G.R. No. L-6764 June 30, 1954
Ignacio Arnido, plaintiff-appellee, vs. Alfonso Francisco, defendant-appellant.

FACTS

The case involves a parcel of land in Kabangkalan, Placer, Masbate, designated as lot 1 in a sketch plan. The land formed part of the homestead application (H.A. No. 123545) of Albaro Vergara, filed in July 1926 and approved on June 2, 1931. On October 17, 1941, Vergara sold the land to defendant Alfonso Francisco for P800. On August 10, 1948, Vergara assigned his homestead rights to Francisco, and after investigation, the assignment was recommended for approval, leading Francisco to file his own homestead application. Previously, in an action of forcible entry and detainer filed by plaintiff Ignacio Arnido against Vergara, the Court of First Instance found that on July 13, 1939, one Joaquin Ferrer sold an eleven-hectare land to Arnido, and in the same deed, Vergara sold the coconuts and bamboos on the land. The Bureau of Lands had adjudicated the land to Vergara in a prior controversy with Ferrer, and the court absolved Vergara. Later, in September 1940, Arnido filed an action to recover title against Vergara (Civil Case No. 989-R). After the records were destroyed in the war and reconstituted in November 1948, Vergara recognized Arnido’s title in a compromise agreement, resulting in a judgment in favor of Arnido. The lands officer investigating the transfer to Francisco was unaware of this case or compromise. A writ of execution dated November 27, 1948, was issued, but Francisco refused to deliver the property. The trial court held the land was private land, based on improvements like 15- to 35-year-old coconut trees and bananas existing before Vergara’s 1926 application, which belonged to Vergara.

ISSUE

Whether the land in question is private land or public land, and whether the compromise judgment in Civil Case No. 989-R binds defendant Alfonso Francisco.

RULING

The Supreme Court reversed the trial court’s judgment. It held that the land is public land, not private land. Mere occupation of public land and planting of improvements do not convert it into private property. Vergara’s homestead application itself indicated he occupied it as public land. His admission in the compromise agreement with Arnido, contrary to his conduct in applying for homestead, is not evidence that the land is private. The agreed statement of facts expressly concedes the land is part of H.A. No. 123545. The trial court’s conclusion lacked legal or factual foundation. Furthermore, the judgment in Civil Case No. 989-R, based on a compromise agreement dated November 27, 1948, does not bind Francisco, who was not a party to that action. When Vergara made the compromise, he was no longer in possession, having sold his rights to Francisco in 1941 and assigned his homestead rights in 1948. Vergara’s acts prejudicial to Francisco’s rights are not binding on Francisco. Francisco’s purchase is presumed in good faith, with no evidence of bad faith. The Court found it unnecessary to consider other conclusions, such as the applicability of Article 1473 of the Spanish Civil Code or fraudulent acts by Vergara, as they are immaterial. Francisco, a third party, should not suffer from Vergara’s double-dealing. The action was dismissed, and Francisco was absolved from the complaint, with costs against Arnido.