G.R. No. 168970 - Balus vs. Balus

Celestino Balus (petitioner) and Saturnino Balus and Leonarda Balus, Vda. de Calunod (respondents) are the children of the late Rufo and Sebastiana Balus.

On January 3, 1979, Rufo mortgaged a parcel of land (originally covered by OCT No. P-439(788)) as security for a loan from the Rural Bank of Maigo, Lanao del Norte.

The mortgaged property was sold at a public auction; a Certificate of Sale was executed by the sheriff on November 20, 1981.

After the expiration of the redemption period, a Definite Deed of Sale was executed on January 25, 1984, leading to the issuance of a new title in the name of the Bank.

On October 10, 1989, the petitioner and respondents executed an Extrajudicial Settlement of Estate, dividing the subject property into three equal shares (each receiving a one‑third portion measuring 10,246 square meters).

The Settlement acknowledged that their father had mortgaged the property and expressed an intention to redeem the property as soon as possible.

Despite the Settlement, respondents proceeded to purchase the property from the Bank. On October 12, 1992, a Deed of Sale was executed by the Bank in favor of the respondents, culminating in the issuance of Transfer Certificate of Title No. T-39,484.

Petitioner continued in possession of his alleged one‑third share of the property even after this transaction.

On June 27, 1995, respondents filed a Complaint for Recovery of Possession and Damages against the petitioner, asserting that they had informed him of their ownership yet he refused to surrender possession.

On February 7, 1997, the RTC rendered a decision ordering the petitioner to execute a Deed of Sale conveying his one‑third share to the respondents and dismissed his other claims.

The CA ruled that when neither party redeemed the property within the legal redemption period—resulting in the foreclosure and issuance of a new title in the Bank’s name—their co‑ownership was effectively extinguished.

The CA ordered the petitioner to immediately surrender possession of the subject property to the respondents.

Whether or not co‑ownership between the petitioner and respondents over the subject property persisted after foreclosure and the subsequent transfer of title to the Bank, and even after the respondents repurchased the property.
Whether the Extrajudicial Settlement of Estate constituted an independent contract binding the parties to continue their supposed co‑ownership of the property despite its foreclosure and repurchase by the respondents.
Whether the fact that the property was foreclosed, with the title transferred to the Bank before Rufo’s death, precluded any rights of co‑ownership or inheritance by his children.