G.R. No. 168970 ; January 15, 2010
CELESTINO BALUS, Petitioner, vs. SATURNINO BALUS and LEONARDA BALUS VDA. DE CALUNOD, Respondents.

FACTS

Petitioner Celestino Balus and respondents Saturnino Balus and Leonarda Balus Vda. de Calunod are the children of spouses Rufo and Sebastiana Balus. Rufo owned a parcel of land. On January 3, 1979, Rufo mortgaged this land to the Rural Bank of Maigo, Lanao del Norte. He failed to pay the loan, leading to foreclosure. The property was sold at public auction to the Bank on November 20, 1981. The redemption period expired, and a Definite Deed of Sale was executed in favor of the Bank on January 25, 1984. A new title was issued in the Bank’s name before Rufo died on July 6, 1984. On October 10, 1989, the parties executed an Extrajudicial Settlement of Estate, adjudicating to each a specific one-third portion of the subject property and stating their knowledge of the mortgage and intent to redeem it. On October 12, 1992, respondents bought the property from the Bank, and a new title was issued in their name. Petitioner remained in possession. Respondents filed a Complaint for Recovery of Possession and Damages. The Regional Trial Court ruled in favor of petitioner, ordering respondents to execute a deed of sale for a one-third portion in his favor upon his payment. The Court of Appeals reversed the RTC, ruling that co-ownership was extinguished when the Bank acquired title.

ISSUE

Whether co-ownership among the petitioner and the respondents over the property persisted even after the transfer of title to the Bank and its subsequent repurchase by the respondents, thereby entitling petitioner to enforce their prior agreement by reimbursing his share of the repurchase price.

RULING

No. The Supreme Court denied the petition and affirmed the Court of Appeals Decision. The Court held that when Rufo failed to redeem the mortgaged property, the Bank acquired exclusive ownership during his lifetime. Consequently, at the time of Rufo’s death, the property no longer formed part of his estate. Therefore, the petitioner and respondents never inherited the property and never became co-owners. The Extrajudicial Settlement did not create a contract to continue co-ownership or jointly repurchase the property. Its provisions indicated an intent to partition, which seeks to end co-ownership, not continue it. Petitioner’s claim that the agreement bound respondents to allow him to claim a portion by reimbursing them was without basis, as there was no co-ownership to speak of from the outset.