs of the action.

SO ORDERED.2/29/00 2:20 PM

Davide, Jr., C.J., (Chairman), Puno, Kapunan, and Pardo, JJ., concur.