Third Division G.R. No. 168970, January 15, 2010: Supreme Court of The Philippines
Third Division G.R. No. 168970, January 15, 2010: Supreme Court of The Philippines
Third Division G.R. No. 168970, January 15, 2010: Supreme Court of The Philippines
htm
Batas.org
THIRD DIVISION
G.R. No. 168970, January 15, 2010
CELESTINO BALUS, PETITIONER, VS. SATURNINO
BALUS AND LEONARDA BALUS VDA. DE CALUNOD,
RESPONDENTS.
DECISION
PERALTA, J.:
Assailed in the present petition for review on certiorari under Rule 45 of the Rules
of Court is the Decision[1] 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.
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 Sale[3] 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 Sale[4] 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 Estate[5] 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 the subject property to the Bank and that they
intended to redeem the same at the soonest possible time.
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 Land[6] 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.
SO ORDERED.[10]
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:
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 Sale[13] 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.
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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 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 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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SO ORDERED.
Corona, (Chairperson), Velasco, Jr., Peralta, and Mendoza, JJ., concur.
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[19] TSPIC Corporation v. TSPIC Employees Union (FFW), supra note 17.
[20] Arbolario v. Court of Appeals, 449 Phil. 357, 369 (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 (2003).
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