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l\epublic of tbe Jlbilippines

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SECOND DIVISION

SPOUSES YU HWA PING G.R. No. 173120

and MARY GAW,
Petitioners,

- versus -

AYALA LAND, INC.,

Respondent.
x. - - - - - - - - - - - - - - - - - - - - - x.
HEIRS OF SPOUSES ANDRES G.R. No. 173141
DIAZ and JOSEFA MIA, .
Petitioners,

Present:

CARPIO, J., Chairperson,

- versus - PERALTA,
MENDOZA,
LEONEN, and
MARTIRES, JJ.

AYALA LAND, INC., Promulgated:

Respondent. 2 S JUL 2017
x.-----------------
i;~cisio-~ ---~\Wnb~,Qrtr~~
~v-v~,-~-- --
x.

MENDOZA, J.:

These petitions for review on certiorari seek to reverse and set aside
the June 19, 2006 Decision 1 of the Court of Appeals (CA) in CA-G.R. CV
Nos. 61593 and 70622, which reversed and set aside its February 8, 2005

1
Rollo (G.R. No. 173120), pp. 1397-1437.

~
DECISION 2 G.R. Nos. 173120 & 173141

Amended Decision 2 and reinstated its February 28, 2003 Decision, 3 in a

case for annulment of title and surveys, recovery of possession and judicial
confirmation of title.

The Antecedents

On March 17, 1921, petitioners Spouses Andres Diaz and Josefa Mia
(Spouses Diaz) submitted to the General Land Registration Office for
approval of the Director of Lands a survey plan designated as Psu-25909,
which covered a parcel of land located at Sitio of Kay Monica, Barrio Pugad
Lawin, Las Pifias, Rizal, with an aggregate area of 460,626 square meters
covered by Lot 1. On May 26, 1921, the Director of Lands approved survey
plan Psu-25909.

On October 21, 1925, another survey plan was done covering Lot 3
of the same parcel of land designated as Psu-47035 for a certain Dominador
Mayuga. The said survey, however, stated that the lot was situated at Sitio
May Kokek, Barrio Almanza, Las Pifias, Rizal. Then, on July 28, 1930,
another survey was undertaken designated as Psu-80886 for a certain
Eduardo C. Guico (Guico). Again, the survey indicated a different address
that the lots were situated in Barrio Tindig na Mangga, Las Pifias, Rizal.
Finally, on March 6, 1931, an additional survey plan was executed over the
similar parcel of land designated as Psu-80886/SW0-20609 for a certain
Alberto Yaptinchay (Yaptinchay). Psu-80886 and Psu-80886/SW0-20609
covered Lot 2, with 158,494 square meters, and Lot 3, with 171,309 square
meters, of the same land.

On May 9, 1950, Original Certificate of Title (OCT) No. 242 was

issued in favor of Yaptinchay covering Lots 2 and 3 pursuant to Psu-
80886/SW0-20609. On May 11, 1950, OCT No. 244 was also issued to
Yaptinchay. On May 21, 1958, OCT No. 1609 covering Lot 3 pursuant to
Psu-47035 was issued in favor of Dominador Mayuga. On May 18, 1967,
some of properties were sold to CPJ Corporation resulting in the issuance of
Transfer Certificate Title (TCT) No. 190713 in its name.

On February 16, 1968, petitioner Andres Diaz filed a petition for

original registration before the Court of First Instance (CF!) of Pasay for Lot
No. 1 of Psu-25909. On October 19, 1969, judgment was rendered by the
CFI of Pasay for the original registration of Psu-25909 in favor of Andres
Diaz. On May 19, 1970, OCT No. 8510 was issued in the name of Spouses
Diaz. On May 21, 1970, the Spouses Diaz subdivided their 460,626 square

2
Id. at 1178-1197.
3
Id. at 1061-1121.

~
DECISION 3 G.R. Nos. 173120 & 173141

meter property covered by OCT No. 8510 into ten (10) lots, described as
Lots No. 1-A to 1-J and conveyed to different third parties.

On May 17, 1971, CPJ Corporation, then owner of the land covered
by TCT No. 190713, which originated from OCT No. 242, filed Land
Registration Case No. N-24-M before the Regional Trial Court (RTC) of
Pasig City, Branch 166, against Spouses Diaz and other named respondents
(Diaz Case). It sought to review OCT No. 8510 in the names of Spouses
Diaz on the ground that the interested persons were not notified of the
application.

On August 30, 1976 and December 4, 1976, Andres Diaz sold to

Librado Cabautan (Cabautan) the following parcels of land, which
originated from OCT No. 8510 under Psu-25909, to wit:

1. Lot 1-1, with an area of 190,000 square meters covered by

the new TCT No. 287416;
2. Lot 1-B, with an area of 135,000 square meters covered by
the new TCTNo. 287411;
3. Lot 1-A with an area of 125,626 square meters covered by
the new TCT No. 287412; and
4. Lot 1-D, with an area of 10,000 square meters also covered
by the new TCT No. 287412. 4

On March 12, 1993, petitioner Spouses Yu Hwa Ping and Mary Gaw
(Spouses Yu) acquired ownership over 67,813 square meters representing
the undivided half-portion of Lot 1-A originating from OCT No. 8510 of
Spouses Diaz. The said property was co-owned by Spouses Diaz with
Spouses Librado and Susana Cabautan resulting from a civil case decided by
the RTC ofMakati on March 29, 1986.

On January 27, 1994, Spouses Yu acquired ownership over Lot 1-B

originating from OCT No. 8510 of Spouses Diaz with an area of 135,000
square meters. Pursuant to the transfers of land to Spouses Yu, TCT Nos.
39408 and 64549 were issued in their names.

On the other hand, on May 4, 1980, CPJ Corporation transferred their

interest in the subject properties to third persons. Later, in 1988, Ayala
Corporation obtained the subject properties from Goldenrod, Inc. and
PESALA. In 1992, pursuant to the merger of respondent Ayala Land, Inc.
(ALI) and Las Pifias Ventures, Inc., ALI acquired all the subject properties,
as follows:

4
Id. at 1181.

V'
DECISION 4 G.R. Nos. 173120 & 173141

1. Lot 3 which originated from OCT No. 1609 under Psu-

47035 and covered by a new TCT No. 41325;
2. Lot 2 which originated from OCT No. 242 under Psu-
80886/SW0-20609 and covered by a new TCT No. 41263;
3. Lot 3 which originated from OCT No. 242 under Psu-
80886/SW0-20609 and covered by a new TCT No. 41262;
and
4. Lot 6 which originated from OCT No. 242 under Psu-
80886/SW0-20609 and covered by a new TCT No. 41261. 5

First RTC Ruling

Returning to the Diaz case, on December 13, 1995, the RTC of Pasig
City rendered a Decision6 against Spouses Diaz. It held that OCT No. 8510
and all the transfer certificates issued thereunder must be cancelled. The
RTC of Pasig City opined that Spouses Diaz committed fraud when they
filed their application for original registration of land without informing the
interested parties therein in violation of Sections 31 and 32 of Act No. 496.
It also held that Spouses Diaz knew that CPJ Corporation had an appropriate
interest over the subject properties.

Aggrieved, Spouses Diaz elevated an appeal before the CA docketed

as CA-G.R. CV No. 61593.

Meanwhile, sometime in August 1995, Spouses Yu visited their lots.

To their surprise, they discovered that ALI had already clandestinely fenced
the area and posted guards thereat and they were prevented from entering
and occupying the same. 7 They also discovered that the transfer of
certificates of titles covering parcels of land overlapping their claim were in
the name of ALI under TCT Nos. 41325, 41263, 41262, and 41261.

On December 4, 1996, Spouses Yu filed a complaint before the RTC

of Las Pifias City, Branch 255, against ALI for declaration of nullity of the
TCTs issued in the name of the latter (Yu case). They also sought the
recovery of possession of the property covered by ALI's title which
overlapped their land alleging that Spouses Diaz, their predecessors had
open, uninterrupted and adverse possession of the same from 1921 until it
was transferred to Cabautan in 1976. Spouses Yu averred that Cabautan

5
Id. at 842.
6
Id. at 130-144.
7
Id.atl57.

\li.
DECISION 5 G.R. Nos. 173120 & 173141

possessed the said land until it was sold to them in 1994. 8 They likewise
sought the judicial confirmation of the validity of their titles.

Spouses Yu principally alleged that the titles of ALI originated from

OCT Nos. 242, 244, and 1609, which were covered by Psu-80886 and Psu-
47035. The said surveys were merely copied from Psu-25909, which was
prepared at an earlier date, and the Director of Lands had no authority to
approve one or more surveys by different claimants over the same parcel of
land. 9 They asserted that OCT No. 8510 and its transfer certificates, which
covered the Psu-25909, must be declared valid against the titles of ALI.

The RTC of Las Pifi.as ordered the conduct of a verification survey to

help in the just and proper disposition of the case. Engr. Veronica Ardina-
Remolar from the Bureau of Lands, the court-appointed commissioner,
supervised the verification survey, and the parties sent their respective
surveyors. After the verification survey was completed and the parties
presented all their pieces of evidence, the case was submitted for resolution.

Second RTC Ruling

In its May 7, 2001 Decision, 10 the RTC of Las Pifi.as ruled in favor of
Spouses Yu. It held that based on the verification survey and the
testimonies of the parties' witnesses, OCT Nos. 242, 244, and 1609
overlapped OCT No. 8510. The RTC of Las Pifias also pointed out, and
extensively discussed, that Psu-80886 and Psu-47035, which were the bases
of OCT Nos. 242, 244, and 1609, were marred with numerous and blatant
errors. It opined that ALI did not offer any satisfactory explanation
regarding the glaring discrepancies of Psu-80886 and Psu-47035. On the
other hand, it observed that Psu-25909, the basis of OCT No. 8510, had no
irregularity in its preparation. Thus, the RTC of Las Pifias concluded that the
titles of ALI were void ab initio because their original titles were secured
through fraudulent surveys. The fa/lo reads:

WHEREFORE, judgment is rendered in favor of the

plaintiffs in that the three transfer certificates issued in the name of
Ayala Land, Inc. by the Register of Deeds in the City of Las Pifias,
namely, Transfer Certificate of Title Nos. 41325, 41263 and 41262
all covering Lots Nos. 1, 2 and 6 of survey plans PSU-47035, PSU-
80886, Psu-80886/SW0-20609, the original survey under PSU-
47035 and decree of registration no. N-63394, and Original
Certificate of Title No. 1609 issue in favor of Dominador Mayuga,
including all other titles, survey and decrees pertaining thereto and
from or upon which the aforesaid titles emanate, are hereby
8
Id. at 157.
9
Id.atl59.
10
Id. at 679-715.

\k.\
DECISION 6 G.R. Nos. 173120 & 173141

declared spurious and void ab initio. In the same vein, the Court
upholds the validity of Transfer Certificates of Title Nos. TCT Nos.
T-64549 covering Lot 1-A in the name of Mary Gaw, spouse of Yu
Hwa Ping, and T-39408 covering Lot 1-B in the name of Yu Hwa
Ping (both originating from Original Certificate of Title No. 8510)
pursuant to plan PSU-25909 undertaken on March 17, 1921. The
defendant is also ordered to pay the plaintiffs temperate damages in
the amount of One Million Pesos (PHP1,ooo,ooo.oo) exemplary
damages in the amount of Five Hundred Thousand Pesos
(PHP500,ooo.oo), and to pay the costs.
SO ORDERED. 11

Unconvinced, ALI appealed to the CA, where the case was docketed
as CA-G.R. CV No. 70622. Eventually, said appeal was consolidated with
the earlier appeal of Spouses Diaz in CA-G.R. CV No. 61593.

The CA Rulings

In its decision, dated June 19, 2003, the CA ruled in favor of ALI. It
held that in the Diaz case, the RTC of Pasig properly cancelled OCT No.
8510 because Spouses Diaz committed fraud. It opined that Spouses Diaz
knew of CPJ Corporation's interest over the subject land but failed to inform
it of their application.

With respect to the Yu case, the CA ruled that Spouses Yu could no

longer assert that the titles of ALI were invalid because the one-year period
to contest the title had prescribed. Hence, ALi's titles were incontestable.
The CA underscored that the errors cited by the RTC of Las Pifias in Psu-
80886 and Psu-47035, upon which the titles of ALI were based, were
innocuous or already explained. It also stressed that OCT Nos. 242, 244, and
1609, from which the titles of ALI originated, were issued in 1950 and 1958;
while the OCT No. 8510, from which the titles of Spouses Yu originated,
was only issued in 1970. As the original titles of ALI predated that of
Spouses Yu, the CA concluded that the former titles were superior.

Undaunted, Spouses Yu and Spouses Diaz filed their motions for

reconsideration.

In its decision, dated February 8, 2005, the CA granted Spouses Yu

and Spouses Diaz' motions for reconsideration. It opined that the numerous
errors in Psu-80886 and Psu-47035 were serious and these affected the
validity of the original titles upon which the surveys were based. In contrast,

11
Id. at 714-715.

\t
DECISION 7 G.R. Nos. 173120 & 173141

the CA noted that Psu-25909, upon which the original titles of Spouses Yu
and Spouses Diaz were based, bore all the hallmarks of verity.

The CA also emphasized that in Guico v. San Pedro, 12 the Court

already recognized the defects surrounding Psu-80886. In that case, the
Court noted that the applicant-predecessor of Psu-80886 was not able to
submit the corresponding measurements of the land and he failed to prove
that he had occupied and cultivated the land continuously since the filing of
their application. The CA likewise cited ( 1) the certification from the
Department of Environment and Natural Resources-Land Management
Bureau (DENR-LMB) that Psu-80886 was included in the list of restricted
plans because of the doubtful signature of the surveyor, and (2) the
memorandum, dated August 3, 2000, from the Assistant Regional Director
for Operations of the DENR directing all personnel of the Land Survey
Division not to issue copies or technical descriptions of Psu-80886 and Psu-
47035.

The CA further wrote that the slavish adherence to the issue of

prescription and laches by ALI should not be countenanced. It declared that
the doctrine that registration done fraudulently is no registration at all
prevails over the rules on equity. With respect to the Diaz case, the CA held
that Spouses Diaz had no obligation to inform CPJ Corporation and its
successors about their registration because the original titles of the latter,
from which their transferred titles were derived, were based on fraudulent
surveys.

Undeterred, ALI filed a second motion for reconsideration.

In its assailed June 19, 2006 decision, the CA granted the second
motion for reconsideration in favor of ALI. It reversed and set aside its
February 8, 2005 decision and reinstated its February 28, 2003 decision. The
CA held that Guico v. San Pedro did not categorically declare that Psu-
80886 was invalid and it even awarded some of the lots to the applicant; and
that the certification of DENR-LMB and the memorandum of the Assistant
Director of the DENR could not be considered by the courts because these
were not properly presented in evidence.

The CA reiterated its ruling that Spouses Yu could no longer question

the validity of the registrations of OCT Nos. 242, 244, and 1609 because the
one-year reglementary period from the time of registration had already
expired and these titles were entitled to the presumption of regularity. Thus,
once a decree of registration was made under the Torrens system, and the

12
72 Phil. 415 (1941).

y
DECISION 8 G.R. Nos. 173120 & 173141

reglementary period had lapsed, the title was perfected and could not be
collaterally attacked. The CA also stressed that the noted discrepancies in
Psu-80886 and Psu-47035 were immaterial to assail the validity of OCT Nos.
242, 244 and 1609, which were registered earlier than OCT No. 8510.

Hence, these petitions, anchored on the following

ISSUES

WHETHER THE COMPLAINT OF SPOUSES YU IS BARRED BY

PRESCRIPTION

II

WHETHER THE VALIDITY OF THE SURVEYS OF OCT NOS.

242, 244 AND 1609 AS AGAINST OCT NO. 8510 CAN BE
ASSAILED IN THE PRESENT CASE

III

WHETHER THE CASE OF GUICO V. SAN PEDRO IS

APPLICABLE IN THE PRESENT CASE

IV

WHETHER THE ALLEGED ERRORS IN PSU-80886 AND PSU-

47035 ARE OF SUCH DEGREE SO AS TO INVALIDATE OCT
NOS. 242, 244 AND 1609 AND ITS TRANSFER CERTIFICATES
OF TITLES

In their Memorandum, 13 the petitioners chiefly argue that the

complaint filed by Spouses Yu is not barred by the one-year prescriptive
period under Act No. 496 because an action to annul the fraudulent
registration of land is imprescriptible; that there are several and conspicuous
irregularities in Psu-80886 and Psu-4 7035 which cast doubt on the validity
of OCT Nos. 242, 244, and 1609; that Guico v. San Pedro did not
categorically award Lots No. 2 and 3 covered by Psu-80886 to the applicant
therein because he was still required to submit an amended plan duly
approved by the Director of Lands; that the applicant in Guico v. San Pedro
never submitted any amended plan, hence, no lot was awarded under Psu-
80886 and its irregularity was affirmed by the Supreme Court; that the
registration of OCT Nos. 242, 244, and 1609 on a date earlier than OCT No.
8510 did not render them as the superior titles; that in case of two conflicting
titles, the court must look into the source of the titles; that the sources of the

13
Rollo (G.R. No. 173141), pp. 414-554.

~
DECISION 9 G.R. Nos. 173120 & 173141

titles, Psu-80886 and Psu-47035, had numerous errors that could not be
satisfactorily explained by ALI; and that Psu-25909 had the hallmark of
regularity and it was approved by the Director of Lands at an earlier date.

In its Memorandum, 14 ALI essentially countered that in the June 19,

2006 decision, the CA properly disregarded the certification of DENR-LMB
and the memorandum of the Assistant Director of the DENR because these
were not presented in evidence; that Guico v. San Pedro recognized the
registrability of Lots No. 2 and 3 under Psu-80886; that the RTC of Las
Pifias did not have jurisdiction to look beyond the details of the decrees of
registration; that the registration of a land under the Torrens system carries
with it a presumption of regularity; that in case of conflict between two
certificates of title, the senior and superior title must be given full effect and
validity; and that the alleged errors in the Psu-80886 and Psu-47035 were
sufficiently explained.

The Court's Ruling

The Court finds the petitions meritorious.

The present case essentially involves the issue: between the registered
titles of the petitioners and ALI, which is more superior? Before the said
issue can be discussed thoroughly, the Court must first settle whether the
actions instituted by the petitioners were filed within the reglementary
periods.

The actions were filed

within their respective
prescriptive periods

The Diaz case was a petition for review before the RTC of Pasig. It
assailed OCT No. 8510 in the names of Spouses Diaz on the ground that the
said title was issued through fraud because the interested persons were not
informed of their application for registration. Under Section 38 of Act No.
496, "any person deprived of land or of any estate or interest therein by
decree of registration obtained by fraud [may] file in the competent Court of
First Instance a petition for review within one year after entry of the decree
provided no innocent purchaser for value has acquired an interest." 15

14
Id. at 355-408.
15
See Rublico v. Orellana, 141 Phil. 181 (1969).

~
DECISION 10 G.R. Nos. 173120 & 173141

Here, OCT No. 8510 was issued in the name of Spouses Diaz on May
21, 1970. On the other hand, the petition for review of CPJ Corporation was
filed on May 17, 1971. Thus, the said petition was timely filed and the RTC
of Pasig could tackle the issues raised therein. When the RTC of Pasig ruled
in favor of CPJ Corporation, Spouses Diaz appealed to the CA. In the same
manner, when they received an unfavorable judgment from the CA, Spouses
Diaz filed a petition for review on certiorari before the Court. Accordingly,
the appeal of Spouses Diaz is proper and it can be adjudicated on the merits.

On the other hand, the Yu case began when they filed a complaint
before the RTC of Las Pifias against ALI for declaration of nullity of the
TCTs issued in the name of the latter because of the spurious, manipulated
and void surveys of OCT Nos. 242, 244 and 1609. They also sought the
recovery of possession of the property covered by ALi's title that overlapped
their land alleging that their predecessors, Spouses Diaz, had open,
uninterrupted and adverse possession of the same from 1921 until it was
transferred to Cabautan in 1976. Spouses Yu also alleged that Cabautan
possessed the said land until it was sold to them in 1994. 16 It was only in
August 1995 that they discovered that ALI clandestinely fenced their
property and prevented them from occupying the same. They also sought the
judicial confirmation of the validity of their titles.

ALI argues that the complaint of Yu is barred by prescription because

it was filed beyond the one-year period under Section 38 of Act No. 496. On
the other hand, Spouses Yu assert that their action was imprescriptible
because they sought to set aside the titles that were obtained through void
surveys and they assert that the principle of indefeasibility of a Torrens title
does not apply where fraud attended the issuance of the title.

The Court finds that the complaint of Spouses Yu is not barred by

prescription. While Section 38 of Act No. 496 states that the petition for
review to question a decree of registration must be filed within one ( 1) year
after entry of the decree, such provision is not the only remedy of an
aggrieved party who was deprived of land by fraudulent means. The remedy
of the landowner whose property has been wrongfully or erroneously
registered in another's name is, after one year from the date of the decree,
not to set aside the decree, as was done in this case, but, respecting the
decree as incontrovertible and no longer open to review, to bring an ordinary
action in the ordinary court of justice for reconveyance or, if the property
has passed into the hands of an innocent purchaser for value, for damages. 17

16
Rollo (G.R. No. 173120), p. 157.
17
Philippine National Bank v. Jumamoy, 670 Phil. 4 72, 482 (2011 ).

v
DECISION 11 G.R. Nos. 173120 & 173141

Uy v. Court of Appeals 18 remarkably explained the prescriptive

periods of an action for reconveyance depending on the ground relied upon,
to wit:

The law creates the obligation of the trustee to reconvey the

property and its title in favor of the true owner. Correlating Section
53, paragraph 3 of PD No. 1529 and Article 1456 of the Civil Code
with Article 1144 (2) of the Civil Code, the prescriptive period for
the reconveyance of fraudulently registered real property is ten (10)
years reckoned from the date of the issuance of the certificate of
title. This ten-year prescriptive period begins to run from the date
the adverse party repudiates the implied trust, which repudiation
takes place when the adverse party registers the land. An exception
to this rule is when the party seeking reconveyance based on
implied or constructive trust is in actual, continuous and peaceful
possession of the property involved. Prescription does not
commence to run against him because the action would be in the
nature of a suit for quieting of title, an action that is imprescriptible.

The foregoing cases on the prescriptibility of actions for

reconveyance apply when the action is based on fraud, or when the
contract used as basis for the action is voidable. Under Article 1390
of the Civil Code, a contract is voidable when the consent of one of
the contracting parties is vitiated by mistake, violence, intimidation,
undue influence or fraud. When the consent is totally absent and
not merely vitiated, the contract is void. An action for reconveyance
may also be based on a void contract. When the action for
reconveyance is based on a void contract, as when there was no
consent on the part of the alleged vendor, the action is
imprescriptible. The property may be reconveyed to the true owner,
notwithstanding the TCTs already issued in another's name. The
issuance of a certificate of title in the latter's favor could not vest
upon him or her ownership of the property; neither could it validate
the purchase thereof which is null and void. Registration does not
vest title; it is merely the evidence of such title. Our land
registration laws do not give the holder any better title than what he
actually has. Being null and void, the sale produces no legal effects
whatsoever.

Whether an action for reconveyance prescribes or not is

therefore determined by the nature of the action, that is, whether it
is founded on a claim of the existence of an implied or constructive
trust, or one based on the existence of a void or inexistent contract.
x xxx 19

As discussed-above, when the action for reconveyance is based on an

implied or constructive trust, the prescriptive period is ten (10) years, or it is
imprescriptible if the movant is in the actual, continuous and peaceful

18
G.R. No. 173186, September 16, 2015.
19 Id.

v
DECISION 12 G.R. Nos. 173120 & 173141

possession of the property involved. On the other hand, when the action for
reconveyance is based on a void deed or contract the action is
imprescriptible under Article 1410 of the New Civil Code. 20 As long as the
land wrongfully registered under the Torrens system is still in the name of
the person who caused such registration, an action in personam will lie to
compel him to reconvey the property to the real owner. 21

In Hortizuela v. Tagufa, 22 the complainant therein filed an action for

reconveyance and recovery of possession with damages for a parcel of land
which was wrongfully granted a patent or decree issued in a registration
proceedings in the name of a third person. The CA and the Municipal Circuit
Trial Court initially dismissed the complaint because it allegedly questioned
the validity of the Torrens title in a collateral proceeding and it had
prescribed. When the case reached the Court, it ruled that the instituted
complaint had not prescribed because "in a complaint for reconveyance, the
decree of registration is respected as incontrovertible and is not being
questioned. What is being sought is the transfer of the property wrongfully
or erroneously registered in another's name to its rightful owner or to the
one with a better right. If the registration of the land is fraudulent, the
person in whose name the land is registered holds it as a mere trustee, and
the real owner is entitled to file an action for reconveyance of the
property. "23 It was eventually ruled therein that the action for reconveyance
was proper and the possession was recovered.

In this case, Spouses Yu sought to reconvey to them once and for all
the titles over the subject properties. To prove that they had a superior right,
they questioned the validity of the surveys which were the bases of OCT
Nos. 242, 244 and 1609, the origin of ALI's TCTs. Moreover, they also
sought to recover the possession that was clandestinely taken away from
them. Thus, as the subject matter of this case is the ownership and
possession of the subject properties, Spouses Yu's complaint is an action for
reconveyance, which is not prohibited by Section 38 of Act No. 496.

Moreover, a reading of Spouses Yu's complaint reveals that they are

seeking to declare void ab initio the titles of ALI and their predecessors-in-
interest as these were based on spurious, manipulated and void surveys. 24 If
successful, the original titles of ALI's predecessors-in-interest shall be
declared void and, hence, they had no valid object to convey. It would result
to a void contract or deed because the subject properties did not belong to
the said predecessors-in-interest. Accordingly, the Yu case involves an
20
New Civil Code, Art. 1410. The action or defense for the declaration of the inexistence of a contract does
not prescribe.
21
Daclag v. Macahilig, 599 Phil. 28, 31 (2009).
22
Hortizuela v. Tagufa, G.R. No. 205867, February 23, 2015, 751SCRA371.
23
Id. at 382.
24
Rollo (G.R. No. 173120), p. 160.

~
DECISION 13 G.R. Nos. 173120 & 173141

action for reconveyance based on a void deed or contract which is

imprescriptible under Article 1410 of the New Civil Code.

Further, the Court agrees with the observation of the CA in its

February 8, 2005 Amended Decision, to wit:

9. In light of the circumstances, we feel that a slavish

adherence to the doctrine being invoked by ALI with respect to
alleged prescription and laches, should not be countenanced. The
said axioms do not possess talismanic powers, the mere invocation
of which will successfully defeat any and all attempts by those who
claim to be the real owners of property, to set aright what had been
done through fraud and imposition. Consistent with the doctrine
that registration done fraudulently is no registration at all, then this
court must not allow itself to be swayed by appeals to a strict
interpretation of what are, after all, principles based on equity. To
rule otherwise would be to reward deception and duplicity and
place a premium on procedural niceties at the expense of
substantial justice. 25

Neither can ALI be considered an innocent purchaser for value of the

subject properties. As discussed by the RTC of Las Pifias, when ALI
purchased the subject lots from their predecessors-in-interest in 1988, the
titles bore notices of the pending cases and adverse claims sufficient to place
it on guard. In the TCTs of ALI, the notices of /is pendens indicated therein
were sufficient notice that the ownership of the properties were being
disputed. The trial court added that even the certified true copy of Psu-80886
had markings that it had been used in some other cases as early as March 7,
1959.26 Accordingly, ALI is covered by the present action for reconveyance.
As both the Diaz and Yu cases were properly filed and are not barred by
prescription, these can be adjudicated by the Court on the merits.

The Rule - that between

two (2) conflicting titles,
the title registered earlier
prevails - is Not Absolute

The June 19, 2006 and February 28, 2003 decisions of the CA
essentially ruled that ALI'S titles were superior to those of the petitioners
because OCT Nos. 242, 244 and 1609 were registered earlier than OCT No.
8510. The CA emphasized that the general rule was that in case of two
certificates of title purporting to include the same land, the earlier date

25
Id. at 1195.
26
Id. at 973-974.

l
DECISION 14 G.R. Nos. 173120 & 173141

prevails. This general rule was first discussed in Legarda v. Saleeby, 27 as

follows:

The question, who is the owner of land registered in the

name of two different persons, has been presented to the courts in
other jurisdictions. In some jurisdictions, where the "torrens"
system has been adopted, the difficulty has been settled by express
statutory provision. In others it has been settled by the courts. Hogg,
in his excellent discussion of the "Australian Torrens System," at
page 823, says: "The general rule is that in the case of two
certificates of title, purporting to include the same land, the earlier
in date prevails, whether the land comprised in the latter certificate
be wholly, or only in part, comprised in the earlier certificate. xxx In
successive registrations, where more than one certificate is issued in
respect of a particular estate or interest in land, the person claiming
under the prior certificate is entitled to the estate or interest; and
that person is deemed to hold under the prior certificate who is the
holder of, or whose claim is derived directly or indirectly from the
person who was the holder of the earliest certificate issued in
respect thereof xxxx. 28

The said general rule has been repeated by the Court in its subsequent
decisions in Garcia v. Court of Appeals, 29 MWSS v. Court ofAppeals, 30
Spouses Carpo v. Ayala Land, Inc., 31 and recently in Jose Yulo Agricultural
Corp. v. Spouses Davis. 32 Nevertheless, the rule on superiority is not
absolute. The same case of Legarda v. Saleeby explains the exception to the
rule, viz:

Hogg adds however that, "if it can be clearly ascertained by

the ordinary rules of construction relating to written documents,
that the inclusion of the land in the certificate of title of prior date is a
mistake, the mistake may be rectified by holding the latter of the two
certificates of title to be conclusive. "33 [Emphasis supplied]

Accordingly, if the inclusion of the land in the earlier registered title

was a result of a mistake, then the latter registered title will prevail. The
ratio decidendi of this exception is to prevent a title that was earlier
registered, which erroneously contained a parcel of land that should not have
been included, from defeating a title that was later registered but is
legitimately entitled to the said land. It reinforced the doctrine that
"[r]egistering a piece of land under the Torrens System does not create or
vest title because registration is not a mode of acquiring ownership. A

27
31 Phil. 590 (1915).
28
Id. at 595-596.
29
184 Phil. 358 (1980).
30
290 Phil. 284 (1992).
31
625 Phil. 277 (2010).
32
G.R. No. 197709, August 3, 2015, 764 SCRA 589.
33
Legarda v. Saleeby, supra note 27, at 595.

\t'
DECISION 15 G.R. Nos. 173120 & 173141

certificate of title is merely an evidence of ownership or title over the

particular property described therein."34

In his book, Land Registration and Related Proceedings, 35 Atty.

Amado D. Aquino further explained that the principle of according
superiority to a certificate of title earlier in date cannot, however, apply if it
was procured through fraud or was otherwise jurisdictionally flawed. Thus,
if there is a compelling and genuine reason to set aside the rule on the
superiority of earlier registered title, the Court may look into the validity of
the title bearing the latter date of registration, taking into consideration the
evidence presented by the parties.

In Golloy v. Court of Appeals, 36 there were two conflicting titles with

overlapping boundaries. The first title was registered on March 1, 1918,
while the second title was registered on August 15, 1919. Despite having
been registered at a prior date, the Court did not allow the earlier registered
title of the respondents to prevail because of the continuing possession of the
petitioners therein and the laches committed by the respondents. Hence, the
holder of an earlier registered title does not, in all instances, absolutely
triumph over a holder of a latter registered title.

In this case, the petitioners assail the numerous and serious defects in
the surveys of OCT Nos. 242, 244 and 1609, which cast doubt on the
inclusion of the subject lands in ALI's titles. Accordingly, the Court must
delve into the merits of their contentions to determine whether the subject
properties are truly and genuinely included in ALI's title. Merely relying on
the date of registration of the original titles is insufficient because it is the
surveys therein that are being assailed. It is only through a judicious scrutiny
of the evidence presented may the Court determine whether to apply the
general rule or the exception in the superiority of titles with an earlier
registration date.

The survey of the registered

land may be scrutinized by
the courts when compelling
reasons exist

In its June 19, 2006 decision, the CA emphasized that OCT Nos. 242,
244, and 1609 carry with it the presumption of regularity and that the
surveys therein were presumably undertaken by qualified surveyors before

34
Heirs ofErmac v. Heirs ofErmac, 451 Phil. 368, 377 (2003).
35
2007 ed., pp. 140-141.
36
25 5 Phil. 26 ( 1989).

~
DECISION 16 G.R. Nos. 173120 & 173141

the issuance of the titles. In effect, the appellate court declares that the
surveys of these titles should no longer be inspected.

The Court does not agree.

Although a certificate of title serves as evidence of an indefeasible

and incontrovertible title to the property in favor of the person whose name
appears therein, 37 it is not a conclusive proof of ownership. It is a well-
settled rule that ownership is different from a certificate of title. The fact that
a person was able to secure a title in his name does not operate to vest
ownership upon him of the subject land. Registration of a piece of land
under the Torrens System does not create or vest title, because it is not a
mode of acquiring ownership. A certificate of title is merely an evidence of
ownership or title over the particular property described therein. It cannot be
used to protect a usurper from the true owner; nor can it be used as a shield
for the commission of fraud; neither does it permit one to enrich himself at
the expense of others. Its issuance in favor of a particular person does not
foreclose the possibility that the real property may be co-owned with persons
not named in the certificate, or that it may be held in trust for another person
by the registered owner. 38

Hence, the Court may inquire into the validity of the ownership of a
property by scrutinizing the movant's evidence of title and the basis of such
title. When there is compelling proof that there is doubt on the validity of the
sources or basis of such title, then an examination is proper. Thus, the
surveys of the certificates of title are not immune from judicial scrutiny, in
light of the genuine and legitimate reasons for its analysis.

In Dizon v. Rodriguez 39 and Republic v. Ayala y Cia, 40 the Court

confronted the validity of the surveys conducted on the lands to determine
whether the title was properly subdivided. It was ruled therein that
subdivision plan Psd-27941 was erroneous because it was "prepared not in
accordance with the technical descriptions in TCT No. T-722 but in
disregard of it, support the conclusion reached by both the lower court and
the Court of Appeals that Lots 49 and 1 are actually part of the territorial
waters and belong to the State." 41 Accordingly, the sole method for the
Court to determine the validity of the title was to dissect the survey upon
which it was sourced. As a result, it was discovered that the registered titles
therein contained areas which belong to the sea and foreshore lands.

37
Heirs of Maligaso, Sr. v. Spouses Encinas, 688 Phil. 516, 523 (2012).
38
Wee v. Mardo, G.R. No. 202414, June 4, 2014, 725 SCRA 242, 256-257.
39
121 Phil. 681(1965).
40
121 Phil. 1052 (1965).
41
Dizon v. Rodriguez, supra note 39, at 686.

v
DECISION 17 G.R. Nos. 173120 & 173141

Here, only a direct review of the surveys of OCT Nos. 242, 244, and
1609, as well as OCT No. 8510 can resolve the issue on the validity of these
titles. The findings of the RTC of Las Pifias and the CA differ with respect
to the cited errors in the surveys. The Court is convinced that through a
rigorous study of the affected surveys, the valid owners of the subject
properties are can be finally adjudicated.

Finally, after resolving the various preliminary issues, the Court can
now tackle the crux of these petitions - the validity of Psu-25909, Psu-47035,
Psu-80886, and Psu-80886/SW0-20609. The resolution of this issue will
decisively determine the true and rightful owner of the subject properties.

Psu-47035, and
Psu-80886
Psu-80886/SW0-20609 contain
numerous and serious irregularities
which cast doubt on the validity of
OCT Nos. 242, 244 and 1609

At the onset, the present case poses an issue on the validity of

registered and overlapping titles based on their surveys. The Court must
commend the RTC of Las Fifi.as for taking the correct procedure in resolving
such issue.

In Cambridge Realty and Resources Corp. v. Eridanus Development,

42
Inc., it was ruled that a case of overlapping of boundaries or encroachment
depends on a reliable, if not accurate, verification survey; barring one, no
overlapping or encroachment may be proved successfully, for obvious
reasons. The first step in the resolution of such cases is for the court to direct
the proper government agency concerned to conduct a verification or
relocation survey and submit a report to the court, or constitute a panel of
commissioners for the purpose. In that case, the Court lamented that the trial
court therein did not order the conduct of a verification survey and the
appointment of geodetic engineers as commissioners, to wit:

This is precisely the reason why the trial court should have
officially appointed a commissioner or panel of commissioners and
not leave the initiative to secure one to the parties: so that a
thorough investigation, study and analysis of the parties' titles
could be made in order to provide, in a comprehensive report, the
necessary information that will guide it in resolving the case
completely, and not merely leave the determination of the case to a
consideration of the parties' more often than not self-serving
eVI'dence. 43

42
579 Phil. 375(2008).
43
Id. at 401.

'1-
DECISION 18 G.R. Nos. 173120 & 173141

Similarly, in Chua v. B.E. San Diego, Inc., 44 the Court nlled that in
overlapping boundary disputes, the verification survey must be actually
conducted on the very land itself. In that case, the verification survey
conducted it was merely based on the technical description of the defective
titles. The opinion of the surveyor lacked authoritativeness because his
verification survey was not made on the land itself.

In this case, the RTC of Las Pifias issued an Order, 45 dated December
5, 1997, which directed the parties to conduct a verification survey pursuant
to the prescribed rules. Engr. Veronica Ardina-Remolar (Remolar) from the
Bureau of Lands of the DENR was the court-appointed commissioner who
supervised and coordinated the verification survey. Engrs. Rolando
Nathaniel Pada (Pada) and Alexander Ocampo (Ocampo) were the geodetic
engineers for Spouses Yu; while Engr. Lucal Francisco (Francisco) was the
geodetic engineer for ALL They conducted actual verification survey on
April 5, 6, 7 and 16, 1998 and June 8, 1998. Afterwards, Engr. Remolar
submitted her Report, 46 dated November 4, 1998, to the trial court which
stated that there were overlapping areas in the contested surveys. Likewise,
Engrs. Pada and Francisco submitted their Verification Reports and Survey
Plans, 47 which were approved by the DENR. Then, the parties presented
their respective witnesses.

The RTC of Las Pifias had a technical and accurate understanding and
appreciation of the overlapping surveys of Psu-25909, Psu-47035, Psu-
80886, and Psu-80886/SW0-20609. In its decision, dated May 7, 2001, it
ruled in favor of Spouses Yu and it discussed extensively its observations
and findings regarding the overlapping areas, to wit:

From the evidence on record, it appears that the following

plans were made on the dates and by the surveyor specified herein:

Survey No. PSU-25909 March 17, 1921 A.N. Feliciano

Survey No. PSU-47035 October 21, 1925 A.N. Feliciano
Survey No. PSU-80886 July 28, 1930 A.N. Feliciano
Survey No. SW0-20609 March 6, 1931 A.N. Feliciano

Plan PSU-25909 (Exhibit "F") invoked by the plaintiffs and

authenticity of which is certified by appropriate government
custodians including Engineer Remolar, the court-designated
commissioner, appears to have been prepared on March 17, 1921 for
one Andres Diaz and recites the following entries:

44
708 Phil. 386 (2013).
45
Rollo (G.R. No. 173120), pp. 287-293.
46
Id. at 294-295.
47
Id. at 296-308.

~
DECISION 19 G.R. Nos. 173120 & 173141

"THE ORIGINAL FIELD NOTES,

COMPUTATIONS AND PLAN OF THIS SURVERY
EXECUTED BY A.M. FELICIANO HAVE BEEN CHECKED
AND VERIFIED IN THIS OFFICE IN ACCORDANCE
WITH SECTIONS 1858 TO 1865, ACT 2711 AND ARE
HEREBY APPROVED MAY 26, 192i."

-and-

"This is to certify that this is a true and correct plan

of Psu-25909 as traced from the mounted paper of plan
Psu-25909 which is on file at T.R.S. Lands Management
Sector, N.C.R.

"This true copy of the plan is requested by the Chief,

Technical Records Section as contained in a letter dated
February 15, 1989.

TEODORICO C. CALISTERIO
Chief, Topographic 7 Special Maps Section

Traced by: F.SUMAGUE

Checkd by: A.O. VENZON (Sgd.) 4/28/89

Thus, the Court holds that plan PSU-25909 (Exhibit"F) is a

true copy of an official document on file with the Bureau of Lands and
is, therefore, entitled to great weight and appreciation, there being no
irregularity demonstrated in the preparation thereof.

On the other hand, an examination of Plan PSU-47035

(Exhibit "G") invites suspicion thereto. As observed by Engineer
Pada in his verification survey report, the photocopy of plan PSU-
47035 submitted by the defendant shows that the plan appears to
have done for one Estanislao Mayuga, while in the certified true
copy of the pertinent decree (Exhibit "HH"/Exhibit 20), it appears
that the same was done for a certain Dominador Mayuga. Viewing
this discrepancy in the light of the fact that the plan for PSU-47035
was undertaken on October 21, 1925 or more than four years after
the survey for plan PSU-25909 was done, the same discrepancy
leads the Court to conclude that PSU-47035 is spurious and void.

The third plan enumerated above, plan PSU-80886 (Exhibit

"II/Exhibit 29), prepared on July 28, 1930 or more than five years
since plan PSU-25909 was done for Andres Diaz, also invites
suspicion. An examination of the same reveals that the lower right
hand corner of the plan, which bears the serial number PSU-80886,
is manifestly different from the main document in terms of the
intensity of its contrast, and that the change in the intensity of the
shading is abrupt as one examines the document starting from the
lower right hand corner to anywhere else in the same document.
Also, it is worth observing that the main document, minus the lower
right hand corner mentioned, does not indicate anything to even
suggest that it pertains to plan PSU-80886. For these reasons, the
contention of the plaintiffs that this lower right hand corner of the
plan appears to be a spurious attachment to the main document to

~
DECISION 20 G.R. Nos. 173120 & 173141

make the main document it look like it is actually plan PSU-80886,

has merit.

Another discrepancy invites further suspicion under the

circumstances. The main document bears what appears to be the
actual signature of the surveyor, Mr. A.N. Feliciano while the lower
right hand corner of the plan mentions only the name "Serafin P.
Hidalgo - Director of Lands" with the prefix "Sgd." But without
any actual signature. An interesting query arises: Why would the
document bear an actual signature of the surveyor without bearing
the signature of the Director of Lands which in essence is the more
important signature for authentication purposes?

Still another discrepancy is with respect to a monument

appearing in PSU-80886 (Exhibit "II"). At the upper off-right
portion thereof are entries referring to a monument more
specifically described as B.L.L.M. No. 4. According to Engineer
Pada, citing a certified document taken from the Land Management
Bureau of the Department of Environment and Natural Resources,
this monument was established only on November 27, 1937 (TSN,
March 24, 2000, pp. 18-20) which is more than seven years after
PSU-80886 was undertaken. How a monument which was
established only in November 1937 can actually exist in a plan
made on July 28, 1930 is absolutely incredible.

In view of the .foregoing, the Court finds good reason to

consider PSU-80886 (Exhibit "II" and 29), relied upon by the
defendant, spurious and void as well.

The fourth and last plan mentioned is SW0-20609, done on

March 6, 1931.

It is admitted by the geodetic engineer of the defendant that

a specific work order (SWO) co-exists with a survey plan, and that
in particular, SW0-20609 was undertaken in view of alleged errors
in plan PSU-80886 (TSN, February 16, 2001, pp. 31-32). Therefore,
SW0-20609 must be evaluated in relation to plan PSU-80886.
From this perspective, the Court also notes that SW0-20609 is
attended with discrepancies thus rendering it devoid of any
credence.

For the record, in PSU-80886 (Exhibit "II" /Exhibits 29 and

30), the land concerned appears to have been surveyed for one
Eduardo C. Guico while in PSU-80886/SW0-20609 (Exhibit
"H" /Exhibit 35), the same land appears to have been surveyed for
one Alberto Yaptinchay. In addition, it is evident in PSU-80886
(Exhibits 29 and 30) that vital entries regarding the total area of the
property covered by the document bear many erasures, particularly
two erasures as to the total area in terms of number and one
erasure as to that total area in terms of unit of measurement.

The Court likewise notes with suspicion the fact that all four
survey plans were purportedly undertaken by one and the same
surveyor, a Mr. A.N. Feliciano. It seems extremely unusual why
the same A.N. Feliciano, who surveyed the same property for

\\
DECISION 21 G.R. Nos. 173120 & 173141

Andres Diaz in 1921, would do so again in 1925 with different

results, and again in 1930 once more with different results, and still
one more time in 1931 with still different results. The only
reasonable and logical conclusion under these telling circumstances
is that the second, third and last surveys corresponding to PSU-
47035, PSU-80886 and PSU-80886/SW0-20609 are all spurious
and void, too.

The Court went through the record of the case and no

satisfactory explanation has been offered by the defendant
regarding these discrepancies. Even the documentary evidence
presented by the defendant offers no plausible reason for the Court
to reject the contentions of the plaintiffs. This all the more
strengthens the view of the Court to effect that PSU-47035, PSU-
80886 and PSU-80886/SW0-20609 are spurious and void ab
initio. This view is also strengthened by the credentials of Engineer
Pada whom the Court considers as a very credible witness.

All in all, the Court is convinced that the title of the plaintiffs
to the properties in dispute is superior over those invoked by the
defendant. 48 [Emphases supplied]

The findings of the RTC of Las Pifias were affirmed by the CA in its
February 8, 2005 decision. It agreed that there are indeed glaring errors in
the surveys relied upon by ALI. These errors could not be merely
disregarded as they affect the authenticity and validity of OCT Nos. 242,
244 and 1609.

Conclusion

After a judicious study of the case, the Court agrees with the findings
of the RTC of Las Pifias and the CA in its February 8, 2005 decision.

First, Psu-25909 was conducted by a certain A.N. Feliciano in favor

of Andres Diaz and was approved on May 26, 1921. Curiously, the
subsequent surveys of Psu-47035 for a certain Dominador Mayuga, Psu-
80886 for a certain Guico and Psu-80886/SW0-20609 for a certain
Yaptinchay were also conducted by A.N. Feliciano. It is dubious how the
same surveyor or agrimensor conducted Psu-47035, Psu-80886 and Psu-
80886/SW0-20609 even though an earlier survey on Psu-25909, which the
surveyor should obviously be aware, was already conducted on the same
parcel of land. Engr. Pada, witness of Spouses Yu, also observed this
irregularity and stated that this practice is not the standard norm in
conducting surveys.

48
Id. at 710-713.

y
DECISION 22 G.R. Nos. 173120 & 173141

Second, even though a single entity conducted the surveys, the lands
therein were described to be located in different places. Psu-25909, the
earliest dated survey, indicated its location at Sitio of Kay Monica, Barrio
Pugad Lawin, Las Pifias, Rizal, while Psu-47035 and Psu-80886 stated their
locations at Sitio May Kokek, Barrio Almanza, Las Pifias, Rizal, and Barrio
Tindig na Mangga, Las Pifias, Rizal, respectively. Again, Engr. Pada
observed this peculiarity and pointed out that the subject properties should
have had the same address. ALI did not provide an explanation to the
discrepancies in the stated addresses. Thus, it led the CA to believe that the
same surveyor indicated different locations to prevent the discovery of the
questionable surveys over the same parcel of land.

Third, there is a discrepancy as to who requested the survey of Psu-

47035. The photocopy of Psu-47035 as submitted by ALI shows that it was
done for a certain Estanislao Mayuga. On the other hand, the certified true
copy of Psu-47035 depicts that it was made for Dominador Mayuga. Once
more, Engr. Pada noticed this discrepancy on the said survey. ALI, however,
did not give any justification on the diverging detail, which raises question
as to the authenticity and genuineness of Psu-47035.

Fourth, Psu-80886 does not contain the signature of then Director of

Lands, Serafin P. Hidalgo; rather, the prefix "Sgd." was simply indicated
therein. As properly observed by the CA in its February 8, 2005 decision,
any person can place the said prefix and it does not show that the Director of
Lands actually signed and gave his imprimatur to Psu-80886. The absence
of the approval of the Director of Lands on Psu-80886 added doubt to its
legitimacy. The excuse proffered by ALI - that Psu-80886 is regular and
valid simply because land registration proceedings were undertaken - is
insufficient to cure the crucial defect in the survey.

In University of the Philippines v. Rosario, 49 it was held that "[ nJo

plan or survey may be admitted in land registration proceedings until
approved by the Director of Lands. The submission of the plan is a statutory
requirement of mandatory character. Unless a plan and its technical
description are duly approved by the Director of Lands, the same are of no
value. " Hence, the lack of approval by the Director of Lands of Psu-80886
casts doubt on its legality. It also affects the jurisdictional facts before the
land registration courts which relied on Psu-80886 for registration.

Fifth, Psu-80886 was issued on July 28, 1930 but it referred to a

specific monument described as B.L.L.M No. 4. According to the LMB-
DENR, the said monument was only established on November 27, 1937,

49
407 Phil. 924 (2001 ).

\~
DECISION 23 G.R. Nos. 173120 & 173141

more than seven years after Psu-80886 was issued. 50 This discrepancy was
duly noted in the findings of the verification report and it was affirmed by
the testimony of Engr. Pada. Thus, both the R TC of Las Pifias and the CA in
its February 8, 2005 decision properly observed that it was highly irregular
for Psu-80886 to refer to B.L.L.M No. 4 because the said monument existed
seven years later.

Sixth, ALI attempted to explain this anomaly by stating that Psu-

80886 was amended by Psu-80886/SW0-20609, a Special Work Order, in
view of the discrepancies of the former. While Psu-80886/SW0-20609 is
dated March 6, 1931, ALI insists that it was actually conducted in 193 7 and
approved in 1940. However, in its February 8, 2005 decision, the CA noted
that said testimony crumbled under cross-examination as ALI' s witness,
Engr. Pelino Cortez (Cortez), could not reaffirm the said justification for
Psu-80886's manifest error of including a latter dated monument. Also, the
Court observed that ALI's other witness, Engr. Percival Bacani, testified that
he does not know why B.L.L.M No. 4 was used in preparing Psu-80886
even though the said monument appears on all the titles. 51 Moreover, the
alleged explanation provided by ALI to justify the existence of B.L.L.M No.
4 in Psu-80886 was not indicated at all in the verification report and survey
plan they submitted before the RTC of Las Pifias. Accordingly, ALI did not
resolve the uncertainty surrounding the reference to B.L.L.M No. 4 by Psu-
80886 and it seriously damages the validity of the said survey.

Seventh, ALI explained that Psu-80886/SW0-20609 was undertaken

to correct a discrepancy in Psu-80886. Its witness, Engr. Cortez, confirmed
that Psu-80886/SW0-20609 was commenced to resolve the mistake in the
timeline. He added that the timeline published in the notice of initial hearing
in the Official Gazette for Psu-80886 was different from the approved plan
in Psu-80886/SW0-20609. He also noted some difference in the area of Psu-
80886 compared to Psu-80886/SW0-20609. 52 These admissions show that
Psu-80886 was flawed from the very beginning. Yaptinchay merely
requested the conduct of Psu-80886/SW0-20609 in order to resurrect or
salvage the erroneous Psu-80886 and to wrongfully acquire OCT No. 242. It
does not, however, erase the fact that Psu-80886, from which ALI's titles
originated, is marred with irregularities. This is a badge of fraud that further
runs counter to the legitimacy of the surveys that ALI relied upon.

Eight, the R TC of Las Pifias continuously observed the irregularities

in Psu-80886. It stated that "the total area of the property covered by the
document bear many erasures, particularly two erasures as to the total area
in terms of number and one erasure as to that total area in terms of unit of

50
TSN, March 24, 2000, pp. 18-20.
51
TSN, November 24, 2000, pp. 4-9.
52
TSN, February 16, 2001, pp. 40-41.

\
DECISION 24 G.R. Nos. 173120 & 173141

measurement." 53 Manifestly, no explanation was provided why it was

necessary to make erasures of the crucial data in the survey regarding the
total area.

Ninth, the RTC of Las Pifias continued its observations regarding

Psu-80886's anomalies. It added that "[a]n examination of the same reveals
that the lower right hand corner of the plan, which bears the serial number
PSU-80886, is manifestly different from the main document in terms of the
intensity of its contrast, and that the change in the intensity of the shading is
abrupt as one examines the document starting from the lower right hand
corner to anywhere else in the same document. Also, it is worth observing
that the main document, minus the lower right hand corner mentioned, does
not indicate anything to even suggest that it pertains to plan PSU-80886.
For these reasons, the contention of the plaintiffs that this lower right hand
corner of the plan appears to be a spurious attachment to the main document
to make the main document it look like it is actually plan PSU-80886, has
merit." 54 These observations were based on the first-hand examination of the
surveys, verification reports~ and witnesses by the RTC of Las Pifias.

Tenth, as correctly emphasized by the CA in its February 8, 2005

decision, the Supreme Court had previously noted the defects surrounding
Psu-80886 in the case of Guico v. San Pedro. The said case involved the
application of registration of Guico of a tract of land covered by Psu-80886,
subdivided into eleven (11) lots, filed on November 4, 1930 before the Court
of First Instance of Rizal (CF!). The said land originated from Pedro Lopez
de Leon, covered by Psu-16400. It was transferred to his son, Mariano
Lopez de Leon, and then one-third portion thereof was conveyed to Guico.
Several oppositors appeared therein to assail Gui co' s application. On August
19, 1935, the CFI ruled that only Lot Nos. 1, 2, 3, 6, 7 and 10 may be
registered in the name of Guico.

On appeal, the CA disposed the case in this wise:

Adjudicamos a Eduardo C. Guico los lotes 2 y 3 de su piano

y las porciones que quedan de las adjudicadas a el por el Juzgado
inferior y que no estan comprendidos en los terrenos reclamados
por Valeriano Miranda, Nicasio san Pedro, Jose Dollenton,
Gregorio Arciaga, Donato Navarro, Leon Navarro, Dionisio
Dollenton, Basilio Navarro, Bernardo Mellama y Lorenzo
Dollenton, debiendo al ejecta presentar un piano enmendado
debidamente aprobado por el Director de Terrenos, confirmado
asi la decision apelada en lo que estuvira conforme, y revocandola
. 55
en lo que no estuvzera.

53
Rollo (G.R. No. 173120), p. 712.
54
Id. at 711.
55
Guico v. San Pedro, supra note 12, at 417.

\I\
DECISION 25 G.R. Nos. 173120 & 173141

When translated, the text reads:

We adjudicate to Eduardo C. Guico Lots 2 and 3 of his plant

and the portions that remain adjudicated to him by the lower court
and that are not included in the lands claimed by Valeriano
Miranda, Nicasio San Pedro, Jose Dollenton, Gregorio Arciaga,
Donato Navarro, Leon Navarro, Dionisio Dollenton, Basilio
Navarro, Bernardo Mellama, and Lorenzo Dollenton, under the
obligation to present an amended properly approved plan to the
Director of Lands, confirming therefore the appealed decision what
is consistent with this and revoking it on what is not. 56 [Emphasis
and underscoring supplied]

Undeterred, Guico filed an appeal before the Supreme Court alleging

that the CA erred in declaring that there was no imperfect title in favor of
Pedro Lopez de Leon, his predecessor-in-interest.

In its decision, dated June 20, 1941, the Court dismissed the appeal of
Guico and affirmed the CA ruling. It was held that "la solicitud de Pedro
Lopez de Leon composicion con el Estado no Jue aprobada porque no pudo
hacerse la medicion correspondiente. " Its translation stated that the
application of Pedro Lopez de Leon regarding the composition of the estate
was not approved because he was not able to submit the corresponding
measurements, referring to Psu-16400, from which Psu-80886 was derived.

In addition, the Supreme Court noted that "while abundant proof is

offered concerning the filing of the application for composition title by the
original possessor, the records nowhere exhibits compliance with the
operative requirement of said section 45 (a) of Act. No. 2874, that such
applicants or grantees and their heirs have occupied and cultivated said lands
continuously since the filing of their applications." 57

Consequently, the Court observed two major irregularities in the

application of Guico under Psu-80886, (1) his predecessor-in-interest did not
submit any valid measurement of the estate from which Psu-80886 was
derived; and (2) that the applicant or his grantees failed to occupy or
cultivate the subject land continuously. These findings are substantial and
significant as these affect the validity of Psu-80886.

ALI insisted that Guico v. San Pedro should actually be construed in

their favor because the Court affirmed the ruling of the CA which awarded
Lot Nos. 2 and 3 to Guico, hence, Psu-80886 was valid.

The Court is not persuaded.

56
Rollo (G.R. No. 173120), p. 1418.
57
Guico v. San Pedro, supra note 12, at 419.

~
DECISION 26 G.R. Nos. 173120 & 173141

A reading of the dispositive portion of the CA decision in Guico v.

San Pedro does not categorically state that Lot Nos. 2 and 3 were absolutely
and completely awarded to Guico. The award of the said lots was subject to
the vital and primordial condition or obligation to present to the court an
amended, properly approved, plan to the Director of Lands. Evidently, the
Court was not satisfied with Psu-80886 because it lacked the requisites for a
valid survey. Thus, it required Guico to secure an amended and correctly
approved plan, signed by the Director of Lands. The purpose of this new
plan was to confirm that the appealed decision was consistent with the facts
established therein. The records, however, did not show that Guico indeed
secured an amended and properly approved plan. Psu-80886/SW0-20609
obviously was not the required amended order because a special work order
is different from an amended survey. 58 Moreover, the said special work
order was initiated by Yaptinchay, and not Guico. The insufficiency of Psu-
80886 is evident in this decision.

Thus, as Guico did not subject Psu-80886 to a valid amended

approved plan, he was not awarded Lot Nos. 2 and 3 for registration. It can
be seen from the OCT Nos. 242, 244, and 1609; that Guico never secured
their registration because the Court discovered the anomalous Psu-80886.
The Court's pronouncement in Guico v. San Pedro, although promulgated
more than half a century ago, must be respected in accordance with the rule
onjudicial adherence.

Lastly, the Court also agrees with the finding of the CA in its
February 8, 2005 decision that Psu-25909 bears all the hallmarks of verity. It
was established that Andres Diaz was the very first claimant of the subject
property and was the proponent of Psu-25909. The said survey clearly
contained the signature of the surveyor and the Director of Lands, as can be
seen on its face. In stark contrast with Psu-80886, which contained
alterations and erasures, Psu-25909 has none. The original of Psu-25909 was
likewise on file with the Bureau of Lands and a microfilm reproduction was
readily obtained from the file of the said office, unlike in Psu-80886 and
Psu-47909.

The RTC of Las Pifias shared this examination. It ruled that Psu-
25909 was a true copy of an official document on file with the Bureau of
Lands. It also gave great weight and appreciation to the said survey because
no irregularity was demonstrated in the preparation thereof. The trial court
added that Engr. Remolar, as the appropriate government custodian and
court-appointed commissioner, certified the authenticity of Psu-25909.

58
See Sections 605 and 579 of DENR-LMB Administrative Order No. 4 or the Manuel for Land Survey of
the Philippines for the definitions of a special work order and an amended survey.

~
DECISION 27 G.R. Nos. 173120 & 173141

In fine, the Court finds that there are numerous defects in Psu-4 7909,
Psu-80886 and Psu-80886/SW0-20609, which are all hallmarks of fraud, viz:

1. That A.N. Feliciano conducted all the surveys even though

he should have known that the earlier dated survey Psu-
25909, already covered the same parcel of land;
2. That Psu-47909, Psu-80886 and Psu-25909 covered the
same parcel of land and were conducted by the same
surveyor but each survey stated a different location;
3. That the photocopy of Psu-47035, as submitted by ALI,
shows that it was done for a certain Estanislao Mayuga but
the certified true copy of Psu-47035 depicted that it was
made for Dominador Mayuga;
4. That Psu-80886 did not contain the signature of then
Director of Lands, Serafin P. Hidalgo, and it is well-settled
rule that no plan or survey may be admitted in land
registration proceedings until approved by the Director of
Lands;
5. That Psu-80886 was issued on July 28, 1930 but it referred
to a specific monument described as B.L.L.M No.4, which
was only established on November 27, 1937;
6. That ALI attempted to explain this anomaly by stating that
Psu-80886 was amended by Psu-80886/SW0-20609, which
was done in 1937. On cross-examination, however, the
witness of ALI was unable to reaffirm that the special work
order was rightly performed in 193 7 and the said
explanation was not reflected in the verification report and
survey plan of ALI;
7. That Psu-80886/SW0-20609 was undertaken to correct a
discrepancy in Psu-80886, which was an admission that the
latter survey, from which the titles of ALI originated, was
defective;
8. That the total area of the property covered by Psu-80886
contained many erasures, which were not satisfactorily
explained;
9. That there was a difference in the intensity of the lower right
portion of Psu-80886 which showed that it may simply have
been an attachment to the main document; and
10.That in Guico v. San Pedro, the Court found that
irregularities surround Psu-80886 because its predecessor-
in-interest did not submit the corresponding measurement of

t
DECISION 28 G.R. Nos. 173120 & 173141

his survey and the applicant or his grantees failed to occupy

and cultivate the subject land continuously. Further, Lot Nos.
2 and 3 of Psu-80886 were not awarded to Guico because
the records do not show that he submitted the required
amended properly approved plan by the Director of Lands.

In contrast, Psu-25909 bore all the hallmarks of verity because it

contains the signatures of the surveyor and the Director of Lands, and it
did not contain any erasure or alterations thereon. Likewise, a duly
authenticated copy of Psu-25909 is readily available in the Bureau of
Lands.

The foregoing anomalies surrounding Psu-47909, Psu-80886, and

Psu-80886/SW0-20609 were similarly observed by the RTC of Las Pifias.
The trial court was able to establish its findings based on the verification
survey it ordered, under the supervision of the court-appointed
commissioner. Hence, the trial court had the direct access to the evidence
presented by the parties as well as the verification reports and survey plans
submitted by the parties. It is a fundamental rule that the conclusion and
findings of fact by the trial court are entitled to great weight on appeal and
should not be disturbed except for strong and cogent reasons, because the
trial court is in a better position to examine real evidence, as well as to
observe the demeanor of the witnesses while testifying in the case. 59

Even without considering (1) the certification from the DENR-LMB

that Psu-80886 is included in the list of restricted plans because of the
doubtful signature of the surveyor, and (2) the memorandum, dated August 3,
2000, from the Assistant Regional Director of the DENR directing all
personnel of the Land Survey Division not to issue copies or technical
descriptions of Psu-80886 and Psu-47035, there were numerous defects on
the surveys that affected their validity. The exclusion of these documents did
not alter the finding of the Court that the surveys were spurious and must be
set aside.

Further, the Court cannot subscribe to the finding of the CA in its June
19, 2006 decision that the numerous defects in Psu-47909, Psu-80886 and
Psu-80886/SW0-20609 are "not enough to deprive the assailed decree of
registration of its conclusive effect, neither are they sufficient to arrive at the
conclusion that the survey was definitely, certainly, conclusively
spurious." 60 The Court cannot close its eyes to the blatant defects on the
surveys upon which the original titles of ALI were derived simply because
its titles were registered. To allow these certificates of title in the registration
books, even though these were sourced from invalid surveys, would tarnish

59
Ban v. Intermediate Appellate Court, 229 Phil. 159, 163 (1986).
60
Rollo (G.R. No. 173120), p. 1430.

'{\
DECISION 29 G.R. Nos. 173120 & 173141

and damage the Torrens system of registration, rather than uphold its
integrity.

It is an enshrined principle in this jurisdiction that registration is not a

mode of acquiring ownership. A certificate of title merely confirms or
records title already existing and vested. The indefeasibility of a Torrens title
should not be used as a means to perpetrate fraud against the rightful owner
of real property. Good faith must concur with registration because, otherwise,
registration would be an exercise in futility. A Torrens title does not furnish
a shield for fraud, notwithstanding the long-standing rule that registration is
a constructive notice of title binding upon the whole world. The legal
principle is that if the registration of the land is fraudulent, the person in
whose name the land is registered holds it as a mere trustee. 61

When a land registration decree is marred by severe irregularity that

discredits the integrity of the Torrens system, the Court will not think twice
in striking down such illegal title in order to protect the public against
unscrupulous and illicit land ownership. Thus, due to the numerous, blatant
and unjustifiable errors in Psu-47909, Psu-80886, and Psu-80886/SW0-
20609, these must be declared void. Likewise, OCT Nos. 242, 244, and 1609,
their transfer certificates, and instruments of conveyances that relied on the
anomalous surveys, must be absolutely declared void ab initio.

With respect to the Diaz case, the Court agrees with the CA in its
February 8, 2005 decision that Spouses Diaz did not commit fraud. As Psu-
47909, Psu-80886 and Psu-80886/SW0-20609 are void, then OCT Nos. 242,
244 and 1609 are also void ab initio. The transfer certificates in the hands of
third parties, including CP J Corporation and ALI, are likewise void.
Accordingly, Spouses Diaz had no obligation to inform CPJ Corporation of
their application for registration and they could not be held guilty of fraud.

WHEREFORE, the petitions are GRANTED. The June 19, 2006

Decision of the Court of Appeals in CA-G.R. CV Nos. 61593 & 70622 is
hereby REVERSED and SET ASIDE. The February 8, 2005 Amended
Decision of the Court of Appeals is hereby REINSTATED.

SO ORDERED.

JOSE CA

61
Spouses Reyes v. Montemayor, 614 Phil. 256 (2009).
DECISION 30 G.R. Nos. 173120 & 173141

WE CONCUR:

Clz;;:!i)~
ANTONIO T. CARPIO
Associate Justice
Chairperson

ATTESTATION

I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Court's Division.

c+ct~
ANTONIO T. CARPIO
Associate Justice
Chairperson, Second Division

w
DECISION 31 G.R. Nos. 173120 & 173141

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constit~tion and the

Division Chairperson's Attestation, I certify that the cone usions in the
above Decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Court's Division. :
I
I

MARIA LOURDES P. A. SERENO

Chief Justice