G.R. No. 186014; June 26, 2013
Ali Akang, Petitioner, vs. Municipality of Isulan, Sultan Kudarat Province, represented by its Municipal Mayor and Municipal Vice Mayor and Municipal Councilors/Kagawads, Respondent.

FACTS

Petitioner Ali Akang, a member of the Maguindanaon tribe, is the registered owner of a lot in Isulan, Sultan Kudarat. In 1962, he sold a two-hectare portion of this property to the respondent Municipality of Isulan through a Deed of Sale for the sum of Three Thousand Pesos (P3,000.00), with the portion to be used as a government center site. The respondent took possession and constructed the municipal building. Thirty-nine years later, in 2001, the petitioner filed a complaint for Recovery of Possession and/or Quieting of Title, alleging the agreement was a contract to sell that was not consummated due to non-payment of the purchase price. The respondent countered that the sale was valid, payment was made, and the action was barred by laches. The Regional Trial Court (RTC) ruled in favor of the petitioner, declaring the contract null and void for being a contract to sell without payment and for violating legal provisions (Section 145 of the Administrative Code for Mindanao and Sulu and Section 120 of the Public Land Act). The RTC also ordered the respondent to pay the lot’s value or back rentals, damages, and attorney’s fees. The Court of Appeals (CA) reversed the RTC, upholding the validity of the 1962 Deed of Sale as a perfected contract of sale and applying the doctrines of estoppel and laches against the petitioner.

ISSUE

The primary issue is whether the Deed of Sale dated July 18, 1962, is a valid and perfected contract of sale that transferred ownership of the property to the respondent Municipality.

RULING

The Supreme Court reversed the Decision of the Court of Appeals and reinstated the Judgment of the Regional Trial Court with modification. The Court held that the 1962 Deed of Sale was null and void ab initio. The contract was executed in violation of Section 145 of the Administrative Code for Mindanao and Sulu, which required such contracts to be previously approved by the provincial governor, and Section 120 of the Public Land Act (Commonwealth Act No. 141), as amended by Republic Act No. 3872, which required conveyances by illiterate non-Christians to be approved by the Chairman of the Commission on National Integration. The petitioner, being illiterate, did not have the required approval. The Court ruled that contracts executed in violation of such mandatory and prohibitory laws are void. The defense of laches cannot be invoked to validate a void contract. The Court modified the RTC decision by deleting the awards for the lot’s value, back rentals, moral and exemplary damages, and attorney’s fees, as the nullity of the contract results in mutual restitution. The parties are to be restored to their original positions: the respondent must return possession of the property to the petitioner, and the petitioner must return the purchase price of P3,000.00 to the respondent.