G.R. No. 150824 - LAND BANK OF THE PHILIPPINES, VS. REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE DIRECTOR OF LANDS. D E C I S I O N - Supreme Court E-Library

Ruling

Accordingly, said TCT was cancelled and replaced by TCT No. T-42166 in the name of spouses Du. [11] Afterwards, the spouses Du further caused the subdivision of the land covered by their TCT No. T-42166 into two (2) lots. They sold one of said lots to spouses Felix and Guadalupe Dayola, who were issued TCT No. T-45586. The other remaining lot, registered under TCT No. T-45587, was retained by and registered in the names of spouses Du. [12] Subsequently, Du spouses TCT No. T-45587 was cancelled and was replaced by TCT No. T-57348 registered in the name of Lourdes Farms, Inc. subject of this case. [13] Lourdes Farms, Inc. mortgaged this property to petitioner LBP on April 14, 1980. [14] The validity of OCT No. P-2823, as well as its derivative TCTs, remained undisturbed until some residents of the land it covered, particularly those along Bolton Diversion Road, filed a formal petition before the Bureau of Lands on July 15, 1981. [15] Investigation and ocular inspection were conducted by the Bureau of Lands to check the legitimacy of OCT No. P-2823. They found out that: (1) at the time Sales Patent No. 4576 was issued to Bugayong, the land it covered was still within the forest zone, classified under Project No. 1, LC-47 dated August 6, 1923; it was released as alienable and disposable land only on March 25, 1981, pursuant to BFD Administrative Order No. 4-1585 and to the provisions of Section 13, Presidential Decree (P.D.) No. 705; [16] (2) the land was marshy and covered by sea water during high tide; and (3) Bugayong was never in actual possession of the land. [17] In view of the foregoing findings, the Bureau of Lands resolved that the sales patent in favor of Bugayong was improperly and illegally issued and that the Director of Lands had no jurisdiction to dispose of the subject land. [18] Upon recommendation of the Bureau of Lands, the Republic of the Philippines represented by the Director of Lands, through the Office of the Solicitor General (OSG), instituted a complaint [19] before the RTC in Davao, Branch 15, for the cancellation of title/patent and reversion of the land covered by OCT No. P-2823 into the mass of public domain. The complaint, as amended, [20] was file against Bugayong and other present owners and mortgagees of the land, such as Lourdes Farms, Inc. and the latters mortgagee, petitioner LBP. In its answer with cross-claim, [21] LBP claimed that it is a mortgagee in good faith and for value. It prayed that should TCT No. T-57348 of Lourdes Farms, Inc. be annulled by the court, Lourdes Farms, Inc. should be ordered to pay its outstanding obligations to LBP or to provide a ne collateral security. [22] RTC Judgment Eventually, the RTC rendered its judgment [23] on July 9, 1996 determining that: x x x The mistakes and the flaws in the granting of the title were made by the Bureau of Lands personnel more particularly the Director of Lands who is the Officer charged with the following the provisions of the Public Land Law. x x x.