Heirs of Enrique Zambales v. Court of Appeals
G.R. No. L-54070, February 28, 1983; Melencio-Herrera, J.
Facts: Petitioners were homestead patentees of a parcel of land in the municipality of Del Pilar, Roxas, Palawan covered by an Original Certificate Title issued pursuant to Homestead Patent No. V-59501 dated September 6, 1955. A civil case claiming damages was filed by said petitioners against respondent Nin Bay Mining Corp. claiming that the latter has removed silica sand from their land destroying the plants and other improvements thereon. A Compromise Agreement was then entered into by the parties on October 29, 1959 with petitioners duly assisted by their counsel containing, among other things, that a rental of P 20 per hectare be paid to petitioners as full payment and indemnity for all damages to the property; that they bind themselves to sell, transfer, and convey the property and that the respondent agrees to purchase and pay for the same; and that petitioners irrevocably appoint respondent as their attorney-in-fact with full power and authority to sell, transfer and convey the same on September 10, 1960 or anytime thereafter. Thereafter, respondent Corporation, as attorney-in-fact, sold the property to Preysler with a corresponding Transfer Certificate Title issued with the approval of the Scretary of Agriculture and Natural Resources. Ten years after the trial court’s decision based on the Compromise Agreement and nine years after the sale to Preysler, petitioners filed for the annulment of the aforementioned sale and recovery of the property with damages alleging that they were unschooled and that there was fraud, deceit, and manipulation employed by their lawyer and respondent Corporation. The lower court ruled in favor of petitioners but the appellate court reversed after finding that the alleged fraud and misrepresentation in the Compromise Agreement has not been substantiated by evidence. Hence, this petition.
Issue: WON the Compromise Agreement and the subsequent Deed of Sale are valid?
Held: The general rule is that whoever alleges fraud or mistake must substantiate his allegation, since the presumption is that a person takes ordinary care of his concerns and that private transactions have been fair and regular. The rule admits of an exception in Article 1332 of the Civil Code, which provides: “When one of the parties is unable to read, or if the contract is in a language not understood by him, and mistake or fraud is alleged, the person enforcing the contract must show that the terms thereof have been fully explained to the former.”
For the proper application of said provision, it has first to be established convincingly that the illiterate or the party at a disadvantage could not read or understand the language in which the contract was written. The burden of proof, therefore, shifted to the Corporation to show that the compromise agreement had been fully explained to the plaintiffs.
However, the Court is not convinced that indeed appellees were victims of a fraudulent scheme employed upon them by their former counsel by reason of their alleged illiteracy and ignorance. The evidence discloses that appellees, although unschooled, are intelligent, well-informed and intelligent people. They could not have been misled by their former counsel into signing the compromise agreement, taking into account as well the acts of the appellees and their children subsequent to the execution of the compromise agreement.
Although the petitioners were not misled into signing the Compromise Agreement, the Court held that there has been violation of the Public Land Act. The sale of a homestead lot within the five-year prohibitory period is illegal and void. The law does not distinguish between executory and consummated sales.
The bilateral promise to buy and sell, and the agency to sell, entered into within five years from the date of the homestead patent, was in violation of section 118 of the Public Land Law, although the executed sale was deferred until after the expiration of the five-year prohibitory period.
As the contract is void from the beginning, for being expressly prohibited by law, the action for the declaration of its inexistence does not prescribe. Being absolutely void, it is entitled to no authority or respect, the sale may be impeached in a collateral proceeding by any one with whose rights and interest it conflicts. There is no presumption of its validity. The approval of the sale by the Secretary of Agriculture and Natural Resources after the lapse of five years from the date of the patent would neither legalize the sale.
Decision reversed.
