G.R. No. 213225 - People vs. Comprado y Bronola

Development Bank of the Philippines (DBP), petitioner, executed a "Deed of Absolute Sale" dated July 20, 1981, in favor of spouses Celebrada and Abner Mangubat (respondents) for a parcel of unregistered land (Lot 1, PSU-142380) in Garchitorena, Camarines Sur, containing approximately 55.5057 hectares.
The land was originally owned by Presentacion Cordovez, donated to Luciano Sarmiento in 1937, sold to Pacifico Chica in 1964, and mortgaged by Chica to DBP in 1965 for a loan of P6,000.00.

Chica defaulted on his loan payments; DBP foreclosed extrajudicially and acquired the land via auction on September 9, 1970.
A certificate of sale was issued to DBP and entered into the Book of Unregistered Property. Chica failed to redeem, consolidating DBP’s ownership.

On October 14, 1980, the Mangubats offered to purchase the property for P18,599.99; DBP counter-offered P25,500.00, accepted by the Mangubats.
Payment was to be made within six months as a cash condition. The Deed of Absolute Sale was executed on July 20, 1981, including a waiver of DBP’s warranty against eviction.

Mangubats sought a tree planting loan from DBP, which required a certification from the Bureau of Forest Development that the land was alienable and disposable.
The Bureau issued a certificate on October 29, 1981, stating the land was classified as timberland and thus not subject to disposition.

Despite the classification, DBP approved a P140,000.00 industrial tree planting loan to the Mangubats, with the understanding DBP would assist in releasing the land from the Ministry of Natural Resources.
On March 17, 1982, the Mangubats executed a real estate mortgage on the land to secure the loan. The loan proceeds were released in installments amounting to P118,540.00.
Further release of the remaining loan amount was withheld, apparently due to non-release of the land by the Ministry.

On July 7, 1983, the Mangubats filed a complaint for annulment of the deed of sale on grounds that the land was timberland and inalienable, and that DBP acted fraudulently by misrepresenting ownership and including a waiver of warranty.
DBP denied fraud, asserting absolute ownership by virtue of acquisition at foreclosure sale and knowledge by the Mangubats of the nature of DBP’s title. DBP also claimed the annulment would prejudice it as the loan proceeds had been partially released and sought payment of the loan in case of invalidity.
Trial Court ruling (May 25, 1990) annulled the deed, ordered DBP to return the purchase price plus interest, reimburse taxes and relocation survey costs, and awarded damages and attorneys’ fees to the Mangubats.

The Court of Appeals affirmed the annulment and return of purchase price but deleted the awards for damages, attorney's fees, litigation expenses, and costs.
The Court of Appeals denied DBP’s motion for reconsideration on April 7, 1993.

Whether the Mangubats should be ordered to pay the loan obligation of P118,540.00 under the mortgage contract.
Whether DBP should reimburse the Mangubats the purchase price and P11,980.00 for taxes and relocation survey expenses.

Whether the Mangubats should be held liable to pay the loan obligation secured by the mortgage over the property despite annulment of the deed of sale.

Whether DBP is obligated to reimburse the Mangubats the purchase price paid for the land and the amount claimed for taxes and relocation survey expenses.