G.R. No. 173120 - Spouses Yu vs. Ayala Land, Inc.

Case Summary (G.R. No. 173120)

Procedural History and Motions for Reconsideration

On July 26, 2017, the Supreme Court granted the petitions filed by Spouses Yu and heirs of Spouses Diaz, setting aside a 2006 Court of Appeals decision, and reinstating the Court of Appeals Amended Decision of 2005. ALI filed a Motion for Reconsideration with a motion to refer the case to the Court en banc, alleging that the July 2017 decision modified established doctrines on land registration and the Torrens system. The Court denied ALI’s motions in December 2017. ALI then filed a Second Motion for Reconsideration and renewed the motion to elevate the case to the Court en banc, claiming the Supreme Court’s decision altered long-standing legal principles. The Court denied ALI’s second motion and the motion to elevate, holding that the decision did not modify or reverse any en banc doctrine but simply applied existing law to the facts.

Prohibition of Second Motions for Reconsideration and Exceptions

The Rules of Court and the Supreme Court’s Internal Rules prohibit filing a second motion for reconsideration, except in the "higher interest of justice" when the challenged decision is not only erroneous but also unjust and likely to cause irreparable harm. ALI failed to present any new or meritorious grounds beyond those already considered. The Court reaffirmed these procedural rules as essential to avoid piecemeal litigation and ensure finality in cases.

Nature and Indefeasibility of Torrens Titles; Distinction Between Ownership and Title

The Court reiterated that while certificates of title are strong evidence of ownership, they are not conclusive proof. Registration under the Torrens system merely confirms existing ownership but does not create or vest ownership itself. A certificate of title cannot protect a usurper or shield fraud, nor can it confer ownership over land improperly or erroneously included. The absolute certainty sought by the Torrens system depends fundamentally on the correctness of the survey plan which identifies the land’s exact boundaries.

Importance of Survey Plans in Land Registration

The survey plan is an indispensable element in land registration, fixing the identity of the land and ensuring that titles do not overlap or include unauthorized territory. Original registration requires submission and approval of an accurate, duly approved survey plan by competent authorities, particularly the Director of Lands, to establish the property’s exact identity. Any fundamental error or irregularity in the survey invalidates the technical description and, consequently, the certificate of title based on that survey.

Irregularities and Invalidity of ALI’s Survey Plans and Titles

ALI’s titles trace back to survey plans Psu-47035, Psu-80886, and Psu-80886/SWO-20609, all prepared by the same surveyor who also prepared the earlier Psu-25909 survey in favor of Spouses Diaz. However, serious irregularities were found in ALI’s surveys:

The same surveyor conducting multiple surveys over supposedly the same land but reporting different locations.
Discrepancies in who requested the surveys and lack of explanations from ALI.
Absence of signature or proper approval from the Director of Lands on Psu-80886, contrary to legal mandates making such surveys void.
Reference in Psu-80886 to a monument (B.L.L.M No. 4) established several years after the survey was conducted, indicating fraud or error.
Attempts to justify errors by citing an amendment survey or special work order failed due to lack of evidence and credible explanation.
Physical alterations and suspicious changes in the survey documents, including erasures and spurious attachments, weakening survey authenticity.
Prior court rulings in Guico v. San Pedro indicating invalidity of Psu-80886 due to non-compliance with required occupation and survey procedures.

Therefore, the technical descriptions in ALI’s OCT Nos. 242, 244, and 1609, derived from these flawed surveys, are void and their titles cannot be upheld.

Validity of Petitioners’ Survey Plan and Superior Title

In contrast, Psu-25909, sourced by petitioners’ titles from OCT No. 8510 dated 1921, was established as a valid, properly approved survey plan bearing signatures of the surveyor and the Director of Lands and free from any irregularities or erasures. Petitioners demonstrated a superior title based on a valid survey and proper registration, supporting their ownership claims to the subject properties.

The Rule of Prior Registrations and Its Exceptions

While the general rule in land registration provides that when two titles cover the same land, the earlier in date prevails ("Primus Tempore, Fortior Jure"), this rule is not absolute. The Court reaffirmed exceptions whereby if the inclusion of land in the earlier title results from mistake, fraud, or invalid surveys, the latter title may prevail. The Torrens system does not protect fraudulent or irregular registrations, and such titles can be declared void to protect true owners. Authorities and jurisprudence confirm that titles originating from defective, irregular, or invalid surveys do not grant valid ownership.

Necessity of Verification Survey in Overlapping Titles

The Court highlighted the importance of verification or relocation surveys when dealing with overlapping titles or conflicting land claims. It commended the RTC of Las Piñas for ordering and supervising such verification surveys before making a factual determination on conflicting claims. Verification surveys provide the factual and technical basis to resolve boundary disputes and allow courts to apply the appropriate legal principles.

Alleged Preclusion by Prior Supreme Court Decisions and Prescription Arguments

ALI argued that the validity of its titles had already been upheld in previous cases such as Spouses Carpo v. Ayala Land, Inc. and Realty Sales v. IAC, and that petitioners’ claims were barred by prescription. The Court distinguished this case on factual grounds, observing that in the prior cases no verification survey had been conducted and the controversies involved different parcels or parties. The current case focuses on overlapping boundaries and the invalidity of ALI’s titles due to defective surveys as proven by verification. Hence, prior decisions do not bar this adjudication.

Moreover, the Court held that actions to declare a void title null and void are imprescriptible and may be raised directly or collaterally at any time. Titles based on void surveys and registrations cannot be considered valid or confer ownership to successors or transferees, and actions to reconvey the property to rightful owners based on such void titles are not time-barred.

Status of ALI as Purchaser and Notice of Defects

ALI contended it was an innocent purchaser for value, relying on the certificates of title and lacking duty to investigate beyond the face of the titles. The trial court found that ALI’s titles contained notices of pending cases and adverse claims, sufficient to place ALI on notice of possible defects. Furthermore, certain markings on the defective surveys and the long litigations should have put ALI on guard. Therefore, ALI could not claim status as a bona fide pur

Case Syllabus (G.R. No. 173120)

Background and Procedural History

The case involves consolidated petitions filed by Spouses Yu Hwa Ping and Mary Gaw (hereinafter Spouses Yu), and the heirs of Spouses Andres Diaz and Josefa Mia, contesting the validity of certain land titles owned by Ayala Land, Inc. (ALI).
The Supreme Court, in its Decision dated July 26, 2017, granted the petitions, reversed a June 19, 2006 Decision of the Court of Appeals, and reinstated the earlier February 8, 2005 Amended Decision by the Court of Appeals.
ALI filed a Motion for Reconsideration with a motion to refer the case to the Court en banc, which was unanimously denied on December 4, 2017.
ALI’s Second Motion for Reconsideration and supplement to refer the case to the Court en banc were also denied by a majority vote, with one dissenting opinion.
The Supreme Court clarified that Divisions of the Court sit with the same authority as the Court en banc, and that there is a prohibition against second motions for reconsideration unless justified by the higher interest of justice.

Legal Issues Presented

Whether ALI’s transfer certificates of title (TCTs), sourced from specific Original Certificates of Title (OCT Nos. 242, 244, and 1609), are invalid due to defects in their underlying surveys.
The applicability of the doctrine regarding the indefeasibility of Torrens titles and the one-year prescriptive period to question titles.
The doctrine of "primus tempore, potior jure" (first in time, stronger in right) in conflicts between overlapping land titles.
Whether the Court en banc should have been required to review the case due to the alleged modification or reversal of settled doctrines.
Whether the doctrines on reconveyance, prescription, survey validity, and title registration were modified or reversed by the July 26, 2017 Decision.

The Legal Nature of Torrens Titles and Surveys

Torrens certificates of title serve as evidence of ownership but are not conclusive proof thereof; ownership and the certificate of title are distinct.
The registration under the Torrens system does not create ownership but evidences ownership previously vested.
The survey plan and the technical description of land are indispensable in identifying the exact property covered by a title.
Errors and irregularities in surveys and technical descriptions can render certificates of title void.
Registration is not a shield for fraud; an invalid survey underlying a title affects the validity of that title.

Facts Relating to Survey Irregularities and Overlapping Titles

Spurious and void survey plans (Psu-47035, Psu-80886, Psu-80886/SWO-20609) were identified, conducted by the same surveyor, A.N. Feliciano, over the same property but with contradictory locations and approval anomalies.
Psu-25909, the earliest valid survey conducted in favor of Andres Diaz, was found to be genuine and free from irregularities.
Critical discrepancies included use of a monument (B.L.L.M No. 4) that did not exist at the time of survey, unauthorized alterations, erasures in the survey plans, and lack of approval by the Director of Lands.
Multiple surveys overlapped with each other, with later surveys overlapping areas already validly surveyed and registered under earlier titles.
The trial court and Court of Appeals both found that ALI’s surveys and subsequent titles were invalid due to these anomalies.

Doctrine on Conflicting Overlapping Titles

The general rule is that when two certificates of title overlap, the one with the earlier date prevails (“primus tempore, potior jure”).
Exceptions exist where the earlier title mistakenly included land it was not entitled to, thus allowing a later valid title to prevail.
Verification surveys by qualified geodetic engineers and government officials are necessary to resolve overlapping boundaries reliably.
In this case, a verification survey was conducted by court-appoin