Republic of the Philippines


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

ALFONSO ANGELES, ET AL., petitioners,

Ernesto Angeles and Ildefonso M. Bleza for petitioners.
Pedro D. Maldia for respondents.


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., vs. 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 13.6696hectares 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 said the above landto defendants Gregorio Santa Ines and Anastacia Divino, who thereupon took possession thereof. Juan Angeles died in the year 1938, and thereafter his heirs, the petitioner herein, sought to recover the land from the defendantson the ground that the sale was null and void (Sec. 116, Act No. 2874). The defendants refused to re turn the land, so daid heirs, petitioner 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 thatdefendants' possession of the land was the virtue of the sale which isagainst the law and therefore did not convey title to them. It is alsoalleged 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 vacatethe land and the possession thereof returned to the plaintiffs, and thatthe defendants be condemned to pay damages at the rate of 200 cavans of palayper 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 outmost good faith, and that the defendants tookpossession of the land with the knowledge, consent of plaintiffs. They deniedthat the harvest of the land is 200 cavans per year for the ownerand 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; but more than five yearshad elapsed from the date of the final approval of the homestead, when the sale was made on May 28, 1937; 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 incleaning 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 tothe 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 ashaving 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 levied and a dike was built thereon at a coast of P3,000.00 to prevent it from being flooded everyyear; 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 andto 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 P2,500.00 and that the P3,000.00, value of theimprovements, should consititute a lien on the land.

Tha case having been appealed to the Court of Appeals, the latter held thatArticle 1306, paragraph 1 of the Spanish Civil Code, which provides:

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

which legal provisions is founded on the principle of in pari delicto, is applicable, it held that none of the parties should be given any remedy dueto the fact that they did not only violate the prohibition contained in thePublic Land but because they knowingly tried to cheat the prohibition (by theinsertion of a prohibition for the execution of another deed of sale afterfive years). The decision of the lower court was, therefore, reversed and theaction 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 thatthe heirs of the homesteader should be declared entitled to the possessionof the homeasted 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 squarelydecided in the case of Catalina de los Santos vs. Roman Catholic Church of Midsayap, et al., 94 Phil., 405; 50 Off. Gaz. 1588, in the negative. In thecase we held that the principle of in pari delicto is not applicable to ahomestead 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 familyfor home and cultivation and the law allows the homesteader to reacquire theland even if it has been sold; hence, the right may not be waived. Thisprinciple was again confirmed in the case of Ancierto, et al. vs. De los Santos, et al., (95 Phil. 887) in which, through Mr.Justice Alex, Reyes, we said:

Appelants, however, contended that the voiding of the Act may not be invoked in favor of plaintiffs as their predecessor in interest was in pari delcto, since the same provision says the illegal sale shall have the effect of annuling 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, vs.Roman Catholic Church of Midsayap et al., 94 Phil., 405, 50 Off. Gaz., 1588, but they were overrruled, this Court holding that the in 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 titleto the homestead the purchaser is, as grant the vendor or his heirs, 'no more entitled to keep the land any intruder.

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 raisedin the answer to the amended complaint can be sustained, it appearing thatwhen 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 Usadversely to the defendant's respondents in the case of Eugenio, et al., vs.Perdido, et al., 97 Phil., 41. In that case we held, thru Mr. JusticeBengzon:

There is no question that the sale in March 1932 having clean made withinfive years from 'the date of the issuance of the patent' was 'unlawful andnull and void from its execution', by expressed provision of sections 116 and122 of Act No. 2874 (Now com. Act No. 141).

Under the existing classification, such contract would be 'in existent' and'the action or defense for declaration' of such inexistence 'does notprescribed'. (Art. 1410 new Civil Code). While it is true that this is a newprovision of the new Civil Code, it is nevertheless a principle recognized seems Tipton V. Velasco, 6 Phil., 67 that 'mere lapse of time cannot giveefficacy to contracts that are null and void'.

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 effectsof 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 thehomestead by the buyer. The stipulation of the parties (pp. 39-40, R.O.A.)shows that the deed after the expiration of five years, and that this factwas 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 thetitle. This circumstance shows that the parties to the were aware of theexistence of the prohibition such knowledge. As a matter of fact, the Court of Appeals predicated its decision on the finding that the parties to the sale where both guilty of bad faith.

The question that no possess is whether the return of the value of the products gathered from the land by the defendants and the expenses incurredin the construction of the dike—all useful and necessary expenses—should be odered to be retuned by the defendants of the plaintiffs. While we believethat the rule of in pari delicto should not apply to the sale of the homestead, because such sale is contrary to the public poliuvy enunciated in the hometsead law, the loss of the produts realized by the defendants andthe value of the necessary improvements made by them on the land should notbe expected 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 thephilosophy and the policy behind the approval of the Public Land Act. The principle underlying pari delicto has known here and in the United Statesis not absolute in its application. It recognizes certain exceptions one of them being when its enforcement or application runs counter to an avowedfundamental policy or 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 vs. Gaw Chee Hun, 93 Phil. 827; 49 Off. Gaz. 4345.) (De los Santos vs. 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 fromthe 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 thehomestead, 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, orderingthe defendants to return the same to the plaintiffs upon payment by the latter to them of the sum of P2,500. The claim of the plaintiffs for value of the products of the land and that of defendants for the expenses in theconstruction of the dike are both dismissed. Without costs in this appeal.

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

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