2017625 G.R.No.

168970

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RepublicofthePhilippines
SUPREMECOURT
Manila

THIRDDIVISION

G.R.No.168970January15,2010

CELESTINOBALUS,Petitioner,
vs.
SATURNINOBALUSandLEONARDABALUSVDA.DECALUNOD,Respondents.

DECISION

PERALTA,J.:

AssailedinthepresentpetitionforreviewoncertiorariunderRule45oftheRulesofCourtistheDecision1ofthe
Court of Appeals (CA) dated May 31, 2005 in CAG.R. CV No. 58041 which set aside the February 7, 1997
DecisionoftheRegionalTrialCourt(RTC)ofLanaodelNorte,Branch4inCivilCaseNo.3263.

Thefactsofthecaseareasfollows:

HereinpetitionerandrespondentsarethechildrenofthespousesRufoandSebastianaBalus.Sebastianadied
onSeptember6,1978,whileRufodiedonJuly6,1984.

OnJanuary3,1979,Rufomortgagedaparcelofland,whichheowns,assecurityforaloanheobtainedfromthe
RuralBankofMaigo,LanaodelNorte(Bank).ThesaidpropertywasoriginallycoveredbyOriginalCertificateof
TitleNo.P439(788)andmoreparticularlydescribedasfollows:

Aparceloflandwithalltheimprovementsthereon,containinganareaof3.0740hectares,moreorless,situated
intheBarrioofLagundang,Bunawan,IliganCity,andboundedasfollows:BoundedontheNE.,alongline12,by
Lot5122,Csd292alongline212,byDodionganRiveralongline1213byLot4649,Csd292andalongline
121,byLot4661,Csd292.xxx2

Rufofailedtopayhisloan.Asaresult,themortgagedpropertywasforeclosedandwassubsequentlysoldtothe
Bankasthesolebidderatapublicauctionheldforthatpurpose.OnNovember20,1981,aCertificateofSale3
wasexecutedbythesheriffinfavoroftheBank.Thepropertywasnotredeemedwithintheperiodallowedbylaw.
Morethantwoyearsaftertheauction,oronJanuary25,1984,thesheriffexecutedaDefiniteDeedofSale4in
theBank'sfavor.Thereafter,anewtitlewasissuedinthenameoftheBank.

On October 10, 1989, herein petitioner and respondents executed an Extrajudicial Settlement of Estate5
adjudicating to each of them a specific onethird portion of the subject property consisting of 10,246 square
meters.TheExtrajudicialSettlementalsocontainedprovisionswhereinthepartiesadmittedknowledgeofthefact
that their father mortgaged the subject property to the Bank and that they intended to redeem the same at the
soonestpossibletime.

Three years after the execution of the Extrajudicial Settlement, herein respondents bought the subject property
fromtheBank.OnOctober12,1992,aDeedofSaleofRegisteredLand6wasexecutedbytheBankinfavorof
respondents. Subsequently, Transfer Certificate of Title (TCT) No. T39,484(a.f.)7 was issued in the name of
respondents.Meanwhile,petitionercontinuedpossessionofthesubjectlot.

OnJune27,1995,respondentsfiledaComplaint8forRecoveryofPossessionandDamagesagainstpetitioner,
contending that they had already informed petitioner of the fact that they were the new owners of the disputed
property,butthepetitionerstillrefusedtosurrenderpossessionofthesametothem.Respondentsclaimedthat
theyhadexhaustedallremediesfortheamicablesettlementofthecase,buttonoavail.

OnFebruary7,1997,theRTCrenderedaDecision9disposingasfollows:

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WHEREFORE, judgment is hereby rendered, ordering the plaintiffs to execute a Deed of Sale in favor of the
defendant,theonethirdshareofthepropertyinquestion,presentlypossessedbyhim,anddescribedinthedeed
ofpartition,asfollows:

AonethirdportionofTransferCertificateofTitleNo.T39,484(a.f.),formerlyOriginalCertificateofTitleNo.P
788, now in the name of Saturnino Balus and Leonarda B. Vda. de Calunod, situated at Lagundang, Bunawan,
IliganCity,boundedontheNorthbyLot5122EastbysharesofSaturninoBalusandLeonardaBalusCalunod
South by Lot 4649, Dodiongan River West by Lot 4661, consisting of 10,246 square meters, including
improvementsthereon.

anddismissingallotherclaimsoftheparties.

TheamountofP6,733.33consignedbythedefendantwiththeClerkofCourtisherebyordereddeliveredtothe
plaintiffs,aspurchasepriceoftheonethirdportionofthelandinquestion.

Plaintiffsareorderedtopaythecosts.

SOORDERED.10

TheRTCheldthattherightofpetitionertopurchasefromtherespondentshisshareinthedisputedpropertywas
recognizedbytheprovisionsoftheExtrajudicialSettlementofEstate,whichthepartieshadexecutedbeforethe
respondentsboughtthesubjectlotfromtheBank.

AggrievedbytheDecisionoftheRTC,hereinrespondentsfiledanappealwiththeCA.

OnMay31,2005,theCApromulgatedthepresentlyassailedDecision,reversingandsettingasidetheDecision
of the RTC and ordering petitioner to immediately surrender possession of the subject property to the
respondents.TheCAruledthatwhenpetitionerandrespondentsdidnotredeemthesubjectpropertywithinthe
redemptionperiodandallowedtheconsolidationofownershipandtheissuanceofanewtitleinthenameofthe
Bank,theircoownershipwasextinguished.

Hence,theinstantpetitionraisingasoleissue,towit:

WHETHER OR NOT COOWNERSHIP AMONG THE PETITIONER AND THE RESPONDENTS OVER THE
PROPERTYPERSISTED/CONTINUEDTOEXIST(EVENAFTERTHETRANSFEROFTITLETOTHEBANK)BY
VIRTUEOFTHEPARTIES'AGREEMENTPRIORTOTHEREPURCHASETHEREOFBYTHERESPONDENTS
THUS, WARRANTING THE PETITIONER'S ACT OF ENFORCING THE AGREEMENT BY REIMBURSING THE
RESPONDENTSOFHIS(PETITIONER'S)JUSTSHAREOFTHEREPURCHASEPRICE.11

The main issue raised by petitioner is whether coownership by him and respondents over the subject property
persistedevenafterthelotwaspurchasedbytheBankandtitletheretotransferredtoitsname,andevenafterit
waseventuallyboughtbackbytherespondentsfromtheBank.

Petitionerinsiststhatdespiterespondents'fullknowledgeofthefactthatthetitleoverthedisputedpropertywas
already in the name of the Bank, they still proceeded to execute the subject Extrajudicial Settlement, having in
mindtheintentionofpurchasingbackthepropertytogetherwithpetitionerandofcontinuingtheircoownership
thereof.

Petitioner posits that the subject Extrajudicial Settlement is, in and by itself, a contract between him and
respondents, because it contains a provision whereby the parties agreed to continue their coownership of the
subjectpropertyby"redeeming"or"repurchasing"thesamefromtheBank.Thisagreement,petitionercontends,
is the law between the parties and, as such, binds the respondents. As a result, petitioner asserts that
respondents' act of buying the disputed property from the Bank without notifying him inures to his benefit as to
givehimtherighttoclaimhisrightfulportionoftheproperty,comprising1/3thereof,byreimbursingrespondents
theequivalent1/3ofthesumtheypaidtotheBank.

TheCourtisnotpersuaded.

Petitionerandrespondentsarearguingonthewrongpremisethat,atthetimeoftheexecutionoftheExtrajudicial
Settlement,thesubjectpropertyformedpartoftheestateoftheirdeceasedfathertowhichtheymaylayclaimas
hisheirs.

Attheoutset,itbearstoemphasizethatthereisnodisputewithrespecttothefactthatthesubjectpropertywas
exclusivelyownedbypetitionerandrespondents'father,Rufo,atthetimethatitwasmortgagedin1979.Thiswas
stipulatedbythepartiesduringthehearingconductedbythetrialcourtonOctober28,1996.12Evidenceshows
that a Definite Deed of Sale13 was issued in favor of the Bank on January 25, 1984, after the period of
redemptionexpired.ThereisneitheranydisputethatanewtitlewasissuedintheBank'snamebeforeRufodied
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on July 6, 1984. Hence, there is no question that the Bank acquired exclusive ownership of the contested lot
duringthelifetimeofRufo.

Therightstoaperson'ssuccessionaretransmittedfromthemomentofhisdeath.14Inaddition,theinheritance
ofapersonconsistsofthepropertyandtransmissiblerightsandobligationsexistingatthetimeofhisdeath,as
wellasthosewhichhaveaccruedtheretosincetheopeningofthesuccession.15Inthepresentcase,sinceRufo
lostownershipofthesubjectpropertyduringhislifetime,itonlyfollowsthatatthetimeofhisdeath,thedisputed
parcel of land no longer formed part of his estate to which his heirs may lay claim. Stated differently, petitioner
andrespondentsneverinheritedthesubjectlotfromtheirfather.

Petitioner and respondents, therefore, were wrong in assuming that they became coowners of the subject lot.
Thus, any issue arising from the supposed right of petitioner as coowner of the contested parcel of land is
negated by the fact that, in the eyes of the law, the disputed lot did not pass into the hands of petitioner and
respondentsascompulsoryheirsofRufoatanygivenpointintime.

Theforegoingnotwithstanding,theCourtfindsanecessityforacompletedeterminationoftheissuesraisedinthe
instantcasetolookintopetitioner'sargumentthattheExtrajudicialSettlementisanindependentcontractwhich
giveshimtherighttoenforcehisrighttoclaimaportionofthedisputedlotboughtbyrespondents. 1 a v v p h i1

ItistruethatunderArticle1315oftheCivilCodeofthePhilippines,contractsareperfectedbymereconsentand
fromthatmoment,thepartiesareboundnotonlytothefulfillmentofwhathasbeenexpresslystipulatedbutalso
toalltheconsequenceswhich,accordingtotheirnature,maybeinkeepingwithgoodfaith,usageandlaw.

Article1306ofthesameCodealsoprovidesthatthecontractingpartiesmayestablishsuchstipulations,clauses,
terms and conditions as they may deem convenient, provided these are not contrary to law, morals, good
customs,publicorderorpublicpolicy.

In the present case, however, there is nothing in the subject Extrajudicial Settlement to indicate any express
stipulationforpetitionerandrespondentstocontinuewiththeirsupposedcoownershipofthecontestedlot.

On the contrary, a plain reading of the provisions of the Extrajudicial Settlement would not, in any way, support
petitioner's contention that it was his and his sibling's intention to buy the subject property from the Bank and
continuewhattheybelievedtobecoownershipthereof.Itisacardinalruleintheinterpretationofcontractsthat
the intention of the parties shall be accorded primordial consideration.16 It is the duty of the courts to place a
practicalandrealisticconstructionuponit,givingdueconsiderationtothecontextinwhichitisnegotiatedandthe
purposewhichitisintendedtoserve.17Suchintentionisdeterminedfromtheexpresstermsoftheiragreement,
as well as their contemporaneous and subsequent acts.18 Absurd and illogical interpretations should also be
avoided.19

ForpetitionertoclaimthattheExtrajudicialSettlementisanagreementbetweenhimandhissiblingstocontinue
whattheythoughtwastheirownershipofthesubjectproperty,evenafterthesamehadbeenboughtbytheBank,
isstretchingtheinterpretationofthesaidExtrajudicialSettlementtoofar.

Inthefirstplace,asearlierdiscussed,thereisnocoownershiptotalkaboutandnopropertytopartition,asthe
disputedlotneverformedpartoftheestateoftheirdeceasedfather.

Moreover, petitioner's asseveration of his and respondents' intention of continuing with their supposed co
ownershipisnegatedbynolessthanhisassertionsinthepresentpetitionthatonseveraloccasionshehadthe
chance to purchase the subject property back, but he refused to do so. In fact, he claims that after the Bank
acquiredthedisputedlot,itofferedtoresellthesametohimbutheignoredsuchoffer.Howthencanpetitioner
nowclaimthatitwasalsohisintentiontopurchasethesubjectpropertyfromtheBank,whenheadmittedthathe
refusedtheBank'soffertoresellthesubjectpropertytohim?

Inaddition,itappearsfromtherecitalsintheExtrajudicialSettlementthat,atthetimeoftheexecutionthereof,the
partieswerenotyetawarethatthesubjectpropertywasalreadyexclusivelyownedbytheBank.Nonetheless,the
lackofknowledgeonthepartofpetitionerandrespondentsthatthemortgagewasalreadyforeclosedandtitleto
the property was already transferred to the Bank does not give them the right or the authority to unilaterally
declarethemselvesascoownersofthedisputedpropertyotherwise,thedispositionofthecasewouldbemade
to depend on the belief and conviction of the partylitigants and not on the evidence adduced and the law and
jurisprudenceapplicablethereto.

Furthermore,petitioner'scontentionthatheandhissiblingsintendedtocontinuetheirsupposedcoownershipof
the subject property contradicts the provisions of the subject Extrajudicial Settlement where they clearly
manifested their intention of having the subject property divided or partitioned by assigning to each of the
petitionerandrespondentsaspecific1/3portionofthesame.Partitioncallsforthesegregationandconveyance
ofadeterminateportionofthepropertyownedincommon.Itseeksaseveranceoftheindividualinterestsofeach

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coowner, vesting in each of them a sole estate in a specific property and giving each one a right to enjoy his
estatewithoutsupervisionorinterferencefromtheother.20Inotherwords,thepurposeofpartitionistoputan
endtocoownership,21anobjectivewhichnegatespetitioner'sclaimsinthepresentcase.

WHEREFORE,theinstantpetitionisDENIED.TheassailedDecisionoftheCourtofAppeals,datedMay31,2005
inCAG.R.CVNo.58041,isAFFIRMED.

SOORDERED

DIOSDADOM.PERALTA
AssociateJustice

WECONCUR:

RENATOC.CORONA
AssociateJustice
Chairperson

PRESBITEROJ.VELASCO,JR. ANTONIOEDUARDOB.NACHURA
AssociateJustice AssociateJustice

JOSEC.MENDOZA
AssociateJustice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case was
assignedtothewriteroftheopinionoftheCourtsDivision.

RENATOC.CORONA
AssociateJustice
ThirdDivision,Chairperson

CERTIFICATION

PursuanttoSection13,ArticleVIIIoftheConstitutionandtheDivisionChairpersonsAttestation,Icertifythatthe
conclusionsintheaboveDecisionhadbeenreachedinconsultationbeforethecasewasassignedtothewriterof
theopinionoftheCourtsDivision.

REYNATOS.PUNO
ChiefJustice

Footnotes
1PennedbyAssociateJusticeArturoG.Tayag,withAssociateJusticesRodrigoF.Lim,Jr.andNormandie
B.Pizarro,concurringCArollo,pp.6976.

2SeeCertificateofSaleandDefiniteDeedofSale,Exhibits"A"and"B,"respectively,records,pp.7475.

3Exhibit"A,"records,p.74.

4Exhibit"B,"id.at75.

5Exhibit"C"/"4,"id.at76.

6Exhibit"D,"id.at79.

7Exhibit"E,"id.at80.

8Records,pp.16.

9Id.at131140.

10Id.at139140.

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11Rollo,p.21.

12SeeTSN,October28,1996p.2.

13Exhibit"B,"records,p.75.

14CivilCode,Art.777.

15CivilCode,Art.781.

16Aliov.HeirsofAngelicaA.Lorenzo,G.R.No.159550,June27,2008,556SCRA139,148.

17TSPICCorporationv.TSPICEmployeesUnion(FFW),G.R.No.163419,February13,2008,545SCRA
215,226.

18Tatingv.Marcella,G.R.No.155208,March27,2007,519SCRA79,87.

19TSPICCorporationv.TSPICEmployeesUnion(FFW),supranote17.

20Arbolariov.CourtofAppeals,449Phil.357,369(2003).

21 Cruz v. Court of Appeals, G.R. No. 122904, April 15, 2005, 456 SCRA 165, 171 Lopez v. Court of
Appeals,446Phil.722,743(2003).

TheLawphilProjectArellanoLawFoundation

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