Case Summary (G.R. No. 1)
Petitioner and Respondent Roles
Petitioners (Artates and Pojas) are the registered owners under Original Certificate of Title No. P-572, having received a homestead patent. Respondent Urbi is the judgment creditor who obtained a sheriff’s sale of the homestead to satisfy a judgment for physical injuries. Soliven is the minor alleged transferee of the property from Urbi, represented by a court-appointed guardian.
Key Dates and Documents
- Homestead patent issued to appellants: September 23, 1952 (Patent No. V-12775; OCT No. P-572).
- Injury inflicted by Artates on Urbi: October 21, 1955.
- Judgment in favor of Urbi (Justice of the Peace, Camalaniugan): March 14, 1956.
- Alleged private deed of sale by Urbi to Soliven: June 26, 1961.
- Public (execution) sale by Provincial Sheriff: June 2, 1962 (property sold to Urbi as sole bidder for P1,476.35).
- Trial court decision: March 29, 1963.
- Appellate decision rendered by the Supreme Court: January 30, 1971.
Applicable constitution at time of decision: the 1935 Philippine Constitution.
Applicable Law
Primary statutory provision: Section 118 of the Public Land Law (Commonwealth Act No. 141) — homestead grants are protected from encumbrance, alienation, or liability to satisfaction of any debt “contracted” within five years from issuance of the patent, except in favor of the Government or duly constituted banking corporations; improvements/crops may be mortgaged/pledged. Related provisions: Section 119 (redemption by grantee), Section 26 of Revised Rule 39 (provisional certificate/final deed of sale under execution). The decision relies on established Philippine precedents interpreting Section 118 and on comparative American authority concerning the meaning of “debt.”
Facts
Appellants received a homestead patent in 1952. Artates assaulted Urbi in 1955; a civil judgment for damages was entered in 1956. To satisfy that judgment, the Provincial Sheriff conducted an execution sale and the homestead was sold to Urbi in 1962 as the only bidder for the judgment amount. Prior to the sheriff’s sale, Urbi allegedly executed a deed transferring the same parcel to the minor Soliven (represented by a guardian), purportedly to defeat the homestead’s vulnerability to execution. Appellants alleged the sale and later transactions were null and void under Section 118 and sought reconveyance, return of possession, and damages.
Procedural History
Plaintiffs filed for annulment of the execution and related reliefs. The defendants answered. The Court of First Instance of Cagayan (trial court) upheld the regularity of the sheriff’s execution sale but found the Urbi-to-Soliven sale simulated and void. The trial court ordered reconveyance to the plaintiffs upon their payment (redemption) of the judgment amount plus sheriff’s fees and other sums (including reimbursement to Urbi for payment to Philippine National Bank to release a mortgage). Plaintiffs appealed from aspects of the trial court ruling; the Supreme Court reviewed the validity of the execution sale and related transactions.
Issues Presented
- Whether Section 118’s prohibition against rendering homestead lands liable for “any debt contracted” within five years of the patent includes extra‑contractual obligations (i.e., liabilities arising from torts or crimes).
- Whether an execution sale of a homestead to satisfy a judgment entered within the five‑year protected period is valid or void.
- Whether the alleged private sale by the judgment creditor to a minor was simulated and thus void.
- The proper consequences and remedies if the sale is void (possession, title status, reimbursement for sums advanced to remove encumbrances).
Supreme Court Holding (Majority)
The Supreme Court reversed the trial court’s principal disposition insofar as it upheld the execution sale, holding that the execution sale of the homestead was null and void under Section 118 of the Public Land Law. The Court declared appellants entitled to the return and possession of the lot covered by OCT No. P-572. The Court held, however, that the judgment debt in favor of Urbi remained enforceable against Artates personally — the homestead’s exemption did not extinguish Artates’ personal obligation. The Court also ordered appellants to reimburse Urbi for the sum he paid to the Philippine National Bank to release a mortgage on the land (or whatever actual benefit appellants received from that payment). No costs were imposed.
Majority Reasoning — Interpretation of Section 118
The Court reasoned that Section 118’s protection applies for five years from issuance of the patent and bars enforcement against the homestead of “any debt contracted prior to the expiration of said period,” whether enforcement would be by voluntary alienation or by involuntary levy and sale. The Court extended the phrase “debt contracted” to include extra‑contractual obligations (torts/crimes) on several bases: (a) the protective public policy underlying homestead grants — to keep the land for the homesteader and his family so they may reside and be productive; (b) statutory vocabulary — “debt” can be read broadly to include obligations imposed by law, and “contracted” in ordinary usage can mean “incurred” rather than limited to consensual contracts; and (c) persuasive American precedents which construed analogous homestead exemptions to include tort liabilities. Given this interpretation, the judgment against Artates (entered in 1956) was a debt/obligation contracted within the five‑year period after the 1952 patent and thus the homestead could not be subjected to execution and sale for its satisfaction.
Majority Reasoning — Effect of Execution Sale and Title Status
The Court observed that the purchaser at the execution sale had only a sheriff’s provisional certificate and no absolute title until the redemption period expired without redemption or a final certificate/deed issued. Because the execution sale was void, title remained with appellants; reconveyance by the purchaser was unnecessary to restore ownership. Nevertheless, the Court preserved Urbi’s personal judgment against Artates — Artates remained obliged to pay the judgment amount with interest (accruing from the date the writ of execution was first returned unsatisfied). Appellants were ordered to reimburse Urbi for amounts paid to remove an encumbrance (the PNB payment) to the extent appellants benefited.
Trial Court’s Finding on Simulated Sale to Minor
The trial court found that the sale by Urbi to minor Soliven was simulated and intended to place the property beyond reach of the judgment debtor; that finding was affirmed to the effect that the private sale was null and void. The Supreme Court’s annulment of the execution sale rendered the simulated conveyance superfluous in restoring appellants’ possessory rights.
Separate Opinions — Dissent and Concurring/Dissenting Views
- Dissent (Justice Barredo): Objected to extending Section 118 to civil liabilities arising from crimes. Barredo emphasized the purpose of homestead grants — requiring grantees to be able to develop the land — and argued that a grantee who commits crimes forfeits the special privilege of the grant. He would have affirmed the trial court’s disposition (which recognized redemption rights) rather than void the execution sale outright, reasoning that the trial court’s order appropriately balanced homesteader protection and the victim’s remedy.
- Concurring (Justice Makalintal) and Concurring/Dissenting (Justice Teehankee): Both would have affirmed the trial court. Makalintal emphasized the ordinary meaning of “contracted” and the unfairness to tort victims who did not consent to obligations. Teehankee stressed that the majority’s rule would deny the judgment creditor permanent access to the homestead even though the judgment predated the expiration of the five‑year period, thereby frustrating the creditor’s remedy. Teehankee would have preserved the trial court’s solution which allowed reconveyance upon redemption and requir
Case Syllabus (G.R. No. 1)
Case Caption, Citation and Bench
- Supreme Court decision reported at 147 Phil. 334, G.R. No. L-29421, dated January 30, 1971.
- Decision authored by Justice Reyes, J. B. L.
- Concurrences: Concepcion, C.J., Dizon, Zaldivar, Fernando, Makasiar, JJ.; Makalintal, J., concurs with Justice Teehankee in a separate opinion; Castro, J., concurs in the dissenting opinion of Justice Teehankee; Villamor, J., concurs in the separate concurring and dissenting opinion of Justice Teehankee.
- Separate opinions: Justice Teehankee — concurs and dissents in a separate opinion; Justice Makalintal — separate concurring opinion; Justice Barredo — dissenting opinion.
Factual Background
- Plaintiffs-appellants: spouses Lino Artates and Manuela Pojas, grantees of a homestead covered by Patent No. V-12775, recorded as Original Certificate of Title No. P-572.
- The homestead parcel: Lot No. 151 of the Allacapan Public Land Subdivision, barrio Allig, municipality of Allacapan, province of Cagayan.
- Patent/grant issuance date: 23 September 1952.
- Underlying tort event: physical injuries inflicted by Lino Artates upon Daniel Urbi on 21 October 1955.
- Judgment for plaintiff Urbi: awarded by the Justice of the Peace Court of Camalaniugan, Cagayan, in Civil Case No. 40, decision dated 14 March 1956, adjudging damages to Daniel Urbi against Lino Artates in the amount of P1,476.35.
- Execution sale: a public sale conducted by the Provincial Sheriff of Cagayan on 2 June 1962 to satisfy the 1956 judgment; the property was sold to judgment creditor Daniel Urbi as the only bidder for P1,476.35.
- Subsequent deed: on 26 June 1961, defendant Urbi executed a deed of sale of the same parcel to defendant Crisanto Soliven (a minor represented by guardian ad litem Marcela B. Soliven), purportedly for P2,676.35, which plaintiffs allege was done with fraudulent intent to defeat plaintiffs’ rights.
- Possession and crops: plaintiffs allege that Urbi and Soliven entered into possession and deprived plaintiffs of the owners’ share of rice crops for agricultural year 1961–1962.
- Mortgage release payment: appellee Daniel Urbi paid P783.45 to the Philippine National Bank to release a mortgage on the land contracted by Lino Artates.
Lower Court (Court of First Instance of Cagayan) Ruling (Civil Case No. 116-T)
- Date of trial court judgment: 29 March 1963.
- Findings by the trial court:
- The execution conducted by the Provincial Sheriff was regular and valid.
- The sale by defendant Urbi to minor Soliven was simulated and intended to place the property beyond the reach of the judgment debtor.
- Plaintiffs had offered to redeem the land within the 5-year period allowed by Section 119 of the Public Land Law.
- Relief ordered by trial court:
- Declared the sale by Daniel Urbi to Crisanto Soliven null and void.
- Ordered Daniel Urbi to reconvey the property to plaintiffs upon plaintiffs’ payment to Urbi of P1,476.35 plus the sheriff’s fee incident to the sale at public auction, with interest at 12% per annum from 2 June 1961 until full payment.
- Ordered payment by plaintiffs of P783.45 (amount paid by Urbi to PNB) with legal rate of interest from 29 June 1961.
- Plaintiffs appealed from this decision, assigning errors principally concerning the validity of the public sale of the lot.
Statutory Provision at Issue (Section 118, Public Land Law — Commonwealth Act No. 141)
- Text as quoted in the source:
- "SEC. 118. Except in favor of the Government or any of its branches, units, or institution, or legally constituted banking corporations, 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. x x x x x x x x x x x x x x"
- Legal effect described in the opinion:
- For five years from issuance of the patent, homestead lands cannot be encumbered or alienated except in specified exceptions, and are not liable to satisfy any debt contracted within that five-year period.
- The provision is mandatory; sales in violation are null and void and produce no effect.
Legal Issues Presented
- Primary issue: Whether the execution sale of the appellants’ homestead lot to satisfy a civil judgment for physical injuries (a tort) incurred within five years from issuance of the homestead patent is valid or null and void under Section 118 of the Public Land Law.
- Subsidiary issues:
- Whether the phrase "debt contracted prior to the expiration of said period" includes extra-contractual obligations such as tort liabilities or civil liability arising from a crime.
- The legal effect of the sheriff’s provisional certificate and whether the purchaser acquired absolute title before expiration of any redemption period or issuance of a final certificate/deed.
- Whether appellee Urbi is entitled to reimbursement for amounts paid to release a mortgage on the land.
Majority Court Holding (Reverse of Trial Court)
- Principal holding:
- The execution sale of the homestead lot was null and void under Section 118 of the Public Land Law because the civil obligation giving rise to the judgment against Lino Artates was adjudicated on 14 March 1956 — a date within five years from the patent issuance of 23 September 1952 — and therefore the homestead could not be subjected to satisfaction of that debt.
- Consequent relief and effects:
- The decision of the court below is reversed.
- Appellants are declared entitled to return and possession of the lot covered by OCT No. P-572.
- Title to the property remains with appellants; there is no need for appellee Urbi to execute a deed of reconveyance because Urbi had only a sheriff’s provisional certificate and had not obtained absolute title or final certificate of sale.
- Lino Artates remains under obligation to satisfy the judgment debt to Daniel Urbi in the sum of P1,476.35, with legal interest accruing from the date the writ of execution was first returned unsatisfied.
- Appellants must reimburse appellee Urbi the sum of P783.45 or whatever amount appellants actually benefited by Urbi’s payment to Philippine National Bank to release the mortgage on the land.
- No costs were imposed.
- Vote and concurrence:
- Concepcion, C.J., Dizon, Zaldivar, Fernando, and Makasiar, JJ., concur.
- Makalintal, J., concurs with Justice Teehankee in separate opinion; Castro, J., concurs in Justi