8/17/2019 SUPREME COURT REPORTS ANNOTATED VOLUME 610

G.R. No. 168970. January 15, 2010.*

CELESTINO BALUS, petitioner, vs. SATURNINO BALUS and

LEONARDA BALUS VDA. DE CALUNOD, respondents.

Civil Law; Property; Succession; Inheritance; What consists

inheritance; The rights to a person’s succession are transmitted from the
moment of his death; The inheritance of a person consists of the property
and transmissible rights and obligations existing at the time of his death as
well as those which have accrued thereto since the opening of the
succession.—The rights to a person’s succession are transmitted from the
moment of his death. In addition, the inheritance of a person consists of the
property and transmissible rights and obligations existing at the time of his
death, as well as those which have accrued thereto since the opening of the
succession. In the present case, since Rufo lost ownership of the subject
property during his lifetime, it only follows that at the time of his death, the
disputed parcel of land no longer formed part of his estate to which his heirs
may lay claim. Stated differently, petitioner and respondents never inherited
the subject lot from their father.
Same; Same; Partition; Co-ownership; The purpose of partition is to
put an end to co-ownership.—Petitioner’s contention that he and his siblings
intended to continue their supposed co-ownership of 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 petitioner and respondents a specific
1/3 portion of the same. Partition calls for the segregation and conveyance
of a determinate portion of the property owned in common. It seeks a
severance of the individual interests of each co-owner, vesting in each of
them a sole estate in a specific property and giving each one a right to enjoy
his estate without supervision or interference from the other. In other words,
the purpose of partition is to put an end to co-ownership, an objective which
negates petitioner’s 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 be ac-

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* THIRD DIVISION.

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corded primordial consideration.—In the present case, however, there

is nothing in the subject Extrajudicial Settlement to indicate any express
stipulation for petitioner and respondents to continue with their supposed
co-ownership of the contested lot. 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 continue what they believed to be co-
ownership thereof. It is a cardinal rule in the interpretation of contracts that
the intention of the parties shall be accorded primordial consideration. It is
the duty of the courts to place a practical and realistic construction upon it,
giving due consideration to the context in which it is negotiated and the
purpose which it is intended to serve. Such intention is determined from the
express terms of their agreement, as well as their contemporaneous and
subsequent acts. Absurd and illogical interpretations should also be avoided.

PETITION for review on certiorari of a decision of the Court 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 the Court of
Appeals (CA) dated May 31, 2005 in CA-G.R. CV No. 58041 which
set aside the February 7, 1997 Decision of the Regional Trial Court
(RTC) of Lanao del Norte, Branch 4 in Civil Case No. 3263.
The facts of the case are as follows:

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1 Penned by Associate Justice Arturo G. Tayag, with Associate Justices Rodrigo F.

Lim, Jr. and Normandie B. Pizarro, concurring; CA Rollo, pp. 69-76.

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Herein petitioner and respondents are the children of the spouses

Rufo and Sebastiana Balus. Sebastiana died on September 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 the Rural Bank of
Maigo, Lanao del Norte (Bank). The said property was originally
covered by Original Certificate of Title No. P-439(788) and more
particularly described as follows:

“A parcel of land with all the improvements thereon, containing an area

of 3.0740 hectares, more or less, situated in the Barrio of Lagundang,
Bunawan, Iligan City, and bounded as follows: Bounded on the NE., along
line 1-2, by Lot 5122, Csd-292; along line 2-12, by Dodiongan River; along
line 12-13 by Lot 4649, Csd-292; and along line 12-1, by Lot 4661, Csd-
292. x x x”2

Rufo failed to pay his loan. As a result, the mortgaged property

was foreclosed and was subsequently sold to the Bank as the sole
bidder at a public auction held for that purpose. On November 20,
1981, a Certificate of Sale3 was executed by the sheriff in favor of
the Bank. The property was not redeemed within the period allowed
by law. More than two years after the auction, or on January 25,
1984, the sheriff executed a Definite Deed of Sale4 in the Bank’s
favor. Thereafter, a new title was issued in the name of the Bank.
On October 10, 1989, herein petitioner and respondents executed
an Extrajudicial Settlement of Estate5 adjudicating to each of them a
specific one-third portion of the subject property consisting of
10,246 square meters. The Extrajudicial Settlement also contained
provisions wherein the parties admitted knowledge of the fact that
their father mortgaged

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2 See Certificate of Sale and Definite Deed of Sale, Exhibits “A” and “B”,
respectively, Records, pp. 74-75.
3 Exhibit “A,” Records, p. 74.
4 Exhibit “B,” Id., at p. 75.
5 Exhibit “C”/”4,” Id., at p. 76.

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the subject property to the Bank and that they intended to redeem the
same at the soonest possible time.
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Three years after the execution of the Extrajudicial Settlement,

herein respondents bought the subject property from the Bank. On
October 12, 1992, a Deed of Sale of Registered Land6 was executed
by the Bank in favor of respondents. Subsequently, Transfer
Certificate of Title (TCT) No. T-39,484(a.f.)7 was issued in the name
of respondents. Meanwhile, petitioner continued possession of the
subject lot.
On June 27, 1995, respondents filed a Complaint8 for Recovery
of Possession and Damages against petitioner, contending that they
had already informed petitioner of the fact that they were the new
owners of the disputed property, but the petitioner still refused to
surrender possession of the same to them. Respondents claimed that
they had exhausted all remedies for the amicable settlement of the
case, but to no avail.
On February 7, 1997, the RTC rendered a Decision9 disposing as
follows:

“WHEREFORE, judgment is hereby rendered, ordering the plaintiffs to

execute a Deed of Sale in favor of the defendant, the one-third share of the
property in question, presently possessed by him, and described in the deed
of partition, as follows:

A one-third portion of Transfer Certificate of Title No. T-39,484

(a.f.), formerly Original Certificate of Title No. P-788, 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 of Saturnino Balus and Leonarda Balus-
Calunod; South by Lot 4649, Dodiongan River; West by Lot 4661,
consisting of 10,246 square meters, including improvements thereon.

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6 Exhibit “D,” Id., at p. 79.

7 Exhibit “E,” Id., at p 80.
8 Records, pp. 1-6.
9 Id., at pp. 131-140.

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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, as purchase price of the
one-third portion of the land in question.
Plaintiffs are ordered to pay the costs.
SO ORDERED.”10

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The RTC held that the right of petitioner to purchase from the
respondents his share in the disputed property was recognized by the
provisions of the Extrajudicial Settlement of Estate, which the
parties had executed before the respondents bought the subject lot
from the Bank.
Aggrieved by the Decision of the RTC, herein respondents filed
an appeal with the CA.
On May 31, 2005, the CA promulgated the presently assailed
Decision, reversing and setting aside the Decision of the RTC and
ordering petitioner to immediately surrender possession of the
subject property to the respondents. The CA ruled that when
petitioner and respondents did not redeem the subject property
within the redemption period and allowed the consolidation of
ownership and the issuance of a new title in the name of the Bank,
their co-ownership was extinguished.
Hence, the instant petition raising a sole issue, to wit:

WHETHER OR NOT CO-OWNERSHIP AMONG THE PETITIONER

AND THE RESPONDENTS OVER THE PROPERTY
PERSISTED/CONTINUED TO EXIST (EVEN AFTER THE TRANSFER
OF TITLE TO THE BANK) BY VIRTUE OF THE PARTIES’
AGREEMENT PRIOR TO THE REPURCHASE THEREOF BY THE
RESPONDENTS; THUS, WARRANTING THE PETITIONER’S ACT OF
ENFORCING THE AGREEMENT BY REIMBURSING THE
RESPONDENTS OF HIS (PETITIONER’S) JUST SHARE OF THE
REPURCHASE PRICE.11

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10 Id., at pp. 139-140.

11 Rollo, p. 21.

183

The main issue raised by petitioner is whether co-ownership by

him and respondents over the subject property persisted even after
the lot was purchased by the Bank and title thereto transferred to its
name, and even after it was eventually bought back by the
respondents from the Bank.
Petitioner insists that despite respondents’ full knowledge of the
fact that the title over the disputed property was already in the name
of the Bank, they still proceeded to execute the subject Extrajudicial
Settlement, having in mind the intention of purchasing back the
property together with petitioner and of continuing their co-
ownership thereof.
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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 co-
ownership of the subject property by “redeeming” or “repurchasing”
the same from the Bank. This agreement, petitioner contends, 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 give him the right to claim his rightful portion of the property,
comprising 1/3 thereof, by reimbursing respondents the equivalent
1/3 of the 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 the Extrajudicial Settlement, the
subject property formed part of the estate of their deceased father to
which they may lay claim as his heirs.
At the outset, it bears to emphasize that there is no dispute with
respect to the fact that the subject property was exclusively owned
by petitioner and respondents’ father, Rufo, at the time that it was
mortgaged in 1979. This was stipulated by the parties during the
hearing conducted by the trial court on October 28, 1996.12
Evidence shows that a Definite Deed of

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12 See 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 any dispute that a
new title was issued in the Bank’s name before Rufo died on July 6,
1984. Hence, there is no question that the Bank acquired exclusive
ownership of the contested lot during the lifetime of Rufo.
The rights to a person’s succession are transmitted from the
moment of his death.14 In addition, the inheritance of a person
consists of the property and transmissible rights and obligations
existing at the time of his death, as well as those which have accrued
thereto since the opening of the succession.15 In the present case,
since Rufo lost ownership of the subject property during his lifetime,
it only follows that at the time of his death, the disputed parcel of
land no longer formed part of his estate to which his heirs may lay
claim. Stated differently, petitioner and respondents never inherited
the subject lot from their father.
Petitioner and respondents, therefore, were wrong in assuming
that they became co-owners of the subject lot. Thus, any issue
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arising from the supposed right of petitioner as co-owner 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
respondents as compulsory heirs of Rufo at any given point in time.
The foregoing notwithstanding, the Court finds a necessity for a
complete determination of the issues raised in the instant case to
look into petitioner’s argument that the Extrajudicial Settlement is
an independent contract which gives him the right to enforce his
right to claim a portion of the disputed lot bought by respondents.
It is true that under Article 1315 of the Civil Code of the
Philippines, contracts are perfected by mere consent; and

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13 Exhibit “B,” Records, p. 75.

14 Civil Code, Art. 777.
15 Civil Code, Art. 781.

185

from that moment, the parties are bound not only to the fulfillment
of what has been expressly stipulated but also to 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 the contracting
parties may establish such stipulations, clauses, terms and conditions
as they may deem convenient, provided these are not contrary to
law, morals, good customs, public order or public policy.
In the present case, however, there is nothing in the subject
Extrajudicial Settlement to indicate any express stipulation for
petitioner and respondents to continue with their supposed co-
ownership of the contested lot.
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 continue what they believed to
be co-ownership thereof. It is a cardinal rule in the interpretation of
contracts that the intention of the parties shall be accorded
primordial consideration.16 It is the duty of the courts to place a
practical and realistic construction upon it, giving due consideration
to the context in which it is negotiated and the purpose which it is
intended to serve.17 Such intention is determined from the express
terms of their agreement, as well as their contemporaneous and
subsequent acts.18 Absurd and illogical interpretations should also be
avoided.19

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16 Aliño 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.
18 Tating v. Marcella, G.R. No. 155208, March 27, 2007, 519 SCRA 79, 87.
19 TSPIC Corporation v. TSPIC Employees Union (FFW), supra note 17.

186

For petitioner to claim that the Extrajudicial Settlement is an

agreement between him and his siblings to continue what they
thought was their ownership of the subject property, even after the
same had been bought by the Bank, is stretching the interpretation of
the said Extrajudicial Settlement too far.
In the first place, as earlier discussed, there is no co-ownership to
talk about and no property to partition, as the disputed lot never
formed part of the estate of their deceased father.
Moreover, petitioner’s asseveration of his and respondents’
intention of continuing with their supposed co-ownership is negated
by no less than his assertions in the present petition that on several
occasions he had the chance to purchase the subject property back,
but he refused to do so. In fact, he claims that after the Bank
acquired the disputed lot, it offered to re-sell the same to him but he
ignored such offer. How then can petitioner now claim that it was
also his intention to purchase the subject property from the Bank,
when he admitted that he refused the Bank’s offer to re-sell the
subject property to him?
In addition, it appears from the recitals in the Extrajudicial
Settlement that, at the time of the execution thereof, the parties were
not yet aware that the subject property was already exclusively
owned by the Bank. Nonetheless, the lack of knowledge on the part
of petitioner and respondents that the mortgage was already
foreclosed and title to the property was already transferred to the
Bank does not give them the right or the authority to unilaterally
declare themselves as co-owners of the disputed property; otherwise,
the disposition of the case would be made to depend on the belief
and conviction of the party-litigants and not on the evidence
adduced and the law and jurisprudence applicable thereto.
Furthermore, petitioner’s contention that he and his siblings
intended to continue their supposed co-ownership of the subject
property contradicts the provisions of the subject Ex-

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trajudicial Settlement where they clearly manifested their intention

of having the subject property divided or partitioned by assigning to
each of the petitioner and respondents a specific 1/3 portion of the
same. Partition calls for the segregation and conveyance of a
determinate portion of the property owned in common. It seeks a
severance of the individual interests of each co-owner, vesting in
each of them a sole estate in a specific property and giving each one
a right to enjoy his estate without supervision or interference from
the other.20 In other words, the purpose of partition is to put an end
to co-ownership,21 an objective which negates petitioner’s claims in
the present case.
WHEREFORE, the instant petition is DENIED. The assailed
Decision of the Court of Appeals, dated May 31, 2005 in CA-G.R.
CV No. 58041, is AFFIRMED.
SO ORDERED.

Corona (Chairperson), Velasco, Jr., Nachura and Mendoza, JJ.,

concur.

Petition denied, judgment affirmed.

Note.—Partition is premature when ownership of the lot is still in

dispute. (Figuracion-Gerilla vs. Vda. de Figuracion, 499 SCRA 484
[2006])

——o0o——

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20 Arbolario v. Court of Appeals, 449 Phil. 357, 369; 401 SCRA 360, 370 (2003).
21 Cruz v. Court of Appeals, G.R. No. 122904, April 15, 2005, 456 SCRA 165,
171; Lopez v. Court of Appeals, 446 Phil. 722, 743; 398 SCRA 550, 566 (2003).

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