Santos v. Lumbao
REITERATIONFacts
The Antecedents: Respondents Spouses Lumbao claimed to have bought a 107-square meter lot from Rita Santos on two separate occasions in 1979 and 1981 through documents denominated as "Bilihan ng Lupa." They took possession and built a house thereon. Rita informed respondent Proserfina Lumbao that she could not deliver the title as the inherited property had not yet been partitioned. On May 2, 1986, Rita's heirs, including petitioners, executed a Deed of Extrajudicial Settlement, partitioning Maria Catoc's estate, which included the subject property. Respondents alleged this was done fraudulently. On June 15, 1992, respondents sent a demand letter, which was ignored. Subsequently, respondents discovered that petitioners executed a Deed of Real Estate Mortgage on the property on February 16, 1990, which was annotated on the title. Respondents filed a Complaint for Reconveyance with Damages. Procedural History: The Regional Trial Court (RTC) dismissed the Complaint for Reconveyance for lack of merit and ordered respondents to pay petitioners attorney's fees and litigation expenses. The Court of Appeals (CA) reversed the RTC decision, ordering petitioners to reconvey the property and pay attorney's fees. The CA denied petitioners' motion for reconsideration. The Petition: Petitioners filed a Petition for Review on Certiorari, assailing the CA's decision and resolution, arguing that the CA erred in reversing the RTC's findings, in ordering reconveyance, in not ruling that respondents were guilty of laches, in not finding petitioners in good faith in executing the Deed of Extrajudicial Settlement, and in not ruling that the 'Bilihan ng Lupa' documents were unenforceable and that the complaint was dismissible for non-compliance with barangay conciliation.
Issue(s)
Whether the Complaint for Reconveyance with Damages is dismissible for failure to comply with the Revised Katarungang Pambarangay Law. Whether the "Bilihan ng Lupa" documents are valid and enforceable bases for the action for reconveyance. Whether petitioners are legally bound to comply with the "Bilihan ng Lupa" and reconvey the subject property. Whether respondents are guilty of laches or if their action has prescribed. Whether petitioners acted in good faith in executing the Deed of Extrajudicial Settlement.
Ruling
The Supreme Court denied the petition and affirmed the decision of the Court of Appeals. Petitioners were ordered to reconvey the subject property to respondents Spouses Lumbao and to pay attorney's fees and litigation expenses.
Ratio Decidendi
On the issue of non-compliance with barangay conciliation: The Court held that while prior resort to barangay conciliation is a pre-condition for filing a complaint in court, non-compliance is not jurisdictional and can be waived. Petitioners waived this defense by actively participating in the trial proceedings without filing a motion to dismiss, thereby invoking the court's jurisdiction. Their participation, including presenting their own witness and cross-examining respondents' witnesses, constituted a recognition of the court's jurisdiction. Therefore, petitioners could no longer raise the defense of non-compliance to seek dismissal of the complaint. On the validity and enforceability of the "Bilihan ng Lupa" documents: The Court found the "Bilihan ng Lupa" documents to be valid and enforceable. The signatures of petitioners Virgilio and Tadeo on the August 17, 1979 document were deemed admissions, despite Virgilio's later denial due to the passage of time. The Court gave credence to the CA's finding that the witness testimony did not negate the signing as witnesses. Furthermore, the documents were duly notarized, enjoying a presumption of regularity and due execution, which petitioners failed to overcome with clear and convincing evidence of falsity or fraud. The Court also clarified that sales of undivided shares in an estate are valid, subject to partition, and that the description of the property, even if referring to an undivided share, was sufficient given the circumstances at the time of sale. On whether petitioners are bound to reconvey the property: The Court ruled that petitioners, as heirs of Rita Santos, are bound by the "Bilihan ng Lupa" contracts entered into by their predecessor-in-interest. Citing Article 1311 of the Civil Code, the Court stated that rights and obligations arising from contracts are transmissible to heirs. Petitioners succeeded to the property subject to the liabilities affecting their mother's estate, including the sale of the 107-square meter lot. They could not escape the legal consequences of their mother's transaction, as they inherited only what their mother validly possessed and what was binding upon her was also binding upon them. On the defense of prescription and laches: The Court found the defenses of prescription and laches to be unjustifiable. In actions for reconveyance, prescription does not set in when the plaintiff is in actual possession of the land. Respondents Spouses Lumbao had been and remained in actual possession and occupation of the property since acquiring it. Moreover, they were not guilty of laches because they consistently demanded the transfer of title from Rita and later from the petitioners, who failed to comply despite the partition of the estate, even including the sold portion in their inheritance. This inclusion, despite knowledge of the prior sale, demonstrated bad faith on the part of the petitioners. On the good faith of petitioners in executing the Deed of Extrajudicial Settlement: The Court implicitly rejected the petitioners' claim of good faith. By including the 107-square meter lot, which had already been sold to respondents, in the Deed of Extrajudicial Settlement and partitioning it among themselves, petitioners acted contrary to their knowledge of the prior sale. This act, coupled with their subsequent refusal to reconvey, demonstrated a lack of good faith and an attempt to deprive respondents of their rightful property.
Main Doctrine
The Supreme Court affirmed the Court of Appeals' decision ordering the reconveyance of the subject property, holding that the 'Bilihan ng Lupa' documents were valid and enforceable, and that the heirs were bound by the contracts entered into by their predecessor-in-interest. The Court also ruled that the failure to comply with barangay conciliation was waived by the petitioners' active participation in the case, and that the action for reconveyance did not prescribe as the respondents remained in possession of the property.