G.R. No. 164978 - Pimentel, Jr. vs. Ermita

Since 1920, Francisco Sabas (plaintiff-appellant) and Francisco Garma (defendant-appellee), together with Garma's deceased wife Tarcila Vilaray, were engaged in various loan transactions.
The transactions involved monetary loans where the deceased Garma couple were the debtors and Sabas was the creditor.

On November 10, 1930, a liquidation of accounts was made between the parties.
The liquidation showed that the spouses Francisco Garma and Tarcila Vilaray owed the sum of P2,187.53 to Sabas.

On November 10, 1930, in connection with the unsettled loan, the debtors executed a mortgage instrument (Exhibit A), pledging their land.
The land mortgaged was a homestead acquired under a free patent, for which the patent was issued on September 14, 1926 by the Governor-General, and the original certificate of title was issued on October 18, 1926 by the register of deeds of Cagayan.
Despite the execution on November 10, 1930, the instrument of mortgage was not registered until October 5, 1932 (Exhibit B).

The defendants did not settle the full loan amount but delivered two lots of tobacco as partial payment.

The first lot, amounting to 10 bales of tobacco valued at P50, was delivered on September 18, 1931.
The second lot, consisting of 11 bales valued at P38.50, was delivered in 1932.

The total value of the tobacco (P88.50) was considered for deduction from the mortgage credit claimed by Sabas.

The defendant Garma alleged that he signed the mortgage instrument under force and intimidation; however, the evidence did not substantiate this claim.
It was also stated that the children of the deceased Tarcila Vilaray had not inherited any interest from their mother and thus could not be held responsible for the mortgage debt.
On June 12, 1933, Francisco Garma executed another mortgage in favor of Pascual de Guzman for a loan amounting to P1,500.

This subsequent mortgage pertained to the same parcel of land and was registered on June 26, 1933.

The dispute centers on whether the mortgage executed by Garma and his wife in favor of Sabas is valid.
The pertinent laws are contained in sections 116 and 122 of Act No. 2874 (with section 116 as amended by section 23 of Act No. 3517) regarding the encumbrance and alienation of lands acquired under free patent or homestead provisions.

Whether the mortgage executed by Garma and his wife Tarcila Vilaray in favor of Sabas, securing a loan from the liquidation of accounts on November 10, 1930, is valid or null and void ab initio.
Whether the later registration of the mortgage instrument (October 5, 1932) could cure any defect arising from its execution within the prohibited period.

Whether the transaction in question violates sections 116 and 122 of Act No. 2874 (as amended), which prohibit encumbrances on lands acquired under free patent during the first five years from the issuance of the patent.
Whether the mortgage could subject the homestead property to satisfy a pre-existing debt, contrary to the statutory protection provided for such lands.

The defendant Garma contended that the mortgage instrument was executed under force and intimidation.
Whether any evidence supports the allegation and if it affects the validity of the mortgage.

The issue of whether the children of the deceased Tarcila Vilaray could be compelled to pay on account of the mortgage despite no evidence of their inheriting any maternal property.