GENEROSO BAJE AND SATURNINA SACDALAN, PETITIONERS VS. COURT OF APPEALS, CRISTINA VALDEZ, VICENTE VALDEZ, CLEMENTE VALDEZ, MACARIA VALDEZ, GERONIMO VALDEZ, MARCELO VALDEZ II, ACC…

CONCEPCION, J.:

Appeal by certiorari from a decision of the Court of Appeals. As set forth in
said decision, the facts are:

“It appears that on June 17, 1932, Marcelo Valdez, now deceased, was issued
homestead patent No. 19151 covering four parcels of land situated in barrio
Wakal, Bayombong and Solano, Nueva Vizcaya, together with the improvements
existing thereon; that said patent having been recordedin the registry of deeds
of Nueva Vizcaya, Original Certificate of Title No. 542 was issued in the name
of said Marcelo Valdez; that he and his family had been possessing said parcel
of land from 1907 to the time they were sold to appellees in 1933 and 1935; that
since then appellees have been in possession of said parcels of land which have
an average annual yield of 50 cavanes of palay of 50 kilos each per hectare,
one-half of which belongs to the tenant and the other half to the owner, the
current price of a cavan of palay being P9.00; that on April 1936, May 1940 and
December 1946, appellants Macaria and Cristina, surnamed Valdez, daughters of
the late Marcelo Valdez, demanded the return of the parcels of land in question
from appellees but the latter refused to do so; and that on March 1,1953
appellants Cristina, Vicente and Clemente, surnamed Valdez, formally required
from appellees the return and delivery of said parcels of land.

“In the light of the foregoing facts, the lower-court dismissed the present
action hold-ing that appellants having been guilty of laches had lost their
right to demand the return of the parcels of land in dispute.”

The Court of Appeals disagreed with this conclusion of the court of first
instance upon the ground that the “requisites for the existence of the equitable
defense of laches are not present, in this case” and that:-

“* * * even if appellants may be held guilty of laches for having instituted
this action only on March 23, 1953, after the lapse of almost twenty-one years
since the homestead patent was issued in the name of the late Marcelo Valdez,
still they are entitled as heirs of said Marcelo Valdez to recover the parcels
of land in dispute it appearing that their sale in favor of appellants having
been made within the period of five years from the date of the issuance of the
homestead patent, the same was null and void from its execution (Secs. 116, 122,
Act No.2874 as amended; Labrador et al. vs. Santos et al., 66
Phil. 579, 58l; Oliveros vs. Porciongcola, 69 Phil. 305, 306; Corpuz
et al. vs. Beltran et al., 51 Off. Gaz. 5631-5632;
Angeles et al. vs. Court of Appeals, G. R. No. L-11024, January 31,
1958). And appellants as heirs of the late Marcelo Valdez had personality to
institute the present action for the declaration of the inexistence of such
sale, and such action does not prescribe(Art. 1410, new Civil Code; Eugenio et
al. vs. Perdido et al., 97 Phil., 41).”

The Court of Appeals further held:-

“On the other hand, appellees claim that they are not bound to pay damages as
they were possessors in good faith. But they ceased to be such possessors in
good faith from the time they became actually aware of the flaw in their title,
and that was on March 23, 1953, when the original complaint in this case was
filed. Hence, from such date appellees are liable to appellants for damages.”

The dispositive part of the decision of the Courtof Appeals, reads:-

“WHEREFORE, the decision appealed from is hereby reversed and another entered
declaring appellants to be the owners of the four parcels of land in dispute
with right of possession thereof; ordering appellees to deliver the ownership
and possession of said parcels of land to appellants; ordering the cancellation
of transfer certificate of title No. 2213 in appellees’ name and the issuance of
another in appellants’ name and ordering appellees to pay appellants in the
concept of damages the current price of P9.00 per cavan of palay for 25 cavanes
of palay of 50 kilos each per hectare annually from March 23, 1953, until
delivery of the parcels of land shall have actually been made to appellants.
Without any pronouncement as to costs.”

Hence, the case is now before us on petition for review by certiorari filed
by the defendants in the lower court, Generoso Baje and his wife Saturnina
Sacdalan. In their original petition the Bajes assigned eight (8) errors
allegedly committed by the Court of Appeals; however, in their amended petition
they maintained that the Court of Appeals had merely erred:-

“l. * * * in holding that petitioners deliver possession of the lands in
question without ordering the respondents to return the purchase price paid
therefor.

“2. * * * in not holding that the petitioners are entitled to reimbursement
of the value of improvements introduced by petitioners in good faith and also in
not holding that the petitioners have the right to retain the land in question
until they are reimbursed of said value of improvements.”

With respect to the first assignment of error, it appears that, upon receipt
of notice of the decision of the Court of Appeals, the Bajes filed therein a
motion for reconsideration alleging, inter alia, that, if the sales in their
favor are null and Void, and, accordingly, the lands in question belong to the
heirs of Marcelo Valdez, said heirs should be sentenced to refund the amounts
paid by the Bajes to Marcelo Valdez, or the aggregate sum of P3,734. This relief
was denied by the Court of Appeals, upon the ground:-

“That the appellants are not bound to return to appellees the purchase price
that their predecessors in interest, the late Marcelo Valdez, had received in
consideration of the sale, appellees recourse being to institute an intestate
proceedings covering the estate of the deceased Marcelo Valdez and file therein
a claim for the purchase price paid by them or ;their predecessors-in-interest.”

This view is supported by Labrador vs. De los Santos 66 Phil. 579, 581-582
(November 26, 1938), in which it was held:-

“The alienation by Santiago de los Santos of his land in favor of the
plaintiffs Antonio Labrador and Felipe Canonizado was made in violation of the
provision of section 116 of Act No. 2874, as amended by section 23 of Act
No.3517, which prohibits the encumbering or alienation of a land acquired as a
homestead within five years from the issuance of the homestead patent,
wherefore, it is illegal and void, As the declaration of nullity of a contract
void ab initio operates to restore things in the state and condition in which
they were found before the execution thereof, the land in question was returned
to the ownership of Santiago de los Santos, in his lifetime, and that of his
children, after his death, with the obligation on the part of said Santiago de
los Santos to return to the purchasers, the plaintiffs, the price of the sale,
with interest(Art.1308, Civil Code). Santiago de los Santos being the vendor,
had the declaration of nullity taken place while he was living, he would have to
return said price to the purchasers; but having died before the declaration of
nullity, the plaintiffs should have presented their claim for the return of the
price in the testate or intestate proceedings of the deceased, and they cannot
go against the children of the latter inasmuch as the said children inherit with
the benefit of inventory and only that remaining of the inheritance after paying
the indebtedness of the testate or intestate. While it is true that the
defendants inherited the land in question, the price of the sale cannot be
charged thereon, because the said section116 of Act No. 2874, as amended by
section23 of Act No. 3517, prohibits the subjection of such land to the payment
of said obligation which was contracted within five years from the issuance of
the homestead patent, as above stated. In any event, the plain-tiffs may
institute the intestate proceedings of Santiago de los Santos and file their
claim before the committee on claims and appraisal to be named therein.”

This ruling was reiterated in Castro et al. vs. Orpiano, 90 Phil. 49l, 493
(November 29, 1951), but it is inconsistent with subsequent decisions of this
Court.

After declaring that the sale of a homestead made within five (5) years from
the issuance of the corresponding patent is null and void and that the heirs of
the deceased homesteaders “have the right to recover the homestead illegally
disposed of”, we held in Angeles vs. Court of Appeals, 102 Phil. 1006 (January
3l, 1958), speaking thru Mr. Justice Labrador:-

“With respect to the price that the defend-ants -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 of 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
pro-ducts of the land and that of defendants for the expenses in the
construction of the dike are both dismissed. Without costs in this appeal.”
(Italics ours.)

In Medel vs. Eliazo, L-l26l7 (August 27, 1959), the language used was:-

“It is the contention of plaintiffs that the contract of sale was void ab
initio, therefore, it does not exist in the eyes of the law and so it does
not have any consideration; consequently, they are not liable to pay or return
the P1,500, the price of the sale. We agree with the defendant that
plaintiffs may not enrich themselves at his expense. The sale of the
homestead in question, having been executed before the expiration of the
five-year period prescribed by law, it is void, but it does not mean that
since they continue to be owners of the land, they should not return the sum
received by them as the sales price. It is acase of mutual restitution incident
to the nullity ab initio of the conveyance (Santander et. al. vs.
Villanueva et al., 103 Phil., 1; Felices vs. Irioa, 103 Phil., 125 ”).(Italics
ours.)

Again, under substantially the same conditions, we affirmed, in Companero vs.
Coloma, 109 Phil., 993a decision of the Court of First Instance of Nueva
Vizcaya, the dispositive part of which reads as follows:-

“In view of the foregoing, decision is hereby rendered in favor of the
plaintiffs and against the defendants, ordering the latter to surrender the
possession of the parcel of land in question to the plaintiffs; and ordering the
cancellation of Transfer Certificate of Title No. 2398 in the name of the
defendant Apolonio T. Coloma, over the parcel of land in question and the
issuance, in lieu thereof, of another transfer certificate of title in the name
of the here-in plaintiffs in equal shares, upon reimbursement by them to the
defendants of the sum of P700.00^[*]
with interest at the rate of 6% per annum from the date this decision has become
final. And without special pronouncement as to costs.” (Italics ours.)

In a decision penned by Mr. Justice Reyes (J.B.L.),ourselves in Manzano vs.
Ocampo, 111 Phil., 283 as follows:-

“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 Il8 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, G.R. No. L-6184, Feb. 28,1958; Cadiz vs. Nicolas, G. R. No.
L-9198, Feb. 13, 1958). The result is that the home-stead 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 asthe price
thereof (Medel vs. Eliazo, G. R. No.L-12617, Aug. 27, 1959; Santander vs.
Villanueva, supra; Felices vs. Iriola, G.R. No.L-11269, Feb. 28, 1958). 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.” (Italics ours.)

In other words, the doctrine laid down in the Labrador and the Castro cases
must be deemed revoked. Indeed, performance of the obligation of the Bajes to
restore the possession of the lots in dispute to the heirs of the deceased
Marcelo Valdez cannot be demanded by the latter unless they, in turn, comply
with their reciprocal obligation to refund the price paid by the Bajes. Hence,
the first assignment of error is well taken.

Under the second assignment of error, the Bajes maintain that they are
entitled to reimbursement of the cost the improvements allegedly introduced by
them in good faith and to retain the land in question until such reimbursement
shall have been made. The record does not satisfactorily show, however, the
existence of any such improvements. What is more, the court of first instance
found – and the Court of Appeals has not disturbed this finding – that the
expenses allegedly incurred by the Bajes in connection with the lots in
litigation were not necessary for the preservation thereof and did not
constitute improvements, but were mere expenses of production the reimbursement
of which may not be demanded by the Bajes, they having been compensated therefor
by the products of said lots harvested by them. The second assignment of error
is, therefore, untenable.

In short, the sale made by the deceased Marcelo Valdez to herein petitioners
Generoso Baje and Saturnina Sacdalan is null and void ab initio, for
which reason the respondents herein, as heirs and successors in interest of
Marcelo Valdez are the owners of the lots aforementioned, and, hence, entitled
to the possession thereof upon reimbursement to the Bajes of the sum of P3,734
paid by them to the deceased. Thereafter, Transfer Certificate of Title No.
2213, in the name of herein petitioners, shall be cancelled and another one
issued in the name of respondents herein.

Inasmuch as the latter have no right to the pos- session of the lots in
question until after the reimbursement above referred to shall have taken place,
and they have neither judicially consigned said sum of P3,734, nor offered to
make such reimbursement, the Bajes are not bound to pay to herein respondents
the damages awarded in the decision of the Court of Appeals, except those that
may be caused from and after the refund of said sum of P3,734.00.

With this modification, said decision is hereby affirmed, without special
pronouncement as to costs. It is so ordered.

Bengzon, C.J., Padilla,
Bautista Angelo, Labrador, Barrera, Paredes, Dizon, and Makalintal,
JJ., concur.

---

^[*] Representing the purchase price of
the land in question.