Case Summary (G.R. No. 168970)
Petitioner
Celestino Balus contends that an Extrajudicial Settlement of Estate executed in 1989, allocating one-third of the property to each heir and containing an express intention to jointly redeem the land, created a binding contract preserving their co-ownership. He seeks enforcement of that agreement by reimbursing respondents for his one-third share.
Respondents
Saturnino Balus and Leonarda Balus Vda. de Calunod purchased the entire parcel from the bank in 1992 and secured Transfer Certificate of Title No. T-39,484. They filed for recovery of possession in 1995 when petitioner refused to vacate his alleged one-third.
Key Dates
• January 3, 1979 – Mortgage by Rufo Balus to Rural Bank of Maigo
• November 20, 1981 – Certificate of Sale on foreclosure
• January 25, 1984 – Definite Deed of Sale executed; new title in bank’s name
• October 10, 1989 – Extrajudicial Settlement of Estate among heirs
• October 12, 1992 – Deed of Sale from bank to respondents; issuance of TCT No. T-39,484
• June 27, 1995 – Complaint for Recovery of Possession filed by respondents
• February 7, 1997 – RTC decision enforcing petitioner’s right to redeem one-third share
• May 31, 2005 – CA decision reversing the RTC, ordering surrender to respondents
• January 15, 2010 – Supreme Court decision under review
Applicable Law
1987 Philippine Constitution; Civil Code Articles 1306 (freedom of contract), 1315 (effect of consent), 777 and 781 (inheritance); and jurisprudential rules on contract interpretation and partition.
Factual Background
Rufo Balus mortgaged a titled parcel in 1979, defaulted, and the property was foreclosed and sold to the bank. The bank’s title was perfected in January 1984—before Rufo’s death in July 1984—thus extinguishing his ownership. Unaware that foreclosure had vested full title in the bank, the heirs executed an Extrajudicial Settlement in 1989, purporting to divide the parcel into three equal shares and acknowledging an intention to redeem it. Respondents later repurchased the property from the bank in 1992, obtained a new title, and sought petitioner’s compliance with their ownership.
Procedural History
The RTC granted petitioner a right to enforce the Extrajudicial Settlement by reimbursing respondents for his one-third share and dismissed other claims. On appeal, the CA set aside that decision, ruling that foreclosure terminated co-ownership and precluded any subsequent joint redemption agreement. The Supreme Court granted petitioner’s Rule 45 petition to settle the conflict.
Issue
Did co-ownership among the heirs survive foreclosure, enabling petitioner to enforce the Extrajudicial Settlement as a contract to redeem and partition the property?
Court’s Analysis on Co-Ownership
The Court reaffirmed that foreclosure and issuance of a new title in 1984 transferred exclusive ownership to the bank, removing the property from Rufo’s estate at his death. Under Articles 777 and 781 of the Civil Code, successors inherit only assets existing at the decedent’s death. Since the bank already held
...continue readingCase Syllabus (G.R. No. 168970)
Facts of the Case
- The parties are Celestino Balus (petitioner) and his siblings Saturnino Balus and Leonarda Balus Vda. de Calunod (respondents), all children of Rufo and Sebastiana Balus
- Sebastiana Balus died on September 6, 1978; Rufo Balus died on July 6, 1984
- On January 3, 1979, Rufo mortgaged a 3.0740-hectare parcel in Barrio Lagundang, Bunawan, Iligan City (Original Certificate of Title No. P-439(788)) to the Rural Bank of Maigo
- Rufo defaulted; the property was foreclosed, sold at auction to the bank as sole bidder, and a Certificate of Sale was executed on November 20, 1981
- No redemption was effected. On January 25, 1984, the sheriff executed a Definite Deed of Sale in favor of the bank and a new title was issued in the bank’s name before Rufo’s death
- On October 10, 1989, petitioner and respondents executed an Extrajudicial Settlement of Estate, each receiving a 10,246 sqm portion and acknowledging the mortgage and intent to redeem
- On October 12, 1992, the bank sold the entire parcel to respondents (Deed of Sale of Registered Land), and Transfer Certificate of Title No. T-39,484(a.f.) was issued; petitioner remained in possession
Procedural History
- June 27, 1995: Respondents filed a Complaint for Recovery of Possession and Damages against petitioner for refusing to surrender possession despite their new title
- February 7, 1997: RTC, Branch 4, Lanao del Norte (Civil Case No. 3263) ordered respondents to execute a Deed of Sale of their one-third share to petitioner upon payment of ₱6,733.33 and dismissed all other claims
- May 31, 2005: Court of Appeals (CA-G