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MENIL V.

CA
NOS. L-43668-69, JULT 31, 1978
GUERRERO, J.
Facts:
 Agueda Garan (PR) obtained a homestead patent over the land in question
o An original TCT was issued pursuant to the homestead patent
 Garan then sold the land to Potenciano Menil, within the 5-year prohibitive period
o The parties did not register the deed of sale in the registry of deeds
o The TCT in the hands of Garan was not cancelled and the land remained with her
 Garan then executed another deed of sale over the same parcel of land in favor of the same vendee, Menil and
for the same price of 415 pesos
 The parties registered the second deed of sale in the registry of deeds and the TCT with Garan was cancelled
 Menil then mortgaged the land to the DBP to secure an agricultural loan
 Petitioners were in possession of the land in question until sometime in 1967 when PR Garan, Calania, Nayve Jr.,
Naybe and Calanias forcibly took possession of the said land and filed for a queting of title
o The court dismissed the complaint and awarded damages to the petitioners
o BUT the PR refused to vacate the land upon the claim that the decision was silent as to who must possess
the land
 Petitioners then filed for recovery of possession of said land (Case No. 1810)
o During the pendency of this case, the petitioners filed a case for reconveyance of land litigated in 1810
(Case No. 1816)
o These cases were heard jointly
 JOINT JUDGEMENT declared that Quieting of Title case clearly stated that the Sps. Menil were legally entitled to
the possession of the land
 PR dismissed the appeal and affirmed the decision of the lower court on the ground of res judicata
o MR ruled that the sale of the homestead in question to petitioners as null and void
Issue:
 WON the sale within the 5-year prohibitory period of homestead is null and void?
Ruling:
 Yes. the parties executed the contract less than the 5 years prohibited by law under Sec. 118 of CA 141 or the
Public Land Act
o Therefore, the homestead patent awarded to PR Garan is null and void
 Sec. 118. Except in favor of the government or any of its branches, units, or institutions, 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.
 The contention that there was subsequent approval of the Secretary of Agriculture and Natural Resources, and
the execution of the confirmatory deed of sale which cured the defect of the sale is without merit
 It cannot be claimed that there are two contracts: one which is undisputably null and void, and another, having
been executed after the lapse of the 5-year prohibitory period, which is valid.
 The second contract of sale executed on March 3, 1964 is admittedly a confirmatory deed of sale. Even the
petitioners concede this point. 3
 Inasmuch as the contract of sale executed on May 7, 1960 is void for it is expressly prohibited or declared void by
law [CA- 141, Section 118], it therefore cannot be confirmed nor ratified.
 Article 1409 of the New Civil Code states:
o Art. 1409. The following contracts are inexistent and void from the beginning:
o (1) Those whose cause, object, or purpose is contrary to law, morals, good customs, public order or public
policy;
o (2) Those which are absolutely simulated or fictitious;
o (3) Those whose cause or object did not exist at the time of the transaction;
o (4) Those whose object is outside the commerce of men;
o (5) Those which contemplate an impossible service;
o (6) Those where the intention of the parties relative to the principal object of the contract cannot be
ascertained;
o (7) Those expressly prohibited or declared void by law.
 These contracts cannot be ratified. Neither can the right to set up the defense of illegality be waived.
 Further, noteworthy is the fact that the second contract of sale over the said homestead in favor of the same
vendee, petitioner Potenciano Menil, is for the same price of P415.00. Clearly, the unvarying term of the said
contract is ample manifestation that the same is simulated and that no object or consideration passed between
the parties to the contract.
 It is evident from the whole record of the case that the homestead had long been in the possession of the vendees
upon the execution of the first contract of sale on May 7, 1960; likewise, the amount of P415.00 had long been
paid to Agueda Garan on that same occasion. We find no evidence to the contrary.
ARSENAL V. IAC
NO. L-66696, JULY 14, 1986
GUTIERREZ, JR., J.
Facts:
 Filomeno Palaos (PR) secured a title from the register of deeds for Lot 81, Pls-112 at Bukidnon by virtue of a
Homestead patent granted to him
 PR and his wife then executed in favor of Suralta, selling 4 hectares of the land in the Torrens Certificate
o Suralta immediately took possession of the 4 hectare portion up to the present time in concept of an
owner
o He also built a house and introduced permanent improvements thereon
 Petitioners Sps. Arsenal became tenants pf an adjoining land owned by Pabualan that is separated from the land
in question only by a public road
o In the course of their relationship as neighbors, Suralta knew of the petitioner’s intention to buy the
remaining land of Palaos
 Sps. Palaos then executed a notarial Deed of Sale in consideration of the amount of 800 pesos supposedly for the
remaining 3 hectares of land without knowing that the document covered the entirety of Lot 81 including the 4
hectare portion previously deeded by them to the plaintiff
o The deed was presented to the Office of the Commission on National Integration
o It was approved bt the field representative and inspector without inspecting the land to determine the
actual occupants thereof
 Petitioenrs then took possession of the 3-hectare portion of Lot 81 after their purchase and have cultivated the
same
o Arsenal also caused the tax declaration of the entire lot to be transferred in her name
 Suralta then learned of the transfer of tax declaration to Arsenal and agreed to contribute in the payment of the
land taxes and paid yearly
 Suralta presented his sales contact in the office of the register of deed but it was refused registration for having
been executed within the prohibitive period of 5 years
o To cure the defect, he caused Palaos to sign a new sales contract in his favor covering the same 4 hectare
portion from the rest of the land
 Suralta saw for the first time in 1973 the deed of sale in favor of petitioner
o He asked Palaos about the same who responded that he only sold 3 hectares to petitioner
o Suralta approached Arsenal for satisfactory arrangements who wanted to abide by the contract
 Arsenal then registered her deed of sale and obtained a TCT for the entire Lot 81 without the knowledge of Suralta
 Suralta then sent a TELEGRAM to the Secretary of Agriculture requesting suspension of the sale of Palaos to
Arsenal
 Suralta later learned of the cancellation of the original certificate of title of Palaos and the issuance of the TCT to
Arsenal so he sought the help of the municipal authorities to reach an amicable settlement
 Suralta then filed a case against Palaos et. Al for the annulment of the TCT issued to Arsenals as it covers the 4
hectare portion previously sold to him
 Arsenals denied that they knew od a previous sale to Suralta
o They assailed the validity of the purchase since it was within the prohibited period of disposal
 TC FOR SURALTA that the Arsenals were in bad faith
 IAC AFFIRMED
Issue:
 WON the sale of the land to the Aresnals are null and void?
Ruling:
 No. Again, use the Sec. 118 of Act. No. 141
 The above provisions of law are clear and explicit.
o A contract which purports of alienate, transfer, convey or encumber any homestead within the
prohibitory period of five years from the date of the issuance of the patent is void from its execution.
o In a number of cases, this Court has held that such provision is mandatory
 Under the provisions of the Civil Code, a void contract is inexistent from the beginning. It cannot be ratified neither
can the right to set up the defense of its illegality be waived. (Art. 1409, Civil Code).
 To further distinguish this contract from the other kinds of contract, a commentator has stated that:
o The right to set up the nullity of a void or non-existent contract is not limited to the parties as in the case
of annullable or voidable contracts; it is extended to third persons who are directly affected by the
contract. (Tolentino, Civil Code of the Philippines, Vol. IV, p. 604, [1973]).
o Any person may invoke the inexistence of the contract whenever juridical effects founded thereon are
asserted against him. (Id. p. 595).
 Concededly, the contract of sale executed between the respondents Palaos and Suralta in 1957 is void.
o It was entered into three (3) years and eight (8) months after the grant of the homestead patent to the
respondent Palaos in 1954.
 Being void, the foregoing principles and rulings are applicable.
 Thus, it was erroneous for the trial court to declare that the benefit of the prohibition in the Public Land Act "does
not inure to any third party."
o Such a sweeping declaration does not find support in the law or in precedents. A third person who is
directly affected by a void contract may set up its nullity.
o In this case, it is precisely the petitioners' interest in the disputed land which is in question.
 As to whether or not the execution by the respondents Palaos and Suralta of another instrument in 1973 cured
the defects in their previous contract, we reiterate the rule that an alienation or sale of a homestead executed
within the five-year prohibitory period is void and cannot be confirmed or ratified.
 This Court has on several occasions ruled on the nature of a confirmatory sale and the public policy which
proscribes it. In the case of Menil v. Court of Appeals (may digest tayo nito(84 SCRA 413), we stated that:
 The respondents Palaos and Suralta admitted that they executed the subsequent contract of sole in 1973 in order
to cure the defects of their previous contract.
o The terms of the second contract corroborate this fact as it can easily be seen from its terms that no new
consideration passed between them.
o The second contract of sale being merely confirmatory, it produces no effect and can not be binding.
 Notwithstanding the above circumstances of the case, however, we still think that the petitioners' claim to the
land must fail.
 The finding of bad faith by the lower court is binding on us since it is not the function of this Court to analyze and
review evidence on this point all over again (Sweet Lines, Inc. v. Court of Appeals, 121 SCRA 769) but only to
determine its substantiality