Oral partition of property is valid

Article 1079 of the New Civil Code of the Philippines provides for the meaning of partition, which states that:

"Art. 1079. Partition, in general, is the separation, division and assignment of a thing held in common among those to whom it may belong. The thing itself may be divided, or its value."

"Every act which is intended to put an end to indivision among co-heirs and legatees or devisees is deemed to be a partition. Partition may be inferred from circumstances sufficiently strong to support the presumption. Thus, after a long possession in severalty, a deed of partition may be presumed." (Spouses Marcos v. Heirs of Bangi, GR 185745, Oct. 15, 2014, penned by Associate Justice Bienvenido Reyes)

In the case of Espinas-Lanuza v. Luna, Jr., GR 229775, March 11, 2019, penned by Associate Justice Jose Reyes Jr., it is stated that:

"An oral partition by the heirs is valid if no creditors are affected. Even the requirement of a written memorandum under the statute of frauds does not apply considering that such a transaction is not a conveyance of property resulting in change of ownership but merely a designation and segregation of that part which belongs to each heir."

Citing an earlier case, the high court explained in Espinas-Lanuza v. Luna that:

"On general principle, independent and in spite of the statute of frauds, courts of equity have enforced oral partition when it has been completely or partly performed.

"Regardless of whether a parol* partition or agreement to partition is valid and enforceable at law, equity will in proper cases, where the parol partition has actually been consummated by the taking of possession in severalty and the exercise of ownership by the parties of the respective portions set off to each, recognize and enforce such parol partition and the rights of the parties thereunder.

Thus, it has been held or stated in a number of cases involving an oral partition under which the parties went into possession, exercised acts of ownership, or otherwise partly performed the partition agreement, that equity will confirm such partition and in a proper case decree title in accordance with the possession in severalty."

In many families, the issue of property inheritance often causes confusion and conflict, especially when the division of property is not formalized through a written agreement.

For an oral partition to be valid, it must be made with the consent of all the heirs. The oral partition is considered valid if the heirs have already taken possession of their respective shares in the property. If the heirs physically possess their designated portions, this can serve as proof of their agreement to the oral partition.

*Parol partitions are oral agreements between co-tenants to informally partition land.

Source: Manila Times

Concept of "Legitime" in Philippine Law

Legitime refers to the portion of a deceased person’s estate that is reserved by law for compulsory heirs and cannot be freely disposed of by the decedent through a will. It is a mechanism to protect the rights of certain heirs, ensuring they receive a minimum share of the inheritance.

Law Governing Legitime

Legitime is primarily governed by the Civil Code of the Philippines, particularly Articles 886 to 914 under Title IV (Succession), Chapter 3 (Provisions Common to Testamentary and Legal Succession), and Section 5 (Legitime).

Who Are the Compulsory Heirs?

According to Article 887 of the Civil Code, the following are considered compulsory heirs:

1. Legitimate children and descendants (e.g., grandchildren, if their parent predeceased the decedent)

2. Legitimate parents and ascendants (if the decedent has no children)

3. The surviving spouse

4. Illegitimate children (who have a right to a legitime but receive a reduced share compared to legitimate children)

How Legitime Is Applied

The legitime is a fixed portion of the estate that the decedent cannot freely dispose of. The remaining estate is called the free portion, which the testator may distribute according to his will.

1. If the decedent has legitimate children:

• The legitime of legitimate children is 1/2 of the total estate, to be divided equally among them.

• The surviving spouse gets 1/4 of the total estate (equivalent to the share of one legitimate child).

• Illegitimate children get 1/2 of the share of a legitimate child each.

2. If the decedent has no children but has surviving parents or ascendants:

• The legitime of parents (or ascendants) is 1/2 of the total estate.

• The surviving spouse gets 1/2 of the total estate.

3. If the decedent has only a surviving spouse:

• The legitime of the spouse is 1/2 of the total estate.

4. If the decedent has only illegitimate children:

• The illegitimate children receive 1/2 of the total estate, divided among them.

• The surviving spouse gets 1/2 of the total estate.

Restrictions on Disposition of Property

A testator cannot will away the legitime of compulsory heirs, either through donations or by testamentary disposition. If a will reduces the legitime, the heirs can seek a reduction of the will’s provisions to comply with the mandatory legitime rules.

Disinheritance and Legitime

A compulsory heir may be disinherited, but only under specific grounds stated in the Civil Code (Articles 915–923), such as attempted murder against the testator, maltreatment, or refusal to provide support. If a compulsory heir is validly disinherited, his legitime goes to the other compulsory heirs.

Source: Ziggurat Real Estate

How a Foreigner Can Receive Land Inheritance in the Philippines

Legal Framework and Limitations 

Introduction

The Philippines has strict laws regulating land ownership by foreigners. Under Section 7, Article XII of the 1987 Philippine Constitution, land ownership is reserved for Filipino citizens and corporations that are at least 60% Filipino-owned. This provision aims to safeguard national resources and ensure that land remains primarily in Filipino hands. However, the law allows for certain exceptions in specific situations, such as inheritance. A common question that arises is whether a foreigner can inherit land in the Philippines and, if so, how they can legally receive their inheritance.

This article outlines the legal framework surrounding land inheritance by foreigners, the limitations set by Philippine law, and the possible courses of action for foreigners who inherit land in the country.

 Legal Basis for Land Ownership by Foreigners

The general rule under Philippine law is that foreigners are prohibited from owning land. However, there are a few exceptions to this rule:

1. By Hereditary Succession: A foreigner may acquire land in the Philippines through inheritance, but only if the land is passed to them as a legal or intestate heir. The law does not prevent foreigners from inheriting land from a Filipino relative, but it imposes certain restrictions on how long they may keep the land or whether they must dispose of it.

2. Ownership of Buildings or Improvements: While land ownership is restricted, foreigners may legally own buildings and other improvements built on land, as there is no prohibition on ownership of personal property such as houses or structures.

3. Acquisition by a Former Natural-Born Filipino Citizen: Foreigners who were previously natural-born Filipino citizens may acquire up to a certain size of land for residential (up to 1,000 square meters) or business (up to 5,000 square meters) purposes.

 Inheritance by Foreigners: General Rule and Exceptions

Under Philippine law, a foreigner can inherit property either through testate (with a will) or intestate (without a will) succession. If a foreigner is designated as an heir to land in the Philippines, the following scenarios may arise:

1. Foreigners Inheriting Land through Testate or Intestate Succession:

   - A foreigner can inherit land from a Filipino relative as an heir by intestate succession (when there is no will) or testate succession (when there is a valid will). For example, if a Filipino spouse or parent dies and leaves land to a foreigner as an heir, the foreigner may inherit that land.

2. Limitations on Land Ownership by Foreigners:

   - Although foreigners can legally inherit land, they cannot own the land permanently. A foreigner who inherits land is generally expected to sell or dispose of the property within a reasonable time because long-term ownership of land by foreigners is prohibited under the Constitution.

 Options for Foreigners Who Inherit Land

When a foreigner inherits land in the Philippines, they have a few legal options to comply with the constitutional restrictions while still benefiting from the inheritance:

1. Disposition of the Land:

   - A foreigner who inherits land must generally sell or dispose of the property. The law does not specify a fixed timeframe, but the general understanding is that the sale or transfer should be completed within a reasonable period.

   - The foreigner may sell the property to a Filipino citizen or to a corporation that meets the 60% Filipino ownership requirement.

   - The proceeds from the sale of the land can then be received by the foreign heir.

2. Transfer of Ownership to Filipino Relatives:

   - Instead of selling the property to third parties, a foreign heir may choose to transfer ownership of the land to Filipino relatives. This is a common course of action for foreigners who want to keep the property within the family. The foreign heir can also execute a deed of donation or transfer to a Filipino spouse or children who are Filipino citizens.

3. Retaining Ownership of Improvements:

   - A foreigner who inherits both land and structures on the property can retain ownership of the improvements (e.g., house or building) while transferring the land itself to a qualified Filipino citizen or corporation. The foreigner can negotiate a long-term lease for the land on which the structure stands.

4. Former Natural-Born Filipinos:

   - A special exception is made for foreigners who were once natural-born Filipino citizens. Under Batas Pambansa Blg. 185 and Republic Act No. 8179, former Filipino citizens can inherit and own land, subject to the following limitations:

     - Up to 1,000 square meters of residential land.

     - Up to 5,000 square meters of urban land or up to three hectares of rural land for business or commercial purposes.

   - If the foreign heir was a natural-born Filipino citizen but later acquired foreign citizenship, they can still legally inherit and retain ownership of a limited portion of land.

 Practical Considerations for Foreigners Inheriting Land

While the legal framework allows foreigners to inherit land, certain practical and procedural considerations arise:

1. Probate or Estate Settlement:

   - Whether the foreigner is an heir under a will or under intestate succession, the estate of the deceased must undergo probate or estate settlement. This is the legal process of distributing the assets of the deceased to the heirs. Foreign heirs must participate in this process to formally receive their inheritance.

2. Legal Assistance:

   - Given the complexity of land laws and inheritance procedures, foreign heirs are strongly advised to seek legal assistance from a Philippine attorney who specializes in estate law and land ownership issues. This ensures that the foreign heir complies with the law and secures the best possible outcome for their inheritance.

3. Taxation:

   - Foreigners inheriting land are subject to the same inheritance taxes as Filipino heirs. The estate tax is based on the value of the deceased’s estate at the time of death. Taxes must be settled before the transfer of ownership or sale of the property can be completed.

4. Repatriation of Proceeds:

   - If a foreign heir chooses to sell the inherited land, they must also comply with foreign exchange regulations when repatriating the proceeds of the sale out of the Philippines. The proceeds from the sale can generally be repatriated with proper documentation and compliance with Bangko Sentral ng Pilipinas (BSP) rules.

 Conclusion

While the Philippine Constitution restricts land ownership by foreigners, it allows for exceptions when land is inherited through succession. Foreigners who inherit land can receive their inheritance but must dispose of the land in compliance with constitutional limitations. Whether by selling the land, transferring it to Filipino relatives, or retaining ownership of improvements, foreign heirs have several legal options to manage their inheritance. However, these options must be exercised carefully, and it is advisable for foreign heirs to seek legal counsel to navigate the complexities of land inheritance in the Philippines.

Understanding the legal framework, procedural requirements, and practical considerations ensures that a foreigner can maximize the benefits of their Philippine land inheritance while remaining compliant with the law.

Source: Ziggurat Real Estate