G.R. No. 71510 - People vs. Silfavan

On November 3, 1955, private respondent Agueda Garan obtained a homestead patent over the land in question.
On February 4, 1956, Original Certificate of Title (OCT) No. 220 was issued in her name pursuant to the homestead patent.

On May 7, 1960, within the five-year prohibitory period provided under Section 118 of the Public Land Act, Agueda Garan sold the land to Potenciano Menil for P415.00, as evidenced by a deed of sale.
The deed of sale executed on May 7, 1960 was not registered, leaving OCT No. 220 intact and still bearing the name of Agueda Garan.

On March 3, 1964, Agueda Garan executed another deed of sale over the same parcel of land in favor of the same vendee, Potenciano Menil, for the same price of P415.00.
On August 30, 1965, the contracting parties registered the second deed of sale in the Registry of Deeds of Surigao, which resulted in the cancellation of OCT No. 220 and the issuance of Transfer Certificate of Title (TCT) No. T-60 in the name of Potenciano Menil.
Prior official endorsements by the Bureau of Lands, including the 1st and 2nd indorsements in May and June 1965 respectively, recommended and approved the sale.

On February 28, 1966, Potenciano Menil mortgaged the land to the Development Bank of the Philippines (DBP) to secure an agricultural loan.
The mortgage, executed on the homestead, later became a significant issue in the dispute regarding the validity of transactions concerning the land.

Petitioners, identified as Potenciano Menil and his wife, Crispina Nayve, maintained possession of the land until around 1967 when private respondents (Agueda Garan, Francisco Calanias, Miguel Nayve, Jr., among others) forcibly took possession.
The private respondents initiated Civil Case No. 1692 for “Quieting of Title” before the Court of First Instance (CFI) of Surigao del Norte, which dismissed the complaint but awarded damages to petitioners and granted a writ of execution for possession.
Due to a subsequent claim that the decision was silent on the entitlement to possession, petitioners filed Civil Case No. 1810 for “Recovery of Possession” in July 1968.
During the pendency of Civil Case No. 1810, the private respondents lodged Civil Case No. 1816 for reconveyance of the land.
A joint hearing of Cases No. 1810 and 1816 at the CFI led to a joint judgment on June 13, 1970, which:

Declared that the decision in Civil Case No. 1692 definitively resolved the entitlement to possession in favor of petitioners.
Ordered private respondents to restore possession to petitioners.
Dismissed Civil Case No. 1816 for insufficiency of evidence.

On motion for reconsideration, the lower court reopened the cases, re-heard them, and ultimately reaffirmed the joint judgment of June 13, 1970, while dismissing Civil Case No. 1816 insofar as the DBP was concerned.

The private respondents appealed the lower court’s decisions, prompting the CA to initially invalidate the appeal on April 18, 1975, affirming the trial court’s decision.
On a motion for reconsideration by the private respondents:

The CA issued a Resolution on September 3, 1975 declaring the sale of the homestead to petitioners null and void.
The CA ordered the cancellation of TCT No. T-60.
It further ordered the reissuance of OCT No. 220 in favor of homesteader Agueda Garan and mandated that Menil reimburse Garan the sum of P415.00 (plus interest as offset by the fruits derived from possession).

Subsequent to petitioners’ own motion for reconsideration, the CA, in a Resolution dated January 16, 1976:

Affirmed the September 3, 1975, Resolution.
Denied petitioners’ motion for reconsideration.
Granted the motion of the DBP by declaring the mortgage executed by Menil as valid.

Petitioners then filed an appeal by certiorari seeking to set aside the CA Resolutions of September 3, 1975 and January 16, 1976, and to revive the CA Decision of April 18, 1975.

Whether the initial contract of sale executed on May 7, 1960 is null and void for being in violation of Section 118 of the Public Land Act, which prohibits the alienation of homestead lands within a period of five years from the issuance of the patent.
Whether the subsequent confirmatory deed of sale executed on March 3, 1964, and registered on August 30, 1965, can cure or validate the defect of the earlier null transaction.

Whether the decision rendered in Civil Case No. 1692, later characterized as a dismissal of the complaint without prejudice to filing the proper action, is res judicata as applied to Civil Case No. 1810 and Civil Case No. 1816.
Whether the trial court’s resolution on possession effectively resolved the issue of entitlement to the land.

Whether petitioners remain liable for the agricultural loan obtained from the Development Bank of the Philippines, considering that the mortgage was executed over a homestead sale subsequently declared null and void.

Whether the identical price in both contracts of sale is indicative of a simulated transaction lacking a genuine exchange of consideration, thereby reinforcing its nullity.