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.
CHICO-NAZARIO, J.:

FACTS:

Rita sold to Spouses Lumbao the subject property, which is a part of her share in
the estate of her deceased mother, Maria Catoc (Maria). Rita sold her inchoate
share in her mother’s estate through a document denominated as "Bilihan ng
Lupa," in 1979 a 100 square meters thereof and in 1981 an additional 7 square
meters evidenced by a document denominated as "Bilihan ng Lupa".

As the exclusive owners of the subject property, Spouses Lumbao made several
verbal demands to Rita, and afterwards upon herein petitioners, for them to
execute the necessary documents to effect the issuance of a separate title in
favor of Lumbao.

On 1986, Spouses Lumbao claimed that petitioners, acting fraudulently and in

conspiracy with one another, executed a Deed of Extrajudicial Settlement,
adjudicating and partitioning among themselves and the other heirs, the estate
left by Maria, which included the subject property already sold to them.

On 1992, Spouses Lumbao sent a formal demand letter to petitioners but despite
receipt of such demand letter, petitioners still failed reconvey the subject property
to the Spouses. Consequently, they filed a Complaint for Reconveyance with
Damages.

Petitioners denied the allegations that the subject property had been sold to the
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.

Spouses Lumbao amended their Complaint as they discovered that without their
knowledge, petitioners executed a Deed of Real Estate Mortgage in favor of
Julieta S. Esplana.

The RTC ruled in favor of the petitioners and ordered the Lumbaos to pay
P30,000 for expenses incurred. While the CA ruled in favor of the Spouses
Lumbao.

ISSUE:
Whether or not petitioners are legally bound to comply with the "Bilihan ng
Lupa" and consequently, reconvey the subject property to herein spouses
Lumbao.

HELD:

Yes. General rule is that heirs are bound by contracts entered into by their
predecessors-in-interest applies in the present case. Article 1311 of the Civil
Code 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. 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.

Consequently, they must reconvey to herein respondents Spouses Lumbao the

107-square meter lot which they bought from Rita, petitioners’ mother.