THIRD DIVISION

[G.R. No. 169129. March 28, 2007.]

SPS. VIRGILIO F. SANTOS & ESPERANZA LATI SANTOS, SPS.

VICTORINO F. SANTOS, & LAGRIMAS SANTOS, ERNESTO F. SANTOS,
and TADEO F. SANTOS , petitioners, vs . SPS. JOSE LUMBAO and
PROSERFINA LUMBAO , respondents.

DECISION

CHICO-NAZARIO , J : p

Before this Court is a Petition for Review on Certiorari under Rule 45 of the 1997
Revised Rules of Civil Procedure seeking to annul and set aside the Decision 1 and
Resolution 2 of the Court of Appeals in CA-G.R. CV No. 60450 entitled, Spouses Jose
Lumbao and Proser na Lumbao v. Spouses Virgilio F. Santos and Esperanza Lati, Spouses
Victorino F. Santos and Lagrimas F. Santos, Ernesto F. Santos and Tadeo F. Santos , dated
8 June 2005 and 29 July 2005, respectively, which granted the appeal led by herein
respondents Spouses Jose Lumbao and Proser na Lumbao (Spouses Lumbao) and
ordered herein petitioners Spouses Virgilio F. Santos and Esperanza Lati, Spouses
Victorino F. Santos and Lagrimas F. Santos, Ernesto F. Santos and Tadeo F. Santos to
reconvey to respondents Spouses Lumbao the subject property and to pay the latter
attorney's fees and litigation expenses, thus, reversing the Decision 3 of the Regional Trial
Court (RTC) of Pasig City, dated 17 June 1998 which dismissed the Complaint for
Reconveyance with Damages filed by respondents Spouses Lumbao for lack of merit.
Herein petitioners Virgilio, Victorino, Ernesto and Tadeo, all surnamed Santos, are
the legitimate and surviving heirs of the late Rita Catoc Santos (Rita), who died on 20
October 1985. The other petitioners Esperanza Lati and Lagrimas Santos are the
daughters-in-law of Rita.
Herein respondents Spouses Jose Lumbao and Proser na Lumbao are the alleged
owners of the 107-square meter lot (subject property), which they purportedly bought
from Rita during her lifetime. aEHADT

The facts of the present case are as follows:

On two separate occasions during her lifetime, Rita sold to respondents Spouses
Lumbao the subject property which is a part of her share in the estate of her deceased
mother, Maria Catoc (Maria), who died intestate on 19 September 1978. On the rst
occasion, Rita sold 100 square meters of her inchoate share in her mother's estate through
a document denominated as "Bilihan ng Lupa," dated 17 August 1979. 4 Respondents
Spouses Lumbao claimed the execution of the aforesaid document was witnessed by
petitioners Virgilio and Tadeo, as shown by their signatures a xed therein. On the second
occasion, an additional seven square meters was added to the land as evidenced by a
document also denominated as "Bilihan ng Lupa," dated 9 January 1981. 5
After acquiring the subject property, respondents Spouses Lumbao took actual
possession thereof and erected thereon a house which they have been occupying as
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 exclusive owners up to the present. As the exclusive owners of the subject property,
respondents Spouses Lumbao made several verbal demands upon Rita, during her lifetime,
and thereafter upon herein petitioners, for them to execute the necessary documents to
effect the issuance of a separate title in favor of respondents Spouses Lumbao insofar as
the subject property is concerned. Respondents Spouses Lumbao alleged that prior to her
death, Rita informed respondent Proser na Lumbao she could not deliver the title to the
subject property because the entire property inherited by her and her co-heirs from Maria
had not yet been partitioned.
On 2 May 1986, the Spouses Lumbao claimed that petitioners, acting fraudulently
and in conspiracy with one another, executed a Deed of Extrajudicial Settlement, 6
adjudicating and partitioning among themselves and the other heirs, the estate left by
Maria, which included the subject property already sold to respondents Spouses Lumbao
and now covered by TCT No. 81729 7 of the Registry of Deeds of Pasig City.
On 15 June 1992, respondents Spouses Lumbao, through counsel, sent a formal
demand letter 8 to petitioners but despite receipt of such demand letter, petitioners still
failed and refused to reconvey the subject property to the respondents Spouses Lumbao.
Consequently, the latter led a Complaint for Reconveyance with Damages 9 before the
RTC of Pasig City. AHCaES

Petitioners led their Answer denying the allegations that the subject property had
been sold to the respondents Spouses Lumbao. They likewise denied that the Deed of
Extrajudicial Settlement had been fraudulently executed because the same was duly
published as required by law. On the contrary, they prayed for the dismissal of the
Complaint for lack of cause of action because respondents Spouses Lumbao failed to
comply with the Revised Katarungang Pambarangay Law under Republic Act No. 7160,
otherwise known as the Local Government Code of 1991, which repealed Presidential
Decree No. 1508 1 0 requiring first resort to barangay conciliation.
Respondents Spouses Lumbao, with leave of court, amended their Complaint
because they discovered that on 16 February 1990, without their knowledge, petitioners
executed a Deed of Real Estate Mortgage in favor of Julieta S. Esplana for the sum of
P30,000.00. The said Deed of Real Estate Mortgage was annotated at the back of TCT No.
PT-81729 on 26 April 1991. Also, in answer to the allegation of the petitioners that they
failed to comply with the mandate of the Revised Katarungang Pambarangay Law,
respondents Spouses Lumbao said that the Complaint was led directly in court in order
that prescription or the Statute of Limitations may not set in.
During the trial, respondents Spouses Lumbao presented Proser na Lumbao and
Carolina Morales as their witnesses, while the petitioners presented only the testimony of
petitioner Virgilio.
The trial court rendered a Decision on 17 June 1998, the dispositive portion of which
reads as follows:
Premises considered, the instant complaint is hereby denied for lack of
merit. DaHcAS

Considering that [petitioners] have incurred expenses in order to protect

their interest, [respondents spouses Lumbao] are hereby directed to pay
[petitioners], to wit: 1) the amount of P30,000.00 as attorney's fees and litigation
expenses, and 2) costs of the suit. 1 1

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 Aggrieved, respondents Spouses Lumbao appealed to the Court of Appeals. On 8
June 2005, the appellate court rendered a Decision, thus:
WHEREFORE, premises considered, the present appeal is hereby GRANTED.
The appealed Decision dated June 17, 1998 of the Regional Trial Court of Pasig
City, Branch 69 in Civil Case No. 62175 is hereby REVERSED and SET ASIDE. A
new judgment is hereby entered ordering [petitioners] to reconvey 107 square
meters of the subject [property] covered by TCT No. PT-81729 of the Registry of
Deeds of Pasig City, Metro Manila, and to pay to [respondents spouses Lumbao]
the sum of P30,000.00 for attorney's fees and litigation expenses.

No pronouncement as to costs. 1 2

Dissatis ed, petitioners led a Motion for Reconsideration of the aforesaid Decision
but it was denied in the Resolution of the appellate court dated 29 July 2005 for lack of
merit.
Hence, this Petition.
The grounds relied upon by the petitioners are the following:
I. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN
REVERSING THE DECISION OF THE TRIAL COURT, THEREBY CREATING A
VARIANCE ON THE FINDINGS OF FACTS OF TWO COURTS.
II. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN
ORDERING THE PETITIONERS TO RECONVEY THE SUBJECT [PROPERTY]
TO THE RESPONDENTS [SPOUSES LUMBAO] AND IN NOT RULING THAT
THEY ARE GUILTY OF LACHES, HENCE THEY CANNOT RECOVER THE LOT
ALLEGEDLY SOLD TO THEM.

III. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN NOT

FINDING HEREIN PETITIONER[S] TO BE IN GOOD FAITH IN EXECUTING
THE "DEED OF EXTRAJUDICIAL SETTLEMENT" DATED [2 MAY 1986].
IV. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN NOT
FINDING THAT PETITIONERS ARE NOT LEGALLY BOUND TO COMPLY
WITH THE SUPPOSED BILIHAN NG LUPA DATED [17 AUGUST 1979] AND
[9 JANUARY 1981] THAT WERE SUPPOSEDLY EXECUTED BY THE LATE
RITA CATOC. HCITcA

V. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN NOT

FINDING THAT RESPONDENTS [SPOUSES LUMBAO'S] ACTION FOR
RECONVEYANCE WITH DAMAGES CANNOT BE SUPPORTED WITH AN
UNENFORCEABLE DOCUMENTS, SUCH AS THE BILIHAN NG LUPA DATED
[17 AUGUST 1979] AND [9 JANUARY 1981].

VI. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN NOT

FINDING THAT RESPONDENTS [SPOUSES LUMBAO'S] COMPLAINT FOR
RECONVEYANCE IS DISMISSABLE (SIC) FOR NON COMPLIANCE OF THE
MANDATE OF [P.D. NO.] 1508, AS AMENDED BY Republic Act No. 7160.
VII. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN NOT
FINDING THAT RESPONDENTS [SPOUSES LUMBAO] SHOULD BE HELD
LIABLE FOR PETITIONERS' CLAIM FOR DAMAGES AND ATTORNEY[']S
FEES. STIHaE

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 Petitioners ask this Court to scrutinize the evidence presented in this case, because
they claim that the factual ndings of the trial court and the appellate court are con icting.
They allege that the ndings of fact by the trial court revealed that petitioners Virgilio and
Tadeo did not witness the execution of the documents known as "Bilihan ng Lupa"; hence,
this nding runs counter to the conclusion made by the appellate court. And even
assuming that they were witnesses to the aforesaid documents, still, respondents
Spouses Lumbao were not entitled to the reconveyance of the subject property because
they were guilty of laches for their failure to assert their rights for an unreasonable length
of time. Since respondents Spouses Lumbao had slept on their rights for a period of more
than 12 years reckoned from the date of execution of the second "Bilihan ng Lupa," it would
be unjust and unfair to the petitioners if the respondents will be allowed to recover the
subject property.
Petitioners allege they are in good faith in executing the Deed of Extrajudicial
Settlement because even respondents Spouses Lumbao's witness, Carolina Morales,
testi ed that neither petitioner Virgilio nor petitioner Tadeo was present during the
execution of the "Bilihan ng Lupa," dated 17 August 1979 and 9 January 1981. Petitioners
a rm that the Deed of Extrajudicial Settlement was published in a newspaper of general
circulation to give notice to all creditors of the estate subject of partition to contest the
same within the period prescribed by law. Since no claimant appeared to interpose a claim
within the period allowed by law, a title to the subject property was then issued in favor of
the petitioners; hence, they are considered as holders in good faith and therefore cannot
be barred from entering into any subsequent transactions involving the subject property.
Petitioners also contend that they are not bound by the documents denominated as
"Bilihan ng Lupa" because the same were null and void for the following reasons: 1) for
being falsi ed documents because one of those documents made it appear that
petitioners Virgilio and Tadeo were witnesses to its execution and that they appeared
personally before the notary public, when in truth and in fact they did not; 2) the identities
of the properties in the "Bilihan ng Lupa," dated 17 August 1979 and 9 January 1981 in
relation to the subject property in litigation were not established by the evidence
presented by the respondents Spouses Lumbao; 3) the right of the respondents Spouses
Lumbao to lay their claim over the subject property had already been barred through
estoppel by laches; and 4) the respondents Spouses Lumbao's claim over the subject
property had already prescribed. THIcCA

Finally, petitioners claim that the Complaint for Reconveyance with Damages led by
respondents Spouses Lumbao was dismissible because they failed to comply with the
mandate of Presidential Decree No. 1508, as amended by Republic Act No. 7160,
particularly Section 412 of Republic Act No. 7160.
Given the foregoing, the issues presented by the petitioners may be restated as
follows:
I. Whether or not the Complaint for Reconveyance with Damages led by
respondents spouses Lumbao is dismissible for their failure to comply
with the mandate of the Revised Katarungang Pambarangay Law under
R.A. No. 7160.

II. Whether or not the documents known as "Bilihan ng Lupa" are valid and
enforceable, thus, they can be the bases of the respondents spouses
Lumbao's action for reconveyance with damages.

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 III. Whether or not herein petitioners are legally bound to comply with the
"Bilihan ng Lupa" dated 17 August 1979 and 9 January 1981 and
consequently, reconvey the subject property to herein respondents spouses
Lumbao. cDAEIH

It is well-settled that in the exercise of the Supreme Court's power of review, the
court is not a trier of facts and does not normally undertake the re-examination of the
evidence presented by the contending parties during the trial of the case considering that
the ndings of fact of the Court of Appeals are conclusive and binding on the Court. 1 3 But,
the rule is not without exceptions. There are several recognized exceptions 1 4 in which
factual issues may be resolved by this Court. One of these exceptions is when the ndings
of the appellate court are contrary to those of the trial court. This exception is present in
the case at bar.
Going to the rst issue presented in this case, it is the argument of the petitioners
that the Complaint for Reconveyance with Damages led by respondents Spouses
Lumbao should be dismissed for failure to comply with the barangay conciliation
proceedings as mandated by the Revised Katarungang Pambarangay Law under Republic
Act No. 7160. This argument cannot be sustained.
Section 408 of the aforesaid law and Administrative Circular No. 14-93 1 5 provide
that all disputes between parties actually residing in the same city or municipality are
subject to barangay conciliation. A prior recourse thereto is a pre-condition before ling a
complaint in court or any government o ces. Non-compliance with the said condition
precedent could affect the su ciency of the plaintiff's cause of action and make his
complaint vulnerable to dismissal on ground of lack of cause of action or prematurity; but
the same would not prevent a court of competent jurisdiction from exercising its power of
adjudication over the case before it, where the defendants failed to object to such exercise
of jurisdiction. 1 6
While it is true that the present case should rst be referred to the Barangay Lupon
for conciliation because the parties involved herein actually reside in the same city (Pasig
City) and the dispute between them involves a real property, hence, the said dispute should
have been brought in the city in which the real property, subject matter of the controversy,
is located, which happens to be the same city where the contending parties reside. In the
event that respondents Spouses Lumbao failed to comply with the said condition
precedent, their Complaint for Reconveyance with Damages can be dismissed. In this case,
however, respondents Spouses Lumbao's non-compliance with the aforesaid condition
precedent cannot be considered fatal. Although petitioners alleged in their answer that the
Complaint for Reconveyance with Damages led by respondents spouses Lumbao should
be dismissed for their failure to comply with the condition precedent, which in effect, made
the complaint prematurely instituted and the trial court acquired no jurisdiction to hear the
case, yet, they did not file a Motion to Dismiss the said complaint. DHSaCA

Emphasis must be given to the fact that the petitioners could have prevented the
trial court from exercising jurisdiction over the case had they led a Motion to Dismiss.
However, instead of doing so, they invoked the very same jurisdiction by ling an answer
seeking an a rmative relief from it. Worse, petitioners actively participated in the trial of
the case by presenting their own witness and by cross-examining the witnesses presented
by the respondents Spouses Lumbao. 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. 1 7 It is also well-settled that the
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 non-referral of a case for barangay conciliation when so required under the law is not
jurisdictional in nature and may therefore be deemed waived if not raised seasonably in a
motion to dismiss. 1 8 Hence, herein petitioners can no longer raise the defense of non-
compliance with the barangay conciliation proceedings to seek the dismissal of the
complaint led by the respondents Spouses Lumbao, because they already waived the
said defense when they failed to file a Motion to Dismiss.
As regards the second issue, petitioners maintain that the "Bilihan ng Lupa," dated
17 August 1979 and 9 January 1981 are null and void for being falsi ed documents as it is
made to appear that petitioners Virgilio and Tadeo were present in the execution of the
said documents and that the identities of the properties in those documents in relation to
the subject property has not been established by the evidence of the respondents
Spouses Lumbao. Petitioners also claim that the enforceability of those documents is
barred by prescription of action and laches.
It is the petitioners' incessant barking that the "Bilihan ng Lupa" documents dated 17
August 1979 and 9 January 1981 were falsi ed because it was made to appear that
petitioners Virgilio and Tadeo were present in the executions thereof, and their allegation
that even respondents Spouses Lumbao's witness Carolina Morales proved that said
petitioners were not present during the execution of the aforementioned documents. This
is specious. ITEcAD

Upon examination of the aforesaid documents, this Court nds that in the "Bilihan ng
Lupa," dated 17 August 1979, the signatures of petitioners Virgilio and Tadeo appeared
thereon. Moreover, in petitioners' Answer and Amended Answer to the Complaint for
Reconveyance with Damages, both petitioners Virgilio and Tadeo made an admission that
indeed they acted as witnesses in the execution of the "Bilihan ng Lupa," dated 17 August
1979. 1 9 However, in order to avoid their obligations in the said "Bilihan ng Lupa," petitioner
Virgilio, in his cross-examination, denied having knowledge of the sale transaction and
claimed that he could not remember the same as well as his appearance before the notary
public due to the length of time that had passed. Noticeably, petitioner Virgilio did not
categorically deny having signed the "Bilihan ng Lupa," dated 17 August 1979 and in
support thereof, his testimony in the cross-examination propounded by the counsel of the
respondents Spouses Lumbao is quoted hereunder:
ATTY. CHIU:
Q. Now, you said, Mr. Witness. . . Virgilio Santos, that you don't know about
this document which was marked as Exhibit "A" for the [respondents
spouses Lumbao]?
ATTY. BUGARING:
The question is misleading, your Honor. Counsel premised the question
that he does not have any knowledge but not that he does not know.
ATTY. CHIU:
Q. Being. . . you are one of the witnesses of this document? [I]s it not?

WITNESS:
A. No, sir.
Q. I am showing to you this document, there is a signature at the left hand
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 margin of this document Virgilio Santos, will you please go over the same
and tell the court whose signature is this?
A. I don't remember, sir, because of the length of time that had passed. EDACSa

Q. But that is your signature?

A. I don't have eyeglasses. . . My signature is different.
Q. You never appeared before this notary public Apolinario Mangahas?
A. I don't remember. 2 0

As a general rule, facts alleged in a party's pleading are deemed admissions of that
party and are binding upon him, but this is not an absolute and in exible rule. An answer is
a mere statement of fact which the party ling it expects to prove, but it is not evidence. 2 1
And in spite of the presence of judicial admissions in a party's pleading, the trial court is
still given leeway to consider other evidence presented. 2 2 However, in the case at bar, as
the Court of Appeals mentioned in its Decision, "[herein petitioners] had not adduced any
other evidence to override the admission made in their [A]nswer that [petitioners Virgilio
and Tadeo] actually signed the [Bilihan ng Lupa dated 17 August 1979] except that they
were just misled as to the purpose of the document, . . . ." 2 3 Virgilio's answers were unsure
and quibbled. Hence, the general rule that the admissions made by a party in a pleading are
binding and conclusive upon him applies in this case. IcTEaC

On the testimony of respondents Spouses Lumbao's witness Carolina Morales, this

Court adopts the findings made by the appellate court. Thus —
[T]he trial court gave singular focus on her reply to a question during cross-
examination if the [petitioners Virgilio and Tadeo] were not with her and the
vendor [Rita] during the transaction. It must be pointed out that earlier in the direct
examination of said witness, she con rmed that [respondents spouses Lumbao]
actually bought the lot from [Rita] ("nagkabilihan") . Said witness positively
identi ed and con rmed the two (2) documents evidencing the sale in favor of
[respondents spouse Lumbao]. Thus, her subsequent statement that the
[petitioners Virgilio and Tadeo] were not with them during the transaction does
not automatically imply that [petitioners Virgilio and Tadeo] did not at any time
sign as witnesses as to the deed of sale attesting to their mother's voluntary act
of selling a portion of her share in her deceased mother's property. The rule is that
testimony of a witness must be considered and calibrated in its entirety and not
by truncated portions thereof or isolated passages therein. 2 4

Furthermore, both "Bilihan ng Lupa" documents dated 17 August 1979 and 9

January 1981 were duly notarized before a notary public. It is well-settled that a document
acknowledged before a notary public is a public document 2 5 that enjoys the presumption
of regularity. It is a prima facie evidence of the truth of the facts stated therein and a
conclusive presumption of its existence and due execution. 2 6 To overcome this
presumption, there must be presented evidence that is clear and convincing. Absent such
evidence, the presumption must be upheld. 2 7 In addition, one who denies the due
execution of a deed where one's signature appears has the burden of proving that contrary
to the recital in the jurat, one never appeared before the notary public and acknowledged
the deed to be a voluntary act. Nonetheless, in the present case petitioners' denials without
clear and convincing evidence to support their claim of fraud and falsity were not su cient
to overthrow the above-mentioned presumption; hence, the authenticity, due execution and
the truth of the facts stated in the aforesaid "Bilihan ng Lupa" are upheld.
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 The defense of petitioners that the identities of the properties described in the
"Bilihan ng Lupa," dated 17 August 1979 and 9 January 1981 in relation to the subject
property were not established by respondents Spouses Lumbao's evidence is likewise not
acceptable.
It is noteworthy that at the time of the execution of the documents denominated as
"Bilihan ng Lupa," the entire property owned by Maria, the mother of Rita, was not yet
divided among her and her co-heirs and so the description of the entire estate is the only
description that can be placed in the "Bilihan ng Lupa, dated 17 August 1979 and 9 January
1981" because the exact metes and bounds of the subject property sold to respondents
Spouses Lumbao could not be possibly determined at that time. Nevertheless, that does
not make the contract of sale between Rita and respondents Spouses Lumbao invalid
because both the law and jurisprudence have categorically held that even while an estate
remains undivided, co-owners have each full ownership of their respective aliquots or
undivided shares and may therefore alienate, assign or mortgage them. 2 8 The co-owner,
however, has no right to sell or alienate a speci c 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. Furthermore, the sale is subject to the
results of the partition upon the termination of the co-ownership. 2 9
In the case at bar, when the estate left by Maria had been partitioned on 2 May 1986
by virtue of a Deed of Extrajudicial Settlement, the 107-square meter lot sold by the mother
of the petitioners to respondents Spouses Lumbao should be deducted from the total lot,
inherited by them in representation of their deceased mother, which in this case measures
467 square meters. The 107-square meter lot already sold to respondents Spouses
Lumbao can no longer be inherited by the petitioners because the same was no longer part
of their inheritance as it was already sold during the lifetime of their mother.
IaCHTS

Likewise, the fact that the property mentioned in the two "Bilihan ng Lupa"
documents was described as "a portion of a parcel of land covered in Tax Declarations No.
A-018-01674," while the subject matter of the Deed of Extrajudicial Settlement was the
property described in Transfer Certi cate of Title (TCT) No. 3216 of the Registry of Deeds
of the Province of Rizal in the name of Maria is of no moment because in the "Bilihan ng
Lupa," dated 17 August 1979 and 9 January 1981, it is clear that there was only one estate
left by Maria upon her death. And this fact was not refuted by the petitioners. Besides, the
property described in Tax Declaration No. A-018-01674 and the property mentioned in TCT
No. 3216 are both located in Barrio Rosario, Municipality of Pasig, Province of Rizal, and
almost have the same boundaries. It is, thus, safe to state that the property mentioned in
Tax Declaration No. A-018-01674 and in TCT No. 3216 are one and the same.
The defense of prescription of action and laches is likewise unjusti able. In an
action for reconveyance, the decree of registration is respected as incontrovertible. What
is sought instead is the transfer of the property or its title which has been wrongfully or
erroneously registered in another person's name to its rightful or legal owner, or to the one
with a better right. It is, indeed, true that the right to seek reconveyance of registered
property is not absolute because it is subject to extinctive prescription. However, 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. 3 0

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 In the case at bar, the right of the respondents Spouses Lumbao to seek
reconveyance does not prescribe because the latter have been and are still in actual
possession and occupation as owners of the property sought to be reconveyed, which fact
has not been refuted nor denied by the petitioners. Furthermore, respondents Spouses
Lumbao cannot be held guilty of laches because from the very start that they bought the
107-square meter lot from the mother of the petitioners, they have constantly asked for
the transfer of the certi cate of title into their names but Rita, during her lifetime, and the
petitioners, after the death of Rita, failed to do so on the imsy excuse that the lot had not
been partitioned yet. Inexplicably, after the partition of the entire estate of Maria,
petitioners still included the 107-square meter lot in their inheritance which they divided
among themselves despite their knowledge of the contracts of sale between their mother
and the respondents Spouses Lumbao. cSCTEH

Under the above premises, this Court holds that the "Bilihan ng Lupa" documents
dated 17 August 1979 and 9 January 1981 are valid and enforceable and can be made the
basis of the respondents Spouses Lumbao's action for reconveyance. The failure of
respondents Spouses Lumbao to have the said documents registered does not affect its
validity and enforceability. It must be remembered that registration is not a requirement
for validity of the contract as between the parties, for the effect of registration serves
chie y to bind third persons. The principal purpose of registration is merely to notify other
persons not parties to a contract that a transaction involving the property had been
entered into. Where the party has knowledge of a prior existing interest which is
unregistered at the time he acquired a right to the same land, his knowledge of that prior
unregistered interest has the effect of registration as to him. 3 1 Hence, the "Bilihan ng
Lupa" documents dated 17 August 1979 and 9 January 1981, being valid and enforceable,
herein petitioners are bound to comply with their provisions. In short, such documents are
absolutely valid between and among the parties thereto.
Finally, the general rule that heirs are bound by contracts entered into by their
predecessors-in-interest applies in the present case. Article 1311 3 2 of the NCC is the
basis of this rule. It is clear from the said provision that whatever rights and obligations
the decedent have over the property were transmitted to the heirs by way of succession, a
mode of acquiring the property, rights and obligations of the decedent to the extent of the
value of the inheritance of the heirs. 3 3 Thus, the heirs cannot escape the legal
consequence of a transaction entered into by their predecessor-in-interest because they
have inherited the property subject to the liability affecting their common ancestor. Being
heirs, there is privity of interest between them and their deceased mother. They only
succeed to what rights their mother had and what is valid and binding against her is also
valid and binding as against them. 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. Similarly, nonperformance is not
excused by the death of the party when the other party has a property interest in the
subject matter of the contract. 3 4
In the end, despite the death of the petitioners' mother, they are still bound to
comply with the provisions of the "Bilihan ng Lupa," dated 17 August 1979 and 9 January
1981. Consequently, they must reconvey to herein respondents Spouses Lumbao the 107-
square meter lot which they bought from Rita, petitioners' mother. And as correctly ruled
by the appellate court, petitioners must pay respondents Spouses Lumbao attorney's fees
and litigation expenses for having been compelled to litigate and incur expenses to protect
their interest. 3 5 On this matter, we do not find reasons to reverse the said findings.
DTEcSa

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 WHEREFORE, premises considered, the instant Petition is hereby DENIED. The
Decision and Resolution of the Court of Appeals dated 8 June 2005 and 29 July 2005,
respectively, are hereby AFFIRMED. Herein petitioners are ordered to reconvey to
respondents Spouses Lumbao the subject property and to pay the latter attorney's fees
and litigation expenses. Costs against petitioners.
SO ORDERED.
Ynares-Santiago, Austria-Martinez, Callejo, Sr. and Nachura, JJ., concur.

Footnotes
1. Penned by Associate Justice Martin S. Villarama, Jr. with Associate Justices Lucas P.
Bersamin and Lucenito N. Tagle, concurring, rollo, pp. 47-62.
2. Id. at 64.
3. Penned by Judge Ma. Cristina C. Estrada, rollo, pp. 103-114.
4. Id. at 73-74.
5. Id. at 77-78.
6. Id. at 80-82.
7. Id. at 83.
8. Id. at 84-86.
9. Id. at 66-72.
10. A decree, "Establishing a System of Amicably Settling Disputes at the Barangay Level."

11. Rollo, p. 114.

12. Id. at 61.
13. Almendrala v. Ngo, G.R. No. 142408, 30 September 2005, 471 SCRA 311, 322.
14. Recognized exceptions to this rule are: (1) when the findings are grounded entirely on
speculation, surmises or conjectures; (2) when the inference made is manifestly
mistaken, absurd or impossible; (3) when there is grave abuse of discretion; (4) when the
judgment is based on misapprehension of facts; (5) when the finding of facts are
conflicting; (6) when in making its findings the Court of Appeals went beyond the issues
of the case, or its findings are contrary to the admissions of both the appellee and the
appellant; (7) when the findings are contrary to the trial court; (8) when the findings are
conclusions without citation of specific evidence on which they are based; (9) when the
facts set forth in the petition as well as in the petitioner's main and reply briefs are not
disputed by the respondent; (10) when the findings of fact are premised on the supposed
absence of evidence and contradicted by the evidence on record; or (11) when the Court
of Appeals manifestly overlooked certain relevant facts not disputed by the parties,
which, if properly considered, would justify a different conclusion [ Langkaan Realty
Development, Inc. v. United Coconut Planters Bank, G.R. No. 139437, 8 December 2000,
347 SCRA 542; Nokom v. National Labor Relations Commissions, 390 Phil. 1228, 1243
(2000); Commissioner of Internal Revenue v. Embroidery and Garments Industries
(Phils.), Inc., 364 Phil. 541, 546-547 (1999); Sta. Maria v. Court of Appeals, 349 Phil. 275,
282-283 (1998); Almendrala v. Ngo, G.R. No. 142408, 30 September 2005, 471 SCRA
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 311, 322].
15. Guidelines on the Katarungang Pambarangay Conciliation Procedure to Prevent
Circumvention of the Revised Katarungang Pambarangay Law [Sections 399-442,
Chapter VII, Title I, Book III, R.A. No. 7160, otherwise known as the Local Government
Code of 1991] issued by the Supreme Court on 15 July 1993.
16. Royales v. Intermediate Appellate Court, G.R. No. L-65072, 31 January 1984, 127 SCRA
470, 473-474.
17. Sta. Rosa Realty Development Corporation v. Amante, G.R. No. 112526, 16 March 2005,
453 SCRA 432, 477.
18. Bañares II v. Balising, G.R. No. 132624, 13 March 2000, 328 SCRA 36, 50-51.
19. Rollo, pp. 87, 97.
20. TSN, 12 September 1996. Records, pp. 13-14.

21. Atillo III v. Court of Appeals, G.R. No. 119053, 23 January 1997, 266 SCRA 596, 604.
22. Id. at 605.
23. Rollo, p. 55.
24. Id. at 55-56.
25. Rule 132, Section 19 (b) of the Revised Rules on Evidence.
26. Id., Section 23 of the Revised Rules on Evidence; Medina v. Greenfield Development
Corporation, G.R. No. 140228, 19 November 2004, 443 SCRA 150, 160; Agasen v. Court
of Appeals, G.R. No. 115508, 15 February 2000, 325 SCRA 504, 511.
27. Medina v. Greenfield Development Corporation, id.
28. Barcenas v. Tomas, G.R. No. 150321, 31 March 2005, 454 SCRA 593, 610-611.
29. Heirs of the Late Spouses Aurelio and Esperanza Balite v. Lim, G.R. No. 152168, 10
December 2004, 446 SCRA 56, 71.
30. Heirs of Pomposa Saludares v. Court of Appeals, G.R. No. 128254, 16 January 2004,
420 SCRA 51, 56-58. HATICc

31. Heirs of Eduardo Manlapat v. Court of Appeals, G.R. No. 125585, 8 June 2005, 459
SCRA 412, 426.
32. Art. 1311. Contracts take effect only between the parties, their assigns and heirs, except
in case where the rights and obligations arising from the contract are not transmissible
by their nature, or by stipulation or by provision of law. The heir is not liable beyond the
value of the property he received from the decedent.

33. Tanay Recreation Center and Development Corp. v. Fausto, G.R. No. 140182, 12 April
2005, 455 SCRA 436, 446

34. DKC Holdings Corporation v. Court of Appeals, G.R. No. 118248, 5 April 2000, 329 SCRA
666, 674-675.
35. Art. 2208. In the absence of stipulation, attorney's fees and expenses of litigation, other
than judicial costs cannot be recovered, except:

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 (1) . . .

(2) When the defendant's act or omission has compelled the plaintiff to litigate with third
persons or to incur expenses to protect his interest;
(3) . . .

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