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Balus v. Balus
G.R. No. 168970 January 15, 2010
Herein petitioner and respondents are the children of the deceased Rufo Balus who died
on July 6, 1984. In 1979, Rufo mortgaged his land as security for a loan he obtained
from the Rural Bank. When he failed to pay, the same was foreclosed and was
subsequently sold to the Bank as the sole bidder. A new title then was issued in favor of
the bank.
In 1989, petitioner and respondents executed an Extrajudicial Settlement of Estate
adjudicating to each of them a specific one-third portion of the subject property. Three
years after the execution of the Extrajudicial Settlement, respondents bought the subject
property from the Bank. Hence, a new title was issued to them. Meanwhile, petitioner
continued possession of the subject lot. In 1995, respondents filed a Complaint for
Recovery of Possession against petitioner for his refusal to surrender the property.
The RTC then ordered the respondents to execute a Deed of Sale in favor of the
petitioner, with respect to his one-third share in the property in question, presently
possessed by him, and described in the deed of partition. It 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.
The CA however ruled otherwise and ordered petitioner to surrender possession. It held
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.
ISSUE: Whether co-ownership between the parties 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.
No. The rights to a persons succession are transmitted from the moment of his death. 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 coowners of the subject lot. Thus, any issue 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. Moreover, 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 petitioners contention that it was his and his siblings intention
to buy the subject property from the Bank and continue what they believed to be coownership thereof. 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.

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ISSUE$
<hether co8o#nership by hi! and respondents over the sub7ect property persisted
even after the lot #as purchasedby the Ban$ and title thereto transferred to its na!
e, and even after it #as eventually bou"ht bac$ by the respondentsfro! the Ban$.
%EL!$
'o. =n the first place, as #ill be e0plained belo#, there is no co8o#nership to be"in
#ith. 'evertheless, there isnothin" in the sub7ect 60tra7udicial Settle!ent to indicate
any e0press stipulation for herein parties to continue #iththeir supposed
co8o#nership of the contested lot.Petitioner insists that despite respondents5 full
$no#led"e of the fact that the title over the disputed property #asalready in the na!
e of the Ban$, they still proceeded to e0ecute the sub7ect 60tra7udicial Settle!ent,
havin" in !indthe intention of purchasin" bac$ the property to"ether #ith petitioner
and of continuin" their co8o#nership thereof.Petitioner posits that the sub7ect
60tra7udicial Settle!ent is, in and by itself, a contract bet#een hi! and
respondents,because it contains a provision #hereby the parties a"reed to continue
their co8o#nership of the sub7ect property by>redee!in"> or >repurchasin"> the
sa!e fro! the Ban$. his a"ree!ent, petitioner contends, is the la# bet#een
theparties and, as such, binds the respondents. *s a result, petitioner asserts that
respondents5 act of buyin" thedisputed property fro! the Ban$ #ithout notifyin" hi!

inures to his benefit as to "ive hi! the ri"ht to clai! his ri"htfulportion of the property,
co!prisin" 1?3 thereof, by rei!bursin" respondents the e+uivalent 1?3 of the su! they
paid tothe Ban$.he /ourt is not persuaded
Petitioner and respondents are ar"uin" on the #ron" pre!ise that, at the ti!e of the
e0ecution of the 60tra7udicialSettle!ent, the sub7ect property for!ed part of the
estate of their deceased father to #hich they !ay lay clai! as hisheirs. *t the outset,
it bears to e!phasi;e that there is no dispute #ith respect to the fact that the
sub7ect property #ase0clusively o#ned by petitioner and respondents5 father,
Rufo, at the ti!e that it #as !ort"a"ed in 199. his #asstipulated by the parties
durin" the hearin" conducted by the trial court on October , 199 .
1
6vidence sho#s that a4efinite 4eed of Sale
13
#as issued in favor of the Ban$ on January 2, 19 , after the period of rede!ption
e0pired.here is neither any dispute that a ne# title #as issued in the Ban$5s na!e
before Rufo died on July , 19. Hence,there is no +uestion that the Ban$
ac+uired e0clusive o#nership of the contested lot durin" the lifeti!e of Rufo. he
ri"hts to a person5s succession are trans!itted fro! the !o!ent of his death.
1
=n addition, the inheritance of aperson consists of the property and trans!issible
ri"hts and obli"ations e0istin" at the ti!e of his death, as #ell asthose #hich have
accrued thereto since the openin" of the succession.
12
=n the present case, since Rufo losto#nership of the sub7ect property durin" his
lifeti!e, it only follo#s that at the ti!e of his death, the disputed parcel of land no
lon"er for!ed part of his estate to #hich his heirs !ay lay clai!. Stated differently,
petitioner andrespondents never inherited the sub7ect lot fro! their father.Petitioner
and respondents, therefore, #ere #ron" in assu!in" that they beca!e co8o#ners of
the sub7ect lot. hus,any issue arisin" fro! the supposed ri"ht of petitioner as
co8o#ner of the contested parcel of land is ne"ated by thefact that, in the eyes of
the la#, the disputed lot did not pass into the hands of petitioner and respondents
asco!pulsory heirs of Rufo at any "iven point in ti!e. he fore"oin" not#ithstandin",
the /ourt finds a necessity for a co!plete deter!ination of the issues raised in
theinstant case to loo$ into petitioner5s ar"u!ent that the 60tra7udicial Settle!ent is
an independent contract #hich "iveshi! the ri"ht to enforce his ri"ht to clai! a portion
of the disputed lot bou"ht by respondents. * plain readin" of the provisions of the
60tra7udicial Settle!ent #ould not, in any #ay, support petitioner5s contentionthat
it #as his and his siblin"5s intention to buy the sub7ect property fro! the Ban$ and
continue #hat they believed tobe co8o#nership thereof. =t is a cardinal rule in the
interpretation of contracts that the intention of the parties shall beaccorded pri!
ordial consideration.

1
=t is the duty of the courts to place a practical and realistic construction upon
it,"ivin" due consideration to the conte0t in #hich it is ne"otiated and the purpose
#hich it is intended to serve.
1
Suchintention is deter!ined fro! the e0press ter!s of their a"ree!ent, as #ell as their
conte!poraneous and subse+uentacts.
1
*bsurd and illo"ical interpretations should also be avoided.
19
:or petitioner to clai! that the 60tra7udicial Settle!ent is an a"ree!ent bet#een hi!
and his siblin"s to continue#hat they thou"ht #as their o#nership of the sub7ect
property, even after the sa!e had been bou"ht by the Ban$, isstretchin" the
interpretation of the said 60tra7udicial Settle!ent too far.=n the first place, as
earlier discussed, there is no co8o#nership to tal$ about and no property to
partition, as thedisputed lot never for!ed part of the estate of their deceased father.
%oreover, petitioner5s asseveration of his and respondents5 intention of continuin"
#ith their supposed co8o#nershipis ne"ated by no less than his assertions in the
present petition that on several occasions he had the chance topurchase the
sub7ect property bac$, but he refused to do so. =n fact, he clai!s that after the
Ban$ ac+uired thedisputed lot, it offered to re8sell the sa!e to hi! but he i"nored
such offer. Ho# then can petitioner no# clai! that it#as also his intention to
purchase the sub7ect property fro! the Ban$, #hen he ad!itted that he refused the
Ban$5soffer to re8sell the sub7ect property to hi!@=n addition, it appears fro! the
recitals in the 60tra7udicial Settle!ent that, at the ti!e of the e0ecution thereof,
theparties #ere not yet a#are that the sub7ect property #as already e0clusively
o#ned by the Ban$. 'onetheless, thelac$ of $no#led"e on the part of petitioner and
respondents that the !ort"a"e #as already foreclosed and title to theproperty #as
already transferred to the Ban$ does not "ive the! the ri"ht or the authority to
unilaterally declarethe!selves as co8o#ners of the disputed property