G.R. No. L-44428 - Baluran vs. Navarro

Spouses Domingo Paraiso and Fidela Q. Paraiso owned a residential lot of about 480 square meters in Sarrat, Ilocos Norte.
On or about February 2, 1964, the Paraisos executed an agreement entitled "BARTER" with spouses Avelino and Benilda Baluran.
The agreement stipulated a "barter and exchange" of the Paraisos' residential lot for the Balurans’ unirrigated riceland of approximately 223 square meters in Sarrat, Ilocos Norte.
Important conditions of the agreement included:

Both parties would enjoy material possession of their respective properties; Paraisos would reap the fruits of the riceland, the Balurans could build a house on the residential lot.
If any of the children of Natividad P. Obedencio (the daughter of the Paraisos) chose to reside and build on the residential lot, the Balurans must return the lot to such children with damages.
Neither party shall encumber, alienate, or dispose of their respective properties without the other's consent.
The agreement would be registered according to prevailing law despite the properties not being registered under Act No. 496 or the Spanish Mortgage Law.

On May 6, 1975, Antonio Obedencio (child of Natividad Paraiso Obedencio) filed a complaint in the Court of First Instance of Ilocos Norte seeking to recover the residential lot.
He claimed ownership based on donation from his mother, Natividad Paraiso Obedencio, and his need to build a house after taking residence in Sarrat.
Obedencio requested the court to declare him owner, order Avelino Baluran to vacate, and forfeit Baluran’s improvements on the property allegedly made in bad faith.

Avelino Baluran answered asserting that the barter agreement transferred ownership of the residential lot to him in exchange for the riceland, which remains in possession of Natividad Obedencio.
He also argued that any cause of action by Obedencio had prescribed.
At pre-trial, parties stipulated facts including:

Natividad Obedencio donated the residential lot to Antonio Obedencio on October 4, 1974.
Since the February 2, 1964 agreement, Baluran was in possession of the residential lot, paid taxes, and constructed a house assessed at P250.00.

On November 8, 1975, the trial court declared Antonio Obedencio the owner of the residential lot and ordered Avelino Baluran to vacate the property, with costs against him.

That the barter agreement did not transfer ownership of the residential lot to him.
That Obedencio’s right to demand re-barter or re-exchange was barred by the statute of limitation.

Whether the barter agreement of February 2, 1964, transferred ownership of the residential lot to Avelino Baluran.

Whether the statute of limitations barred Antonio Obedencio’s cause of action to recover the residential lot under the barter agreement.

Whether Avelino Baluran is entitled to recover damages and the improvements made on the residential lot.

Ownership and possession rights over the unirrigated riceland involved in the barter agreement.