G.R. No. L-7487; October 27, 1955
PAULINA CORPUZ, ET AL., plaintiffs-appellants, vs. LEOPOLDO L. BELTRAN, ET AL., defendants-appellees.

FACTS

On June 22, 1932, Esteban Corpuz was granted Homestead Patent No. 19222 over a parcel of agricultural land in San Jose, Nueva Ecija, and Original Certificate of Title No. 3842 was issued in his favor on July 14, 1932. On March 28, 1933, Esteban Corpuz sold the land with a pacto de retro to spouses Leocadio L. Beltran and Maria del Rosario. Subsequently, on July 11, 1935, he executed a direct sale of the same property to the same spouses, resulting in the issuance of Transfer Certificate of Title No. 9388 in their favor and the transfer of possession. The plaintiffs, who are the legitimate heirs of Esteban Corpuz, filed an action for the annulment of these two deeds of sale, contending they were executed within five years from the issuance of the homestead patent and are therefore void under Section 116 of Act No. 2874 . The Court of First Instance of Nueva Ecija dismissed the complaint on the ground of prescription, as more than 17 years had elapsed from the sale to the institution of the action. The plaintiffs appealed directly to the Supreme Court, arguing that the issue involved is purely legal.

ISSUE

1. Whether the action for annulment has prescribed.
2. Whether the two deeds of sale executed within five years from the issuance of the homestead patent are null and void.

RULING

1. On the issue of prescription, the Supreme Court ruled that the defense of prescription is unavailable. The action seeks to declare the sales void ab initio for allegedly violating a legal prohibition. Under Article 1410 of the New Civil Code, an action for the declaration of the inexistence of a contract does not prescribe. The Court cited the principle that the defect of a void contract is permanent and cannot be cured by mere lapse of time, as previously established in Tipton vs. Velasco. Therefore, the lower court erred in dismissing the case on the ground of prescription.
2. On the validity of the sales, the Supreme Court ruled that the sales are valid and binding. The Court applied the doctrine established in Balboa vs. Farrales. Esteban Corpuz’s application and compliance with homestead requirements occurred under Act No. 926 , which was the law in force at the time and did not contain any prohibition against the alienation of homestead land. Although Act No. 2874 , which contains the five-year restriction under Section 116, had already repealed Act No. 926 by the time the patent was issued in 1932, the vested rights acquired under the prior law cannot be impaired by the subsequent statute. Consequently, the validity of the sales must be determined under Act No. 926 , which imposes no restriction, and not under Act No. 2874 . Thus, the deeds of sale are valid.
The decision of the lower court was modified, and the complaint was dismissed for lack of merit, not on the ground of prescription. No costs were awarded.