Lee Tek Sheng vs. Court of Appeals

A notice of lis pendens annotated on a Torrens certificate of title does not constitute a collateral attack on the certificate of title, and the certificate of title cannot be considered conclusive evidence of ownership where the issue of ownership has been properly raised in a partition case. The certificate of title is merely the best evidence of ownership, not ownership itself, and registration does not foreclose the possibility that the registrant may be a trustee or that co-ownership may exist with persons not named in the certificate.

Petitioner Leoncio Lee Tek Sheng is one of the legitimate children of private respondent Lee Teksheng, who also has illegitimate children with another woman. After the death of petitioner's mother, petitioner sought partition of the conjugal properties of his parents. The properties listed in the complaint included a lumber business, rents, four buildings, and a warehouse. Private respondent alleged that four parcels of land registered solely in petitioner's name under Transfer Certificate of Title (TCT) 8278 were actually conjugal properties, registered in petitioner's name only as trustee because petitioner was then the only Filipino citizen in the family.

Petitioner Leoncio Lee Tek Sheng, a legitimate child of private respondent Lee Teksheng, filed a complaint against his father for partition of the conjugal properties of his parents after his mother's death. The properties listed in the complaint included a lumber business, rents, four buildings, and a warehouse. In his answer with counterclaim, private respondent alleged that four parcels of land registered solely in petitioner's name under Transfer Certificate of Title (TCT) 8278 are conjugal properties. Private respondent contended that the lots were owned by the conjugal regime but were registered in petitioner's name only as a trustee, considering that at that time, petitioner was then the only Filipino citizen in the family. Accordingly, private respondent prayed for the dismissal of the partition case and for the reconveyance of the lots to its rightful owner — the conjugal regime.

Meantime, to protect the interest of the conjugal regime during the pendency of the case, private respondent caused the annotation of a notice of lis pendens on TCT 8278. Petitioner moved for the cancellation of said annotation, which was denied by the trial court ruling that (a) the notice was not for the purpose of molesting or harassing petitioner and (b) it was also to keep the property within the power of the court pending litigation. Petitioner assailed the denial of his motion to cancel the notice of lis pendens via petition for certiorari and prohibition to the Court of Appeals, but to no avail.

Resorting to the Supreme Court, petitioner primarily contended that in the resolution of an incidental motion for cancellation of the notice of lis pendens, (a) it was improper to thresh out the issue of ownership of the disputed lots since ownership cannot be passed upon in a partition case, otherwise, (b) it would amount to a collateral attack of his title obtained more than 28 years ago. He argued that his sole ownership as shown in the TCT would be improperly assailed in a partition case and should be done through a separate suit. On the contrary, private respondent posited that evidence of ownership is admissible in a partition case as this is not a probate or land registration proceeding where the court's jurisdiction is limited.

The Supreme Court noted that one of the issues agreed upon by the parties at pre-trial was to determine what properties were acquired by the spouses during their marriage. In addition, private respondent in his answer with counterclaim prayed for the reconveyance of the disputed lots. Accordingly, the issue of ownership had been put in issue, and each claimant was required to present their respective evidence to substantiate their respective allegations.

• Improper Resolution of Ownership in an Incidental Motion: Petitioner contended that in the resolution of an incidental motion for cancellation of the notice of lis pendens, it was improper to thresh out the issue of ownership of the disputed lots since ownership cannot be passed upon in a partition case.
• Collateral Attack on Title: Petitioner argued that resolving the ownership issue would amount to a collateral attack of his title obtained more than 28 years ago, and that his sole ownership as shown in the TCT would be improperly assailed in a partition case and should be done through a separate suit.

• Admissibility of Ownership Evidence in Partition Cases: Private respondent posited that evidence of ownership is admissible in a partition case as this is not a probate or land registration proceeding where the court's jurisdiction is limited.

• Collateral Attack on Title: Whether the annotation of a notice of lis pendens on petitioner's certificate of title amounts to a collateral attack on the Torrens title.
• Adjudication of Ownership in a Partition Case: Whether ownership of the disputed lots can be passed upon and resolved in a partition case.

• Collateral Attack on Title: No. The annotation of a notice of lis pendens does not amount to nor can it be considered as equivalent to a collateral attack of the certificate of title for a parcel of land. What cannot be collaterally attacked is the certificate of title and not the title itself, and the certificate cannot always be considered as conclusive evidence of ownership.
• Adjudication of Ownership in a Partition Case: Yes. Until and unless ownership is definitely resolved, it would be premature to effect partition of the property. An action for partition is one case where the annotation of a notice of lis pendens is proper, and the court is required to inquire into the "nature and extent of title" of the supposed claimant.

• Collateral Attack on Title: The concept of no collateral attack of title is based on Section 48 of P.D. 1529, which states 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 clarified that what cannot be collaterally attacked is the certificate of title and not the title. The certificate referred to is that document issued by the Register of Deeds known as the Transfer Certificate of Title (TCT). By title, the law refers to ownership which is represented by that document. Petitioner apparently confused certificate with title. Placing a parcel of land under the mantle of the Torrens system does not mean that ownership thereof can no longer be disputed. Ownership is different from a certificate of title. The TCT is only the best proof of ownership of a piece of land. Mere issuance of the certificate of title 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 subsequent to the issuance of the certificate of title. Registration is not the equivalent of title, but is only the best evidence thereof. In this case, petitioner's certificate of title was not being assailed by private respondent; what the latter disputed was the former's claim of sole ownership. Thus, although petitioner's certificate of title may have become incontrovertible one year after issuance, it does not bar private respondent from questioning his ownership.

• Adjudication of Ownership in a Partition Case: A notice of lis pendens may be cancelled only on two grounds: (1) if the annotation was for the purpose of molesting the title of the adverse party, or (2) when the annotation is not necessary to protect the title of the party who caused it to be recorded. Neither ground for cancellation of the notice was convincingly shown to concur in this case. The annotation of a notice of lis pendens is only for the purpose of announcing to the whole world that a particular real property is in litigation, serving as a warning that one who acquires an interest over said property does so at his own risk. The parties were still locked in a legal battle to settle their respective claims of ownership. Until and unless ownership is definitely resolved, it would be premature to effect partition of the property. For purposes of annotating a notice of lis pendens, there is nothing in the rules which requires the party seeking annotation to prove that the land belongs to him. An action for partition is one case where the annotation of a notice of lis pendens is proper. One of the issues agreed upon by the parties at pre-trial was to determine what properties were acquired by the spouses during their marriage, and private respondent in his answer with counterclaim prayed for the reconveyance of the disputed lots. Accordingly, the issue of ownership had been put in issue, and each claimant must present their respective evidence to substantiate their respective allegations. Considering that this is a partition case, the court is required to inquire into the "nature and extent of title" of the supposed claimant — the title referred to by the rule is the purported ownership of the claimants and not the certificate of title mentioned in Section 48 of P.D. 1529, although the latter may be considered in the determination of the former.

• Distinction between certificate of title and title — A certificate of title is the document issued by the Register of Deeds known as the Transfer Certificate of Title (TCT), while title refers to ownership which is represented by that document. The certificate of title is only the best proof of ownership, not ownership itself. Registration is not the equivalent of title but is only the best evidence thereof. The Court applied this distinction to hold that while a certificate of title cannot be collaterally attacked, the ownership it represents can still be disputed, and the certificate cannot always be considered conclusive evidence of ownership.

• Notice of lis pendens as not a collateral attack — The annotation of a notice of lis pendens does not amount to nor can it be considered as equivalent to a collateral attack of the certificate of title for a parcel of land. The notice of lis pendens is only for the purpose of announcing to the whole world that a particular real property is in litigation, serving as a warning that one who acquires an interest over said property does so at his own risk.

• Grounds for cancellation of notice of lis pendens — A notice of lis pendens may be cancelled only on two grounds: (1) if the annotation was for the purpose of molesting the title of the adverse party, or (2) when the annotation is not necessary to protect the title of the party who caused it to be recorded. Neither ground was convincingly shown to concur in this case.

• Ownership as a requisite issue in partition cases — Until and unless ownership is definitely resolved, it would be premature to effect partition of the property. In a partition case, the court is required to inquire into the "nature and extent of title" of the supposed claimant, which refers to the purported ownership of the claimants and not the certificate of title.

• "What cannot be collaterally attacked is the certificate of title and not the title. The certificate referred to is that document issued by the Register of Deeds known as the Transfer Certificate of Title (TCT). By title, the law refers to ownership which is represented by that document." — This passage articulates the central distinction between the certificate of title as a document and title as ownership, which is the ratio decidendi of the case.

• "Mere issuance of the certificate of title 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 subsequent to the issuance of the certificate of title." — This passage defines the limits of the evidentiary value of a Torrens certificate of title and supports the ruling that ownership may still be disputed despite registration.

• "The annotation of a notice of lis pendens is only for the purpose of announcing 'to the whole world that a particular real property is in litigation, serving as a warning that one who acquires an interest over said property does so at his own risk, or that he gambles on the result of the litigation over said property.'" — This passage states the purpose and function of a notice of lis pendens, which is the controlling doctrine on the first issue.

• Halili vs. NLRC, 257 SCRA 174 — Cited for the proposition that a Torrens certificate of title cannot be collaterally attacked and that the TCT is only the best proof of ownership of a piece of land.
• Heirs of Gonzaga vs. CA, 261 SCRA 327; Republic vs. CA, 258 SCRA 712 — Cited for the proposition that the certificate cannot always be considered as conclusive evidence of ownership.
• Sajonas vs. CA, 258 SCRA 79; Garbin vs. CA, 253 SCRA 187; Tanchoco vs. Aquino, 154 SCRA 1; J.P. Pellicer & Co., Inc. vs. Philippine Realty Corp., 87 Phil. 302 — Cited for the definition of the purpose of a notice of lis pendens as announcing to the whole world that a particular real property is in litigation.
• Catapusan vs. CA, 264 SCRA 534 — Cited for the proposition that until and unless ownership is definitely resolved, it would be premature to effect partition of the property.
• Villanueva vs. CA, G.R. No. 117108, November 5, 1997 — Cited for the proposition that there is nothing in the rules which requires the party seeking annotation of a notice of lis pendens to prove that the land belongs to him.
• Magdalena Homeowners Association, Inc. vs. CA, 184 SCRA 325 (1990) — Cited for the instances where the notice of lis pendens is proper, including actions to recover possession of real estate, to quiet title, to remove clouds thereon, and any other proceedings directly affecting the title to the land.

• Section 48, P.D. 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 distinguishing between the certificate of title and title as ownership, holding that the annotation of a notice of lis pendens does not constitute a collateral attack.
• Section 32, P.D. 1529 — Provides that a certificate of title becomes incontrovertible one year after issuance. The Court held that this does not bar private respondent from questioning petitioner's ownership.
• Section 77, P.D. 1529 — Provides for the cancellation of lis pendens before final judgment upon proper showing that the notice is for the purpose of molesting the adverse party or that it is not necessary to protect the rights of the party who caused it to be registered.
• Section 14, Rule 13, 1997 Rules of Civil Procedure (formerly Section 24) — Provides that a notice of lis pendens may be cancelled only upon order of the court after proper showing that the notice is for the purpose of molesting the adverse party or that it is not necessary to protect the rights of the party who caused it to be recorded.
• Section 1, Rule 69, 1997 Rules of Civil Procedure — Requires a person having the right to compel the partition of real estate to set forth in his complaint the nature and extent of his title and an adequate description of the real estate of which partition is demanded. The Court applied this to hold that the court is required to inquire into the "nature and extent of title" of the supposed claimant in a partition case.
• Section 1, Rule 131, 1997 Rules of Civil Procedure — Cited in connection with the requirement that each claimant must present their respective evidence to substantiate their respective allegations.

Regalado, Melo, Puno, and Mendoza, JJ., concurred.