balus vs. balus case remedial law

G.R. No. 168970.January 15, 2010.*

CELESTINO BALUS, petitioner, vs. SATURNINO BALUSand LEONARDA BALUS VDA. DE CALUNOD,respondents.

Civil Law Property Succession Inheritance What consistsinheritance The rights to a persons succession are transmittedfrom the moment of his death The inheritance of a person consistsof the property and transmissible rights and obligations existing atthe time of his death as well as those which have accrued theretosince the opening of the succession.The rights to a personssuccession are transmitted from the moment of his death. Inaddition, the inheritance of a person consists of the property andtransmissible rights and obligations existing at the time of hisdeath, as well as those which have accrued thereto since theopening of the succession. In the present case, since Rufo lostownership of the subject property during his lifetime, it onlyfollows that at the time of his death, the disputed parcel of landno longer formed part of his estate to which his heirs may layclaim. Stated differently, petitioner and respondents neverinherited the subject lot from their father.

Same Same Partition Coownership The purpose ofpartition is to put an end to coownership.Petitioners contentionthat he and his siblings intended to continue their supposed coownership of the subject property contradicts the provisions of thesubject Extrajudicial Settlement where they clearly manifestedtheir intention of having the subject property divided orpartitioned by assigning to each of the petitioner and respondentsa specific 1/3 portion of the same. Partition calls for thesegregation and conveyance of a determinate portion of theproperty owned in common. It seeks a severance of the individualinterests of each coowner, vesting in each of them a sole estate ina specific property and giving each one a right to enjoy his estatewithout supervision or interference from the other. In otherwords, the purpose of partition is to put an end to coownership,an objective which negates petitioners claims in the present case.

Same Same Same Contracts It is a cardinal rule in the

interpretation of contracts that the intention of the parties shall beac

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*THIRD DIVISION.

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Balus vs. Balus

corded primordial consideration.In the present case, however,there is nothing in the subject Extrajudicial Settlement toindicate any express stipulation for petitioner and respondents tocontinue with their supposed coownership of the contested lot.On the contrary, a plain reading of the provisions of theExtrajudicial Settlement would not, in any way, supportpetitioners contention that it was his and his siblings intentionto buy the subject property from the Bank and continue what theybelieved to be coownership thereof. It is a cardinal rule in theinterpretation of contracts that the intention of the parties shallbe accorded primordial consideration. It is the duty of the courtsto place a practical and realistic construction upon it, giving dueconsideration to the context in which it is negotiated and thepurpose which it is intended to serve. Such intention isdetermined from the express terms of their agreement, as well astheir contemporaneous and subsequent acts. Absurd and illogicalinterpretations should also be avoided.

PETITION for review on certiorari of a decision of theCourt of Appeals.

The facts are stated in the opinion of the Court. Moises G. Dalisay, Jr. for petitioner. Alfredo R. Busico for respondents.

PERALTA,J.:Assailed in the present petition for review on certiorari

under Rule 45 of the Rules of Court is the Decision1 of theCourt of Appeals (CA) dated May 31, 2005 in CAG.R. CVNo. 58041 which set aside the February 7, 1997 Decision ofthe Regional Trial Court (RTC) of Lanao del Norte, Branch4 in Civil Case No. 3263.

The facts of the case are as follows:

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1Penned by Associate Justice Arturo G. Tayag, with Associate JusticesRodrigo F. Lim, Jr. and Normandie B. Pizarro, concurring CA Rollo, pp.6976.

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180 SUPREME COURT REPORTS ANNOTATEDBalus vs. Balus

Herein petitioner and respondents are the children ofthe spouses Rufo and Sebastiana Balus. Sebastiana died onSeptember 6, 1978, while Rufo died on July 6, 1984.

On January 3, 1979, Rufo mortgaged a parcel of land,which he owns, as security for a loan he obtained from theRural Bank of Maigo, Lanao del Norte (Bank). The saidproperty was originally covered by Original Certificate ofTitle No. P439(788) and more particularly described asfollows:

A parcel of land with all the improvements thereon,containing an area of 3.0740 hectares, more or less, situated inthe Barrio of Lagundang, Bunawan, Iligan City, and bounded asfollows: Bounded on the NE., along line 12, by Lot 5122, Csd292along line 212, by Dodiongan River along line 1213 by Lot 4649,Csd292 and along line 121, by Lot 4661, Csd292. x x x2

Rufo failed to pay his loan. As a result, the mortgagedproperty was foreclosed and was subsequently sold to theBank as the sole bidder at a public auction held for thatpurpose. On November 20, 1981, a Certificate of Sale3 wasexecuted by the sheriff in favor of the Bank. The propertywas not redeemed within the period allowed by law. Morethan two years after the auction, or on January 25, 1984,the sheriff executed a Definite Deed of Sale4 in the Banksfavor. Thereafter, a new title was issued in the name of theBank.

On October 10, 1989, herein petitioner and respondentsexecuted an Extrajudicial Settlement of Estate5adjudicating to each of them a specific onethird portion ofthe subject property consisting of 10,246 square meters.The Extrajudicial Settlement also contained provisions

wherein the parties admitted knowledge of the fact thattheir father mortgaged

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2 See Certificate of Sale and Definite Deed of Sale, Exhibits A andB, respectively, Records, pp. 7475.

3Exhibit A, Records, p. 74.4Exhibit B, Id., at p. 75.5Exhibit C/4, Id., at p. 76.

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VOL. 610, JANUARY 15, 2010 181Balus vs. Balus

the subject property to the Bank and that they intended toredeem the same at the soonest possible time.

Three years after the execution of the ExtrajudicialSettlement, herein respondents bought the subject propertyfrom the Bank. On October 12, 1992, a Deed of Sale ofRegistered Land6 was executed by the Bank in favor ofrespondents. Subsequently, Transfer Certificate of Title(TCT) No. T39,484(a.f.)7 was issued in the name ofrespondents. Meanwhile, petitioner continued possession ofthe subject lot.

On June 27, 1995, respondents filed a Complaint8 forRecovery of Possession and Damages against petitioner,contending that they had already informed petitioner of thefact that they were the new owners of the disputedproperty, but the petitioner still refused to surrenderpossession of the same to them. Respondents claimed thatthey had exhausted all remedies for the amicablesettlement of the case, but to no avail.

On February 7, 1997, the RTC rendered a Decision9disposing as follows:

WHEREFORE, judgment is hereby rendered, ordering theplaintiffs to execute a Deed of Sale in favor of the defendant, theonethird share of the property in question, presently possessedby him, and described in the deed of partition, as follows:

A onethird portion of Transfer Certificate of Title No. T39,484 (a.f.), formerly Original Certificate of Title No. P788, now in the name of Saturnino Balus and Leonarda B.Vda. de Calunod, situated at Lagundang, Bunawan, Iligan

City, bounded on the North by Lot 5122 East by shares ofSaturnino Balus and Leonarda BalusCalunod South byLot 4649, Dodiongan River West by Lot 4661, consisting of10,246 square meters, including improvements thereon.

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6Exhibit D, Id., at p. 79.7Exhibit E, Id., at p 80.8Records, pp. 16.9Id., at pp. 131140.

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and dismissing all other claims of the parties.The amount of P6,733.33 consigned by the defendant with the

Clerk of Court is hereby ordered delivered to the plaintiffs, aspurchase price of the onethird portion of the land in question.

Plaintiffs are ordered to pay the costs.SO ORDERED.10

The RTC held that the right of petitioner to purchasefrom the respondents his share in the disputed propertywas recognized by the provisions of the ExtrajudicialSettlement of Estate, which the parties had executed beforethe respondents bought the subject lot from the Bank.

Aggrieved by the Decision of the RTC, hereinrespondents filed an appeal with the CA.

On May 31, 2005, the CA promulgated the presentlyassailed Decision, reversing and setting aside the Decisionof the RTC and ordering petitioner to immediatelysurrender possession of the subject property to therespondents. The CA ruled that when petitioner andrespondents did not redeem the subject property within theredemption period and allowed the consolidation ofownership and the issuance of a new title in the name ofthe Bank, their coownership was extinguished.

Hence, the instant petition raising a sole issue, to wit:

WHETHER OR NOT COOWNERSHIP AMONG THEPETITIONER AND THE RESPONDENTS OVER THE

PROPERTY PERSISTED/CONTINUED TO EXIST (EVENAFTER THE TRANSFER OF TITLE TO THE BANK) BYVIRTUE OF THE PARTIES AGREEMENT PRIOR TO THEREPURCHASE THEREOF BY THE RESPONDENTS THUS,WARRANTING THE PETITIONERS ACT OF ENFORCINGTHE AGREEMENT BY REIMBURSING THE RESPONDENTSOF HIS (PETITIONERS) JUST SHARE OF THE REPURCHASEPRICE.11

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10Id., at pp. 139140.11Rollo, p. 21.

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The main issue raised by petitioner is whether coownership by him and respondents over the subjectproperty persisted even after the lot was purchased by theBank and title thereto transferred to its name, and evenafter it was eventually bought back by the respondentsfrom the Bank.

Petitioner insists that despite respondents fullknowledge of the fact that the title over the disputedproperty was already in the name of the Bank, they stillproceeded to execute the subject Extrajudicial Settlement,having in mind the intention of purchasing back theproperty together with petitioner and of continuing theircoownership thereof.

Petitioner posits that the subject ExtrajudicialSettlement is, in and by itself, a contract between him andrespondents, because it contains a provision whereby theparties agreed to continue their coownership of the subjectproperty by redeeming or repurchasing the same fromthe Bank. This agreement, petitioner contends, is the lawbetween the parties and, as such, binds the respondents.As a result, petitioner asserts that respondents act ofbuying the disputed property from the Bank withoutnotifying him inures to his benefit as to give him the rightto claim his rightful portion of the property, comprising 1/3thereof, by reimbursing respondents the equivalent 1/3 ofthe sum they paid to the Bank.

The Court is not persuaded.Petitioner and respondents are arguing on the wrong

premise that, at the time of the execution of theExtrajudicial Settlement, the subject property formed partof the estate of their deceased father to which they may layclaim as his heirs.

At the outset, it bears to emphasize that there is nodispute with respect to the fact that the subject propertywas exclusively owned by petitioner and respondentsfather, Rufo, at the time that it was mortgaged in 1979.This was stipulated by the parties during the hearingconducted by the trial court on October 28, 1996.12Evidence shows that a Definite Deed of

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12See TSN, October 28, 1996 p. 2.

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Sale13 was issued in favor of the Bank on January 25, 1984,after the period of redemption expired. There is neither anydispute that a new title was issued in the Banks namebefore Rufo died on July 6, 1984. Hence, there is noquestion that the Bank acquired exclusive ownership of thecontested lot during the lifetime of Rufo.

The rights to a persons succession are transmitted fromthe moment of his death.14 In addition, the inheritance of aperson consists of the property and transmissible rightsand obligations existing at the time of his death, as well asthose which have accrued thereto since the opening of thesuccession.15 In the present case, since Rufo lost ownershipof the subject property during his lifetime, it only followsthat at the time of his death, the disputed parcel of land nolonger formed part of his estate to which his heirs may layclaim. Stated differently, petitioner and respondents neverinherited the subject lot from their father.

Petitioner and respondents, therefore, were wrong inassuming that they became coowners of the subject lot.Thus, any issue arising from the supposed right ofpetitioner as coowner of the contested parcel of land isnegated by the fact that, in the eyes of the law, the

disputed lot did not pass into the hands of petitioner andrespondents as compulsory heirs of Rufo at any given pointin time.

The foregoing notwithstanding, the Court finds anecessity for a complete determination of the issues raisedin the instant case to look into petitioners argument thatthe Extrajudicial Settlement is an independent contractwhich gives him the right to enforce his right to claim aportion of the disputed lot bought by respondents.

It is true that under Article 1315 of the Civil Code of thePhilippines, contracts are perfected by mere consent and

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13Exhibit B, Records, p. 75.14Civil Code, Art. 777.15Civil Code, Art. 781.

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from that moment, the parties are bound not only to thefulfillment of what has been expressly stipulated but alsoto all the consequences which, according to their nature,may be in keeping with good faith, usage and law.

Article 1306 of the same Code also provides that thecontracting parties may establish such stipulations,clauses, terms and conditions as they may deemconvenient, provided these are not contrary to law, morals,good customs, public order or public policy.

In the present case, however, there is nothing in thesubject Extrajudicial Settlement to indicate any expressstipulation for petitioner and respondents to continue withtheir supposed coownership of the contested lot.

On the contrary, a plain reading of the provisions of theExtrajudicial Settlement would not, in any way, supportpetitioners contention that it was his and his siblingsintention to buy the subject property from the Bank andcontinue what they believed to be coownership thereof. Itis a cardinal rule in the interpretation of contracts that theintention of the parties shall be accorded primordialconsideration.16 It is the duty of the courts to place apractical and realistic construction upon it, giving due

consideration to the context in which it is negotiated andthe purpose which it is intended to serve.17 Such intentionis determined from the express terms of their agreement,as well as their contemporaneous and subsequent acts.18Absurd and illogical interpretations should also beavoided.19

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16 Alio v. Heirs of Angelica A. Lorenzo, G.R. No. 159550, June 27,2008, 556 SCRA 139, 148.

17 TSPIC Corporation v. TSPIC Employees Union (FFW), G.R. No.163419, February 13, 2008, 545 SCRA 215, 226.

18Tating v. Marcella, G.R. No. 155208, March 27, 2007, 519 SCRA 79,87.

19TSPIC Corporation v. TSPIC Employees Union (FFW), supra note17.

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For petitioner to claim that the Extrajudicial Settlementis an agreement between him and his siblings to continuewhat they thought was their ownership of the subjectproperty, even after the same had been bought by theBank, is stretching the interpretation of the saidExtrajudicial Settlement too far.

In the first place, as earlier discussed, there is no coownership to talk about and no property to partition, as thedisputed lot never formed part of the estate of theirdeceased father.

Moreover, petitioners asseveration of his andrespondents intention of continuing with their supposedcoownership is negated by no less than his assertions inthe present petition that on several occasions he had thechance to purchase the subject property back, but herefused to do so. In fact, he claims that after the Bankacquired the disputed lot, it offered to resell the same tohim but he ignored such offer. How then can petitioner nowclaim that it was also his intention to purchase the subjectproperty from the Bank, when he admitted that he refusedthe Banks offer to resell the subject property to him?

In addition, it appears from the recitals in the

Extrajudicial Settlement that, at the time of the executionthereof, the parties were not yet aware that the subjectproperty was already exclusively owned by the Bank.Nonetheless, the lack of knowledge on the part of petitionerand respondents that the mortgage was already foreclosedand title to the property was already transferred to theBank does not give them the right or the authority tounilaterally declare themselves as coowners of thedisputed property otherwise, the disposition of the casewould be made to depend on the belief and conviction of thepartylitigants and not on the evidence adduced and thelaw and jurisprudence applicable thereto.

Furthermore, petitioners contention that he and hissiblings intended to continue their supposed coownershipof the subject property contradicts the provisions of thesubject Ex

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trajudicial Settlement where they clearly manifested theirintention of having the subject property divided orpartitioned by assigning to each of the petitioner andrespondents a specific 1/3 portion of the same. Partitioncalls for the segregation and conveyance of a determinateportion of the property owned in common. It seeks aseverance of the individual interests of each coowner,vesting in each of them a sole estate in a specific propertyand giving each one a right to enjoy his estate withoutsupervision or interference from the other.20 In otherwords, the purpose of partition is to put an end to coownership,21 an objective which negates petitioners claimsin the present case.

WHEREFORE, the instant petition is DENIED. Theassailed Decision of the Court of Appeals, dated May 31,2005 in CAG.R. CV No. 58041, is AFFIRMED.

SO ORDERED.

Corona (Chairperson), Velasco, Jr., Nachura andMendoza, JJ., concur.

Petition denied, judgment affirmed.

Note.Partition is premature when ownership of thelot is still in dispute. (FiguracionGerilla vs. Vda. deFiguracion, 499 SCRA 484 [2006])

o0o

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20Arbolario v. Court of Appeals, 449 Phil. 357, 369 401 SCRA 360, 370(2003).

21Cruz v. Court of Appeals, G.R. No. 122904, April 15, 2005, 456 SCRA165, 171 Lopez v. Court of Appeals, 446 Phil. 722, 743 398 SCRA 550, 566(2003).

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balus vs. balus case remedial law

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