G.R. No. 74470 March 8, 1989 NATIONAL GRAINS AUTHORITY and WILLLAM CABAL, petitioners vs.

THE INTERMEDIATE APPELLATE COURT and LEON SORIANO, respondents.

MEDIALDEA, J.: This is a petition for review of the decision (pp. 9-21, Rollo) of the Intermediate Appellate Court (now Court of Appeals) dated December 23, 1985 in A.C. G.R. CV No. 03812 entitled, "Leon Soriano, Plaintiff- Appellee versus National Grains Authority and William Cabal, Defendants Appellants", which affirmed the decision of the Court of First Instance of Cagayan, in Civil Case No. 2754 and its resolution (p. 28, Rollo) dated April 17, 1986 which denied the Motion for Reconsideration filed therein. The antecedent facts of the instant case are as follows: Petitioner National Grains Authority (now National Food Authority, NFA for short) is a government agency created under Presidential Decree No. 4. One of its incidental functions is the buying of palay grains from qualified farmers. On August 23, 1979, private respondent Leon Soriano offered to sell palay grains to the NFA, through William Cabal, the Provincial Manager of NFA stationed at Tuguegarao, Cagayan. He submitted the documents required by the NFA for pre-qualifying as a seller, namely: (1) Farmer's Information Sheet accomplished by Soriano and certified by a Bureau of Agricultural Extension (BAEX) technician, Napoleon Callangan, (2) Xerox copies of four (4) tax declarations of the riceland leased to him and copies of the lease contract between him and Judge Concepcion Salud, and (3) his Residence Tax Certificate. Private respondent Soriano's documents were processed and accordingly, he was given a quota of 2,640 cavans of palay. The quota noted in the Farmer's Information Sheet represented the maximum number of cavans of palay that Soriano may sell to the NFA. In the afternoon of August 23, 1979 and on the following day, August 24, 1979, Soriano delivered 630 cavans of palay. The palay delivered during these two days were not rebagged, classified and weighed. when Soriano demanded payment of the 630 cavans of palay, he was informed that its payment will be held in abeyance since Mr. Cabal was still investigating on an information he received that Soriano was not a bona tide farmer and the palay delivered by him was not produced from his farmland but was taken from the warehouse of a rice trader, Ben de Guzman. On August 28, 1979, Cabal wrote Soriano advising him to withdraw from the NFA warehouse the 630 cavans Soriano delivered stating that NFA cannot legally accept the said delivery on the basis of the subsequent certification of the BAEX technician, Napoleon Callangan that Soriano is not a bona fide farmer.

Instead of withdrawing the 630 cavans of palay, private respondent Soriano insisted that the palay grains delivered be paid. He then filed a complaint for specific performance and/or collection of money with damages on November 2, 1979, against the National Food Authority and Mr. William Cabal, Provincial Manager of NFA with the Court of First Instance of Tuguegarao, and docketed as Civil Case No. 2754. Meanwhile, by agreement of the parties and upon order of the trial court, the 630 cavans of palay in question were withdrawn from the warehouse of NFA. An inventory was made by the sheriff as representative of the Court, a representative of Soriano and a representative of NFA (p. 13, Rollo). On September 30, 1982, the trial court rendered judgment ordering petitioner National Food Authority, its officers and agents to pay respondent Soriano (as plaintiff in Civil Case No. 2754) the amount of P 47,250.00 representing the unpaid price of the 630 cavans of palay plus legal interest thereof (p. 1-2, CA Decision). The dispositive portion reads as follows: WHEREFORE, the Court renders judgment in favor of the plaintiff and against the defendants National Grains Authority, and William Cabal and hereby orders: 1. The National Grains Authority, now the National Food Authority, its officers and agents, and Mr. William Cabal, the Provincial Manager of the National Grains Authority at the time of the filing of this case, assigned at Tuguegarao, Cagayan, whomsoever is his successors, to pay to the plaintiff Leon T. Soriano, the amount of P47,250.00, representing the unpaid price of the palay deliveries made by the plaintiff to the defendants consisting of 630 cavans at the rate Pl.50 per kilo of 50 kilos per cavan of palay; 2. That the defendants National Grains Authority, now National Food Authority, its officer and/or agents, and Mr. William Cabal, the Provincial Manager of the National Grains Authority, at the time of the filing of this case assigned at Tuguegarao, Cagayan or whomsoever is his successors, are likewise ordered to pay the plaintiff Leon T. Soriano, the legal interest at the rate of TWELVE (12%) percent per annum, of the amount of P 47,250.00 from the filing of the complaint on November 20, 1979, up to the final payment of the price of P 47,250.00; 3. That the defendants National Grains Authority, now National Food Authority, or their agents and duly authorized representatives can now withdraw the total number of bags (630 bags with an excess of 13 bags) now on deposit in the bonded warehouse of Eng. Ben de Guzman at Tuguegarao, Cagayan pursuant to the order of this court, and as appearing in the written inventory dated October 10, 1980, (Exhibit F for the plaintiff and Exhibit 20 for the defendants) upon payment of the price

of P 47,250.00 and TWELVE PERCENT (12%) legal interest to the plaintiff, 4. That the counterclaim of the defendants is hereby dismissed; 5. That there is no pronouncement as to the award of moral and exemplary damages and attorney's fees; and 6. That there is no pronouncement as to costs. SO ORDERED (pp. 9-10, Rollo) Petitioners' motion for reconsideration of the decision was denied on December 6, 1982. Petitioners' appealed the trial court's decision to the Intermediate Appellate Court. In a decision promulgated on December 23, 1986 (pp. 9-21, Rollo) the then Intermediate Appellate Court upheld the findings of the trial court and affirmed the decision ordering NFA and its officers to pay Soriano the price of the 630 cavans of rice plus interest. Petitioners' motion for reconsideration of the appellate court's decision was denied in a resolution dated April 17, 1986 (p. 28, Rollo). Hence, this petition for review filed by the National Food Authority and Mr. William Cabal on May 15, 1986 assailing the decision of the Intermediate Appellate Court on the sole issue of whether or not there was a contract of sale in the case at bar. Petitioners contend that the 630 cavans of palay delivered by Soriano on August 23, 1979 was made only for purposes of having it offered for sale. Further, petitioners stated that the procedure then prevailing in matters of palay procurement from qualified farmers were: firstly, there is a rebagging wherein the palay is transferred from a private sack of a farmer to the NFA sack; secondly, after the rebagging has been undertaken, classification of the palay is made to determine its variety; thirdly, after the determination of its variety and convinced that it passed the quality standard, the same will be weighed to determine the number of kilos; and finally, it will be piled inside the warehouse after the preparation of the Warehouse Stock Receipt (WSP) indicating therein the number of kilos, the variety and the number of bags. Under this procedure, rebagging is the initial operative act signifying acceptance, and acceptance will be considered complete only after the preparation of the Warehouse Stock Receipt (WSR). When the 630 cavans of palay were brought by Soriano to the Carig warehouse of NFA they were only offered for sale. Since the same were not rebagged, classified and weighed in accordance with the palay procurement program of NFA, there was no acceptance of the offer which, to petitioners' mind is a clear case of solicitation or an unaccepted offer to sell. The petition is not impressed with merit.

Article 1458 of the Civil Code of the Philippines defines sale as a contract whereby one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing, and the other party to pay therefore a price certain in money or its equivalent. A contract, on the other hand, is a meeting of minds between two (2) persons whereby one binds himself, with respect to the other, to give something or to render some service (Art. 1305, Civil Code of the Philippines). The essential requisites of contracts are: (1) consent of the contracting parties, (2) object certain which is the subject matter of the contract, and (3) cause of the obligation which is established (Art. 1318, Civil Code of the Philippines. In the case at bar, Soriano initially offered to sell palay grains produced in his farmland to NFA. When the latter accepted the offer by noting in Soriano's Farmer's Information Sheet a quota of 2,640 cavans, there was already a meeting of the minds between the parties. The object of the contract, being the palay grains produced in Soriano's farmland and the NFA was to pay the same depending upon its quality. The fact that the exact number of cavans of palay to be delivered has not been determined does not affect the perfection of the contract. Article 1349 of the New Civil Code provides: ". . .. The fact that the quantity is not determinate shall not be an obstacle to the existence of the contract, provided it is possible to determine the same, without the need of a new contract between the parties." In this case, there was no need for NFA and Soriano to enter into a new contract to determine the exact number of cavans of palay to be sold. Soriano can deliver so much of his produce as long as it does not exceed 2,640 cavans. In its memorandum (pp. 66-71, Rollo) dated December 4, 1986, petitioners further contend that there was no contract of sale because of the absence of an essential requisite in contracts, namely, consent. It cited Section 1319 of the Civil Code which states: "Consent is manifested by the meeting of the offer and the acceptance of the thing and the cause which are to constitute the contract. ... " Following this line, petitioners contend that there was no consent because there was no acceptance of the 630 cavans of palay in question. The above contention of petitioner is not correct Sale is a consensual contract, " ... , there is perfection when there is consent upon the subject matter and price, even if neither is delivered." (Obana vs. C.A., L-36249, March 29, 1985, 135 SCRA 557, 560) This is provided by Article 1475 of the Civil Code which states: Art. 1475. The contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price. xxx The acceptance referred to which determines consent is the acceptance of the offer of one party by the other and not of the goods delivered as contended by petitioners.

From the moment the contract of sale is perfected, it is incumbent upon the parties to comply with their mutual obligations or "the parties may reciprocally demand performance" thereof. (Article 1475, Civil Code, 2nd par.). The reason why NFA initially refused acceptance of the 630 cavans of palay delivered by Soriano is that it (NFA) cannot legally accept the said delivery because Soriano is allegedly not a bona fide farmer. The trial court and the appellate court found that Soriano was a bona fide farmer and therefore, he was qualified to sell palay grains to NFA. Both courts likewise agree that NFA's refusal to accept was without just cause. The above factual findings which are supported by the record should not be disturbed on appeal. ACCORDINGLY, the instant petition for review is DISMISSED. The assailed decision of the then Intermediate Appellate Court (now Court of Appeals) is affirmed. No costs. SO ORDERED.

G.R. No. 102881 December 7, 1992 TOYOTA MOTOR PHILIPPINES CORPORATION, petitioner, vs. THE COURT OF APPEALS, HON. FERNANDO V. GOROSPE, JR. and SUN VALLEY MANUFACTURING & DEVELOPMENT CORPORATION, respondents.

GUTIERREZ, JR., J.: This case involves a boundary dispute between Toyota Motor Phil. Corporation (Toyota) and Sun Valley Manufacturing and Development Corporation (Sun Valley). Both Toyota and Sun Valley are the registered owners of two (2) adjoining parcels of land situated in La Huerta, Paraaque, Metro Manila which they purchased from the Asset Privatization Trust (APT). The properties in question formerly belonged to Delta Motors Corporation (DMC). They were foreclosed by the Philippine National Bank (PNB) and later transferred to the national government through the APT for disposition. APT then proceeded to classify the DMC properties according to the existing improvements, i.e., buildings, driveways, parking areas, perimeter fence, walls and gates and the land on which the improvements stood. The entire DMC property is called GC III-Delta Motors Corporation, divided into Delta I, Delta II, and Delta III. Further subdivisions for the separate catalogues were made for each division e.g. Delta I into Lots 1, 2 and 3. After this classification, APT parcelled out and catalogued the properties for bidding and sale. Part of the duly parcelled Delta I property (Lot 2) was sold to Toyota through public bidding on May 12, 1988 for the amount of P95,385,000.00. After its purchase, Toyota constructed a concrete hollow block (CHB) perimeter fence around its alleged property. On October 5, 1990, another part of the parcelled Delta I (Lot 1) covering an area of 55,236 square meters was purchased by Sun Valley from APT for the bid price of P124,349,767.00. Relying upon the title description of its property and the surveys it had commissioned, Sun Valley claimed that Toyota's perimeter fence overlaps Sun Valley's property along corners 11 to 15 by 322 square meters and corners 19 to 1 by 401 square meters for a total of 723 square meters. (Rollo, p. 841) Negotiations between the two (2) corporations for a possible settlement of the dispute bogged down. Court battles ensued, grounded on purely procedural issues. In pursuing the resolution of the dispute, both Toyota and Sun Valley opted to file separate actions. Much of the complications that arose and are now before us can be traced to the two

separate cases pursued by both parties. There are other cases arising from the same dispute but which are not before us. Culled from the records, these are the antecedents of the two cases which transpired below.

TOYOTA CASE (Civil Case No. 91-2504) On September 11, 1991, Toyota filed a case against APT and Sun Valley docketed as Civil Case No. 91-2504 with the Regional Trial Court of Makati, Branch 146 presided by Judge Salvador Tensuan. The complaint was for the reformation of the Deed of Sale executed between Toyota and APT. Toyota alleges that the instrument failed to reflect the true intention of the parties, as evidenced by the failure of the title to include the 723 square meters strip of land. Toyota alleges that the discrepancy came about because of the serious flaw in the classification/cataloguing of properties bidded out for sale by APT. Toyota was made to understand that included in its perimeter fence is the disputed strip of land. Thus, Toyota sought the resurvey of the property to correct this error in the title. Sun Valley was impleaded considering that it purchased the adjoining land whose title allegedly included the 723 square meters property. On September 11, 1991, upon Toyota's application, Judge Tensuan issued a temporary restraining order (TRO) enjoining Sun Valley and APT from any act of destruction and removal of Toyota's walls and structures. Sun Valley and APT were respectively served summons on the following day. On September 16, 1991, Sun Valley filed a motion to dismiss, on the ground that the Toyota complaint failed to state a cause of action against it (1) since it was not a party to the contract of the deed of sale between Toyota and APT, and (2) the complaint was in effect a collateral attack on its title. On September 27, 1991, Judge Tensuan initially denied Toyota's application for preliminary injunction on the finding that there was no evidence of any threatened destruction, removal or dispossession of Toyota's property. On October 10, 1991, Judge Tensuan denied Sun Valley's motion to dismiss. Both Toyota and Sun Valley filed their respective motions for reconsideration. Toyota moved to reconsider the denial of its injunctive application while Sun Valley moved to reconsider the denial of its motion to dismiss. On October 30, 1991, APT filed its answer with affirmative defenses alleging that the complaint must be dismissed on the ground that Toyota and APT should first have

resorted to arbitration as provided in Toyota's deed of sale with APT. On December 4, 1991, Toyota filed a motion alleging that Sun Valley's long threatened destruction and removal of Toyota's walls and structures were actually being implemented to which Judge Tensuan issued another TRO enjoining acts of destruction and removal of the perimeter walls and structures on the contested area. Consequently, on December 17, 1991, Judge Tensuan reconsidered his earlier denial of Toyota's application for injunction and granted a writ of preliminary injunction enjoining Sun Valley from proceeding with its threatened destruction and removal of Toyota's walls and directed Sun Valley to restore the premises to the status quo ante. On December 11, 1991, Judge Tensuan denied Sun Valley's motion for reconsideration of its motion to dismiss. Sun Valley elevated this denial to the Court of Appeals. The case was docketed as CA-G.R. Sp. No. 26942 and raffled to the Eleventh (11th) Division. Judge Tensuan's jurisdiction to act considering the defense of prematurity of action for failure to arbitrate the validity of the TRO issued on December 4, 1991 and the order granting injunctive reliefs were challenged in a petition for certiorari filed with the Court of Appeals and docketed as CA-G.R. No. 26813, assigned to the Second (2nd) Division.

SUN VALLEY CASE (Civil Case No. 91-2550) On September 16, 1991, Sun Valley, on the other hand, filed a case for recovery of possession of the disputed 723 square meters boundary with the Regional Trial Court (RTC) Makati, Branch 61 presided by Judge Fernando Gorospe, Jr. On the same day, Judge Gorospe issued a TRO enjoining Toyota from committing further acts of dispossession against Sun Valley. On September 19, 1991, Toyota moved to lift the TRO and opposed Sun Valley's application for injunction. On September 23, 1991, Toyota filed a motion to dismiss on the ground that the RTC has no jurisdiction over the case since the complaint was a simple ejectment case cognizable by the Metropolitan Trial Court (MTC). The motion to dismiss was set for hearing on September 27, 1991. On September 27, 1991, Sun Valley filed an amended complaint to incorporate an allegation that Toyota's possession of the alleged disputed area began in September, 1988 when Toyota purchased the property. Ruling that the amendment was a matter of right, Judge Gorospe admitted the amended complaint. Toyota adopted its motion to dismiss the original complaint as its motion to

dismiss the amended complaint. After the arguments to Toyota's motion to dismiss, the same was submitted for resolution. Sun Valley's application for prohibitory and mandatory injunction contained in its complaint was set for hearing on October 1, 1991. Protesting the admission of the amended complaint, Toyota went to the Court of Appeals, on certiorari on October 1, 1991. This petition was docketed as CA-G.R. No. 26152 raffled to the Tenth (10th) Division. Toyota was later prompted to file two supplemental petitions, before the Court of Appeals as a result of Judge Gorospe's alleged hasty issuance of four (4) Orders, all dated October 1, 1992. These are: (1) First supplemental petition dated October 4, 1991 which sought to nullify the Order denying Toyota's motion to dismiss the amended complaint. (2) Second supplemental petition dated October 23, 1991 which sought the nullification of the orders granting Sun Valley's application for preliminary prohibitory and mandatory injunction and denying Toyota's motion to cross-examine Sun Valley's witnesses on the latter's injunction application. On November 27, 1991, respondent Court of Appeals' Tenth Division promulgated its questioned decision which is primarily the subject matter of the present petition before us. The respondent court denied due course to the Toyota petition on the finding that the amendment of Sun Valley's complaint was a valid one as Sun Valley's action was not for unlawful detainer but an accion publiciana. Furthermore, the supplemental petitions filed by Toyota assailing the prohibitory and mandatory injunctive writ were not ruled upon as they were expunged from the records because of Toyota's failure to attach a motion to admit these supplemental petitions. Consequently, Toyota filed the present petition for certiorari on December 9, 1991. Earlier, upon an ex-parte motion to clarify filed by Sun Valley on October 25, 1991, Judge Gorospe issued another order dated December 2, 1991 which followed Sun Valley to break open and demolish a portion of the Toyota perimeter walls, and eventually to secure possession of the disputed area. Toyota was constrained to come to this Court for relief. On December 11, 1991, we issued a TRO enjoining the implementation of Judge Gorospe's injunction and break-open orders dated October 1, 1991 and December 2, 1991 respectively as well as further proceedings in Civil Case No. 91-2550. Meanwhile, the Court of Appeals' Second Division issued a TRO ordering respondent Judge Tensuan and all other persons acting in his behalf to cease and desist from further proceeding with Civil Case No. 91-2504 and from enforcing the Order dated

December 17, 1991 and the writ of preliminary mandatory injunction dated December 19, 1991. This prompted Toyota to file a motion to quash the TRO and file a supplemental petition with this Court impleading the Court of Appeals' Second Division. On January 13, 1992, we admitted the supplemental petition. On January 10, 1992, the Court of Appeals' Second Division issued the Resolution granting Sun Valley's application for preliminary injunction which enjoined Judge Tensuan in the Toyota case from implementing his injunction Order and from proceeding with the case before him (Civil Case No. 91-2504). Thus, Toyota filed its Second Supplemental Petition with this Court challenging the validity of the injunction writ issued by the Court of Appeals' Second Division. This Second Supplemental Petition was admitted on February 10, 1992. On February 10, 1992, we gave due course to Toyota's petition. Subsequently, through a manifestation dated April 29, 1992, Toyota informed the Court that on April 15, 1992, the Court of Appeals' 11th Division (Sun Valley case) rendered a decision dismissing the case before it for lack of merit. The Court of Appeals ruled that the Toyota complaint was not a collateral attack on Sun Valley's title and that misjoinder of parties is not a ground for dismissal. A subsequent motion for reconsideration was denied in a resolution dated August 10, 1992. In the instant petition Toyota raises the following issues, to wit: 1. The Court of Appeals' 10th Division gravely abused its discretion when it ignored or pretended to ignore Toyota's protests against Judge Gorospe's injunction orders. 2. Sun Valley is guilty of forum-shopping and Judge Gorospe of case-grabbing. Sun Valley, on the other hand raises the following: 1. Whether or not the petitioner availed of the proper mode of elevating the case to this Court. 2. Whether or not the Court of Appeals committed grave abuse of discretion in refusing to act upon petitioner's supplemental petitions for certiorari. 3. Whether or not the complaint filed in the court below is an accion publiciana which is within the jurisdiction of the RTC.

4. Whether or not Judge Salvador S. Tensuan had jurisdiction to take cognizance of Civil Case No. 2504 for reformation of instrument. 5. Whether or not respondent Judge Gorospe, Jr. committed grave abuse of discretion in granting private respondent's application for a writ of preliminary prohibitory/mandatory injunction. 6. Whether or not Judge Tensuan committed grave abuse of discretion in issuing the writ of mandatory injunction dated December 19, 1991. This case is far from settlement on the merits. Through legal maneuverings, the parties have succeeded in muddling up the vital issues of the case and getting the lower courts embroiled in numerous appeals over technicalities. As it is now, there are three appellate decisions/resolutions before us for review and conflicting orders issued by lower courts as a result of the separate cases filed by the parties. As in the case of Consolidated Bank and Trust Corp. v. Court of Appeal,s 193 SCRA 158 [1991], the Court is explicit in stating that: xxx xxx xxx Where there are conflicting but inextricably interconnected issues in one and the same complicated case, it is best that these be resolved in one integrated proceeding where an overall picture of the entirety of the case can be presented and examined. Piecemeal determinations by several trial courts on segments of the basic issue and disconnected appeals to different Divisions of the Court of Appeals resulting in separate decisions each dealing with only part of the problem are discouraged. Needless multiplicity of suits is something which is frowned upon. xxx xxx xxx Amid the clutter of extraneous materials which have certainly bloated the records of this case, we find only two (2) issues vital to the disposition of the petition: first, is the matter of jurisdiction, who as between Judge Tensuan or Judge Gorospe has jurisdiction over the dispute; and second, who as between the parties has the rightful possession of the land. Anent the issue on jurisdiction, we examine the two actions filed by the parties. Toyota filed an action for reformation on September 11, 1991, before Judge Tensuan alleging that the true intentions of the parties were not expressed in the instrument (Art. 1359 Civil Code). The instrument sought to be reformed is the deed of sale executed by APT in favor of Toyota. Toyota alleges that there was a mistake in the designation of the real properties subject matter of the contract. Sun Valley was impleaded in order to obtain complete relief since it was the owner of the adjacent lot.

Sun Valley, however, argues that the complaint for reformation states no cause of action against it since an action for reformation is basically one strictly between the parties to the contract itself. Third persons who are not parties to the contract cannot and should not be involved. Thus, Sun Valley contends that it should not have been impleaded as a defendant. The Court of Appeals' 11th Division, in its decision promulgated on April 15, 1992 where the denial of Sun Valley's motion to dismiss was sustained, correctly ruled that misjoinder of parties is not a ground for dismissal. American jurisprudence from where provisions on reformation of instruments were taken discloses that suits to reform written instruments are subject to the general rule in equity that all persons interested in the subject matter of the litigation, whether it is a legal or an equitable interest should be made parties, so that the court may settle all their rights at once and thus prevent the necessity of a multiplicity of suits (Bevis Construction Co. v. Grace [Fla App] 115 So 2d 84; Green v. Stone, 54 N.J.E. 387, 34 A 1099). As a general rule, therefore, all persons to be affected by the proposed reformation must be made parties (American Fidelity & Casualty Co. v. Elder, 189 Ga 229, 5 SE 2d 668; Kemp v. Funderburk, 224 NC 353, 30 SE 2d 155). In an action to reform a deed, all parties claiming an interest in the land or any part thereof purportedly conveyed by the instrument sought to be reformed, and whose interests will be affected by the reformation of the instrument are necessary parties to the action (Kemp v. Funderburk, 224 NC 353, 30 SE 2d 155). From the foregoing jurisprudence, it would appear that Toyota was correct in impleading Sun Valley as party defendant. However, these principles are not applicable under the particular circumstances of this case. Under the facts of the present case, Toyota's action for reformation is dismissible as against Sun Valley. Attention must first be brought to the fact that the contract of sale executed between APT and Toyota provides an arbitration clause which states that: xxx xxx xxx 5. In case of disagreement or conflict arising out of this Contract, the parties hereby undertake to submit the matter for determination by a committee of experts, acting as arbitrators, the composition of which shall be as follows: a) One member to be appointed by the VENDOR; b) One member to be appointed by the VENDEE; c) One member, who shall be a lawyer, to be appointed by both of the aforesaid parties;

The members of the Arbitration Committee shall be appointed not later than three (3) working days from receipt of a written notice from either or both parties. The Arbitration Committee shall convene not later than three (3) weeks after all its members have been appointed and proceed with the arbitration of the dispute within three (3) calendar months counted therefrom. By written mutual agreement by the parties hereto, such time limit for the arbitration may be extended for another calendar month. The decision of the Arbitration Committee by majority vote of at least two (2) members shall be final and binding upon both the VENDOR and the VENDEE; (Rollo, pp. 816-817) xxx xxx xxx The contention that the arbitration clause has become disfunctional because of the presence of third parties is untenable. Contracts are respected as the law between the contracting parties (Mercantile Ins. Co. Inc. v. Felipe Ysmael, Jr. & Co., Inc., 169 SCRA 66 [1989]). As such, the parties are thereby expected to abide with good faith in their contractual commitments (Quillan v. CA, 169 SCRA 279 [1989]). Toyota is therefore bound to respect the provisions of the contract it entered into with APT. Toyota filed an action for reformation of its contract with APT, the purpose of which is to look into the real intentions/agreement of the parties to the contract and to determine if there was really a mistake in the designation of the boundaries of the property as alleged by Toyota. Such questions can only be answered by the parties to the contract themselves. This is a controversy which clearly arose from the contract entered into by APT and Toyota. Inasmuch as this concerns more importantly the parties APT and Toyota themselves, the arbitration committee is therefore the proper and convenient forum to settle the matter as clearly provided in the deed of sale. Having been apprised of the presence of the arbitration clause in the motion to dismiss filed by APT, Judge Tensuan should have at least suspended the proceedings and directed the parties to settle their dispute by arbitration (Bengson v. Chan, 78 SCRA 113 [1977], Sec. 7, RA 876). Judge Tensuan should have not taken cognizance of the case. But the more apparent reason which warrants the dismissal of the action as against Sun Valley is the fact that the complaint for reformation amounts to a collateral attack on Sun Valley's title, contrary to the finding of the Court of Appeals' 11th Division. It is disputed that Sun Valley has a Torrens title registered in its name by virtue of its purchase of the land from APT.

Toyota contends that the 723 square meters strip of land which it understood to be included in its purchase from APT was erroneously included in Sun Valley's title. This is the reason why reformation was sought to correct the mistake. Well-settled is the rule that a certificate of title can not be altered, modified, or cancelled except in a direct proceeding in accordance with law (Section 48, P.D. No. 1529). In the case of Domingo v. Santos Ongsiako, Lim y Sia (55 Phil. 361 [1930]), the Court held that: . . . The fact should not be overlooked that we are here confronted with what is really a collateral attack upon a Torrens title. The circumstance that the action was directly brought to recover a parcel of land does not alter the truth that the proceeding involves a collateral attack upon a Torrens title, because as we have found, the land in controversy lies within the boundaries determined by that title. The Land Registration Law defines the methods under which a wrongful adjudication of title to land under the Torrens system may be corrected . . . While reformation may often be had to correct mistakes in defining the boundary of lands conveyed so as to identify the lands, it may not be used to pass other lands from those intended to be bought and sold, notwithstanding a mistake in pointing out the lines, since reformation under these circumstances would be inequitable and unjust. (McCay v. Jenkins, 244 Ala 650, 15 So 2d 409, 149 ALR 746) Assuming that Toyota is afforded the relief prayed for in the Tensuan court, the latter can not validly order the contested portion to be taken out from the Sun Valley's TCT and award it in favor of Toyota. An action for reformation is in personam, not in rem (Cohen v. Hellman Commercial Trust & Savings Bank, 133 Cal App 758, 24 P2d 960; Edwards v. New York Life Ins. Co. 173 Tenn 102, 114 SW 2d 808) even when real estate is involved (Agurs v. Holt, 232 La 1026, 95 So 2d 644; Vallee v. Vallee (La App) 180 So 2d 570). It is merely an equitable relief granted to the parties where through mistake or fraud, the instrument failed to express the real agreement or intention of the parties. While it is a recognized remedy afforded by courts of equity it may not be applied if it is contrary to well-settled principles or rules. It is a long standing principle that equity follows the law. It is applied in the abscence of and never against statutory law (Zabat v. Court of Appeals, 142 SCRA 587 [1986]). Courts are bound by rules of law and have no arbitrary discretion to disregard them. (See Arsenal v. Intermediate Appellate Court, 143 SCRA 40 [1986].) Courts of equity must proceed with utmost caution especially when rights of third parties may intervene. Thus in the instant case, vis-a-vis well-settled principles or rules in land registration, the equitable relief of reformation may not come into play in order to transfer or appropriate a piece of land that one claims to own but which is titled in the name of a third party.

On the other hand, Sun Valley filed an action for reconveyance against Toyota to recover possession of the strip of land encroached upon and occupied by the latter. What Sun Valley seeks in its complaint is the recovery of possession de jure and not merely possession de facto. Toyota moved to dismiss on the assumption that the complaint was one for unlawful detainer cognizable by the MTC. We do not find any reversible error in the decision of the Court of Appeals' 10th Division where it upheld Judge Gorospe's order denying Toyota's motion to dismiss. An amendment to a complaint before a responsive pleading is filed, is a matter of right (Rule 10, Sec. 2). Whether or not the complaint was amended, Sun Valley's complaint was one for accion publiciana cognizable by the RTC. Its right over the land is premised on the certificate of title registered in its name after it had purchased said land from APT. As the registered owner it had the right of possession of said land illegally occupied by another (Ybaez v. IAC, 194 SCRA 743 [1991]). The case ofBanayos v. Susana Realty, Inc. (71 SCRA 557 [1976]) is quite instructive: xxx xxx xxx We deem it advisable, at this point, to reiterate the essential differences between three kinds of actions for the recovery of possession of real property, namely: (1) the summary action for forcible entry and unlawful detainer; (2) the accion publiciana; and (3) the accion de reivindicacion. The action for forcible entry may be brought where dispossession of real property had taken place by any of the means provided for in Section 1 of Rule 70 of the Revised Rules of Court, and in the case of unlawful detainer, where the possession is withheld after the expiration or termination of the right to hold possession, by virtue of any contract express or implied. These two actions must be filed within one (1) year after such unlawful deprivation or withholding of possession with the municipal or city court. These actions in their essence are mere quieting processes by virtue of which a party in possession of land may not be, by force, dispossessed of that land, the law restoring to him such possession in a summary manner, until the right of ownership can be tried in due course of law. They are, therefore, intended to provide an expeditious means of protecting actual possession or right to possession of property. The aforesaid Rule 70 does not, however, cover all of the cases of dispossession of lands. Thus, "whenever the owner is dispossessed by any other means than those mentioned he may maintain his action in the Court of First Instance, and it is not necessary for him to wait until the expiration of twelve months before commencing an action to be repossessed or declared to be owner of land." (Gumiran v. Gumiran, 21 Phil. 174, 179. Cf. Medina, et al. v. Valdellon, 63 SCRA 278) Courts of First Instance have jurisdiction over actions to recover possession of real property illegally detained, together with rents due and damages, even though one (1) year has not expired from the beginning of such illegal

detention, provided the question of ownership of such property is also involved. In other words, if the party illegal dispossessed desires to raise the question of illegal dispossession as well as that of the ownership over the property, he may commence such action in the Court of First Instance immediately or at any time after such illegal dispossession. If he decides to raise the question of illegal dispossession only, and the action is filed more than one (1) year after such deprivation or withholding of possession, then the Court of First Instance will have original jurisdiction over the case. (Bishop of Cebu v. Mangoron, 6 Phil. 286; Catholic Church v. Tarlac and Victoria, 9 Phil. 450; Ledesma v. Marcos, 9 Phil. 618; Medina, et al. v. Valdellon, supra) The former is an accion de reivindicacion which seeks the recovery of ownership as well as possession, while the latter refers to an accion publiciana, which is the recovery of the right to possess and is a plenary action in an ordinary proceeding in the Court of First Instance. (Sec. 88, Rep. Act No. 296; Rule 70, Rules of Court; Manila Railroad Co. v. Attorney General, 20 Phil. 523; Lim Cay v. Del, 55 Phil. 692; Central Azucarera de Tarlac v. De Leon, 56 Phil. 169; Navarro v. Aguila, 66 Phil. 604; Luna v. Carandang, 26 SCRA 306; Medina, et al. v. Valdellon, supra; Pasaqui, et al. v. Villablanca, et al.,supra). With the finding that Toyota's action for reformation is dismissable as it is in effect a collateral attack on Sun Valley's title, Sun Valley's action for recovery of possession filed before Judge Gorospe now stands to be the proper forum where the following dispute may be tried or heard. We now come to the issue as to which of the parties has a legal right over the property to warrant the issuance of the preliminary mandatory/prohibitory injunction. In actions involving realty, preliminary injunction will lie only after the plaintiff has fully established his title or right thereto by a proper action for the purpose. To authorize a temporary injunction, the complainant must make out at least a prima facie showing of a right to the final relief. Preliminary injunction will not issue to protect a right not in esse (Buayan Cattle Co. Inc. v. Quintillan, 128 SCRA 286-287 [1984]; Ortigas & Company, Limited Partnership v. Ruiz, 148 SCRA 326 [1987]). Two requisites are necessary if a preliminary injunction is to issue, namely, the existence of the right to be protected, and the facts against which the injunction is to be directed, are violative of said right. In particular, for a writ of preliminary injunction to issue, the existence of the right and the violation must appear in the allegations of the complaint and an injunction is proper also when the plaintiff appears to be entitled to the relief demanded in his complaint. Furthermore, the complaint for injunctive relief must be construed strictly against the pleader (Ortigas & Company, Limited Partnership v. Ruiz, supra).

In the instant case the existence of a "clear positive right" especially calling for judicial protection has been shown by Sun Valley. Toyota's claim over the disputed property is anchored on the fact of its purchase of the property from APT, that from the circumstances of the purchase and the intention of the parties, the property including the disputed area was sold to it. Sun Valley, on the other hand has TCT No. 49019 of the Registry of Deeds of Paraaque embracing the aforesaid property in its name, having been validly acquired also from APT by virtue of a Deed of Sale executed in its favor on December 5, 1990 (Rollo, pp. 823-825; 826-827). There are other circumstances in the case which militate against Toyota's claim for legal possession over the disputed area. The fact that Toyota has filed a suit for reformation seeking the inclusion of the 723 square meters strip of land is sufficient to deduce that it is not entitled to take over the piece of property it now attempts to appropriate for itself. As early as September, 1988 prior to the construction of the perimeter fence, Toyota was already aware of the discrepancies in the property's description in the title and the actual survey. The letter of its surveyor company, Summa Kumagai thus reveals: 09 September, 1988 TOYOTA MOTOR PHILIPPINES CORPORATION 10th Floor, Metrobank Plaza Sen. Gil J. Puyat Ave. Makati, Metro Manila ATTENTION: MR. FLORENCIO JURADO Finance Officer SUBJECT: PHASE I RENOVATION WORK PERIMETER FENCE GENTLEMEN: This is in connection with the construction of the Perimeter Fence for the Toyota Motor Plant Facilities which to this date we have not started yet due to the following reasons:

1. Lack of fencing permit which can only be applied to and issued by the Paraaque Building Official upon receipt of the transfer certificate to title and tax declaration. 2. Although the Building Official has verbally instructed us to proceed with the renovation work and construction of fence, we could not execute the fencing work due to discrepancies on the consolidation plan and the existing property monuments. These discrepancies was (sic) confirmed with the representatives of the Geodetic Engineer. Kindly expedite the immediate confirmation with the Geodetic Engineer on the final descriptions of the property lines. We would appreciate your usual prompt attention regarding this matter. Very truly yours, CESAR D. Project Manager (Emphasis supplied, Rollo, p. 811) ELE

Despite such notification, Toyota continued to build the perimeter fence. It is highly doubtful whether Toyota may be considered a builder in good faith to be entitled to protection under Article 448 of the Civil Code. The records also reveal that Toyota's own surveyor, the Certeza Surveying & Acrophoto Systems, Inc. confirmed in its reports dated April 1 and April 5, 1991 that Toyota's perimeter fence overlaps the boundaries of Sun Valley's lot (Rollo, pp. 833-383). Even communication exchanges between and among APT, Toyota & Sun Valley show that the parties are certainly aware that the ownership of the disputed property more properly pertains to Sun Valley. Among these are the following: May 28, 1991 MR. JOSE CH. ALVAREZ President Sun Valley Manufacturing & Development Corp. (SVMDC) Cor. Aurora Blvd. and Andrews Ave. Pasay City, Metro Manila Dear Mr. Alvarez: Thank you for honoring our invitation to a luncheon meeting held at noon time today at Sugi Restaurant.

As per our understanding, we would like to propose as a package the settlement of differences between your property and ours as follows: 1. Boundary Issue between TMP Main Office & Factory and the recently acquired property of SVMDC. The boundary lines to our property lines bidded early 1988 were determined after making full payment in August 1988 jointly by representatives of TMP/Metrobank Messrs. Mitake, Pedrosa, Alonzo and Jurado, APT Mr. Bince together with representatives of Geo-Resources who installed the monuments and prepared the technical description of the property. The construction of the fence utilized existing fence marked yellow on Exhibit 1 and made sure that the new fence to set boundaries were on top of the monuments set by Geo-Resources. The replacement of existing wire fence were affected by setting concrete walls on exactly the same position. This is the reason why we are surprised top be informed that our fence goes beyond the boundary lines set forth in the Technical Description on the Transfer Certificate of Title (TCT) to our property. This occurs even on fence already existing and should have been maintained in the TCT. Since we have manifested our intention when we set boundaries to our property, we propose the following in relation to the excess area occupied by TMP. 1. We offer to give way to an access road 5 m. wide more or less from point 15 to 16 of Lot 2 (14.65 m. in length) at the back of our Paint Storage Building (Exhibit 2). 2. We propose to pay for the balance of excess land inside TMP fence (contested areas) at a price mutually agreed upon. II. Question of ownership of certain permanent improvements (underground water reservoir and perimeter walls/fences) located at Lot 6 which we won by bidding from APT on October 5, 1990. We have made our position to APT that these permanent improvements are part of Lot 6 on "as is where is" bid basis (See explanatory map Exhibit 3). However, since you have relayed to us that the underground water reservoir is of

no use to you, as part of the total package we are proposing to pay for the underground water reservoir, the applicable perimeter walls/fences and the water pump/pipings at a price mutually agreed upon. We hope that through this proposal we would settle our differences and look forward to a more cooperative relationship between good neighbors. We will appreciate your favorable consideration and immediate attention on the matter. Very truly yours, MASAO MITAKE President

July 4, 1991 TOYOTA MOTOR PHILIPPINES CORPORATION Rm. 15, South Superhighway Paraaque, Metro Manila ATTENTION: MR. MASAO MITAKE President Gentlemen: This refers to our several meetings regarding the property problems at "Lot 6" and your encroachment of SVMD LOT I. We wish to thank you for finally acknowledging the legitimacy of our demands on both properties. In order to start a good business relationship, we propose that the property problem at "LOT 6" which consists of the perimeter fence, water reservoir, water pump and systems be settled first, in the amount of P3,500,000.00 payable to CMANC. We also would like to request you to allow us to continue usage of the MERALCO posts and lines connecting to SVMD power station which passes thru your property and allow entry of MERALCO linemen from time to time. Upon acceptance of these requests, I will confer which our Japanese partners to consider the selling of the 723 sq. m. of land adjacent to your

Assembly Plant which you continue to use even after said property has been legally transferred to us from last quarter of 1990. In view of your present good behavior, we are hoping that this first problem be settled not later than July 15, 1991, otherwise, we will consider the whole matter as unacceptable to you and we, therefore, proceed as earlier demanded to immediately demolish the CHB fence that prevents us from using our property. We hope for your immediate action to start the resolution of these unwanted problems. Very truly yours, JOSE CH. ALVAREZ President (Rollo, p. 832; Emphasis supplied) Moreover, Sun Valley puts forth evidence that Toyota has altered the boundaries of its own property by moving the monuments erected thereon by APT's surveyor GeoResources and Consultancy, Inc. when Lot 2 was initially surveyed in August 1988: The Asset Privitalization Trust 10th Floor, BA-Lepanto Building 9847 Paseo de Roxas Building Metro Manila Attention: Mr. Felipe B. Bince, Jr. Associate Executive Trustee Dear Sirs: This has reference to our letter to your office dated April 8, 1991, a copy of which is attached, regarding the check survey of Delta I. After asking some of the field men who participated in the various surveys of Delta I from the consolidation to subdivision surveys, we found out that some more of the present corner points are not the same points shown to them during the surveys. We shall show this during a meeting with the representatives of the owners of Lots 1 and 2. We hope this will clarify the discrepancies. Very truly yours,

NORBERTO S. VILA Exec. Vice Pres. & Gen. Manager (Emphasis supplied; Rollo, p. 839) There is therefore sufficient and convincing proof that Sun Valley has a clear legal right to possession in its favor to warrant the issuance of a writ of preliminary/mandatory injunction. Sun Valley's TCT gives it that right to possession. On the other hand, Toyota has not established its right over the said property except for the assertion that there was a mistake in an instrument which purportedly should have included the questioned strip of land. As between the two (2) parties, Sun Valley has a better right. Under the circumstances, therefore, and considering that the clear legal right of Toyota to possession of the disputed area has not been established sufficient to grant the prayed for relief, a writ of preliminary mandatory injunction may be issued pendente lite. (See Mara, Inc. v. Estrella, 65 SCRA 471 [1975]; De Gracia v. Santos, 79 Phil. 365 [1947]; Rodulfa v. Alfonso, 76 Phil. 225 [1946] and Torre v. Querubin, 101 Phil. 53 [1957]) In view of all the foregoing, the petition is hereby DISMISSED for failure to show reversible error, much less grave abuse of discretion, on the part of the respondent court.

G.R. No. L-76265 March 11, 1994 VIRGINIA CALALANG, petitioner, vs. REGISTER OF DEEDS OF QUEZON CITY, ADMINISTRATOR OF NATIONAL LAND TITLES AND DEEDS REGISTRATION, LUCIA DE LA CRUZ, CONSTANCIO SIMANGAN, and IGLESIA NI KRISTO, respondents. G.R. No. L-83280 March 11, 1994 AUGUSTO M. DE LEON, JOSE M. DE CASTRO, JOSE A. PANLILEO, FELICIDAD VERGARA VDA. DE PINEDA, FERNANDO L. VITUG I, FERNANDO M. VITUG II, FERNANDO M. VITUG III, FAUSTINO TOBIA, ELENO M. OSTREA and FELISA C. CRISTOBAL-GENEROSO, petitioners, vs. THE HONORABLE COURT OF APPEALS and BISHOP ERANO-MANALO, respondents.

MELO, J.: The Decision of the Second Division of this Court promulgated April 22, 1992 (208 SCRA 215) dismissing, for lack of merit, these two (2) consolidated petitions, is assailed by petitioners in their separate motions for reconsideration. The assailed Decision states: With this Court's ruling promulgated in 1984, it is our considered view that the petitioners can not raise anew the question of ownership of Lucia de la Cruz over Lot 671 which had been determined by the Court of Appeals and affirmed by the Supreme Court in the de la Cruz case. Well-settled in the rule enunciated in Church Assistance Program, Inc. v. Sibulo, 171 SCRA 408 [1989] that: When a right or fact has been judicially tried and determined by a court of competent jurisdiction, so long as it remains unreversed, it should be conclusive upon the parties and those in privity with them in law or estate. The Court's ruling has long been final and the issue on ownership of Lot 671 finally disposed of several years ago. This declaration must be respected and followed in the instant case applying the principle of res judicata or, otherwise, the rule on conclusiveness of judgment. The less familiar concept of less terminological usage of res judicata as a rule on conclusiveness of judgment refers to the situation where the judgment in

the prior action operates as an estoppel only as to the matters actually determined therein or which were necessarily included therein. (De la Cruz v. Court of Appeals, 187 SCRA 165 [1990]). Inevitably, the de la Cruz ruling should be applied to the present petitions since the facts on which such decision was predicated continue to be the facts of the case before us now (See Rivas v. SEC, 190 SCRA 295 [1990]). Even the petitioners substantially adopt the same findings of facts in their pleadings. The factual inquiry with regards to the history of Lot 671 has already been laid to rest and may no longer be disturbed. xxx xxx xxx In our capacity as the court of last resort, the petitioners try to convince us to look or inquire into the validity of the reconstitution proceedings initiated by Lucia de la Cruz ruling, contending that the implementation of de la Cruz ruling would deprive them of their properties without due process of law. We have looked long and hard into the records of the case but the facts and circumstances plus law and jurisprudence on the matter do not warrant such action from the Court. INK's title over Lot 671 which necessarily included Lot 671-A had already become incontrovertible and indefeasible. To reopen or to question the legality of INK's title would defeat the purpose of our Torrens system which seeks to insure stability by quieting titled lands and putting to a stop forever any question of the legality of the registration in the certificate or questions which may arise therefrom. (de la Cruz v. de la Cruz, supra.) In fairness to INK, as registered owner it is entitled to rest secure in its land title. In view of all the foregoing, it would be for the public interest and the maintenance of the integrity and stability of the Torrens system of land registration that all transfer certificates of title derived from the reconstituted title of Eugenia de la Paz and Dorotea de la Cruz be annulled in order to prevent the proliferation of derivative titles which are null and void. The legality or validity of INK's title over Lot 671 has been settled. The Court has spoken and it has done so with finality, logically and rightly so as to assure stability in legal relations and avoid confusion. (See Ver v. Quetulio, 163 SCRA 80 [1988]). (pp. 224-225; 229-230.) In G.R. No. 76265, petitioners seek a reconsideration of the aforesaid decision because allegedly, the same is contrary to the following settled principles of law and doctrines laid down this Court, to wit: 1. That a judgment rendered in an action in personam binds only the parties to the action;

2. That a petition for "reconstitution" of a certificate of title filed in 1971, thirty years after the sale to respondent Lucia de la Cruz in 1941, without personal notice to petitioners and other title holders of Lot 671-A, whose titles date from 1952, is void and can be collaterally attacked; 3. That the registration of the sale to respondent Lucia de la Cruz in the Primary Entry Book of the Register of Deeds of Manila in 1943 of a land located in Caloocan, Rizal, cannot be the operative act to convey said property to the vendee, as the record of the title to said property was then in Pasig, Rizal and then transferred to Quezon City, after the war; 4. That the indefeasibility of a Torrens title after one year from issuance, refers to the indefeasibility of a decree of registration after one year from entry thereof in an original registration or cadastral proceeding, and by analogy, the principle is extended to a patent issued in an administrative proceeding, but not to a reconstitution of a certificate of title allegedly lost, nor to the issuance of subsequent transfer certificate of title; and 5. That respondent Iglesia ni Kristo cannot be considered as an innocent purchaser for value as far as petitioners and other title holders to Lot 671-A are concerned, because the titles of respondent Iglesia ni Kristo are derived from the "reconstituted" title of respondent Lucia de la Cruz issued in 1971. Respondent Iglesia ni Kristo is deemed to have actual and constructive knowledge of the rights of more than 80 buyers of Lot 671A who were issued transfer certificates of title dating from 1952. In G.R. No. 83280, petitioners assail the decision on the following grounds: 1. The decision in the de la Cruz case does not bind the petitioners. 2. The Iglesia ni Kristo, represented by public respondent, is not an innocent purchaser for value of the parcels of land in dispute. 3. Petitioners, as duly registered owners of land under the Torrens system, are purchasers in good faith whose titles have become indefeasible. Aware of the importance of the case, the Court granted the request of petitioners to have their motions for reconsideration be considered by the Court en banc. At the core of the controversy is the case of Agustina de la Cruz et al. vs. Lucia de la Cruz, Iglesia ni Kristo and Hon. Court of Appeals (130 SCRA 666 [1984]) which has settled once and for all the question of ownership of Lot 671 of the Piedad Estate in Barrio Culiat, Quezon City. A portion of this lot, Lot 671-A, is the subject of these two (2) consolidated petitions at bar. In said de la Cruz case, the Court found and held:

1. The mother title of Lot 671 is OCT. No. 614 registered on March 12, 1912 in the name of the Philippine Government. When Lot 671, with an area of 184,268 square meters, more or less, was segregated the original title was partially cancelled and TCT40355 T-201 was issued to Eugenia de la Paz and Dorotea de la Cruz by virtue of Entry No. 3241 which reads: . . . Vendido a Eugenia de la Paz y Dorotea de la Paz y Dorotea de la Cruz el Lote No. 671 del terreno en este certificado de titulo, mediante escritura ratificada al 27 de Julio de 1931 en Manila, ante Vicente Garcia, Notario Publico, se cancela parcialmente al presente certificado de titulo, en cuanto al lote mencianado y se expide otro a nombre de las compradoras con el No. 40355, folio 5, Tomo T-201 del libro de transferencias; archivandose la escritura de que se ha hecho referencia en el Legajo T-No. 40355. 2. On November 29, 1941 Eugenia de la Paz and Dorotea de la Cruz sold Lot 671 to Lucia de la Cruz and TCT No. 40355 T-201 was cancelled by virtue of Entry No. 258, Page 7, volume 7, Primary Entry Book of the Registry of Deeds of Manila. Said entry reads as follows: 1. Number of Entry 258 2. Date of filing: Month, day & year July 17, 1943 Hour and Minute 10:15 A.M. 3. Nature of Contract Sale 4. Executed by Doroteo (sic) de la Cruz, et al. 5. In favor of Lucia de la Cruz 6. Date of Instrument 11-29-41 7. Relative to: Certificate of Title No 40355 Book T-201 8. Papers presented by: Name Regino Cleofas Address Pasong Tamo, Quezon City 9. Contract value P2,500.00 10. Remark Caloocan 3. In 1971, Lucia de la Cruz petitioned for the reconstitution of her title in the Court of First Instance of Manila. The court granted the petition and the Register of Deeds of Manila issued to her TCT No. RT-58, thereby cancelling TCT 40355 T-201. (at p. 698.)

4. The petition for reconstitution was duly published and proper notices posted in accordance with law; and after due hearing, was granted by the court in the exercise of its authority and jurisdiction. "Hence, We reject petitioners' assignment of error that the Court of Appeals erred in not declaring that the reconstituted title of Lucia de la Cruz is absolutely null and void." (at p. 698.). 5. "With respect to the reconstituted title of Dorotea de la which was granted by the Court of First Instance of Rizal on December 14, 1945 and TCT 5284 of the Register of Deeds of Quezon City was issued in substitution and/or reconstitution of TCT 40355 of the Register of Deeds of Rizal, . . . it may be true that the order granting reconstitution was null and void by reason of the failure to cause the necessary publication of the petition, and, therefore, the reconstituted title was ineffective. More than that, it is established that Dorotea de la Cruz and Eugenia de la Paz had previously sold the land to Lucia de la Cruz on November 29, 1941 as indicated in Entry No. 258 so that Dorotea de la Cruz was no longer the owner at the time she petitioned for reconstitution." (at pp. 298-699.) 6. "Nonetheless, it is not disputed that Dorotea de la Cruz together with Eugenia de la Paz were the registered owners of Lot 671 under TCT 40355, T-201 of the Register of Deeds of Rizal and they could legally transfer the same to Lucia de la Cruz who thereafter sold in favor of Iglesia ni Kristo." (at p. 699.) 7. Under Section 38 of the Land Registration Act, "the registered title of Lucia de la Cruz reconstituted as TCT No. RT-58 in 1971 became indefeasible and incontrovertible one year from its issuance. As registered owner, Lucia de la Cruz had the perfect and legal right to sell, assign, and convey the property to respondent Iglesia ni Kristo who as purchaser for value in good faith hold the same free from all encumbrances except those noted in said certificate (Sec. 39 Land Registration Act). The Iglesia may then safely rely on the correctness of the certificate of title issued therefor and the will in no way oblige him to go behind the certificate to determine the condition of the property". (at p. 7063.) The rule is well-settled that once a decision becomes final, the Court can no longer amend, modify, much less, set aside the same (Adez Realty Inc. vs. Court of Appeals, 212 SCRA 625 [1992]); otherwise, endless litigation will result (Fabular vs. Court of Appeals, 119 SCRA 329 [1982]) In fact, in Duenas vs. Mandi (151 SCRA 530 [1987]) cited in Adez, we held that the trial court and the appellate court may have committed error in the assignment or partition of the eight (8) parcels of land to the parties in said case, but considering that their judgments are already final, the error, assuming one was committed, can no longer be amended or corrected. In Icao vs. Apalisok (180 SCRA 680 [1989]), likewise cited in Adez, we ruled that even the subsequent discovery of an erroneous imposition of a penalty will not justify correction of the judgment after it has become final.

Our decision in these two consolidated petitions is an application of this well-established rule, that once a decision becomes final, the Court can no longer modify, amend, much less, set aside the same. To grant a reconsideration of this decision would also reconsider, reverse, and set aside our 1984 decision which was long become final. For, while the 1984 decision declared the reconstituted title RT-58 of Lucia de la Cruz valid and legal, petitioners would want us to reach 10 years back and declare the same title null and void; while the 1984 decision declared the Iglesia ni Kristo a purchaser in good faith and for value, petitioners would want us to do a complete turn around and find the Iglesia ni Kristo a purchaser in bad faith. In the case of Legarda vs. Savellano (158 SCRA 194 [1988] the Court stated: . . . It is a general rule common to all civilized system of jurisprudence, that the solemn and deliberate sentence of the law, pronounced by its appointed organs, upon a disputed fact or a state of facts, should be regarded as a final and conclusive determination of the question litigated, and should forever set the controversy at rest. Indeed, it has been well said that this maxim is more than a mere rule of law, more than an important principle of public policy; and that it is not too much to say that it is a fundamental concept in the organization of every jural system. Public policy and sound practice demand that at the risk of occasional errors, judgments of courts should become final at some definite date fixed by law. The very object for which courts were constituted was to put an end to controversies. If we were to allow repeated suits seeking to nullify OCT Nos. 1348-1355 issued to Benito Legarda, Sr. in 1907, the indefeasibility of titles issued under the Torrens systems and land registration, which the Philippines has adopted, will be defeated and set to naught. (at p. 200.) The Court, speaking through Justice Nocon, in Swan vs. Court of Appeals (212 SCRA 114 [1992]) stated: It is high time that we write finis to a litigation that has been pending for years not only to the prejudice of the prevailing parties, but also to the prompt determination of controversies, and in violation of the fundamental concept that public policy and sound practice demand that judgments of courts shall become final at some definite date fixed by law. (at p. 124) Petitioners contend that the de la Cruz case is not applicable and that the doctrine of res judicatashould not have been applied. We do not agree. The doctrine res judicata actually embraces two different concepts: (1) bar by former judgment and (b) conclusiveness of judgment.

The second concept conclusiveness of judgment states that a fact or question which was in issue in a former suit and was there judicially passed upon and determined by a court of competent jurisdiction, is conclusively settled by the judgment therein as far as the parties to the action and persons in privity with them are concerned and cannot be again litigated in any future action between such parties or their privies, in the same court or any other court of concurrent jurisdiction on either the same or different cause of action, while the judgment remains unreversed by proper authority. It has been held that in order that a judgment in one action can be conclusive as to a particular matter in another action between the same parties or their privies, it is essential that the issue be identical. If a particular point or question is in issue in the second action, and the judgment will depend on the determination of that particular point or question, a former judgment between the same parties or their privies will be final and conclusive in the second if that same point or question was in issue and adjudicated in the first suit (Nabus vs. Court of Appeals, 193 SCRA 732 [1991]). Identity of cause of action is not required but merely identity of issue. Justice Feliciano, in Smith Bell & Company (Phils.), Inc. vs. Court of Appeals (197 SCRA 201, 210 [1991]), reiterated Lopez vs. Reyes (76 SCRA 179 [1977]) in regard to the distinction between bar by former judgment which bars the prosecution of a second action upon the same claim, demand, or cause of action, and conclusiveness of judgment which bars the relitigation of particular facts or issues in another litigation between the same parties on a different claim or cause of action. The general rule precluding the relitigation of material facts or questions which were in issue and adjudicated in former action are commonly applied to all matters essentially connected with the subject matter of the litigation. Thus, it extends to questions necessarily implied in the final judgment, although no specific finding may have been made in reference thereto and although such matters were directly referred to in the pleadings and were not actually or formally presented. Under this rule, if the record of the former trial shows that the judgment could not have been rendered without deciding the particular matter, it will be considered as having settled that matter as to all future actions between the parties and if a judgment necessarily presupposes certain premises, they are as conclusive as the judgment itself . . . (at pp. 186-187.) The issue of the validity of the reconstituted title of Lucia de la Cruz over Lot 671 of the Piedad Estate, the issue of whether or not the Iglesia ni Kristo was an innocent purchaser for value and in good faith, and the issue of the validity of the reconstituted title of Dorotea de la Cruz and Eugenia de la Paz (herein petitioners' predecessors-ininterest) were actually, directly, and expressly raised, controverted, litigated and resolved in our 1984 decision. Applying the rule on conclusiveness of judgment, these issue may no longer be relitigated in these present petitions.

Petitioners cannot evade the conclusive effect of the 1984 decision, merely because they were not impleaded parties in the said case. It has been said that the foundation principle upon which the doctrine of res judicata rests is that parties ought no to be permitted to litigate the same issue more than once; that, when a right or fact has been judicially tried and determined by a court of competent jurisdiction, or an opportunity for such trials has been given, the judgment of the court, so long as it remains unreversed, should be conclusive upon the parties those in privity with them in law or estate. (Nabus vs. Court of Appeals, supra). In the case of Vda. de Medina vs. Cruz (161 SCRA 36 [1988]), the Court stated: The crucial issue in this case is whether or not the decision in Civil Case No. C-120 which has long become final and executory can be enforced against the petitioner who is not a party to the aforementioned case. Petitioner alleged in her memorandum that she is not affected by the decision in C-120 as persons who are not parties to a suit are not bound by the judgment and that she purchased the lot in good faith from an entirely different person the Heirs of Don Mariano San Pedro y Esteban and not from either the plaintiffs or defendants of the aforesaid case. It is a generally accepted principle "that no man shall be affected by any proceeding to which he is a stranger . . . [but] being a privy, the petitioner can be reached by the order of execution and Writ of Demolition. (at pp. 43-44.) Also, in the case of Varsity Hills, Inc. vs. Navarro (43 SCRA 503 [1972]), the Court ruled: In the face of these declarations in a final decisions of the highest Court of the land, it becomes indubitable that the action in the court below was definitely barred: for while present private respondents were not parties in the 1993 cause, their predecessor-in-interest Quintin Mejia was such a party and the final judgment against him concludes and bars his successors and privies as well. (at pp. 510-511.) Admittedly, petitioners derived their title from Amando Clemente and/or Clemville Subdivision. Amando Clemente derived his title from Dorotea de la Cruz and Eugenia de la Paz. Being privies and/or successors in interest to the parties in the 1984 decision, petitioners are bound by said decision.

Likewise untenable is petitioners' contention that the reconstituted titled of Lucia de la Cruz, RT-58, is void. Proceedings for judicial reconstitution or certificates of title are proceedings in rem. Thus, notice of hearing by proper publication is sufficient to clothe the Court with jurisdiction and the mere fact that a person purporting to have a legitimate claim in the property did not receive personal notice is not sufficient ground to invalidate the proceedings. In Adez Realty, Inc. vs. Court of Appeals (212 SCRA 625 [1992]), the Court, through Justice Bellosillo, held: Besides, as early as 1910, in Grey Alba v. de la Cruz (17 Phil. 41) We already ruled that the land registration proceedings are proceedings in rem, not in personam, and therefore it is not necessary to give personal notice to the owners or claimants of the land sought to be registered, in order to vest the courts with power and authority over the res. Thus, while, it may be true that no notice was sent by registered mail to petitioners when the judicial reconstitution of title was sought, such failure, however, did not amount to a jurisdictional defect. (See PNR vs. De la Vina & Zamacona, 109 Phil. 342). In Register of Deeds of Malabon vs. RTC, Malabon, Metro Manila, Br. 170 (G.R. No. 886623, February 5, 1990, 181 SCRA 788), We said that "the purpose of the publication of the notice of the petition for reconstitution in the Official Gazette is to apprise the whole world that such a petition has been filed and that whoever is minded to oppose it for good cause may do so within thirty (30) days before the date set by the court for hearing the petition. It is the publication of such notice that brings in the whole word as a party in the case and vests the court with jurisdiction to hear and decide it." Thus, notice of hearing by proper publication in the Official Gazette is sufficient to clothe the court with jurisdiction, and the mere fact that a person purporting to have a legitimate claim in the property did not receive personal notice is not sufficient ground to invalidate the proceedings. (at p. 628.) Besides, the official records of the Quezon City Municipal Hall, as certified to by the Office of the City Assessor of Quezon City (pp. 456-556, Rollo of G.R. No. 83280) show that there are no improvements whatsoever on the property in question thus signifying that the property is unoccupied. Therefore, it would have been impossible for Lucia de la Cruz to notify petitioners. Be this as it may, the issue of the validity of the 1971 reconstitution proceedings is no longer a valid issue in these petitions at bar, its validity having already been resolved with finality in the 1984 decision.

The contention that the registration of the November 29, 1941 sale by Dorotea de la Cruz and Eugenia de la Paz to Lucia de la Cruz, with the Register of Deeds of Manila is irregular deserves scant consideration. As certified to by the Administrator of the Land. Registration Authority (p. 448, Rollo of G.R. No. 83280) the City of Manila and the nearby towns and cities were treated as a single political unit, that is Greater Manila, during the Japanese Occupation. Thus, the Excerpts from volume 7 of the Registry Book of Manila, year 1943 (p. 447, Rollo of G.R. No. 83280), show, among other things, the following entries: (a) The sale of a parcel of land located in Quezon City executed by Magdalena Estates, Inc. in favor of Dionisio Bravo; (b) The mortgage of a parcel of land in Quezon City by Antonio Zuzuareggui in favor of Elena Africa, et al.; and (c) The sale of a parcel of land in Quezon City to Lucia de la Cruz by Dorotea de la Cruz, et al. clearly indicating that transactions involving parcels of land located in Quezon City were indeed recorded and registered in the Registry of Manila. Under the law, it is the act of registration of the deed of conveyance that serves as the operative act to convey the land registered under the Torrens system. The act of registration creates constructive notice to the whole world of the fact of such conveyance. (Quilisadio vs. Court of Appeals, 182 SCRA 401 [1990]; De la CalzadaCierras vs. Court of Appeals, 212 SCRA 390 [1992]). We cannot go along with petitioners' position that their titles, because they were issued in 1952, must prevail over the title of the Iglesia ni Kristo. The titles issued to petitioners are derived from TCT No. 5284. This title, TCT No. 5284 is the reconstituted title of Dorotea de la Cruz which was declared null and void in the 1984 decision. 3. With respect to the reconstituted title of Dorotea de la Cruz which was granted by the Court of First Instance of Rizal on December 14, 1945 and TCT 5284 of the Register of Deeds of Quezon City was issued in substitution and/or reconstitution of TCT 40355 of the Register of Deeds of Rizal by virtue of the following inscription on TCT 40335, to wit: Se expide otra copia para el dueno del presente certificado de titulo en sustitucion del duplicado que se alega haberse quemado, en virtud de na orden del juzgado de Primera Instancia de Rizal dictada el 14 de Deciembre, 1945, en

Expediente G.L.R.O. Rec. No. 5975, y en donde se declara nulo y ninguna valor dicho duplicado quemado. MAMERTO TINGKUNGKO Register of Deeds Interino it may be true that the order granting reconstitution was null and void by reason of the failure to cause the necessary publication of the petition, and therefore, the reconstituted title was ineffective. More than that, it is established that Dorotea de la Cruz and Eugenia de la Paz had previously sold the land to Lucia de la Cruz executed on November 29, 1941 as indicated in Entry No. 258 so that Dorotea de la Cruz was no longer the owner at the time she petitioned for reconstitution. Nonetheless, it is not disputed that Dorotea de la Cruz together with Eugenia de la Paz were the registered owners of Lot 671 under TCT 40355, T-201 of the Register of Deeds of Rizal, and they could legally transfer the same to Lucia de la Cruz who thereafter sold in favor of respondent Iglesia ni Kristo. (at pp. 698-699.) Needless to state, all subsequent certificates of title including petitioners' titles are also void because of the legal truism that the spring cannot rise higher than its source (De Santos vs. Intermediate Appellate Court, 157 SCRA 295 [1988].) The law must protect and prefer the lawful holder of registered title over the transferee of a vendor bereft of any transmissible rights (Baltazar vs. Court of Appeals, 168 SCRA 354 [1988]). Finally, both petitions are procedurally erroneous because certiorari is not the proper remedy. G.R. No. 76265 stemmed from a letter in consulta addressed by the then Acting Register of Deeds of Quezon City to the Administrator of the National Land Titles and Deeds Registration Administration involving the registrability of a deed of sale presented for registration. by Mr. Constancio Simangan. The Administrator issued a resolution dated April 4, 1988 ordering the Register of Deeds to register the deed of sale subject of the consulta. The Register of Deeds moved for reconsideration. Herein petitioner Virginia Calalang moved to intervene. The Acting Administrator denied both motions. Calalang filed a motion for reconsideration but the same was denied, and forthwith, Calalang filed the present petition.

The proper remedy available to Calalang is an appeal to the Court of Appeals pursuant to Section 117 of Presidential Decree No. 1529 and Republic Act No. 5434, and not certiorari or prohibition. Sec. 117, PD 1529 (Property Registration Decree) Procedure . . . the party in interest who disagrees with the final resolution, ruling or order of the Commission relative to theconsultas may appeals to the Court of Appeals within the period and in the manner provided in Republic Act No. 5434. Sec. 2, RA 5434 (Uniform Procedure for Appeals) Appeals to Court of Appeals. Appeals to the Court of Appeals shall be filed within fifteen (15) days from notice of the ruling, award, order, decision or judgment or from the date of its last publication, if publication is required by law for its effectivity; . . . If no appeal is filed within the periods here fixed, the ruling, award, order, decision or judgment shall become final and may be executed as provided by existing law. The other case, G.R. No. 83280, stemmed from an injunction suit filed by Augusto de Leon et al. against the Iglesia ni Kristo and Bishop Manalo. The case was dismissed by the Regional Trial Court. Instead of appealing the order of dismissal, petitioners filed with the Court of Appeals the following. 1. A "Motion for Reconsideration Ad Cautelam"; and 2. An "Omnibus Motion Incident to Execution of the Decision" The Court of Appeals denied both motions. Hence, the other herein petition. It is elementary that a petition for certiorari can not substitute for a lost appeal. The order of the Regional Trial Court dismissing the case was appealable. Petitioners in the second petition failed to appeal the same, consequently the order has already become final and may no longer be reviewed oncertiorari. Moreover, these petitions amount to a collateral attack on the title of the Iglesia ni Kristo. Well-settled is the rule that a certificate of title cannot be altered, modified or cancelled except in a direct proceeding in accordance with law. (Section 48, PD No. 1529.) IN VIEW OF THE FOREGOING, petitioners' Motion for Reconsiderations are hereby DENIED.

[G.R. No. L-24864. May 30, 1996]

FORTUNATO HALILI, doing business under the name and style Halili Transit [substituted by Emilia De Vera Vda. de Halili], petitioner, vs.COURT OF INDUSTRIAL RELATIONS, and HALILI BUS DRIVERS and CONDUCTORS UNION (PTGWO), respondents.

[G.R. No. L-27773. May 30, 1996]

EMILIA DE VERA VDA. DE HALILI, petitioner, vs. COURT OF INDUSTRIAL RELATIONS, and HALILI BUS DRIVERS and CONDUCTORS UNION (PTGWO), respondents.

[G.R. No. L-30110. May 30, 1996]

EMILIA DE VERA VDA. DE HALILI, petitioner, vs. HALILI BUS DRIVERS AND CONDUCTORS UNION-PTGWO, and COURT OF INDUSTRIAL RELATIONS, respondents.

[G.R. No. L-38655. May 30, 1996]

FELICIDAD M. TOLENTINO, as Administratrix of the ESTATE of FORTUNATO F. HALILI,petitioner, vs. COURT OF INDUSTRIAL RELATIONS and HALILI BUS DRIVERS & CONDUCTORS UNION (PTGWO), respondents. RESOLUTION HERMOSISIMA, JR., J.: The herein petition was filed by the Halili Bus Drivers and Conductors Union (PTGWO), under the caption of the original case/cases, 1 as it may in fact be considered an incident thereto. The above-captioned cases were claims for unpaid overtime pay of 897 union members against Fortunato Halili, then doing business under the name and style, Halili

Transit which were initially commenced as a complaint2 with the defunct Court of Industrial Relations on August 20, 1958. After Fortunato Halilis demise, said cases were settled amicably. The Union and the Administratrix of Fortunato F. Halilis estate reached an Agreement on December 23, 1974, the pertinent portions of which read: xxx xxx xxx

WHEREAS, in the face of this strong urging on the part of the Supreme Court Justices upon the parties to put an immediate end to this case by amicable settlement, the parties repeatedly came to conference, conscientiously explored all avenues of settlement, and finally arrived at the tentative agreement (tentative because of the condition that the same be sanctioned by the court in the estate case) whereby the Administratrix would transfer to the employees title to that tract of land, covered by TCT No. 36389, containing an area of approximately 33,952 square meters, situated in the Barrio of San Bartolome, Municipality of Caloocan, Province of Rizal, and pay in addition the cash amount of P25,000.00 in full and final satisfaction of all the claims and causes of action of all of the employees against the estate of Fortunato F. Halili, subject of CIR Case No. 1099-V. xxx xxx xxx

NOW, THEREFORE, for and in consideration of the foregoing and of the covenants, stipulations and undertakings hereinafter contained, the parties have agreed as follows: 1. The UNION, its officers and members-claimants relative to CIR Case No. 1099V. shall withdraw and dismiss with prejudice Case No. 1099-V filed by the UNION in behalf of its members-claimants before the Court of Industrial Relations and all its incidents thereto. 2. The ESTATE shall deliver or cause to be delivered, to the UNION the following:

(a) Deed of Transfer of a parcel of land situated in Barrio San Bartolome, Caloocan City, containing an area of THIRTY-THREE THOUSAND NINE HUNDRED FIFTY-TWO (33,952) Square Meters, more or less, and covered by Transfer Certificate of title No. 35389 of the Registry of Deeds of Rizal, to be made, upon authority and approval granted by the Court of First Instance of Rizal, Branch IV, at Quezon City, in Proc. No. Q-10852 in the name of the Halili Bus Drivers & Conductors Union (PTGWO), free from any and all liens, encumbrances, and any and all claims whatsoever. (b) Negotiable Check for TWENTY-FIVE THOUSAND (P25,000.00) PESOS in the name of Domingo D. Cabading, President of the UNION. 3. The transfer of the above-described parcel of land and receipt of the amount of P25,000.00 constitute the full and final satisfaction of the claims and award in said CIR

Case No. 1099-V, as well as any and all attorneys liens in said case, for and in consideration of which the UNION members- claimants in CIR Case No. 1099-V by these presents now and forever release and quitclaim Halili Enterprises, Halili Transit, Fortunato F. Halili, his estate, heirs and successors by reason of CIR Case No. 1099-V, it being their intention that they be absolutely, completely and finally absolved and released from any and all liability in said case, including attorneys liens, the transfer of the property and payment of the amount hereinabove stated constituting for all intents and purposes a full, final and complete settlement and satisfaction of the award in CIR Case No. 1099-V and all incidents thereto. 4. The UNION and its undersigned officers hereby warrant that the UNION is a duly registered labor organization and that in a special meeting called for the purpose they were duly authorized on December 22, 1974, by all the members-claimants in CIR Case No. 1099-V to sign this Memorandum of Agreement with Release and Quitclaim which was unanimously approved and ratified by said members-claimants as evidenced by a Resolution dated December 22, 1974, a copy of which is attached hereto and made a part hereof as Annex B, and hereby jointly and severally hold the estate and heirs of Fortunato F. Halili free and harmless from, and undertake to indemnify them for any and all liability for any claims by members of the UNION, their heirs, assigns and agents relating to CIR Case No. 1099-V or attorneys liens in connection therewith (69 SCRA 509- 510).3 On January 6, 1975, pursuant to the abovementioned Agreement, the Administratrix of the Estate of Fortunato F. Halili executed a Deed of Conveyance of Real Property, transferring the aforementioned parcel of land to the Halili Bus and Conductors Union (PTGWO) in trust for the individual members of the Union claimants. The parcel of land covered by the said Deed of Conveyance was registered without encumbrance in the name of the said Union on February 14, 1975 under Transfer Certificate of Title No. 205755.4 On August 9, 1982, the said Union, through its legal counsel, Atty. Benjamin C. Pineda, filed an urgent motion with the then Ministry of Labor and Employment (MOLE) requesting that authority be granted to sell and dispose of the property. On September 23, 1982, the MOLE acting through Labor Arbiter Raymundo R. Valenzuela, granted the Unions motion to sell the subject property. Thereafter, Atty. Benjamin C. Pineda filed a motion with the Supreme Court on December 1, 1982, requesting authority to sell the property. This Court, however, merely noted the motion in a Resolution dated December 8, 1982. Relying on the earlier authority given him by the Ministry of Labor, Atty. Pineda subsequently filed another urgent motion with the MOLE, this time praying that the Union be authorized to sell the lot to the respondent herein Manila Memorial Park Cemetery, Inc. (MMPCI, for brevity). In an Order, dated February 9, 1983, Labor Arbiter Valenzuela, for the MOLE, likewise granted the motion to sell the subject property to MMPCI.

The sale of the property held in trust by the seller-Union to the buyer-MMPCI was finally consummated on June 7, 1983. On the basis of the Order of Arbiter Valenzuela and the Deed of Sale between the Union and MMPCI, Transfer Certificate of Title No. 205755 in the name of the Union was canceled and said property was registered in the name of respondent MMPCI, under Transfer Certificate of Title No. 301151 by the Register of Deeds of Quezon City on June 14, 1983. Significantly, however, the Orders, dated September 23, 1982 and February 9, 1983, issued by Labor Arbiter Valenzuela which granted the two motions of the Unions former counsel, Atty. Benjamin C. Pineda, for an authority to sell the real property awarded to the Union, were set aside by this Court in a Resolution, dated October 18, 1983, to wit: [A]nd considering that, as affirmed by the Solicitor General, the challenged orders of Arbiter Raymundo R. Valenzuela dated September 23, 1982 and February 9, 1983, were issued without due process of law, the COURT RESOLVED (1) to set aside as null and void said orders of September 23, 1982 and February 9, 1983 of Arbiter Raymundo R. Valenzuela x x x.5 On the basis of this Resolution nullifying the above orders of the Labor Arbiter, the Union filed a complaint with the National Labor Relations Commission (NLRC) seeking to compel the buyer, private respondent Manila Memorial Park Cemetery, Inc., to reconvey the Unions property bought by MMPCI from Atty. Pineda upon the ground that the latter sold it without proper authority from the Supreme Court. The Chief of the Legal and Enforcement Division of the NLRC, tasked to act on the complaint, refused to take cognizance of the case for lack of jurisdiction, viz: The instant complaint does not fall under the jurisdictional ambit of this Commission (NLRC) or any labor forum. It is our considered view that the cause of action raised herein is a proper subject of the regular courts. 6 Hence, the Union filed this Petition/Motion with Prayer for Clarification, through which it seeks, among others, the recovery of subject real property comprising of 33,952 square meters sold to respondent MMPCI, to wit: 3. That the Petition/Motion with Prayer for Clarification in this subject complaint claim for recovery of the Union Real Property in trust as provided in the provisions in the Union General Resolution dated January 21, 1986, was a valid and verified cause of action of the union-members/co-owners of the said union real property in trust to be recovered and take possession due to the ground that the sale of said union real property was sold by persons without authority to sell from the owners of said property or acquired authority to sell from the Supreme Court or Court of jurisdiction being that this union real property in trust was sold in a means of purely illegal sale. 7 The petition has no merit.

I Article 217 of the Labor Code, as amended by Section 9 of Republic Act 6715 delineates the scope ofjurisdiction of the National Labor Relations Commission and the Labor Arbiters, to wit: ART. 217. Jurisdiction of Labor Arbiters and the Commission (a) Except as otherwise provided under this Code the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the case by the parties for decision without extension, even in the absence of stenographic notes, the following cases involving all workers, whether agricultural or non-agricultural: 1. 2. Unfair labor practice cases; Termination disputes;

3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates of pay, hours of work and other terms and conditions of employment; 4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations; 5. Cases arising from any violation of Article 264 of this Code, including questions involving the legality of strikes and lockouts; and 6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims, arising from employer-employee relations, including those of persons in domestic or household service, involving an amount exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement. (b) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters. (c) Cases arising from the interpretation or implementation of collective bargaining agreements and those arising from the interpretation or enforcement of company personnel policies shall be disposed of by the Labor Arbiter by referring the same to the grievance machinery and voluntary arbitration as may be provided in said agreements. The subject matter of the instant petition, which is the reconveyance of the disputed real property to the Union by the respondent MMPCI does not fall under any of the issues cognizable by the NLRC as enumerated in Article 217 of the Labor Code. Hence, the public respondent NLRC committed no error in dismissing the complaint brought

before them by the petitioner Union for the simple reason that said Tribunal has no jurisdiction to entertain the same.

II The fact that the subject real property was registered under the Torrens System of registration in the name of respondent MMPCI under Transfer Certificate of Title No. 301151 by the Register of Deeds of Quezon City on June 14, 1983, makes the instant petition all the more dismissible, considering that the best proof of ownership of a piece of land is the Certificate of Title.8 Section 48 of Presidential Decree No. 1529, otherwise known as the Property Registration Decree provides: SEC. 48. Certificate not subject to collateral attack. -A certificate of title shall not be subject to collateral attack. It cannot be altered, modified, or canceled except in a direct proceeding in accordance with law. A certificate of title accumulates in one document a precise and correct statement of the exact status of the fee held by its owner. The certificate, in the absence of fraud, is the evidence of title and shows exactly the real interest of its owner. The title once registered, with very few exceptions, should not thereafter be impugned, altered, changed, modified, enlarged, or diminished, except in some direct proceeding permitted by law. Otherwise, all security in registered titles would be lost.9 In the present petition, the Union seeks from respondent MMPCI the recovery of the subject property. It is evident that the objective of such claim is to nullify the title of private respondent to the property in question, which thereby challenges the judgment pursuant to which the title was decreed. This is apparently a collateral attack which is not permitted under the principle of indefeasibility of a Torrens Title. It is well settled that a Torrens Title cannot be collaterally attacked. The issue on the validity of title, i.e., whether or not it was fraudulently issued, can only be raised in an action expressly instituted for that purpose. Hence, whether or not petitioners have the right to claim ownership of the land in question is beyond the province of the instant proceeding. 10

III Furthermore, all portions of said land, now known as Holy Cross Memorial Park, have already been sold out to individual lot buyers, who are innocent purchasers for value, and contain the interred remains of the lot owners and/or their relatives. Where innocent third persons, relying on the correctness of the Certificate of Title thus issued, acquire rights over the property, the Court cannot disregard such rights and order the total cancellation of the certificate. The effect of such an outright cancellation would be to impair public confidence in the Certificate of Title, for everyone dealing with property

registered under the Torrens System would have to inquire in every instance as to whether the title has been regularly or irregularly issued by the Court. And this is contrary to the evident purpose of the law. Every person dealing with registered land may safely rely on the correctness of the Certificate of Title issued there for and the law will in no way oblige him to go behind the certificate to determine the condition of the property.11

IV As adverted to earlier, ownership of the lot in question had already been vested in the Union upon sale to it by the Heirs of Halili. Considering this, the Union had every right to dispose of the property. After the termination of the above-entitled cases, judgment therefor having become final and executory, even as of 1982, neither the NLRC nor this Court will have any authority to look into the validity of the disposal by the Union of the property so acquired by the Union in the proceedings. Under the circumstances, therefore, it is to be assumed that the sale by the Union, as virtual owner of the property, to the respondent MMPCI would not need any authority to sell from the NLRC or from this Court and we hereby write finis to these cases in order to avoid multiplicity of suits and considering that these cases were instituted as early as 1958. WHEREFORE, the instant petition is DISMISSED for lack of merit. Costs against the petitioner. SO ORDERED.

G.R. No. 98328 October 9, 1997 JUAN C. CARVAJAL, petitioner, vs. COURT OF APPEALS and SOLID HOMES, INC., respondents.

PANGANIBAN, J.: Is there denial of due process if an applicant for land registration is unable to testify? May a land registration court, after it is convinced that the property subject of an application for registration under the torrens system is already covered by an existing certificate, dismiss such application and thus ignore petitioner's insistence on submitting further evidence of his alleged title? What constitutes sufficient evidence to show identity of the land applied for with the land already titled in favor of private respondent? The Case These are the main questions raised in this petition for review assailing the November 29, 1990 Decision 1 of the Court of Appeals 2 in CA-G.R. SP No. 18318, the dispositive portion of which reads: WHEREFORE, in view of the foregoing, let this petition be, as it is hereby DISMISSED. 3 This petition also impugns the April 25, 1991 Court of Appeals Resolution 4 which denied reconsideration. The Facts The facts found by public respondent are as follows: 5 Petitioner is the applicant in a land registration case filed with Branch 71, Regional Trial Court of the Fourth Judicial Region stationed in Antipolo, Rizal. Sought to be brought by petitioner under the operation of the Land Registration Act (Act No. 496) is a 96,470 square meter lot denominated as Lots 6846-A, 6846-B, 6846-C and 6846-D. Copies of the application were ordered by respondent Court to be furnished (to) the National Land Titles and Deeds Registration Administration (NLTDRA) which on March 18, 1987 submitted a report recommending that applicant be order[ed] to amend his petition by including the names and complete postal addresses of the adjoining owners and correcting the discrepancy regarding the boundary lot number along line 2-3 of Lot 6846-D on plan Csd-04-005516-D. On order of respondent Court [trial court], the petition was accordingly amended.

After the NLTDRA was notified that the case is [sic] initially set for hearing on December 7, 1987, the Acting Chief, Docket Division of the NLRDRA [sic] submitted another report recommending that petitioner be ordered to refer to the Bureau of Lands for corrections of the discrepancy existing in the directional bearing and area of Lot 6846-D, Csd-04-005516-D. The technical descriptions as corrected by the Bureau of Lands was [sic] submitted and the application was initially set for hearing on April 26, 1988. The "Notice of Initial Hearing" stating that the application was set forbe [sic] heard on April 26, 1988 was thereafter issued by the NLTDRA. On June 1, 1988, an order of general default was issued by respondent Court. Exempted from the order was one Annie Jimenez who filed an opposition to the application. On June 22, 1988, private respondent Solid Homes, Inc. filed its opposition stating that a land registered in its name under the Torrens System and covered by then TCT No. N-7873 is almost identical to the property subject of the application by petitioner. The opposition was not admitted considering that no motion to set aside the order of general default was filed by private respondent. On June 28, 1988, private respondent filed a motion to lift the order of general default and to admit its opposition on the ground that its right would be adversely affected by the application. Acting on the motion and in order to avoid duplicity, the NLTDRA was directed to make the plotting of the relative position of the property covered by LRC Psd-245998 and embraced in TCT No. N-7873 and to submit its plotting to the Court for its guidance. In the same order dated July 1, 1988, respondent Court in the interest of justice set aside the order of general default in so far as private respondent was concerned and admitted private respondent's opposition. On January 10, 1989, petitioner filed a motion praying that the opposition of private respondent be dismissed for the reason that the order issued by respondent court directing the NLRTDA [sic] to make a plotting of the land in question on the basis of the title submitted by the Registry of Deeds of Marikina Branch Manila released the private respondent from the duty and obligation of presenting evidence to prove that the land applied for is private and that there is apparent lack of interest on the part of private respondent to pursue its claim on account of its non-appearance despite the lapse of more than six months or to introduce evidence that will show that the land in question is covered by the alleged torrens certificate of title. During the hearings conducted on September 13, 1988, September 27, 1988, October 4, 1988, October 11, 1988, October 11, 1988, November 22, 1988, December 6, 1988, petitioner presented his evidence on the question as to whether or not he had a registrable right over the land in question.

Pursuant to the court order dated July 1, 1988 directing the NLTDRA to make the plotting of the relative position of the property covered by LRC Psd-245998 and embraced in TCT No. N-7873, the Land Registration Authority submitted a report dated December 22, 1986 [should be 1988] recommending that, after due hearing, the application for registration of petitioner be dismissed. The application was thus dismissed by respondent court in an order dated January 2, 1989. Considering, however, that the recommendation is [sic] for dismissal after due hearing, respondent judge issued an order dated January 10, 1989 setting for hearing on January 24, 1989 the "Report" submitted by the Land Registration Authority. The hearing proceeded on February 8, 1989 with Engr. Silverio G. Perez, Chief, Department on Registration, Land Registration Authority being presented in connection with his "Report" recommending the dismissal of the application after due hearing. On February 28, 1989, the petitioner's application for registration was dismissed. On March 13, 1989, petitioner filed his motion to reconsider the February 28, 1989 dismissal of the application for registration to which private respondent filed an opposition dated March 20, 1989. The motion for reconsideration was denied in an order dated March 4, 1989. On May 2, 1989 petitioner filed a second motion to reconsider the dismissal of his petition. On May 8, 1989, question to respondent judge issued an order requiring the parties as well as the engineers from the Land Registration Commission and the DENR to appear before respondent Court on June 5, 1989. The engineer from the Land Registration Commission was likewise directed to inform the court whether the property applied for by petitioner is indeed inside the titled property of private respondent. After the Land Registration Authority submitted a report showing that there was indeed an overlapping of the four (4) parcels of land applied for by petitioner and the properties of Solid Homes under TCT 7873 and considering that the properties applied for are [sic] within the titled property and could not be the subject of an application for registration, the second motion to reconsider the dismissal of the application for registration was denied in an order dated July 5, 1989. As earlier stated, the Court of Appeals affirmed the dismissal of the application for registration, and denied the subsequent motion for reconsideration. Hence, this recourse to this Court via Rule 45 of the Rules of Court. The Issues Petitioner submits the following issues: 6 1. Whether or not an actual ground verification survey is required to establish the identity of the two parcels of land or whether TCT No. 7873 under Plan FP-1540

of Solid Homes Inc., situated in Barangay Mayamot, Antipolo, Rizal is identical or similar to Lots 6846-A to 6846-D inclusive Cad. 585, Lungsod Silangan, Cadastre, situated in Mambogan, Antipolo, Rizal applied for under LRC Case No. 414 (-A), LRC Record No. N-60084; 2. Whether or not the petitioner was given (the) chance and the opportunity to be heard or allowed to fully introduce his evidence in the (proceeding) for Land Registration and (to) rest (his) case; 3. Whether the decision of the Honorable Court of Appeals is reversible. Petitioner alleges that the "table survey" made by the Land Registration Authority and the geodetic engineer of the Land Management Bureau cannot serve as basis "for identifying" his land. "On the other hand, petitioner was able to establish the identity" of the land he applied for by "actual ground survey which was approved by the Director of Lands and reprocessed by the Land Registration Authority." He claims that if said land is "covered by private respondent's title, the Director of Lands and/or Regional Director will no(t) approve the survey." Petitioner also argues that the land in question is situated in "Mambogan, Antipolo, Rizal" while that of private respondent is in "Mayamot, Antipolo, Rizal." Survey Plan "FP-1540," which served as basis of private respondent's certificate of title, cannot be found; hence, according to petitioner, the "table survey" was anomalous. Petitioner adds that the "matter entirely wanting in this case (is) the identity or similarity of the realties." 7 Petitioner concludes that the trial court should have ordered "actual ocular inspection and ground verification survey" of the properties involved. Petitioner further maintains that he was denied due process when he, as an applicant in a land registration case, was not able to take the witness stand. According to petitioner, even his counsel hardly participated in the proceeding except to propound clarificatory questions during the examination of Engineer Silverio Perez of the Land Registration Authority. 8 Public respondent justified its dismissal of the appeal in this wise: 9 Land already decreed and registered in an ordinary registration proceeding cannot again be subject of adjudication or settlement in a subsequent conducted proceeding (Land Titles and Deeds by Noblejas, 1968 Revised Edition, page 96). The "Report" submitted by the Land Registration Authority (Annex "B") and the Survey Division of the DENR (Annex "RR") both indicate an overlapping of the lot applied for by petitioner and the lot covered by TCT N-7873 owned by private respondent Solid Homes, Inc. Even if petitioner were allowed to continue with the presentation of his evidence, the end result would still be the dismissal of his application for registration. Respondent Judge was therefore justified in cutting short the proceeding as the time to be spent in hearing petitioner's application could be used disposing the other cases pending with respondent court.

Anent the allegation that private respondent Solid Homes did not actively participate in the trials conducted to hear his evidence, suffice it to state that it is counsel's prerogative to determine how he intends to pursue his case. The Court's Ruling The petition has no merit. First Issue: Identity of the Property Applied For We are not persuaded that the land petitioner applied for was not identical to private respondent's land which was already covered by a torrens certificate of title. The two reports prepared by the Land Registration Authority and the DENR Survey Division clearly showed that there was an overlapping between the two properties. Because the futility of petitioner's application was apparent, the trial court deemed it unnecessary to hear further evidence. We agree. At the outset, we stress that there was nothing irregular in the order given by the trial court to the Land Registration Authority and the Survey Division of the DENR to submit reports on the location of the land covered by petitioner's application and private respondent's certificate of title. The authority of the land registration court to require the filing of additional papers to aid it in its determination of the propriety of the application was based on Section 21 of PD 1529: 10 Sec. 21. Requirement of additional facts and papers; ocular inspection. The court may require facts to be stated in the application in addition to those prescribed by this Decree not inconsistent therewith and may require the filing of any additional papers. It may also conduct an ocular inspection, if necessary. From the above provision, it is also clear that ocular inspection of the property applied for was only discretionary, not mandatory. Likewise, the land registration court was not obliged to order the survey of the contested lot, especially when another government agency had already submitted a report finding that the contested lot was identical with that described in private respondent's certificate of title and recommending the dismissal of the application for registration. Further, the order of the land registration court for the LRA and DENR to submit reports was in accordance with the purposes of the Land Registration Law: 11 The purposes of the land registration law, in general, are: "to ascertain once and for all the absolute title over a given landed property; to make, so far as it is possible, a certificate of title issued by the court to the owner of the land absolute proof of such title; to quiet title to the land and to put a stop forever to any question of legality to a title; and to decree that land title to be final, irrevocable and, undisputable. (citing Benen vs. Tuason, L-26127, June 28, 1974, 57 SCRA 531.)

It is true that a court of first instance acting as a land registration court has limited and special jurisdiction. It can not be denied, however, that when the law confers jurisdiction upon a court, the latter is deemed to have all the necessary powers to exercise such jurisdiction to make it effective. (citing Marcelino vs. Antonio, 70 Phil. 388, 391.) The purpose of the applicant is to prove that he has an absolute or simple title over the property sought to be registered, otherwise his application will be denied. An absolute oppositor claims a dominical right totally adverse to that of the applicant. If successful, registration will be decreed in favor of the oppositor. As to whether or not private respondents have absolute or fee simple title over the property sought to be registered necessarily requires a resolution of the question as to whether or not the oppositors had a dominical right totally adverse to that of the applicants. . . . . Based on the reports submitted, the land registration court correctly dismissed the application for original land registration. An application for registration of an already titled land constitutes a collateral attack on the existing title. It behooves a land registration court to determine the veracity of any and all adverse claims, bearing in mind Section 46 of Act No. 496 which provides that "(n)o title to registered land in derogation to that of the registered owner shall be acquired by prescription or adverse possession." The trial court's order to the LRA and DENR was a mere cautionary measure in cognizance of the well-settled rule that a torrens title cannot be collaterally attacked. In other words, the title may be challenged only in a proceeding for that purpose, not in an application for registration of a land already registered in the name of another person. After one year from its registration, the title is incontrovertible and is no longer open to review. The remedy of the landowner, whose property has been wrongfully or erroneously registered in another's name, is to institute an ordinary action for reconveyance or if the property has passed into the hands of an innocent purchaser for value for damages. 12 In view of the nature of a torrens title, a land registration court has the duty to determine whether the issuance of a new certificate alters a valid and existing certificate of title. Contrary to petitioner's contention, the approval by the assistant chief of the Bureau of Lands Survey Division of the survey conducted on the land applied for by petitioner did not prove that the said land was not covered by any title. It merely showed that such land has been surveyed and its boundaries have been determined. Also noteworthy is the finding of public respondent that "the same order (issued by the land registration court) [which set] aside the order (of) general default insofar as private respondent Solid Homes, Inc. was concerned, directed the NLTDRA to make the plotting of the relative position of the property covered by LRC Psd-245998 and [that which was] embraced in TCT No. N7873." 13 The intention of the land registration court was to avoid "duplicity," 14 that is, to rule out the possibility that the land he sought to register was already covered by a certificate of title. In this case, the land he applied for was found to be within the land described in private respondent's transfer certificate of title.

Petitioner also alleges that the land he applied for was located in Barangay Mambogan, while the registered land of private respondent was in Barangay Mayamot. In his reply filed with public respondent, however, he himself admitted that "Barangay Mambogan is a part of Barangay Mayamot [which is] a bigger barrio in Antipolo, Rizal, and Mayamot covers a big parcel of land running from Antipolo up to Marikina." 15 In view of petitioner's declaration, it was not impossible for the land owned by private respondent to be located in Barangay Mayamot and in Barangay Mambogan. At any rate, whether the two lands are located in Mambogan or Mayamot or both is a factual question, and its resolution by the trial and the appellate courts is binding on this Court. Petitioner failed to provide a reason, let alone an adequate one, to justify the reversal of such finding of the lower courts. Petitioner also argues that the plotting made by NLTDRA was "anomalous" because Survey Plan FP-1540, on which private respondent's title was based, could not be located. This argument lacks merit. The law does not require resorting to a survey plan to prove the true boundaries of a land covered by a valid certificate of title; the title itself is the conclusive proof of the realty's metes and bounds. Section 47 of the Land Registration Act, or Act No. 496, provides that "(t)he original certificates in the registration book, any copy thereof duly certified under the signature of the clerk, or of the register of deeds of the province or city where the land is situated, and the seal of the court, and also the owner's duplicate certificate, shall be received as evidence in all the courts of the Philippine Islands and shall be conclusive as to all matters contained therein except so far as otherwise provided in this Act." It has been held that a certificate of title is conclusive evidence with respect to the ownership of the land described therein and other matters which can be litigated and decided in land registration proceedings. 16 Thus, this Court in Odsigue vs. Court of Appeals 17 ruled: . . . . Petitioner contends that private respondents have not identified the property sought to be recovered as required by Art. 434 of the Civil Code. He alleges that Sitio Aduas, where the land in question is located, is at the boundary of Barangay May-Iba, Teresa, Rizal, and Barangay Lagundi, Morong, Rizal. On the other hand, petitioner maintains, the parcel of land he is occupying is located in Barangay May-Iba. He claims that the technical description in the title does not sufficiently identify the property of private respondent and that a geodetic survey to determine which of his improvements should be demolished should first have been conducted by the private respondent. . . . But private respondent's title (OCT No. 4050) indicates that the property is located in Barangay Lagundi. Likewise, the certification issued by the Municipal Agrarian Reform Officer at Morong, Rizal stated that petitioner was occupying a landholding at Barangay Lagundi. For our purposes, a survey is not necessary. A certificate of title is conclusive evidence not only of ownership of the land referred but also its location. The subject of these proceedings is the land covered by OCT No. 4050. Accordingly,

petitioners required to demolish only whatever is constructed within its boundaries. (Emphasis supplied.) The old case of Legarda and Prieto vs. Saleeby 18 explains the nature of a torrens certificate of title, as follows: . . . . The registration, under the torrens system, does not give the owner any better title than he had. If he does not already have a perfect title, he can not have it registered. Fee simple titles only may be registered. The certificate of registration accumulates in one document a precise and correct statement of the exact status of the fee held by its owner. The certificate, in the absence of fraud, is the evidence of title and shows exactly the real interest of its owner. The title once registered, with very few exceptions, should not thereafter be impugned, altered, changed, modified, enlarged, or diminished, except in some direct proceeding permitted by law. Otherwise all security in registered titles would be lost. A registered title can not be altered, modified, enlarged, or diminished in a collateral proceeding and not even by a direct proceeding, after the lapse of the period prescribed by law. All in all, the land registration court did not err in relying on the certificate of title instead of the survey plan; likewise, the appellate court did not commit any reversible error in affirming the trial court's decision. Second Issue: Denial of Due Process Petitioner claims that he was denied due process because he was unable to take the witness stand. We disagree. The essence of due process is the opportunity to be heard. It is the denial of this opportunity that is repugnant to due process. 19 In this case, petitioner was afforded an opportunity to present witnesses, and he did present three. However, petitioner did not invoke his right to take the witness stand even when the trial court ordered the submission of the parties' memoranda which signified the termination of the proceedings. Because he acquiesced to the termination of the case, he forfeited his right to take the witness stand. Likewise, we are not persuaded by his allegation that his own counsel hardly participated in the proceedings. The records show that said counsel did cross-examine Engineer Silverio Perez by propounding clarificatory questions to the latter. In any event, the client is generally bound by the acts of his counsel. Petitioner has not shown at all that his previous counsel had acted in such grossly negligent manner as to deprive him of effective representation, or of due process. 20 In support of his contention, petitioner cites Tinora vs. Naawa 21 which held: We hold the view, however that respondent Judge erred when he ordered the dismissal of the registration case over the objection of the oppositors; and when he refused to reconsider the order of dismissal and reinstate the case he had

neglected to perform an act which the law enjoins as a duty resulting from an office, and had thereby deprived the oppositors of a right to which they are entitled. Such ruling finds no application to the present case, because neither Respondent Mariano Raymundo (the applicant in the land registration case) nor Petitioner Constantino Tirona (the oppositor in the cited case) was a holder of any certificate of title over the land intended for registration. Such being the case, the land registration court was ordered to act in accordance with Section 37 of Act No. 496 22 either by dismissing the application if none of the litigants succeeded in showing a proper title, or by entering a decree awarding the land applied for to the person entitled thereto. WHEREFORE, premises considered, the petition is hereby DENIED and the assailed Decision and Resolution are AFFIRMED. Costs against petitioner. SO ORDERED.

G.R. No. 136803

June 16, 2000

EUSTAQUIO MALLILIN, JR., petitioner, vs. MA. ELVIRA CASTILLO, respondent. MENDOZA, J.: This is a petition for review of the amended decision 1 of the Court of Appeals dated May 7, 1998 in CA G.R. CV No. 48443 granting respondent's motion for reconsideration of its decision dated November 7, 1996, and of the resolution dated December 21, 1998 denying petitioner's motion for reconsideration. The factual and procedural antecedents are as follows: On February 24, 1993, petitioner Eustaquio Mallilin, Jr. filed a complaint 2 for "Partition and/or Payment of Co-Ownership Share, Accounting and Damages" against respondent Ma. Elvira Castillo. The complaint, docketed as Civil Case No. 93-656 at the Regional Trial Court in Makati City, alleged that petitioner and respondent, both married and with children, but separated from their respective spouses, cohabited after a brief courtship sometime in 1979 while their respective marriages still subsisted. During their union, they set up the Superfreight Customs Brokerage Corporation, with petitioner as president and chairman of the board of directors, and respondent as vice-president and treasurer. The business flourished and petitioner and respondent acquired real and personal properties which were registered solely in respondent's name. In 1992, due to irreconcilable differences, the couple separated. Petitioner demanded from respondent his share in the subject properties, but respondent refused alleging that said properties had been registered solely in her name. In her Amended Answer,3 respondent admitted that she engaged in the customs brokerage business with petitioner but alleged that the Superfreight Customs Brokerage Corporation was organized with other individuals and duly registered with the Securities and Exchange Commission in 1987. She denied that she and petitioner lived as husband and wife because the fact was that they were still legally married to their respective spouses. She claimed to be the exclusive owner of all real personal properties involved in petitioner's action for partition on the ground that they were acquired entirely out of her own money and registered solely in her name. On November 25, 1994, respondent filed a Motion for Summary Judgment, 4 in accordance with Rule 34 of the Rules of Court.5 She contended that summary judgment was proper, because the issues raised in the pleadings were sham and not genuine, to wit: A.

The main issue is Can plaintiff validly claim the partition and/or payment of coownership share, accounting and damages, considering that plaintiff and defendant are admittedly both married to their respective spouses under still valid and subsisting marriages, even assuming as claimed by plaintiff, that they lived together as husband and wife without benefit of marriage? In other words, can the parties be considered as co-owners of the properties, under the law, considering the present status of the parties as both married and incapable of marrying each other, even assuming that they lived together as husband and wife (?) B. As a collateral issue, can the plaintiff be considered as an unregistered co-owner of the real properties under the Transfer Certificates of Title duly registered solely in the name of defendant Ma. Elvira Castillo? This issue is also true as far as the motor vehicles in question are concerned which are also registered in the name of defendant.6 On the first point, respondent contended that even if she and petitioner actually cohabited, petitioner could not validly claim a part of the subject real and personal properties because Art. 144 of the Civil Code, which provides that the rules on coownership shall govern the properties acquired by a man and a woman living together as husband and wife but not married, or under a marriage which is void ab initio, applies only if the parties are not in any way incapacitated to contract marriage. 7 In the parties' case, their union suffered the legal impediment of a prior subsisting marriage. Thus, the question of fact being raised by petitioner, i.e., whether they lived together as husband and wife, was irrelevant as no co-ownership could exist between them. As to the second issue, respondent maintained that petitioner cannot be considered an unregistered co-owner of the subject properties on the ground that, since titles to the land are solely in her name, to grant petitioner's prayer would be to allow a collateral attack on the validity of such titles. Petitioner opposed respondent's Motion for Summary Judgment. 8 He contended that the case presented genuine factual issues and that Art. 144 of the Civil Code had been repealed by the Family Code which now allows, under Art. 148, a limited co-ownership even though a man and a woman living together are not capacitated to marry each other. Petitioner also asserted that an implied trust was constituted when he and respondent agreed to register the properties solely in the latter's name although the same were acquired out of the profits made from their brokerage business. Petitioner invoked the following provisions of the Civil Code: Art. 1452. If two or more persons agree to purchase property and by common consent the legal title is taken in the name of one of them for the benefit of all, a trust is created by force of law in favor of the others in proportion to the interest of each.

Art. 1453. When the property is conveyed to a person in reliance upon his declared intention to hold it for, or transfer it to another grantor, there is an implied trust in favor of the person whose benefit is contemplated. On January 30, 1995, the trial court rendered its decision9 granting respondent's motion for summary judgment. It ruled that an examination of the pleadings shows that the issues involved were purely legal. The trial court also sustained respondent's contention that petitioner's action for partition amounted to a collateral attack on the validity of the certificates of title covering the subject properties. It held that even if the parties really had cohabited, the action for partition could not be allowed because an action for partition among co-owners ceases to be so and becomes one for title if the defendant, as in the present case, alleges exclusive ownership of the properties in question. For these reasons, the trial court dismissed Civil Case No. 93-656. On appeals, the Court of Appeals on November 7, 1996, ordered the case remanded to the court of origin for trial on the merits. It cited the decision in Roque v. Intermediate Appellate Court 10 to the effect that an action for partition is at once an action for declaration of co-ownership and for segregation and conveyance of a determinate portion of the properties involved. If the defendant asserts exclusive title over the property, the action for partition should not be dismissed. Rather, the court should resolve the case and if the plaintiff is unable to sustain his claimed status as a coowner, the court should dismiss the action, not because the wrong remedy was availed of, but because no basis exists for requiring the defendant to submit to partition. Resolving the issue whether petitioner's action for partition was a collateral attack on the validity of the certificates of title, the Court of Appeals held that since petitioner sought to compel respondent to execute documents necessary to effect transfer of what he claimed was his share, petitioner was not actually attacking the validity of the titles but in fact, recognized their validity. Finally, the appellate court upheld petitioner's position that Art. 144 of the Civil Code had been repealed by Art. 148 of the Family Code. Respondent moved for reconsideration of the decision of Court of Appeals. On May 7, 1998, nearly two years after its first decision, the Court of Appeals granted respondent's motion and reconsidered its prior decision. In its decision now challenged in the present petition, it held Prefatorily, and to better clarify the controversy on whether this suit is a collateral attack on the titles in issue, it must be underscored that plaintiff-appellant alleged in his complaint that all the nine (9) titles are registered in the name of defendant-appellee, Ma. Elvira T. Castillo, except one which appears in the name of Eloisa Castillo (seepar. 9, Complaint). However, a verification of the annexes of such initiatory pleading shows some discrepancies, to wit: 1. TCT No. 149046 (Annex A) = Elvira T. Castillo, single 2. TCT No. 168208 (Annex B) = do

3. TCT No. 37046 (Annex C) = do 4. TCT No. 37047 (Annex D) = do 5. TCT No. 37048 (Annex E) = do 6. TCT No. 30368 (Annex F) = Steelhaus Realty & Dev. Corp. 7. TCT No. 30369 (Annex G) = do 8. TCT No. 30371 (Annex F) = do 9. TCT No. (92323) 67881 (Annex I) = Eloisa Castillo In this action, plaintiff-appellant seeks to be declared as 1/2 co-owner of the real properties covered by the above listed titles and eventually for their partition [par. (a), Prayer; p. 4 Records]. Notably, in order to achieve such prayer for a joint co-ownership declaration, it is unavoidable that the individual titles involved be altered, changed, cancelled or modified to include therein the name of the appellee as a registered 1/2 coowner. Yet, no cause of action or even a prayer is contained filed. Manifestly, absent any cause or prayer for the alteration, cancellation, modification or changing of the titles involved, the desired declaration of co-ownership and eventual partition will utterly be an indirect or collateral attack on the subject titled in this suit. It is here that We fell into error, such that, if not rectified will surely lead to a procedural lapse and a possible injustice. Well settled is the rules that a certificate of title cannot be altered, modified or cancelled except in a direct proceeding in accordance with law. In this jurisdiction, the remedy of the landowner whose property has been wrongfully or erroneously registered in another name is, after one year from the date of the decree, not to set aside the decree, but respecting it as incontrovertible and no longer open to review, to bring an action for reconveyance or, if the property had passed into the hands of an innocent purchaser for value, for damages. Verily, plaintiff-appellant should have first pursued such remedy or any other relief directly attacking the subject titles before instituting the present partition suit.Apropos, the case at bench appears to have been prematurely filed. Lastly, to grant the partition prayed for by the appellant will in effect rule and decide against the properties registered in the names of Steelhouse Realty and Development Corporation and Eloisa Castillo, who are not parties in the case. To allow this to happen will surely result to injustice and denial of due process of law. . . . 11 Petitioner moved for reconsideration but his motion was denied by the Court of Appeals in its resolution dated December 21, 1998. Hence this petition.

Petitioner contends that: (1) the Court of Appeals, in its first decision of November 7, 1996, was correct in applying the Roque ruling and in rejecting respondent's claim that she was the sole owner of the subject properties and that the partition suit was a collateral attack on the titles; (2) the Court of Appeals correctly rules in its first decision that Art. 148 of the Family Code governs the co-ownership between the parties, hence, the complaint for partition is proper; (3) with respect to the properties registered in the name of Steelhouse Realty, respondent admitted ownership thereof and, at the very least, these properties could simply be excluded and the partition limited to the remaining real and personal properties; and (4) the Court of Appeals erred in not holding that under the Civil Code, there is an implied trust in his favor. 12 The issue in this case is really whether summary judgment, in accordance with Rule 35 of the Rules of Court, is proper. We rule in the negative. First. Rule 35, 3 of the Rules of Court provides that summary judgment is proper only when, based on the pleadings, depositions, and admissions on file, and after summary hearing, it is shown that except as to the amount of damages, there is no veritable issue regarding any material fact in the action and the movant is entitled to judgment as a matter of law. 1 Conversely, where the pleadings tender a genuine issue, i.e., an issue of fact the resolution of which calls for the presentation of evidence, as distinguished from an issue which is sham, fictitious, contrived, set-up in bad faith, or patently unsubstantial, summary judgment is not proper. 14 In the present case, we are convinced that genuine issues exist. Petitioner anchors his claim of co-ownership on two factual grounds: first, that said properties were acquired by him and respondent during their union from 1979 to 1992 from profits derived from their brokerage business; and second, that said properties were registered solely in respondent's name only because they agreed to that arrangement, thereby giving rise to an implied trust in accordance with Art. 1452 and Art. 1453 of the Civil Code. These allegations are denied by respondent. She denies that she and petitioner lived together as husband and wife. She also claims that the properties in question were acquired solely by her with her own money and resources. With such conflicting positions, the only way to ascertain the truth is obviously through the presentation of evidence by the parties. The trial court ruled that it is immaterial whether the parties actually lived together as husband and wife because Art. 144 of the Civil Code can not be made to apply to them as they were both incapacitated to marry each other. Hence, it was impossible for a coownership to exist between them. We disagree. Art. 144 of the Civil Code provides: When a man and a woman live together as husband and wife, but they are not married, or their marriage is void from the beginning, the property acquired by

either or both of them through their work or industry or their wages and salaries shall be governed by the rules on co-ownership. This provision of the Civil Code, applies only to cases in which a man and a woman live together as husband and wife without the benefit of marriage provided they are not incapacitated or are without impediment to marry each other, 15 or in which the marriage is void ab initio, provided it is not bigamous. Art. 144, therefore, does not cover parties living in an adulterous relationship. However, Art. 148 of the Family Code now provides for a limited co-ownership in cases where the parties in union are incapacitated to marry each other. It states: In cases of cohabitation not falling under the preceding article, 16 only the properties acquired by both of the parties through their actual joint contribution of money, property or industry shall be owned by them in common in proportion to their respective contributions. In the absence of proof to the contrary, their contributions and corresponding shares are presumed to be equal. The same rule and presumption shall apply to joint deposits of money and evidences of credits. If one of the parties is validly married to another, his or her share in the coownership shall accrue to the absolute community or conjugal partnership existing in such valid marriage. If the party who acted in bad faith is not validly married to another, his or her share shall be forfeited in the manner provided in the last paragraph of the preceding article. The foregoing rules on forfeiture shall likewise apply even if both parties are in bad faith. It was error for the trial court to rule that, because the parties in this case were not capacitated to marry each other at the time that they were alleged to have been living together, they could not have owned properties in common. The Family Code, in addition to providing that a co-ownership exists between a man and a woman who live together as husband and wife without the benefit of marriage, likewise provides that, if the parties are incapacitated to marry each other, properties acquired by them through their joint contribution of money, property or industry shall be owned by them in common in proportion to their contributions which, in the absence of proof to the contrary, is presumed to be equal. There is thus co-ownership eventhough the couple are not capacitated to marry each other. In this case, there may be a co-ownership between the parties herein. Consequently, whether petitioner and respondent cohabited and whether the properties involved in the case are part of the alleged co-ownership are genuine and material. All but one of the properties involved were alleged to have been acquired after the Family Code took effect on August 3, 1988. With respect to the property acquired before the Family Code took effect if it is shown that it was really acquired under the regime of the Civil Code, then it should be excluded.

Petitioner also alleged in paragraph 7 of his complaint that: Due to the effective management, hardwork and enterprise of plaintiff assisted by defendant, their customs brokerage business grew and out of the profits therefrom, the parties acquired real and personal properties which were, upon agreement of the parties, listed and registered in defendant's name with plaintiff as the unregistered co-owner of all said properties. 17 On the basis of this, he contends that an implied trust existed pursuant to Art. 1452 of the Civil Code which provides that "(I)f two or more persons agree to purchase property and by common consent the legal title is taken in the name of one of them for the benefit of all, a trust is created by force of law in favor of the others in proportion to the interest of each." We do not think this is correct. The legal relation of the parties is already specifically covered by Art. 148 of the Family Code under which all the properties acquired by the parties out of their actual joint contributions of money, property or industry shall constitute a co-ownership. Co-ownership is a form of trust and every co-owner is a trustee for the other. 18 The provisions of Art. 1452 and Art. 1453 of the Civil Code, then are no longer material since a trust relation already inheres in a coownership which is governed under Title III, Book II of the Civil Code. Second. The trial court likewise dismissed petitioner's action on the ground that the same amounted to a collateral attack on the certificates of title involved. As already noted, at first, the Court of Appeals ruled that petitioner's action does not challenge the validity of respondent's titles. However, on reconsideration, it reversed itself and affirmed the trial court. It noted that petitioner's complaint failed to include a prayer for the alteration, cancellation, modification, or changing of the titles involved. Absent such prayer, the appellate court ruled that a declaration of co-ownership and eventual partition would involve an indirect or collateral attack on the titles. We disagree. A torrens title, as a rule, is conclusive and indefeasible. Proceeding from this, P.D. No. 1529, 19 48 provides that a certificate of title shall not be subject to collateral attack and can not be altered, modified, or canceled except in a direct proceeding. When is an action an attack on a title? It is when the object of the action or proceeding is to nullify the title, and thus challenge the judgment pursuant to which the title was decreed. The attack is direct when the object of an action or proceeding is to annul or set aside such judgment, or enjoin its enforcement. On the other hand, the attack is indirect or collateral when, in an action to obtain a different relief, an attack on the judgment is nevertheless made as an incident thereof. 20 In his complaint for partition, consistent with our ruling in Roque regarding the nature of an action for partition, petitioner seeks first, a declaration that he is a co-owner of the subject properties; and second, the conveyance of his lawful shares. He does not attack respondent's titles. Petitioner alleges no fraud, mistake, or any other irregularity that would justify a review of the registration decree in respondent's favor. His theory is that although the subject properties were registered solely in respondent's name, but since by agreement between them as well as under the Family Code, he is co-owner of these

properties and as such is entitled to the conveyance of his shares. On the premise that he is a co-owner, he can validly seek the partition of the properties in co-ownership and the conveyance to him of his share. Thus, in Guevara v. Guevara, 21 in which a parcel of land bequeathed in a last will and testament was registered in the name of only one of the heirs, with the understanding that he would deliver to the others their shares after the debts of the original owner had been paid, this Court ruled that notwithstanding the registration of the land in the name of only one of the heirs, the other heirs can claim their shares in "such action, judicial or extrajudicial, as may be necessary to partition the estate of the testator." 22 Third. The Court of Appeals also reversed its first decision on the ground that to order partition will, in effect, rule and decide against Steelhouse Realty Development Corporation and Eloisa Castillo, both strangers to the present case, as to the properties registered in their names. This reasoning, however, ignores the fact that the majority of the properties involved in the present case are registered in respondent's name, over which petitioner claims rights as a co-owner. Besides, other than the real properties, petitioner also seeks partition of a substantial amount of personal properties consisting of motor vehicles and several pieces of jewelry. By dismissing petitioner's complaint for partition on grounds of due process and equity, the appellate court unwittingly denied petitioner his right to prove ownership over the claimed real and personal properties. The dismissal of petitioner's complaint is unjustified since both ends may be amply served by simply excluding from the action for partition the properties registered in the name of Steelhouse Realty and Eloisa Castillo. WHEREFORE, the amended decision of the Court of Appeals, dated May 7, 1998, is REVERSED and the case is REMANDED to the Regional Trial Court, Branch 59, Makati City for further proceedings on the merits. SO ORDERED.

[G.R. No. 125375. June 17, 2004]

SPOUSES ELPIDIO APOSTOL and AMELIA APOSTOL, petitioners, vs. COURT OF APPEALS and SPOUSES EMMANUEL CHUA and EDNA L. CHUA, respondents. DECISION CALLEJO, SR., J.: This is a petition for review of the Decision[1] of the Court of Appeals in CA-G.R. SP No. 38333 reversing the Decision,[2] on appeal, of the Regional Trial Court of Quezon City, Branch 215, in Civil Case No. Q-94-21698.

The Antecedents On September 3, 1993, the respondents, Spouses Emmanuel and Edna Chua, filed a complaint for unlawful detainer against the petitioners, Spouses Elpidio and Amelia Apostol, in the Metropolitan Trial Court (MeTC) of Metro Manila, docketed as Civil Case No. 7660. The respondents alleged, inter alia, that they had contracted with the Spouses Paulo and Georgina Pascua for the purchase of a parcel of land. The petitioners, who were present during the negotiations, verbally assured the respondents that they would vacate the property within ten (10) days from the execution of the sale. The petitioners then acknowledged that their stay in the property was only upon the tolerance of its former owners. On June 7, 1993, the Spouses Pascua executed a Deed of Absolute Sale over the property and the improvements thereon in favor of the respondents for P1,000,000. On the basis of the said deed, the respondents were issued Transfer Certificate of Title (TCT) No. 87610 over the property on June 8, 1993. Despite demands, however, the petitioners refused to vacate the property. The respondents prayed that, after due proceedings, judgment be rendered in their favor, thus: WHEREFORE, premises considered, it is respectfully prayed of this Honorable Court that after a summary hearing, judgment be rendered in favor of the plaintiffs and against the defendants, as follows: 1. Ordering the defendants and all persons claiming under them to immediately vacate the above-mentioned parcel of land; 2. Ordering the defendants to pay the plaintiffs the sum of P5,000.00 per month from the filing of the complaint until they finally vacate and turn over completely the above-mentioned parcel of land representing the reasonable compensation for the use and occupancy of the above-mentioned parcel of land; 3. Ordering the defendants to pay the plaintiffs the sum of P10,000.00 for and as attorneys fees, plus the sum of P1,000.00 appearance fee for every court attendance of plaintiffs counsel; and 4. Ordering defendants to pay plaintiffs the costs of suit.

PLAINTIFFS further pray for such other reliefs and remedies as may be deemed just and equitable in the premises.[3] In their answer with special and affirmative defenses and compulsory counterclaim, the respondents alleged, inter alia, that Luz B. Pascua was the owner of the parcel of land located in Quezon City covered by TCT No. 198936 with an area of 315 square meters. She sold a portion of the property, an area of 285.32 square meters, to the respondents on July 8, 1976 for P45,548 of which P15,548 was paid. On the same day, the parties executed a memorandum agreement covering the property, in which the

respondents agreed that the balance of the purchase price would be paid in installments. Thereafter, a deed of absolute sale was executed in favor of the respondents over an unsegregated portion of the property, with an area of 29.68 square meters, for P7,350 and, later, a deed of confirmation of deed of absolute sale with waiver over the said property. On June 20, 1979, the respondents executed an Affidavit of Adverse Claim over the property, stating, inter alia, that they could not cause the registration of the said deeds because the owners duplicate of TCT No. 198936 was in the possession of Teresita B. Jimenez, a former co-owner of the property. The respondents further alleged that Luz Pascua, in her letter to the Register of Deeds dated August 6, 1979, confirmed that she failed to turn over the owners duplicate of TCT No. 198936 because the same was in the possession of Jimenez, who, in turn, gave it to Jose J. Burgos. Thereafter, on May 15, 1980, Luz Pascua filed a Complaint against the petitioners in the RTC of Quezon City for rescission and damages docketed as Civil Case No. 29895 but the same was dismissed on December 19, 1983 for lack of interest to prosecute. Paulo Pascua filed a similar complaint against the petitioners in the RTC, docketed as Civil Case No. 88-523, but the same was, likewise, dismissed. Finally, the petitioners alleged that the Spouses Pascuas possession of the property after the sale thereof to the respondents was by mere tolerance. In the meantime, the petitioners filed a complaint against the respondents, the Spouses Chua, the Spouses Pascua, and the Register of Deeds in the RTC of Quezon City, for annulment of deed of sale and TCT No. 86338, and for reconveyance with damages. The petitioners alleged, inter alia, that they had been in possession of the property since 1973; their adverse claim over the property was annotated on June 20, 1979 as Entry No. PE 8812; Luz Pascua died on December 2, 1984 but Paulo Pascua did not inherit the property from her because the same had already been sold to the respondents; Paulo Pascua executed a falsified affidavit for self-adjudication over the property on the basis of which he was able to secure, on May 20, 1993, TCT No. 86338. The petitioners prayed that, after due proceedings, judgment be rendered in their favor, thus: WHEREFORE, premises considered, it is respectfully prayed that judgment be rendered as follows: 1. Nullifying the deed of sale executed by Paulo Pascua in favor of Edna Chua, marked as Annex G hereof and TCT No. 87610 (Annex H) in the name of Edna L. Chua; including TCT No. 86338 RT-432 (Annex F) in the name of Paulo Pascua; and in the alternative to reconvey the aforesaid property to herein plaintiffs; 2. Ordering the Register of Deeds of Quezon City to cancel TCT Nos. 87610 and 86338; 3. a) b) c) Sentencing defendants to pay plaintiffs: P100,000 as actual and consequential damages; P50,000 as moral damages; Exemplary damages, P50,000;

f)

d) P15,000 as attorneys fee; e) Cost; and, Praying for other reliefs and remedies, equitable and just under the premises. [4]

On February 17, 1994, the MeTC issued an Order in Civil Case No. 7660 defining the issues, thus: 1. 2. Whether or not the complaint is for Forcible Entry or Unlawful Detainer; Who is entitled to the lawful possession of the subject property;

3. Whether this case has to be suspended in view of the filing of an action for Annulment of Title in the Regional Trial Court of Quezon City; and 4. Whether the plaintiffs can lawfully eject the defendants from the premises.[5]

The MeTC rendered judgment in favor of the respondents on August 11, 1994. The decretal portion of the decision reads: WHEREFORE, in view of the foregoing, the Court hereby renders judgment in favor of plaintiffs and against defendants by ordering as follows: 1) Defendants and all persons claiming rights under them to vacate the premises denominated as No. 39, Visayas Ave., Project 6, Diliman, Quezon City, and to surrender the peaceful possession thereof to plaintiffs; 2) Defendants to pay plaintiffs the sum of P5,000.00 per month representing the reasonable compensation for the use and occupancy of the premises from the time of formal demand until the possession of the premises shall have been fully restored to plaintiffs; 3) 4) Defendants to pay plaintiffs the sum of P5,000.00 as attorneys fees; and Defendants to pay the costs of this suit.

SO ORDERED.[6] The MeTC ruled that having acquired the property from the Spouses Pascua, and being the registered owners of the property, the respondents are entitled to the possession thereof: The Court holds that plaintiffs are the ones entitled to the material or physical possession of the subject property. This is so because they have sufficiently established their title over the premises in question. They have shown that they are the registered owners of the subject premises located at No. 39 Visayas Avenue, Project 6, Diliman, Quezon City, as evidenced by Transfer Certificate of Title No. 87610 issued in

their name by the Registry of Deeds of Quezon City, which property they acquired from its former registered owners, the Sps. Paulo and Georgiana (sic) Pascua. Hence, as an incident to their ownership over said property, plaintiffs are entitled to its possession.[7] The court also ruled that the proceedings were not suspended by the pendency of Civil Case No. Q-94-19352. The respondents appealed the decision to the RTC, which rendered judgment on April 15, 1996 in their favor, reversing the decision of the MeTC and ordering the dismissal of the complaint. The RTC anchored its decision on the following findings: It is the contention of the plaintiff that as registered owners of the subject lot, they have the right to take possession thereof and eject defendants from the premises. On the other hand, it is the contention of the defendants that they are the rightful owners of the land and have been in possession thereon from the time they acquired the land from the real owner Luz B. Pascua. In ejectment cases, the only issue to be determined by the Court is the fact of prior physical and material possession over the subject property. Under Article 538 of the New Civil Code (NCC), it is provided that: Article 538. Possession as a fact cannot be recognized at the same time in two different personalities except in cases of co-possession. Should a question arise regarding the fact of possession, the present possessor shall be preferred, if there are two possessors, the one longer in possession; if the dates of the possession are the same, the one who presents a title; and if all these conditions are equal, the thing shall be placed in judicial deposit pending determination of its possession or ownership through proper proceedings. In this case, defendants were able to establish the fact that they have been in physical and material possession of the subject premises from the time they purchased the same from Luz B. Pascua on July 8, 1976. Defendants, therefore, are in possession of the property in the concept of an owner, and under the law, a possessor in the concept of an owner has in his favor the legal presumption that he possesses with a just title and he cannot be obliged to show or prove it (Art. 541, NCC). Moreover, it is important to note that defendants purchased the subject premises from Luz B. Pascua on July 8, 1976 while plaintiffs purchased the same from Paulo Pascua only on June 4, 1993, a much later date. This is shown by the Deed of Absolute Sale executed by Luz B. Pascua in favor of defendants on July 8, 1976 (Annex 1); Deed of Absolute Sale of Unsegregated Portion of Land executed by Luz B. Pascua and Paulo Pascua in favor of the defendants on July 14, 1977 (Annex 2) and a Deed of Confirmation of Deed of Absolute Sale of a Parcel of Land with Waiver dated July 14, 1977 executed by Paulo Pascua (Annex 3). These documents put in doubtful validity the subsequent sale of the same land by Paulo Pascua in favor of the plaintiffs. Paulo Pascua had no right, therefore, to transfer ownership of the subject land to plaintiffs because, Luz B. Pascua, the original owner, had already sold the same land to

defendants during her lifetime. And upon the death of Luz B. Pascua, Paulo Pascua had no right to adjudicate the subject lot to himself because he even confirmed such sale and waived any rights, interest and participation over the subject residential house and lot in a Deed of Confirmation of Absolute Sale with Waiver dated July 14, 1977 (Annex 3). It bears emphasis, however, that the validity of the respective titles of the parties is now the subject of controversy in Civil Case No. Q-94-19352 pending before the Regional Trial Court of Quezon City, Branch 102. From the foregoing, it is clear that defendants have priority of right and possession over the subject property and have, therefore, the right to be respected in their present possession thereon.[8] The petitioners filed a petition for review with the Court of Appeals, which later rendered judgment reversing the decision of the RTC and reinstated the decision of the MeTC. The CA held that in ruling against the petitioners, who were the registered owners of the property, the RTC thereby violated the prescription against the collateral attack of a torrens title.

The Present Petition In the present recourse, the petitioners, the Spouses Apostol, assert the following: (a) their possession of the property since 1976 preceded the sale of the property to the private respondents; (b) the respondents were purchasers of the property in bad faith; and, (c) in declaring that the petitioners had priority of possession of the property on the sale thereof by Luz Pascua and Paulo Pascua way back in 1976 and 1977, the RTC did not thereby collaterally attack the title of the respondents over the property. According to the petitioners, an inflexible adherence to the proscription against a collateral attack of a torrens title may result to gross injustice. In their comment on the petition, the respondents assert that contrary to the petitioners claim, the petition raises questions of facts. The respondents also aver that the CA did not commit any error in its decision. The petitioners contend that the respondents themselves admitted in their complaint before the MeTC that they knew that the petitioners were in actual possession of the property even before they purchased the same. Hence, the petitioners argue, the respondents were purchasers in bad faith. The petitioners also point out that since they purchased the property before the respondents, they cannot be ejected therefrom. Under Article 1544 of the Civil Code which, according to Justice Jose C. Vitug, is self-operating, the sale of the property to them prevails over the sale in favor of the respondents. Thus, the sale in favor of the respondents is null and void; consequently, TCT No. 87610 issued in favor of the respondents is, likewise, null and void. Finally, the petitioners aver that they may very well have become the owners of the property by prescription under Article 1134 of the New Civil Code.

For its part, the CA held as follows: The respondent court erred in dismissing the action for unlawful detainer on the sole ground that the private respondents are possessors in the concept of an owner of the subject premises and cannot, thus, be dispossessed of the same. The subject property is registered under the Torrens System in the names of the petitioners whose title to the property is presumed legal and cannot be collaterally attacked, much less in an action for unlawful detainer. No title to registered land in derogation of the title of the registered owner may be acquired by prescription or adverse possession (Caina vs. Court of Appeals, 239 SCRA 256; Odsigue vs. Court of Appeals, 233 SCRA 615; Calang vs. Register of Deeds of Quezon City, 231 SCRA 257). The presumption of ownership granted by law to a possessor in the concept of an owner under Article 541 is only prima facie and cannot prevail over a valid title registered under the Torrens System.[9]

The Ruling of the Court We agree with the Court of Appeals. In Pangilinan v. Aguilar,[10] we held that it is an accepted rule that a person who has a torrens title over the property, such as the respondents, is entitled to the possession thereof. We reiterated our ruling in the Pangilinan Case in Javelosa v. Court of Appeals,[11] and declared that the registered owners are entitled to the possession of the property covered by the said title from the time such title was issued in their favor. Moreover, the fact that the respondents were never in prior physical possession of the subject land is of no moment, as prior physical possession is necessary only in forcible entry cases. The petitioners claim that, as alleged in their answer to the complaint for unlawful detainer, the respondents title over the property is a nullity; hence, the complaint for unlawful detainer against the petitioners should be dismissed for lack of merit. Such allegation does not help their present recourse. Under Section 48 of Presidential Decree No. 1529, a certificate of title shall not be subject to collateral attack. It cannot be altered, modified or cancelled, except in a direct proceeding for that purpose in accordance with law. The issue of the validity of the title of the respondents can only be assailed in an action expressly instituted for that purpose.[12] Whether or not the petitioners have the right to claim ownership over the property is beyond the power of the court a quo to determine in an action for unlawful detainer.[13] The following issues are now the subject of Civil Case No. Q-94-19352 before the RTC of Quezon City: (1) whether the respondents were buyers in bad faith; (2) the validity of the deed of absolute sale over the property executed by the Spouses Pascua in favor of the respondents; and (3) the validity of the title issued to and in the names of the respondents. Hence, the Court shall no longer delve into such issues. IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The assailed decision of the Court of Appeals in CA-G.R. SP No. 38333 is AFFIRMED. Costs against the petitioners.

SO ORDERED.