FIRST DIVISION

[G.R. No. L-11024. January 31, 1958.]

ALFONSO ANGELES, ET AL., Petitioners, v. THE COURT OF APPEALS, GREGORIO

STA. INES and ANASTACIA DIVINO, Respondents.

Ernesto Angeles and Ildefonso M. Bleza, for Petitioners.

Pedro D. Maldia for Respondents.

SYLLABUS

1. HOMESTEAD; SALES; RECOVERING; HOMESTEAD, ILLEGALLY SOLD; PRINCIPLE OF

"IN PARI DELICTO. — Where a homestead was illegally sold in violation of the
homestead law, the principle of in pari delicto is not applicable. Reason for the rule is
that the policy of the law is to give land to a family for home and cultivation and the
law allows the homesteader to reacquire the land even if it has been sold; hence the
right may not be waived. In the case at bar, the sale of the homestead by the deceased
homesteader within five years from the issuance of the patent was null and void and his
heir have the right to recover the homestead illegally disposed.

2. LIMITATION OF ACTION; ACTION TO RECOVER HOMESTEAD ILLEGALLY SOLD; DOES

NOT PRESCRIBE. — Where the sale of a homestead is null and void, the action to
recover the same does not prescribe because mere lapse of the time cannot give
efficacy to the contracts that are null and void and inexistent.

3. ID.; ID.; ID.; VALUE OF PRODUCTS GATHERED; USEFUL AND NECESSARY

EXPENSES. — Although the rule of in pari delicto should not apply to the sale of the
homestead, because such sale is contrary to the public policy enunciated in the
homestead law, the loss of the products realized by the defendants and the value of the
necessary improvements made by them on the land should be excepted from the
application of said rule because no cause or reason can be cited to justify an exception.
In the case bar the heirs of the homestead should be declared to have lost and
forfeited, the value of the products gathered from the land and so should the
defendants lose the value of the necessary improvements that they have made
thereon.

DECISION

LABRADOR, J.:

Appeal by certiorari from a decision of the Court of Appeals reversing the judgment of

the Court of First Instance of Nueva Ecija in Civil Case No. 631, entitled Alfonso
Angeles, Et Al., v. Gregorio Santa Ines, Et Al., and dismissing the complaint and
counterclaim, without pronouncement as to costs.

On March 12, 1935, homestead patent No. 31613 was issued for a parcel of land in the
municipality of Santo Domingo, Nueva Ecija, containing an area of 13.6696 hectares
more or less. Pursuant to the issuance of this homestead patent, original certificate of
title No. 4906 was issued to the patentee Juan Angeles on March 28, 1935. On May 28,
1937, Juan Angeles sold the above land to defendants Gregorio Santa Ines and
Anastacia Divino, who thereupon took possession thereof. Juan Angeles died in the year
1938, and thereafter his heirs, the petitioners herein, sought to recover the land from
the defendants on the ground that the sale was null and void (Sec. 116, Act No. 2874).
The defendants refused to return the land, so said heirs, petitioners herein, brought this
action in the Court of First Instance of Nueva Ecija.

In the amended complaint filed by the plaintiffs the allegation is made that defendants’
possession of the land was by virtue of a sale which is against the law and therefore did
not convey title to them. It is also alleged that the homestead produces an average of
200 cavans per year as share for the owner. Prayer is made that the defendants be
ordered to vacate the land and the possession thereof returned to the plaintiffs, and
that the defendants be condemned to pay damages at the rate of 200 cavans of palay
per year from 1938, valued at P12 per cavan, until the return of the land. Defendants
answered the amended complaint alleging that the purchase was for a valuable
consideration, in utmost good faith, and that the defendants took possession of the land
with the knowledge, consent and acquiescence of plaintiffs. They denied that the
harvest of the land is 200 cavans per year for the owner and that the alleged price is
P12 per cavan. As special defenses, they alleged that the plaintiffs are guilty of laches
for having allowed 12 years to pass, after the death of the original homesteader, before
they brought the action; that the plaintiff’s right of action had prescribed; that more
than five years had elapsed from the date of the final approval of the homestead, when
the sale was made on May 28, 193; etc. It is, therefore, prayed that the complaint be
dismissed that the sale be declared valid and defendant’s be declared owners of the
property; and that the certificate of title be cancelled and one issued in the name of the
defendants. As an alternative remedy, it was prayed that should the court declare the
sale null and void the defendants be reimbursed in the amount of P6,000 which they
incurred in cleaning the land, etc.

That trial court found that when the sale was made by the deceased Angeles, five years
had not passed from the issuance of the certificate of title to the homestead; that both
vendor and vendee knew that the sale was void because the five-year period prescribed
by law had not yet elapsed; as a consequence of this bad faith of both parties, they
should be considered as having acted in good faith (Art. 364, Civil Code of Spain), and
that defendants are entitled to the fruits of the land. The court further held that the
right of action of plaintiffs had already prescribed before the complaint was filed on
June 12, 1950, in accordance with Section 40 of Act No. 190. The trial court also found
that the land was levelled and a dike was built thereon at a cost of P3,000.00 to
prevent it from being flooded every year; that defendants paid P2,500.00 for the
homestead. Wherefore, the court declared that the sale of the homestead is null and
void and ordered plaintiffs to return the price of the land of P2,500.00 to the
defendants and to reimburse the latter in the amount of P3,000, for expenses incurred
in levelling the land and the construction of the dike thereon. The court ordered the
defendants to return the homestead to the plaintiffs upon the payment to the
defendants of 2,500.00 and that the P3,000.00, value of the improvements, should
constitute a lien on the land.

The case having been appealed to the Court of Appeals, the latter held that Article
1306, paragraph 1 of the Spanish Civil Code, which provides: jgc:chanrobles.com.ph

". . . When both parties are guilty, neither of them can recover what he may have given
by virtue of the contract, or enforce the performance of the undertaking of the other
party;"

which legal provision is founded on the principle of in pari delicto, is applicable. In

accordance with said principle, it held that none of the parties should be given any
remedy due to the fact that they did not only violate the prohibition contained in the
Public Land Law but because they knowingly tried to cheat the prohibition (by the
insertion of a provision for the execution of another deed of sale after five years). The
decision of the lower court was, therefore, reversed and the action dismissed.

In this Court it is claimed by the petitioners that the application of Article 1306, par. 1,
of the Spanish Civil Code is null and void; and that the heirs of the homesteader should
be declared entitled to the possession of the homestead and the fruits of the same.

The most important issue raised in the appeal is whether the doctrine of in pari delicto
is applicable to sales of homesteads. This question was squarely decided in the case of
Catalina de los Santos v. Roman Catholic Church of Midsayap, Et Al., 94 Phil. 405; 50
Off. Gaz. 1588, in the negative. In that case we held that the principle of in pari delicto
is not applicable to a homestead which has been illegally sold, in violation of the
homestead law. Reason for the rule is that the policy of the law is to give land to a
family for home and cultivation and the law allows the homesteader to reacquire the
land even if it has been sold; hence the right may not be waived. This principle was
again confirmed in the case of Acierto, Et. Al. v. De los Santos, Et Al., (95 Phil. 887) in
which, through Mr. Justice Alex. Reyes, we said: jgc:chanrobles.com.ph

"Appellants, however, contend that the voiding provision of the Act may not be invoked
in favor of plaintiffs as their predecessor in interest was in pari delicto, and that, since
the same provision says the illegal sale shall have the effect of annulling the grant and
cause the reversion of the property and its improvements to the State, plaintiffs may no
longer claim the homestead. Similar contentions were made in the case of Catalina de
los Santos v. Roman Catholic Church of Midsayap Et. Al., 94 Phil., 405, 50 Off. Gaz.
1588, but they were there overruled, this Court holding that the pari delicto doctrine
may not be invoked in a case of this kind since it would turn counter to an avowed
fundamental policy of the State that the forfeiture of the homestead is a matter
between the State and the grantee of his heirs, and that until the State has taken steps
to annul the grant and asserts title to the homestead the purchaser is, as against the
vendor or his heirs, no more entitled to keep the land than any intruder." cralaw virtua1aw library

Consistent with the above decisions, we must hold that in the case at bar the sale of
the homestead by the deceased homesteader was null and void and his heirs have the
right to recover the homestead illegally disposed of.

It now becomes necessary to determine if the defense of prescription raised in the

answer to the amended complaint can be sustained, it appearing that when the action
was brought in the year 1950, about 13 years had elapsed since the date of the sale.
The precise question was also passed upon by Us adversely to the defendants-
respondents in the case of Eugenio, Et. Al. v. Perdido, Et Al., 97 Phil., 41. In that case
we held, thru Mr. Justice Bengzon: jgc:chanrobles.com.ph

"There is no question that the sale in March 1932 having been made within five years
from, the date of the issuance of the patent, was ‘unlawful and null and void from its
execution’, by express provision of sections 116 and 122 of Act No. 2874 (Now Com.
Act No. 141).

"Under the existing classification, such contract would be ‘inexistent’ and ‘the action or
defense for declaration’ of such inexistence ‘does not prescribe’. (Art. 1410 New Civil
Code). While it is true that this is a new provision of the New Civil Code, it is
nevertheless a principle recognized since Tipton v. Velasco, 6 Phil. 67 that ‘mere lapse
of time cannot give efficacy to contracts that are null and void’."cralaw virtua1aw library

Having found that the sale of the homestead is null and void, and that the action to
recover the same does not prescribe, we now come to the effects of these rulings on
the price paid for the sale and the value of the improvements made on the homestead
and of the products realized from the homestead by the buyer. The stipulation of the
parties (pp. 39-40, R.O.A.) shows that the deed of sale was to be renewed after the
expiration of five years, and that this fact was explained by the notary to the parties.
The notary must have informed the latter that renewal of the deed was necessary to
avoid the prohibition against the sale of the homestead within five years after the
issuance of the title. This circumstance shows that the parties to the sale were aware of
the existence of the prohibition and that they entered into the contract of sale
notwithstanding such knowledge. As a matter of fact, the Court of Appeals predicated
its decision on the finding that the parties to the sale were both guilty of bad faith.

The question that now poses is whether the return of the value of the products
gathered from the land by the defendants and the expenses incurred in the construction
of the dike — all useful and necessary expenses — should be ordered to be returned
by the defendants to the plaintiffs. While we believe that the rule of in pari delicto
should not apply to the sale of the homestead, because such sale is contrary to the
public policy enunciated in the homestead law, the loss of the products realized by the
defendants and the value of the necessary improvements made by them on the land
should not be excepted from the application of the said rule because no cause or reason
can be cited to justify an exception. It has been held that the rule of in pari delicto is
inapplicable only where the same violates a well-established public policy.

". . . But we doubt if these principles can now be involved considering the philosophy
and the policy behind the approval of the Public Land Act. The principle underlying pari
delicto as known here and in the United States is not absolute in its application. It
recognizes certain exceptions one of them being when its enforcement or application
runs counter to an avowed fundamental policy or to public interest. As stated by us in
the Rellosa case, ‘This doctrine is subject to one important limitation, namely,
"whenever public policy is considered advanced by allowing either party to sue for relief
against the transaction." (Rellosa v. Gaw Chee Hun, 93 Phil. 827; 49 Off. Gaz. 4345.)"
(De los Santos v. Roman Catholic Church of Midsayap, 94 Phil. 405; 50 Off. Gaz. 1588).
We are constrained to hold that the heirs of the homesteader should be declared to
have lost and forfeited the value of the products gathered from the land, and so should
the defendants lose the value of the necessary improvements that they have made
thereon.

With respect to the price that the defendants had paid for the land P2,500, in view of
the rule that no one should enrich himself at the expense of another, the return of the
said amount by the plaintiffs should be decreed, before the plaintiffs may be allowed to
recover back the possession of the homestead, subject to the action.

The decision of the Court of Appeals is hereby reversed and judgment is hereby entered
declaring the sale of the homestead null and void, ordering the defendants to return the
same to the plaintiffs upon payment by the latter to them of the sum of P2,500. The
claim of plaintiffs for the value of the products of the land and that of defendants for
the expenses in the construction of the dike are both dismissed. Without costs in this
appeal.

Paras, C.J., Bengzon, Padilla, Reyes, A., Bautista Angelo, Concepcion, Reyes, J. B. L.,
Endencia and Felix, JJ., concur.