Lacbayan vs. Samoy, Jr.

In a judicial partition action, the court must first resolve whether co-ownership exists; such determination does not constitute a collateral attack on a Torrens certificate of title, because what cannot be collaterally attacked is the certificate, not the title or ownership itself. A party’s assent to a proposed partition agreement is not an admission against interest where it involves matters of law and would prejudice a third person with rights recognized by law.

Petitioner Betty B. Lacbayan and respondent Bayani S. Samoy, Jr. met in 1978 through a common friend; respondent was already married. Their relationship produced a son in 1979, and during their cohabitation they, with three other incorporators, established a manpower services company. Five Quezon City parcels were registered in their names ostensibly as husband and wife. The dispute concerns the property consequences of that cohabitation and the interplay between a partition action and Torrens registration under the Property Registration Decree.

Petitioner Betty B. Lacbayan and respondent Bayani S. Samoy, Jr. met each other through a common friend sometime in 1978. Respondent was already married at that time, but their relationship developed, and petitioner gave birth to respondent’s son on October 12, 1979. During their illicit relationship, petitioner and respondent, together with three more incorporators, established a manpower services company.

Five parcels of land were acquired during that period and were registered in petitioner’s and respondent’s names, ostensibly as husband and wife. The parcels were: (a) a 255-square meter property at Malvar St., Quezon City, covered by TCT No. 303224 and registered in the name of Bayani S. Samoy, Jr. “married to Betty Lacbayan”; (b) a 296-square meter property at Main Ave., Quezon City, covered by TCT No. 23301 and registered in the name of “Spouses Bayani S. Samoy and Betty Lacbayan”; (c) a 300-square meter property at Matatag St., Quezon City, covered by TCT No. RT-38264 and registered in the name of Bayani S. Samoy, Jr. “married to Betty Lacbayan Samoy”; (d) a 183.20-square meter property at Zobel St., Quezon City, covered by TCT No. 335193 and registered in the name of Bayani S. Samoy, Jr. “married to Betty L. Samoy”; and (e) a 400-square meter property at Don Enrique Heights, Quezon City, covered by TCT No. 90232 and registered in the name of Bayani S. Samoy, Jr. “married to Betty L. Samoy.”

Initially, petitioner lived with her parents in Mapagbigay St., V. Luna, Quezon City. In 1983, she left her parents and decided to reside in the Malvar St. property in Project 4, Quezon City. Later, she and their son transferred to Zobel St., also in Project 4, and finally to the 400-square meter property in Don Enrique Heights.

Eventually, their relationship turned sour, and they decided to part ways sometime in 1991. In 1998, both parties agreed to divide the properties and terminate their business partnership by executing a Partition Agreement. Initially, respondent agreed to petitioner’s proposal that the Malvar St. and Don Enrique Heights properties be assigned to petitioner, while ownership over the three other properties would go to respondent. When petitioner wanted additional demands included in the partition agreement, however, respondent refused. Feeling aggrieved, petitioner filed a complaint for judicial partition of the properties before the RTC in Quezon City on May 31, 1999.

In her complaint, petitioner averred that she and respondent started to live together as husband and wife in 1979 without the benefit of marriage and worked together as business partners, acquiring real properties amounting to P15,500,000.00. Respondent, in his Answer, denied petitioner’s claim of cohabitation and said that the properties were acquired out of his own personal funds without any contribution from petitioner. During trial, petitioner admitted that although they were together for almost 24 hours a day from 1983 until 1991, respondent would still go home to his wife usually in the wee hours of the morning. Petitioner likewise claimed that they acquired the real properties from the income of the company which she and respondent established. Respondent, meanwhile, testified that the properties were purchased from his personal funds, salaries, dividends, allowances, and commissions. He countered that the properties were registered in his name together with petitioner to exclude them from the property regime of respondent and his legal wife and to prevent the possible dissipation of the properties since his legal wife was then a heavy gambler. Respondent added that he also purchased the properties as investment, with the intention to sell them later on for the purchase or construction of a new building.

The trial court gave considerable weight to petitioner’s own admission that the properties were acquired not from her personal funds but from the income of the manpower services company, over which she owned a measly 3.33% share. That factual finding, along with the parties’ conflicting claims on the source of funds and the purpose of registering the properties in both names, framed the Supreme Court’s review.

• Ownership in Partition: Petitioner argued that ownership cannot be passed upon in a partition case and that it was improper to thresh out the issue on ownership in an action for partition.
• Collateral Attack: Petitioner contended that the trial court’s decision subjected the certificates of title over the properties to a collateral attack contrary to law and jurisprudence.
• Admission Against Interest: Petitioner maintained that the partition agreement duly signed by respondent contained an admission against respondent’s interest as to the existence of co-ownership between the parties.
• Self-Serving Repudiation: Petitioner argued that an action for partition cannot be defeated by the mere expedience of repudiating co-ownership based on self-serving claims of exclusive ownership.
• Torrens Title as Evidence: Petitioner asserted that a Torrens title is the best evidence of ownership and cannot be outweighed by respondent’s self-serving assertion to the contrary.
• Joint Contribution: Petitioner claimed that the properties were acquired by both parties through their actual joint contribution of money, property, or industry.
• Pro Indiviso Share: Petitioner asserted that she is the pro indiviso owner of one-half of the properties in dispute.

• No Cohabitation: Respondent denied petitioner’s claim of cohabitation.
• Exclusive Ownership and Personal Funds: Respondent maintained that the properties were acquired out of his own personal funds without any contribution from petitioner; he testified that they were purchased from his personal funds, salaries, dividends, allowances, and commissions.
• Purpose of Registration: Respondent countered that the properties were registered in his name together with petitioner to exclude them from the property regime of respondent and his legal wife and to prevent possible dissipation since his legal wife was then a heavy gambler.
• Investment Purpose: Respondent added that he purchased the properties as investment, with the intention to sell them later on for the purchase or construction of a new building.
• No Co-Ownership: Respondent maintained that he was the sole owner of the properties and opposed petitioner’s claim of co-ownership.

• Ownership in Partition: Whether an action for partition precludes a settlement on the issue of ownership.
• Collateral Attack on Torrens Title: Whether the Torrens title over the disputed properties was collaterally attacked in the action for partition.
• Estoppel / Admission Against Interest: Whether respondent is estopped from repudiating co-ownership over the subject realties.
• Attorney’s Fees: Whether respondent is entitled to attorney’s fees.

• Ownership in Partition: No. An action for partition does not preclude settlement of ownership; the determination of whether co-ownership exists is necessary before partition may be effected.
• Collateral Attack on Torrens Title: No. What cannot be collaterally attacked is the certificate of title, not the title itself; ownership may be disputed notwithstanding the issuance of a Torrens certificate.
• Estoppel / Admission Against Interest: No. Respondent’s assent to the initial partition agreement was not an admission against interest; it involved matters of law and would prejudice his legal spouse, and petitioner did not assent to the agreement.
• Attorney’s Fees: No. The award was deleted because respondent himself induced petitioner’s belief that she had rights over the properties and used the spousal registration to skirt the law and escape his obligations to his legal wife.

• Ownership in Partition: The Court relied on Municipality of Biñan vs. Garcia, which explained that a partition and/or accounting suit has two phases. The first phase determines whether co-ownership in fact exists and whether partition is proper; the second phase begins when the parties cannot agree on partition, in which case the court orders partition with commissioners. Because petitioner’s complaint was premised on her claim of co-ownership and respondent denied it, the issue of ownership had to be resolved first. Until and unless co-ownership is definitely and finally resolved, it would be premature to effect a partition. The complaint would not even lie if petitioner had no rightful interest over the subject properties. Thus, an action for partition does not preclude a settlement of ownership; it requires it.

• Collateral Attack on Torrens Title: The Court held that there was no collateral attack. Section 48 of Presidential Decree No. 1529 provides that a certificate of title shall not be subject to collateral attack and cannot be altered, modified, or cancelled except in a direct proceeding. However, what cannot be collaterally attacked is the certificate of title, not the title itself. The certificate is the document issued by the Register of Deeds known as the TCT; the title referred to by law means ownership, which is often represented by that document. Petitioner confused title with the certificate of title. Placing a parcel of land under the Torrens system does not mean that ownership thereof can no longer be disputed. Ownership is different from a certificate of title, the latter only serving as the best proof of ownership over a piece of land, and the certificate cannot always be considered conclusive evidence of ownership. Mere issuance of the certificate in the name of any person does not foreclose the possibility that the real property may be under co-ownership with persons not named in the certificate, or that the registrant may only be a trustee, or that other parties may have acquired interest over the property subsequent to the issuance of the certificate. Registration does not vest ownership over a property, but may be the best evidence thereof.

• Estoppel / Admission Against Interest: The Court ruled that respondent’s assent to the initial partition agreement did not operate as an admission against interest. An admission is any statement of fact made by a party against his interest or unfavorable to the conclusion for which he contends or inconsistent with the facts alleged by him. Under Section 26, Rule 130 of the Rules of Court, the act, declaration, or omission of a party as to a relevant fact may be given in evidence against him. To be admissible, an admission must (a) involve matters of fact, and not of law; (b) be categorical and definite; (c) be knowingly and voluntarily made; and (d) be adverse to the admitter’s interests, otherwise it would be self-serving and inadmissible. A careful perusal of the Partition Agreement showed that it involved matters necessitating prior settlement of questions of law, basic of which was a determination of whether the parties had the right to freely divide the subject properties. Following petitioner’s argument would allow respondent not only to admit against his own interest but also that of his legal spouse, who may also be lawfully entitled to co-ownership over the properties. Respondent was not allowed by law to waive whatever share his lawful spouse may have had. Rights may be waived, unless the waiver is contrary to law, public order, public policy, morals, good customs, or prejudicial to a third person with a right recognized by law. Moreover, petitioner herself admitted that she did not assent to the Partition Agreement after seeing the need to amend it to include other matters; she had no right to insist on the contents of an agreement she intentionally refused to sign.

• Attorney’s Fees: The Court did not subscribe to the trial court’s view that respondent was entitled to attorney’s fees. The trial court had ruled that respondent was forced to litigate and engaged the services of counsel to defend his interest, entitling him to P100,000.00. However, respondent himself had impressed upon petitioner that she had a right over the involved properties. Second, respondent’s act of representing himself and petitioner as husband and wife was a deliberate attempt to skirt the law and escape his legal obligation to his lawful wife. Respondent therefore had no one but himself to blame for the consequences of his deceitful act, which resulted in the filing of the complaint against him.

• Partition and Co-ownership — In a judicial partition action, the court must first determine whether co-ownership exists. A partition suit has two phases: the first phase determines whether co-ownership in fact exists and whether partition is proper; the second phase begins when the parties cannot agree on partition, in which case the court orders partition with commissioners. Until ownership or co-ownership is definitely resolved, partition is premature. The Court applied this doctrine in holding that petitioner’s complaint for partition necessarily required a prior ruling on ownership.

• Torrens Certificate vs. Title — A Torrens certificate of title cannot be collaterally attacked, but what is protected from collateral attack is the certificate, not the title itself. Title means ownership, while the certificate is the document issued by the Register of Deeds as evidence of such ownership. Registration does not vest ownership; it may be the best evidence thereof, but it is not conclusive. Mere issuance of a certificate in one person’s name does not foreclose co-ownership with persons not named, trusteeship, or subsequent interests. The Court applied this doctrine in ruling that resolving ownership in the partition case did not collaterally attack the TCTs.

• Admission Against Interest — An admission is any statement of fact made by a party against his interest or unfavorable to the conclusion for which he contends or inconsistent with the facts alleged by him. To be admissible, an admission must (a) involve matters of fact, and not of law; (b) be categorical and definite; (c) be knowingly and voluntarily made; and (d) be adverse to the admitter’s interests; otherwise it is self-serving and inadmissible. The Court applied this doctrine in holding that respondent’s assent to the initial partition agreement was not an admission against interest because it involved questions of law and would prejudice his legal spouse.

• Waiver and Third-Party Rights — Rights may be waived unless the waiver is contrary to law, public order, public policy, morals, good customs, or prejudicial to a third person with a right recognized by law. The Court applied this doctrine in ruling that respondent could not waive whatever share his lawful spouse may have had in the disputed properties.

• Attorney’s Fees and Induced Litigation — Attorney’s fees may be denied where the party seeking them himself induced the claimant’s belief of a right over the property and engaged in a deliberate attempt to skirt the law. The Court applied this doctrine in deleting the P100,000.00 attorney’s fees award because respondent’s own deceitful act resulted in the filing of the complaint against him.

• “The first phase of a partition and/or accounting suit is taken up with the determination of whether or not a co-ownership in fact exists, and a partition is proper (i.e., not otherwise legally proscribed) and may be made by voluntary agreement of all the parties interested in the property.” — This passage states the first phase of a partition suit and supports the ruling that ownership must be resolved before partition can be effected.
• “What cannot be collaterally attacked is the certificate of title and not the title itself.” — This is the core distinction between a Torrens certificate and ownership, and it supports the holding that the partition action did not collaterally attack the TCTs.
• “To be admissible, an admission must (a) involve matters of fact, and not of law; (b) be categorical and definite; (c) be knowingly and voluntarily made; and (d) be adverse to the admitter’s interests, otherwise it would be self-serving and inadmissible.” — This passage enumerates the requisites of an admissible admission against interest, which the Court applied to the Partition Agreement.
• “Respondent, therefore, has no one but himself to blame the consequences of his deceitful act which resulted in the filing of the complaint against him.” — This passage supports the deletion of the attorney’s fees award because respondent’s own conduct induced the litigation.

• Municipality of Biñan vs. Garcia, G.R. No. 69260, December 22, 1989, 180 SCRA 576 — Controlling precedent. The Court quoted its two-phase framework for partition and/or accounting suits, holding that the first phase determines whether co-ownership exists and whether partition is proper.
• Lee Tek Sheng vs. Court of Appeals, G.R. No. 115402, July 15, 1998, 292 SCRA 544 — Cited for the distinction between a certificate of title and the title itself, and for the rule that registration does not vest ownership and the certificate is not always conclusive evidence of ownership.
• Fabrica vs. Court of Appeals, No. L-47360, December 15, 1986, 146 SCRA 250 — Cited in support of the rule that partition is premature until the issue of co-ownership is definitely and finally resolved.
• Catapusan vs. Court of Appeals, G.R. No. 109262, November 21, 1996, 264 SCRA 534 — Cited for the rule that the complaint will not lie if the claimant does not have any rightful interest over the subject properties.

• Section 48, Presidential Decree No. 1529 (Property Registration Decree) — Provides that a certificate of title shall not be subject to collateral attack and cannot be altered, modified, or cancelled except in a direct proceeding in accordance with law. The Court applied this provision by holding that the partition action did not collaterally attack the TCTs because the issue was ownership, not the validity of the certificates.
• Section 26, Rule 130, Rules of Court — Provides that the act, declaration, or omission of a party as to a relevant fact may be given in evidence against him. The Court applied this provision in ruling that respondent’s assent to the Partition Agreement was not an admissible admission against interest because the requisites for admissibility were not met.
• Article 6, Civil Code — Provides that rights may be waived, unless the waiver is contrary to law, public order, public policy, morals, good customs, or prejudicial to a third person with a right recognized by law. The Court applied this provision in holding that respondent could not waive whatever share his lawful spouse may have had in the disputed properties.
• Rule 45, 1997 Rules of Civil Procedure — Governs petitions for review on certiorari and generally limits the Court to questions of law. The Court applied this rule by declining to disturb the lower courts’ factual findings on the source of funds and the parties’ contributions.

• Carpio Morales (Chairperson), Bersamin, and Sereno, JJ. — concurred.
• Brion, J. — concurred subject to observations. He agreed that petitioner failed to prove co-ownership by clear preponderant evidence under Article 148 of the Family Code because, although the properties were acquired during cohabitation, no evidence showed her actual joint contribution; corporate income is not automatically personal earnings. He disagreed with declaring respondent sole owner of all the properties because petitioner is a registered co-owner of the property covered by TCT No. 23301; the decision should be without prejudice to partition of that property or remanded for determination. He also objected to the clause preserving the legal wife’s claims as beyond the issues and advisory.