VALENTINA CADIZ, ET AL., PLAINTIFFS AND APPELLANTS, VS. FRANCISCO NICOLAS, DEFENDANT AND APPELLANT.

On February 3, 1937, the Government
granted a homestead patent to Domingo Cadiz over a piece of land
situated in Angadanan (now Alicia), Isabela, containing an area of
22.5758 hectares for which Original Certificate of Title No. 1-4243 was
issued on March 20, 1937, pursuant to the provisions of the Public Land
Law.

On December 26, 1939, Cadiz obtained a loan of P1,000
from Francisco Nicolas which was evidenced by a public document subject
to the following conditions: (a) that the loan must be paid at the end of February, 1942; (b)
that it shall not bear any interest, but Cadiz shall temporarily cede
to Nicolas a portion of two hectares for the latter to cultivate from
the date of the document to the end of February, 1942; (c)
that the palay to be gathered from said portion shall be for the
exclusive benefit of Nicolas, the purpose being to have the homestead
open for cultivation; and (d) that should Cadiz fail to pay
the loan on February 28, 1942, he shall convey to Nicolas by absolute
sale the entire homestead and if he should fail to comply with his
promise to effect the transfer, and Nicolas or his heirs should bring
an action in court for the enforcement of the agreement, Cadiz shall
pay the expenses incident to the litigation, including attorney’s fees,
which were fixed at P200.

On December 8, 1941, the Pacific
war broke out and as a result Cadiz and Nicolas failed to see each
other until the month of February, 1943 when they again talked about
the loan, the latter reminding the former that if he was not able to
settle it he should make good their understanding relative to the
absolute transfer of the land in payment thereof. As Cadiz was not then
in a position to return the loan, he agreed to have a contract of sale
executed and so on February 28, 1943, Nicolas, accompanied by a notary
public and two witnesses went to the house of Cadiz at barrio Viga,
Angadanan, Isabela where then and there they executed the deed of sale
Exhibit 2. Although in said document it was stated that the
consideration of the sale was the sum of P1,000.00, the same however
was not actually paid by the vendee because it merely represented the
loan which the vendor had previously contracted sometime in December,
1939. Upon the advice of the notary public, Nicolas sent the original
and one copy of the deed of sale to the Secretary of Agriculture and
Natural Resources for his approval as required by law, and after the
same had been obtained, the original was brought to the Register of
Deeds who issued the corresponding certificate of title in the name of
the vendee, Francisco Nicolas.

On January 29, 1951, Domingo
Cadiz, claiming that the deed of sale Exhibit 2 was either fictitious
or null and void, commenced the present action in the Court of First
Instance of Isabela praying that the new title issued in the name of
Francisco Nicolas be cancelled and that he be restored to the ownership
and possession of his homestead. He also asked that he be awarded
P10,000 as damages, costs and attorney’s fees. But during the pendency
of this case, or on November 17, 1952 to be exact, Domingo Cadiz died
and upon motion for substitution duly entered therein, he was
substituted as party plaintiff by his surviving heirs, his daughters
Valentina Cadiz, Jovita Cadiz and Maria Cadiz in an order issued by the
court on December 9, 1952.

The lower court after due hearing entered judgment as follows: “(a)
ordering the defendant to return to the plaintiffs the possession of
the land described in Transfer Certificate of Title No. T-415 upon
receipt of the sum of P546.69 from the plaintiffs who are ordered to
pay said amount to the defendant; (b) ordering the defendant to surrender to this Court Transfer Certificate of Title No. T-415; and (c)
ordering the Register of Deeds of Isabela to cancel Transfer
Certificate of Title No. T-415 and issue in lieu thereof another
Transfer Certificate of Title in the name of Domingo Cadiz. Without
pronouncement as to costs.” From this decision, both parties appealed
directly to this Court on the ground that the only issues they would
raise are purely of law.

The issues posed by plaintiffs-appellants are: (a)
that the lower court erred in computing the damages awarded to them
based upon 2 hectares only when it should be upon 19 hectares of the
land in question; (b) that the lower court erred in not
ordering defendant to pay the loan he obtained from the Rehabilitation
Finance Corporation to secure which he mortgaged the land in question;
and (c) the lower court erred in ordering that the new title
be issued in the name of Domingo Cadiz, now deceased, instead of in the
name of his three daughters, the present plaintiffs-appellants.

Defendant-appellant on the other hand raised two issues, namely: that the lower court erred (a) in not dismissing the amended complaint for lack of legal capacity to sue of plaintiffs; and (b)
in declaring null and void the deed of sale executed by Domingo Cadiz
in favor of Francisco Nicolas on February 28, 1943 covering the land in
question.

We will first take up the issues posed by plaintiffs-appellants.

As
regards the first issue, it is contended that the lower court erred in
computing the damages to be awarded to the plaintiffs by taking as
basis a portion of 2 hectares of the land in question when it should be
19 hectares because it was admitted by defendant-appellant that he had
been in actual possession of the land in 1943 and cultivated 19
hectares thereof since 1948 until 1954. On this point, the lower court
found: “The parties have stipulated that the produce in palay per
hectare is 25 cavans. But the plaintiffs failed to adduce
evidence as to the number of hectares under cultivation in 1947 when
plaintiffs’ predecessor-in-interest, Domingo Cadiz, was turned out of
possession. We may safely conclude that 2 hectares at least were placed
under cultivation by the defendant (Exhibit ‘1’).” (Italics supplied).
Considering that the question raised is one of fact, which runs counter
to what was found by the trial court, the same cannot now be looked
into, this appeal having been taken on purely questions of law.

The
second issue is well taken. Since the loan obtained from Rehabilitation
Finance Corporation was taken advantage of by the defendant-appellant
and our conclusion is that the deed of sale Exhibit 2 is null and void
and so he should return the possession of the land in question, it is
meet and proper that he be the one to pay that loan and that he relieve
the property from the encumbrance. It must only be due to an oversight
that no pronouncement on this matter was made by the lower court in its
decision.

With regard to the third issue, it appearing that
the original owner has already died, the title of the land cannot be
transferred to the heirs without proper settlement of the estate,
either judicially or extrajudicially. This step is necessary to protect
the interest of the creditors. So it is not proper that at this stage
the title be placed in the name of the heirs and, consequently, the
lower court did not err on this score.

This brings us to the consideration of the errors assigned by defendant-appellant.

The
first error refers to the lack of personality to sue of
plaintiffs-appellants. It is contended that since these plaintiffs are
married women they have no legal standing in this case unless joined by
their respective husbands. This contention cannot be seriously taken for
two reasons: (1) because when this objection was raised, the defendant
had already filed his answer to the complaint and the plaintiffs had
finished presenting their evidence. The objection is therefore a
belated one or one raised after a responsive pleading had been
submitted and it is a settled rule in this jurisdiction that after
issues had been joined, all objections that the defendant may set up to
the complaint are deemed waived with the exception only of that which
refers to lack of jurisdiction over the subject matter which may be
raised at any stage of the proceeding and failure to state a cause of
action (Section 10, Rule 9, Rules of Court). And (2) because the
plaintiffs-appellants are not the original plaintiffs as they were
taken in only when their father Domingo Cadiz died and their
substitution became necessary as required by the rules (section 17,
Rule 3). As the real parties in interest, they have therefore the right
to come into the case in representation of their father even in the
absence of their respective husbands.

There is also no merit in the second error. Section 118 of Commonwealth Act 141 provides:

“SEC.
118. Except in favor of the Government or any of its branches, units,
or institution, lands acquired under free patent or homestead
provisions shall not be subject to encumbrance or alienation from the
date of the approval of the application and for a term of five years
from and after the date of issuance of the patent or grant, nor shall they become liable to the satisfaction of any debt contracted prior to the expiration of said period, but the improvements or crops on the land may be mortgaged or pledged to qualified persons, associations, or corporations.

“No
alienation, transfer, or conveyance of any homestead after five years
and before twenty-five years after issuance of title shall be valid
without the approval of the Secretary of Agriculture and Commerce,
which approval shall not be denied except on constitutional and legal
grounds.” (As amended by Commonwealth Act No. 456.)

It
clearly appears from the above that a parcel of land acquired under
free patent or homestead provisions can not become liable to the
satisfaction of any debt contracted prior to the expiration of 5 years
from and after the date of the issuance of the patent, except in favor
of the Government or any of its branches. This provision is mandatory.
Its purpose is to give to the homesteader a place where to live with
his family so that he may become a happy citizen and a useful member of
our society (Jocson vs. Soriano, 45 Phil., 375, 379). That
the deed of sale in question comes under this prohibition is evident In
the first contract evidencing the loan taken by Domingo Cadiz, it was
expressly agreed that if said loan is not paid, Cadiz would be
bound to sell the property to Nicolas for the same amount of the loan
and true to this agreement, the deed of sale Exhibit 2 was executed. It
also appears that the loan was obtained before the expiration of the
5-year period from the issuance of the patent. It cannot therefore be
disputed that the land was sold to Nicolas practically to satisfy a
debt contracted prior to said period which is the very event which the
law seeks to prevent. This has been adopted in order that the purpose
of the Homestead Law may not be defeated. And it is immaterial whether
the satisfaction of the debt be made either by a voluntary sale or
through judicial process as when the property is levied upon and sold
at public auction, because the spirit of the law may be defeated either
way. We therefore hold that the trial court did not err in declaring
the sale null and void as contravening Section 118 of Commonwealth Act
141. (Beach vs. Pacific Com. Co., 49 Phil., 765; Francisco vs. Parsons Hard. Co., 67 Phil. 234; Gonzalo Puyat & Sons vs. De las Alas, 74 Phil, 3).

With
regard to the motion for new trial filed by defendant-appellant, we
also find that the alleged newly discovered evidence would not affect
the conclusion we have reached for even if it be shown, as is actually
the case, that the sale of the homestead was made with the approval of
the Secretary of Agriculture and Natural Resources, said sale would
still be null and void for having been done to satisfy a debt
contracted prior to the expiration of the period of 5 years. Said
motion is therefore denied.

Wherefore, the decision appealed
from is affirmed, with the addition that defendant-appellant should pay
the loan he obtained from the Rehabilitation Finance Corporation and
free the land in question from the encumbrance he created thereon as a
security for that loan. No pronouncement as to costs.

Paras, C.J., Bengzon, Padilla, Montemayor, Reyes, A., Labrador, Conception, Reyes, J.B.L., Endencia, and Felix, JJ., concur.