Source: http://lawlibrary.chanrobles.com/index.php?option=com_content&amp;view=article&amp;id=50619:gr-150824-2008&amp;catid=1502&amp;Itemid=566
Timestamp: 2019-04-19 18:14:56+00:00

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LAND BANK OF THE PHILIPPINES, Petitioner, v. REPUBLIC OF THE PHILIPPINES, represented by the Director of Lands, Respondent.
It is well settled that a certificate of title is void when it covers property of public domain classified as forest, timber or mineral lands. Any title issued covering non-disposable lots even in the hands of an alleged innocent purchaser for value shall be cancelled.2 The rule must stand no matter how harsh it may seem. Dura lex sed lex.3 Ang batas ay maaaring mahigpit subalit ito ang mananaig.
Before Us is a Petition for Review on Certiorari under Rule 45 filed by petitioner Land Bank of the Philippines (LBP) appealing the: (1) Decision4 of the Court of Appeals (CA), dated August 23, 2001, in CA-G.R. CV No. 64121 entitled "Republic of the Philippines, represented by the Director of Lands v. Angelito Bugayong, et al."; and (2) Resolution5 of the same Court, dated November 12, 2001, denying LBP's motion for reconsideration.
The land was initially subdivided into four lots, viz.: Lot Nos. 4159-A, 4159-B, 4159-C and 4159-D under Subdivision Plan (LRC) Psd-139511 approved by the Commissioner of Land Registration on April 23, 1971.10 Consequently, OCT No. P-2823 was cancelled and new Transfer Certificates of Title (TCTs) replaced it, all in the name of Bugayong.
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 complaint19 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 filed against Bugayong and other present owners and mortgagees of the land, such as Lourdes Farms, Inc. and the latter's mortgagee, petitioner LBP.
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.
It is clear that the mother Title, OCT P-2823 in the name of defendant Bugayong was issued at a time when the area was not yet released by the Bureau of Forestry to the Bureau of Lands.
1.A. TCT No. 57348 in the name of defendant Lourdes Farms mortgaged to defendant Land Bank.
B. TCT No. 84749 in the name of defendants Johnny and Catherine Du mortgaged to defendant Development Bank of the Philippines.
C. TCT No. 37386 in the name of defendants spouses Pahamotang mortgaged to defendant Lourdes Du mortgaged with defendant Allied Bank.
E. TCT Nos. 68154 and 32768 in the names of defendants/spouses Maglana Santamaria.
2. All private defendants shall give to the Davao City Register of Deeds their titles, who shall cancel the Transfer Certificate of Titles mentioned in paragraph number one.
3. Lot No. 4159, Plan SI (VIII-1) 328-D covered by O.C.T. P-2823 is hereby REVERTED to the mass of public domain.
Disagreeing with the RTC judgment, LBP appealed to the CA on October 31, 1996. It asserted in its appellant's brief28 that it validly acquired mortgage interest or lien over the subject property because it was an innocent mortgagee for value and in good faith.29 It also emphasized that it is a government financial institution.
Forest lands or forest reserves, are incapable of private appropriation and possession thereof, however long, cannot convert them into private properties. This is premised on the Regalian Doctrine enshrined not only in the 1935 and 1973 Constitutions but also in the 1987 Constitution. Our Supreme Court has upheld this rule consistently even in earlier cases. It has also been held that whatever possession of the land prior to the date of release of forested land as alienable and disposable cannot be credited to the 30-year requirement (now, since June 12, 1945) under Section 48(b) of the Public Land Act. It is only from that date that the period of occupancy for purposes of confirmation of imperfect or incomplete title may be counted. Since the subject land was declared as alienable and disposable only on March 25, 1981, appellants and their predecessors-in-interest could not claim any vested right thereon prior to its release from public forest zone.
The inclusion of forest land in a title, "whether title be issued during the Spanish regime or under the Torrens system, nullifies the title." It is, of course, a well-recognized principle that the Director of Lands (now Land Management Bureau) is bereft of any jurisdiction over public forest or any lands not capable of registration. It is the Bureau of Forestry that has jurisdiction and authority over the demarcation, protection, management, reproduction, occupancy and use of all public forests and forest reservations and over the granting of licenses for the taking of products therefrom. And where the land applied for is part of the public forest, the land registration court acquires no jurisdiction over the land, which is not yet alienable and disposable.
When LBP's motion for reconsideration was denied, it resorted to the petition at bar.
THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE PETITIONER LAND BANK OF THE PHILIPPINES' MORTGAGE RIGHT AND INTEREST AS AN INNOCENT PURCHASER (MORTGAGEE) FOR VALUE AND IN GOOD FAITH OVER THE SUBJECT LAND COVERED BY TCT NO. T-57348 IS VALID AND SUBSISTING IN ACCORDANCE WITH THE LAW AND EXISTING JURISPRUDENCE IN OUR COUNTRY.
THE COURT OF APPEALS ERRED IN NOT FINDING PETITIONER LAND BANK OF THE PHILIPPINES' MORTGAGE RIGHT AND INTEREST OVER THE SUBJECT LAND AS VALID AND SUBSISTING UNDER THE CONSTITUTIONAL GUARANTEE OF NON-IMPAIRMENT OF OBLIGATION OF CONTRACTS.
interest over the land covered by TCT No. T-57348.
Despite these established facts, LBP argues that its alleged interest as mortgagee of the subject land covered by TCT No. T-57348 must be respected. It avers that TCT No. T-57348 is a Torrens title which has no written indications of defect or vice affecting the ownership of Lourdes Farms, Inc. Hence, it posits that it was not and could not have been required to explore or go beyond what the title indicates or to search for defects not indicated in it.
The contention that LBP has an interest over the subject land as a mortgagee has no merit. The mortgagor, Lourdes Farms, Inc. from which LBP supposedly obtained its alleged interest has never been the owner of the mortgaged land. Acquisition of the subject land by Lourdes Farms, Inc. is legally impossible as the land was released as alienable and disposable only on March 25, 1981. Even at present, no one could have possessed the same under a claim of ownership for the period of thirty (30) years required under Section 48(b) of Commonwealth Act No. 141, as amended.43 Hence, LBP acquired no rights over the land.
While it is true that the mortgagees, having entered into a contract with petitioner as mortgagor, are estopped from questioning the latter's ownership of the mortgaged property and his concomitant capacity to alienate or encumber the same, it must be considered that, in the first place, petitioner did not possess such capacity to encumber the land at the time for the stark reason that it had been classified as a forest land and remained a part of the patrimonial property of the State. Assuming, without admitting, that the mortgagees cannot subsequently question the fact of ownership of petitioner after having dealt with him in that capacity, still, petitioner was never vested with the proprietary power to encumber the property. In fact, even if the mortgagees continued to acknowledge petitioner as the owner of the disputed land, in the eyes of the law, the latter can never be presumed to be owner.
On September 22, 1969, Angelito C. Bugayong was issued a sales patent covering a 41,276 square meter parcel of land in Bocana, Barrio Kabacan, Davao City by the Bureau of Lands. On the basis of the sales patent, the Register of Deeds of Davao City issued OCT No. P-2823 to Bugayong. Bugayong later subdivided the land into four lots, one of which (Lot No. 4159-B covered by TCT No. T-32770) was sold by him to the spouses Reynaldo Rogacion and Corazon Pahamotang. After obtaining TCT No. T-37786 in their names, the spouses mortgaged the lot to the Philippine National Bank (PNB). As they defaulted in the payment of their loan, the PNB foreclosed the property and purchased it at the foreclosure sale as the highest bidder. Eventually, the PNB consolidated its title.
Sometime in 1981, upon the petition of the residents of the land, the Bureau of Lands conducted an investigation into the sales patent issued in favor of Angelito C. Bugayong and found the sales patent to have been illegally issued because (1) the land was released as alienable and disposable only on March 25, 1981; previous to that, the land was within the forest zone; (2) the land is covered by sea water during high tide; and (3) the patentee, Angelito C. Bugayong, had never been in actual possession of the land.
Based on this investigation, the government instituted the present suit in 1987 for cancellation of title/patent and reversion of the parcel of land against Angelito C. Bugayong, the Rogacion spouses, and the PNB, among others.
On July 6, 1996, the trial court rendered a decision declaring OCT No. P-2823 and all titles derived therefrom null and void and ordering reversion of the subject property to the mass of the public domain. On appeal, the Court of Appeals affirmed the trial court's decision. Hence, this petition.
First. Petitioner contends that it had a right to rely on TCT No. T-37786 showing the mortgagors Reynaldo Rogacion and Corazon Pahamotang's ownership of the property.
The contention is without merit. It is well settled that a certificate of title is void when it covers property of public domain classified as forest or timber or mineral lands. Any title issued covering non-disposable lots even in the hands of an alleged innocent purchaser for value shall be cancelled (Republic v. Reyes, 155 SCRA 313 (1987)).
(Republic v. Court of Appeals, 148 SCRA 480 (1987)). In this case, petitioner does not dispute that its predecessor-in-interest, Angelito C. Bugayong, had the subject property registered in his name when it was forest land. Indeed, even if the subject property had been eventually segregated from the forest zone, neither petitioner nor its predecessors-in-interest could have possessed the same under claim of ownership for the requisite period of thirty (30) years because it was released as alienable and disposable only on March 25, 1981.
When the government is the real party in interest, and is proceeding mainly to assert its own rights and recover its own property, there can be no defense on the ground of laches or limitation x x x.
exercise of police power of the State.
The view this Court takes of the cases at bar is but in adherence to public policy that should be followed with respect to forest lands. Many have written much, and many more have spoken, and quite often, about the pressing need for forest preservation, conservation, protection, development and reforestation. Not without justification. For, forests constitute a vital segment of any country's natural resources. It is of common knowledge by now that absence of the necessary green cover on our lands produces a number of adverse or ill effects of serious proportions. Without the trees, watersheds dry up; rivers and lakes which they supply are emptied of their contents. The fish disappear. Denuded areas become dust bowls. As waterfalls cease to function, so will hydroelectric plants. With the rains, the fertile topsoil is washed away; geological erosion results. With erosion come the dreaded floods that wreak havoc and destruction to property - crops, livestock, houses and highways - not to mention precious human lives. Indeed, the foregoing observations should be written down in a lumberman's decalogue.
Because of the importance of forests to the nation, the State's police power has been wielded to regulate the use and occupancy of forest and forest reserves.
to the RTC for further proceedings.
LBP filed a cross-claim against Lourdes Farms, Inc. before the RTC.58 The cross-claim is for the payment of cross-defendant Lourdes Farms, Inc.'s alleged obligation to LBP or its submission of a substitute collateral security in lieu of the property covered by TCT No. T-57348.
However, the records do not show that Lourdes Farms, Inc. was required by the RTC to file an answer to the cross-claim. Likewise, Lourdes Farms, Inc. was not notified of the proceedings before the CA. It was not also made a party to this petition.
We rule in the negative. It may be true that Lourdes Farms, Inc. still has an obligation to LBP but We cannot make a ruling regarding the same for lack of factual basis. There is no evidence-taking on the cross-claim. No evidence was adduced before the RTC or the CA regarding it. No factual finding or ruling was made by the RTC or the CA about it.
Moreover, the failure to make a ruling on the cross-claim by the RTC was not assigned as an error in LBP's appellant's brief60 before the CA. Hence, the CA cannot be faulted for not making a ruling on it.
Questions that may be decided. - No error which does not affect the jurisdiction over the subject matter or the validity of the judgment appealed from or the proceedings therein will be considered unless stated in the assignment of errors, or closely related to or dependent on an assigned error and properly argued in the brief, save as the court may pass upon plain errors and clerical errors.
Apparently, the cross-claim was taken for granted not only by the RTC but also by LBP. The cross-claim was not included as a subject or issue in the pre-trial order and instead of asking that the same be heard, LBP filed a motion62 to submit the main case for resolution. The main case was thus resolved by the RTC without touching on the merits of the cross-claim.
The CA thus impliedly ruled that LBP's cross-claim should not be included in this case. Instead of making a ruling on the same, it recommended that LBP pursue its claim against Lourdes Farms, Inc.
All told, although the relationship between LBP and Lourdes Farms, Inc. as mortgagee and mortgagor was established, the cross-claim of LBP against Lourdes Farms, Inc. was left unresolved.
WHEREFORE, the appealed Decision of the Court of Appeals is hereby AFFIRMED with the MODIFICATION that the cross-claim of petitioner Land Bank of the Philippines against Lourdes Farms, Inc. is REMANDED to the Regional Trial Court, Branch 15, Davao City, for further proceedings.
1 Gordula v. Court of Appeals, 348 Phil. 670, 684 (1998).
2 Republic v. Reyes, G.R. NOS. L-30263-5, October 30, 1987, 155 SCRA 313, 325; Republic v. Court of Appeals, G.R. No. L-40402, March 16, 1987, 148 SCRA 480, 492.
3 Reyes v. Court of Appeals, G.R. No. 94524, September 10, 1998, 295 SCRA 296, 313.
4 Rollo, pp. 33-40. Penned by Associate Justice Martin S. Villarama, Jr., with Associate Justices Conrado M. Vasquez, Jr. and Eliezer R. de los Santos, concurring.
6 Records, pp. 511-529. Penned by Judge Jesus V. Quitain.
16 Revised Forestry Code of the Philippines.
27 Id. at 528-529; rollo, p. 36.
28 CA rollo, pp. 29-38.
31 Appellants include the mortgagees, namely: Philippine National Bank and petitioner LBP.
35 This is also the contention of the Philippine National Bank.
36 G.R. NOS. L-30263-5, October 30, 1987, 155 SCRA 313.
43 See Zarate v. Director of Lands, G.R. No. 131501, July 14, 2004, 434 SCRA 322, 334, citing Republic v. Court of Appeals, G.R. No. L-56948, September 30, 1987, 154 SCRA 476.
44 349 Phil. 898, 906 (1998).
46 Director of Forest Administration v. Fernandez, G.R. No. 36827, December 10, 1990, 192 SCRA 121, 138, citing Director of Lands v. Court of Appeals, G.R. No. L-50340, December 26, 1984, 133 SCRA 701; Republic v. Court of Appeals, G.R. No. L-56077, February 28, 1985, 135 SCRA 156; Vallarta v. Intermediate Appellate Court, G.R. No. L-74957, June 30, 1987, 151 SCRA 679.
47 Republic v. Reyes, supra note 2.
48 Second Division Resolution dated November 14, 2001.
50 G.R. No. 79582, April 10, 1989, 171 SCRA 721, 734.
51 132 Phil. 637, 669-670 (1968).
52 G.R. No. L-32096, October 24, 1970, 35 SCRA 481.
53 Rubi v. Provincial Board, 39 Phil. 660, 708 (1919).
54 Ynot v. Intermediate Appellate Court, G.R. No. 74457, March 20, 1987, 148 SCRA 659, 670.
57 Reyes v. Court of Appeals, supra note 3.
59 Diokno v. Cacdac, G.R. No. 168475, July 4, 2007, 526 SCRA 440, 460, citing Gerlach v. Reuters Limited Phils., G.R. No. 148542, January 17, 2005, 448 SCRA 535, 544-545.
60 CA rollo, pp. 29-38.
61 421 Phil. 1033, 1043 (2001).
63 CA rollo, p. 187.
64 See Telefunken Semiconductors Employees Union-FFW v. Court of Appeals, G.R. NOS. 143013-14, December 18, 2000, 348 SCRA 565, 580; Cf. Government Service Insurance System v. Commission on Audit, G.R. No. 138381, November 10, 2004, 441 SCRA 532, 544.

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