Santos vs. Lumbao

A sale of an undivided aliquot share by a co-owner is valid and binding on the heirs, who must reconvey the specific portion upon partition, provided the buyer is in actual possession, barring prescription and laches.

Rita Catoc Santos sold 107 square meters of her inchoate share in her deceased mother's estate to respondents Spouses Lumbao via two notarized documents denominated as "Bilihan ng Lupa," dated August 17, 1979 and January 9, 1981. The respondents took actual possession of the lot, erected a house thereon, and repeatedly demanded the transfer of the title, which Rita could not effect because the estate remained unpartitioned. Upon Rita's death in 1985, her heirs—the petitioners—executed a Deed of Extrajudicial Settlement in 1986, partitioning the mother's estate among themselves and including the 107-square meter lot already sold to the respondents. A title was issued in the petitioners' names, and they subsequently mortgaged the property. After the petitioners refused formal demands to reconvey the lot, the respondents filed a complaint for reconveyance with damages.

• The Sales: During her lifetime, Rita Catoc Santos sold 100 square meters of her inchoate share in her mother's estate to respondents Spouses Lumbao via a "Bilihan ng Lupa" dated August 17, 1979. An additional 7 square meters was sold via a second "Bilihan ng Lupa" dated January 9, 1981. Both documents were notarized, and the signatures of petitioners Virgilio and Tadeo appeared as witnesses on the 1979 document.
• Possession and Demands: The respondents took actual possession of the 107-square meter lot, built a house, and have occupied it since. They made verbal demands to Rita and, later, the petitioners for the issuance of a separate title. Rita explained she could not deliver the title because the estate had not yet been partitioned.
• The Extrajudicial Settlement: On May 2, 1986, after Rita's death, the petitioners executed a Deed of Extrajudicial Settlement, adjudicating the estate among themselves and including the lot already sold to the respondents. Transfer Certificate of Title (TCT) No. PT-81729 was issued in the petitioners' names. Without the respondents' knowledge, the petitioners also mortgaged the property in 1990.
• The Complaint: On June 15, 1992, the respondents sent a formal demand letter, which the petitioners ignored. The respondents subsequently filed a Complaint for Reconveyance with Damages before the RTC of Pasig City. In their answer, the petitioners denied the sale, claimed the documents were falsified, and asserted the complaint was dismissible for non-compliance with the Katarungang Pambarangay Law; however, they did not file a motion to dismiss and actively participated in the trial.

• Conflicting Findings: Petitioners argued that the appellate court committed reversible error by reversing the trial court, creating a variance in factual findings—specifically regarding whether petitioners Virgilio and Tadeo witnessed the execution of the "Bilihan ng Lupa."
• Laches and Prescription: Petitioners maintained that the respondents were guilty of laches for sleeping on their rights for over 12 years from the execution of the second "Bilihan ng Lupa," making it unjust to allow recovery of the property.
• Good Faith: Petitioners argued they were in good faith in executing the Deed of Extrajudicial Settlement because it was duly published, no claimants appeared, and a title was validly issued to them.
• Falsity and Unenforceability of Documents: Petitioners contended that the "Bilihan ng Lupa" documents were falsified, the identities of the properties therein were not established, and the respondents' claim was already barred by prescription and estoppel.
• Katarungang Pambarangay: Petitioners claimed the complaint was dismissible for non-compliance with the mandate of P.D. No. 1508, as amended by R.A. No. 7160, which requires prior barangay conciliation.
• Damages: Petitioners asserted they should be awarded damages and attorney's fees.

• Katarungang Pambarangay Exception: Respondents countered that the complaint was filed directly in court to prevent the Statute of Limitations from setting in.
• Validity of Sale: Respondents argued that the sale of the aliquot share was valid and that they were entitled to reconveyance.
• Binding Effect on Heirs: Respondents maintained that the petitioners, as heirs, were bound by the contracts entered into by their predecessor-in-interest.

• Katarungang Pambarangay Compliance: Whether the complaint for reconveyance is dismissible for failure to comply with the Revised Katarungang Pambarangay Law under R.A. No. 7160.
• Validity and Enforceability of the Bilihan ng Lupa: Whether the "Bilihan ng Lupa" documents are valid and enforceable, and thus can serve as the basis for an action for reconveyance with damages.
• Binding Effect on Heirs: Whether the petitioners are legally bound to comply with the "Bilihan ng Lupa" and consequently reconvey the subject property to the respondents.

• Katarungang Pambarangay Compliance: Non-compliance with barangay conciliation proceedings was deemed waived. While prior recourse to barangay conciliation is a precondition before filing a complaint, the failure to comply does not prevent a court of competent jurisdiction from exercising its power of adjudication if the defendant fails to object. Because the petitioners did not file a motion to dismiss on this ground and instead invoked the court's jurisdiction by seeking affirmative relief and actively participating in the trial, the defense was waived.
• Validity and Enforceability of the Bilihan ng Lupa: The "Bilihan ng Lupa" documents were upheld as valid and enforceable. As notarized documents, they enjoy the presumption of regularity and due execution, which was not overcome by the petitioners' mere denials and unsure testimony. The lack of exact metes and bounds at the time of the sale did not invalidate the contract, because a co-owner has full ownership of their aliquot share and may alienate it even while the estate remains undivided; the sale is valid with respect to the aliquot share and subject to the results of partition. Furthermore, prescription and laches do not apply because the respondents have been in continuous actual possession of the property, an exception grounded on the principle that registration cannot be used as a shield for fraud.
• Binding Effect on Heirs: The petitioners are bound to comply with the "Bilihan ng Lupa" and reconvey the property. Under Article 1311 of the Civil Code, contracts take effect between the parties, their assigns, and heirs. The rights and obligations of the decedent over the property were transmitted to the heirs by way of succession; thus, the heirs succeed only to the rights their mother had and are bound by contracts validly entered into by her. The 107-square meter lot, having been sold during Rita's lifetime, was no longer part of the inheritance available to the petitioners.

• Presumption of Regularity of Notarized Documents — A document acknowledged before a notary public is a public document that enjoys the presumption of regularity and due execution. To overcome this presumption, clear and convincing evidence is required; absent such evidence, the presumption must be upheld. The Court applied this doctrine to affirm the validity of the "Bilihan ng Lupa" despite the petitioners' unsubstantiated claims of falsity.
• Aliquot Share Doctrine — While an estate remains undivided, co-owners have full ownership of their respective aliquot or undivided shares and may alienate them. A co-owner cannot sell a specific or determinate part of the thing owned in common, but if the deed purports to transfer a concrete portion, the sale is valid with respect to the aliquot share of the selling co-owner and subject to the results of partition. The Court applied this to uphold the sale made by Rita before the estate of her mother was partitioned.
• Waiver of Barangay Conciliation — Non-compliance with the Katarungang Pambarangay Law is not jurisdictional and may be deemed waived if not raised seasonably in a motion to dismiss. Active participation by a defendant in the trial—such as filing an answer seeking affirmative relief and presenting evidence—constitutes recognition of the court's jurisdiction and bars a later impugnment based on non-compliance.
• Possession as an Exception to Prescription in Reconveyance — When the plaintiff is in possession of the land to be reconveyed, the action does not prescribe. This is based on the theory that registration proceedings cannot be used as a shield for fraud or for enriching a person at the expense of another. The Court applied this to reject the petitioners' defenses of prescription and laches, as the respondents had been in actual, continuous possession of the lot.
• Relativity of Contracts (Article 1311, Civil Code) — Contracts take effect only between the parties, their assigns, and heirs. The heir is not liable beyond the value of the property received from the decedent. The Court relied on this to bind the petitioners to the "Bilihan ng Lupa" executed by their deceased mother.

• "It is elementary that the active participation of a party in a case pending against him before a court is tantamount to recognition of that court’s jurisdiction and a willingness to abide by the resolution of the case which will bar said party from later on impugning the court’s jurisdiction."
• "The co-owner, however, has no right to sell or alienate a specific or determinate part of the thing owned in common, because such right over the thing is represented by an aliquot or ideal portion without any physical division. In any case, the mere fact that the deed purports to transfer a concrete portion does not per se render the sale void. The sale is valid, but only with respect to the aliquot share of the selling co-owner."
• "When the plaintiff is in possession of the land to be reconveyed, prescription cannot set in. Such an exception is based on the theory that registration proceedings could not be used as a shield for fraud or for enriching a person at the expense of another."
• "The death of a party does not excuse nonperformance of a contract which involves a property right and the rights and obligations thereunder pass to the personal representatives of the deceased."

• Royales v. Intermediate Appellate Court, G.R. No. L-65072 — Followed. Non-compliance with barangay conciliation could affect the sufficiency of a cause of action but would not prevent a court of competent jurisdiction from exercising its power of adjudication where the defendants failed to object to such exercise of jurisdiction.
• Bañares II v. Balising, G.R. No. 132624 — Followed. Non-referral of a case for barangay conciliation when required by law is not jurisdictional and may be waived if not raised seasonably in a motion to dismiss.
• Barcenas v. Tomas, G.R. No. 150321 — Followed. Even while an estate remains undivided, co-owners have full ownership of their aliquot shares and may alienate them.
• Heirs of the Late Spouses Balite v. Lim, G.R. No. 152168 — Followed. A co-owner has no right to sell a specific part of the thing owned in common; if the deed purports to transfer a concrete portion, the sale is valid only with respect to the aliquot share of the selling co-owner.
• Heirs of Pomposa Saludares v. Court of Appeals, G.R. No. 128254 — Followed. In an action for reconveyance, when the plaintiff is in possession of the land, prescription cannot set in.

• Article 1311, Civil Code — Contracts take effect only between the parties, their assigns, and heirs. The heir is not liable beyond the value of the property received from the decedent. Applied to bind the petitioners to the sale contract executed by their predecessor-in-interest.
• Article 2208(2), Civil Code — Attorney's fees and expenses of litigation can be recovered when the defendant's act or omission has compelled the plaintiff to incur expenses to protect his interest. Applied to award attorney's fees and litigation expenses to the respondents.
• Section 408, Republic Act No. 7160 (Local Government Code of 1991) — All disputes between parties actually residing in the same city or municipality are subject to barangay conciliation, a precondition before filing a complaint in court. Applied to determine that while the dispute fell under the law's coverage, the defense of non-compliance was waived.

Ynares-Santiago, Martinez (on leave), Callejo, Sr., Nachura