SECOND DIVISION

[G.R. No. 140357. September 24, 2004]

SPOUSES REYNALDO and EDITHA LOPEZ, petitioners, vs. MARGARITA SARABIA, respondent.

DECISION

CALLEJO, SR., J.:

This is a petition for review on certiorari of the Decision[1] of the Court of Appeals (CA) dated June 11,
1999 and the Resolution dated October 5, 1999 denying the motion for reconsideration thereof in CA-
G.R. CV No. 50656 which affirmed with modification the Decision[2] of the Regional Trial Court (RTC) of
Kalibo, Aklan, Branch 6.

Case for the Respondent

Margarita Sarabia owned two (2) lots with a residential house built on one of the lots in Poblacion,
Kalibo, Aklan. Spouses Reynaldo and Editha Lopez were renting the second floor of the house for
P300.00 per month. On the other lot was a building rented by Dr. Nilda Tambong for P600.00 a month,
with two (2) boarders upstairs paying P440.00 a month.[3] Sometime in March 1984, the Spouses Lopez
approached Margarita and asked her if they could construct additional rooms for their growing children.
Margarita told them that she did not have the money for such construction project. They then proposed
that they could apply for a Pag-ibig Housing Loan from the Development Bank of the Philippines (DBP)
and use Margaritas property as collateral. Margarita, however, informed them that her property had
already been mortgaged to the Philippine National Bank (PNB) in 1978 in the amount of P20,000.00,[4]
and was, in fact, in danger of being foreclosed for non-payment of amortization. Her outstanding loan
balance as of March 1984 had already ballooned to about P63,000.00.

The Spouses Lopez tried to convince Margarita that it was better to transfer the mortgage to the DBP
where interest rates were lower; Editha Lopez was a public school teacher and the monthly amortization
could easily be deducted from her salary. They told Margarita that the PNB loan balance could be paid
off from the proceeds of the loan from the DBP, and the excess could be used for the construction of the
rooms. In order to facilitate the loan, it was, however, necessary that the property be in the name of the
Spouses Lopez.

Relying on the couples good faith and assurances that they would religiously pay the amortization,
Margarita agreed to their proposition. A document was thus executed denominated as Assumption of
Mortgage with Quitclaim.[5] In said document, the Register of Deeds was authorized to cancel TCT No. T-
4471 and TCT No. T-4474 over the two (2) parcels of land and issue new TCTs[6] under the name of the
Spouses Lopez covering the two lots. The Spouses Lopez then mortgaged the properties to DBP where
they obtained a loan in the amount of P163,000.00. They paid the PNB, which then released the
mortgage of Margarita. The Spouses Lopez ceased paying rentals to Margarita and even collected the
rentals from the other lot as part of the payment of the monthly amortization.
Sometime in October 1987, Reynaldo Lopez approached Margarita and informed her that he needed
P30,000.00 to update their loan payments. Margarita gave him the amount as part of the refund to the
payment of the PNB loan. She expected Reynaldo to give her an official receipt from the DBP, but did not
receive any. Sensing something irregular, she went to the DBP to inquire about the status of the loan.
She was aghast to find out that the loan amortization had not been paid and that her property was again
in danger of being foreclosed.

Margarita was constrained to file an action with the RTC against the Spouses Lopez for annulment of
document, specific performance and reconveyance with damages. The DBP was included as party-
defendant. In her complaint, Margarita prayed for the following:

a. Declaring the Assumption of Mortgage with Quitclaim null and void;

b. Ordering the defendants Lopezes to redeem the parcels of land and residential house presently
mortgaged to the Development Bank of the Philippines;

c. Ordering the defendants to reconvey the certificates of title as well as the tax declarations of the said
parcels of land and the house in favor of plaintiff;

d. Ordering the defendants to pay the plaintiff the amount of P10,000.00 as attorneys fee; litigation
expenses in the amount of P10,000.00, and as actual damage to the value of the property mentioned
above to be determined by this Honorable Court, and monthly rental of P300.00 from 1984 up to actual
payment.[7]

Case for the Petitioners

In their Answer[8] to the Complaint, the Spouses Lopez averred that it was Margarita who approached
them to help her redeem her property from the PNB because it was going to be foreclosed. She was
aware that the couple wanted to buy a house and lot of their own, and offered her property to them
instead. The Spouses Lopez told her that they did not have the money to redeem the property, but if
Margarita was certain in selling her house to them, they could arrange for a loan from the DBP, the
proceeds of which the PNB loan could be paid in full and would form part of the purchase price. The
balance would also be taken from the proceeds of the DBP loan. Pursuant to their mutual and verbal
agreement, Margarita executed a Deed of Assumption of Mortgage with Quitclaim,[9] authorizing the
couple to assume her loan with the PNB over the two lots, together with all the improvements thereon
and renouncing all her rights over the property. The same document authorized the Register of Deeds of
Aklan to cancel TCT Nos. T-4471 and T-4474 and issue two (2) new certificates of title in the name of the
Spouses Reynaldo and Editha Lopez. In April 1984, Margarita asked for partial payment from the Spouses
Lopez and was given the amount of P6,700.00 which the former acknowledged.[10] On May 8, 1984,
Margarita executed a Special Power of Attorney[11] appointing the DBP to be her attorney-in-fact, where
the latter would issue a check in favor of the PNB covering the amount of P63,307.34 as payment of the
outstanding loan balance. Another check in the amount of P89,992.66 was also issued in the name of
Margarita, as per the Distribution of Proceeds and Release Guide of the DBP.[12] The couple has
introduced improvements on the land since then, which cost them about P300,000.00. The Spouses
Lopez claim and assert ownership over the subject properties, as evidenced by the TCTs issued in their
names.

On the part of DBP, it alleged in its answer with cross-claim that it had no knowledge of the agreement
between Margarita and the Spouses Lopez. It granted a loan to the spouses in the amount of
P163,500.00 and accepted the certificates of title presented to it by the Spouses Lopez over the two
parcels of land as security/collateral. It had the right to rely on the certificates of title presented to it,
which were free from all liens and encumbrances. The DBP was an innocent mortgagee for value. As
cross-claim, DBP demanded payment from the Spouses Lopez the amount of the loan granted to them,
plus damages for misrepresenting to the bank that they were the owners in fee simple of the subject
properties which they mortgaged to the bank.[13]

The Findings of the RTC

On November 29, 1994, the RTC rendered judgment in favor of Margarita. The trial court found that it
was Margarita who sought the help of the Spouses Lopez so that she could redeem her property which
was on the verge of being foreclosed by the PNB for non-payment of the loan amortization. By virtue of
the documents executed by Margarita in favor of the Spouses Lopez, viz, Deed of Assumption and
Quitclaim dated March 6, 1984,[14] Offer to Sell dated March 20, 1984,[15] and Release of Real Estate
Mortgage dated May 9, 1984,[16] the titles to the land were transferred and registered in the names of
the latter. The Spouses Lopez applied for a Pag-ibig Housing Loan from the DBP using Margaritas
property as security, and was granted thereof in the amount of P163,500.00. The PNB loan was paid
pursuant to the special power of attorney. Although another check in the amount of P87,000.00 was
issued to Margarita and later endorsed by her for encashment, she testified that she never received the
money.[17] The Spouses Lopez ceased paying rentals and even collected the rentals of the other tenants
which were supposed to be applied to the monthly amortization.

The trial court found that the true intentions of the parties were not really embodied in the
documents/instruments. The documentary, as well as parol evidence, clearly showed that Margarita did
not really intend to convey her property to the petitioners. She merely agreed to lend her titles so that
the Spouses Lopez could procure a bigger loan which she could not possibly obtain, considering her age
and meager salary as Supervising Accounting Clerk in the Municipality of Kalibo. She agreed to sign the
pertinent documents with the understanding that they were requirements of the bank in processing the
loan applied for by the Spouses Lopez. The trial court continued to rule that the Spouses Lopez were in
bad faith, so whatever improvements were made on the land were forfeited in favor of Margarita.[18]

The dispositive portion of the decision reads as follows:

WHEREFORE, premises considered, judgment is hereby rendered as follows:

1. Declaring the Deed of Assumption and Quitclaim executed by the plaintiff in favor of the defendant
spouses, Exhibit G of the plaintiff and Exhibit 4 of defendants a relatively simulated contract;

2. Declaring the conveyance of title in favor of the defendant spouses under TCT No. T-13472 and TCT
No. T-13473, as a simulated or fictitious transfer, and therefore void; and that said spouses merely hold
legal title in trust and for the benefit of the plaintiff;

3. Declaring the assumption by the defendant spouses of plaintiffs loan valid;

4. Declaring the loan obtained by the defendant spouses from the defendant bank valid and subsisting,
but declaring the mortgage, giving the properties in question as a security for the payment thereof, null
and void;

5. Ordering that the properties in question with all the existing improvements thereon, covered by TCT
No. T-13472 and TCT No. T-13473 in the names of the defendant spouses, be conveyed in the name of
the plaintiff upon payment of proper fees; and for the purpose, ordering the defendant bank to return
the owners duplicate of said certificates of title to the plaintiff;

6. Ordering the defendant spouses to vacate the premises and return possession over the same to the
plaintiff;

7. Ordering the defendant spouses to pay Ten Thousand Pesos (P10,000.00) as attorneys fees, and
litigation expenses, and to pay the costs.[19]

The Spouses Lopez appealed to the Court of Appeals. The CA affirmed the RTC finding that the nature of
the transaction between Margarita and the Spouses Lopez was, verily, an equitable mortgage and not a
sale. The CA, however, declared that the petitioners were builders in good faith. According to the CA,
Margarita was aware and approved the construction/improvements undertaken by the Spouses Lopez;
thus, forfeiture of the improvements in favor of Margarita was unwarranted. The fallo of the decision
reads:

WHEREFORE, the decision appealed from is AFFIRMED with the modification that, defendant-appellant
Lopez spouses being considered builders in good faith, the improvements they introduced after the
transaction in question be either purchased by plaintiff-appellee Margarita Sarabia or removed at
defendant-appellants own expense. [20]

The Spouses Lopez are now before the Court raising the following:

(1) THAT WHILE THE COURT OF APPEALS HAS CORRECTLY REVERSED THE FINDING OF THE TRIAL COURT
THAT THE DEFENDANTS-APPELLANTS (HEREIN PETITIONERS) WERE NOT BUILDERS IN BAD FAITH AND
CATEGORICALLY DECLARED THEM TO BE BUILDERS IN GOOD FAITH, IT FAILED TO APPLY CORRECTLY THE
RULES ON BUILDER IN GOOD FAITH UNDER ART. 448 OF THE NEW CIVIL CODE ON THE OPTIONS OF THE
OWNER OF THE LAND AND THE RIGHTS OF THE BUILDER IN GOOD FAITH; and
(2) THAT WHILE THE HONORABLE COURT OF APPEALS HAS AFFIRMED THE RULING OF THE TRIAL COURT
THAT THE REAL AGREEMENT BETWEEN THE PARTIES WAS A FORM OF EQUITABLE MORTGAGE AND NOT
A SALE, IT FAILED TO DEFINE AND ADJUDICATE WITH CERTAINTY THE RELATIVE RIGHTS AND RECIPROCAL
OBLIGATIONS OF THE PARTIES UNDER ART. 1616 OF THE NEW CIVIL CODE.[21]

Ruling of the Court

There is no dispute that the transaction between the parties is one of equitable mortgage and not a sale
as maintained by the petitioners. This was a finding correctly made by the trial court and the appellate
court, which we find no cogent reason to disturb.

No matter what nomenclature is given to a document, Article 1602 of the New Civil Code provides that
the contract is presumed to be an equitable mortgage in any of the following cases:

1) When the price of a sale with right to repurchase is usually inadequate;

2) When the vendor remains in possession as lessee or otherwise;

3) When upon the expiration of the right to repurchase another instrument extending the period of
redemption or granting a new period is executed;

4) When the purchaser retains for himself a part of the purchase price;

5) When the vendor binds himself to pay the taxes on the thing sold;

6) In any other case where it may be fairly inferred that the real intention of the parties is that the
transaction shall secure the payment of a debt or the performance of any other obligation;

In any of the foregoing cases, any money, fruits or other benefit to be received by the vendee as rent or
otherwise shall be considered as interest which shall be subject to the usury laws.

The pertinent document which is subject to scrutiny in this case is the Deed of Assumption of Mortgage
with Quitclaim[22] executed by Margarita in favor of the Spouses Lopez. The said document empowered
the Spouses Lopez to assume the loan of Margarita with the PNB. And in consideration for such
assumption of indebtedness, Margarita was considered to have waived all her rights and participation
over the two parcels of land, together with all the improvements thereon, and that such titles were
transferred to the Spouses Lopez. This document was followed by a Deed of Offer to Sell signed by
Margarita bearing the value of the subject property which was P160,000.00, since the Deed of
Assumption of Mortgage did not contain the amount of the purchase price of the property.[23] In line
with the basic requirement in our laws that the mortgagor be the absolute owner of the property sought
to be mortgaged,[24] it was, thus, made to appear that Margarita sold her property to the Spouses
Lopez so that they could declare the same as collateral for the housing loan. While under the Deed of
Assumption of Mortgage, Margarita allowed the transfer of title over the subject property in the name of
the Spouses Lopez, the evidence showed that ownership thereof was not intended to be conveyed to
them. Margarita was firm in her testimony that she merely allowed the Spouses Lopez to apply for a loan
using her titles as collateral, so that the couple could help her redeem her property from PNB. She never
made any offer to sell and never thought of such.[25] Unfortunately, she signed the Deed of Assumption
of Mortgage with Quitclaim and the Offer to Sell without actually reading and understanding the
contents thereof.[26] The real agreement was for the Spouses Lopez to apply for a loan in order to pay
Margaritas indebtedness with the PNB. Margarita, in turn, would pay the Spouses Lopez by installment.
[27] The trial court correctly found that the Deed of Assumption of Mortgage did not actually contain all
the matters agreed upon by the parties prior to its execution.[28]

In the case of Lorbes v. Court of Appeals,[29] the Court held that:

The decisive factor in evaluating such agreement is the intention of the parties, as shown not necessarily
by the terminology used in the contract but by all the surrounding circumstances, such as the relative
situation of the parties at that time, the attitude, acts, conduct, declarations of the parties, the
negotiations between them leading to the deed, and generally, all pertinent facts having a tendency to
fix and determine the real nature of their design and understanding. As such, documentary and parol
evidence may be submitted and admitted to prove the intention of the parties.[30]

The trial and appellate courts did not find the version of the petitioners credible, considering that the
subsequent acts and conditions of the parties were more leaning to the presumption of an equitable
mortgage and not of sale.

First. The owner, Margarita, remained in possession of the house. If she really intended to sell her house,
then she would have looked for another place to live.

Second. It was inconceivable that Margarita would sell her house and the two lots just to pay the PNB
loan. She would have necessarily retained one parcel of land which she could have called her own.

Third. The acknowledgement receipt[31] signed by Reynaldo Lopez showing that they were paid by
Margarita the sum of P30,000.00 is quite telling. The said receipt states:

This is to acknowledge from MISS MARGARITA SARABIA, of Mabini Street, Kalibo, Aklan, the amount of
THIRTY THOUSAND PESOS (P30,000.00) as partial refund of the previous loan assumed by Engr. Reynaldo
L. Lopez from the Philippine National Bank to be paid to the Development Bank of the Philippines.[32]

If it were a sale in favor of the couple, it behooved the Spouses Lopez to show why Margarita should pay
them the amount, when it should be the other way around.

Fourth. The Spouses Lopez never paid the monthly amortization. If they were truly the owner, then they
would have protected their own property from being foreclosed.

It bears stressing that the law favors the least transmission of rights and interests over a property in
controversy. The purpose of the law is to prevent circumvention of the law on usury and the prohibition
against a creditor appropriating the mortgaged property. Additionally, it is aimed to end unjust or
oppressive transactions or violations in connection with the sale of the property. The wisdom of these
provisions cannot be doubted, considering many cases of unlettered persons or even those with average
intelligence invariably finding themselves in no position whatsoever to bargain fairly with their creditors.
[33]

No doubt in this case, the Spouses Lopez took advantage of Margaritas advanced age and urgent
necessity for money, which explains why she agreed to sign the documents without being fully aware of
their meaning and contents. Necessitous men are not, truly speaking, free men; but to answer a present
emergency, will submit to any terms that the crafty may impose upon them.[34] What was intended to
be a mere loan so as to enjoin the foreclosure by the bank of her property, ended up as a transfer of
property to the Spouses Lopez, which was not the real intention and agreement of the parties in the first
place. This is a fact which the Spouses Lopez cannot deny. From all indications, the Spouses Lopez were
quite dishonest in attempting to appropriate the property as their own when this was not their
agreement with Margarita.

Conceding that the transaction was not really a sale of the subject property, the Spouses Lopez now
demand their rights for reimbursement for expenses and improvements made on the land under Articles
448 and 1616 of the Civil Code. This leads us to the pivotal question: Can the Spouses Lopez invoke
Article 448 and claim the benefits of this provision as builders in good faith when they constructed
improvements on the subject property?

The trial court found the Spouses Lopez in bad faith and ordered the forfeiture of the improvements in
Margaritas favor. The CA disagreed with the trial court as it ruled:

Construction of the improvements went on without the objections of Margarita. It can thus be safely
concluded that, absent any objections, the Lopez spouses sincerely believed that as lessees, they had
Margaritas approval to construct such improvements. Forfeiture of the improvements in Margaritas
favor is thus not warranted.[35]

The petitioners allege that Article 448 applies in this case because they constructed the building on one
of the lots in the concept of owner, after the title over the two lots had already been transferred in their
names and out of the proceeds of their Pag-ibig loan. They believed that they have a right to build
because they thought that they owned the land or believed themselves to have claim or title.[36]

The contention is untenable.

Articles 448[37] and 546[38] of the New Civil Code, which allow full reimbursement of useful
improvements and retention of the premises until reimbursement is made, apply only to a possessor in
good faith, i.e., one who builds on land with the belief that he is the owner thereof. A builder in good
faith is one who is unaware of any flaw in his title to the land at the time he builds on it.[39] In this case,
the petitioners cannot claim that they were not aware of any flaw in their title or were under the belief
that they were owners of the subject properties. It was the agreement and intention that Margaritas
titles would only be lent to them in order to secure the Pag-ibig Housing Loan, in which Margarita had a
direct interest since the proceeds thereof were to be immediately applied to her mortgage obligation
with the PNB. There was no agreement or intention to transfer ownership of the subject properties. The
petitioners cannot claim to be owners. Hence, they cannot be considered builders in good faith. Article
448 is not applicable.

More importantly, however, it must be remembered that the Spouses Lopez were lessees of Margarita
who were renting the place for P300.00 a month. Such fact was never controverted. The CA
unmistakably did not overlook this relationship but apparently erred in defining the rights of the lessor
and/or lessee with regard to indemnity for improvements made on the land. Article 448 does not apply
to a case where one builds, plants, or sows on land where the only interest of the builder, planter, or
sower is that of a holder, such as a tenant or a lessee.[40] Thus, whether or not Margarita gave her
consent to the construction so as to be considered builders in good faith, as ruled by the CA, is of no
moment. As lessees, their right for reimbursement viz-a-viz the improvements made on the land is
governed by Article 1678 of the New Civil Code which reads:

Art. 1678. If the lessee makes, in good faith, useful improvements which are suitable to the use for which
the lease is intended, without altering the form or substance of the property leased, the lessor upon the
termination of the lease, shall pay the lessee one-half of the value of the improvements at that time.
Should the lessor refuse to reimburse said amount, the lessee may remove the improvements, even
though the principal thing may suffer damage thereby. He shall not, however, cause any more
impairment upon the property leased than is necessary.

With regard to ornamental expenses, the lessee shall not be entitled to any reimbursement, but he may
remove the ornamental objects, provided no damage is caused to the principal thing, and the lessor
does not choose to retain them by paying their value at the time the lease is extinguished.

The petitioners reliance on Article 448 is, therefore, misplaced. Being mere lessees, the petitioners knew
that their occupation of the premises would continue only for the life of the lease. Plainly, they cannot
be considered as possessors nor builders in good faith.[41] In the case of Sia v. Court of Appeals,[42] we
explained that:

In the 1991 case of Cabangis v. Court of Appeals where the subject of the lease contract was also a
parcel of land and the lessees father constructed a family residential house thereon, and the lessee
subsequently demanded indemnity for the improvements built on the lessors land based on Articles 448
and 546 of the New Civil Code, we pointed out that reliance on said legal provisions was misplaced.

The reliance by the respondent Court of Appeals on Articles 448 and 546 of the Civil Code of the
Philippines is misplaced. These provisions have no application to a contract of lease which is the subject
matter of this controversy. Instead, Article 1678 of the Civil Code applies. We quote:

Art. 1678. If the lessee makes, in good faith, useful improvements which are suitable to the use for which
the lease is intended, without altering the form or substance of the property leased, the lessor upon
termination of the lease, shall pay the lessee one-half of the value of the improvements at that time.
Should the lessor refuse to reimburse said amount, the lessee may remove the improvements, even
though the principal thing may suffer damage thereby. He shall not, however, cause any more
impairment upon the property leased than is necessary.
On the other hand, Article 448 governs the right of accession while Article 546 pertains to effects of
possession. The very language of these two provisions clearly manifest their inapplicability to lease
contracts. They provide:

The petitioners do not dispute the contention of the private respondent that her father Gaspar Devis,
filled the leased parcel of land with truck loads of big stones or rocks (escumbro), and enclosed or walled
the same with hollow blocks before constructing a residential house thereon. All these, being in the
nature of expenses which augmented the value of the land, (Manresa, 270 cited in 2, A. Tolentino, Civil
Code 110 [2nd ed., 1972) or increased the income from it, or improved its productivity, are useful
improvements within the purview of the law (Alburo v. Villanueva, 7 Phil. 277 [1907]; Valencia v. Roxas,
13 Phil. 45 [1909]).

But, it must be remembered, as in fact it is not controverted, that Gaspar Devis was a lessee by virtue of
a lease contract between him and the City of Manila. As a mere lessee, he knew that the parcel of land in
question was not his but belonged to the latter. Even the respondent court conceded this fact when it
stated that the private respondent was not claiming prior possession much less ownership of the land as
heir of her father. (Rollo, p. 16).

Thus, the improvements that the private respondents father had introduced in the leased premises were
done at his own risk as lessee. The right to indemnity equivalent to one-half of the value of the said
improvements the house, the filling materials, and the hollow block fence or wall is governed, as earlier
adverted to, by the provisions of Art. 1678, first paragraph of the Civil Code above quoted. But this right
to indemnity exists only if the lessor opts to appropriate the improvements (Alburo v. Villanueva, supra,
note 10 at 279-280; Valencia v. Ayala de Roxas, supra, note 10 at 46). The refusal of the lessor to pay the
lessee one-half of the value of the useful improvements gives rise to the right of removal. On this score,
the commentary of Justice Paras is enlightening.

Note that under the 1st paragraph of Art. 1678, the law on the right of REMOVAL says that should the
lessor refuse to reimburse said amount, the lessee may remove the improvements, even though the
principal thing may suffer thereby. While the phrase even though implies that Art. 1678 always applies
regardless of whether or not the improvements can be removed without injury to the leased premises, it
is believed that application of the Article cannot always be done. The rule is evidently intended for cases
where a true accession takes place as when part of the land leased is, say, converted into a fishpond; and
certainly not where as easily removable thing (such as a wooden fence) has been introduced. There is no
doubt that in a case involving such a detachable fence, the lessee can take the same away with him
when the lease expires (5 E. Paras, Civil code of the Philippines Annotated 345 [11th ed., 1986]).[43]

The petitioners have made substantial improvements on the land for which they seek indemnity.
Petitioner Reynaldo Lopez testified that there are now three buildings standing on the two parcels of
land: the first building is where Margarita and they are presently residing, constructed wayback in 1970;
the second building, with an estimated cost of P300,000.00, is the one the couple constructed after
obtaining the loan from DBP, with an office at the ground floor and the second floor with three rooms
also occupied by the Lopezes; and the third building is the old house where the first floor is being rented
by Dr. Nilda Tambong with boarders on the second floor.[44]

It must be stressed that the right to indemnity under Article 1678 arises only if the lessor opts to
appropriate the improvements. The respondent (Margarita) would become the owner of the building
constructed by the petitioners by reimbursing to the couple one-half (1/2) of the value of the building at
the time it was built. This option to pay such indemnity is given to herein respondent. On the other
hand, the petitioners do not actually have the right to demand that they be paid therefor.[45] Neither do
they have the right to retain in the premises until reimbursement is made. If Margarita refuses to pay
indemnity, the petitioners sole right then is to remove the improvements without causing anymore
impairment upon the lot than is necessary.[46]

Notwithstanding the finding that the nature of the transaction is an equitable mortgage, the petitioners
have no basis to invoke Article 1616.[47] The petitioners attempt to seek reimbursement for whatever
expenses have been incurred or resulted from this transaction with Margarita cannot prosper. It must be
noted that after the transfer of title in the name of the petitioners, the latter ceased paying rentals to
Margarita since 1984 and, in fact, collected the rentals from the other tenants. We find that the
petitioners have benefited more than enough, having stayed in the premises without paying rentals
therefor. On the other hand, Margarita was deprived of the fruits and enjoyment of her property. Thus,
the petition has no merit.

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals is AFFIRMED with the
modification that respondent Margarita Sarabia is DIRECTED to exercise, within thirty (30) days from the
finality of this decision, her option of either paying one-half of the value of the improvements made on
the land at that time they were made, or to demand the removal by the petitioners of the improvements
made on the subject property at their expense. No costs.

SO ORDERED.

Puno, (Chairman), Austria-Martinez, and Tinga, JJ., concur.

Chico-Nazario, J., on leave.

Republic of the Philippines

SUPREME COURT

Manila

FIRST DIVISION

G.R. No. 160453 November 12, 2012

REPUBLIC OF THE PHILIPPINES, Petitioner,

vs.

ARCADIO IVAN A. SANTOS III, and ARCADIO C. SANTOS, JR., Respondents.

DECISION

BERSAMIN, J.:

By law, accretion - the gradual and imperceptible deposit made through the effects of the current of the
water- belongs to the owner of the land adjacent to the banks of rivers where it forms. The drying up of
the river is not accretion. Hence, the dried-up river bed belongs to the State as property of public
dominion, not to the riparian owner, unless a law vests the ownership in some other person.

Antecedents

Alleging continuous and adverse possession of more than ten years, respondent Arcadio Ivan A. Santos
III (Arcadio Ivan) applied on March 7, 1997 for the registration of Lot 4998-B (the property) in the
Regional Trial Court (RTC) in Parafiaque City. The property, which had an area of 1,045 square meters,
more or less, was located in Barangay San Dionisio, Paraaque City, and was bounded in the Northeast
by Lot 4079 belonging to respondent Arcadio C. Santos, Jr. (Arcadio, Jr.), in the Southeast by the
Paraaque River, in the Southwest by an abandoned road, and in the Northwest by Lot 4998-A also
owned by Arcadio Ivan.1

On May 21, 1998, Arcadio Ivan amended his application for land registration to include Arcadio, Jr. as his
co-applicant because of the latters co-ownership of the property. He alleged that the property had been
formed through accretion and had been in their joint open, notorious, public, continuous and adverse
possession for more than 30 years.2

The City of Paraaque (the City) opposed the application for land registration, stating that it needed the
property for its flood control program; that the property was within the legal easement of 20 meters
from the river bank; and that assuming that the property was not covered by the legal easement, title to
the property could not be registered in favor of the applicants for the reason that the property was an
orchard that had dried up and had not resulted from accretion.3

Ruling of the RTC

On May 10, 2000,4 the RTC granted the application for land registration, disposing:

WHEREFORE, the Court hereby declares the applicants, ARCADIO IVAN A. SANTOS, III and ARCADIO C.
SANTOS, JR., both Filipinos and of legal age, as the TRUE and ABSOLUTE OWNERS of the land being
applied for which is situated in the Barangay of San Dionisio, City of Paraaque with an area of one
thousand forty five (1045) square meters more or less and covered by Subdivision Plan Csd-00-000343,
being a portion of Lot 4998, Cad. 299, Case 4, Paraaque Cadastre, LRC Rec. No. and orders the
registration of Lot 4998-B in their names with the following technical description, to wit:

xxxx

Once this Decision became (sic) final and executory, let the corresponding Order for the Issuance of the
Decree be issued.

SO ORDERED.

The Republic, through the Office of the Solicitor General (OSG), appealed.

Ruling of the CA

In its appeal, the Republic ascribed the following errors to the RTC,5 to wit:

THE TRIAL COURT ERRED IN RULING THAT THE PROPERTY SOUGHT TO BE REGISTERED IS AN ACCRETION
TO THE ADJOINING PROPERTY OWNED BY APPELLEES DESPITE THE ADMISSION OF APPELLEE ARCADIO C.
SANTOS JR. THAT THE SAID PROPERTY WAS NOT FORMED AS A RESULT OF THE GRADUAL FILLING UP OF
SOIL THROUGH THE CURRENT OF THE RIVER.

II

THE TRIAL COURT ERRED IN GRANTING THE APPLICATION FOR LAND REGISTRATION DESPITE APPELLEES
FAILURE TO FORMALLY OFFER IN EVIDENCE AN OFFICIAL CERTIFICATION THAT THE SUBJECT PARCEL OF
LAND IS ALIENABLE AND DISPOSABLE.

III

THE TRIAL COURT ERRED IN RULING THAT APPELLEES HAD SUFFICIENTLY ESTABLISHED THEIR
CONTINUOUS, OPEN, PUBLIC AND ADVERSE OCCUPATION OF THE SUBJECT PROPERTY FOR A PERIOD OF
MORE THAN THIRTY (30) YEARS.

On May 27, 2003, the CA affirmed the RTC.6

The Republic filed a motion for reconsideration, but the CA denied the motion on October 20, 2003.7

Issues
Hence, this appeal, in which the Republic urges that:8

RESPONDENTS CLAIM THAT THE SUBJECT PROPERTY IS AN ACCRETION TO THEIR ADJOINING LAND THAT
WOULD ENTITLE THEM TO REGISTER IT UNDER ARTICLE 457 OF THE NEW CIVIL CODE IS CONTRADICTED
BY THEIR OWN EVIDENCE.

II

ASSUMING THAT THE LAND SOUGHT TO BE REGISTERED WAS "PREVIOUSLY A PART OF THE PARAAQUE
RIVER WHICH BECAME AN ORCHARD AFTER IT DRIED UP," THE REGISTRATION OF SAID PROPERTY IN
FAVOR OF RESPONDENTS CANNOT BE ALTERNATIVELY JUSTIFIED UNDER ARTICLE 461 OF THE CIVIL CODE.

III

THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN NOT RULING THAT THE FAILURE OF
RESPONDENTS TO FORMALLY OFFER IN EVIDENCE AN OFFICIAL CERTIFICATION THAT THE SUBJECT
PROPERTY IS ALIENABLE AND DISPOSABLE IS FATAL TO THEIR APPLICATION FOR LAND REGISTRATION.

IV

THE FINDING OF THE COURT OF APPEALS THAT RESPONDENTS HAVE CONTINUOUSLY, OPENLY, PUBLICLY
AND ADVERSELY OCCUPIED THE SUBJECT PROPERTY FOR MORE THAN THIRTY (30) YEARS IS NOT
SUPPORTED BY WELL-NIGH INCONTROVERTIBLE EVIDENCE.

To be resolved are whether or not Article 457 of the Civil Code was applicable herein; and whether or
not respondents could claim the property by virtue of acquisitive prescription pursuant to Section 14(1)
of Presidential Decree No. 1529 (Property Registration Decree).

Ruling

The appeal is meritorious.

I.

The CA grossly erred in applying Article 457 of the Civil Code to respondents benefit

Article 457 of the Civil Code provides that "(t)o the owners of lands adjoining the banks of rivers belong
the accretion which they gradually receive from the effects of the currents of the waters."

In ruling for respondents, the RTC pronounced as follows:

On the basis of the evidence presented by the applicants, the Court finds that Arcadio Ivan A. Santos III
and Arcadio C. Santos, Jr., are the owners of the land subject of this application which was previously a
part of the Paraaque River which became an orchard after it dried up and further considering that Lot 4
which adjoins the same property is owned by applicant, Arcadio C. Santos, Jr., after it was obtained by
him through inheritance from his mother, Concepcion Cruz, now deceased. Conformably with Art. 457 of
the New Civil Code, it is provided that:

"Article 457. To the owners of the lands adjoining the bank of rivers belong the accretion which they
gradually receive from the effects of the current of the waters."9

The CA upheld the RTCs pronouncement, holding:

It could not be denied that "to the owners of the lands adjoining the banks of rivers belong the accretion
which they gradually receive from the effects of the current of the waters" (Article 457 New Civil Code)
as in this case, Arcadio Ivan Santos III and Arcadio Santos, Jr., are the owners of the land which was
previously part of the Paraaque River which became an orchard after it dried up and considering that
Lot 4 which adjoins the same property is owned by the applicant which was obtained by the latter from
his mother (Decision, p. 3; p. 38 Rollo).10

The Republic submits, however, that the application by both lower courts of Article 457 of the Civil Code
was erroneous in the face of the fact that respondents evidence did not establish accretion, but instead
the drying up of the Paraaque River.

The Republics submission is correct.

Respondents as the applicants for land registration carried the burden of proof to establish the merits of
their application by a preponderance of evidence, by which is meant such evidence that is of greater
weight, or more convincing than that offered in opposition to it.11 They would be held entitled to claim
the property as their own and apply for its registration under the Torrens system only if they established
that, indeed, the property was an accretion to their land.

Accretion is the process whereby the soil is deposited along the banks of rivers.12 The deposit of soil, to
be considered accretion, must be: (a) gradual and imperceptible; (b) made through the effects of the
current of the water; and (c) taking place on land adjacent to the banks of rivers.13

Accordingly, respondents should establish the concurrence of the elements of accretion to warrant the
grant of their application for land registration.

However, respondents did not discharge their burden of proof. They did not show that the gradual and
imperceptible deposition of soil through the effects of the current of the river had formed Lot 4998-B.
Instead, their evidence revealed that the property was the dried-up river bed of the Paraaque River,
leading both the RTC and the CA to themselves hold that Lot 4998-B was "the land which was previously
part of the Paraaque River xxx (and) became an orchard after it dried up."

Still, respondents argue that considering that Lot 4998-B did not yet exist when the original title of Lot 4
was issued in their mothers name in 1920, and that Lot 4998-B came about only thereafter as the land
formed between Lot 4 and the Paraaque River, the unavoidable conclusion should then be that soil and
sediments had meanwhile been deposited near Lot 4 by the current of the Paraaque River, resulting in
the formation of Lot 4998-B.
The argument is legally and factually groundless. For one, respondents thereby ignore that the effects of
the current of the river are not the only cause of the formation of land along a river bank. There are
several other causes, including the drying up of the river bed. The drying up of the river bed was, in fact,
the uniform conclusion of both lower courts herein. In other words, respondents did not establish at all
that the increment of land had formed from the gradual and imperceptible deposit of soil by the effects
of the current. Also, it seems to be highly improbable that the large volume of soil that ultimately
comprised the dry land with an area of 1,045 square meters had been deposited in a gradual and
imperceptible manner by the current of the river in the span of about 20 to 30 years the span of time
intervening between 1920, when Lot 4 was registered in the name of their deceased parent (at which
time Lot 4998-B was not yet in existence) and the early 1950s (which respondents witness Rufino
Allanigue alleged to be the time when he knew them to have occupied Lot 4988-B). The only plausible
explanation for the substantial increment was that Lot 4988-B was the dried-up bed of the Paraaque
River. Confirming this explanation was Arcadio, Jr.s own testimony to the effect that the property was
previously a part of the Paraaque River that had dried up and become an orchard.

We observe in this connection that even Arcadio, Jr.s own Transfer Certificate of Title No. 44687
confirmed the uniform conclusion of the RTC and the CA that Lot 4998-B had been formed by the drying
up of the Paraaque River. Transfer Certificate of Title No. 44687 recited that Lot 4 of the consolidated
subdivision plan Pcs-13-002563, the lot therein described, was bounded "on the SW along line 5-1 by
Dried River Bed."14

That boundary line of "SW along line 5-1" corresponded with the location of Lot 4998-B, which was
described as "bounded by Lot 4079 Cad. 299, (Lot 1, Psu-10676), in the name of respondent Arcadio
Santos, Jr. (Now Lot 4, Psd-13-002563) in the Northeast."15

The RTC and the CA grossly erred in treating the dried-up river bed as an accretion that became
respondents property pursuant to Article 457 of the Civil Code. That land was definitely not an
accretion. The process of drying up of a river to form dry land involved the recession of the water level
from the river banks, and the dried-up land did not equate to accretion, which was the gradual and
imperceptible deposition of soil on the river banks through the effects of the current. In accretion, the
water level did not recede and was more or less maintained. Hence, respondents as the riparian owners
had no legal right to claim ownership of Lot 4998-B. Considering that the clear and categorical language
of Article 457 of the Civil Code has confined the provision only to accretion, we should apply the
provision as its clear and categorical language tells us to. Axiomatic it is, indeed, that where the language
of the law is clear and categorical, there is no room for interpretation; there is only room for
application.16 The first and fundamental duty of courts is then to apply the law.17

The State exclusively owned Lot 4998-B and may not be divested of its right of ownership. Article 502 of
the Civil Code expressly declares that rivers and their natural beds are public dominion of the State.18 It
follows that the river beds that dry up, like Lot 4998-B, continue to belong to the
State as its property of public dominion, unless there is an express law that provides that the dried-up
river beds should belong to some other person.19

II

Acquisitive prescription was not applicable in favor of respondents

The RTC favored respondents application for land registration covering Lot 4998-B also because they
had taken possession of the property continuously, openly, publicly and adversely for more than 30 years
based on their predecessor-in-interest being the adjoining owner of the parcel of land along the river
bank. It rendered the following ratiocination, viz:20

In this regard, the Court found that from the time the applicants became the owners thereof, they took
possession of the same property continuously, openly, publicly and adversely for more than thirty (30)
years because their predecessors-in-interest are the adjoining owners of the subject parcel of land along
the river bank. Furthermore, the fact that applicants paid its realty taxes, had it surveyed per subdivision
plan Csd-00-000343 (Exh. "L") which was duly approved by the Land Management Services and the fact
that Engr. Chito B. Cainglet, OICChief, Surveys Division Land Registration Authority, made a Report that
the subject property is not a portion of the Paraaque River and that it does not fall nor overlap with Lot
5000, thus, the Court opts to grant the application.

Finally, in the light of the evidence adduced by the applicants in this case and in view of the foregoing
reports of the Department of Agrarian Reforms, Land Registration Authority and the Department of
Environment and Natural Resources, the Court finds and so holds that the applicants have satisfied all
the requirements of law which are essential to a government grant and is, therefore, entitled to the
issuance of a certificate of title in their favor. So also, oppositor failed to prove that the applicants are not
entitled thereto, not having presented any witness.

In fine, the application is GRANTED.

As already mentioned, the CA affirmed the RTC.

Both lower courts erred.

The relevant legal provision is Section 14(1) of Presidential Decree No. 1529 (Property Registration
Decree), which pertinently states:

Section 14. Who may apply. The following persons may file in the proper [Regional Trial Court] an
application for registration of title to land, whether personally or through their duly authorized
representatives:

(1) Those who by themselves or through their predecessors-in-interest have been in open, continuous,
exclusive and notorious possession and occupation of alienable and disposable lands of the public
domain under a bona fide claim of ownership since June 12, 1945, or earlier.

xxxx
Under Section 14(1), then, applicants for confirmation of imperfect title must prove the following,
namely: (a) that the land forms part of the disposable and alienable agricultural lands of the public
domain; and (b) that they have been in open, continuous, exclusive, and notorious possession and
occupation of the land under a bona fide claim of ownership either since time immemorial or since June
12, 1945.21

The Republic assails the findings by the lower courts that respondents "took possession of the same
property continuously, openly, publicly and adversely for more than thirty (30) years."22

Although it is well settled that the findings of fact of the trial court, especially when affirmed by the CA,
are accorded the highest degree of respect, and generally will not be disturbed on appeal, with such
findings being binding and conclusive on the Court,23 the Court has consistently recognized exceptions
to this rule, including the following, to wit: (a) when the findings are grounded entirely on speculation,
surmises, or conjectures; (b) when the inference made is manifestly mistaken, absurd, or impossible; (c)
when there is grave abuse of discretion; (d) when the judgment is based on a misapprehension of facts;
(e) when the findings of fact are conflicting; (f) when in making its findings the CA went beyond the
issues of the case, or its findings are contrary to the admissions of both the appellant and the appellee;
(g) when the findings are contrary to those of the trial court; (h) when the findings are conclusions
without citation of specific evidence on which they are based; (i) when the facts set forth in the petition
as well as in the petitioners main and reply briefs are not disputed by respondent; and (j) when the
findings of fact are premised on the supposed absence of evidence and contradicted by the evidence on
record.24

Here, the findings of the RTC were obviously grounded on speculation, surmises, or conjectures; and that
the inference made by the RTC and the CA was manifestly mistaken, absurd, or impossible. Hence, the
Court should now review the findings.

In finding that respondents had been in continuous, open, public and adverse possession of the land for
more than 30 years, the RTC declared:

In this regard, the Court found that from the time the applicant became the owners thereof, they took
possession of the same property continuously, openly, publicly and adversely for more than thirty years
because their predecessor in interest are the adjoining owners of the subject parcel of land along the
river banks. Furthermore, the fact that the applicant paid its realty taxes, had it surveyed per subdivision
plan Csd-00-000343 (Exh. "L") which was duly approved by the Land Management Services and the fact
that Engr. Chito B. Cainglet, OIC Chief, Surveys Division Land Registration Authority, made a Report that
the subject property is not a portion of the Paraaque River and that it does not fall nor overlap with Lot
5000, thus, the Court opts to grant the application.

The RTC apparently reckoned respondents period of supposed possession to be "more than thirty years"
from the fact that "their predecessors in interest are the adjoining owners of the subject parcel of land."
Yet, its decision nowhere indicated what acts respondents had performed showing their possession of
the property "continuously, openly, publicly and adversely" in that length of time. The decision
mentioned only that they had paid realty taxes and had caused the survey of the property to be made.
That, to us, was not enough to justify the foregoing findings, because, firstly, the payment of realty taxes
did not conclusively prove the payors ownership of the land the taxes were paid for,25 the tax
declarations and payments being mere indicia of a claim of ownership;26 and, secondly, the causing of
surveys of the property involved was not itself an of continuous, open, public and adverse possession.

The principle that the riparian owner whose land receives the gradual deposits of soil does not need to
make an express act of possession, and that no acts of possession are necessary in that instance because
it is the law itself that pronounces the alluvium to belong to the riparian owner from the time that the
deposit created by the current of the water becomes manifest27 has no applicability herein. This is
simply because Lot 4998-B was not formed through accretion. Hence, the ownership of the land
adjacent to the river bank by respondents predecessor-in-interest did not translate to possession of Lot
4998-B that would ripen to acquisitive prescription in relation to Lot 4998-B.

On the other hand, the claim of thirty years of continuous, open, public and adverse possession of Lot
4998-B was not even validated or preponderantly established. The admission of respondents themselves
that they declared the property for taxation purposes only in 1997 and paid realty taxes only from
199928 signified that their alleged possession would at most be for only nine years as of the filing of
their application for land registration on March 7, 1997.

Yet, even conceding, for the sake of argument, that respondents possessed Lot 4998-B for more than
thirty years in the character they claimed, they did not thereby acquire the land by prescription or by
other means without any competent proof that the land was already declared as alienable and
disposable by the Government. Absent that declaration, the land still belonged to the State as part of its
public dominion.

Article 419 of the Civil Code distinguishes property as being either of public dominion or of private
ownership. Article 420 of the Civil Code lists the properties considered as part of public dominion,
namely: (a) those intended for public use, such as roads, canals, rivers, torrents, ports and bridges
constructed by the State, banks, shores, roadsteads, and others of similar character; and (b) those which
belong to the State, without being for public use, and are intended for some public service or for the
development of the national wealth. As earlier mentioned, Article 502 of the Civil Code declares that
rivers and their natural beds are of public dominion.

Whether the dried-up river bed may be susceptible to acquisitive prescription or not was a question that
the Court resolved in favor of the State in Celestial v. Cachopero,29 a case involving the registration of
land found to be part of a dried-up portion of the natural bed of a creek. There the Court held:

As for petitioners claim of ownership over the subject land, admittedly a dried-up bed of the Salunayan
Creek, based on (1) her alleged long term adverse possession and that of her predecessor-in-interest,
Marcelina Basadre, even prior to October 22, 1966, when she purchased the adjoining property from the
latter, and (2) the right of accession under Art. 370 of the Spanish Civil Code of 1889 and/or Article 461
of the Civil Code, the same must fail.
Since property of public dominion is outside the commerce of man and not susceptible to private
appropriation and acquisitive prescription, the adverse possession which may be the basis of a grant of
title in the confirmation of an imperfect title refers only to alienable or disposable portions of the public
domain. It is only after the Government has declared the land to be alienable and disposable agricultural
land that the year of entry, cultivation and exclusive and adverse possession can be counted for purposes
of an imperfect title.

A creek, like the Salunayan Creek, is a recess or arm extending from a river and participating in the ebb
and flow of the sea. As such, under Articles 420(1) and 502(1) of the Civil Code, the Salunayan Creek,
including its natural bed, is property of the public domain which is not susceptible to private
appropriation and acquisitive prescription. And, absent any declaration by the government, that a
portion of the creek has dried-up does not, by itself, alter its inalienable character.

xxxx

Had the disputed portion of the Salunayan Creek dried up after the present Civil Code took effect, the
subject land would clearly not belong to petitioner or her predecessor-in-interest since under the
aforementioned provision of Article 461, "river beds which are abandoned through the natural change in
the course of the waters ipso facto belong to the owners of the land occupied by the new course," and
the owners of the adjoining lots have the right to acquire them only after paying their value.

And both Article 370 of the Old Code and Article 461 of the present Civil Code are applicable only when
"river beds are abandoned through the natural change in the course of the waters." It is uncontroverted,
however, that, as found by both the Bureau of Lands and the DENR Regional Executive Director, the
subject land became dry as a result of the construction an irrigation canal by the National Irrigation
Administration. Thus, in Ronquillo v. Court of Appeals, this Court held:

The law is clear and unambiguous. It leaves no room for interpretation. Article 370 applies only if there is
a natural change in the course of the waters. The rules on alluvion do not apply to man-made or artificial
accretions nor to accretions to lands that adjoin canals or esteros or artificial drainage systems.
Considering our earlier finding that the dried-up portion of Estero Calubcub was actually caused by the
active intervention of man, it follows that Article 370 does not apply to the case at bar and, hence, the
Del Rosarios cannot be entitled thereto supposedly as riparian owners.

The dried-up portion of Estero Calubcub should thus be considered as forming part of the land of the
public domain which cannot be subject to acquisition by private ownership. xxx (Emphasis supplied)

Furthermore, both provisions pertain to situations where there has been a change in the course of a
river, not where the river simply dries up. In the instant Petition, it is not even alleged that the Salunayan
Creek changed its course. In such a situation, commentators are of the opinion that the dry river bed
remains property of public dominion. (Bold emphases supplied)

Indeed, under the Regalian doctrine, all lands not otherwise appearing to be clearly within private
ownership are presumed to belong to the State.30 No public land can be acquired by private persons
without any grant, express or implied, from the Government. It is indispensable, therefore, that there is
a showing of a title from the State.31 Occupation of public land in the concept of owner, no matter how
long, cannot ripen into ownership and be registered as a title.32

Subject to the exceptions defined in Article 461 of the Civil Code (which declares river beds that are
abandoned through the natural change in the course of the waters as ipso facto belonging to the owners
of the land occupied by the new course, and which gives to the owners of the adjoining lots the right to
acquire only the abandoned river beds not ipso facto belonging to the owners of the land affected by the
natural change of course of the waters only after paying their value), all river beds remain property of
public dominion and cannot be acquired by acquisitive prescription unless previously declared by the
Government to be alienable and disposable. Considering that Lot 4998-B was not shown to be already
declared to be alienable and disposable, respondents could not be deemed to have acquired the
property through prescription.

Nonetheless, respondents insist that the property was already classified as alienable and disposable by
the Government. They cite as proof of the classification as alienable and disposable the following
notation found on the survey plan, to wit:33

NOTE

ALL CORNERS NOT OTHERWISE DESCRIBED ARE OLD BL CYL. CONC. MONS 15 X 60CM

All corners marked PS are cyl. conc. mons 15 x 60 cm

Surveyed in accordance with Survey Authority NO. 007604-48 of the Regional Executive Director issued
by the CENR-OFFICER dated Dec. 2, 1996.

This survey is inside L.C. Map No. 2623, Proj. No. 25 classified as alienable/disposable by the Bureau of
Forest Devt. on Jan. 3, 1968.

Lot 4998-A = Lot 5883} Cad 299

Lot 4998-B = Lot 5884} Paranaque Cadastre.

Was the notation on the survey plan to the effect that Lot 4998-B was "inside" the map "classified as
alienable/disposable by the Bureau of Forest Development on 03 Jan. 1968" sufficient proof of the
propertys nature as alienable and disposable public land?

To prove that the land subject of an application for registration is alienable, an applicant must
conclusively establish the existence of a positive act of the Government, such as a presidential
proclamation, executive order, administrative action, investigation reports of the Bureau of Lands
investigator, or a legislative act or statute. Until then, the rules on confirmation of imperfect title do not
apply.

As to the proofs that are admissible to establish the alienability and disposability of public land, we said
in Secretary of the Department of Environment and Natural Resources v. Yap34 that:
The burden of proof in overcoming the presumption of State ownership of the lands of the public
domain is on the person applying for registration (or claiming ownership), who must prove that the land
subject of the application is alienable or disposable. To overcome this presumption, incontrovertible
evidence must be established that the land subject of the application (or claim) is alienable or
disposable.There must still be a positive act declaring land of the public domain as alienable and
disposable. To prove that the land subject of an application for registration is alienable, the applicant
must establish the existence of a positive act of the government such as a presidential proclamation or
an executive order; an administrative action; investigation reports of Bureau of Lands investigators; and a
legislative act or a statute. The applicant may also secure a certification from the government that the
land claimed to have been possessed for the required number of years is alienable and disposable.

In the case at bar, no such proclamation, executive order, administrative action, report, statute, or
certification was presented to the Court. The records are bereft of evidence showing that, prior to 2006,
the portions of Boracay occupied by private claimants were subject of a government proclamation that
the land is alienable and disposable. Absent such well-nigh incontrovertible evidence, the Court cannot
accept the submission that lands occupied by private claimants were already open to disposition before
2006. Matters of land classification or reclassification cannot be assumed. They call for proof." (Emphasis
supplied)

In Menguito v. Republic,35 which we reiterated in Republic v. Sarmiento,36 we specifically resolved the

issue of whether the notation on the survey plan was sufficient evidence to establish the alienability and
disposability of public land, to wit:

To prove that the land in question formed part of the alienable and disposable lands of the public
domain, petitioners relied on the printed words which read: "This survey plan is inside Alienable and
Disposable Land Area, Project No. 27-B as per L.C. Map No. 2623, certified by the Bureau of Forestry on
January 3, 1968," appearing on Exhibit "E" (Survey Plan No. Swo-13-000227).

This proof is not sufficient. Section 2, Article XII of the 1987 Constitution, provides: "All lands of the
public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy,
fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State.
x x x."

For the original registration of title, the applicant (petitioners in this case) must overcome the
presumption that the land sought to be registered forms part of the public domain. Unless public land is
shown to have been reclassified or alienated to a private person by the State, it remains part of the
inalienable public domain. Indeed, "occupation thereof in the concept of owner, no matter how long,
cannot ripen into ownership and be registered as a title." To overcome such presumption,
incontrovertible evidence must be shown by the applicant. Absent such evidence, the land sought to be
registered remains inalienable.
In the present case, petitioners cite a surveyor-geodetic engineers notation in Exhibit "E" indicating that
the survey was inside alienable and disposable land. Such notation does not constitute a positive
government act validly changing the classification of the land in question. Verily, a mere surveyor has no
authority to reclassify lands of the public domain. By relying solely on the said surveyors assertion,
petitioners have not sufficiently proven that the land in question has been declared alienable. (Emphasis
supplied)

In Republic v. T.A.N. Properties, Inc.,37 we dealt with the sufficiency of the certification by the Provincial
Environmental Officer (PENRO) or Community Environmental Officer (CENRO) to the effect that a piece
of public land was alienable and disposable in the following manner, viz:

x x x it is not enough for the PENRO or CENRO to certify that a land is alienable and disposable. The
applicant for land registration must prove that the DENR Secretary had approved the land classification
and released the land of the public domain as alienable and disposable, and that the land subject of the
application for registration falls within the approved area per verification through survey by the PENRO
or CENRO. In addition, the applicant for land registration must present a copy of the original
classification approved by the DENR Secretary and certified as a true copy by the legal custodian of the
official records. These facts must be established to prove that the land is alienable and disposable.
Respondent failed to do so because the certifications presented by respondent do not, by themselves,
prove that the land is alienable and disposable.

Only Torres, respondents Operations Manager, identified the certifications submitted by

respondent.1wphi1 The government officials who issued the certifications were not presented before
the trial court to testify on their contents. The trial court should not have accepted the contents of the
certifications as proof of the facts stated therein. Even if the certifications are presumed duly issued and
admissible in evidence, they have no probative value in establishing that the land is alienable and
disposable.

The CENRO and Regional Technical Director, FMS-DENR, certifications do not prove that Lot 10705-B falls
within the alienable and disposable land as proclaimed by the DENR Secretary. Such government
certifications do not, by their mere issuance, prove the facts stated therein. Such government
certifications may fall under the class of documents contemplated in the second sentence of Section 23
of Rule 132. As such, the certifications are prima facie evidence of their due execution and date of
issuance but they do not constitute prima facie evidence of the facts stated therein. (Emphasis supplied)

These rulings of the Court indicate that the notation on the survey plan of Lot 4998-B, Cad-00-000343 to
the effect that the "survey is inside a map classified as alienable/disposable by the Bureau of Forest
Devt" did not prove that Lot 4998-B was already classified as alienable and disposable. Accordingly,
respondents could not validly assert acquisitive prescription of Lot 4988-B.

WHEREFORE, the Court REVERSES and SETS ASIDE the decision of the Court of Appeals promulgated on
May 27, 2003; DISMISSES the application for registration of Arcadio C. Santos, Jr. and Arcadio Ivan S.
Santos III respecting Lot 4998-B with a total area of 1,045 square meters, more or less, situated in
Barangay San Dionisio, Paraaque City, Metro Manila; and DECLARES Lot 4998-B as exclusively belonging
to the State for being part of the dried--up bed of the Parat1aque River.

Respondents shall pay the costs of suit.

SO ORDERED.

LUCAS P. BERSAMIN

Associate Justice
Republic of the Philippines

SUPREME COURT

Manila

THIRD DIVISION

G.R. No. L-46963 March 14, 1994

GLORIA A. FERRER, petitioner,

vs.

HON. ANTONIO BAUTISTA, MARIANO BALANAG, AND MAGDALENA DOMONDON, respondents.

Fortunato F.L. Viray, Jr. for petitioner.

Agaton D. Yaranon, Jr., for private respondent.

VITUG, J.:

This petition for review on certiorari seeks to reverse and set aside the order, dated 11 December 1976,
of the Court of First Instance (now Regional Trial Court) of La Union, Branch III, dismissing petitioner's
complaint for Quieting of Title to Real Property, as well as its order of 03 May 1977, denying the motion
for reconsideration.

Pursuant to this Court's Resolution, dated 19 August 1977 (p. 4, Rollo), petitioner was allowed to file the
instant petition under Republic Act No. 5440 considering that only questions of law had been raised.

On 03 August 1978, the Court dismissed the petition for lack of interest due to the failure of petitioner's
counsel to submit the requisite memorandum in support of the petition (p. 58, Rollo). In a Resolution,
dated 28 September 1978 (p. 63, Rollo), however, the Court resolved to reconsider the dismissal and to
reinstate the petition.

Under controversy is a strip of land south of Lot 1980 of the Cadastral survey of Aringay, La Union.
Petitioner claims its ownership by virtue of accretion, she being the owner of Lot 1980 covered by TCT
No. T-3280, which is immediately north of the land in question. On the other hand, private respondents
equally assert ownership over the property on account of long occupation and by virtue of Certificate of
Title No. P-168, in the name of respondent Magdalena Domondon, pursuant to Free Patent No. 309504
issued on 24 January 1966 (p. 29, Rollo).
On 23 March 1976, petitioner Gloria A. Ferrer filed a complaint with Branch III of the then Court of First
Instance of La Union to "Quiet Title to Real Property" against herein respondents Mariano Balanag and
Magdalena Domondon. The case was denominated Civil Case No. A-514.

Prior to Civil Case No. A-514, petitioner had also filed with the Court of First Instance of La Union, Branch
III, a complaint for reivindicacion (Civil Case No. A-86), dated 25 November 1965, against private
respondents. Herein respondent Judge, who also handled the case, dismissed, on 10 February 1976, the
complaint, without prejudice, on the ground that the court had no authority to cancel or annul the
decree and the title issued by the Director of Lands on the basis of a mere collateral attack (pp. 22-23,
Rollo).

On 11 March 1976, private respondents also moved for the dismissal of Civil Case No. 514-A on the
following grounds, to wit:

1) Gloria A. Ferrer's lack of personality to file and prosecute Civil Case No. 514-A;

2) Civil Case 514-A is barred by prior judgment;

3) Lack of sufficient averments to constitute a cause of action; and

4) Civil Case No. 514-A, is a collateral attack on the Free Patent Decree No. 309504 and O.C. of Title
No. F-168 (Annex "B," pp. 17-21). (p. 66, Rollo.)

On 07 December 1976, Judge Antonio G. Bautista issued an order

(pp. 23-24, Record on Appeal), dismissing petitioner's complaint, ratiocinating, thus

This has reference to the Motion to Dismiss filed by the defendants, through counsel. The plaintiff filed
an Answer to the Motion to Dismiss also through counsel.
The subject of the present action for Quieting of Title to Real Property, is covered by Free Patent No.
309504 and Original Certificate of Title No. P-168, in the names of the defendants. However, the plaintiff
alleged in her Complaint that said Free Patent and Original Certificate of Title were secured through
fraud, etc., on January 24, 1966, for which reason, they are null and void. In view thereof, while the
plaintiff filed the present action ostensibly to Quiet Title of her alleged real property, it is in reality for the
annulment or revocation of the Free Patent and Original Certificate of Title of the defendants. The
observation of the Court is clinched by prayer (a) of the plaintiff's complaint, i.e., "That Patent Title No.
168 be declared revoked and cancelled as null and void from the Records of the Office of the Register of
Deeds of San Fernando, La Union, etc." Consequently, the present action is untenable because it
constitute a collateral or indirect attach on the Free Patent and Original Certificate of Title of the
defendants. That is so, because it was held in the case of Samonte, et al. vs. Sambelon, et al., L-12964,
February 29, 1960, that like a decree, a Patent cannot be attacked collaterally.

Furthermore, the plaintiff has no cause of action against the defendants because the Patent title issued
in favor of the Firmalos (defendants here) by the Director of Lands is by now already indefeasible due to
the lapse of one year following the entry of the decree of registration in the records of the register of
deeds (Firmalos vs. Tutaan, No. L-35408, October 27, 1973).

WHEREFORE, the Court is constrained to order dismissal of the plaintiff's complaint. There is no
pronouncement as to damages and costs. (p. 33, Rollo.)

Petitioner's motion for reconsideration was denied by the court in its order of 03 May 1977 (p. 38,
Record on Appeal).

Hence this petition.

Petitioner submits the following assignment of errors on the part of respondent judge:

I. In not finding and declaring that Gloria A. Ferrer has legal personality to prosecute Civil Case No.
514-A;

II. In not finding and declaring that Civil Case No. 514-A has stated sufficient cause of action;
III. In not finding and declaring that petitioner Gloria A. Ferrer's title to the land is beclouded by the
contrary claim of the private respondents thereto; and

IV. In outright dismissing Civil Case No. 514-A on the ground of collateral attack on Free Patent
Decree No. 309504 being an abuse of judicial discretion and an excess of his jurisdiction. (p. 13, Rollo.)

The petition has merit.

Article 457 of the Civil Code, under which petitioner claims ownership over the dispute parcel of land,
provides:

Art. 457. 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.

Undoubtedly, plaintiff is the lawful owner of the accretion, she being the registered owner of Lot 1980
which adjoins the alluvial property. Parenthetically, the same finding has also been made by the trial
court in Civil Case No. A-86 (p. 29, Rollo).

Alluvion gives to the owners of lands adjoining the banks of rivers or streams any accretion which is
gradually received from the effects of the current of waters (Art. 457, Civil Code; Tuason vs. Court of
Appeals, 147 SCRA 37; Cureg vs. IAC, 177 SCRA 313). The rationale for the rule is to provide some kind of
compensation to owners of land continually exposed to the destructive force of water and subjected to
various easements (Agustin vs. IAC, 187 SCRA 218; Binalay vs. Manalo, 195 SCRA 374).

The Director of Lands has no authority to grant a free patent over land that has passed to private
ownership and which has thereby ceased to be public land. Any title thus issued or conveyed by him
would be null and void (Tuason vs. Court of Appeals, 147 SCRA 37). The nullity arises, not from fraud or
deceit, but from the fact that the land is no longer under the jurisdiction of the Bureau of Lands, the
latter's authority being limited only to lands of public dominion and not those that are privately owned
(Agne vs. Director of Lands, 181 SCRA 793).
Herein private respondents, therefore, acquired no right or title over the disputed land by virtue of the
free patent since at the time it was issued in 1966, it was already private property and not a part of the
disposable land of the public domain.

Although, ordinarily, a title becomes incontrovertible one year after it is issued pursuant to a public
grant, the rule does not apply when such issuance is null and void. An action to declare the nullity of that
void title does not prescribe (Agne vs. Director of Lands, supra); in fact, it is susceptible to direct, as well
as to collateral, attack (Estoesta, Sr. vs. Court of Appeals, 179 SCRA 203).

Private respondents contend that an action for reconveyance prescribes in ten years. The ten-year
prescriptive period is applicable to an action for reconveyance if, indeed, it is based on an implied or
constructive trust. Article 1456 of the Civil Code, upon which a constructive trust can be predicated,
cannot be invoked, however, since the public grant and the title correspondingly issued to private
respondents that can create that juridical relationship is a patent nullity. Even assuming, nonetheless,
that a constructive trust did arise, the running of the prescriptive period is to be deemed interrupted
when an action is filed in court (Art. 1155, Civil Code) or, obviously, when one is already there pending.

Here, to recall, the Free Patent was issued on 24 January 1966 and OCT P-168 was transcribed in the
Registration Book of La Union on 08 February 1966 (pp. 38-39, Rollo). At that time, Civil Case No. A-86
for reivindicacion between the parties was still pending in court. After Civil Case No. A-86 was dismissed,
without prejudice, on 10 February 1976 (p. 32, Rollo), petitioner, on 22 March 1976 (p. 1, Record on
Appeal), promptly filed Civil Case No. A-514 (now on appeal in this instance).

Neither can private respondents claim ownership of the disputed property by acquisitive prescription.
Ownership and other real rights over immovable property are acquired by ordinary prescription through
possession of ten years if the adverse possession is with a just title and the possession is in good faith.
Ownership and other real rights over immovables also prescribe through uninterrupted adverse
possession thereof for thirty years, this time without need of title or of good faith. (See Art. 1134, Civil
Code.)

Given the settings in this case at bench, the applicable period of acquisitive prescription, if at all, would
be thirty years. Even assuming, then, that private respondents were in adverse possession of the
property from 1966 when the free patent was obtained, or even at the inception of their alleged adverse
possession in 1954 ("Comment on Petition for Review," p. 35, Rollo), that possession, for purposes of
acquisitive prescription, was deemed interrupted upon their receipt of summons (Art. 1123, Civil Code)
in Civil Case No. A-86 pending since 1965, as well as Civil Case No. A-514 filed in 1976 following the
dismissal the month previous of Civil Case No. A-86. The prescriptive period of prescription may not be
held to commence anew during the pendency of said cases.

The instant petition has merely prayed that respondent court be directed to continue hearing Civil Case
No. 514-A. We have repeatedly ruled, however, that where the determinative facts are before this Court,
and it is in a position to finally resolve the dispute, the expeditious administration of justice will be
subserved by the resolution of the case and thereby obviate the needless protracted proceedings
consequent to the remand of the case to the trial court (Heirs of Crisanta Almoradie, et al. vs. Court of
Appeals, et al., G.R. No. 91385, January 4, 1994; Lianga Bay Logging Co., et al. vs. Court of Appeals, 157
SCRA 357; Escudero vs. Dulay, 158, SCRA 69). Clearly, the records support the finding that herein
petitioner is the true owner of the land subject of the free patent issued to private respondents. The
court then, in the exercise of its equity jurisdiction. may, instead of remanding the case to the trial court,
direct the owner to reconvey the disputed parcel to its lawful owner (Limaza vs. IAC, 182 SCRA 855; Agne
vs. Director of Lands, supra). Considering, moreover, the length of time that this case has been pending
between the parties, not counting petitioner's original action for reivindicacion in Civil Case No.

A-86 filed on 25 November 1956, an order from this Court requiring such reconveyance can certainly be
just and warranted.

WHEREFORE, the questioned order of dismissal of the trial court in its Civil Case No. 514-A is REVERSED
and SET ASIDE, and judgment is hereby rendered DECLARING petitioner to be the owner of the disputed
parcel of land and ORDERING private respondents to reconvey the same to said petitioner. No costs.

SO ORDERED.

Bidin, Romero and Melo, JJ., concur.

Feliciano, J., concurs in the result.

Republic of the Philippines

Supreme Court

Manila

FIRST DIVISION

JOSE FERNANDO, JR., ZOILO FERNANDO, NORMA FERNANDO BANARES, ROSARIO FERNANDO
TANGKENCGO, HEIRS OF TOMAS FERNANDO, represented by ALFREDO V. FERNANDO, HEIRS OF
GUILLERMO FERNANDO, represented by Ronnie H. Fernando, HEIRS OF ILUMINADA FERNANDO,
represented by Benjamin Estrella and HEIRS OF GERMOGENA FERNANDO,

Petitioners,

- versus -

LEON ACUNA, HERMOGENES FERNANDO, HEIRS OF SPOUSES ANTONIO FERNANDO AND FELISA
CAMACHO, represented by HERMOGENES FERNANDO,

Respondents.

G.R. No. 161030

Present:

CORONA, C.J.,

Chairperson,

LEONARDO-DE CASTRO,

BERSAMIN,

DEL CASTILLO, and

VILLARAMA, JR., JJ.

Promulgated:

September 14, 2011

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

LEONARDO-DE CASTRO, J.:

This is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure seeking to
reverse and set aside the Decision[1] dated November 24, 2003 of the Court of Appeals in CA-G.R. CV
No. 75773, entitled Jose Fernando, Jr., et al. v. Heirs of Germogena Fernando, et al., which reversed and
set aside the Decision[2] dated May 16, 2002 of Branch 84, Regional Trial Court (RTC) of Malolos, Bulacan
in Civil Case No. 256-M-97.

At the heart of this controversy is a parcel of land covered by Original Certificate of Title (OCT) No. RO-
487 (997)[3] registered in the names of Jose A. Fernando, married to Lucila Tinio, and Antonia A.
Fernando, married to Felipe Galvez, and located in San Jose, Baliuag, Bulacan. When they died intestate,
the property remained undivided. Petitioners herein namely, Jose Fernando, Jr., Zoilo Fernando, Norma
Fernando Banares, Rosario Fernando Tangkencgo, the heirs of Tomas Fernando, the heirs of Guillermo
Fernando, the heirs of Iluminada Fernando and the heirs of Germogena Fernando are the heirs and
successors-in-interest of the deceased registered owners. However, petitioners failed to agree on the
division of the subject property amongst themselves, even after compulsory conciliation before the
Barangay Lupon.

Thus, petitioners, except for the heirs of Germogena Fernando, filed a Complaint[4] for partition on April
17, 1997 against the heirs of Germogena Fernando. In the Complaint, plaintiffs alleged, among others,
that they and defendants are common descendants and compulsory heirs of the late spouses Jose A.
Fernando and Lucila Tinio, and the late spouses Antonia A. Fernando and Felipe Galvez. They further
claimed that their predecessors-in-interest died intestate and without instructions as to the disposition
of the property left by them covered by OCT No. RO-487 (997). There being no settlement, the heirs are
asking for their rightful and lawful share because they wish to build up their homes or set up their
business in the respective portions that will be allotted to them. In sum, they prayed that the subject
property be partitioned into eight equal parts, corresponding to the hereditary interest of each group of
heirs.

In their Answer[5] filed on May 20, 1997, defendants essentially admitted all of the allegations in the
complaint. They alleged further that they are not opposing the partition and even offered to share in the
expenses that will be incurred in the course of the proceedings.

In his Complaint in Intervention[6] filed on January 12, 1998, respondent Leon Acuna (Acuna) averred
that in the Decision[7] dated November 29, 1929 of the Cadastral Court of Baliuag, Bulacan, the portion
of the property identified as Lot 1303 was already adjudicated to: (a) Antonio Fernando, married to
Felisa Camacho; (b) spouses Jose Martinez and Gregoria Sison; (c) spouses Ignacio de la Cruz and Salud
Wisco; and (d) Jose Fernando, married to Lucila Tinio, the petitioners predecessor-in-interest. He likewise
claimed that in a 1930 Decision of the Cadastral Court, the portion identified as Lot 1302 was also
already adjudicated to other people as well.

Respondent Acuna further alleged that Salud Wisco, through her authorized attorney-in-fact, Amador W.
Cruz, sold her lawful share denominated as Lot 1303-D with an area of 3,818 square meters to Simeon P.
Cunanan,[8] who in turn sold the same piece of land to him as evidenced by a Deed of Sale.[9] He also
belied petitioners assertion that the subject property has not been settled by the parties after the death
of the original owners in view of the Decision[10] dated July 30, 1980 of the Court of First Instance (CFI)
of Baliuag, Bulacan, in LRC Case No. 80-389 which ordered the Register of Deeds of Bulacan to issue the
corresponding certificates of title to the claimants of the portion of the subject property designated as
Lot 1302.[11] Norma Fernando, one of the petitioners in the instant case, even testified in LRC Case No.
80-389. According to respondent Acuna, this circumstance betrayed bad faith on the part of petitioners
in filing the present case for partition.

Respondent Acuna likewise averred that the action for partition cannot prosper since the heirs of the
original owners of the subject property, namely Rosario, Jose Jr., Norma, Tomas, Guillermo, Leopoldo,
Hermogena, Illuminada and Zoilo, all surnamed Fernando, and Lucila Tinio, purportedly had already sold
their respective one-tenth (1/10) share each in the subject property to Ruperta Sto. Domingo Villasenor
for the amount of P35,000.00 on January 25, 1978 as evidenced by a Kasulatan sa Bilihang Patuluyan.
[12] He added that he was in possession of the original copy of OCT No. RO-487 (997) and that he had
not commenced the issuance of new titles to the subdivided lots because he was waiting for the owners
of the other portions of the subject property to bear their respective shares in the cost of titling.

Subsequently, a Motion for Intervention[13] was filed on June 23, 1998 by respondent Hermogenes
Fernando (Hermogenes), for himself and on behalf of the heirs of the late spouses, Antonio A. Fernando
and Felisa Camacho. According to him, in the July 30, 1980 Decision of the CFI of Bulacan, their
predecessors-in-interest had already been adjudged owners of Lots 1302-A, 1302-F, 1302-G,[14] 1302-H
and 1302-J of OCT No. RO-487 (997) and any adverse distribution of the properties would cause
respondents damage and prejudice. He would also later claim, in his Answer-in-Intervention,[15] that
the instant case is already barred by res judicata and, should be dismissed.

In the interest of substantial justice, the trial court allowed the respondents to intervene in the case.

The plaintiffs and defendants jointly moved to have the case submitted for judgment on the pleadings on
May 7, 1999.[16] However, the trial court denied said motion in a Resolution[17] dated August 23, 1999
primarily due to the question regarding the ownership of the property to be partitioned, in light of the
intervention of respondents Acuna and Hermogenes who were claiming legal right thereto.

In their Manifestation[18] filed on April 12, 2000, petitioners affirmed their execution of a Deed of Sale
in favor of Ruperta Sto. Domingo Villasenor in 1978, wherein they sold to her 1,000 square meters from
Lot 1303 for the sum of 35,000.00.

After the pre-trial conference, trial ensued. On September 19, 2000, petitioner Elizabeth Alarcon testified
that they (plaintiffs) are not claiming the entire property covered by OCT No. RO-487 (997) but only the
area referred to as Lot 1303 and Sapang Bayan. She also admitted that Lot 1302 had already been
divided into ten (10) sublots and allocated to various owners pursuant to the July 30, 1980 Decision of
the CFI of Baliuag, Bulacan and these owners already have their own titles. She likewise claimed that the
entire area consisting of Lot 1303 and Sapang Bayan is based on the subdivision plan of Lot 1303. She
admitted that plaintiffs predecessor-in-interest was only allocated a portion of Lot 1303 based on the
said plan. However, she claimed that the November 29, 1929 Decision subdividing Lot 1303 was never
implemented nor executed by the parties.[19]

Petitioner Norma Fernando testified on October 3, 2000 that she is one of the children of Jose A.
Fernando and Lucila Tinio. She affirmed that plaintiffs were only claiming Lot 1303 and Sapang Bayan.
She also testified that Sapang Bayan was supposedly included in Lot 1302 and was previously a river until
it dried up. Unlike Lot 1302, the rest of the property was purportedly not distributed. She likewise
averred that she is aware of a November 29, 1929 Decision concerning the distribution of Lot 1303
issued by the cadastral court but insisted that the basis of the claims of the petitioners over Lot 1303 is
the title in the name of her ascendants and not said Decision.[20]

On November 16, 2000, as previously directed by the trial court and agreed to by the parties, counsel for
respondent Hermogenes prepared and submitted an English translation of the November 29, 1929
Decision. The same was admitted and marked in evidence as Exhibit X[21] as a common exhibit of the
parties. The petitioners also presented Alfredo Borja, the Geodetic Engineer who conducted a relocation
survey of the subject property.

After plaintiffs rested their case, respondent Hermogenes testified on December 7, 2000. In his
testimony, he claimed to know the plaintiffs and defendants as they were allegedly his relatives and
neighbors. He confirmed that according to the November 29, 1929 Decision, portions of Lot 1303 was
designated as Lots 1303-A, 1303-B, 1303-C and 1303-D which were adjudicated to certain persons,
including Jose Fernando, while the rest of Lot 1303 was adjudicated to his parents, Antonio A. Fernando
married to Felisa Camacho. According to respondent Hermogenes, his familys tenant and the latters
children occupied the portion of Lot 1303 allotted to his (Hermogenes) parents while the rest of Lot 1303
was occupied by the persons named in the said November 29, 1929 Decision. He admitted, however,
that nobody among the purported possessors of Lot 1303 registered the lots assigned to them in the
Decision.[22]

On January 18, 2001, respondent Hermogenes presented a witness, Engineer Camilo Vergara who
testified that the subject land is divided into Lots 1302 and 1303 with a creek dividing the two lots
known as Sapang Bayan. He also identified a Sketch Plan numbered as PSD-45657 and approved on
November 11, 1955.[23] During the hearing on January 30, 2001, respondent Hermogenes made an oral
offer of his evidence and rested his case. On the same date, respondent Acuna, in lieu of his testimony,
offered for the parties to simply stipulate on the due execution and authenticity of the Deeds of Sale
dated April 6, 1979 and December 28, 1980, showing the transfer of Lot 1303-D from Salud Wisco to
Simeon Cunanan and subsequently to respondent Acuna. When counsel for plaintiffs and defendants
agreed to the stipulation, albeit objecting to the purpose for which the deeds of sale were offered, the
trial court admitted Acunas exhibits and Acuna rested his case.[24]

On February 15, 2001, plaintiffs recalled Norma Fernando as a rebuttal witness. In her rebuttal
testimony, she identified the tax declaration[25] over the said property in the name of Jose A. Fernando;
an official receipt[26] dated October 3, 1997 issued by the Office of the Treasurer of the Municipality of
Baliuag, Bulacan for payment of real property taxes from 1991 to 1997; and a real property tax
clearance[27] dated October 6, 1997, to show that plaintiffs have allegedly been paying the real property
taxes on the entire property covered by OCT No. RO-487 (997). However, she further testified that they
were now willing to pay taxes only over the portion with an area of 44,234 square meters, which is
included in their claim.[28]

In a Decision dated May 16, 2002, the trial court ruled that plaintiffs and defendants (petitioners herein)
were indeed the descendants and successors-in-interest of the registered owners, Jose A. Fernando
(married to Lucila Tinio) and Antonia Fernando (married to Felipe Galvez), of the property covered by
OCT No. RO-487 (997). After finding that the parties admitted that Lot 1302 was already distributed and
titled in the names of third persons per the July 30, 1980 Decision of the CFI of Baliuag, Bulacan the trial
court proceeded to rule on the allocation of Lot 1303 and Sapang Bayan.

With respect to Lot 1303, the trial court found that the November 29, 1929 Decision of the Cadastral
Court, adjudicating said lot to different persons and limiting Jose Fernandos share to Lot 1303-C, was
never implemented nor executed despite the lapse of more than thirty years. Thus, the said decision has
already prescribed and can no longer be executed. The trial court ordered the reversion of Lot 1303 to
the ownership of spouses Jose A. Fernando and Lucila Tinio and spouses Antonia A. Fernando and Felipe
Galvez under OCT No. RO-487 (997) and allowed the partition of Lot 1303 among petitioners as
successors-in-interest of said registered owners. Excluded from the partition, however, were the portions
of the property which petitioners admitted had been sold or transferred to Ruperta Sto. Domingo
Villasenor and respondent Acuna.

As for the ownership of Sapang Bayan, the trial court found that the same had not been alleged in the
pleadings nor raised as an issue during the pre-trial conference. Also, according to the trial court, the
parties failed to clearly show whether Sapang Bayan was previously a dry portion of either Lot 1302 or
Lot 1303. Neither was there any proof that Sapang Bayan was a river that just dried up or that it was an
accretion which the adjoining lots gradually received from the effects of the current of water. It was
likewise not established who were the owners of the lots adjoining Sapang Bayan. The trial court
concluded that none of the parties had clearly and sufficiently established their claims over Sapang
Bayan.

The dispositive portion of the May 16, 2002 Decision of the trial court reads:

WHEREFORE, all the foregoing considered, judgment is hereby rendered ordering the reversion of Lot
1303, except the portions allotted to Acuna and Ruperta Sto. Domingo Villasenor, to the ownership of
Jose Fernando and Lucia Tinio and Antonia Fernando and Felipe Galvez under OCT No. 997 and
thereafter allowing the partition of said Lot 1303 among the plaintiffs and the defendants as successors-
in-interest of Jose and Lucia as well as Antonia and Felipe after the settlement of any inheritance tax,
fees, dues and/or obligation chargeable against their estate.[29]

All the parties, with the exception of respondent Acuna, elevated this case to the Court of Appeals which
rendered the assailed November 24, 2003 Decision, the dispositive portion of which reads:

WHEREFORE, premises considered, the decision dated May 16, 2002, of the Regional Trial Court of
Malolos, Bulacan, Third Judicial Region, Branch 84, in Civil Case No. 256-M-97, is hereby REVERSED and
SET ASIDE and the complaint dated April 17, 1997 filed by plaintiffs-appellants is dismissed. Costs against
plaintiffs-appellants.[30]
Hence, plaintiffs and defendants in the court a quo elevated the matter for our review through the
instant petition.

Petitioner raises the following issues for consideration:

1. Whether or not the ownership of Lot 1303 and the Sapang Bayan portion of the piece of land
covered by O.C.T. No. RO-487 (997) or Plan Psu-39080 should revert to the descendants and heirs of the
late spouses Jose Fernando and Lucila Tinio and Antonia Fernando, married to Felipe Galvez;

2. Whether or not a title registered under the Torrens system, as the subject original certificate of title
is the best evidence of ownership of land and is a notice against the world.[31]

The petition is without merit.

Petitioners based their claims to the disputed areas designated as Lot 1303 and Sapang Bayan on their
ascendants title, OCT No. RO-487 (997), which was issued on February 26, 1927 in the name of Jose A.
Fernando married to Lucila Tinio and Antonia A. Fernando married to Felipe Galvez. The Court now rules
on these claims in seriatim.

Petitioners claim with respect to Lot 1303

As the records show, in the November 29, 1929 Decision of the Cadastral Court of Baliuag, Bulacan (in
Cadastral Record No. 14, GLRO Cad. Record No. 781) which was written in Spanish, Lot 1303 had already
been divided and adjudicated to spouses Jose A. Fernando and Lucila Tinio; spouses Antonia A. Fernando
and Felipe Galvez; spouses Antonio A. Fernando and Felisa Camacho; spouses Jose Martinez and
Gregoria Sison; and spouses Ignacio de la Cruz and Salud Wisco from whom respondent Acuna derived
his title. The English translation of the said November 29, 1929 Decision was provided by respondent
Hermogenes and was adopted by all the parties as a common exhibit designated as Exhibit X. The agreed
English translation of said Decision reads:

Lot No. 1303 This lot is decreed in record No. 448, G.L.R.O. Record No. 25414 and actually with Original
Certificate No. 997 (exhibited today) in the name of Jose A. Fernando and Antonia A. Fernando, who now
pray that said lot be subdivided in accordance with the answers recorded in the instant cadastral record,
and the sketch, Exh. A, which is attached to the records.
A part or portion of the lot has been claimed by Antonio A. Fernando, of legal age, married to Felisa
Camacho; another portion by the spouses Jose Martinez and Gregoria Sison; another portion by Antonia
A. Fernando, of legal age, married to Felipe Galvez; another portion by Jose A. Fernando, of legal age,
married to Lucila Tinio; and another portion by the spouses Ignacio de la Cruz and Salud Wisco, both of
legal age. The part claimed by the spouses Jose A. Martinez and Gregoria Sison is Lot 1303-A of Exh. A;
the part claimed by Antonia A. Fernando is Lot 1303-B of said exhibit; the part claimed by Jose A.
Fernando is Lot 1303-C of said exhibit, and the part claimed by the spouses Ignacio de la Cruz and Salud
Wisco is Lot 1303-D of the aforementioned Exhibit.

The subdivision of said lot is hereby ordered, separating from the same the portions that correspond to
each of the claimants, which portions are known as Lots 1303-A, 1303-B, 1303-C, and 1303-D in the
sketch, Exh. A, and once subdivided, are adjudicated in favor of the spouses, Jose Martinez and Gregoria
Sison, of legal age, Lot No. 1303-A, in favor of Antonia A. Fernando, of legal age, married to Felipe
Galvez, Lot No. 1303-B; in favor of Jose A. Fernando, of legal age, married to Lucila Tinio, Lot 1303-C; in
favor of the spouses Ignacio de la Cruz and Salud Wisco, of legal age, Lot 1303-D; and the rest of Lot
1303 is adjudged in favor of Antonio A. Fernando married to Felisa Camacho. It is likewise ordered that
once the subdivision plan is approved, the same be forwarded by the Director of Lands to this Court for
its final decision.

It is ordered that the expense for mentioned subdivision, shall be for the account of the spouses Jose
Martinez and Gregoria Sison, Antonia A. Fernando, Jose A. Fernando, the spouses Ignacio de la Cruz and
Salud Wisco, and Antonio A. Fernando.[32]

From the foregoing, it would appear that petitioners ascendants themselves petitioned for the cadastral
court to divide Lot 1303 among the parties to the 1929 case and they were only allocated Lots 1303-B
and 1303-C. Still, as the trial court noted, the November 29, 1929 Decision was never fully implemented
in the sense that the persons named therein merely proceeded to occupy the lots assigned to them
without having complied with the other directives of the cadastral court which would have led to the
titling of the properties in their names. Nonetheless, it is undisputed that the persons named in the said
November 29, 1929 Decision and, subsequently, their heirs and assigns have since been in peaceful and
uncontested possession of their respective lots for more than seventy (70) years until the filing of the
suit for partition on April 17, 1997 by petitioners which is the subject matter of this case. Respondent
Hermogenes, who testified that petitioners were his relatives and neighbors, further affirmed before the
trial court that the persons named in the November 29, 1929 Decision took possession of their
respective lots:
ATTY. VENERACION:

Q This Jose A. Fernando married to Lucila Tinio, you testified earlier are the parents of the plaintiffs. Did
they take possession of lot 1303-C?

A Yes, sir. They took possession.

Q Did they take possession of the other lots?

A No. Yes, the portion

Q The other lots in the name of the other persons. Did they take possession of that?

A Yes, they took took possession of the other No, sir.

Q I am asking you whether they took possession, the children

ATTY. SANTIAGO:

The questions are already answered, your Honor.

ATTY. VENERACION:

What is the answer?

ATTY. SANTIAGO:

Its in the record.

COURT:

The persons named in the Decision already took possession of the lots allotted to them as per that
Decision. So that was already answered. Anything else?

ATTY. VENERACION;

No more question, Your Honor.[33]

It is noteworthy that petitioners do not dispute that the November 29, 1929 Decision of the cadastral
court already adjudicated the ownership of Lot 1303 to persons other than the registered owners
thereof. Petitioners would, nonetheless, claim that respondents purported failure to execute the
November 29, 1929 Decision over Lot 1303 (i.e., their failure to secure their own titles) meant that the
entire Lot 1303 being still registered in the name of their ascendants rightfully belongs to them. This is
on the theory that respondents right to have the said property titled in their names have long
prescribed.

On this point, we agree with the appellate court.

Section 47 of Presidential Decree No. 1529, otherwise known as the Property Registration Decree, states
that [n]o title to registered land in derogation of the title of the registered owner shall be acquired by
prescription or adverse possession. Thus, the Court has held that the right to recover possession of
registered land is imprescriptible because possession is a mere consequence of ownership.[34]

However, in Heirs of Anacleto B. Nieto v. Municipality of Meycauayan, Bulacan,[35] the Court had
recognized the jurisprudential thread regarding the exception to the foregoing doctrine that while it is
true that a Torrens title is indefeasible and imprescriptible, the registered landowner may lose his right
to recover possession of his registered property by reason of laches.

Thus, in Heirs of Batiog Lacamen v. Heirs of Laruan,[36] the Court had held that while a person may not
acquire title to the registered property through continuous adverse possession, in derogation of the title
of the original registered owner, the heir of the latter, however, may lose his right to recover back the
possession of such property and the title thereto, by reason of laches.

In the more recent case of Bartola M. Vda. De Tirona v. Encarnacion,[37] we similarly held that while
jurisprudence is settled on the imprescriptibility and indefeasibility of a Torrens title, there is equally an
abundance of cases where we unequivocally ruled that registered owners may lose their right to recover
possession of property through the equitable principle of laches.

Laches means the failure or neglect for an unreasonable and unexplained length of time to do that
which, by observance of due diligence, could or should have been done earlier. It is negligence or
omission to assert a right within a reasonable time, warranting the presumption that the party entitled
to assert his right either has abandoned or declined to assert it. Laches thus operates as a bar in equity.
[38] The essential elements of laches are: (a) conduct on the part of the defendant, or of one under
whom he claims, giving rise to the situation complained of; (b) delay in asserting complainants rights
after he had knowledge of defendants acts and after he has had the opportunity to sue; (c) lack of
knowledge or notice by defendant that the complainant will assert the right on which he bases his suit;
and (d) injury or prejudice to the defendant in the event the relief is accorded to the complainant.[39]

In view of respondents decades long possession and/or ownership of their respective lots by virtue of a
court judgment and the erstwhile registered owners inaction and neglect for an unreasonable and
unexplained length of time in pursuing the recovery of the land, assuming they retained any right to
recover the same, it is clear that respondents possession may no longer be disturbed. The right of the
registered owners as well as their successors-in-interest to recover possession of the property is already
a stale demand and, thus, is barred by laches.

In the same vein, we uphold the finding of the Court of Appeals that the title of petitioners ascendants
wrongfully included lots belonging to third persons.[40] Indeed, petitioners ascendants appeared to have
acknowledged this fact as they were even the ones that prayed for the cadastral court to subdivide Lot
1303 as evident in the November 29, 1929 Decision. We concur with the Court of Appeals that
petitioners ascendants held the property erroneously titled in their names under an implied trust for the
benefit of the true owners. Article 1456 of the Civil Code provides:

ART. 1456. If property is acquired through mistake or fraud, the person obtaining it is, by force of law,
considered a trustee of an implied trust for the benefit of the person from whom the property comes.

As aptly observed by the appellate court, the party thus aggrieved has the right to recover his or their
title over the property by way of reconveyance while the same has not yet passed to an innocent
purchaser for value.[41] As we held in Medizabel v. Apao,[42] the essence of an action for reconveyance
is that the certificate of title is respected as incontrovertible. What is sought is the transfer of the
property, in this case its title, which has been wrongfully or erroneously registered in another person's
name, to its rightful owner or to one with a better right. It is settled in jurisprudence that mere issuance
of the certificate of title in the name of any person does not foreclose the possibility that the real
property may be under co-ownership with persons not named in the certificate or that the registrant
may only be a trustee or that other parties may have acquired interest subsequent to the issuance of the
certificate of title.[43]

We cannot subscribe to petitioners argument that whatever rights or claims respondents may have
under the November 29, 1929 Decision has prescribed for their purported failure to fully execute the
same. We again concur with the Court of Appeals in this regard. An action for reconveyance of registered
land based on implied trust prescribes in ten (10) years, the point of reference being the date of
registration of the deed or the date of the issuance of the certificate of title over the property. However,
this Court has ruled that the ten-year prescriptive period applies only when the person enforcing the
trust is not in possession of the property. If a person claiming to be its owner is in actual possession of
the property, the right to seek reconveyance, which in effect seeks to quiet title to the property, does not
prescribe. The reason is that the one who is in actual possession of the land claiming to be its owner may
wait until his possession is disturbed or his title is attacked before taking steps to vindicate his right.[44]

Petitioners claim with respect to Sapang Bayan

As for the issue of the ownership of Sapang Bayan, we sustain the appellate court insofar as it ruled that
petitioners failed to substantiate their ownership over said area. However, we find that the Court of
Appeals erred in ruling that the principle of accretion is applicable. The said principle is embodied in
Article 457 of the Civil Code which states that [t]o 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. We have
held that for Article 457 to apply the following requisites must concur: (1) that the deposit be gradual
and imperceptible; (2) that it be made through the effects of the current of the water; and (3) that the
land where accretion takes place is adjacent to the banks of rivers.[45] The character of the Sapang
Bayan property was not shown to be of the nature that is being referred to in the provision which is an
accretion known as alluvion as no evidence had been presented to support this assertion.

In fact from the transcripts of the proceedings, the parties could not agree how Sapang Bayan came
about. Whether it was a gradual deposit received from the river current or a dried-up creek bed
connected to the main river could not be ascertained.

Even assuming that Sapang Bayan was a dried-up creek bed, under Article 420, paragraph 1[46] and
Article 502, paragraph 1[47] of the Civil Code, rivers and their natural beds are property of public
dominion. In the absence of any provision of law vesting ownership of the dried-up river bed in some
other person, it must continue to belong to the State.

We ruled on this issue in Republic v. Court of Appeals,[48] to wit:

The lower court cannot validly order the registration of Lots 1 and 2 in the names of the private
respondents. These lots were portions of the bed of the Meycauayan river and are therefore classified as
property of the public domain under Article 420 paragraph 1 and Article 502, paragraph 1 of the Civil
Code of the Philippines. They are not open to registration under the Land Registration act. The
adjudication of the lands in question as private property in the names of the private respondents is null
and void.[49]

Furthermore, in Celestial v. Cachopero,[50] we similarly ruled that a dried-up creek bed is property of
public dominion:

A creek, like the Salunayan Creek, is a recess or arm extending from a river and participating in the ebb
and flow of the sea. As such, under Articles 420(1) and 502(1) of the Civil Code, the Salunayan Creek,
including its natural bed, is property of the public domain which is not susceptible to private
appropriation and acquisitive prescription. And, absent any declaration by the government, that a
portion of the creek has dried-up does not, by itself, alter its inalienable character.[51]

Therefore, on the basis of the law and jurisprudence on the matter, Sapang Bayan cannot be adjudged to
any of the parties in this case.

WHEREFORE, premises considered, the petition is hereby DENIED. The assailed Decision dated
November 24, 2003 of the Court of Appeals in CA-G.R. CV No. 75773 is hereby AFFIRMED. Costs against
petitioners.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 94283 March 4, 1991

MAXIMO JAGUALING, ANUNCITA JAGUALING and MISAMIS ORIENTAL CONCRETE PRODUCTS, INC.,
petitioners,

vs.

COURT OF APPEALS (FIFTEENTH DIVISION), JANITA F. EDUAVE and RUDYGONDO EDUAVE, respondents.

Cabanlas, Resma & Cabanlas Law Offices for petitioners.

Jaime Y Sindiong for private respondents.

GANCAYCO, J.:

Between the one who has actual possession of an island that forms in a non-navigable and non-flotable
river and the owner of the land along the margin nearest the island, who has the better right thereto?
This is the issue to be resolved in this petition.

The parties to this case dispute the ownership of a certain parcel of land located in Sta. Cruz, Tagoloan,
Misamis Oriental with an area of 16,452 square meters, more or less, forming part of an island in a non-
navigable river, and more particularly described by its boundaries as follows:

North by the Tagoloan River,

South by the Tagoloan River,

East by the Tagoloan River and

West by the portion belonging to Vicente Neri.

Private respondents filed with the Regional Trial Court of Misamis Oriental1 an action to quiet title
and/or remove a cloud over the property in question against petitioners.

Respondent Court of Appeals2 summarized the evidence for the parties as follows:

The appellant [private respondent Janita Eduave] claims that she inherited the land from his [sic] father,
Felomino Factura, together with his co-heirs, Reneiro Factura and Aldenora Factura, and acquired sole
ownership of the property by virtue of a Deed of Extra Judicial Partition with sale (Exh. D). The land is
declared for tax purposes under Tax Decl. No. 26137 (Exh. E) with an area of 16,452 square meters more
or less (Exh. D). Since the death of her father on May 5, 1949, the appellant had been in possession of
the property although the tax declaration remains in the name of the deceased father.

The appellants further state that the entire land had an area of 16,452 square meters appearing in the
deed of extrajudicial partition, while in [the] tax declaration (Exh. E) the area is only 4,937 square
meters, and she reasoned out that she included the land that was under water. The land was eroded
sometime in November 1964 due to typhoon Ineng, destroying the bigger portion and the
improvements leaving only a coconut tree. In 1966 due to the movement of the river deposits on the
land that was not eroded increased the area to almost half a hectare and in 1970 the appellant started
to plant bananas [sic].

In 1973 the defendants-appellees [petitioners herein] asked her permission to plant corn and bananas
provided that they prevent squatters to come to the area.

The appellant engaged the services of a surveyor who conducted a survey and placed concrete
monuments over the land. The appellant also paid taxes on the land in litigation, and mortgaged the land
to the Luzon Surety and Co., for a consideration of P6,000.00.

The land was the subject of a reconveyance case, in the Court of First Instance of Misamis Oriental,
Branch V, at Cagayan de Oro City, Civil Case No. 5892, between the appellant Janita Eduave vs. Heirs of
Antonio Factura which was the subject of judgment by compromise in view of the amicable settlement
of the parties, dated May 31, 1979. (Exh. R);

That the heirs of Antonio Factura, who are presently the defendants-appellees in this case had ceded a
portion of the land with an area of 1,289 square meters more or less, to the appellant, Janita Eduave, in
a notarial document of conveyance, pursuant to the decision of the Court of First Instance, after a
subdivision of the lot No. 62 Pls-799, and containing 1,289 square meters more or less was designated as
Lot No. 62-A [sic], and the subdivision plan was approved as Pls-799-Psd-10-001782. (Exh. R; R-1 and R-
2);

The portion Lot No. 62-A, is described as follows:

A parcel of land (Lot No. 62-A, Psd-10-001782 being a portion of Lot 62, Pls-799, Tagoloan Public Land
Subdivision) situated in Bo. Sta. Cruz, Municipality of Tagoloan, Province of Misamis Oriental. Bounded
on the W, and on the N along lines 4-5-1 by Lot 62-B of the subdivision plan 10-001782; on the E by line
1-2 by Lot 64; Pls-799; on the S, along line 2-3-4 by Saluksok Creek, containing an area of one thousand
two hundred eighty nine (1,289) square meters more or less.

Appellant also applied for concession with the Bureau of Mines to extract 200 cubic meters of gravel
(Exh. G & G-1); and after an ocular inspection the permit was granted (Exh. K, and K-1 and K-2). That the
appellant after permit was granted entered into an agreement with Tagoloan Aggregates to extract sand
and gravel (Exh. L; L-1; and L-2), which agreement was registered in the office of the Register of Deeds
(Exh. M; M-1; and M-2);

The defendants-appellees [petitioners herein] denied the claim of ownership of the appellant, and
asserted that they are the real owners of the land in litigation containing an area of 18,000 square
meters more or less. During the typhoon Ineng in 1964 the river control was washed away causing the
formation of an island, which is now the land in litigation. The defendants started occupying the land in
1969, paid land taxes as evidenced by tax declaration No. 26380 (Exh. 4) and tax receipts (Exhs. 7 to 7-G),
and tax clearances (Exhs. 8 & 9). Photographs showing the actual occupation of the land by the
defendants including improvements and the house were presented as evidence (Exh. 11 to 11-E). The
report of the Commissioner who conducted the ocular inspection was offered as evidence of the
defendants (Exh. G).
The sketch plan prepared by Eng. Romeo Escalderon (Exh. 12) shows that the plaintiffs' [private
respondents'] land was across the land in litigation (Exh. 12-A), and in going to the land of the plaintiff,
one has to cross a distance of about 68 meters of the Tagoloan river to reach the land in litigation.3

On 17 July 1987 the trial court dismissed the complaint for failure of private respondents as plaintiffs
therein to establish by preponderance of evidence their claim of ownership over the land in litigation.
The court found that the island is a delta forming part of the river bed which the government may use to
reroute, redirect or control the course of the Tagoloan River. Accordingly, it held that it was outside the
commerce of man and part of the public domain, citing Article 420 of the Civil Code.4

As such it cannot be registered under the land registration law or be acquired by prescription. The trial
court, however, recognized the validity of petitioners' possession and gave them preferential rights to
use and enjoy the property. The trial court added that should the State allow the island to be the subject
of private ownership, the petitioners have rights better than that of private respondents.5

On appeal to the Court of Appeals, respondent court found that the island was formed by the branching
off of the Tagoloan River and subsequent thereto the accumulation of alluvial deposits. Basing its ruling
on Articles 463 and 465 of the Civil Code6 the Court of Appeals reversed the decision of the trial court,
declared private respondents as the lawful and true owners of the land subject of this case and ordered
petitioners to vacate the premises and deliver possession of the land to private respondents.7

In the present petition, petitioners raise the following as errors of respondent court, to wit:

1. Whether [or not] respondent court correctly applied the provisions of Articles 463 and 465 of
the new Civil Code to the facts of the case at bar; and

2. Whether [or not] respondent court gravely abused its discretion in the exercise of its judicial
authority in reversing the decision appealed from.8

Petitioners point out as merely speculative the finding of respondent court that the property of private
respondents was split by the branching off or division of the river. They argue that because, as held by
the trial court, private respondents failed to prove by preponderance of evidence the identity of their
property before the same was divided by the action of the river, respondent court erred in applying
Article 463 of the Civil Code to the facts of this case.

It must be kept in mind that the sole issue decided by respondent court is whether or not the trial court
erred in dismissing the complaint for failure of private respondents (plaintiffs below] to establish by
preponderance of evidence their claim of ownership over the island in question. Respondent court
reversed the decision of the trial court because it did not take into account the other pieces of evidence
in favor of the private respondents. The complaint was dismissed by the trial court because it did not
accept the explanation of private respondents regarding the initial discrepancy as to the area they
claimed: i.e., the prior tax declarations of private respondents refer to an area with 4,937 square meters,
white the Extra-judicial Partition with Sale, by virtue of which private respondents acquired ownership of
the property, pertains to land of about 16,452 square meters.

The trial court favored the theory of petitioners that private respondents became interested in the land
only in 1979 not for agricultural purposes but in order to extract gravel and sand. This, however, is belied
by other circumstances tantamount to acts of ownership exercised by private respondents over the
property prior to said year as borne out by the evidence, which apparently the trial court did not
consider at all in favor of private respondents. These include, among others, the payment of land taxes
thereon, the monuments placed by the surveyor whose services were engaged by the private
respondent, as evidenced by the pictures submitted as exhibits, and the agreement entered into by
private respondents and Tagoloan Aggregates to extract gravel and sand, which agreement was duly
registered with the Register of Deeds.

Private respondents also presented in evidence the testimony of two disinterested witnesses: Gregorio
Neri who confirmed the metes and bounds of the property of private respondents and the effects of the
typhoon on the same, and Candida Ehem who related on the agreement between private respondents
and petitioners for the latter to act as caretakers of the former.9 The trial court disregarded their
testimony without explaining why it doubted their credibility and instead merely relied on the self-
serving denial of petitioners.10

From the evidence thus submitted, respondent court had sufficient basis for the finding that the
property of private respondents actually existed and was Identified prior to the branching off or division
of the river. The Court of Appeals, therefore, properly applied Article 463 of the Civil Code which allows
the ownership over a portion of land separated or isolated by river movement to be retained by the
owner thereof prior to such separation or isolation.11
Notwithstanding the foregoing and assuming arguendo as claimed by petitioners that private
respondents were not able to establish the existence and identity of the property prior to the branching
off or division of the Tagoloan River, and hence, their right over the same, private respondents are
nevertheless entitled under the law to their respective portion of the island.

It is clear petitioners do not dispute that the land in litigation is an island that appears in a non-flotable
and non-navigable river; they instead anchor their claim on adverse possession for about fifteen years. It
is not even controverted that private respondents are the owners of a parcel of land along the margin of
the river and opposite the island. On the other hand, private respondents do not dispute that the island
in question has been in the actual physical possession of petitioners; private respondents insist only that
such possession by petitioners is in the concept of caretakers thereof with the permission of private
respondents.

This brings Us, as phrased earlier in this opinion, to the underlying nature of the controversy in this case:
between the one who has actual possession of an island that forms in a non-navigable and non-flotable
river and the owner of the land along the margin nearest the island, who has the better light thereto?

The parcel of land in question is part of an island that formed in a non-navigable and non-flotable river;
from a small mass of eroded or segregated outcrop of land, it increased to its present size due to the
gradual and successive accumulation of alluvial deposits. In this regard the Court of Appeals also did not
err in applying Article 465 of the Civil Code.12 Under this provision, the island belongs to the owner of
the land along the nearer margin as sole owner thereof; or more accurately, because the island is longer
than the property of private respondents, they are deemed ipso jure to be the owners of that portion
which corresponds to the length of their property along the margin of the river.

What then, about the adverse possession established by petitioners? Are their rights as such not going
to be recognized? It is well-settled that lands formed by accretion belong to the riparian owner.13 This
preferential right is, under Article 465, also granted the owners of the land located in the margin nearest
the formed island for the reason that they are in the best position to cultivate and attend to the
exploitation of the same.14 In fact, no specific act of possession over the accretion is required.15 If,
however, the riparian owner fails to assert his claim thereof, the same may yield to the adverse
possession of third parties, as indeed even accretion to land titled under the torrens system must itself
still be registered.16
Petitioners may therefore, acquire said property by adverse possession for the required plumber of years
under the doctrine of acquisitive prescription. Their possession cannot be considered in good faith,
however, because they are presumed to have notice of the status of private respondents as riparian
owners who have the preferential right to the island as recognized and accorded by law; they may claim
ignorance of the law, specifically Article 465 of the Civil Code, but such is not, under Articles 3 and 526 of
the same code, an adequate and valid defense to support their claim of good faith.17 Hence, not
qualifying as possessors in good faith, they may acquire ownership over the island only through
uninterrupted adverse possession for a period of thirty years.18 By their own admission, petitioners
have been in possession of the property for only about fifteen years. Thus, by this token and under the
theory adopted by petitioners, the island cannot be adjudicated in their favor.

This case is not between parties as opposing riparian owners contesting ownership over an accession but
rather between a riparian owner and the one in possession of the island. Hence, there is no need to
make a final determination regarding the origins of the island, i.e., whether the island was initially
formed by the branching off or division of the river and covered by Article 463 of the Civil Code, in which
case there is strictly no accession because the original owner retains ownership, or whether it was due
to the action of the river under Article 465, or, as claimed by petitioners, whether it was caused by the
abrupt segregation and washing away of the stockpile of the river control, which makes it a case of
avulsion under Article 459.19

We are not prepared, unlike the trial court, to concede that the island is a delta which should be outside
the commerce of man and that it belongs to the State as property of the public domain in the absence of
any showing that the legal requirements to establish such a status have been satisfied, which duty
properly pertains to the State.20 However, We are also well aware that this petition is an upshot of the
action to quiet title brought by the private respondents against petitioners. As such it is not technically
an action in rem or an action in personam, but characterized as quasi in rem which is an action in
personam concerning real property.22 Thus, the judgment in proceedings of this nature is conclusive
only between the parties23 and does not bind the State or the other riparian owners who may have an
interest over the island involved herein.

WHEREFORE, We find no error committed by respondent court and DENY the petition for lack of
sufficient merit. The decision of respondent Court of Appeals is hereby AFFIRMED, without
pronouncement as to costs.

SO ORDERED.

Republic of the Philippines

SUPREME COURT

Manila
THIRD DIVISION

G.R. No. 184746 August 8, 2012

SPOUSES CRISPIN GALANG and CARlOAD GALANG, Petitioners,

vs.

SPOUSES CONRADO S. REYES AND FE DE KASTRO REYES (As substituted by their legal heir:
Hermenigildo K. Reyes), Respondents.

REYES,*

DECISION

MENDOZA, J.:

This petition for review on certiorari under Rule 45 seeks to reverse and set aside the April 9, 2008
Decision1 of the Court of Appeals (CA) and its October 6, 2008 Resolution,2 in CA-G.R. CV. No. 85660.

The Facts

On September 4, 1997, spouses Conrado S. Reyes and Fe de Kastro Reyes (the Reyeses) filed a case for
the annulment of Original Certificate of Title (OCT) No. P-928 against spouses Crispin and Caridad Galang
(the Galangs) with the Regional Trial Court, Antipolo, Rizal (RTC),docketed as Civil Case No. 97-4560.

In their Complaint,3 the Reyeses alleged that they owned two properties: (1) a subdivision project
known as Ponderosa Heights Subdivision (Ponderosa), and (2) an adjoining property covered by Transfer
Certificate of Title (TCT) No. 185252, with an area of 1,201 sq.m.;4 that the properties were separated by
the Marigman Creek, which dried up sometime in 1980 when it changed its course and passed through
Ponderosa; that the Galangs, by employing manipulation and fraud, were able to obtain a certificate of
title over the dried up creek bed from the Department of Environment and Natural Resources (DENR),
through its Provincial Office (PENRO); that, specifically, the property was denominated as Lot 5735, Cad
29 Ext., Case-1, with an area of 1,573 sq.m. covered by OCT No. P-928; that they discovered the
existence of the certificate of title sometime in March 1997 when their caretaker, Federico Enteroso
(Enteroso), informed them that the subject property had been fraudulently titled in the names of the
Galangs; that in 1984, prior to such discovery, Enteroso applied for the titling of the property, as he had
been occupying it since 1968 and had built his house on it; that, later, Enteroso requested them to
continue the application because of financial constraints on his part;5 that they continued the
application, but later learned that the application papers were lost in the Assessors Office;6 and that as
the owners of the land where the new course of water passed, they are entitled to the ownership of the
property to compensate them for the loss of the land being occupied by the new creek.
The Galangs in their Answer7 denied that the land subject of the complaint was part of a creek and
countered that OCT No. P-928 was issued to them after they had complied with the free patent
requirements of the DENR, through the PENRO; that they and their predecessor-in-interest had been in
possession, occupation, cultivation, and ownership of the land for quite some time; that the property
described under TCT No. 185252 belonged to Apolonio Galang, their predecessor-in-interest, under OCT
No. 3991; that the property was transferred in the names of the Reyeses through falsified document;8
that assuming ex gratia argumenti that the creek had indeed changed its course and passed through
Ponderosa, the Reyeses had already claimed for themselves the portion of the dried creek which
adjoined and co-existed with their property; that Enteroso was able to occupy a portion of their land by
means of force, coercion, machinations, and stealth in 1981; that such unlawful entry was then the
subject of an Accion Publiciana before the RTC of Antipolo City (Branch 72); and that at the time of the
filing of the Complaint, the matter was still subject of an appeal before the CA, under CA-G.R. CV No.
53509.

The RTC Decision

In its Decision,9 dated July 16, 2004, the RTC dismissed the complaint for lack of cause of action and for
being an erroneous remedy. The RTC stated that a title issued upon a patent may be annulled only on
grounds of actual and intrinsic fraud, which much consist of an intentional omission of fact required by
law to be stated in the application or willful statement of a claim against the truth. In the case before the
trial court, the Reyeses presented no evidence of fraud despite their allegations that the Galangs were
not in possession of the property and that it was part of a dried creek. There being no evidence, these
contentions remained allegations and could not defeat the title of the Galangs. The RTC wrote:

A title issued upon patent may be annulled only on ground of actual fraud.

Such fraud must consist [of] an intentional omission of fact required by law to be stated in the
application or willful statement of a claim against the truth. It must show some specific facts intended to
deceive and deprive another of his right. The fraud must be actual and intrinsic, not merely constructive
or intrinsic; the evidence thereof must be clear, convincing and more than merely preponderant,
because the proceedings which are being assailed as having been fraudulent are judicial proceedings,
which by law, are presumed to have been fair and regular. (Libudan v. Palma Gil 45 SCRA 17)
However, aside from allegations that defendant Galang is not in possession of the property and that the
property was part of a dried creek, no other sufficient evidence of fraud was presented by the plaintiffs.
They have, thus, remained allegations, which cannot defeat the defendants title.10

The RTC added that the land, having been acquired through a homestead patent, was presumably public
land. Therefore, only the State can institute an action for the annulment of the title covering it.

It further opined that because the Reyeses claimed to have acquired the property by right of accretion,
they should have filed an action for reconveyance, explaining "[t]hat the remedy of persons whose
property had been wrongly or erroneously registered in anothers name is not to set aside the
decree/title, but an action for reconveyance, or if the property has passed into the hands of an innocent
purchaser for value, an action for damages."11

The Court of Appeals Decision

In its Decision, dated April 9, 2008, the CA reversed and set aside the RTC decision and ordered the
cancellation of OCT No. P-928 and the reconveyance of the land to the Reyeses.

The CA found that the Reyeses had proven by preponderance of evidence that the subject land was a
portion of the creek bed that was abandoned through the natural change in the course of the water,
which had now traversed a portion of Ponderosa. As owners of the land occupied by the new course of
the creek, the Reyeses had become the owners of the abandoned creek bed ipso facto. Inasmuch as the
subject land had become private, a free patent issued over it was null and void and produced no legal
effect whatsoever. A posteriori, the free patent covering the subject land, a private land, and the
certificate of title issued pursuant thereto, are null and void.12

The Galangs moved for a reconsideration,13 but their motion was denied in a Resolution dated October
6, 2008.

Hence, this petition.

Issues

The Galangs present, as warranting a review of the questioned CA decision, the following grounds:

THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK
OF JURISDICTION IN NOT RESOLVING THAT THE OFFICE OF THE SOLICITOR GENERAL, NOT THE PRIVATE
RESPONDENTS, HAS THE SOLE AUTHORITY TO FILE [CASES FOR] ANNULMENT OF TITLE INVOLVING
PUBLIC LAND.

THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK
OF JURISDICTION IN HOLDING THAT PRIVATE RESPONDENTS HAVE [A] CAUSE OF ACTION AGAINST
PETITIONERS EVEN WITHOUT EXHAUSTION OF ADMINISTRATIVE REMED[IES].

THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK
OF JURISDICTION IN DEVIATING FROM THE FINDINGS OF FACT OF THE TRIAL COURT AND INTERPRETING
ARTICLE 420 IN RELATION TO ARTICLE 461 OF THE CIVIL CODE OF THE PHILIPPINES BY SUBSTITUTING ITS
OWN OPINION BASED ON ASSUMPTION OF FACTS.14

A reading of the records discloses that these can be synthesized into two principal issues, to wit: (1)
whether the Reyeses can file the present action for annulment of a free patent title and reconveyance;
and (2) if they can, whether they were able to prove their cause of action against the Galangs.

The Courts Ruling

Regarding the first issue, the Galangs state that the property was formerly a public land, titled in their
names by virtue of Free Patent No. 045802-96-2847 issued by the DENR. Thus, they posit that the
Reyeses do not have the personality and authority to institute any action for annulment of title because
such authority is vested in the Republic of the Philippines, through the Office of the Solicitor General.15

In this regard, the Galangs are mistaken. The action filed by the Reyeses seeks the transfer to their
names of the title registered in the names of the Galangs. In their Complaint, they alleged that: first, they
are the owners of the land, being the owners of the properties through which the Marigman creek
passed when it changed its course; and second, the Galangs illegally dispossessed them by having the
same property registered in their names. It was not an action for reversion which requires that the State
be the one to initiate the action in order for it to prosper. The distinction between the two actions was
elucidated in the case of Heirs of Kionisala v. Heirs of Dacut,16 where it was written:

An ordinary civil action for declaration of nullity of free patents and certificates of title is not the same as
an action for reversion. The difference between them lies in the allegations as to the character of
ownership of the realty whose title is sought to be nullified. In an action for reversion, the pertinent
allegations in the complaint would admit State ownership of the disputed land. Hence in Gabila v. Barriga
where the plaintiff in his complaint admits that he has no right to demand the cancellation or
amendment of the defendants title because even if the title were cancelled or amended the ownership
of the land embraced therein or of the portion affected by the amendment would revert to the public
domain, we ruled that the action was for reversion and that the only person or entity entitled to relief
would be the Director of Lands.

On the other hand, a cause of action for declaration of nullity of free patent and certificate of title would
require allegations of the plaintiffs ownership of the contested lot prior to the issuance of such free
patent and certificate of title as well as the defendants fraud or mistake; as the case may be, in
successfully obtaining these documents of title over the parcel of land claimed by plaintiff. In such a case,
the nullity arises strictly not from the fraud or deceit but from the fact that the land is beyond the
jurisdiction of the Bureau of Lands to bestow and whatever patent or certificate of title obtained
therefor is consequently void ab initio. The real party in interest is not the State but the plaintiff who
alleges a pre-existing right of ownership over the parcel of land in question even before the grant of title
to the defendant. In Heirs of Marciano Nagano v. Court of Appeals we ruled

x x x x from the allegations in the complaint x x x private respondents claim ownership of the 2,250
square meter portion for having possessed it in the concept of an owner, openly, peacefully, publicly,
continuously and adversely since 1920. This claim is an assertion that the lot is private land x x x x
Consequently, merely on the basis of the allegations in the complaint, the lot in question is apparently
beyond the jurisdiction of the Director of the Bureau of Lands and could not be the subject of a Free
Patent. Hence, the dismissal of private respondents complaint was premature and trial on the merits
should have been conducted to thresh out evidentiary matters. It would have been entirely different if
the action were clearly for reversion, in which case, it would have to be instituted by the Solicitor
General pursuant to Section 101 of C.A. No. 141 x x x x
It is obvious that private respondents allege in their complaint all the facts necessary to seek the
nullification of the free patents as well as the certificates of title covering Lot 1015 and Lot 1017. Clearly,
they are the real parties in interest in light of their allegations that they have always been the owners
and possessors of the two (2) parcels of land even prior to the issuance of the documents of title in
petitioners favor, hence the latter could only have committed fraud in securing them

x x x x That plaintiffs are absolute and exclusive owners and in actual possession and cultivation of two
parcels of agricultural lands herein particularly described as follows [technical description of Lot 1017
and Lot 1015 x x x x 3. That plaintiffs became absolute and exclusive owners of the abovesaid parcels of
land by virtue of inheritance from their late father, Honorio Dacut, who in turn acquired the same from a
certain Blasito Yacapin and from then on was in possession thereof exclusively, adversely and in the
concept of owner for more than thirty (30) years x x x x 4. That recently, plaintiff discovered that
defendants, without the knowledge and consent of the former, fraudulently applied for patent the said
parcels of land and as a result thereof certificates of titles had been issued to them as evidenced by
certificate of title No. P-19819 in the name of the Hrs. of Ambrocio Kionisala, and No. P- 20229 in the
name of Isabel Kionisala x x x x 5. That the patents issued to defendants are null and void, the same
having been issued fraudulently, defendants not having been and/or in actual possession of the litigated
properties and the statement they may have made in their application are false and without basis in fact,
and, the Department of Environment and Natural Resources not having any jurisdiction on the
properties the same not being anymore public but already private property x x x x

It is not essential for private respondents to specifically state in the complaint the actual date when they
became owners and possessors of Lot 1015 and Lot 1017. The allegations to the effect that they were so
preceding the issuance of the free patents and the certificates of title, i.e., "the Department of
Environment and Natural Resources not having any jurisdiction on the properties the same not being
anymore public but already private property," are unquestionably adequate as a matter of pleading to
oust the State of jurisdiction to grant the lots in question to petitioners. If at all, the oversight in not
alleging the actual date when private respondents ownership thereof accrued reflects a mere deficiency
in details which does not amount to a failure to state a cause of action. The remedy for such deficiency
would not be a motion to dismiss but a motion for bill of particulars so as to enable the filing of
appropriate responsive pleadings.

With respect to the purported cause of action for reconveyance, it is settled that in this kind of action
the free patent and the certificate of title are respected as incontrovertible. What is sought instead is the
transfer of the property, in this case the title thereof, which has been wrongfully or erroneously
registered in the defendants name. All that must be alleged in the complaint are two (2) facts which
admitting them to be true would entitle the plaintiff to recover title to the disputed land, namely, (1) that
the plaintiff was the owner of the land and, (2) that the defendant had illegally dispossessed him of the
same.

We rule that private respondents have sufficiently pleaded (in addition to the cause of action for
declaration of free patents and certificates of title) an action for reconveyance, more specifically, one
which is based on implied trust. An implied trust arises where the defendant (or in this case petitioners)
allegedly acquires the disputed property through mistake or fraud so that he (or they) would be bound
to hold and reconvey the property for the benefit of the person who is truly entitled to it. In the
complaint, private respondents clearly assert that they have long been the absolute and exclusive
owners and in actual possession and cultivation of Lot 1015 and Lot 1017 and that they were
fraudulently deprived of ownership thereof when petitioners obtained free patents and certificates of
title in their names. These allegations certainly measure up to the requisite statement of facts to
constitute an action for reconveyance.17 [Emphases supplied]

In this case, the complaint instituted by the Reyeses before the RTC was for the annulment of the title
issued to the Galangs, and not for reversion. Thus, the real party in interest here is not the State but the
Reyeses who claim a right of ownership over the property in question even before the issuance of a title
in favor of the Galangs. Although the Reyeses have the right to file an action for reconveyance, they have
failed to prove their case. Thus, on the second issue, the Court agrees with the RTC that the Reyeses
failed to adduce substantial evidence to establish their allegation that the Galangs had fraudulently
registered the subject property in their names.

The CA reversed the RTC decision giving the reason that the property was the former bed of Marigman
Creek, which changed its course and passed through their Ponderosa property, thus, ownership of the
subject property was automatically vested in them.

The law in this regard is covered by Article 461 of the Civil Code, which provides:

Art. 461. River beds which are abandoned through the natural change in the course of the waters ipso
facto belong to the owners whose lands are occupied by the new course in proportion to the area lost.
However, the owners of the lands adjoining the old bed shall have the right to acquire the same by
paying the value thereof, which value shall not exceed the value of the area occupied by the new bed.
If indeed a property was the former bed of a creek that changed its course and passed through the
property of the claimant, then, pursuant to Article 461, the ownership of the old bed left to dry by the
change of course was automatically acquired by the claimant.18 Before such a conclusion can be
reached, the fact of natural abandonment of the old course must be shown, that is, it must be proven
that the creek indeed changed its course without artificial or man-made intervention. Thus, the claimant,
in this case the Reyeses, must prove three key elements by clear and convincing evidence. These are: (1)
the old course of the creek, (2) the new course of the creek, and (3) the change of course of the creek
from the old location to the new location by natural occurrence.

In this regard, the Reyeses failed to adduce indubitable evidence to prove the old course, its natural
abandonment and the new course. In the face of a Torrens title issued by the government, which is
presumed to have been regularly issued, the evidence of the Reyeses was clearly wanting.
Uncorroborated testimonial evidence will not suffice to convince the Court to order the reconveyance of
the property to them. This failure did not escape the observation of the Office of the Solicitor General.
Thus, it commented:

In the case at bar, it is not clear whether or not the Marigman Creek dried-up naturally back in 1980.
Neither did private respondents submit any findings or report from the Bureau of Lands or the DENR
Regional Executive Director, who has the jurisdiction over the subject lot, regarding the nature of change
in the course of the creeks waters. Worse, what is even uncertain in the present case is the exact
location of the subject matter of dispute. This is evident from the decision of the Regional Trial Court
which failed to specify which portion of the land is actually being disputed by the contending parties.

xxx

Since the propriety of the remedy taken by private respondents in the trial court and their legal
personality to file the aforesaid action depends on whether or not the litigated property in the present
case still forms part of the public domain, or had already been converted into a private land, the
identification of the actual portion of the land subject of the controversy becomes necessary and
indispensable in deciding the issues herein involved.

xxx
Notably, private respondents failed to submit during trial any convincing proof of a similar declaration by
the government that a portion of the Marigman Creek had already dried-up and that the same is already
considered alienable and disposable agricultural land which they could acquire through acquisitive
prescription.

Indeed, a thorough investigation is very imperative in the light of the conflicting factual issues as to the
character and actual location of the property in dispute. These factual issues could properly be resolved
by the DENR and the Land Management Bureau, which have the authority to do so and have the duty to
carry out the provisions of the Public Land Act, after both parties have been fully given the chance to
present all their evidence.19 [Emphases supplied]

Moreover, during cross-examination, Conrado S. Reyes admitted that the plan surveyed for Fe de Castro
Reyes and Jose de Castro, marked before the RTC as Exhibit "A-2," was prepared by a geodetic engineer
without conducting an actual survey on the ground:

COUNSEL FOR DEFENDANTS:

I am showing to you Exhibit "A-2" which is a plan surveyed for Fe de Kastro Reyes and Jose de Kastro.
This plan was prepared by the geodetic engineer without conducting actual survey on the ground, is it
not?

A: I cannot agree to that question.

Q: But based on the certification of the geodetic engineer, who prepared this it appears that this plan
was plotted only based on the certification on this plan marked as Exhibit "A-2", is it not?

A: Yes, sir.

Q: So, based on this certification that the geodetic engineer conducted the survey of this plan based on
the technical description without conducting actual survey on the ground?
A: Yes, sir.20

At some point, Mr. Reyes admitted that he was not sure that the property even existed:

COUNSEL FOR DEFENDANTS:

The subject matter of this document Exhibit I is that, that property which at present is titled in the name
of Fe de Castro Reyes married to Conrado Reyes, et.al. is that correct?

A: Yes.

Q: The subject matter of this case now is the adjoining lot of this TCT 185252, is that correct?

A: I do not know.

Q: You mean you do not know the lot subject matter of this case?

A: I do not know whether it really exists.

Q: Just answer the question, you do not know?

A: Yes.21

The conflicting claims here are (1) the title of the Galangs issued by the DENR, through the PENRO, and
(2) the claim of the Reyeses, based on unsubstantiated testimony, that the land in question is the former
bed of a dried up creek. As between these two claims, this Court is inclined to decide in favor of the
Galangs who hold a valid and subsisting title to the property which, in the absence of evidence to the
contrary, the Court presumes to have been issued by the PENRO in the regular performance of its official
duty.

The bottom line here is that, fraud and misrepresentation, as grounds for cancellation of patent and
annulment of title, should never be presumed, but must be proved by clear and convincing evidence,
with mere preponderance of evidence not being adequate. Fraud is a question of fact which must be
proved.22

In this case, the allegations of fraud were never proven. There was no evidence at all specifically showing
actual fraud or misrepresentation. Thus, the Court cannot sustain the findings of the CA.

WHEREFORE, the petition 1s GRANTED. The April 9, 2008 Decision and the October 6, 2008 Resolution
.of the Court of Appeals, in CA-G.R. CV. No. -85660, are hereby REVERSED and SET ASIDE. Civil Case No.
97-4560 of the Regional Trial Court of Anti polo City, Branch 73, is hereby ordered DISMISSED for lack of
merit.

SO ORDERED.

Republic of the Philippines

SUPREME COURT

Manila

FIRST DIVISION
G.R. No. 108065 July 6, 1993

SPOUSES FELIX BAES AND RAFAELA BAES, petitioners,

vs.

THE COURT OF APPEALS AND REPUBLIC OF THE PHILIPPINES, respondents.

Lorenzo F. Miravite for petitioners.

The Solicitor General for respondents.

CRUZ, J.:

This is an appeal by way of certiorari from the decision of the respondent Court of Appeals which
affirmed in toto the ruling of the trial court in Civil Case No. 0460-P, the dispositive portion of which read
thus:

WHEREFORE, judgment is hereby rendered declaring null and void TCT Nos. 14405, 29592, 29593,
29594, 29595, and TCT No. 29593's derivative titles TCT Nos. 124725, 124726, 124727 and 124729, and
ordering the Register of Deeds for Pasay City to cancel them and issue new ones in their stead in the
name of the plaintiff after segregating from TCT No. 29593 452 sq. m., the actual area of Lot 2958-C
(covered by cancelled TCT No. 11043) belonging to defendant Felix Baes. The counterclaim is hereby
dismissed.

Let a copy of this Decision be furnished the Register of Deeds for Pasay City.

SO ORDERED.

The controversy began in 1962, when the government dug a canal on a private parcel of land, identified
as Lot 2958 and covering an area of P33,902 sq.m., to streamline the Tripa de Gallina creek.

This lot was later acquired by Felix Baes, who registered it in his name under TCT No. 10990 and then
had it subdivided into three lots, namely: (a) Lot 2958-A, with an area of 28,889 sq.m.; (b) Lot 2958-B,
with an area of 3,588 sq.m.; and (c) Lot 2958-C, with an area of 452 sq.m., covered by TCT Nos. 11041,
11042 and 11043, respectively.

In exchange for Lot 2958-B, which was totally occupied by the canal, the government gave Baes a lot
with exactly the same area as Lot 2958-B through a Deed of Exchange of Real Property dated June 20,
1970.1 The property, which was near but not contiguous to Lot 2956-C, was denominated as Lot 3271-A
and later registered in the name of Felix Baes under TCT No. 24300. The soil displaced by the canal was
used to fill up the old bed of the creek.

Meanwhile, Baes had Lot 2958-C and a portion of Lot 2958-A designated as Lot 1, Blk., 4, resurveyed and
subdivided. On January 12, 1968, he submitted a petition for the approval of his resurvey and
subdivision plans, claiming that after the said lots were plotted by a competent surveyor, it was found
that there were errors in respect of their bearings and distances.
The resurvey-subdivision plan was approved by the Court of First Instance of Pasay City in an order dated
January 15, 1968.2

As a result, the old TCTs covering the said lots were canceled and new ones were issued, to wit: (a) Lot 1-
A, Blk. 4, with 672 sq.m., under TCT No.

T-14404; (b) Lot 1-B, with 826 sq.m., representing the increase in area after the resurvey, under TCT No.
T-14405; (c) Lot 2958-C-1, with 452 sq.m., under TCT No. T-14406; and (d) Lot 2958-C-2, with 2,770 sq.m.
representing the increase after resurvey, under TCT No. T-14407.

Lots 2958-C-1 and 2958-C-2 were later consolidated and this time further subdivided into four (4) lots,
namely, Lot 1, with an area of 147 sq.m.; Lot 2, with an area of 950 sq.m.; Lot 3, with an area of 257
sq.m.; and Lot 4, with an area of 1,868 sq.m., which were respectively issued TCT Nos. 29592, 29593,
29594, and 29595.

In 1978, the Republic of the Philippines discovered that Lot 1-B (with TCT No. 14405 and an area of 826
sq.m.), on which the petitioners had erected an apartment building, covered Lot 3611 of the Pasay
Cadastre, which is a filled-up portion of the Tripa de Gallina creek. Moreover, Lot 2958-C (covered by TCT
Nos. 29592 to 29595, with an increased area of 2,770 after resurvey and subdivision) had been
unlawfully enlarged.

On November 17, 1982, it filed a petition for cancellation of TCT Nos. 14405 and 29592 to 29595.3

Baes did not object in his answer to the cancellation of TCT Nos. 29592, 29594 and 29595 and was
notable to prove during the trial that the government utilized a portion of Lot 2 under, TCT No. 29593.
The trial court therefore decreed (correctly) that the original Lot 2958-C (with an area of 452 sq.m.) be
reverted to its status before the resurvey-subdivision of Lot 2958-C.

The only remaining dispute relates to Lot 1-B (TCT No. 14405), which the petitioners, relying on Article
461 of the Civil Code, are claiming as their own. The government rejects this claim and avers that the
petitioners had already been fully compensated for it on June 20, 1970 when they agreed to exchange
their Lot 2958-B with Lot 3271-A belonging to the government.

Article 461 of the Civil Code states:

River beds which are abandoned through the natural change in the course of the waters ipso facto
belong to the owners whose lands are occupied by the new course in proportion to the area lost.
However, the owners of the land adjoining the old bed shall have the right to acquire the same by paying
the value thereof, which value shall not exceed the value of the area occupied by the new bed.
(Emphasis supplied)

A portion of the Tripa de Gallina creek was diverted to a man-made canal which totally occupied Lot
2958-B (with an area of 3,588 sq.m.) belonging to Felix Baes. Thus, the petitioners claim that they
became the owners of the old bed (which was eventually filled up by soil excavated from Lot 2958-B) by
virtue of Article 461.
The petitioners rely heavily on Dr. Arturo M. Tolentino's interpretation of this Article, to wit:

This article (461) refers to a natural change in the course of a stream. If the change of the course is due
to works constructed by concessioners authorized by the government, the concession may grant the
abandoned river bed to the concessioners. If there is no such grant, then, by analogy, the abandoned
river bed will belong to the owners of the land covered by the waters, as provided in this article, without
prejudice to a superior right of third persons with sufficient title. (Citing 3 Manresa 251-252; 2 Navarro
Amandi, 100-101; 3 Sanchez Roman 148)

We agree.

If the riparian owner is entitled to compensation for the damage to or loss of his property due to natural
causes, there is all the more reason to compensate him when the change in the course of the river is
effected through artificial means. The loss to the petitioners of the land covered by the canal was the
result of a deliberate act on the part of the government when it sought to improve the flow of the Tripa
de Gallina creek. It was therefore obligated to compensate the Baeses for their loss.

We find, however, that the petitioners have already been so compensated. Felix Baes was given Lot
3271-A in exchange for the affected Lot 2958-B through the Deed of Exchange of Real Property dated
June 20, 1970. This was a fair exchange because the two lots were of the same area and value and the
agreement was freely entered into by the parties. The petitioners cannot now claim additional
compensation because, as correctly observed by the Solicitor General,

. . . to allow petitioners to acquire ownership of the dried-up portion of the creek would be a clear case
of double compensation and unjust enrichment at the expense of the state.

The exchange of lots between the petitioners and the Republic was the result of voluntary negotiations.
If these had failed, the government could still have taken Lot 2958-B under the power of eminent
domain, upon payment of just compensation, as the land was needed for a public purpose.

WHEREFORE, the petition is DENIED, with costs against the petitioners. It is so ordered.

Grio-Aquino, Bellosillo and Quiason, JJ., concur.

SECOND DIVISION

[G.R. No. 123586. August 12, 2004]

SPOUSES BEDER MORANDARTE and MARINA FEBRERA, petitioners, vs. COURT OF APPEALS, REPUBLIC
OF THE PHILIPPINES, and SPOUSES VIRGINIO B. LACAYA and NENITA LACAYA, respondents.

DECISION
AUSTRIA-MARTINEZ, J.:

Before us is a petition for review on certiorari under Rule 45 of the Rules of Court which seeks the
reversal of the Decision,[1] dated August 23, 1995, of the Court of Appeals (CA for brevity) in CA-G.R. CV
No. 36258, affirming the Decision, dated November 5, 1991, rendered by the Regional Trial Court
(Branch 7), Dipolog City, Zamboanga del Norte (RTC for brevity) in Civil Case No. 3890, declaring Free
Patent No. (IX-8) 785[2] and Original Certificate of Title No. P-21972, in the name of petitioner Beder
Morandarte (Morandarte for brevity), and all its derivative titles, null and void ab initio.

The factual antecedents are as follows:

Morandarte filed an application for free patent, dated December 5, 1972, before the Bureau of Lands,
Dipolog City District Land Office (BOL for brevity), covering a parcel of land located at Sta. Filomena,
Dipolog City with an area of 4.5499 hectares and described as a portion of Lot 1038 of Dipolog Cadastre
No. 85.[3]

On July 27, 1976, the District Land Officer of the BOL approved the free patent application of
Morandarte and directed the issuance of a free patent in his favor.[4] Accordingly, Free Patent No. (IX-8)
785 for Lot No. 7, Csd-09-05-00078-D was issued in the name of Morandarte. On September 20, 1976,
the Register of Deeds of Zamboanga del Norte issued the corresponding Original Certificate of Title No.
(P-21972) 5954.[5]

Subsequently, Morandarte caused a subdivision survey of the lot, dividing the same into Lot No. 6781-A,
with an area of 13,939 square meters, and Lot No. 6781-B, with an area of 32,819 square meters. As a
result of the subdivision survey, Transfer Certificates of Title Nos. T-1835 and T-1836 covering Lots 6781-
A and 6781-B, respectively, were issued in favor of Morandarte on May 12, 1980 by the Registry of Deeds
of Dipolog City.[6]

On May 22, 1981, Morandarte and his wife, Marina Febrera, executed a real estate mortgage over Lot
6781-B, subject of TCT No. 1836, in favor of the Development Bank of the Philippines, Dipolog City
branch (DBP for brevity), in consideration of a loan in the amount of P52,160.00.[7]

More than ten years after the issuance of the OCT in Morandartes name, or on March 19, 1987,
respondent Republic of the Philippines (Republic for brevity), represented by the Director of Lands, filed
before the RTC a Complaint for Annulment of Title and Reversion against the Morandarte spouses, the
Register of Deeds of Zamboanga del Norte, the Register of Deeds of Dipolog City, and DBP, docketed as
Civil Case No. 3890.[8]

The Republic alleged that the BOL found that the subject land includes a portion of the Miputak River
which cannot be validly awarded as it is outside the commerce of man and beyond the authority of the
BOL to dispose of. It claimed that the Morandarte spouses deliberately and intentionally concealed such
fact in the application to ensure approval thereof. Considering that the Morandarte spouses are guilty of
fraud and misrepresentation in the procurement of their title, the Republic stressed that their title is
void.[9]

The Register of Deeds of Dipolog City filed a Motion to Dismiss, dated April 7, 1987, praying for the
dismissal of the complaint as against her since the complaint failed to state a claim against her.[10]

In their Answer dated April 13, 1987, the Morandarte spouses denied the allegations of the complaint
and claimed that they were able to secure the title in accordance and in compliance with the
requirements of the law. They alleged that the land is a portion of inherited property from Antonio L.
Morandarte whose ownership thereof is covered by Tax Declaration No. 2296.

As regards the Miputak River, they argued that the river changed its course brought about by the fact
that a portion of the Miputak River was leased by the Bureau of Fisheries (BOF for brevity) to a certain
Aguido Realiza whose rights were subsequently transferred to Virginio Lacaya. They alleged that they
indicated in their survey plan the actual location of the Miputak River in relation to the property but the
BOL returned the survey with the directive that the existence of the river should not be indicated as the
original survey did not show its existence, to which they complied with by submitting a new survey plan
which did not indicate the existence of the river.

In the alternative, they alleged that inclusion of the Miputak River should not render the title void; only
the portion of the property covered by the Miputak River should be nullified but their title to the
remaining portion should be maintained.[11]

For its part, DBP filed its Answer dated April 13, 1987 praying for the dismissal of the complaint as
against it since it had nothing to do with the issuance of the title to the spouses.[12] DBP interposed a
cross-claim against the spouses for the payment of their outstanding obligations.[13] The Morandarte
spouses filed an Answer to the Crossclaim dated April 29, 1987.[14]
No answer was filed by the Register of Deeds of Zamboanga del Norte.

On March 4, 1988, upon prior leave of court, herein respondent spouses Virginio B. Lacaya and Nenita
Lacaya filed their Complaint-In-Intervention which alleged that they are holders of a fishpond lease
agreement covering a fishpond area of about 5.0335 hectares, 1.2681 hectares of which have been
included in the title issued to the Morandarte spouses. Considering that the land of the Morandarte
spouses encroaches on the area leased to them, the Lacaya spouses submit that the formers title thereto
is void.[15]

In their Answer to the complaint-in-intervention, dated March 19, 1988, the Morandarte spouses denied
the allegations of the Lacaya spouses.[16] They maintained that the portion of the fishpond originally
belonged to Antonio L. Morandarte, their predecessor-in-interest, and the Lacaya spouses have never
been in possession thereof but are actually squatters therein.

On the other hand, the Republic, in its Answer to the complaint-in-intervention, dated March 21, 1988,
adopted the allegations of the complaint-in-intervention to further support its claim that the title of the
Morandarte spouses is void.[17] The Lacaya spouses filed their Reply and Answer on March 30, 1988,
denying the arguments of the Morandarte spouses and reiterating the allegations in their complaint-in-
intervention.[18]

Following trial on the merits, on November 5, 1992, the RTC rendered a Decision[19] in favor of the
Republic and the Lacaya spouses. The RTC declared that while fraud in the procurement of the title was
not established by the State, Morandartes title is, nonetheless, void because it includes a portion of the
Miputak River which is outside the commerce of man and beyond the authority of the BOL to dispose of.
In addition, the RTC sustained the fishpond rights of the Lacaya spouses over a portion included in
Morandartes title based on a Deed of Transfer of Fishpond Rights from Felipe B. Lacaya and a Fishpond
Lease Agreement with the BOF.

The dispositive portion of the decision of the trial court reads:

WHEREFORE, judgment is hereby rendered:

1. Declaring null and void ab initio Free Patent No. (IX-5) (sic) 785 and Original Certificate of Title No. P-
21972 in the name of Beder Morandarte, as well as all derivative titles issued thereafter;

2. Ordering defendants spouses Beder Morandarte and Marina Febrera to surrender their owners
duplicate copies of Transfer Certificate of Title Nos. T-1835 and T-1836, which were the derivative titles
of Original Certificate of Title No. P-21972;

3. Directing the Register of Deeds of Zamboanga del Norte to cancel Original Certificate of Title No. P-
21972 in the name of Beder Morandarte, and the Register of Deeds of Dipolog City to cancel Transfer
Certificate of Title Nos. T-1835 and T-1836 in the name of the same defendant;

4. Ordering the reversion of the land in question to the state, free from liens and encumbrances;

5. Enjoining defendants spouses Beder Morandarte and Marina Febrera from exercising any act of
ownership or possession of the subject property;

6. Dismissing the Cross-Claim of defendant Development Bank of the Philippines against Cross
Defendants Spouses Beder Morandarte and Marina Febrera, for being premature, but ordering the latter
cross defendants to give a substitute security in favor of DBP as indicated in this decision;

7. Declaring valid and enforceable the Lease Agreement for a period of twenty five years over the
fishpond area of Intervenors;

8. Denying Intervenors prayer for damages against defendants-spouses Morandarte; and

9. Dismissing, for lack of merit, the counterclaim and prayer for damages of defendants spouses
Morandarte against the Intervenors.

No costs against defendant-spouses Morandarte.

IT IS SO ORDERED.[20]

Dissatisfied, the Morandarte spouses appealed to the CA.[21] In a Decision dated August 23, 1995, the
CA affirmed the decision of the RTC,[22] ratiocinating, as follows:

The present controversial Miputak River used to occupy the area adjacent to the northern and western
boundaries of Lot No. 6781 Cad-85 (Exh. J). As time passed, it changed its course and occupies (sic) Lot
No. 6781 Cad-85 (identical to Lot 7, Exh. H). This will explain Beder Morandartes argument that when he
applied for the Sales Patent Lot 7 (identical to Lot 6781), the original technical description did not show
the Miputak River. But it is inescapable though, that while originally, Lot 6781 is not occupied by the
river, at the time that the Sales Application was filed by Beder Morandarte, the Miputak River was
actually occupying said Lot 6781 or Lot 7 covered by his Sales Application and the titles sought to be
annulled in this case.

Rivers and their natural beds are undoubtedly properties of public dominion (Art. 502 par. 1, Civil Code
of the Philippines). Whether navigable or not, rivers belong to the public and cannot be acquired by
prescription (Com vs. Meneses, 38 O.G. 2839, Paras, Civil Code, p. 328, Vol. II, 12th Edition). In fact, a
stream located within private land is still property of public dominion, even if the Torrens Title of the
land does not show the existence of said stream (Talion vs. Sec. of Public Works and Highways, L-24281,
May 16, 1967; Paras, supra).

Correspondingly, Art. 462 of the same Civil Code provides:

Art. 462. Whenever a river, changing its course by natural causes, opens a new bed through a private
estate, this bed shall become of public dominion.

The rule is the same that even if the new bed is on private property. The bed becomes property of public
dominion. Just as the old bed had been of public dominion before the abandonment, the new riverbed
shall likewise be of public dominion (Hilario vs. City of Manila, L-19570, April 27, 1967).[23]
On October 10, 1995, the Morandarte spouses filed a motion for reconsideration.[24] In its Resolution
dated January 19, 1996, the CA found no justifiable cause or reason to modify or reverse its decision.[25]

Hence, the instant petition for review anchored on the following assigned errors:

A.

RESPONDENT COURT COMMITTED A GRAVE ERROR OF LAW IN APPLYING ARTICLE 462 OF THE CIVIL
CODE TO THIS CASE WHEN THE CHANGE IN COURSE OF THE OLD MIPUTAK RIVER WAS NOT DUE TO
NATURAL CAUSES BUT WAS ACCIDENTAL.

B.

ASSUMING ARGUENDO THAT THE CHANGE OF COURSE OF THE OLD MIPUTAK RIVER WAS DUE TO
NATURAL CAUSE ONLY A PORTION OF THE SUBJECT PROPERTY OF PETITIONERS WAS AFFECTED THEREBY
SO THAT THE TITLE OF PETITIONERS TO THE REMAINING PORTION IS VALID AND CANNOT BE NULLIFIED
AS IT REMAINED PRIVATE PROPERTY.

C.

RESPONDENT COURT GRAVELY ERRED IN ORDERING THE REVERSION OF LOT 7, CSD-09-05-00078-D TO

THE PUBLIC DOMAIN.

D.

RESPONDENT COURT GRAVELY ERRED IN NOT DECLARING AS NULL AND VOID THE LEASE AGREEMENT
EXECUTED IN FAVOR OF INTERVENORS.

E.
RESPONDENT COURT GRAVELY ERRED IN NOT DISMISSING THE COMPLAINT CONSIDERING THAT NO
FRAUD OR MISREPRESENTATION WAS EMPLOYED BY THE SPOUSES MORANDARTE IN OBTAINING THE
TITLE.[26]

The Morandarte spouses emphatically argue that the CA failed to take into consideration the true state
of the present Miputak River in relation to Lot 7. They contend that the Miputak River changed its course
due to the closure of the river bed through the construction of dikes by the Lacaya spouses, forcing the
river to be diverted into Lot 6781-B. Thus, they submit that the applicable provision is Article 77 of the
Law of Waters, which provides that [l]ands accidentally inundated by the waters of lakes, or by creeks,
rivers and other streams shall continue to be the property of their respective owners.

Furthermore, they staunchly claim that the Miputak River does not actually correspond to Lot 7. The
Miputak River occupies only 12,162 square meters of Lot 7 which has an area of 45,499 square meters.
Also, they insist that the lower courts made capital, albeit erroneously, of their agreement to a reversion.
The reversion agreed to refers only to the 12,162 square meters portion covered by the Miputak River,
which should be voided, while the portion unaffected by the Miputak River is valid and their title thereto
should be maintained and respected.

Moreover, they vigorously contend that the CA erred in sustaining the validity of fishpond rights of the
Lacaya spouses. They aver that the Lacaya spouses violated the terms of the lease agreement by
constructing dikes for the fishponds which caused the Miputak River to traverse the property of the
Morandarte spouses.

Prefatorily, it must be stated that in petitions for review on certiorari, only questions of law may be
raised by the parties and passed upon by this Court.[27] Factual findings of the trial court, when adopted
and confirmed by the CA, are binding and conclusive upon the Supreme Court and generally will not be
reviewed on appeal.[28] Inquiry upon the veracity of the CAs factual findings and conclusion is not the
function of the Supreme Court for the Court is not a trier of facts.[29]

While this Court has recognized several exceptions to this rule, to wit: (1) when the findings are
grounded entirely on speculation, surmises, or conjectures; (2) when the inference made is manifestly
mistaken, absurd, or impossible; (3) when there is grave abuse of discretion; (4) when the judgment is
based on a misapprehension of facts; (5) when the findings of facts are conflicting; (6) when in making its
findings, the CA went beyond the issues of the case, or its findings are contrary to the admissions of both
the appellant and the appellee; (7) when the findings are contrary to the trial court; (8) when the
findings are conclusions without citation of specific evidence on which they are based; (9) when the facts
set forth in the petition as well as in the petitioners main and reply briefs are not disputed by the
respondent; (10) when the findings of fact are premised on the supposed absence of evidence and
contradicted by the evidence on record; and (11) when the CA manifestly overlooked certain relevant
facts not disputed by the parties, which, if properly considered, would justify a different conclusion,[30]
none of these exceptions find application here.

A complaint for reversion involves a serious controversy, involving a question of fraud and
misrepresentation committed against the government and it seeks the return of the disputed portion of
the public domain. It seeks to cancel the original certificate of registration, and nullify the original
certificate of title, including the transfer certificate of title of the successors-in-interest because the same
were all procured through fraud and misrepresentation.[31]

The State, as the party alleging that fraud and misrepresentation attended the application for free
patent, bears the burden of proof. The circumstances evidencing fraud and misrepresentation are as
varied as the people who perpetrate it in each case. It assumes different shapes and forms and may be
committed in as many different ways.[32] Therefore, fraud and misrepresentation are never presumed
but must be proved by clear and convincing evidence;[33] mere preponderance of evidence not even
being adequate.[34]

In this case, the State failed to prove that fraud and misrepresentation attended the application for free
patent. The RTC, in fact, recognized that no fraud attended the application for free patent[35] but
declared reversion based on the judicial admission of the Morandarte spouses that reversion is
warranted due to the inalienability of the Miputak River. Ordinarily, a judicial admission requires no
proof and a party is precluded from denying it except when it is shown that such admission was made
through palpable mistake or that no such admission was made.[36] In this case, the exception finds
application since the records lay bare that such admission was made through mistake and not in the
context it was considered. As reflected in the Order dated May 25, 1998,[37] the Morandarte spouses
essentially agreed only to a reconveyance of the portion covering the Miputak River. Undoubtedly, such
acquiescence to return the portion covering the Miputak River is not, and cannot be considered, an
admission that fraud and misrepresentation attended the application for free patent. This fact, standing
alone, does not prove fraud and misrepresentation.
Besides, it is undisputed that the original survey plan submitted by Morandarte to the BOL reflected the
true state of the Miputak River in Lot 1038 but the BOL did not approve the plan because a 1916 survey
did not so indicate the existence of a river traversing Lot 1038 such that Morandarte was directed to
submit an amended plan deleting the existence of the Miputak River. This mothered the subsequent
error of the BOL of approving the amended plan as CAS-09-05-000078-D.

This error could have been discovered through a thorough ocular inspection of the property claimed
under the free patent application. However, Aurelio F. Bureros, Hearing Officer I of the BOL, surprisingly
failed to notice the existence of the river traversing Lot 1038 in the field investigation he conducted on
January 10, 1976.[38]

Neither did Bureros note the 13,339 square meter portion already covered by an existing fishpond lease
agreement granted by the BOF in favor of Felipe B. Lacaya, the predecessor-in-interest of the Lacaya
spouses.[39]

The records reveal that as early as 1948, 4.6784 hectares[40] of the public land have been leased for
fishpond purposes. Aguido S. Realiza was the initial grantee of a fishpond lease agreement.[41] Amor A.
Realiza, Aguidos son, acquired his fishpond permit on May 29, 1953.[42] Amor A. Realiza transferred his
fishpond rights to Felipe B. Lacaya on May 14, 1956.[43] By 1960, the public land leased for fishpond
purposes had increased to 5.0335 hectares.[44] Felipe B. Lacaya transferred his fishpond rights to Virgilio
B. Lacaya on October 25, 1977.[45] Thus, the fishpond rights have been in existence since 1948, prior to
the 1972 free patent application of Morandarte.

Regardless of the foregoing, Aurelio F. Bureros, concluded that Morandarte is a qualified applicant and
recommended that a free patent be granted to him. This error culminated in the erroneous grant of a
free patent on July 27, 1976 covering the Miputak River and land subject of the fishpond rights of Felipe
B. Lacaya.[46]

Be that as it may, the mistake or error of the officials or agents of the BOL in this regard cannot be
invoked against the government with regard to property of the public domain. It has been said that the
State cannot be estopped by the omission, mistake or error of its officials or agents.[47]

It is well-recognized that if a person obtains a title under the Public Land Act which includes, by
oversight, lands which cannot be registered under the Torrens system, or when the Director of Lands did
not have jurisdiction over the same because it is a public domain, the grantee does not, by virtue of the
said certificate of title alone, become the owner of the land or property illegally included.[48] Otherwise
stated, property of the public domain is incapable of registration and its inclusion in a title nullifies that
title.[49]

The present controversy involves a portion of the public domain that was merely erroneously included in
the free patent. A different rule would apply where fraud is convincingly shown. The absence of clear
evidence of fraud will not invalidate the entire title of the Morandarte spouses.

Accordingly, the 12,162-square meter portion traversed by the Miputak River and the 13,339-square
meter portion covered by the fishpond lease agreement of the Lacaya spouses which were erroneously
included in Free Patent No. (IX-8) 785 and Original Certificate of Title No. P-21972 should be reconveyed
back to the State.

The Morandarte spouses cannot seek refuge in their claim that Antonio A. Morandarte, their
predecessor-in-interest, was already the owner of that portion of Lot 1038 when the fishpond
application of Aguido S. Realiza was approved in 1948 because Lot 1038 was still part of the public
domain then. It was only in 1972, through Forestry Administrative Order No. 4-1257, which was
approved August 14, 1972, when Lot 1038 was declared alienable or disposable property of the State.
[50]

It is a settled rule that unless a public land is shown to have been reclassified as alienable or actually
alienated by the State to a private person, that piece of land remains part of the public domain. Hence,
Antonio A. Morandartes occupation thereof, however long, cannot ripen into private ownership.[51]

The Morandarte spouses also unsuccessfully harp on the inapplicability of Article 462 of the Civil Code
by claiming that the change of course of the Miputak River was due to a man-made cause and not by
natural means. They offered no iota of evidence to substantiate this claim, other than the bare testimony
of Beder Morandarte. Neither is there proof that the movement of the river was caused by accident or
calamity, such as a typhoon, and not by the natural movements thereof. General statements, which are
mere conclusions of law and not proofs, are unavailing and cannot suffice.
Besides, at the time of the filing of the application for free patent in 1972, a portion of the Miputak River
was already in its present course, traversing Lot 1038, particularly Lot 7 of the amended plan submitted
by Morandarte.

We need not delve on the question of whether the Lacaya spouses violated the terms of the fishpond
lease agreement. It is not material in this case in the sense that it was not made an issue by the parties.
Neither is there evidence to corroborate the bare allegation of petitioners that the Lacaya spouses
constructed dikes for the fishponds which caused the Miputak River to traverse Lot 7. What is significant
here is the established fact that there was an existing fishpond lease agreement between Felipe Lacaya
and the Bureau of Fisheries at the time of Morandartes application for free patent; in effect, proving that
the area covering the fishpond belongs to the Government and petitioners have no rights thereto.

In closing, we cannot but decry the carelessness of the BOL in having issued the Free Patent in
Morandartes favor which covered the Miputak River and the fishpond rights of Felipe B. Lacaya. Surely, a
more diligent search into their records and thorough ocular inspection of Lot 7 would have revealed the
presence of the Miputak River traversing therein and an existing fishpond right thereon. Had more
vigilance been exercised by the BOL, the government agency entrusted specifically with the task of
administering and disposing of public lands, the present litigation could have been averted.

WHEREFORE, the petition is partly GRANTED. The assailed Decision of the Court of Appeals, dated
August 23, 1995, in CA G.R. No. 36258 is REVERSED insofar only as it affirmed the nullity of Free Patent
No. (IX-8) 785 and Original Certificate of Title No. P-21972, in the name of petitioner Beder Morandarte.
In its stead, petitioners Spouses Beder Morandarte and Marina Febrera are directed to reconvey to the
respondent Republic of the Philippines within thirty (30) days from the finality of this Decision the
12,162-square meter portion traversed by the Miputak River and the 13,339-square meter portion
covered by the fishpond lease agreement of the Lacaya spouses. No pronouncement as to costs.

SO ORDERED.

Puno, (Chairman), Callejo, Sr., Tinga, and Chico-Nazario, JJ., concur.

Republic of the Philippines

SUPREME COURT

Manila
THIRD DIVISION

G.R. No. 92161 March 18, 1991

SIMPLICIO BINALAY, PONCIANO GANNABAN, NICANOR MACUTAY, DOMINGO ROSALES, GREGORIO

ARGONZA, EUSTAQUIO BAUA, FLORENTINO ROSALES, TEODORO MABBORANG, PATRICIO
MABBORANG and FULGENCIO MORA, petitioners

vs.

GUILLERMO MANALO and COURT OF APPEALS, respondents.

Josefin De Alban Law Office for Petitioners.

FELICIANO, J.:

The late Judge Taccad originally owned a parcel of land situated in Tumauini, Isabela having an estimated
area of twenty (20) hectares. The western portion of this land bordering on the Cagayan River has an
elevation lower than that of the eastern portion which borders on the national road. Through the years,
the western portion would periodically go under the waters of the Cagayan River as those waters swelled
with the coming of the rains. The submerged portion, however, would re-appear during the dry season
from January to August. It would remain under water for the rest of the year, that is, from September to
December during the rainy season.

The ownership of the landholding eventually moved from one person to another. On 9 May 1959,
respondent Guillermo Manalo acquired 8.65 hectares thereof from Faustina Taccad, daughter of Judge
Juan Taccad. The land sold was described in the Deed of Absolute Sale1 as follows:

. . . a parcel of agricultural land in Balug, Tumauini, Isabela, containing an area of 8.6500 hectares, more
or less; bounded on the North by Francisco Forto on the East by National Road; on South by Julian
Tumolva and on the West by Cagayan River; declared for taxation under Tax Declaration No. 12681 in the
name of Faustina Taccad, and assessed at P 750.00. . . .
Later in 1964, respondent Manalo purchased another 1.80 hectares from Gregorio Taguba who had
earlier acquired the same from Judge Juan Taccad. The second purchase brought the total acquisition of
respondent Manalo to 10.45 hectares. The second piece of property was more particularly described as
follows:

. . . a piece of agricultural land consisting of tobacco land, and containing an area of 18,000 square
meters, more or less, bounded on the North by Balug Creek; on the South, by Faustina Taccad (now
Guillermo R. Manalo); on the East, by a Provincial Road; and on the West, by Cagayan River assessed at P
440.00, as tax Declaration No. 3152. . . .2

During the cadastral survey conducted at Balug, Tumauini, Isabela on 21 October 1969, the two (2)
parcels of land belonging to respondent Manalo were surveyed and consolidated into one lot,
designated as Lot No. 307, Pls-964. Lot 307 which contains 4.6489 hectares includes: (a) the whole of the
1.80 hectares acquired from Gregorio Taguba; and (b) 2.8489 hectares out of the 8.65 hectares
purchased from Faustina Taccad. As the survey was conducted on a rainy month, a portion of the land
bought from Faustina Taccad then under water was left unsurveyed and was not included in Lot 307.

The Sketch Plan3 submitted during the trial of this case and which was identified by respondent Manalo
shows that the Cagayan River running from south to north, forks at a certain point to form two (2)
branchesthe western and the eastern branchesand then unites at the other end, further north, to
form a narrow strip of land. The eastern branch of the river cuts through the land of respondent Manalo
and is inundated with water only during the rainy season. The bed of the eastern branch is the
submerged or the unsurveyed portion of the land belonging to respondent Manalo. For about eight (8)
months of the year when the level of water at the point where the Cagayan River forks is at its ordinary
depth, river water does not flow into the eastern branch. While this condition persists, the eastern bed is
dry and is susceptible to cultivation.

Considering that water flowed through the eastern branch of the Cagayan River when the cadastral
survey was conducted, the elongated strip of land formed by the western and the eastern branches of
the Cagayan River looked very much like an island. This strip of land was surveyed on 12 December
1969.4
It was found to have a total area of 22.7209 hectares and was designated as Lot 821 and Lot 822. The
area of Lot 822 is 10.8122 hectares while Lot 821 has an area of 11.9087 hectares. Lot 821 is located
directly opposite Lot 307 and is separated from the latter only by the eastern branch of the Cagayan
River during the rainy season and, during the dry season, by the exposed, dry river bed, being a portion
of the land bought from Faustina Taccad. Respondent Manalo claims that Lot 821 also belongs to him by
way of accretion to the submerged portion of the property to which it is adjacent.

Petitioners who are in possession of Lot 821, upon the other hand, insist that they own Lot 821. They
occupy the outer edges of Lot 821 along the river banks, i.e., the fertile portions on which they plant
tobacco and other agricultural products. They also cultivate the western strip of the unsurveyed portion
during summer.5 This situation compelled respondent Manalo to file a case for forcible entry against
petitioners on 20 May 1969. The case was dismissed by the Municipal Court of Tumauini, Isabela for
failure of both parties to appear. On 15 December 1972, respondent Manalo again filed a case for
forcible entry against petitioners. The latter case was similarly dismissed for lack of jurisdiction by the
Municipal Court of Tumauini, Isabela.

On 24 July 1974, respondent Manalo filed a complaints6 before the then Court of First Instance of
Isabela, Branch 3 for quieting of title, possession and damages against petitioners. He alleged ownership
of the two (2) parcels of land he bought separately from Faustina Taccad and Gregorio Taguba for which
reason he prayed that judgment be entered ordering petitioners to vacate the western strip of the
unsurveyed portion. Respondent Manalo likewise prayed that judgment be entered declaring him as
owner of Lot 821 on which he had laid his claim during the survey.

Petitioners filed their answer denying the material allegations of the complaint. The case was then set
for trial for failure of the parties to reach an amicable agreement or to enter into a stipulation of facts.7
On 10 November 1982, the trial court rendered a decision with the following dispositive portion:

WHEREFORE, in the light of the foregoing premises, the Court renders judgment against the defendants
and in favor of the plaintiff and orders:

1. That plaintiff, Guillermo Manalo, is declared the lawful owner of the land in question, Lot No.
821, Pls-964 of Tumauini Cadastre, and which is more particularly described in paragraph 2-b of the
Complaint;
2. That the defendants are hereby ordered to vacate the premises of the land in question, Lot No.
821, Pls-964 of Tumauini Cadastre, and which is more particularly described in paragraph 2-b of the
Complaint;

3. That the defendants are being restrained from entering the premises of the land in question, Lot
No. 821, Pls-964 of Tumauini Cadastre, and which is more particularly described in paragraph 2-b of the
Complaint; and

4. That there is no pronouncement as to attorney's fees and costs.

SO ORDERED.8

Petitioners appealed to the Court of Appeals which, however, affirmed the decision of the trial court.
They filed a motion for reconsideration, without success.

While petitioners insist that Lot 821 is part of an island surrounded by the two (2) branches of the
Cagayan River, the Court of Appeals found otherwise. The Court of Appeals concurred with the finding of
the trial court that Lot 821 cannot be considered separate and distinct from Lot 307 since the eastern
branch of the Cagayan River substantially dries up for the most part of the year such that when this
happens, Lot 821 becomes physically (i.e., by land) connected with the dried up bed owned by
respondent Manalo. Both courts below in effect rejected the assertion of petitioners that the depression
on the earth's surface which separates Lot 307 and Lot 821 is, during part of the year, the bed of the
eastern branch of the Cagayan River.

It is a familiar rule that the findings of facts of the trial court are entitled to great respect, and that they
carry even more weight when affirmed by the Court of Appeals.9 This is in recognition of the peculiar
advantage on the part of the trial court of being able to observe first-hand the deportment of the
witnesses while testifying. Jurisprudence is likewise settled that the Court of Appeals is the final arbiter
of questions of fact.10 But whether a conclusion drawn from such findings of facts is correct, is a
question of law cognizable by this Court.11
In the instant case, the conclusion reached by both courts below apparently collides with their findings
that periodically at the onset of and during the rainy season, river water flows through the eastern bed
of the Cagayan River. The trial court held:

The Court believes that the land in controversy is of the nature and character of alluvion (Accretion), for
it appears that during the dry season, the body of water separating the same land in controversy (Lot No.
821, Pls-964) and the two (2) parcels of land which the plaintiff purchased from Gregorio Taguba and
Justina Taccad Cayaba becomes a marshy land and is only six (6) inches deep and twelve (12) meters in
width at its widest in the northern tip (Exhs. "W", "W-l", "W-2", "W-3" and "W-4"), It has been held by
our Supreme Court that "the owner of the riparian land which receives the gradual deposits of alluvion,
does not have to make an express act of possession. The law does not require it, and the deposit created
by the current of the water becomes manifest" (Roxas vs. Tuazon, 6 Phil. 408).12

The Court of Appeals adhered substantially to the conclusion reached by the trial court, thus:

As found by the trial court, the disputed property is not an island in the strict sense of the word since the
eastern portion of the said property claimed by appellants to be part of the Cagayan River dries up
during summer. Admittedly, it is the action of the heavy rains which comes during rainy season especially
from September to November which increases the water level of the Cagayan river. As the river becomes
swollen due to heavy rains, the lower portion of the said strip of land located at its southernmost point
would be inundated with water. This is where the water of the Cagayan river gains its entry.
Consequently, if the water level is high the whole strip of land would be under water.

In Government of the Philippine Islands vs. Colegio de San Jose, it was held that

According to the foregoing definition of the words "ordinary" and "extra-ordinary," the highest depth of
the waters of Laguna de Bay during the dry season is the ordinary one, and the highest depth they attain
during the extra-ordinary one (sic); inasmuch as the former is the one which is regular, common, natural,
which occurs always or most of the time during the year, while the latter is uncommon, transcends the
general rule, order and measure, and goes beyond that which is the ordinary depth. If according to the
definition given by Article 74 of the Law of Waters quoted above, the natural bed or basin of the lakes is
the ground covered by their waters when at their highest ordinary depth, the natural bed or basin of
Laguna de Bay is the ground covered by its waters when at their highest depth during the dry season,
that is up to the northeastern boundary of the two parcels of land in question.
We find the foregoing ruling to be analogous to the case at bar. The highest ordinary level of the waters
of the Cagayan River is that attained during the dry season which is confined only on the west side of Lot
[821] and Lot [822]. This is the natural Cagayan river itself. The small residual of water between Lot [821]
and 307 is part of the small stream already in existence when the whole of the late Judge Juan Taccad's
property was still susceptible to cultivation and uneroded.13

The Court is unable to agree with the Court of Appeals that Government of the Philippine Islands vs.
Colegio de San Jose 14 is applicable to the present case. That case involved Laguna de Bay; since Laguna
de Bay is a lake, the Court applied the legal provisions governing the ownership and use of lakes and
their beds and shores, in order to determine the character and ownership of the disputed property.
Specifically, the Court applied the definition of the natural bed or basin of lakes found in Article 74 of the
Law of Waters of 3 August 1866. Upon the other hand, what is involved in the instant case is the eastern
bed of the Cagayan River.

We believe and so hold that Article 70 of the Law of Waters of 3 August 1866 is the law applicable to the
case at bar:

Art. 70. The natural bed or channel of a creek or river is the ground covered by its waters during the
highest floods. (Emphasis supplied)

We note that Article 70 defines the natural bed or channel of a creek or river as the ground covered by
its waters during the highest floods. The highest floods in the eastern branch of the Cagayan River occur
with the annual coming of the rains as the river waters in their onward course cover the entire
depressed portion. Though the eastern bed substantially dries up for the most part of the year (i.e., from
January to August), we cannot ignore the periodical swelling of the waters ( i.e., from September to
December) causing the eastern bed to be covered with flowing river waters.

The conclusion of this Court that the depressed portion is a river bed rests upon evidence of
record.1wphi1 Firstly, respondent Manalo admitted in open court that the entire area he bought from
Gregorio Taguba was included in Lot 307.15 If the 1.80 hectares purchased from Gregorio Taguba was
included in Lot 307, then the Cagayan River referred to as the western boundary in the Deed of Sale
transferring the land from Gregorio Taguba to respondent Manalo as well as the Deed of Sale signed by
Faustina Taccad, must refer to the dried up bed (during the dry months) or the eastern branch of the
river (during the rainy months). In the Sketch Plan attached to the records of the case, Lot 307 is
separated from the western branch of the Cagayan River by a large tract of land which includes not only
Lot 821 but also what this Court characterizes as the eastern branch of the Cagayan River.

Secondly, the pictures identified by respondent Manalo during his direct examination depict the
depressed portion as a river bed. The pictures, marked as Exhibits "W" to "W-4", were taken in July 1973
or at a time when the eastern bed becomes visible.16 Thus, Exhibit "W-2" which according to
respondent Manalo was taken facing the east and Exhibit "W-3" which was taken facing the west both
show that the visible, dried up portion has a markedly lower elevation than Lot 307 and Lot 821. It has
dike-like slopes on both sides connecting it to Lot 307 and Lot 821 that are vertical upward and very
prominent. This topographic feature is compatible with the fact that a huge volume of water passes
through the eastern bed regularly during the rainy season. In addition, petitioner Ponciano Gannaban
testified that one had to go down what he called a "cliff" from the surveyed portion of the land of
respondent Manalo to the depressed portion. The cliff, as related by petitioner Gannaban, has a height
of eight (8) meters.17

The records do not show when the Cagayan River began to carve its eastern channel on the surface of
the earth. However, Exhibit "E"18 for the prosecution which was the Declaration of Real Property
standing in the name of Faustina Taccad indicates that the eastern bed already existed even before the
sale to respondent Manalo. The words "old bed" enclosed in parenthesesperhaps written to make
legitimate the claim of private ownership over the submerged portionis an implied admission of the
existence of the river bed. In the Declaration of Real Property made by respondent Manalo, the
depressed portion assumed the name Rio Muerte de Cagayan. Indeed, the steep dike-like slopes on
either side of the eastern bed could have been formed only after a prolonged period of time.

Now, then, pursuant to Article 420 of the Civil Code, respondent Manalo did not acquire private
ownership of the bed of the eastern branch of the river even if it was included in the deeds of absolute
sale executed by Gregorio Taguba and Faustina Taccad in his favor. These vendors could not have validly
sold land that constituted property of public dominion. Article 420 of the Civil Code states:

The following things are property of public dominion:

(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges
constructed by the State, banks, shores, roadsteads, and others of similar character;

(2) Those which belong to the State, without being for public use, and are intended for some public
service or for the development of the national wealth. (Emphasis supplied)

Although Article 420 speaks only of rivers and banks, "rivers" is a composite term which includes: (1) the
running waters, (2) the bed, and (3) the banks.19 Manresa, in commenting upon Article 339 of the
Spanish Civil Code of 1889 from which Article 420 of the Philippine Civil Code was taken, stressed the
public ownership of river beds:

La naturaleza especial de los rios, en punto a su disfrute general, hace que sea necesario considerar en
su relacion de dominio algo mas que sus aguas corrientes. En efecto en todo rio es preciso distinguir 1.
esta agua corriente; 2. el alveo o cauce, y 3. las riberas. Ahora bien: son estas dos ultimas cosas siempre
de dominio publico, como las aguas?

Realmente no puede imaginarse un rio sin alveo y sin ribera; de suerte que al decir el Codigo civil que los
rios son de dominio publico, parece que debe ir implicito el dominio publico de aquellos tres elementos
que integran el rio. Por otra parte, en cuanto a los alveos o cauces tenemos la declaracion del art. 407,
num 1, donde dice: son de dominion publico . . . los rios y sus cauces naturales; declaracion que
concuerda con lo que dispone el art. 34 de la ley de [Aguas], segun el cual, son de dominion publico: 1.
los alveos o cauces de los arroyos que no se hallen comprendidos en el art. 33, y 2. los alveos o cauces
naturales de los rios en la extension que cubran sus aguas en las mayores crecidas ordinarias.20
(Emphasis supplied)

The claim of ownership of respondent Manalo over the submerged portion is bereft of basis even if it
were alleged and proved that the Cagayan River first began to encroach on his property after the
purchase from Gregorio Taguba and Faustina Taccad. Article 462 of the Civil Code would then apply
divesting, by operation of law, respondent Manalo of private ownership over the new river bed. The
intrusion of the eastern branch of the Cagayan River into his landholding obviously prejudiced
respondent Manalo but this is a common occurrence since estates bordering on rivers are exposed to
floods and other evils produced by the destructive force of the waters. That loss is compensated by, inter
alia, the right of accretion acknowledged by Article 457 of the Civil Code.21 It so happened that instead
of increasing the size of Lot 307, the eastern branch of the Cagayan River had carved a channel on it.
We turn next to the issue of accretion. After examining the records of the case, the Court considers that
there was no evidence to prove that Lot 821 is an increment to Lot 307 and the bed of the eastern
branch of the river. Accretion as a mode of acquiring property under Article 457 of the Civil Code
requires the concurrence of three (3) requisites: (a) that the deposition of soil or sediment be gradual
and imperceptible; (b) that it be the result of the action of the waters of the river (or sea); and (c) that
the land where accretion takes place is adjacent to the banks of rivers (or the sea coast).22 The Court
notes that the parcels of land bought by respondent Manalo border on the eastern branch of the
Cagayan River. Any accretion formed by this eastern branch which respondent Manalo may claim must
be deposited on or attached to Lot 307. As it is, the claimed accretion (Lot 821) lies on the bank of the
river not adjacent to Lot 307 but directly opposite Lot 307 across the river.

Assuming (arguendo only) that the Cagayan River referred to in the Deeds of Sale transferring ownership
of the land to respondent Manalo is the western branch, the decision of the Court of Appeals and of the
trial court are bare of factual findings to the effect that the land purchased by respondent Manalo
received alluvium from the action of the aver in a slow and gradual manner. On the contrary, the
decision of the lower court made mention of several floods that caused the land to reappear making it
susceptible to cultivation. A sudden and forceful action like that of flooding is hardly the alluvial process
contemplated under Article 457 of the Civil Code. It is the slow and hardly perceptible accumulation of
soil deposits that the law grants to the riparian owner.

Besides, it is important to note that Lot 821 has an area of 11.91 hectares. Lot 821 is the northern
portion of the strip of land having a total area of 22.72 hectares. We find it difficult to suppose that such
a sizable area as Lot 821 resulted from slow accretion to another lot of almost equal size. The total
landholding purchased by respondent Manalo is 10.45 hectares (8.65 hectares from Faustina Taccad and
1.80 hectares from Gregorio Taguba in 1959 and 1964, respectively), in fact even smaller than Lot 821
which he claims by way of accretion. The cadastral survey showing that Lot 821 has an area of 11.91
hectares was conducted in 1969. If respondent Manalo's contention were accepted, it would mean that
in a span of only ten (10) years, he had more than doubled his landholding by what the Court of Appeals
and the trial court considered as accretion. As already noted, there are steep vertical dike-like slopes
separating the depressed portion or river bed and Lot 821 and Lot 307. This topography of the land,
among other things, precludes a reasonable conclusion that Lot 821 is an increment to the depressed
portion by reason of the slow and constant action of the waters of either the western or the eastern
branches of the Cagayan River.

We turn finally to the issue of ownership of Lot 821. Respondent Manalo's claim over Lot 821 rests on
accretion coupled with alleged prior possession. He alleged that the parcels of land he bought separately
from Gregorio Taguba and Faustina Taccad were formerly owned by Judge Juan Taccad who was in
possession thereof through his (Judge Taccad's) tenants. When ownership was transferred to him,
respondent Manalo took over the cultivation of the property and had it declared for taxation purposes in
his name. When petitioners forcibly entered into his property, he twice instituted the appropriate action
before the Municipal Trial Court of Tumauini, Isabela. Against respondent Manalo's allegation of prior
possession, petitioners presented tax declarations standing in their respective names. They claimed
lawful, peaceful and adverse possession of Lot 821 since 1955.

If respondent Manalo had proved prior possession, it was limited physically to Lot 307 and the
depressed portion or the eastern river bed. The testimony of Dominga Malana who was a tenant for
Justina Taccad did not indicate that she was also cultivating Lot 821. In fact, the complaints for forcible
entry lodged before the Municipal Trial Court of Tumauini, Isabela pertained only to Lot 307 and the
depressed portion or river bed and not to Lot 821. In the same manner, the tax declarations presented
by petitioners conflict with those of respondent Manalo. Under Article 477 of the Civil Code, the plaintiff
in an action for quieting of title must at least have equitable title to or interest in the real property which
is the subject matter of the action. The evidence of record on this point is less than satisfactory and the
Court feels compelled to refrain from determining the ownership and possession of Lot 821, adjudging
neither petitioners nor respondent Manalo as owner(s) thereof.

WHEREFORE, the Decision and Resolution of the Court of Appeals in CA-GR CV No. 04892 are hereby SET
ASIDE. Respondent Manalo is hereby declared the owner of Lot 307. The regularly submerged portion or
the eastern bed of the Cagayan River is hereby DECLARED to be property of public dominion. The
ownership of Lot 821 shall be determined in an appropriate action that may be instituted by the
interested parties inter se. No pronouncement as to costs.

SO ORDERED.

Fernan, C.J., Gutierrez, Jr., Bidin and Davide, Jr., JJ., concur.

Republic of the Philippines

SUPREME COURT

Manila

EN BANC

G.R. No. L-20851 September 3, 1966

JESUS AGUIRRE, petitioner,

vs.

VICTOR S. PHENG, in his capacity as General Manager of the LEONORA & COMPANY, and NATIONAL
SHIPYARDS AND STEEL CORPORATION, respondents.

Sisenando Villaluz for petitioner.

M. C. Virata for respondent National Shipyards and Steel Corporation.

BARRERA, J.:

Antecedents.On June 28, 1954, Vicente Aldaba and Teresa V. Aldaba sold to Jesus Aguirre a circular
bolted steel tank with a capacity of 5,000 gallons, for the sum of P900.00, for which the latter delivered
to the sellers duly endorsed, Security Bank & Trust Company check No. 281912, in the amount of
P900.00. Aguirre, however, failed to, take physical possession of the tank, having been prevented from
doing so by the municipal authorities of Los Baos, Laguna (where the tank was located), in view of the
claim of ownership being made by the Bureau of Public Highways. It appears, however, that Vicente and
Teresa Aldaba again sold the same tank on December 2, 1954 to Zosimo Gabriel, for P900.000. Gabriel,
in turn, sold it to the Leonora & Company on December 5, 1954, for P2,500.00. After some alterations
and improvements made on the tank, Leonora & Company was able to sell the tank to National
Shipyards & Steel Corporation (Nassco), for P14,500.00. 1

Aguirre immediately filed with Nassco a formal notice of his claim of ownership of the tank, as a
consequence of which, payment of the purchase price to Leonora & Company was suspended. Then,
Aguirre instituted Civil Case No. 24914 in the Court of First Instance of Manila, against Leonora &
Company and the Aldabas, for delivery to him of the tank, with damages. On the other hand, because of
the suspension of payment of the purchase price, Leonora & Company filed Civil Case No. 27988, against
the Nassco, praying for the delivery of the purchase price of P14,500.00, or the reimbursement of the
sum of P2,299.00 allegedly representing the actual investment and expenses made and incurred to put
the tank in usable condition. Jesus Aguirre intervened in this proceeding. These two cases were jointly
heard by the trial court.

Thereafter, decision was rendered in Civil Case No. 24914, the dispositive portion of which reads as
follows:

IN VIEW OF THE FOREGOING, the Court hereby declares Jesus Aguirre the absolute owner of the
property described in his complaint. The subsequent sale made by defendants Aldaba to Zosimo Gabriel,
the sale made by Zosimo Gabriel to defendant Leonora and Co.; and the sale made by defendant
Leonora and Co. to the National Shipyards and Steel Corporation, are hereby declared null and void and
of no effect. Defendants Aldaba and Leonora and Co. and the National Shipyards and Steel Corporation,
are hereby ordered to deliver to plaintiff Jesus Aguirre the tank in question. Failure to make such
delivery, defendant National Shipyards and Steel Corporation, in whose possession the tank is at present,
shall pay to the said Jesus Aguirre the original purchase price of the tank in the amount of P900.00.

No appeal having been perfected on time, this decision became final.

In Civil Case No. 27988, the court rendered decision based on a stipulation of facts by the parties,
wherein the existence of Civil Case No. 24914 was admitted, the dispositive portion of which provides:

IN VIEW OF THE FOREGOING AGREEMENT, judgment is hereby rendered as follows:

Intervenor Jesus Aguirre, as we have already declared in Civil Case No. 24914, is hereby adjudged owner
of the oil tank in question. Defendant National Shipyards and Steel Corporation is hereby ordered to
deliver to the said Jesus Aguirre such tank, but in the event that delivery is not possible, to pay to Aguirre
the purchase price of P900.00, and to Leonora and Co. the amount of P11,299.00 which represents the
costs of the improvements made by the said Leonora & Co.

In the event that the National Shipyards and Steel Corporation shall deliver the oil tank to Jesus Aguirre
as it is, the latter shall pay to Leonora and Co. the amount of P11,299.00 which, as already stated, was
spent by Leonora and Co. for the improvement of the tank.
From this decision, Aguirre perfected an appeal to the Court of Appeals.

The present case.On January 9, 1963, the Court of Appeals rendered decision affirming the judgment
of the lower court in Civil Case No. 27988, to return to intervenor Aguirre the sum of P900.00 in case
delivery of the tank to him will not be possible

because this was all the amount that Aguirre had parted with when he purchased said tank. It was
Leonora & Co. who had 5 spent the sum of P11,299.00 for the rehabilitation of said tank and against this
amount Aguirre has no rightful claim whatsoever. Of course, in the event of delivery of the tank to
Aguirre as improved, it would be just for him to reimburse Leonora & Co. the sum of P11,299.00. The
trial court, therefore, acted properly in denying Aguirre's claim to be paid the fair and reasonable value
of the tank as improved in case the same could no longer be delivered to him.

Aguirre filed the present petition for review, alleging that the judgment of the Court of Appeals, ordering
the return to him of the sum of P900.00 (when the value of the property is at least P14,500.00), nullifies
the declaration of his ownership of the tank. He contends that under Article 440 of the Civil Code, his
ownership of the property entitles him to everything that is produced thereby, or is incorporated or
attached thereto, either naturally or artificially. Thus, he reiterates the claim to the fair and reasonable
value of the tank at the time of its delivery to Nassco which is P14,500.00.

It is clear that we have here a case of accession by specification: Leonora and Company, as purchaser
acting in good faith, spending P11,299.00 for the reconditioning of the tank which is later adjudged to
belong to petitioner Aguirre. There is no showing that without the works made by Leonora & Company,
the tank in its original condition when Aguirre paid P900.00 therefor, would command the price of
P14,500 which Nassco was willing to pay. Although ordinarily, therefore, Aguirre, as owner of the tank,
would be entitled to any accession thereto, the rule is different where the works or improvements or the
accession was made on the property by one who acted in good faith.2 And, it is not contended that the
making of the improvements and incurring of expenses amounting to P11,299.00 by Leonora & Company
was done in bad faith. Furthermore, to uphold petitioner's contention that he is entitled to the sum of
P14,500.00 the price of the tank in its present condition, would be to allow him to enrich himself at the
expense of another. The lower courts, therefore, acted correctly in ordering the reimbursement to
Leonora & Company of the expenses it made on the tank.1awphl.nt
It must also be remembered that the judgment in Civil Case No. 24914 of the Court of First Instance of
Manila, wherein Nassco was directed to pay to Aguirre the of P900.00, in case delivery of the same tank
is no longer possible, has already become final. This ruling cannot be disregarded in the present
proceeding which involves the same parties and practically the same issue, arising from the same set of
facts.

Nassco cannot also be compelled to pay more than P14,500.00 for the tank, the bid offered by Leonora
& Company and accepted by this buyer, and which must be the actual market value of the property at
the time of its delivery to the latter. It has nothing to do at all with the various transactions or sales and
the deprivation of Aguirre's right to possession of the tank, which culminated in this legal suit.

Wherefore finding no error in the decision of the Court of Appeals under review, the present petition is
hereby dismissed, with costs against the petitioner. So ordered.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Bengzon, J.P., Zaldivar, Sanchez and Castro, JJ., concur.