Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-11024 January 31, 1958 L!

ONSO NGELES, ET L., petitioners, vs. T"E COURT O! PPE LS, GREGOR#O ST . #NES an$ N ST C# %#&#NO, respondents. Ernesto Angeles and Ildefonso M. Bleza for petitioners. Pedro D. Maldia for respondents. L 'R %OR, J.( Appeal by certiorari from a decision of the Court of Appeals reversing the udgment of the Court of !irst "nstance of Nueva Eci a in Civil Case No. #$%, entitled Alfonso Angeles, et al., vs. &regorio 'anta "nes, et al., and dismissing the complaint and counterclaim, (ithout pronouncement as to costs. )n March %*, %+$,, homestead patent No. $%#%$ (as issued for a parcel of land in the municipality of 'anto -omingo, Nueva Eci a, containing an area %$.##+#hectares more or less. Pursuant to the issuance of this homestead patent, original certificate of title No. .+/# (as issued to the patentee 0uan Angeles on March *1, %+$,. )n May *1, %+$2, 0uan Angeles said the above land to defendants &regorio 'anta "nes and Anastacia -ivino, (ho thereupon too3 possession thereof. 0uan Angeles died in the year %+$1, and thereafter his heirs, the petitioner herein, sought to recover the land from the defendants on the ground that the sale (as null and void 4'ec. %%#, Act No. *12.5. 6he defendants refused to return the land, so did heirs, petitioner herein, brought this action in the Court of !irst "nstance of Nueva Eci a. "n the amended complaint filed by the plaintiffs the allegation is made that defendants7 possession of the land (as the virtue of the sale (hich is against the la( and therefore did not convey title to them. "t is also alleged that the homestead produces an average of *// cavans per year as share for the o(ner. 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 *// cavans of palay per year from %+$1, valued at P%* per cavan, until the return of the land. -efendants ans(ered the amended complaint alleging that the purchase (as for a valuable consideration, in outmost good faith, and that the defendants too3 possession of the land (ith the 3no(ledge, consent of plaintiffs. 6hey denied that the harvest of the land is *// cavans per year for the o(ner and that the alleged price is P%* per cavan. As special defenses, they alleged that the plaintiffs are guilty of laches for having allo(ed %* years to pass, after the death of the original homesteader, before they brought the action8 that the plaintiff7s right of action had prescribed8 but more than five years had elapsed from the date of the final approval of the homestead, (hen the sale (as made on May *1, %+$28 etc. "t is, therefore, prayed that the complaint be dismissed that the sale be declared valid and defendants be declared o(ners of the property8 and that the certificate of title be cancelled and one issued in the name of the defendants. As an alternative remedy, it (as prayed that should the court declare the sale null and void the defendants be reimbursed in the amount of P#,/// (hich they incurred in cleaning the land, etc. 6hat trial court found that (hen the sale (as made by the deceased Angeles, five years had not passed from the issuance of the certificate of title to the homestead8 that both vendor and vendee 3ne( that the sale (as void because the five9year period prescribed by la( had not yet elapsed8 as a conse:uence of this bad faith of both parties, they should be considered as having acted in good faith 4Art. $#. Civil Code of 'pain5, and that defendants are entitled to the fruits of the land.

6he court further held that the right of action of plaintiffs had already prescribed before the complaint (as filed on 0une %*, %+,/, in accordance (ith 'ection ./ of Act No. %+/. 6he trial court also found that the land (as levied and a di3e (as built thereon at a cost of P$,///.// to prevent it from being flooded every year8 that defendants paid P*,,//.// for the homestead. ;herefore, the court declared that the sale of the homestead is null and void and ordered plaintiffs to return the price of the land of P*,,//.// to the defendants and to reimburse the latter in the amount of P$,///, for e<penses incurred in leveling the land and the construction of the di3e thereon. 6he court ordered the defendants to return the homestead to the plaintiffs upon the payment to the defendants of P*,,//.// and that the P$,///.//, value of the improvements, should constitute a lien on the land. 6he case having been appealed to the Court of Appeals, the latter held that Article %$/#, paragraph % of the 'panish Civil Code, (hich provides= . . . ;hen both parties are guilty, neither of them can recover (hat he may have given by virtue of the contract, or enforce the performance of the underta3ing of the other party8 (hich 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 due to the fact that they did not only violate the prohibition contained in the Public >and but because they 3no(ingly tried to cheat the prohibition 4by the insertion of a prohibition for the e<ecution of another deed of sale after five years5. 6he decision of the lo(er court (as, therefore, reversed and the action dismissed. "n this Court it is claimed by the petitioners that the application of Article %$/#, par. %, of the 'panish Civil Code is null and void,8 and that the heirs of the homesteader should be declared entitled to the possession of the homestead and the fruits of the same. 6he most important issue raised in the appeal is (hether the doctrine of in pari delicto is applicable to sales of homesteads. 6his :uestion (as s:uarely decided in the case of Catalina de los Santos vs. Roman Catholic Church of Midsa ap , et al., +. Phil., ./,8 ,/ )ff. &a?. %,11, in the negative. "n the case (e held that the principle of in pari delicto is not applicable to a homestead (hich has been illegally sold, in violation of the homestead la(. Reason for the rule is that the policy of the la( is to give land to a family for home and cultivation and the la( allo(s the homesteader to reac:uire the land even if it has been sold8 hence, the right may not be (aived. 6his principle (as again confirmed in the case of Ancierto, et al. vs. -e los 'antos, et al., 4+, Phil. 1125 in (hich, through Mr.0ustice Ale<, Reyes, (e said= Appellants, ho(ever, contended that the voiding of the Act may not be invo3ed in favor of plaintiffs as their predecessor in interest (as in pari delcto, 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 'tate, plaintiffs may no longer claim the homestead. 'imilar contentions (ere made in the Case of Catalina de los 'antos, vs. Roman Catholic Church of Midsayap et al., +. Phil., ./,, ,/ )ff. &a?., %,11, but they (ere overruled, this Court holding that the in pari delicto doctrine may not be invo3ed in a case of this 3ind since it (ould turn counter to an avo(ed fundamental policy of the 'tate that the forfeiture of the homestead is a matter bet(een the 'tate and the grantee of his heirs, and that until the 'tate has ta3en steps to annul the grant and asserts title to the homestead the purchaser is, as grant the vendor or

his heirs, 7no more entitled to 3eep the land any intruder. Consistent (ith the above decisions, (e must hold that in the case at bar the sale of the homestead by the deceased homesteader (as null and void and his heirs have the right to recover the homestead illegally disposed of. "t no( becomes necessary to determine if the defense of prescription raised in the ans(er to the amended complaint can be sustained, it appearing that (hen the action (as brought in the year %+,/, about %$ years had elapsed since the date of the sale. 6he precise :uestion (as also passed upon by @sadversely to the defendant7s respondents in the case of Eugenio, et al., vs. Perdido, et al., +2 Phil., .%. "n that case (e held, thru Mr. 0ustice Beng?on= 6here is no :uestion that the sale in March %+$* having clean made (ithin five years from 7the date of the issuance of the patent7 (as 7unla(ful and null and void from its e<ecution7, by e<pressed provision of sections %%# and%** of Act No. *12. 4No( com. Act No. %.%5. @nder the e<isting classification, such contract (ould be 7in e<istent7 and the action or defense for declaration7 of such ine<istence 7does not prescribed7. 4Art. %.%/ ne( Civil Code5. ;hile it is true that this is a ne( provision of the ne( Civil Code, it is nevertheless a principle recogni?ed seems 6ipton A. Aelasco, # Phil., #2 that 7mere lapse of time cannot give efficacy to contracts that are null and void7. Baving found that the sale of the homestead is null and void, and that the action to recover the same does not prescribe, (e no( 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 reali?ed from the homestead by the buyer. 6he stipulation of the parties 4pp. $+9./, R.).A.5sho(s that the deed after the e<piration of five years, and that this fact (as e<plained by the notary to the parties. 6he notary must have informed the latter that rene(al of the deed (as necessary to avoid the prohibition against the sale of the homestead (ithin five years after the issuance of the title. 6his circumstance sho(s that the parties to the (ere a(are of the e<istence of the prohibition such 3no(ledge. As a matter of fact, the Court of Appeals predicated its decision on the finding that the parties to the sale (here both guilty of bad faith. 6he :uestion that no possess is (hether the return of the value of the products gathered from the land by the defendants and the e<penses incurred in the construction of the di3eCall useful and necessary e<pensesCshould be ordered to be returned by the defendants of the plaintiffs. ;hile (e 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 la(, the loss of the products reali?ed by the defendants and the value of the necessary improvements made by them on the land should not be e<pected from the application of the said rule because no cause or reason can be cited to ustify an e<ception. "t has been held that the rule of in pari delicto is inapplicable only (here the same violates a (ell9established public policy. . . . But (e doubt if these principles can no( be involved considering the philosophy and the policy behind the approval of the Public >and Act. 6he principle underlying pari delicto has 3no(n here and in the @nited 'tates is not absolute in its application. "t recogni?es certain e<ceptions one of them being (hen its enforcement or application runs counter to an avo(ed fundamental policy or public interest. As stated by us in the Rellosa case, D6his doctrine is sub ect to one important limitation, namely, D(henever public policy is considered advanced by allo(ing

either party to sue for relief against the transaction. 4Rellosa vs. &a( Chee Bun, +$ Phil. 1*28 .+ )ff. &a?. .$.,.5 4-e los 'antos vs. Roman Catholic Church of Midsayap,+. Phil. ./,8 ,/ )ff. &a?. %,115. ;e 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. ;ith respect to the price that the defendants had paid for the land P*,,//, in vie( of the rule that no one should enrich himself at the e<pense of another, the return of the said amount by the plaintiffs should be decreed, before the plaintiffs may be allo(ed to recover bac3 the possession of the homestead, sub ect to the action. 6he decision of the Court of Appeals is hereby reversed and udgment 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 P*,,//. 6he claim of the plaintiffs for value of the products of the land and that of defendants for the e<penses in the construction of the di3e are both dismissed. ;ithout costs in this appeal. Bengzon! Paras! C.".! Padilla! Re es! A.! Bautista Angelo! Concepcion! Re es! ".B.#.! and $eli%! "".! concur.