G.R. No. L-14778. February 28, 1961
MARGARITA MANZANO, ROMANA MANZANO, FRANCISCA MANZANO AND CRISTINA MANZANO, PETITIONERS, VS. RUFINO OCAMPO, LEONARDA ERNA AND THE COURT OF APPEALS, RESPONDENTS.
REYES, J.B.L., J.:
dismissal by the trial court of petitioners’ complaint against
respondents for the annulment of a sale of a homestead.
The basic facts appear to be as follows:
Victoriano Manzano, now deceased, was granted a homestead patent on
June 25, 1934, and the land was registered in his name on July 25, 1934
under Original Certificate of Title No. 4590. On January 4, 1938, he
.and respondent Rufino Ocampo agreed on the sale of said homestead for
the amount of P1,900.00, P1,100.00 of which paid by Ocampo to Manzano
on the same day, and for the balance, he executed a promissory note, to
wit:
Alangalang sa paglilipat sa akin ng
lupang homestead ni Victoriano Manzano, sa pamamagitan nito ay aking
ipinangangakong babayaran kay nabanggit na Victoriano Manzano o sa
kaniyang taga pagmana ang halagang Walong Daan Piso (P800.00), Kualtang
Pilipino, sa mga sumusunod na fecha:
—sa o bago dumating ng Enero 15, 1939. —sa o bago dumating ng Enero 15, 1940. —Total Ang nabanggit na halagang babayaran ko ay aking eentrega sa kanila dito sa Cabanatuan, Nueva Ecija.
Sa Katunayan, ako’y naglagda ngayon ika 4 ng Enero, 1938 dito sa bayang Cabanatuan, Nueva Ecija.”
(Exh. “A”)
Knowing, however, that any sale of the homestead at that time was
prohibited and void, the parties likewise agreed that the deed of sale
was to be made only after the lapse of five years from the date of
Manzano’s patent. And to protect the buyer Ocampo’s rights in the
agreed sale, Manzano executed in his favor a “Mortgage of Improvements”
over the homestead to secure the amount of P1,100.00 already received
as down payment on the price (Exh. “1”).
Three months later,
Manzano informed Ocampo that someone was offering to buy his homestead
for P3,000.00, and Ocampo agreed to pay that same price therefor after
Manzano’s title would have ripened into absolute ownership.
On October 17, 1939, the Undersecretary of Agriculture and Natural
Resources approved the proposed sale of Manzano’s homestead to Ocampo
(Exh. “2”). Accordingly, the parties executed the formal deed of sale
on October 19, 1939 for the price of P3,000.00, (Exh. “3”), of which
Ocampo paid only P1,900.00, because the amount of P1,100.00 had already
been delivered to Manzano on January 4, 1938. On the same day, the
mortgage Exhibit “1” was released and, a transfer certificate of title
over the homestead issued in Ocampo’s name (Exh. “4”). Ocampo did not,
however, immediately take possession of the land because Manzano
requested that he be permitted to harvest its standing palay crop.
Ocampo demanded from Manzano the return of his promissory note Exhibit
“A”, but the latter informed him that the same was misplaced or lost.
Two years later, in 1940, the tax declaration over the homestead in
question was transferred to Ocampo’s name (Exh. 7).
On June
22, 1954, Manzano commenced this action in the Court of First Instance
of Nueva Ecija for the annulment of the sale of his homestead to
Ocampo, on the theory that the same was executed on the same date as
the promissory note Exhibit “A” and, therefore, within the prohibitory
period of five years from the issuance of his patent. During the
pendency of the case, Manzano died and was substituted by his heirs.
After trial, the court a quo
found that the sale in question was in fact made after the expiration
of five years from the date of Manzano’s patent, and dismissed the
complaint. Manzano’s heirs appealed to the Court of Appeals which, as
already stated, affirmed the lower court’s judgment. Whereupon,
Manzano’s heirs resorted to this Court, urging that the sale of the
homestead in question was made before, and not after, the expiration of
five years from the date of Manzano’s patent and is, therefore, void.
In upholding the validity of the sale in question, the Court of Appeals
drew the following conclusions from the facts found to have been
established:
“It was satisfactorily
explained by appellee Ocampo that the agreement of the parties was that
Manzano would sell the homestead for the price of P1,900.00 after the
expiration of the prohibitory period prescribed by law. The P800.00
stated in the promissory note was the balance of the price to be paid.
As correctly observed by the lower court the phrase in tagalog
“alangalang sa paglilipat sa akin ang lupang homestead” appearing in
the promissory note, is futuristic in character meaning that the
payment of P800.00 was in consideration of the transfer of the
homestead to be made later. It should be noted that at the time the
parties knew of said period of inhibition and were fully aware that the
said period of five years had not yet transpired so that Manzano could
not validly sell or mortgage the homestead. It was so explained clearly
to them by Atty. Pacis. Owing to such knowledge the loan of P1,100.00
was only guaranteed by the mortgage of the improvements of the land
(Exh. 1) and not by the homestead itself.“It appears that
the said intended sale for only P1,900.00 after the lapse of five-year
period was later on abandoned by the parties. Manzano himself, knowing
perhaps that he could not be bound thereby, backed out of it claiming
that there was another offer of P3,000.00 for the same property.
Appellee Ocampo agreed to pay this same amount. It was at this new
price of P3,000.00 that the land was actually sold to appellees on
October 19, 1939. This sale, evidenced by Exhibit 3, was a complete
abandonment of that original arrangement and is a totally distinct
transaction from the promissory note and the deed of mortgage (Exh. 1).
The payment of P1,900.00 to Manzano on October 19, 1939 as complement
of the price of P3,000.00 is evidenced not only by said deed of sale
Exhibit 3, the genuineness and due execution of which was admitted by
the plaintiffs, but also by the uncontradicted testimony of appellee
Ocampo and his witnesses Primo Lopez and Agustin Eugenio. It goes
without saying that the deed of sale, Exhibit 3, having been executed
after the period of five years from the date of the issuance of the
patent and previously approved by the corresponding Head of Department,
pursuant to Section 118 of the Commonwealth Act No. 141, as amended by
Commonwealth Act No. 456, is perfectly valid. It was only after the
execution of said deed of sale (Exh. 3) that the vendee took possession
of the land and had it declared in his name for taxation purposes.”
We are constrained to disagree with the above conclusions.
From the findings of the Court of Appeals, it is clear that a perfected
contract of sale over the homestead in question had already been
entered into by the parties on January 4, 1938 (i. e., within the
period of prohibition) for the price of P1,900.00. There was nothing
“futuristic” in this agreement, except that, being fully aware that any
sale or conveyance of the homestead in question at the time was
prohibited by law, the parties agreed that the execution of the deed of
sale should be postponed to a future date, after Manzano’s title had
ripened into absolute ownership. That a sale existed before the
statutory five years had expired is shown by the fact that Ocampo had
advanced to Manzano the amount of P1,100.00 as part of the price, and
had signed for the balance of the promissory note Exhibit “A”,
undertaking to pay P500 on or before January 15, 1939 (a date also
within the period of prohibition), and the remaining P300.00, on or
before January 15, 1940. If no perfected sale had existed in January,
1938, there would have been no obligation on the part of Ocampo to pay
part of the price, nor any reason or occasion for his executing a
promissory note (an express acknowledgement of indebtedness) for the
balance.
Knowing as they did, however, that any sale of the
homestead in question was prohibited by law in 1938, the parties had to
devise means and ways to circumvent the prohibition and at the same
time still protect themselves from non-compliance of the agreement
after the prohibitory period should have elapsed. Thus, the downpayment
of P1,100.00 on the price already made to Manzano by Ocampo was made to
appear as a loan secured by a “Mortgage of Improvements” signed by
Manzano on the same day of the agreement of sale, January 4, 1938 (Exh.
“1”), which mortgage is patently a simulated contract, because although
entitled “Mortgage of Improvements”, the subject-matter thereof was not
any, improvements on the homestead but “my land more particularly
described as follows * * *, which is the homestead itself. Indeed,
appellees openly admitted in their brief (pp. 12) that the amount of
P1,100.00 received by Manzano from Ocampo on January 4, 1938 was not
really a loan but an advance on the agreed price of P1,900.00, and that
it was only to protect the rights of the buyer Ocampo in the “intended
sale” that the mortgage Exhibit “1” was executed. Upon the other hand
the protection furnished the vendor Manzano, who had yet to receive
P800.00 on the price, was the promissory note Exhibit “A” signed by
Ocampo for such unpaid balance. Even if not simulated, the mortgage
would have been void anyway, since section 118 of the Public Land Law
prohibited encumbrance of homestead land within five years from
issuance of the patent, unless the encumbrance should be in favor of
Government entities.
That the parties modified this original
agreement three months later, increasing the price to P3,000.00, with
the understanding that the buyer, Ocampo, would not pay the balance of
the price until after Manzano’s homestead title had become absolute,
does not imply that their original contract was abandoned and an
entirely new and independent contract was entered into by them. For a
partial payment on the price had already been made, and the parties did
nothing more than increase the price originally stipulated and extend
the term of payment, for which reason “Ocampo did not pay the amount
stated in the promissory note” (Decision of Court of Appeals, p. 6).
And even granting that the parties’ original agreement had been novated
“three months later” by the increase in price and extension of the time
to pay its balance the second transaction was still within the
prohibitive period and is, therefore, as illegal and void as the first
sale.
True to his promise to execute the formal deed of sale
after his title would have become absolute, Manzano, on October 19,
1939, having received the approval of the Undersecretary of Agriculture
and Natural Resources of the proposed sale (Exh. “2”), executed the
deed of sale Exhibit “3” in favor of Ocampo, on the strength of which
Ocampo obtained for himself Transfer Certificates of Title No. 15584
over the homestead in question (Exh. “4”). This execution of the formal
deed after the expiration of the prohibitory period did not and could
not legalize a contract that was void from its inception. Nor was this
formal deed of sale “a totally distinct transaction from the promissory
note and the deed of mortgage”, as found by the Court of Appeals, for
it was executed only in compliance and fulfillment of the vendor’s
previous promise, under the perfected sale of January 4, 1938, to
execute in favor of his vendee the formal act of conveyance after the
lapse of the period of inhibition of five, years from the date of the
homestead patent. What is more the execution of the formal deed of
conveyance was postponed by the parties precisely to circumvent the
legal prohibition of their sale.
The law prohibiting any
transfer or alienation of homestead land within five years from the
issuance of the patent does not distinguish between executory and
consummated sales; and it would hardly be in keeping with the
primordial aim of this prohibition to preserve and keep in the family
of the homesteader the piece of land that the state had gratuitously
given to them,[1] to hold
valid a homestead sale actually perfected during the period of
prohibition but with the execution of the formal deed of conveyance and
the delivery of possession of the land sold to the buyer deferred until
after the expiration of the prohibitory period, purposely to circumvent
the very law that prohibits and declares invalid such transaction to
protect the homesteader and his family. To hold valid such arrangements
would be to throw the door wide open to all possible fraudulent
subterfuges and schemes that persons interested in land given to
homesteaders may devise to circumvent and defeat the legal provisions
prohibiting their alienation within five years from the issuance of the
homesteader’s patent.
We, therefore, hold that the sale in
question is illegal and void for having been made within five years
from the date of Manzano’s patent, in violation of section 118 of the
Public Land Law. Being void from its inception, the approval thereof by
the Undersecretary of Agriculture and Natural Resources after the lapse
of five years from Manzano’s patent did not legalize the sale
(Santander vs. Villanueva, 103 Phil., 1; Cadiz vs.
Nicolas, 102 Phil., 1032). The result is that the homestead in question
must be returned to Manzano’s heirs, petitioners herein, who are, in
turn, bound to restore to appellee Ocampo the sum of P3,000.00 received
by Manzano as the price thereof (Medel vs. Eliazo, G. R. No. L-12617, Aug. 27, 1959; Santander vs. Villanueva, supra; Felices vs. Iriola, 103 Phil., 125). The fruits of the land should equitably compensate the interest on the price.
Wherefore, the judgment appealed from is reversed and another one
entered declaring null and void the sale of the homestead in question
to appellee Rufino Ocampo. The Register of Deeds for the Province of
Nueva Ecija is hereby ordered to cancel appellee Ocampo’s Transfer
Certificate of Title No. 15584, and reissue to the heirs of the
deceased Victoriano Manzano the title to the homestead in question.
Petitioners are, however, ordered to return to appellee Ocampo the
amount of P3,000.00 received by their predecessor Victoriano Manzano as
the price of said homestead. No costs.
Bengzon, Acting C. J., Padilla, Bautista Angelo, Labrador, Concepcion, Barrera, Paredes and Dizon, JJ., concur.
[1] Pascua vs. Talens, 80 Phil., 792; 45 Off. Gaz. (No. 9 Supp.) 413; De los Santos vs. Roman Catholic Church of Midsayap, 94 Phil., 405; 60 Off. Gaz., 1088.