Morandarte vs. Court of Appeals

Property of public dominion is incapable of registration, and its inclusion in a certificate of title nullifies that title; however, where no fraud attended the procurement of the free patent, only the portion erroneously included is void, not the entire title. The State cannot be estopped by the omission, mistake, or error of its officials or agents with regard to property of the public domain.

Petitioner Beder Morandarte and his wife Marina Febrera obtained Free Patent No. (IX-8) 785 over a parcel of land in Sta. Filomena, Dipolog City, described as a portion of Lot 1038 of Dipolog Cadastre No. 85. The land included a portion of the Miputak River, which is property of public dominion outside the commerce of man, and a portion covered by a fishpond lease agreement granted by the Bureau of Fisheries to Felipe B. Lacaya, predecessor-in-interest of respondent spouses Virginio and Nenita Lacaya. The Republic of the Philippines, through the Director of Lands, sought annulment of the title and reversion of the land to the State.

Beder Morandarte filed an application for free patent on December 5, 1972 before the Bureau of Lands, Dipolog City District Land Office, covering a parcel of land located at Sta. Filomena, Dipolog City with an area of 4.5499 hectares, described as a portion of Lot 1038 of Dipolog Cadastre No. 85. On July 27, 1976, the District Land Officer approved the application and directed the issuance of a free patent in his favor. Free Patent No. (IX-8) 785 for Lot No. 7, Csd-09-05-00078-D was issued in Morandarte's name, and on September 20, 1976, the Register of Deeds of Zamboanga del Norte issued Original Certificate of Title No. (P-21972) 5954. Morandarte subsequently caused a subdivision survey of the lot, dividing it into Lot No. 6781-A (13,939 square meters) and Lot No. 6781-B (32,819 square meters), and Transfer Certificates of Title Nos. T-1835 and T-1836 were issued in his favor on May 12, 1980. On May 22, 1981, Morandarte and his wife Marina Febrera executed a real estate mortgage over Lot 6781-B in favor of the Development Bank of the Philippines in consideration of a loan of ₱52,160.00.

More than ten years after the issuance of the OCT, on March 19, 1987, the Republic of the Philippines, represented by the Director of Lands, filed 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. 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, and that the Morandarte spouses deliberately and intentionally concealed such fact in the application. The Morandarte spouses denied the allegations, claiming that the land is a portion of inherited property from Antonio L. Morandarte, and argued that the river changed its course because a portion of the Miputak River was leased by the Bureau of Fisheries to Aguido Realiza, whose rights were subsequently transferred to Virginio Lacaya. They alleged that they indicated the actual location of the Miputak River in their survey plan but the BOL returned the survey with the directive that the existence of the river should not be indicated, to which they complied by submitting a new survey plan.

The Lacaya spouses filed a Complaint-In-Intervention on March 4, 1988, alleging 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. The Morandarte spouses denied the allegations, maintaining that the portion of the fishpond originally belonged to Antonio L. Morandarte, their predecessor-in-interest, and that the Lacaya spouses have never been in possession thereof but are actually squatters therein. The records reveal that as early as 1948, 4.6784 hectares of the public land have been leased for fishpond purposes, with Aguido S. Realiza as the initial grantee. Amor A. Realiza, Aguido's son, acquired his fishpond permit on May 29, 1953, and transferred his fishpond rights to Felipe B. Lacaya on May 14, 1956. By 1960, the public land leased for fishpond purposes had increased to 5.0335 hectares. Felipe B. Lacaya transferred his fishpond rights to Virgilio B. Lacaya on October 25, 1977.

The RTC rendered a Decision on November 5, 1992 in favor of the Republic and the Lacaya spouses, declaring that while fraud in the procurement of the title was not established by the State, Morandarte's 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. The RTC also sustained the fishpond rights of the Lacaya spouses over a portion included in Morandarte's title. The CA affirmed the RTC decision, holding that rivers and their natural beds are properties of public dominion, and that Article 462 of the Civil Code provides that 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 Morandarte spouses filed a motion for reconsideration, which was denied on January 19, 1996, prompting the instant petition for review.

• Inapplicability of Article 462: Petitioners argued that the CA committed a grave error of law in applying Article 462 of the Civil Code because the change in course of the old Miputak River was not due to natural causes but was accidental, caused by 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. They submitted 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."

• Partial Nullity: Petitioners argued that even assuming the change of course was due to natural causes, only a portion of the subject property was affected, so that their title to the remaining portion is valid and cannot be nullified as it remained private property. They insisted that the Miputak River occupies only 12,162 square meters of Lot 7, which has an area of 45,499 square meters, and that the reversion they agreed to refers only to the portion covered by the Miputak River.

• Validity of Fishpond Rights: Petitioners contended that the CA erred in sustaining the validity of fishpond rights of the Lacaya spouses, averring 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.

• Absence of Fraud: Petitioners argued that the CA gravely erred in not dismissing the complaint considering that no fraud or misrepresentation was employed by the spouses Morandarte in obtaining the title.

• Public Dominion of Rivers: The Republic and the Lacaya spouses maintained that rivers and their natural beds are properties of public dominion under Article 502, paragraph 1 of the Civil Code, and cannot be acquired by prescription. They argued that 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.

• Application of Article 462: Respondents argued that Article 462 of the Civil Code applies, providing that whenever a river, changing its course by natural causes, opens a new bed through a private estate, this bed shall become of public dominion, and that even if the new bed is on private property, the bed becomes property of public dominion.

• Fishpond Rights: The Lacaya spouses 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, and that the land of the Morandarte spouses encroaches on the area leased to them.

• Applicability of Article 462: Whether the Court of Appeals committed a grave error of law in applying Article 462 of the Civil Code when the change in course of the Miputak River was allegedly not due to natural causes but was accidental.
• Partial Nullity of Title: Whether the title of petitioners to the portion of the property not affected by the Miputak River remains valid and cannot be nullified.
• Reversion of the Entire Lot: Whether the Court of Appeals gravely erred in ordering the reversion of Lot 7, Csd-09-05-00078-D to the public domain.
• Validity of the Fishpond Lease Agreement: Whether the Court of Appeals gravely erred in not declaring as null and void the lease agreement executed in favor of the intervenors.
• Fraud or Misrepresentation: Whether the Court of Appeals gravely erred in not dismissing the complaint considering that no fraud or misrepresentation was employed by the spouses Morandarte in obtaining the title.

• Applicability of Article 462: No. The petitioners offered no evidence to substantiate their claim that the change of course of the Miputak River was due to a man-made cause, other than the bare testimony of Beder Morandarte. There was no proof that the movement of the river was caused by accident or calamity, and 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.

• Partial Nullity of Title: Yes. The absence of clear evidence of fraud will not invalidate the entire title of the Morandarte spouses. Property of the public domain is incapable of registration, and its inclusion in a title nullifies that title only as to the portion erroneously included. The 12,162-square meter portion traversed by the Miputak River and the 13,339-square meter portion covered by the fishpond lease agreement should be reconveyed back to the State.

• Reversion of the Entire Lot: No. The Court reversed the CA decision insofar as it affirmed the nullity of the entire Free Patent No. (IX-8) 785 and Original Certificate of Title No. P-21972. Only the portions erroneously included — the Miputak River area and the fishpond area — were ordered reconveyed to the Republic.

• Validity of the Fishpond Lease Agreement: No. The Court did not delve on the question of whether the Lacaya spouses violated the terms of the fishpond lease agreement, as it was not made an issue by the parties. What is significant is the established fact that there was an existing fishpond lease agreement between Felipe Lacaya and the Bureau of Fisheries at the time of Morandarte's application for free patent, proving that the area covering the fishpond belongs to the Government.

• Fraud or Misrepresentation: No. The State failed to prove that fraud and misrepresentation attended the application for free patent. The RTC itself recognized that no fraud attended the application. The judicial admission of the Morandarte spouses that reversion is warranted due to the inalienability of the Miputak River was made through mistake and not in the context it was considered, as they essentially agreed only to a reconveyance of the portion covering the Miputak River.

• Applicability of Article 462: The Court noted that in petitions for review on certiorari, only questions of law may be raised, and factual findings of the trial court, when adopted and confirmed by the CA, are binding and conclusive upon the Supreme Court. None of the recognized exceptions to this rule found application. The petitioners offered no iota of evidence to substantiate their claim that the change of course of the Miputak River was due to a man-made cause, other than the bare testimony of Beder Morandarte. Neither was 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. 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.

• Partial Nullity of Title: The Court held that 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.

• Reversion of the Entire Lot: The Court held that the mistake or error of the officials or agents of the BOL cannot be invoked against the government with regard to property of the public domain. The State cannot be estopped by the omission, mistake, or error of its officials or agents. 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. Property of the public domain is incapable of registration and its inclusion in a title nullifies that title. However, the absence of clear evidence of fraud will not invalidate the entire title.

• Validity of the Fishpond Lease Agreement: The Court held that the question of whether the Lacaya spouses violated the terms of the fishpond lease agreement is not material in this case as it was not made an issue by the parties. Neither was 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 is the established fact that there was an existing fishpond lease agreement between Felipe Lacaya and the Bureau of Fisheries at the time of Morandarte's application for free patent, proving that the area covering the fishpond belongs to the Government and petitioners have no rights thereto. 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, approved August 14, 1972, when Lot 1038 was declared alienable or disposable property of the State. 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, and occupation thereof, however long, cannot ripen into private ownership.

• Fraud or Misrepresentation: The Court held that the State, as the party alleging that fraud and misrepresentation attended the application for free patent, bears the burden of proof. Fraud and misrepresentation are never presumed but must be proved by clear and convincing evidence; mere preponderance of evidence not even being adequate. 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 but declared reversion based on the judicial admission of the Morandarte spouses that reversion is warranted due to the inalienability of the Miputak River. The exception to the rule on judicial admissions finds application since the records lay bare that such admission was made through mistake and not in the context it was considered. The Morandarte spouses essentially agreed only to a reconveyance of the portion covering the Miputak River, which is not, and cannot be considered, an admission that fraud and misrepresentation attended the application for free patent. 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 error could have been discovered through a thorough ocular inspection of the property, but the Hearing Officer of the BOL failed to notice the existence of the river traversing Lot 1038 in the field investigation he conducted on January 10, 1976, nor did he note the 13,339 square meter portion already covered by an existing fishpond lease agreement.

• Property of public dominion cannot be acquired by prescription — Rivers and their natural beds are properties of public dominion under Article 502, paragraph 1 of the Civil Code. Whether navigable or not, rivers belong to the public and cannot be acquired by prescription. 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. The Court applied this doctrine in holding that the portion of the Miputak River included in Morandarte's free patent cannot be validly awarded as it is outside the commerce of man.

• Inclusion of public domain property in a title nullifies that title — Property of the public domain is incapable of registration, and its inclusion in a title nullifies that title. 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. The Court applied this doctrine in holding that the portions covered by the Miputak River and the fishpond lease agreement should be reconveyed to the State.

• State cannot be estopped by the mistake of its officials — The State cannot be estopped by the omission, mistake, or error of its officials or agents with regard to property of the public domain. The Court applied this doctrine in holding that the mistake or error of the officials or agents of the BOL in granting the free patent cannot be invoked against the government.

• Fraud must be proved by clear and convincing evidence — Fraud and misrepresentation are never presumed but must be proved by clear and convincing evidence; mere preponderance of evidence not even being adequate. The Court applied this doctrine in holding that the State failed to prove fraud in the procurement of the free patent, and thus the entire title could not be invalidated.

• Public land must be reclassified as alienable to ripen into private ownership — 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, and occupation thereof, however long, cannot ripen into private ownership. The Court applied this doctrine in rejecting the claim of the Morandarte spouses that their predecessor-in-interest was already the owner of the fishpond portion, since Lot 1038 was only declared alienable in 1972 through Forestry Administrative Order No. 4-1257.

• "Property of the public domain is incapable of registration and its inclusion in a title nullifies that title." — This passage states the controlling doctrine on the effect of including public dominion property in a certificate of title, which is central to the Court's ruling that the portions covered by the Miputak River and the fishpond lease must be reconveyed.

• "The absence of clear evidence of fraud will not invalidate the entire title of the Morandarte spouses." — This passage articulates the key distinction the Court drew between fraudulent procurement of title (which voids the entire title) and mere erroneous inclusion of public domain property (which voids only the affected portion).

• "The State cannot be estopped by the omission, mistake or error of its officials or agents." — This passage states the doctrine that prevents the Morandarte spouses from invoking the BOL's error in approving the free patent application against the government.

• "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." — This passage states the rule on reclassification of public land, which the Court applied in rejecting the claim of prior ownership by the Morandarte spouses' predecessor-in-interest.

• Republic vs. Sebastian, 166 SCRA 140 (1988) — Cited for the definition of a complaint for reversion, which involves a serious controversy regarding fraud and misrepresentation committed against the government and seeks the return of the disputed portion of the public domain.

• Republic vs. Heirs of Felipe Alejaga, Sr., 393 SCRA 361 (2002) — Cited for the proposition that fraud and misrepresentation assume different shapes and forms and may be committed in as many different ways.

• Cuizon vs. Court of Appeals, 260 SCRA 645 (1996) — Cited for the rule that fraud and misrepresentation are never presumed but must be proved by clear and convincing evidence.

• Gordula vs. Court of Appeals, 284 SCRA 617 (1988) — Cited for the doctrine that the State cannot be estopped by the omission, mistake, or error of its officials or agents, and that property of the public domain is incapable of registration.

• Republic vs. Court of Appeals, 99 SCRA 742 (1990) — Cited for the rule 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, the grantee does not become the owner of the land or property illegally included.

• Seville vs. National Development Company, 351 SCRA 112 (2001) — Cited for the 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.

• Article 462, Civil Code of the Philippines — Provides that 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 Court of Appeals applied this provision, and the Supreme Court did not disturb this application given the petitioners' failure to prove that the change of course was due to man-made causes.

• Article 502, paragraph 1, Civil Code of the Philippines — Provides that rivers and their natural beds are properties of public dominion. The Court applied this provision in holding that the portion of the Miputak River included in the free patent is outside the commerce of man.

• Article 77, Law of Waters — Provides that lands accidentally inundated by the waters of lakes, or by creeks, rivers and other streams shall continue to be the property of their respective owners. The petitioners invoked this provision, but the Court did not apply it because the petitioners failed to prove that the change of course was accidental or man-made.

• Section 4, Rule 129, Revised Rules of Court — Provides that 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. The Court applied this provision in holding that the Morandarte spouses' agreement to reconvey the portion covering the Miputak River was made through mistake and was not an admission of fraud.

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