FACTS:

This case involves a dispute between the petitioners, heirs of the late Rita Catoc Santos, and the respondents, spouses Jose and Proserfina Lumbao. The respondents claim ownership of a property they purchased from Rita and built a house on. They made verbal demands for the necessary documents to transfer the title, but the petitioners executed a Deed of Extrajudicial Settlement fraudulently, partitioning the estate which included the subject property. The respondents filed a Complaint for Reconveyance, but the trial court dismissed it. However, the Court of Appeals reversed the decision and ordered the petitioners to reconvey the property.

The main issues raised in this case are whether the complaint should be dismissed for failure to comply with the Revised Katarungang Pambarangay Law, and whether the documents known as "Bilihan ng Lupa" are valid and enforceable as the basis for the respondents' claim for reconveyance. The Court held that the failure to comply with the barangay conciliation requirement does not affect the court's jurisdiction. In relation to the "Bilihan ng Lupa" documents, the Court determined that the errors and discrepancies do not render them invalid, upholding their validity.

ISSUES:

1. Whether the Complaint for Reconveyance with Damages should be dismissed for failure to comply with the barangay conciliation proceedings.

2. Whether the "Bilihan ng Lupa" documents dated 17 August 1979 and 9 January 1981 are null and void for being falsified documents and barred by prescription of action and laches.

3. Whether the admissions made by the petitioners in their answer are binding and conclusive upon them.

4. Whether the testimony of the witness, Carolina Morales, sufficiently established that the petitioners signed as witnesses on the deed of sale.

5. Whether the notarized "Bilihan ng Lupa" documents enjoy the presumption of regularity.

6. Whether the identities of the properties described in the "Bilihan ng Lupa" documents were adequately established.

7. Whether the 107-square meter lot sold by the mother of the petitioners to the respondents should be deducted from the total lot inherited by the petitioners.

8. Whether the property described in the "Bilihan ng Lupa" documents and the property described in the Deed of Extrajudicial Settlement are the same.

9. Whether the defense of prescription of action and laches is applicable in this case.

10. Whether or not the petitioners have the legal obligation to reconvey the subject property to the respondents.

11. Whether or not the petitioners are liable to pay the respondents attorney's fees and litigation expenses.

RULING:

1. The Court ruled that the Complaint for Reconveyance with Damages should not be dismissed for failure to comply with the barangay conciliation proceedings. While the case should have first been referred to the Barangay Lupon for conciliation, non-compliance with this condition precedent does not prevent a court of competent jurisdiction from exercising its power of adjudication over the case if the defendants failed to object to such exercise of jurisdiction. The petitioners did not file a Motion to Dismiss and instead actively participated in the trial of the case, thereby recognizing the court's jurisdiction. The defense of non-compliance with barangay conciliation proceedings was waived.

2. The Court found that the claim that the "Bilihan ng Lupa" documents were falsified was specious. Upon examination of the documents and considering the admissions made by the petitioners in their Answer and Amended Answer, it was established that the signatures of the petitioners appeared on the documents and they admitted acting as witnesses in the execution of the "Bilihan ng Lupa" dated 17 August 1979. Petitioner Virgilio's denial and claim of lack of memory were not sufficient to disprove his involvement. The enforceability of the documents was not barred by prescription of action and laches.

3. The admissions made by the petitioners in their answer are binding and conclusive upon them. However, the trial court is still given leeway to consider other evidence presented, but in this case, the petitioners failed to present evidence to override their admission that they signed the deed of sale.

4. The testimony of the witness, Carolina Morales, that the petitioners were not with her and the vendor during the transaction does not automatically imply that the petitioners did not sign as witnesses. The testimony of a witness must be considered in its entirety, and not by truncated portions. Thus, it is held that the testimony of Morales does not refute the fact that the petitioners signed as witnesses on the deed of sale.

5. The notarized "Bilihan ng Lupa" documents enjoy the presumption of regularity. They are prima facie evidence of the truth of the facts stated therein and enjoy a conclusive presumption of their existence and due execution. The petitioners failed to present clear and convincing evidence to overthrow this presumption, therefore, the authenticity, due execution, and truth of the facts in the "Bilihan ng Lupa" documents are upheld.

6. The identities of the properties described in the "Bilihan ng Lupa" documents were adequately established. Since the estate owned by Maria, the mother of Rita, was not yet divided among her co-heirs at the time of the execution of the documents, the description of the entire estate is the only description that can be placed in the "Bilihan ng Lupa." The law and jurisprudence recognize that co-owners have full ownership of their respective aliquots or undivided shares and may alienate them. While the sale is valid, it is only with respect to the aliquot share of the selling co-owner and is subject to the results of the partition upon the termination of the co-ownership.

7. The 107-square meter lot already sold to the respondents cannot be inherited by the petitioners because it was no longer part of their inheritance as it was sold during the lifetime of their mother.

8. The property described in the "Bilihan ng Lupa" documents and the property described in the Deed of Extrajudicial Settlement are considered the same as both are located in the same area and have similar boundaries.

9. The defense of prescription of action and laches is not applicable in an action for reconveyance when the plaintiff is in possession of the land to be reconveyed. The respondents, who have been and are still in possession of the property, cannot be deemed to have committed laches as they continuously sought for the transfer of title into their names.

10. The petitioners have the legal obligation to reconvey the subject property to the respondents. The appellate court correctly ruled that the sale of the subject property by the petitioners' mother to the respondents was valid and effective. As such, the petitioners, being the heirs of the original owners of the property, must reconvey it to the respondents.

11. The petitioners are liable to pay the respondents attorney's fees and litigation expenses. The appellate court correctly ruled that the respondents were compelled to litigate and incur expenses to protect their interest in the subject property. Thus, the petitioners must bear the burden of these expenses.

PRINCIPLES:

• Findings of fact of the Court of Appeals are generally conclusive and binding, but there are exceptions, such as when the findings of the appellate court are contrary to those of the trial court.

• Non-compliance with the barangay conciliation proceedings under Republic Act No. 7160 is not jurisdictional in nature and may be deemed waived if not raised seasonably in a motion to dismiss.

• Active participation of a party in a case pending against them before a court is tantamount to recognition of that court's jurisdiction and can bar the party from later challenging the court's jurisdiction.

• The right to seek reconveyance of registered property is not absolute and is subject to extinctive prescription, except when the plaintiff is in possession of the land to be reconveyed. Registration proceedings cannot be used as a shield for fraud or to enrich one person at the expense of another.

• Registration is not a requirement for validity of a contract between parties, but serves to notify third persons. When a party has knowledge of a prior existing interest in the property, his or her knowledge has the effect of registration as to him or her.

• Heirs are bound by contracts entered into by their predecessors-in-interest, as they succeed to the rights and obligations of the deceased to the extent of the value of the inheritance. The death of a party does not excuse nonperformance of a contract involving a property right, and the rights and obligations pass to the deceased's personal representatives.

• Validity and effectiveness of a sale of property – Once a sale of property has been found to be valid and effective, the seller is obligated to reconvey the property to the buyer.

• Payment of attorney's fees and litigation expenses – The party who has been compelled to litigate and incur expenses to protect their interest may be entitled to receive attorney's fees and litigation expenses from the opposing party.