SECOND DIVISION

[G.R. No. 98045. June 26, 1996]

DESAMPARADO VDA. DE NAZARENO and LETICIA NAZARENO TAPIA, petitioners, vs. THE COURT OF APPEALS, MR.
& MRS. JOSE SALASALAN, MR. & MRS. LEO RABAYA, AVELINO LABIS, HON. ROBERTO G. HILARIO, ROLLEO I.
IGNACIO, ALBERTO M. GILLERA and HON. ABELARDO G. PALAD, JR., in their official and/or private capacities,
respondents.
SYLLABUS
1. CIVIL LAW; OWNERSHIP; RIGHTS OF ACCESSION WITH RESPECT TO IMMOVABLE PROPERTY; ARTICLE 457;
REQUISITES.- In the case of Meneses vs. CA, this Court held that accretion, as a mode of acquiring property under
Art. 457 of the Civil Code, requires the concurrence of these requisites: (1) that the deposition of soil or sediment be
gradual and imperceptible; (2) that it be the result of the action of the waters of the river (or sea); and (3) that the
land where accretion takes place is adjacent to the banks of rivers (or the sea coast). These are called the rules on
alluvion which if present in a case, give to the owners of lands adjoining the banks of rivers or streams any accretion
gradually received from the effects of the current of waters.
2. ID.; ID.; ID.; ID.; ID.; NOT PRESENT IN CASE AT BAR.- Where the accretion was formed by the dumping of
boulders, soil and other filling materials on portions of the Balacanas Creek and the Cagayan River bounding
petitioner's land, it cannot be claimed that the accumulation was gradual and imperceptible, resulting from the
action of the waters or the current of the creek and the river. In Hilario vs. City of Manila, this Court held that the
word current indicates the participation of the body of water in the ebb and flow of waters due to high and low tide.
Not having met the first and second requirements of the rules of alluvion, petitioners cannot claim the rights of a
riparian owner.
3. ID.; ID.; ID.; ID.; ID.; THAT DEPOSIT IS DUE TO THE CURRENT OF THE RIVER, MANDATORY.- In Republic vs. CA,
this Court ruled that the requirement that the deposit should be due to the effect of the current of the river is
indispensable. This excludes from Art. 457 of the Civil Code all deposits caused by human intervention. Putting it
differently, alluvion must be the exclusive work of nature. Thus, in Tiongco vs. Director of Lands, et al., where the
land was not formed solely by the natural effect of the water current of the river bordering said land but is also the
consequence of the direct and deliberate intervention of man, it was deemed a man-made accretion and, as such,
part of the public domain. In the case at bar, the subject land was the direct result of the dumping of sawdust by the
Sun Valley Lumber Co. consequent to its sawmill operations.
4. ID.; PUBLIC LANDS; FINDINGS AS SUCH BY THE BUREAU OF LANDS, RESPECTED.- The mere filing of the
Miscellaneous Sales Application constituted an admission that the land being applied for was public land, having
been the subject of a Survey Plan wherein said land was described as an orchard. Furthermore, the Bureau of Lands
classified the subject land as an accretion area which was formed by deposits of sawdust in the Balacanas Creek and
the Cagayan river, in accordance with the ocular inspection conducted by the Bureau of Lands. This Court has often
enough held that findings of administrative agencies which have acquired expertise because their jurisdiction is
confined to specific matters are generally accorded not only respect but even finality. Again, when said factual
findings are affirmed by the Court of Appeals, the same are conclusive on the parties and not reviewable by this
Court.
5. ID.; PUBLIC LAND LAW; JURISDICTION OVER PUBLIC LANDS.- Having determined that the subject land is public
land, a fortiori, the Bureau of Lands, as well as the Office of the Secretary of Agriculture and Natural Resources have
jurisdiction over the same in accordance with the Public Land Law. Under Sections 3 and 4 thereof, the Director of
Lands has jurisdiction, authority and control over public lands. Here respondent Palad as Director of Lands, is
authorized to exercise executive control over any form of concession, disposition and management of the lands of
the public domain. He may issue decisions and orders as he may see fit under the circumstances as long as they are
based on the findings of fact. In the case of Calibo vs. Ballesteros, this Court held that where, in the disposition of
public lands, the Director of Lands bases his decision on the evidence thus presented, he clearly acts within his
jurisdiction, and if he errs in appraising the evidence, the error is one of judgment, but not an act of grave abuse of
discretion annullable by certiorari.
6. ADMINISTRATIVE LAW; ADMINISTRATIVE REMEDIES; EXHAUSTED IN CASE AT BAR.- The administrative remedies
have been exhausted. Petitioners could not have intended to appeal to respondent Ignacio as an Officer-In-Charge
of the Bureau of Lands. The decision being appealed from was the decision of respondent Hilario who was the
Regional Director of the Bureau of Lands. Said decision was made "for and by authority of the Director of Lands." It
would be incongruous to appeal the decision of the Regional Director of the Bureau of Lands acting for the Director
of the Bureau of Lands to an Officer-In-Charge of the Bureau of Lands. In any case, respondent Ignacio's official
designation was "Undersecretary of the Department of Agriculture and Natural Resources." He was only an "OfficerIn-Charge" of the Bureau of Lands. When he acted on the late Antonio Nazareno's motion for reconsideration by
affirming or adopting respondent Hilario's decision, he was acting on said motion as an Undersecretary on behalf of
the Secretary of the Department. In the case of Hamoy vs. Secretary of Agriculture and Natural Resources, this Court
held that the Undersecretary of Agriculture and Natural Resources may modify, adopt, or set aside the orders or
decisions of the Director of Lands with respect to questions involving public lands under the administration and

control of the Bureau of Lands and the Department of Agriculture and Natural Resources. He cannot, therefore, be
said to have acted beyond the bounds of his jurisdiction under Sections 3, 4 and 5 of Commonwealth Act No. 141.
APPEARANCES OF COUNSEL
Manolo L. Tagarda, Sr. for petitioners.
Arturo R. Legaspi for private respondents.
DECISION
ROMERO, J.:

Petitioners Desamparado Vda. de Nazareno and Leticia Nazareno Tapia challenge the decision of the Court of
Appeals which affirmed the dismissal of petitioners' complaint by the Regional Trial Court of Misamis Oriental,
Branch 22. The complaint was for annulment of the verification, report and recommendation, decision and order of
the Bureau of Lands regarding a parcel of public land.
The only issue involved in this petition is whether or not petitioners exhausted administrative remedies before having
recourse to the courts.
The subject of this controversy is a parcel of land situated in Telegrapo, Puntod, Cagayan de Oro City. Said land was
formed as a result of sawdust dumped into the dried-up Balacanas Creek and along the banks of the Cagayan river.
Sometime in 1979, private respondents Jose Salasalan and Leo Rabaya leased the subject lots on which their houses
stood from one Antonio Nazareno, petitioners' predecessor-in-interest. In the latter part of 1982, private
respondents allegedly stopped paying rentals. As a result, Antonio Nazareno and petitioners filed a case for
ejectment with the Municipal Trial Court of Cagayan de Oro City, Branch 4. A decision was rendered against private
respondents, which decision was affirmed by the Regional Trial Court of Misamis Oriental, Branch 20.
The case was remanded to the municipal trial court for execution of judgment after the same became final and
executory. Private respondents filed a case for annulment of judgment before the Regional Trial Court of Misamis
Oriental, Branch 24 which dismissed the same. Antonio Nazareno and petitioners again moved for execution of
judgment but private respondents filed another case for certiorari with prayer for restraining order and/or writ of
preliminary injunction with the Regional Trial Court of Misamis Oriental, Branch 25 which was likewise dismissed.
The decision of the lower court was finally enforced with the private respondents being ejected from portions of the
subject lots they occupied.
Before he died, Antonio Nazareno caused the approval by the Bureau of Lands of the survey plan designated as Plan
Csd-106-00571 with a view to perfecting his title over the accretion area being claimed by him. Before the approved
survey plan could be released to the applicant, however, it was protested by private respondents before the Bureau
of Lands.
In compliance with the order of respondent District Land Officer Alberto M. Gillera, respondent Land Investigator
Avelino G. Labis conducted an investigation and rendered a report to the Regional Director recommending that
Survey Plan No. MSI-10-06-000571-D (equivalent to Lot No. 36302, Cad. 237) in the name of Antonio Nazareno, be
cancelled and that private respondents be directed to file appropriate public land applications.
Based on said report, respondent Regional Director of the Bureau of Lands Roberto Hilario rendered a decision
ordering the amendment of the survey plan in the name of Antonio Nazareno by segregating therefrom the areas
occupied by the private respondents who, if qualified, may file public land applications covering their respective
portions.
Antonio Nazareno filed a motion for reconsideration with respondent Rolleo Ignacio, Undersecretary of the
Department of Natural Resources and Officer-in-Charge of the Bureau of Lands who denied the motion. Respondent
Director of Lands Abelardo Palad then ordered him to vacate the portions adjudicated to private respondents and
remove whatever improvements they have introduced thereon. He also ordered that private respondents be placed
in possession thereof.
Upon the denial of the late Antonio Nazareno's motion for reconsideration, petitioners Desamparado Vda. de
Nazareno and Leticia Tapia Nazareno, filed a case before the RTC, Branch 22 for annulment of the following: order
of investigation by respondent Gillera, report and recommendation by respondent Labis, decision by respondent
Hilario, order by respondent Ignacio affirming the decision of respondent Hilario and order of execution by
respondent Palad. The RTC dismissed the complaint for failure to exhaust administrative remedies which resulted in
the finality of the administrative decision of the Bureau of Lands.
On appeal, the Court of Appeals affirmed the decision of the RTC dismissing the complaint. Applying Section 4 of
C.A. No. 141, as amended, it contended that the approval of the survey plan belongs exclusively to the Director of
Lands. Hence, factual findings made by the Metropolitan Trial Court respecting the subject land cannot be held to be
controlling as the preparation and approval of said survey plans belong to the Director of Lands and the same shall
be conclusive when approved by the Secretary of Agriculture and Natural Resources.[1]

Furthermore, the appellate court contended that the motion for reconsideration filed by Antonio Nazareno cannot
be considered as an appeal to the Office of the Secretary of Agriculture and Natural Resources, as mandated by C.A.
No. 141 inasmuch as the same had been acted upon by respondent Undersecretary Ignacio in his capacity as Officerin-Charge of the Bureau of Lands and not as Undersecretary acting for the Secretary of Agriculture and Natural
Resources. For the failure of Antonio Nazareno to appeal to the Secretary of Agriculture and Natural Resources, the
present case does not fall within the exception to the doctrine of exhaustion of administrative remedies. It also held
that there was no showing of oppressiveness in the manner in which the orders were issued and executed.
Hence, this petition.
Petitioners assign the following errors:
I. PUBLIC RESPONDENT COURT OF APPEALS IN A WHIMSICAL, ARBITRARY AND CAPRICIOUS MANNER AFFIRMED
THE DECISION OF THE LOWER COURT WHICH IS CONTRARY TO THE PREVAILING FACTS AND THE LAW ON THE
MATTER;
II. PUBLIC RESPONDENT COURT OF APPEALS IN A WHIMSICAL, ARBITRARY AND CAPRICIOUS MANNER AFFIRMED
THE DECISION OF THE LOWER COURT DISMISSING THE ORIGINAL CASE WHICH FAILED TO CONSIDER THAT THE
EXECUTION ORDER OF PUBLIC RESPONDENT ABELARDO G. PALAD, JR., DIRECTOR OF LANDS, MANILA,
PRACTICALLY CHANGED THE DECISION OF PUBLIC RESPONDENT ROBERTO HILARIO, REGIONAL DIRECTOR,
BUREAU OF LANDS, REGION 10, THUS MAKING THE CASE PROPER SUBJECT FOR ANNULMENT WELL WITHIN THE
JURISDICTION OF THE LOWER COURT.
The resolution of the above issues, however, hinges on the question of whether or not the subject land is public
land. Petitioners claim that the subject land is private land being an accretion to his titled property, applying Article
457 of the Civil Code which provides:
"To the owners of lands adjoining the banks of rivers belong the accretion which they gradually receive from the
effects of the current of the waters."

In the case of Meneses v. CA,[2] this Court held that accretion, as a mode of acquiring property under Art. 457 of
the Civil Code, requires the concurrence of these requisites: (1) that the deposition of soil or sediment be gradual
and imperceptible; (2) that it be the result of the action of the waters of the river (or sea); and (3) that the land
where accretion takes place is adjacent to the banks or rivers (or the sea coast). These are called the rules on alluvion
which if present in a case, give to the owners of lands adjoining the banks of rivers or streams any accretion
gradually received from the effects of the current of waters.
For petitioners to insist on the application of these rules on alluvion to their case, the above-mentioned requisites
must be present. However, they admit that the accretion was formed by the dumping of boulders, soil and other
filling materials on portions of the Balacanas Creek and the Cagayan River bounding their land.[3] It cannot be
claimed, therefore, that the accumulation of such boulders, soil and other filling materials was gradual and
imperceptible, resulting from the action of the waters or the current of the Balacanas Creek and the Cagayan River.
In Hilario v. City of Manila,[4] this Court held that the word "current" indicates the participation of the body of water
in the ebb and flow of waters due to high and low tide. Petitioners' submission not having met the first and second
requirements of the rules on alluvion, they cannot claim the rights of a riparian owner.
In any case, this court agrees with private respondents that petitioners are estopped from denying the public
character of the subject land, as well as the jurisdiction of the Bureau of Lands when the late Antonio Nazareno filed
his Miscellaneous Sales Application MSA (G-6) 571.[5] The mere filing of said Application constituted an admission
that the land being applied for was public land, having been the subject of Survey Plan No. MSI-10-06-000571-D
(Equivalent to Lot No. 36302, Cad-237) which was conducted as a consequence of Antonio Nazareno's
Miscellaneous Sales Application wherein said land was described as an orchard. Said description by Antonio
Nazareno was, however, controverted by respondent Labis in his investigation report to respondent Hilario based on
the findings of his ocular inspection that said land actually covers a dry portion of Balacanas Creek and a swampy
portion of Cagayan River. The investigation report also states that except for the swampy portion which is fully
planted to nipa palms, the whole area is fully occupied by a part of a big concrete bodega of petitioners and several
residential houses made of light materials, including those of private respondents which were erected by themselves
sometime in the early part of 1978.[6]
Furthermore, the Bureau of Lands classified the subject land as an accretion area which was formed by deposits of
sawdust in the Balacanas Creek and the Cagayan river, in accordance with the ocular inspection conducted by the
Bureau of Lands.[7] This Court has often enough held that findings of administrative agencies which have acquired
expertise because their jurisdiction is confined to specific matters are generally accorded not only respect but even
finality.[8] Again, when said factual findings are affirmed by the Court of Appeals, the same are conclusive on the
parties and not reviewable by this Court.[9]
It is this Court's irresistible conclusion, therefore, that the accretion was man-made or artificial. In Republic v. CA,
[10] this Court ruled that the requirement that the deposit should be due to the effect of the current of the river is
indispensable. This excludes from Art. 457 of the Civil Code all deposits caused by human intervention. Putting it
differently, alluvion must be the exclusive work of nature. Thus, in Tiongco v. Director of Lands, et al.,[11] where the
land was not formed solely by the natural effect of the water current of the river bordering said land but is also the

consequence of the direct and deliberate intervention of man, it was deemed a man-made accretion and, as such,
part of the public domain.
In the case at bar, the subject land was the direct result of the dumping of sawdust by the Sun Valley Lumber Co.
consequent to its sawmill operations.[12] Even if this Court were to take into consideration petitioners' submission
that the accretion site was the result of the late Antonio Nazareno's labor consisting in the dumping of boulders, soil
and other filling materials into the Balacanas Creek and Cagayan River bounding his land,[13] the same would still
be part of the public domain.
Having determined that the subject land is public land, a fortiori, the Bureau of Lands, as well as the Office of the
Secretary of Agriculture and Natural Resources have Jurisdiction over the same in accordance with the Public Land
Law. Accordingly, the court a quo dismissed petitioners' complaint for non-exhaustion of administrative remedies
which ruling the Court of Appeals affirmed.
However, this Court agrees with petitioners that administrative remedies have been exhausted. Petitioners could not
have intended to appeal to respondent Ignacio as an Officer-in-Charge of the Bureau of Lands. The decision being
appealed from was the decision of respondent Hilario who was the Regional Director of The Bureau of Lands. Said
decision was made "for and by authority of the Director of Lands."[14] It would be incongruous to appeal the
decision of the Regional Director of the Bureau of Lands acting for the Director of the Bureau of Lands to an OfficerIn-Charge of the Bureau of Lands.
In any case, respondent Rolleo Ignacio's official designation was "Undersecretary of the Department of Agriculture
and Natural Resources." He was only an "Officer-In-Charge" of the Bureau of Lands. When he acted on the late
Antonio Nazareno's motion for reconsideration by affirming or adopting respondent's Hilario's decision, he was
acting on said motion as an Undersecretary on behalf of the Secretary of the Department. In the case of Hamoy v.
Secretary of Agriculture and Natural Resources,[15] This Court held that the Undersecretary of Agriculture and
Natural Resources may modify, adopt, or set aside the orders or decisions of the Director of Lands with respect to
questions involving public lands under the administration and control of the Bureau of Lands and the Department of
Agriculture and Natural Resources. He cannot therefore, be said to have acted beyond the bounds of his jurisdiction
under Sections 3, 4 and 5 of Commonwealth Act No. 141.[16]
As borne out by the administrative findings, the controverted land is public land, being an artificial accretion of
sawdust. As such, the Director of Lands has jurisdiction, authority and control over the same, as mandated under
Sections 3 and 4 of the Public Land Law (C.A. No. 141) which states, thus:
"Sec. 3. The Secretary of Agriculture and Natural Resources shall be the exclusive officer charged with carrying out
the provisions of this Act through the Director of Lands who shall act under his immediate control.

Sec. 4. Subject to said control, the Director of Lands shall have direct executive control of the survey, classification,
lease, sale or any other form of concession or disposition and management of the lands of the public domain, and
his decisions as to questions of fact shall be conclusive when approved by the Secretary of Agriculture and Natural
Resources."

In connection with the second issue, petitioners ascribe whim, arbitrariness or capriciousness in the execution order
of public respondent Abelardo G. Palad, the Director of Lands. This Court finds otherwise since said decision was
based on the conclusive finding that the subject land was public land. Thus, this Court agrees with the Court of
Appeals that the Director of Lands acted within his rights when he issued the assailed execution order, as mandated
by the aforecited provisions.
Petitioners' allegation that respondent Palad's execution order directing them to vacate the subject land practically
changed respondent Hilario's decision is baseless. It is incorrect for petitioners to assume that respondent Palad
awarded portions of the subject land to private respondents Salasalans and Rayabas as they had not yet been issued
patents or titles over the subject land. The execution order merely directed the segregation of petitioners' titled lot
from the subject land which was actually being occupied by private respondents before they were ejected from it.
Based on the finding that private respondents were actually in possession or were actually occupying the subject
land instead of petitioners, respondent Palad, being the Director of Lands and in the exercise of this administrative
discretion, directed petitioners to vacate the subject land on the ground that private respondents have a preferential
right, being the occupants thereof.
While private respondents may not have filed their application over the land occupied by them, they nevertheless
filed their protest or opposition to petitioners' Miscellaneous Sales Application, the same being preparatory to the
filing of an application as they were in fact directed to do so. In any case, respondent Palad's execution order merely
implements respondent Hilario's order. It should be noted that petitioners' own application still has to be given due
course.[17]
As Director of lands, respondent Palad is authorized to exercise executive control over any form of concession,
disposition and management of the lands of the public domain.[18] He may issue decisions and orders as he may see
fit under the circumstances as long as they are based on the findings of fact.

In the case of Calibo v. Ballesteros,[19] this Court held that where, in the disposition of public lands, the Director of
Lands bases his decision on the evidence thus presented, he clearly acts within his jurisdiction, and if he errs in
appraising the evidence, the error is one of judgment, but not an act or grave abuse of discretion annullable by
certiorari. Thus, except for the issue of non-exhaustion of administrative remedies, this Court finds no reversible error
nor grave abuse of discretion in the decision of the Court of Appeals.
WHEREFORE, the petition is DISMISSED for lack of merit.
SO ORDERED.
Regalado (Chairman), Puno, Mendoza, and Torres, Jr., JJ., concur.

[1] Decision in CA-G.R. No. 22927 penned by Justice Segundino Chua, pp. 55-56, Rollo.
[2] 246 SCRA 374 (1995).
[3] Petition, p. 16, Rollo.
[4] 19 SCRA 931 (1967).
[5] Memorandum for Private Respondents, p. 118, Rollo.
[6] Annex "C", Investigation Report, p. 30, Rollo.
[7] Appendices "D" and "E", pp. 33-37, Rollo.
[8] COCOFED v. Trajano, 241 SCRA 362 (1995).
[9] Coca-Cola Bottlers Philippines, Inc. v. CA, 229 SCRA 533 (1994).
[10] 132 SCRA 514 (1984).
[11] 16 C.A. Rep. 211.
[12] Investigation Report, Appendix "C", p. 30, Rollo.
[13] Petition, p. 16, Rollo.
[14] Appendix "D", p. 33. Rollo.
[15] 106 Phil. 1046 (1960).
[16] Hamoy v. Secretary of Agriculture and Natural Resources, supra.
[17] Appendix "D", p. 35, Rollo.
[18] Pineda v. CFI of Davao, 1 SCRA 1020.
[19] 15 SCRA 37 (1965).

Republic of the Philippines

Supreme Court
Manila

THIRD DIVISION

HEIRS OF THE LATE JOAQUIN LIMENSE, namely: CONCESA LIMENSE, Surviving Spouse; and DANILO and JOSELITO,
both surnamed Limense, children,
Petitioners,
- versus RITA VDA. DE RAMOS, RESTITUTO RAMOS, VIRGILIO DIAZ, IRENEO RAMOS, BENJAMIN RAMOS, WALDYTRUDES
RAMOS-BASILIO, TRINIDAD RAMOS-BRAVO, PAZ RAMOS-PASCUA, FELICISIMA RAMOS-REYES, and JACINTA
RAMOS,
Respondents.
G.R. No. 152319

Present:
QUISUMBING,* J.,
CARPIO, J., Chairperson,
CHICO-NAZARIO,
PERALTA, and
ABAD,** JJ.

Promulgated:
October 28, 2009
X-- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -X

DECISION

PERALTA, J.,

This is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to annul and set aside the
Decision[1] of the Court of Appeals dated December 20, 2001 in CA-G.R. CV No. 33589 affirming in toto the
Decision[2] of the Regional Trial Court of Manila, Branch 15, dated September 21, 1990 in Civil Case No. 83-16128.

The antecedent facts are as follows:

Dalmacio Lozada was the registered owner of a parcel of land identified as Lot No. 12, Block No. 1074 of the
cadastral survey of the City of Manila covered by Original Certificate of Title (OCT) No. 7036 issued at the City of
Manila on June 14, 1927,[3] containing an area of 873.80 square meters, more or less, located in Beata Street,
Pandacan, Manila.

Dalmacio Lozada subdivided his property into five (5) lots, namely: Lot Nos. 12-A, 12-B, 12-C, 12-D and 12-E.
Through a Deed of Donation dated March 9, 1932,[4] he donated the subdivided lots to his daughters, namely:
Isabel, Salud, Catalina, and Felicidad, all surnamed Lozada. The Deed of Donation was registered with the office of
the Register of Deeds of Manila on March 15, 1932.

Under the said Deed of Donation, the lots were adjudicated to Dalmacio's daughters in the following manner:

a. Lot No. 12-A in favor of Isabel Lozada, married to Isaac Limense;

b. Lot No. 12-B in favor of Catalina Lozada, married to Sotero Natividad;
c. Lot No. 12-C in favor of Catalina Lozada, married to Sotero Natividad; Isabel Lozada, married to Isaac Limense; and
Salud Lozada, married to Francisco Ramos, in equal parts;
d. Lot No. 12-D in favor of Salud Lozada, married to Francisco Ramos; and
e. Lot No. 12-E in favor of Isabel Lozada, married to Isaac Limense, and Felicidad Lozada, married to Galicano
Centeno.

By virtue of the Deed of Donation executed by Dalmacio Lozada, OCT No. 7036, which was registered in his name,
was cancelled and, in lieu thereof, Transfer Certificates of Title (TCTs) bearing Nos. 40041, 40042, 40043, 40044,
and 40045 were issued in favor of the donees, except TCT No. 40044, which remained in his name. These new TCTs
were annotated at the back of OCT No. 7036.[5]

TCT No. 40043, which covered Lot No. 12-C, was issued in the name of its co-owners Catalina Lozada, married to
Sotero Natividad; Isabel Lozada, married to Isaac Limense; and Salud Lozada, married to Francisco Ramos. It covered
an area of 68.60 square meters, more or less, was bounded on the northeast by Lot No. 12-A, on the southwest by
Calle Beata, and on the northwest by Lot No. 12-D of the subdivision plan. In 1932, respondents' predecessor-ininterest constructed their residential building on Lot No. 12-D, adjacent to Lot No. 12-C.

On May 16, 1969, TCT No. 96886[6] was issued in the name of Joaquin Limense covering the very same area of Lot
No. 12-C.

On October 1, 1981, Joaquin Limense secured a building permit for the construction of a hollow block fence on the
boundary line between his aforesaid property and the adjacent parcel of land located at 2759 Beata Street,
Pandacan, Manila, designated as Lot No. 12-D, which was being occupied by respondents. The fence, however,
could not be constructed because a substantial portion of respondents' residential building in Lot No. 12-D
encroached upon portions of Joaquin Limense's property in Lot No. 12-C.

Joaquin Limense demanded the removal of the encroached area; however, respondent ignored both oral and
written demands. The parties failed to amicably settle the differences between them despite referral to the barangay.
Thus, on March 9, 1983, Joaquin Limense, duly represented by his Attorney-in-Fact, Teofista L. Reyes, instituted a
Complaint[7] against respondents before the Regional Trial Court (RTC) of Manila, Branch 15, for removal of
obstruction and damages.

Joaquin Limense prayed that the RTC issue an order directing respondents, jointly and severally, to remove the
portion which illegally encroached upon his property on Lot No. 12-C and, likewise, prayed for the payment of
damages, attorneys fees and costs of suit.

Respondents, on the other hand, averred in their Answer[8] that they were the surviving heirs of Francisco Ramos,
[9] who, during his lifetime, was married to Salud Lozada, one of the daughters of Dalmacio Lozada, the original
owner of Lot No. 12. After subdividing the said lot, Dalmacio Lozada donated Lot No. 12-C in favor of his daughters
Catalina, married to Sotero Natividad; Isabel, married to Isaac Limense; and Salud, married to Francisco Ramos. Being
the surviving heirs of Francisco Ramos, respondents later became co-owners of Lot No. 12-C. Lot No. 12-C has
served as right of way or common alley of all the heirs of Dalmacio Lozada since 1932 up to the present. As a
common alley, it could not be closed or fenced by Joaquin Limense without causing damage and prejudice to
respondents.

After trial on the merits, the RTC rendered a Decision[10] dated September 21, 1990 dismissing the complaint of
Joaquin Limense. It ruled that an apparent easement of right of way existed in favor of respondents. Pertinent
portions of the decision read as follows:

The Court finds that an apparent easement of right of way exists in favor of the defendants under Article 624 of the
Civil Code. It cannot be denied that there is an alley which shows its existence. It is admitted that this alley was
established by the original owner of Lot 12 and that in dividing his property, the alley established by him continued
to be used actively and passively as such. Even when the division of the property occurred, the non-existence of the
easement was not expressed in the corresponding titles nor were the apparent sign of the alley made to disappear
before the issuance of said titles.

The Court also finds that when plaintiff acquired the lot (12-C) which forms the alley, he knew that said lot could
serve no other purpose than as an alley. That is why even after he acquired it in 1969, the lot continued to be used
by defendants and occupants of the other adjoining lots as an alley. The existence of the easement of right of way
was therefore known to plaintiff who must respect the same in spite of the fact that his transfer certificate of title
does not mention the lot of defendants as among those listed therein as entitled to such right of way. It is an
established principle that actual notice or knowledge is as binding as registration.[11]

Aggrieved by said decision, Joaquin Limense filed a notice of appeal. The records of the case were transmitted to the
Court of Appeals (CA). During the pendency of the appeal with the CA, Joaquin Limense died in 1999.[12]

The CA, Seventh Division, in CA-G.R. CV No. 33589, in its Decision[13] dated December 20, 2001 dismissed the
appeal and affirmed in toto the decision of the RTC.

Frustrated by this turn of events, petitioners, as surviving heirs of Joaquin Limense, elevated the case to this Court via
a Petition for Review on Certiorari[14] raising the following issues:

1.
DID THE HONORABLE COURT OF APPEALS COMMIT A GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK
OF JURISDICTION, IN HOLDING, LIKE THE TRIAL COURT DID, THAT RESPONDENTS' LOT 12-D HAS AN EASEMENT OF
RIGHT OF WAY OVER JOAQUIN LIMENSE'S LOT 12-C?

2.
DID THE HONORABLE COURT OF APPEALS COMMIT A GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK
OF JURISDICTION, IN FAILING TO HOLD, LIKE THE TRIAL COURT DID, THAT THE PROTRUDING PORTIONS OF
RESPONDENTS' HOUSE ON LOT 12-D EXTENDING INTO JOAQUIN LIMENSE'S LOT 12-C CONSTITUTE A NUISANCE
AND, AS SUCH, SHOULD BE REMOVED?

Petitioners aver that the CA erred in ruling that since Lot No. 12-C was covered by two TCT's, i.e., TCT Nos. 40043
and 96886, and there was no evidence on record to show how Joaquin Limense was able to secure another title
over an already titled property, then one of these titles must be of dubious origin. According to the CA, TCT No.
96886, issued in the name of Joaquin Limense, was spurious because the Lozada sisters never disposed of the said
property covered by TCT No. 40043. The CA further ruled that a co-ownership existed over Lot No. 12-C between
petitioners and respondents. Petitioners countered that TCT No. 96886, being the only and best legitimate proof of
ownership over Lot No. 12-C, must prevail over TCT No. 40043.

Respondents allege that it was possible that TCT No. 96886, in the name of Joaquin Limense, was obtained thru
fraud, misrepresentation or falsification of documents because the donees of said property could not possibly
execute any valid transfer of title to Joaquin Limense, as they were already dead prior to the issuance of TCT No.
96886 in 1969. Respondents further allege that petitioners failed to produce proof substantiating the issuance of
TCT No. 96886 in the name of Joaquin Limense.

Apparently, respondents are questioning the legality of TCT No. 96886, an issue that this Court cannot pass upon in
the present case. It is a rule that the validity of a torrens title cannot be assailed collaterally.[15] Section 48 of
Presidential Decree (PD) No. 1529 provides that:

[a] certificate of title shall not be subject to collateral attack. It cannot be altered, modified, or cancelled except in a
direct proceeding in accordance with law.

In the case at bar, the action filed before the RTC against respondents was an action for removal of obstruction and
damages. Respondents raised the defense that Joaquin Limense's title could have been obtained through fraud and
misrepresentation in the trial proceedings before the RTC. Such defense is in the nature of a collateral attack, which
is not allowed by law.

Further, it has been held that a certificate of title, once registered, should not thereafter be impugned, altered,
changed, modified, enlarged or diminished, except in a direct proceeding permitted by law. Otherwise, the reliance
on registered titles would be lost. The title became indefeasible and incontrovertible after the lapse of one year from
the time of its registration and issuance. Section 32 of PD 1529 provides that upon the expiration of said period of
one year, the decree of registration and the certificate of title shall become incontrovertible. Any person aggrieved by
such decree of registration in any case may pursue his remedy by action for damages against the applicant or other
persons responsible for the fraud.[16] It has, therefore, become an ancient rule that the issue on the validity of title,
i.e., whether or not it was fraudulently issued, can only be raised in an action expressly instituted for that purpose.
[17] In the present case, TCT No. 96886 was registered in 1969 and respondents never instituted any direct
proceeding or action to assail Joaquin Limense's title.

Additionally, an examination of TCT No. 40043 would readily show that there is an annotation that it has been
CANCELLED.[18] A reading of TCT No. 96886 would also reveal that said title is a transfer from TCT No. 48866[19]
and not TCT 40043. Thus, it is possible that there was a series of transfers effected from TCT No. 40043 prior to the
issuance of TCT No. 96886. Hence, respondents' position that the issuance of TCT No. 96886 in the name of Joaquin
Limense is impossible, because the registered owners of TCT No. 40043 were already dead prior to 1969 and could
not have transferred the property to Joaquin Limense, cannot be taken as proof that TCT No. 96886 was obtained
through fraud, misrepresentation or falsification of documents.

Findings of fact of the CA, although generally deemed conclusive, may admit review by this Court if the CA failed to
notice certain relevant facts that, if properly considered, would justify a different conclusion, and if the judgment of
the CA is premised on a misapprehension of facts.[20] As with the present case, the CA's observation that TCT No.
96886 is of dubious origin, as TCT No. 40043 does not appear to have been disposed of by Catalina, Isabel and
Salud Lozada, is improper and constitutes an indirect attack on TCT No. 96886. As we see it, TCT No. 96886, at
present, is the best proof of Joaquin Limenses ownership over Lot No. 12-C. Thus, the CA erred in ruling that
respondents and petitioners co-owned Lot No. 12-C, as said lot is now registered exclusively in the name of Joaquin
Limense.

Due to the foregoing, Joaquin Limense, as the registered owner of Lot 12-C, and his successors-in-interest, may
enclose or fence his land or tenements by means of walls, ditches, live or dead hedges, or by any other means
without detriment to servitudes constituted thereon.[21]

However, although the owner of the property has the right to enclose or fence his property, he must respect
servitudes constituted thereon. The question now is whether respondents are entitled to an easement of right of
way.

Petitioners contend that respondents are not entitled to an easement of right of way over Lot No. 12-C, because
their Lot No. 12-D is not duly annotated at the back of TCT No. 96886 which would entitle them to enjoy the
easement, unlike Lot Nos. 12-A-1, 12-A-2, 12-A-3, 12-A-4, 12-A-5, and 12-A-6. Respondents, on the other hand,
allege that they are entitled to an easement of right of way over Lot No. 12-C, which has been continuously used as
an alley by the heirs of Dalmacio Lozada, the residents in the area and the public in general from 1932 up to the
present. Since petitioners are fully aware of the long existence of the said alley or easement of right of way, they are
bound to respect the same.

As defined, an easement is a real right on another's property, corporeal and immovable, whereby the owner of the
latter must refrain from doing or allowing somebody else to do or something to be done on his property, for the
benefit of another person or tenement.[22]

Easements may be continuous or discontinuous, apparent or non-apparent.

Continuous easements are those the use of which is or may be incessant, without the intervention of any act of man.
Discontinuous easements are those which are used at intervals and depend upon the acts of man. Apparent
easements are those which are made known and are continually kept in view by external signs that reveal the use
and enjoyment of the same. Non-apparent easements are those which show no external indication of their
existence.[23]

In the present case, the easement of right of way is discontinuous and apparent. It is discontinuous, as the use
depends upon the acts of respondents and other persons passing through the property. Being an alley that shows a
permanent path going to and from Beata Street, the same is apparent.

Being a discontinuous and apparent easement, the same can be acquired only by virtue of a title.[24]

In the case at bar, TCT No. 96886, issued in the name of Joaquin Limense, does not contain any annotation that Lot
No. 12-D was given an easement of right of way over Lot No. 12-C. However, Joaquin Limense and his successors-ininterests are fully aware that Lot No. 12-C has been continuously used and utilized as an alley by respondents and
residents in the area for a long period of time.
Joaquin Limense's Attorney-in-Fact, Teofista L. Reyes, testified that respondents and several other residents in the
area have been using the alley to reach Beata Street since 1932. Thus:

Atty. Manuel B. Tomacruz:

Q: Mrs. Witness, by virtue of that Deed of Donation you claim that titles were issued to the children of Dalmacio
Lozada namely Salud Lozada, Catalina Lozada and Isabel Lozada, is that right?
A: Yes, sir.

Q: And after the said property was adjudicated to his said children the latter constructed their houses on their lots.
A: Yes, sir.

Q: As a matter of fact, the herein defendants have constructed their houses on the premises alloted to them since
the year 1932?
A: Yes, sir, they were able to construct their house fronting Beata Street.

Q: And that house they have constructed on their lot in 1932 is still existing today?
A: Yes, sir and they still used the alley in question and they are supposed to use Beata Street but they are not using
Beata Street.

Q: They are using the alley?

A: Yes, sir, they are using the alley and they do not pass through Beata Street.

Q: And they have been using the alley since 1932 up to the present?
A: Yes, sir they have been using the alley since that time. That was their mistake and they should be using Beata
Street because they are fronting Beata Strret.

Q: As a matter of fact, it is not only herein defendants who have been using that alley since 1932 up to the present?
A: Yes, sir they are using the alley up to now.

Q: As a matter of fact, in this picture marked as Exh. C-1 the alley is very apparent. This is the alley?
A: Yes, sir.

Q: And there are houses on either side of this alley?

A: Yes, sir.

Q: As a matter of fact, all the residents on either side of the alley are passing through this alley?
A: Yes, sir, because the others have permit to use this alley and they are now allowed to use the alley but the
Ramos's family are now [not] allowed to use this alley.[25]

In Mendoza v. Rosel,[26] this Court held that:

Petitioners claim that inasmuch as their transfer certificates of title do not mention any lien or encumbrance on their
lots, they are purchasers in good faith and for value, and as such have a right to demand from respondents some
payment for the use of the alley. However, the Court of Appeals found, as a fact, that when respondents acquired
the two lots which form the alley, they knew that said lots could serve no other purpose than as an alley. The
existence of the easement of right of way was therefore known to petitioners who must respect the same, in spite of
the fact that their transfer certificates of title do not mention any burden or easement. It is an established principle
that actual notice or knowledge is as binding as registration.
Every buyer of a registered land who takes a certificate of title for value and in good faith shall hold the same free of
all encumbrances except those noted on said certificate. It has been held, however, that where the party has
knowledge of a prior existing interest that was unregistered at the time he acquired a right to the same land, his
knowledge of that prior unregistered interest has the effect of registration as to him.[27]

In the case at bar, Lot No. 12-C has been used as an alley ever since it was donated by Dalmacio Lozada to his heirs.
It is undisputed that prior to and after the registration of TCT No. 96886, Lot No. 12-C has served as a right of way in
favor of respondents and the public in general. We quote from the RTC's decision:

x x x It cannot be denied that there is an alley which shows its existence. It is admitted that this alley was established
by the original owner of Lot 12 and that in dividing his property the alley established by him continued to be used
actively and passively as such. Even when the division of the property occurred, the non-existence of the easement
was not expressed in the corresponding titles nor were the apparent sign of the alley made to disappear before the
issuance of said titles.

The Court also finds that when plaintiff acquired the lot (12-C) which forms the alley, he knew that said lot could
serve no other purpose than as an alley. That is why even after he acquired it in 1969 the lot continued to be used by
defendants and occupants of the other adjoining lots as an alley. x x x[28]

Thus, petitioners are bound by the easement of right of way over Lot No. 12-C, even though no registration of the
servitude has been made on TCT No. 96886.

However, respondents right to have access to the property of petitioners does not include the right to continually
encroach upon the latters property. It is not disputed that portions of respondents' house on Lot No. 12-D encroach
upon Lot No. 12-C. Geodetic Engineer Jose Agres, Jr. testified on the encroachment of respondents' house on Lot
No. 12-C, which he surveyed.[29] In order to settle the rights of the parties relative to the encroachment, We should
determine whether respondents were builders in good faith.

Good faith is an intangible and abstract quality with no technical meaning or statutory definition; and it
encompasses, among other things, an honest belief, the absence of malice and the absence of a design to defraud
or to seek an unconscionable advantage. An individuals personal good faith is a concept of his own mind and,
therefore, may not conclusively be determined by his protestations alone. It implies honesty of intention, and
freedom from knowledge of circumstances which ought to put the holder upon inquiry. The essence of good faith
lies in an honest belief in the validity of ones right, ignorance of a superior claim, and absence of intention to

overreach another. Applied to possession, one is considered in good faith if he is not aware that there exists in his
title or mode of acquisition any flaw which invalidates it.[30]

Good faith is always presumed, and upon him who alleges bad faith on the part of the possessor rests the burden of
proof.[31] It is a matter of record that respondents' predecessor-in-interest constructed their residential building on
Lot No. 12-D, adjacent to Lot No. 12-C, in 1932.[32] Respondents' predecessor-in-interest owned the 1/3 portion of
Lot No. 12-C at the time the property was donated to them by Dalmacio Lozada in 1932. The Deed of Donation
executed by the late Dalmacio Lozada, dated March 9, 1932, specifically provides that:

I hereby grant, cede and donate in favor of Catalina Lozada married to Sotero Natividad, Isabel Lozada married to
Isaac Simense and Salud Lozada married to Francisco Ramos, all Filipinos, of legal age, the parcel of land known as
Lot No. 12-C, in equal parts.[33]

The portions of Lot No. 12-D, particularly the overhang, covering 1 meter in width and 17 meters in length; the
stairs; and the concrete structures are all within the 1/3 share alloted to them by their donor Dalmacio Lozada and,
hence, there was absence of a showing that respondents acted in bad faith when they built portions of their house
on Lot No. 12-C.

Using the above parameters, we are convinced that respondents' predecessors-in-interest acted in good faith when
they built portions of their house on Lot 12-C. Respondents being builders in good faith, we shall now discuss the
respective rights of the parties relative to the portions encroaching upon respondents' house.

Articles 448 and 546 of the New Civil Code provide:

Art. 448. The owner of the land on which anything has been built, sown or planted in good faith, shall have the
right to appropriate as his own the works, sowing or planting, after payment of the indemnity provided for in
Articles 546 and 548, or to oblige the one who built or planted to pay the price of the land, and the one who
sowed, the proper rent. However, the builder or planter cannot be obliged to buy the land if its value is considerably
more than that of the building or trees. In such case, he shall pay reasonable rent, if the owner of the land does not
choose to appropriate the building or trees after proper indemnity. The parties shall agree upon the terms of the
lease and, in case of disagreement, the court shall fix the terms thereof.

Art. 546. Necessary expenses shall be refunded to every possessor; but only the possessor in good faith may retain
the thing until he has been reimbursed therefor.
Useful expenses shall be refunded only to the possessor in good faith with the same right of retention, the person
who has defeated him in the possession having the option of refunding the amount of the expenses or of paying the
increase in value which the thing may have acquired by reason thereof.

In Spouses Del Campo v. Abesia,[34] this provision was applied to one whose house, despite having been built at the
time he was still co-owner, overlapped with the land of another. In that case, this Court ruled:

The court a quo correctly held that Article 448 of the Civil Code cannot apply where a co-owner builds, plants or
sows on the land owned in common for then he did not build, plant or sow upon the land that exclusively belongs
to another but of which he is a co-owner. The co-owner is not a third person under the circumstances, and the
situation is governed by the rules of co-ownership.

However, when, as in this case, the ownership is terminated by the partition and it appears that the house of
defendants overlaps or occupies a portion of 5 square meters of the land pertaining to plaintiffs which the
defendants obviously built in good faith, then the provisions of Article 448 of the new Civil Code should apply. x x
x[35]

In other words, when the co-ownership is terminated by a partition, and it appears that the house of an erstwhile
co-owner has encroached upon a portion pertaining to another co-owner, but the encroachment was in good faith,
then the provisions of Article 448 should apply to determine the respective rights of the parties. In this case, the coownership was terminated due to the transfer of the title of the whole property in favor of Joaquin Limense.
Under the foregoing provision, petitioners have the right to appropriate said portion of the house of respondents
upon payment of indemnity to respondents, as provided for in Article 546 of the Civil Code. Otherwise, petitioners
may oblige respondents to pay the price of the land occupied by their house. However, if the price asked for is
considerably much more than the value of the portion of the house of respondents built thereon, then the latter
cannot be obliged to buy the land. Respondents shall then pay the reasonable rent to petitioners upon such terms
and conditions that they may agree. In case of disagreement, the trial court shall fix the terms thereof. Of course,
respondents may demolish or remove the said portion of their house, at their own expense, if they so decide.[36]

The choice belongs to the owner of the land, a rule that accords with the principle of accession that the accessory
follows the principal and not the other way around.[37] Even as the option lies with the landowner, the grant to
him, nevertheless, is preclusive. He must choose one. He cannot, for instance, compel the owner of the building to
instead remove it from the land.[38]

The obvious benefit to the builder under this article is that, instead of being outrightly ejected from the land, he can
compel the landowner to make a choice between two options: (1) to appropriate the building by paying the
indemnity required by law, or (2) to sell the land to the builder.[39]

The raison detre for this provision has been enunciated, thus:

Where the builder, planter or sower has acted in good faith, a conflict of rights arises between the owners, and it
becomes necessary to protect the owner of the improvements without causing injustice to the owner of the land. In
view of the impracticability of creating a state of forced co-ownership, the law has provided a just solution by giving
the owner of the land the option to acquire the improvements after payment of the proper indemnity, or to oblige
the builder or planter to pay for the land and the sower the proper rent. He cannot refuse to exercise either option. It
is the owner of the land who is authorized to exercise the option, because his right is older, and because, by the
principle of accession, he is entitled to the ownership of the accessory thing.[40]
In accordance with Depra v. Dumlao,[41] this case must be remanded to the trial court to determine matters
necessary for the proper application of Article 448 in relation to Article 546. Such matters include the option that
petitioners would take and the amount of indemnity that they would pay, should they decide to appropriate the
improvements on the lots.

Anent the second issue, although it may seem that the portions encroaching upon respondents' house can be
considered a nuisance, because it hinders petitioners' use of their property, it cannot simply be removed at
respondents' expense, as prayed for by petitioner. This is because respondents built the subject encroachment in
good faith, and the law affords them certain rights as discussed above.

WHEREFORE, the petition is DENIED, the Decision of the Court of Appeals dated December 20, 2001 in CA-G.R. CV
No. 33589 is AFFIRMED with the following MODIFICATIONS:

1. No co-ownership exists over Lot No. 12-C, covered by TCT No. 96886, between petitioners and respondents.

2. The case is REMANDED to the Regional Trial Court, Branch 15, Manila, for further proceedings without further
delay to determine the facts essential to the proper application of Articles 448 and 546 of the Civil Code.

SO ORDERED.
DIOSDADO M. PERALTA
Associate Justice
WE CONCUR:
LEONARDO A. QUISUMBING

Associate Justice
ANTONIO T. CARPIO MINITA V. CHICO-NAZARIO
Associate Justice Associate Justice
Chairperson
ROBERTO A. ABAD
Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to
the writer of the opinion of the Courts Division.
ANTONIO T. CARPIO
Associate Justice
Third Division, Chairperson
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution and the Division Chairpersons Attestation, I certify that the
conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the
opinion of the Courts Division.