CLT Realty Development Corporation vs. Phil-Ville Development and Housing Corporation, et al.

An action for quieting of title under Article 476 of the Civil Code prospers where the plaintiff has a legal or equitable title and the instrument casting a cloud is in truth invalid; a Torrens title that traces its source to the inexistent OCT No. 994 dated April 19, 1917 is void and cannot cast a cloud on titles derived from OCT No. 994 dated May 3, 1917.

CLT Realty Development Corporation and Phil-Ville Development and Housing Corporation are domestic corporations claiming title to parcels within the Maysilo Estate in Caloocan City. The Maysilo Estate is historically covered by OCT No. 994; the case text identifies May 3, 1917 as the true date of registration and notes the proliferation of fake titles traced to an inexistent OCT No. 994 dated April 19, 1917. Prior consolidated cases in Manotok Realty, Inc. vs. CLT Realty Development Corporation addressed related titles and the validity of TCT No. T-177013. The Republic of the Philippines, through the Office of the Solicitor General and the Land Registration Authority, also intervened in proceedings involving spurious titles over the Maysilo Estate.

Phil-Ville claimed to be the registered owner and actual possessor of sixteen parcels of land in Baesa, Caloocan City, covered by TCT Nos. C-21568, C-24966, C-33124, C-21569, C-33418, C-21570, C-232569, C-28076, C-28077, C-29114, C-27944, C-156145, C-28075, C-29113, C-35359, and C-27943. It alleged actual, open, notorious, public, physical, and continuous possession before 1980 up to the present, and that it fenced the parcels in 1980 and 1991. Phil-Ville traced the parcels to Lot 26 of the Maysilo Estate, originally covered by OCT No. 994 issued on May 3, 1917. It alleged that CLT’s TCT No. T-177013, covering Lot 26 with an area of 891,547.43 square meters, overlapped its parcels and was invalid despite its apparent validity.

Phil-Ville’s chain of title alleged that on September 9, 1918, TCT Nos. 4210 and 4211 were issued to Alejandro Ruiz and Mariano P. Leuterio, cancelling OCT No. 994 as to Lot 26 by virtue of deeds of sale executed on August 21, 1918. TCT No. 4210 covered areas of 3,052.93 and 16,512.50 square meters, while TCT No. 4211 covered 871,982 square meters; the combined area of 891,547 square meters corresponded to Lot 26 in OCT No. 994. TCT No. 4211 was cancelled by TCT No. 5261 in the name of Francisco J. Gonzales, who purchased from Ruiz and Leuterio. Upon Gonzales’s death, the property was transferred to his six children under TCT No. 35486, who partitioned it into seven lots under TCT Nos. 1368 to 1374. The Republic expropriated the Gonzales lands, and new titles were issued in the Republic’s name; the National Housing Authority consolidated and subdivided the area into 77 lots sold to eight vendees, from whom Phil-Ville acquired the eight lots and later obtained the sixteen titles. Estelita Hipolito, Jose B. Dimson, and CLT were not among the NHA vendees or their transferees.

Phil-Ville further alleged that CLT’s TCT No. T-177013 was a transfer from TCT No. R-17994 in the name of Estelita I. Hipolito; that TCT No. R-17994 was a transfer from TCT No. 15166 in the name of Jose B. Dimson; and that TCT No. 15166 originated from OCT No. 994 in the name of Isabel Gil de Gola as judicial administratrix of the estate of Gonzalo Tuazon and 31 others. Hipolito allegedly acquired Lot 26 by an Order dated October 18, 1977 approving a compromise agreement that admitted Dimson’s sale to her on September 2, 1976. Dimson allegedly acquired the lot by a Court Order dated June 13, 1966 awarding him as attorney’s fees 25% of whatever remained under Lots 25-A, 26, 27, 28, and 29 undisposed of the intestate estate of Concepcion Vidal. Phil-Ville contended that Lot 26 had been totally disposed of on September 9, 1918 and August 21, 1918 in favor of Ruiz and Leuterio, so nothing remained for Dimson, Hipolito, or CLT. It also noted an annotation on the TCTs stating that the title was subject to verification by the LRC Verification Committee on questionable titles, plans, decrees, and other documents pursuant to Ministry Opinion No. 239 dated November 4, 1982.

CLT, for its part, claimed that it was the registered owner of Lot 26 under TCT No. T-177013, which it acquired on December 10, 1988 from Estelita I. Hipolito by a Deed of Absolute Sale with Real Estate Mortgage. It traced its title through Hipolito, who acquired from Dimson by a Deed of Sale dated September 2, 1976, and Dimson, who acquired by a Court Order dated June 13, 1966 in Civil Case No. 4557 concerning the heirs of Maria de la Concepcion Vidal over parcels covered by OCT No. 994, including Lot 26. CLT asserted that when TCT No. 15166 was issued to Dimson, OCT No. 994 had not been totally disposed of as to Lot 26, and the Register of Deeds partially cancelled OCT No. 994 and issued TCT No. 15166. It denied occupying Phil-Ville’s property and instead claimed that Phil-Ville occupied portions of CLT’s property. CLT alleged that Phil-Ville’s titles were null and void and that TCT No. 4211, TCT Nos. 5261 and 35486, and succeeding derivative titles were forged or spurious, citing technical descriptions in Spanish despite OCT No. 994 being in English, missing subdivision survey, absence of survey plan number and lot number, different original survey dates, missing records of deeds of sale and court order, and the alleged fictitious Psd-21154.

To resolve the issues, the RTC issued an Order dated August 28, 1992 enjoining both parties from selling, disposing, leasing, encumbering, or otherwise conveying the subject properties until the main case was resolved. CLT moved to subject TCT Nos. 4210 and 4211, the Escritura de Venta dated August 21, 1918, certain exhibits in CFI Case No. 391, and a Mocion in CFI Case No. 391 to scientific examination by the NBI. Phil-Ville had the documents examined by the PNP Crime Laboratory Service and presented Zacarias Tibol as an expert witness. NBI Questioned Document Report No. 700-1192 dated March 9, 1993 found the signatures of Register of Deeds L. Gardoño on TCT Nos. 4210 and 4211 genuine, the handwritten entries to have common authorship, and the printed entries to have significant similarities, concluding that the questioned TCTs were genuine. NBI Chemistry Report No. C-93-272 dated May 7, 1993 stated that the ink and paper could be more or less fifty years old.

In its Decision dated March 15, 1996, the RTC traced Phil-Ville’s titles from OCT No. 994 to TCT Nos. 4210 and 4211, then to TCT No. 5261, TCT No. 35486, TCT Nos. 1368 to 1374, the Republic’s titles, and finally Phil-Ville’s sixteen titles. The RTC found that the land covered by this series was Lot 26 of the Maysilo Estate, citing the subdivision by agrimensor Fernando on December 22, 1917, the Escritura de Venta dated August 21, 1918, the testimony of Engineer Juanito Bustalino, Entry No. 6665/0-994 in the Memorandum of Encumbrances of OCT No. 994, the annotation of Psd-21154 on TCT No. 35486, the expropriation cases, and the overlap of the parties’ titles. It held that Phil-Ville’s titles were valid and that CLT’s TCT No. T-177013 was null and void because Hipolito’s TCT No. R-17994 was a duplication of TCT Nos. 4210 and 4211 and because the LRC Verification Committee had recommended its annulment. The RTC found that Hipolito and CLT were not innocent transferees, as Hipolito’s title carried the LRC verification annotation and Dimson’s award was conditioned on there being undisposed portions of Lot 26, which the LRC report said did not exist. The Court of Appeals affirmed these factual findings, adding that the NBI and PNP findings complemented each other, that the use of Spanish technical descriptions was acceptable, that the absence of the original survey plan was explained by a certification, and that CLT was not an innocent transferee.

• Technical Defects in Phil-Ville’s Titles: Petitioner argued that the Court of Appeals disregarded admitted patent and inherent technical defects and infirmities in TCT Nos. 4211, 5261, 35486, and 1368 to 1374, from which Phil-Ville derived its titles, including Spanish technical descriptions while OCT No. 994 was in English, the absence of an approved subdivision survey plan for Lot 26, the missing Psd-21154, and material deviations in tie points, which under jurisprudence rendered those titles void and ineffective.
• NBI Forensic Chemistry Report: Petitioner maintained that the Court of Appeals disregarded the NBI Forensic Chemistry Division’s expert and scientific analysis of the ink and paper used on TCT No. 4211, which found that it was prepared only in the 1940s and not in 1918 as indicated on its face, thus proving it spurious.
• Republic’s Intervention: Petitioner argued that the Court of Appeals erroneously relied on the Republic’s petition-in-intervention even though the State had no legal interest in the subject matter, which involved private lands only and could not be ordered reverted to the Republic.
• Innocent Transferee: Petitioner argued that the Court of Appeals blindly adopted the trial court’s erroneous ruling that CLT was not an innocent transferee based solely on an annotation on its TCT.
• Counterclaims: Petitioner argued that the Court of Appeals perfunctorily denied CLT’s counterclaims despite clear, convincing, and preponderant evidence.

• Factual Findings: Respondent Phil-Ville argued that the petition raised purely factual issues and that the factual findings of the RTC and the Court of Appeals, supported by clear and convincing evidence, must be respected.
• Overlap and Spurious CLT Title: Respondent raised as issues whether Lot 26 covered by CLT’s TCT No. T-177013 actually overlapped Phil-Ville’s sixteen parcels and whether CLT’s TCT No. T-177013 was spurious.
• Validity of Phil-Ville’s Titles: Respondent raised as issues whether Phil-Ville’s sixteen titles were valid, whether TCT Nos. 4210 and 4211 suffered from debilitating technical infirmities, whether the use of Spanish technical descriptions was acceptable, whether non-inclusion of the original survey date was fatal, whether designation as Lot 26-A, 26-B, and 26-C was mandatory, whether different tie points were fatal, whether Psd-21154 existed, and whether Phil-Ville’s titles had defects.
• Authenticity and Expropriation: Respondent raised as issues whether TCT Nos. 4210 and 4211 were forged, whether both the PNP and NBI confirmed their authenticity and genuineness, whether the age of the ink and paper could only be more or less fifty years old, and whether Lot 26 was the same land expropriated by the Republic.
• Laches, Innocent Purchase, Intervention, Counterclaims: Respondent raised as issues whether it was too late for petitioner to contest Phil-Ville’s titles, whether CLT was an innocent purchaser, whether CLT’s claim was barred by laches or stale demand, whether the Court of Appeals erred in allowing the Republic’s intervention, and whether the Court of Appeals erred in dismissing CLT’s counterclaims.

• Cloud on Title: Whether petitioner’s TCT No. T-177013 imposes a cloud on respondent Phil-Ville’s titles to the sixteen parcels of land under Article 476 of the Civil Code.
• Validity of Phil-Ville’s Titles: Whether the alleged technical defects and infirmities in TCT Nos. 4211, 5261, 35486, and 1368 to 1374 render Phil-Ville’s titles void and ineffective.
• NBI Forensic Chemistry Report: Whether the NBI finding on the age of the ink and paper of TCT No. 4211 renders it spurious.
• Innocent Transferee: Whether CLT was an innocent transferee of Lot 26.
• Factual Findings under Rule 45: Whether the factual findings of the Court of Appeals may be disturbed in a petition for review on certiorari under Rule 45.

• Cloud on Title: No. TCT No. T-177013 does not impose a cloud on Phil-Ville’s titles; under Article 476, both requisites were met because Phil-Ville had established its equitable title or interest and TCT No. T-177013 had been declared null and void in the Manotok resolutions.
• Validity of Phil-Ville’s Titles: No. The alleged technical defects did not render Phil-Ville’s titles void; the RTC and Court of Appeals factual findings, supported by the evidence, established the genuineness and validity of the titles from which Phil-Ville derived its claim.
• NBI Forensic Chemistry Report: No. The Court of Appeals did not err in not treating the NBI report as conclusive; the NBI and PNP findings were complementary, and the NBI age estimate allowed an allowance of plus five and ten years and even a possibility that the document could be seventy years old.
• Innocent Transferee: No. CLT was not an innocent transferee; its predecessor’s title carried an annotation subjecting it to verification by the LRC Verification Committee, and Dimson’s claim was conditioned on there being undisposed portions of Lot 26, which did not exist.
• Factual Findings under Rule 45: No. The petition for review under Rule 45 is limited to errors of law, and the factual findings of the Court of Appeals are binding and conclusive absent the exceptions in Baricuatro, Jr. vs. Court of Appeals, which were not present.

• Cloud on Title: Article 476 of the Civil Code allows an action to remove a cloud on title where an instrument, record, claim, encumbrance, or proceeding is apparently valid but is in truth invalid, ineffective, voidable, or unenforceable and may prejudice the title. In Phil-Ville Development and Housing Corporation vs. Bonifacio, the Court explained that two requisites must concur: the plaintiff must have a legal or equitable title or interest in the real property, and the deed, claim, encumbrance, or proceeding casting the cloud must be shown to be in fact invalid or inoperative despite its prima facie appearance of validity. The RTC and the Court of Appeals both concluded that Phil-Ville had a valid title to the sixteen parcels and that CLT’s title was invalid despite its prima facie appearance of validity. The Court found no cogent reason to reverse those findings, especially since the 2009 Manotok Resolution had already declared TCT No. T-177013 null and void. Thus, the cloud on Phil-Ville’s sixteen titles had been removed, and both requisites for quieting of title were met.
• Validity of Phil-Ville’s Titles: The alleged technical defects were rejected. The use of Spanish technical descriptions in TCT Nos. 4210 and 4211 was acceptable because agrimensor Fernando, who subdivided Lot 26, was more conversant in Spanish, and other titles and entries derived from OCT No. 994 were also in Spanish. The omission of the original survey date in succeeding titles was not the practice and did not render the titles defective. No rule required the subdivided portions to be designated as Lot 26-A, 26-B, and 26-C. The non-indication of the survey number did not lessen the validity of the titles, since approval by the Bureau of Lands was not required in 1918 under Section 44 of Act No. 496, and the technical descriptions were approved by the court when it approved the Escritura de Venta. The old titles and documents remained in the Register of Deeds of Pasig because Caloocan was formerly part of Rizal and not all titles were transferred upon the creation of Caloocan City. TCT Nos. 4210 and 4211, the Escritura de Venta, and supporting documents were more than 75 years old and were ancient documents under Rule 132, Sections 1 and 23, of the Revised Rules of Court. CLT also did not attack the Republic’s TCT Nos. 12836 to 12842; if those titles were valid, Phil-Ville’s derivative titles were likewise valid. Psd-21154 was supported by a certification and a blue print copy, and the survey plans approved by the Bureau of Lands and the LRC carried a presumption of regularity.
• NBI Forensic Chemistry Report: The Court of Appeals correctly observed that the NBI and PNP examinations used different techniques and were meant to complement each other. The NBI expert admitted that the estimation of the age of the ink and strokes had an allowance of plus five and ten years due to oxidation, and even admitted the possibility that the questioned document could be seventy years old. The NBI report therefore did not conclusively establish that TCT No. 4211 was prepared only in the 1940s. The Supreme Court found the alleged errors assigned by petitioner to be factual in nature and not borne out by the evidence on record.
• Innocent Transferee: The RTC found that when CLT acquired the land from Hipolito, Hipolito’s TCT No. R-17994 carried an annotation that it was subject to verification by the LRC Verification Committee on questionable titles, plans, decrees, and other documents pursuant to Ministry Opinion No. 239 dated November 4, 1982. Hipolito had acquired the land from Dimson, whose claim was based on a court order awarding him 25% of whatever remained undisposed of Lots 25-A, 26, 27, 28, and 29 in the estate of Concepcion Vidal. The LRC Verification Committee confirmed the disapproval of Hipolito’s subdivision plan and recommended the annulment of her TCT No. R-17994 on the ground that it duplicated TCT Nos. 4210 and 4211, and that nothing remained of Lot 26 to convey to Dimson, Hipolito, or CLT. Both Hipolito and CLT therefore took the title subject to conditions and were not innocent transferees. The Manotok resolutions likewise invalidated the Dimson and CLT titles.
• Factual Findings under Rule 45: The jurisdiction of the Supreme Court in a petition for review on certiorari under Rule 45 is limited to reviewing errors of law. Findings of fact of the Court of Appeals are deemed final, conclusive, and binding on the Supreme Court. The exceptions enumerated in Baricuatro, Jr. vs. Court of Appeals were not present. The alleged errors assigned by petitioner to the Court of Appeals were factual in nature and were not borne out by the evidence on record.

• Quieting of Title under Article 476 — An action to quiet title is a common law remedy for the removal of any cloud upon, doubt, or uncertainty affecting title to real property. The cloud consists of any instrument, record, claim, encumbrance, or proceeding that is apparently valid or effective but is in truth invalid, ineffective, voidable, or unenforceable and may be prejudicial to the title sought to be quieted. Two requisites must concur: the plaintiff or complainant has a legal or equitable title or interest in the real property subject of the action, and the deed, claim, encumbrance, or proceeding claimed to be casting cloud on the title must be shown to be in fact invalid or inoperative despite its prima facie appearance of validity or legal efficacy. In this case, Phil-Ville had a valid title, and CLT’s TCT No. T-177013 was invalid, so the cloud was removed.
• Spurious OCT No. 994 and the Maysilo Estate — There is only one OCT No. 994, and its true date of registration is May 3, 1917. Any title that traces its source to OCT No. 994 dated April 19, 1917 is void because that mother title is inexistent. The fact that the Dimson and CLT titles made specific reference to an OCT No. 994 dated April 19, 1917 casts doubt on their validity and is sufficient to invalidate the Dimson and CLT claims if singular reliance is placed on the dates appearing on their titles. The 2009 Manotok Resolution declared TCT No. T-177013 null and void.
• Finality of Court of Appeals Factual Findings — Findings of fact of the Court of Appeals are deemed final, conclusive, and binding on the Supreme Court. A petition for review on certiorari under Rule 45 is limited to reviewing errors of law. The exceptions to this rule, as enumerated in Baricuatro, Jr. vs. Court of Appeals, were not present in this case.
• Innocent Purchaser for Value — A purchaser cannot be considered an innocent transferee where the title carries an annotation subjecting it to verification by the LRC Verification Committee on questionable titles, plans, decrees, and other documents, or where the predecessor’s claim was conditioned on there being undisposed portions of the land. CLT took the title subject to such conditions and was not an innocent transferee.
• Ancient Documents — Documents more than 75 years old, produced from a custody in which they would naturally be found if genuine, need no other evidence of their execution and authenticity under Rule 132, Section 1, of the Revised Rules of Court. As public documents, they also need no further evidence of their validity, genuineness, and authenticity under Rule 132, Section 23. This applied to TCT Nos. 4210 and 4211, the Escritura de Venta, and supporting documents.
• Presumption of Regularity of Survey Plans — Survey plans approved by the Bureau of Lands and the Land Registration Commission carry a presumption of regularity and compliance with existing regulations. This applied to Psd-21154 and the succeeding plan LRC (Psd) 1828.

• "ARTICLE 476. Whenever there is a cloud on title to real property or any interest therein, by reason of any instrument, record, claim, encumbrance or proceeding which is apparently valid or effective but is in truth and in fact invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said title, an action may be brought to remove such cloud or to quiet the title." — This is the statutory basis for the action and defines when a cloud may be removed.
• "In order that an action for quieting of title may prosper, two requisites must concur: (1) the plaintiff or complainant has a legal or equitable title or interest in the real property subject of the action; and (2) the deed, claim, encumbrance, or proceeding claimed to be casting cloud on his title must be shown to be in fact invalid or inoperative despite its prima facie appearance of validity or legal efficacy." — This is the Court’s canonical formulation of the requisites, applied to find both requisites met.
• "Second. Any title that traces its source to OCT No. 994 dated 17 April 1917 is void, for such mother title is inexistent. The fact that the Dimson and CLT titles made specific reference to an OCT No. 994 dated 17 April 1917 casts doubt on the validity of such titles since they refer to an inexistent OCT. This error alone is, in fact, sufficient to invalidate the Dimson and CLT claims over the subject property if singular reliance is placed by them on the dates appearing on their respective titles." — This is the ratio from Manotok invalidating titles traced to the spurious OCT No. 994, including CLT’s.
• "In view of the foregoing disquisitions, invalidating the titles of DIMSON, the title of CLT should also be declared a nullity inasmuch as the nullity of the titles of DIMSON necessarily upended CLT’s propriety claims." — This directly declares CLT’s title a nullity, removing the cloud on Phil-Ville’s titles.

• Manotok Realty, Inc. vs. CLT Realty Development Corporation, 565 Phil. 59 (2007) and 601 Phil. 571 (2009) — Controlling en banc resolutions; established only one OCT No. 994 dated May 3, 1917; declared TCT No. T-177013 null and void.
• Phil-Ville Development and Housing Corporation vs. Bonifacio, G.R. No. 167391, June 8, 2011, 651 SCRA 327 — Cited for the nature and requisites of an action for quieting of title under Article 476.
• Baricuatro, Jr. vs. Court of Appeals, 382 Phil. 15 (2000) — Cited for the exceptions to the rule that factual findings of the Court of Appeals are binding and conclusive on the Supreme Court.
• Chacon Enterprises vs. Court of Appeals, 209 Phil. 634 (1983) — Cited for the general rule that findings of fact of the Court of Appeals are final, conclusive, and binding.
• Alfonso vs. Office of the President and Phil-Ville Development and Housing Corporation, 548 Phil. 615 (2007) — Cited to note that the former register of deeds of Caloocan was penalized for acquiescing to the change of the date of registration of OCT No. 994 from May 3, 1917 to April 19, 1917.

• Article 476, Civil Code — Basis for quieting of title; applied to find that Phil-Ville had a legal or equitable title and that CLT’s TCT No. T-177013 was invalid, thus removing the cloud.
• Section 44, Act No. 496 — Cited by the RTC for the subdivision of registered land and court approval; no Bureau of Lands approval was required in 1918.
• Rule 132, Section 1, Revised Rules of Court — Ancient documents; TCT Nos. 4210 and 4211, the Escritura de Venta, and supporting documents more than 75 years old needed no other evidence of execution and authenticity.
• Rule 132, Section 23, Revised Rules of Court — Public documents; no further evidence of validity, genuineness, and authenticity was necessary.
• Rule 45, Rules of Court — Petition for review on certiorari is limited to errors of law; basis for not disturbing the factual findings of the Court of Appeals.
• Section 13, Article VIII, 1987 Constitution — Certification by the Chief Justice that the conclusions in the Decision had been reached in consultation before the case was assigned to the writer of the opinion.

Chief Justice Maria Lourdes P.A. Sereno (Chairperson); Associate Justices Lucas P. Bersamin, Jose Portugal Perez, and Estela M. Perlas-Bernabe.