The Supreme Court clarified that an oral partition of inherited property is valid, but proving such an agreement requires clear evidence. This case emphasizes that while heirs can informally divide property, disputes arise if the agreement’s terms are unclear. The court underscored the importance of written documentation or corroborating evidence to support claims of oral partition, especially when challenging formally executed documents like extrajudicial settlements. This ruling provides guidance on inheritance disputes and the weight of evidence in partition cases.

Dividing Lines: Can a Handshake Split an Inheritance?

Spouses Ambrocio and Matilde Bandoy had three children: Arturo, Angelita, and Alexander. Upon Ambrocio’s death, his heirs executed an “Extrajudicial Settlement of the Estate” with a sale, transferring a portion of their land to Florencio Benitez. Later, disputes arose when the heirs of Arturo and Angelita sought to partition the remaining land with Alexander, who claimed sole ownership based on an alleged oral agreement with his siblings. This disagreement reached the Supreme Court, which had to determine the validity of the alleged oral partition and the admissibility of certain evidence to prove its existence.

The central issue revolves around whether an oral partition agreement among heirs can supersede the terms of a formally executed extrajudicial settlement. The respondent, Alexander, argued that while the extrajudicial settlement indicated a pro indiviso (undivided) transfer, a verbal agreement existed wherein the sale to Benitez only involved the shares of Arturo and Angelita, leaving him with sole ownership of the remainder. To support his claim, Alexander presented a handwritten note and an affidavit from Angelita, asserting that only her and Arturo’s shares were sold. The petitioners, heirs of Arturo and Angelita, countered that no such oral partition occurred, and the remaining land should be co-owned according to the extrajudicial settlement.

The Supreme Court acknowledged that, under Philippine law, an oral partition among heirs is indeed valid. Citing previous cases such as Vda. De Reyes v. Court of Appeals, the court reiterated that the requirement for a public document and registration primarily serves to protect creditors and the heirs themselves against belated claims. As the Court stated:

[T]his Court, interpreting Section 1 of Rule 74 of the Rules of Court, held that the requirement that a partition be put in a public document and registered has for its purpose the protection of creditors and at the same time the protection of the heirs themselves against tardy claims. The object of registration is to serve as constructive notice to others. It follows then that the intrinsic validity of partition not executed with the prescribed formalities does not come into play when there are no creditors or the rights of creditors are not affected.

However, the court emphasized that proving an oral partition requires substantial evidence. Alexander had the burden of proving that the extrajudicial settlement did not reflect the parties’ true intentions. The court disagreed with the Court of Appeals’ finding that Angelita’s handwritten note and affidavit were admissible as an exception to the parol evidence rule, which generally prevents the introduction of external evidence to alter or contradict the terms of a written agreement. The parol evidence rule, as stated in Section 9, Rule 130 of the Rules of Court, provides that:

SECTION 9. Evidence of written agreements. — When the terms of an agreement have been reduced to writing, it is considered as containing all the terms agreed upon and there can be, between the parties and their successors in interest, no evidence of such terms other than the contents of the written agreement.

While exceptions exist, such as when the written agreement fails to express the parties’ true intent, the court found that the extrajudicial settlement was clear and unambiguous. It explicitly stated that the heirs adjudicated the property to themselves pro indiviso. The court further clarified that Angelita’s statements could only be considered as admissions against her own interest and that of her heirs, but not against Arturo’s heirs due to the res inter alios acta rule, which generally prevents one party’s rights from being prejudiced by the actions or declarations of another.

Moreover, the court noted that Alexander’s subsequent actions contradicted his claim of sole ownership. Specifically, Alexander and Arturo jointly sold a portion of the land to Silverio Bautista after the extrajudicial settlement was executed. This act implied that Arturo still possessed an ownership interest, undermining Angelita’s statement that Arturo had already sold his entire share to Benitez. Thus, the Supreme Court gave greater weight to the extrajudicial settlement, which was executed by all parties involved, including Alexander.

The court then proceeded to determine the rightful shares of each heir. It concluded that Angelita had indeed sold her entire share to Benitez. However, the remaining portion sold to Benitez should be deducted equally from the pro indiviso shares of Arturo and Alexander. This left Alexander and Arturo with equal shares in the remaining property. The court also considered the subsequent sales made by Alexander, deducting these from his share. Ultimately, the court ruled that the heirs of Arturo were entitled to a 2,518 square meter portion, while Alexander was entitled to 922 square meters.

The decision underscores the principle that while co-owners can freely dispose of their undivided shares, such dispositions are limited to the portion eventually allotted to them upon the termination of the co-ownership. As Article 493 of the Civil Code states:

ARTICLE 493. Each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining thereto, and he may therefore alienate, assign or mortgage it, and even substitute another person in its enjoyment, except when personal rights are involved. But the effect of the alienation or the mortgage, with respect to the co-owners, shall be limited to the portion which may be allotted to him in the division upon the termination of the co-ownership.

The court emphasized that the failure to object to previous dispositions does not prevent the heirs from seeking partition. The case was remanded to the trial court for proper partitioning in accordance with Rule 69 of the Rules of Court. This case illustrates the complexities of inheritance law, particularly when oral agreements clash with formal documents and the importance of clear, consistent actions in asserting ownership rights.

FAQs

What was the key issue in this case?	The central issue was whether an oral partition agreement among heirs could supersede the terms of a formally executed extrajudicial settlement of estate. The court needed to determine the validity of the alleged oral partition and the admissibility of evidence to prove its existence.
Is an oral partition agreement valid under Philippine law?	Yes, the Supreme Court affirmed that oral partition agreements among heirs are valid, as there is no law requiring partitions to be in writing. However, proving the existence and terms of such an agreement requires substantial evidence.
What is the parol evidence rule, and how did it apply in this case?	The parol evidence rule generally prevents parties from introducing external evidence to alter or contradict the terms of a written agreement. The court found that the extrajudicial settlement was clear and unambiguous, thus limiting the admissibility of Angelita’s handwritten note and affidavit.
What is the res inter alios acta rule?	The res inter alios acta rule states that one party’s rights cannot be prejudiced by the actions or declarations of another. In this case, the court held that Angelita’s statements could not bind the heirs of Arturo.
How did the court determine the rightful shares of each heir?	The court reviewed the extrajudicial settlement, Angelita’s statements, and the subsequent actions of the parties. It considered sales made by each heir and deducted those amounts from their respective shares, ultimately determining the remaining portions each was entitled to.
What was the significance of Alexander and Arturo jointly selling a portion of the land?	The joint sale suggested that Arturo retained an ownership interest in the property even after the extrajudicial settlement. This contradicted Alexander’s claim that Arturo had already sold his entire share to Benitez, undermining Angelita’s affidavit.
What happens after the Supreme Court’s decision?	The case was remanded to the trial court for proper partitioning in accordance with Rule 69 of the Rules of Court. This involves a formal process of dividing the property according to the shares determined by the Supreme Court.
Can a co-owner sell their share of a property before partition?	Yes, co-owners can sell their undivided shares in a property. However, Article 493 of the Civil Code states that such dispositions are limited to the portion eventually allotted to them upon the termination of the co-ownership.

This case demonstrates that while Philippine law recognizes the validity of oral partitions, it requires clear and convincing evidence to support such claims, especially when they contradict formal documents. The Supreme Court’s decision underscores the importance of written agreements and consistent actions in asserting property rights, providing a valuable precedent for future inheritance disputes.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: HEIRS OF ARTURO E. BANDOY VS. ALEXANDER E. BANDOY, G.R. No. 255258, October 19, 2022