Heirs of Arturo E. Bandoy vs. Bandoy

An oral partition among heirs may be valid even without the formalities prescribed by Rule 74 of the Rules of Court, but a written extrajudicial settlement that unambiguously adjudicates property pro indiviso cannot be contradicted by extrinsic evidence under the parol evidence rule, and admissions against interest by one heir bind only that heir's successors-in-interest—not the successors of another co-heir, pursuant to the res inter alios acta rule.

Spouses Ambrocio Bandoy and Matilde Estal Bandoy had three children: Arturo, Angelita, and Alexander. Ambrocio acquired several properties, including Lot No. 3516 in Tandag City, Surigao del Sur, covering 14,765 square meters and originally registered under Original Certificate of Title No. FP-10897 in his name. Upon Ambrocio's death in 1981, Matilde waived her interest in the estate in favor of their three children. The heirs then executed an "Extrajudicial Settlement of the Estate of the Deceased Ambrocio Bandoy with Absolute Deed of Sale," adjudicating the property pro indiviso among themselves and simultaneously selling a 9,329-square-meter portion to Florencio Benitez. Arturo died on May 27, 1993, survived by four children; Angelita died on September 4, 2014, survived by two children. The dispute centers on the remaining 5,436 square meters of the property after the sale to Benitez.

Spouses Ambrocio and Matilde Estal Bandoy had three children: Arturo, Angelita, and Alexander. Among the properties they acquired was Lot No. 3516, Cad-392-D, located in Tandag City, Surigao del Sur, containing 14,765 square meters and originally covered by Original Certificate of Title No. FP-10897 registered in Ambrocio's name. Ambrocio died in 1981, after which Matilde waived her interest in his estate in favor of their three children. The heirs then executed a document captioned "Extrajudicial Settlement of the Estate of the Deceased Ambrocio Bandoy with Absolute Deed of Sale," which adjudicated Lot No. 3516 unto themselves pro indiviso and simultaneously sold a 9,329-square-meter portion to Florencio Benitez for ₱45,000. All three siblings signed as heirs and vendors, together with Matilde and Benitez as vendee, witnessed by Jesusa Perez. The remainder of the property became Lot No. 3516-B, covered by Tax Declaration No. 08-01-14-01014.

Several dispositions of portions of Lot No. 3516 followed. On June 14, 1992, Arturo and Alexander jointly sold 400 square meters to Silverio Bautista, both explicitly identified as co-owners and vendors in the deed. On December 10, 1996, Alexander sold 600 square meters to Lucita F. Elizalde. On June 2, 1997, Alexander sold 440 square meters to Vicente Bangoy. On February 21, 2012, Alexander sold 556 square meters to Spouses Joel and Zyra Hayag. After these dispositions, the remaining lot area was reduced to 3,440 square meters. Arturo died on May 27, 1993, survived by his four children Alvin, Edwin, Dante, and Robert. Angelita died on September 4, 2014, survived by her two children Joan B. Alcover and Jason B. Albano.

The heirs of Arturo and Angelita subsequently asked Alexander to partition the remaining 5,436 square meters of Lot No. 3516-B, but Alexander refused, claiming sole ownership. He asserted that while the extrajudicial settlement indicated the property was transferred pro indiviso, there was a verbal agreement among the siblings that his share would not be included in the sale to Benitez, and that only Angelita's and Arturo's shares were sold. In support, he presented a handwritten note executed by Angelita on May 29, 2013, and her affidavit dated March 30, 2014, in which she declared that she sold her one-third share to the spouses Benitez and that Alexander had not sold his share, although Arturo had sold a portion of his share to the Benitezes. The heirs of Arturo and Angelita then filed a suit for partition against Alexander.

• Co-ownership: Petitioners argued that Lot No. 3516-B remained a co-owned property among the heirs of Arturo, the heirs of Angelita, and Alexander.
• Absence of Partition: Petitioners maintained that no partition, whether written or oral, was agreed upon by the parties.
• Aliquot Sales: Petitioners contended that when Arturo, Angelita, and Alexander sold portions of Lot No. 3516, they merely sold their aliquot shares, and what remained was still co-owned property.
• Limited Remainder: Petitioners argued that even granting an oral partition, only 656 square meters were left to Alexander, and what he sold were merely undivided parts of the property.
• No Estoppel: Petitioners asserted they were not estopped from claiming ownership over their respective shares in Lot No. 3516-B.
• Conclusive Signature: Petitioners maintained that Alexander's signing of the extrajudicial settlement of the estate with sale was conclusive upon him and could not be denied or disproved as against the heirs of Arturo and Angelita.
• Parol Evidence Rule: Petitioners argued that the parol evidence rule barred the introduction of Angelita's handwritten note and affidavit to contradict the written extrajudicial settlement.
• Hearsay: Petitioners contended that the handwritten note and affidavit of Angelita were inadmissible hearsay evidence.
• Waiver Not Automatic: Petitioners argued that failure to timely object to the admissibility, genuineness, and due execution of hearsay evidence did not automatically accord probative value or weight to the same.

• Oral Partition: Respondent maintained that he and his siblings entered into an oral partition agreement after their father's death.
• Acts of Ownership: Respondent argued that their oral partition was validated and ratified by their subsequent acts of ownership and dominion over their respective shares in the lot.
• Weight of Angelita's Statements: Respondent contended that Angelita's handwritten note and affidavit must be given more weight than the literal interpretation of the extrajudicial settlement because Angelita was a party to the document.
• Parol Evidence Exception: Respondent argued that a party may present evidence to modify, explain, or add to the terms of a written agreement if he puts in issue in his pleading that there was a mistake or failure of the written agreement to express the true intent of the parties.
• Admissions Against Interest: Respondent maintained that the handwritten note and affidavit of Angelita were declarations against her own interest and that of her heirs—a recognized exception to the hearsay rule.
• Waiver of Cross-Examination: Respondent argued that the parties had waived their right to cross-examine the witnesses who executed judicial affidavits because they agreed to resolve the case on the basis of position papers and documentary evidence.

• Validity of Oral Partition: Whether an oral partition may be valid.
• Admissibility of Angelita's Statements: Whether the Handwritten Note and Affidavit of Angelita may be admitted in evidence to prove the purported oral partition.
• Scope of Sale to Benitez: Whether the 9,329 square meter portion of Lot No. 3516 sold in favor of Benitez comprised only the aliquot shares of Angelita and Arturo.

• Validity of Oral Partition: Yes. An oral partition may be valid and binding upon heirs, as no law requires partition among heirs to be in writing. However, the purported oral partition in this case was not duly proven by preponderance of evidence.
• Admissibility of Angelita's Statements: Yes, but only as admissions against interest binding upon Angelita's own heirs—not as an exception to the parol evidence rule and not binding upon the heirs of Arturo under the res inter alios acta rule.
• Scope of Sale to Benitez: No. The 9,329-square-meter sale to Benitez did not comprise only the shares of Angelita and Arturo; it was a sale of the pro indiviso shares of all three heirs, with Angelita's entire aliquot of 4,921 square meters accounted for and the remaining 4,408 square meters deducted equally from Arturo's and Alexander's shares.

• Validity of Oral Partition: Citing Vda. de Reyes vs. Court of Appeals, Hernandez vs. Andal, and Barcelona vs. Barcelona, the Court reaffirmed that the requirement under Section 1, Rule 74 that a partition be put in a public document and registered serves to protect creditors and heirs against tardy claims; the intrinsic validity of a partition not executed with the prescribed formalities does not come into play when no creditors' rights are affected. Partition among heirs is not a conveyance of real property but a confirmation or ratification of title, and thus is not covered by the Statute of Frauds. Courts of equity have enforced oral partition when completely or partly performed. However, while the doctrine validates oral partitions in principle, the burden remained on Alexander to prove by preponderance of evidence that an oral partition was actually agreed upon. The extrajudicial settlement of the estate with sale expressly adjudicated the property pro indiviso among the three heirs, and Alexander's own subsequent conduct—particularly his joint sale with Arturo to Silverio Bautista on June 14, 1992, months after the extrajudicial settlement—contradicted his claim that Arturo's entire share had already been sold to Benitez.

• Admissibility of Angelita's Statements: The Court rejected the Court of Appeals' ruling that the handwritten note and affidavit could be admitted as an exception to the parol evidence rule. Under Section 9, Rule 130, a written agreement is the sole repository of the terms agreed upon, and extrinsic evidence is admissible only where the written contract is so ambiguous or obscure that the parties' intention cannot be understood from a mere reading. The extrajudicial settlement was neither ambiguous nor obscure: it clearly stated the heirs adjudicated the property unto themselves pro indiviso and sold 9,329 square meters to Benitez. The Court also corrected the characterization of Angelita's statements as declarations against interest (an exception to the hearsay rule applicable when the declarant is unavailable and is neither a party nor in privity with a party). Because Angelita was the predecessor-in-interest of the petitioners, her statements were admissions against interest under Lazaro vs. Agustin, admissible against her own heirs if proven genuine and duly executed. However, paragraph 4 of her affidavit, which pertained to Arturo's share, could not bind Arturo's heirs under the res inter alios acta rule (Section 29, Rule 130), as none of the recognized exceptions—admission by co-partner or agent, by conspirator, by privies, or by silence—applied. Alexander's subsequent conduct in jointly selling with Arturo in June 1992 further undermined the veracity of Angelita's statement about Arturo's share. The Court also emphasized that admissibility of evidence should not be confounded with its probative value, citing Mancol, Jr. vs. Development Bank of the Philippines.

• Scope of Sale to Benitez: Because the extrajudicial settlement clearly adjudicated the 14,765-square-meter property pro indiviso among the three heirs, each was entitled to an aliquot share of 4,921 square meters. The 9,329-square-meter sale to Benitez thus comprised Angelita's entire share of 4,921 square meters, with the remaining 4,408 square meters deducted equally from Arturo's and Alexander's pro indiviso shares (2,204 square meters each). This left 5,436 square meters to be divided equally between Arturo and Alexander, yielding 2,718 square meters each. Under Article 493 of the Civil Code, each co-owner may alienate his part, but the effect of the alienation is limited to the portion that may be allotted to him upon termination of the co-ownership. The failure of the heirs to object to Alexander's dispositions did not bar them from seeking partition, as such alienations were valid only insofar as they pertained to the alienor's aliquot share. After deducting Alexander's prior dispositions (600 sqm to Elizalde, 556 sqm to the Hayags, 200 sqm to Bautista, and 440 sqm to Bangoy), his remaining share was 922 square meters. After deducting Arturo's 200-square-meter sale to Bautista, his remaining share was 2,518 square meters, to be divided among his heirs per stirpes under Article 974 of the Civil Code. The heirs of Angelita were entitled to nothing, as her entire aliquot share had been sold to Benitez and her admissions confirmed this waiver.

• Validity of Oral Partition — An oral partition among heirs may be valid and binding even without the formalities prescribed by Section 1, Rule 74 of the Rules of Court. The requirement that a partition be in a public document and registered serves only to protect creditors and heirs against tardy claims; the intrinsic validity of a partition not executed with the prescribed formalities does not come into play when no creditors' rights are affected. Partition among heirs is not a conveyance of real property but a confirmation or ratification of title, and thus is not covered by the Statute of Frauds. Courts of equity have enforced oral partition when completely or partly performed. In this case, while the doctrine was affirmed, the purported oral partition was not duly proven by preponderance of evidence.

• Parol Evidence Rule — Under Section 9, Rule 130 of the Rules of Court, when the terms of an agreement have been reduced to writing, the written agreement is considered as containing all the terms agreed upon, and no evidence of such terms other than the contents of the written agreement may be admitted between the parties and their successors in interest. The recognized exceptions are: (a) intrinsic ambiguity, mistake, or imperfection; (b) failure of the written agreement to express the true intent of the parties; (c) validity of the written agreement; and (d) existence of other terms agreed to after execution. The exception for failure to express true intent obtains only where the written contract is so ambiguous or obscure that the contractual intention cannot be understood from a mere reading. In this case, the extrajudicial settlement was clear and unambiguous, and the parol evidence rule barred the use of Angelita's handwritten note and affidavit to contradict its terms.

• Admissions Against Interest vs. Declarations Against Interest — Admissions against interest are made by a party to a litigation or by one in privity with or identified in legal interest with such party, and are admissible whether or not the declarant is available as a witness. Declarations against interest are made by a person who is neither a party nor in privity with a party, are secondary evidence, constitute an exception to the hearsay rule, and are admissible only when the declarant is unavailable. In this case, Angelita's statements were admissions against interest because she was the predecessor-in-interest of the petitioners, and thus in privity with their legal interest. They were admissible against her own heirs but only to the extent of her own share.

• Res Inter Alios Acta Rule — The rights of a party cannot be prejudiced by an act, declaration, or omission of another. The rule is founded on the principle of good faith and mutual convenience. Recognized exceptions include: (1) admission by co-partner or agent; (2) admission by conspirator; (3) admission by privies; and (4) admission by silence. In this case, none of the exceptions applied to bind the heirs of Arturo to Angelita's extrajudicial statements regarding Arturo's share.

• Co-ownership and Alienation of Pro Indiviso Shares — Under Article 493 of the Civil Code, each co-owner has full ownership of his part and may alienate, assign, or mortgage it, but the effect of the alienation with respect to co-owners is limited to the portion that may be allotted to the alienor upon termination of the co-ownership. Under Article 1078, the whole estate of the decedent is owned in common by the heirs before partition. A co-owner may exercise rights of ownership over his inchoate right, but if an alienation precedes partition, the co-owner cannot sell a definite portion without consent from co-owners. Failure to object to a co-owner's dispositions does not bar other co-owners from seeking partition; the dispositions are simply accounted for in determining each co-owner's aliquot share.

• Admissibility vs. Probative Value — Admissibility of evidence depends on its relevance and competence, while probative value pertains to evidence already admitted and its tendency to convince and persuade. A particular item of evidence may be admissible, but its evidentiary weight depends on judicial evaluation within the guidelines provided by the rules. Admissibility cannot be equated with the weight of evidence, as these are entirely different concepts.

• "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. Where no such rights are involved, it is competent for the heirs of an estate to enter into an agreement for distribution in a manner and upon a plan different from those provided by law." — This passage, quoting Vda. de Reyes vs. Court of Appeals, articulates the foundational rationale for the validity of oral partition among heirs and is the canonical formulation frequently cited in subsequent jurisprudence.

• "partition among heirs or renunciation of an inheritance by some of them is not exactly a conveyance of real property for the reason that it does not involve transfer of property from one to the other, but rather a confirmation or ratification of title or right of property by the heir renouncing in favor of another heir accepting and receiving the inheritance." — This passage, quoting Barcelona vs. Barcelona, explains why oral partition is valid and why it is not covered by the Statute of Frauds, distinguishing partition from conveyance.

• "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." — This is the emphasized portion of Article 493 of the Civil Code as quoted in the decision, defining the limit of a co-owner's right to alienate his pro indiviso share and its effect on co-owners.

• "Admissibility of evidence should not be confounded with its probative value." — This succinct statement, quoting Mancol, Jr. vs. Development Bank of the Philippines, distinguishes the threshold question of whether evidence may be considered from the evaluative question of how much weight it deserves, a distinction central to the Court's treatment of Angelita's affidavit.

• Vda. de Reyes vs. Court of Appeals, 276 Phil. 706 (1991) — Controlling authority for the validity of oral partition among heirs, interpreting Section 1, Rule 74; followed and applied to affirm the principle while finding the purported oral partition unproven in this case.
• Barcelona vs. Barcelona, 100 Phil. 251 (1956) — Followed for the proposition that partition among heirs is not a conveyance of real property but a confirmation or ratification of title, and thus not covered by the Statute of Frauds.
• Hernandez vs. Andal, 78 Phil. 196 (1947) — Followed for the principle that courts of equity have enforced oral partition when completely or partly performed.
• Fajardo vs. Cua-Malate, 850 Phil. 709 (2019) — Followed for the principle that a partition agreement not signed by one party may still be valid, and that written agreements may merely reduce into writing terms already agreed upon.
• Lazaro vs. Agustin, 632 Phil. 310 (2010) — Controlling authority for the distinction between admissions against interest (admissible whether or not declarant is available) and declarations against interest (exception to hearsay rule, admissible only when declarant is unavailable); applied to classify Angelita's statements as admissions against interest.
• Financial Building Corporation vs. Rudlin International Corporation, 46 Phil. 327 (2010) — Followed for the rule that the parol evidence exception for failure to express true intent obtains only where the written contract is so ambiguous or obscure that the parties' intention cannot be understood from a mere reading.
• Mancol, Jr. vs. Development Bank of the Philippines, 821 Phil. 323 (2017) — Followed for the distinction between admissibility and probative value of evidence.
• Alejandrino vs. Court of Appeals, 356 Phil. 851 (1998) — Followed for the principle that each co-owner exercises rights over the whole pro indiviso property and may use and enjoy it without injuring co-owners' interests, and that the law allows a co-owner to exercise rights of ownership over an inchoate right.

• Section 1, Rule 74, Rules of Court — Governs extrajudicial settlement of estate by agreement between heirs. Applied to establish that the heirs of Ambrocio validly resorted to extrajudicial settlement, and that the requirement of a public instrument and registration serves to protect creditors and heirs, not to invalidate oral partitions where no creditors' rights are affected.
• Section 9, Rule 130, Rules of Court (now Section 10 under the 2019 Amendments) — The parol evidence rule. Applied to bar the introduction of Angelita's handwritten note and affidavit to contradict the clear and unambiguous terms of the extrajudicial settlement of the estate with sale.
• Section 28, Rule 130, Rules of Court (now Section 29 under the 2019 Amendments) — The res inter alios acta rule. Applied to hold that Angelita's statements regarding Arturo's share could not bind the heirs of Arturo, as none of the recognized exceptions applied.
• Article 493, Civil Code — Defines a co-owner's right to alienate his part and the limitation of such alienation's effect to the portion allotted upon termination of co-ownership. Applied to hold that Alexander's and Arturo's sales of portions of the property were valid only insofar as they pertained to their respective aliquot shares.
• Article 1078, Civil Code — Provides that the whole estate of the decedent is owned in common by the heirs before partition. Applied to establish co-ownership of Lot No. 3516 among the heirs upon Ambrocio's death.
• Article 974, Civil Code — Governs succession by representation, requiring division per stirpes. Applied to determine that the heirs of Arturo inherit the share Arturo would have inherited, divided equally among them.
• Rule 69, Rules of Court — Governs the procedure for partition. Applied in the dispositive to remand the case to the RTC for partition of the subject property.

Leonen, SAJ. (Chairperson), Lazaro-Javier, M. Lopez, and Kho, Jr., JJ., concurred.