G.R. No. L-6088 - De Los Santos vs. Roman Catholic Church of Midsayap

On December 9, 1938, a homestead patent covering a tract of land in the municipality of Midsayap, Cotabato was issued to Julio Sarabillo.
On March 17, 1939, Original Certificate of Title No. RP-269 (1674) was issued in favor of Julio Sarabillo.

On December 31, 1940, Julio Sarabillo sold two hectares of his homestead land to the Roman Catholic Church of Midsayap for the sum of P800.
The deed of sale expressly stipulated that the sale was subject to the approval of the Secretary of Agriculture and Natural Resources and that the land was to be used solely for educational and charitable purposes.
In December 1947, a request for such approval was submitted by Rev. Fr. Gerard Mongeau on behalf of the Church.
The necessary approval was eventually granted on March 26, 1949.
Subsequently, on March 29, 1950, the deed of sale was registered in the Office of the Register of Deeds for Cotabato, with the deed duly annotated on the back of the homestead title.

Julio Sarabillo later died intestate, and Catalina de los Santos was appointed administratrix of his estate.
During her administration, Catalina discovered that the sale of the land to the Roman Catholic Church violated section 118 of Commonwealth Act No. 141, as it was executed before the lapse of the mandatory five-year period from the issuance of the patent.

Acting on her discovery, the administratrix instituted an action in the Court of First Instance of Cotabato, seeking a declaration that the sale was null and void.
Defendants (the Roman Catholic Church along with its representatives) maintained that the sale was legal and valid given:

The sale was executed for educational and charitable purposes.
The transaction received the necessary approval from the Secretary of Agriculture and Natural Resources.
Even if declared null and void, the immediate effect would be the reversion of the property to the State, not to the administratrix.

Defendants also invoked the defense of pari delicto, arguing that both parties were equally culpable in the improper transaction.

As a preliminary measure, the court directed an appraisal of the improvements on the land.
The clerk of court, assisted by representatives from both parties, reported a value of P601 for the improvements.

Based on the pleadings and the appraisal report, the trial court declared the sale null and void.
The court ordered the administratrix to reimburse the defendants the P800 paid as purchase price plus P601 as the value of the improvements, with interest accruing at 6% per annum from the date of the complaint.
The court also ordered the defendants to vacate the land.
Dissatisfied, the case was brought to the Court of Appeals, and later certified to the Supreme Court for questions of law.

Whether the sale of the two hectares of homestead land, executed on December 31, 1940, is valid given that it was made within five years from the issuance of the patent.
Whether the requirement imposed by section 118 of Commonwealth Act No. 141 (prohibiting sale or encumbrance within five years of the patent grant) was violated.

Whether the subsequent approval granted by the Secretary of Agriculture and Natural Resources in 1949, after the required five-year period, can cure the earlier statutory defect.
Whether such approval has any curative effect on a sale made in violation of the mandatory provision.

Whether the defense of pari delicto, as invoked by the defendants, precludes the administratrix from seeking nullification of the sale.
How the application of pari delicto interacts with the public policy underlying the homestead law.

Whether, upon nullification, the immediate effect is that the land reverts to the State as provided under Section 124 of the Public Land Act.
The determination of which party is entitled to possession of the land pending the State’s action.