Below is a comprehensive discussion of the sale of inherited property without partition in the Philippines. It aims to give general information only and should not be treated as legal advice. If you need guidance for a specific situation, it is best to consult a qualified attorney.

1. Overview of Inherited Property and Co-Ownership

When a person dies, his or her estate (all the properties, rights, and obligations of the decedent that are not extinguished by death) is transmitted to the lawful heirs. Under Philippine law, until there is a formal partition of the estate, the heirs become co-owners of any inherited property. This co-ownership is governed by the Civil Code of the Philippines, particularly Articles 484 to 501 (on Co-ownership) and Articles 1067 to 1105 (on Partition).

Key points:

Inherited property is subject to the rules of co-ownership if there is more than one heir.
Each heir effectively owns an undivided (or ideal) share in the property, not a specified, physically segregated portion.
The shares are typically proportional to their legal or testamentary entitlement.

2. Selling an Inherited Property Without Partition

2.1 General Rule: You Can Only Sell Your Undivided Share

If there has been no formal partition or settlement, each heir is recognized as a co-owner holding an undivided share in the property. In that scenario, a co-owner may sell or dispose only of his or her ideal (undivided) share, not the entire property. This principle is codified in the Civil Code (Article 493) which states:

“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.”

Implication:

An individual heir can validly sell his or her undivided share in the estate.
The buyer of that share essentially steps into the shoes of the selling co-owner with respect to that share.

2.2 Selling the Entire Property Without the Consent of Other Heirs

An heir cannot unilaterally sell the entire inherited property if it has not been partitioned, unless all other heirs (co-owners) explicitly consent. If one co-owner (or a group of co-owners) tries to sell the entire property without the unanimous consent of all co-owners, the sale is void with respect to the shares of the non-consenting co-owners. Only the share of the consenting co-owner(s) is validly transferred.

In practice, the scenario might look like this:

If one heir purports to sell the whole property, the law treats the conveyance as valid only insofar as that heir’s undivided share is concerned.
The new buyer would become a co-owner together with the remaining heirs.

3. Extrajudicial Settlement Versus Judicial Partition

3.1 Extrajudicial Settlement

If the decedent died without leaving any debts, or if debts have been fully paid, and all heirs are of legal age (or minors are duly represented), the heirs can enter into an Extrajudicial Settlement of the estate. This is executed via a notarized document where the heirs decide how to partition the property or properties among themselves.

An Extrajudicial Settlement with Sale happens when the heirs not only settle the estate but also sell it (or parts of it) at the same time—usually to a third-party buyer or sometimes among themselves. This type of instrument is then published (to provide notice to creditors and other claimants) as required by law, and registered with the Registry of Deeds.

Key steps in extrajudicial settlement with sale:

Check for debts: Ensure no outstanding obligations (or that they have been paid or settled).
Prepare the document: Draft an extrajudicial settlement agreement indicating (a) the identities of the heirs, (b) details of the property, (c) manner of partition, and (d) the fact that it is sold to a buyer, along with sale conditions.
Notarization: Sign and have the document notarized.
Publication: Publish a notice in a newspaper of general circulation once a week for three consecutive weeks to comply with legal requirements.
Payment of appropriate taxes: Estate taxes, capital gains tax, documentary stamp taxes, etc., must be settled with the Bureau of Internal Revenue (BIR).
Registration: Submit the notarized and published extrajudicial settlement document, together with proof of tax payment, to the Register of Deeds to effect the transfer in the title.

3.2 Judicial Partition

If the heirs cannot agree among themselves about how to settle or distribute the property, or if there are complications (e.g., contested wills, unresolved debts, minors/heirs not represented, legal conflicts among heirs), a judicial partition (court proceeding) is necessary. In that case, the court oversees the distribution or settlement of the estate.

Judicial partition’s effect on sale:

Until the court issues a final order of partition or settlement, the property remains under co-ownership.
Any sale undertaken before final partition would similarly be limited to each seller’s undivided share.

4. Requirements and Taxes

4.1 Estate Tax

Before any inherited property can be sold or transferred, the estate must first settle estate tax with the BIR. The rate depends on the applicable laws at the time of decedent’s death. If the property is sold without first paying or arranging the estate tax, the title cannot be lawfully transferred.

4.2 Capital Gains Tax and Documentary Stamp Tax

Following settlement of the estate tax, the heirs (as sellers) must also pay:

Capital Gains Tax (CGT): A tax on the profit presumed from the sale or transfer of real property classified as capital assets (typically 6% of the gross selling price or fair market value, whichever is higher).
Documentary Stamp Tax (DST): Usually 1.5% of the consideration or fair market value.

4.3 Transfer Tax and Registration Fees

Once taxes are settled, the local government (city or municipality) may also charge a transfer tax. The Register of Deeds collects registration fees for the issuance of a new title to the buyer.

5. Rights of the Buyer in a Sale of Undivided Shares

If you are a prospective buyer of an inherited property in which not all heirs have agreed to partition or to sell:

Due Diligence: Verify that all heirs are known and accounted for.
Consent of All Heirs: Ideally, obtain the signatures and consent of all co-owners to sell. This ensures that you can acquire 100% ownership of the property.
Partial Sale: If not all heirs agree, you can only purchase the share of the consenting co-owner(s). You will then become a co-owner with the non-selling heirs, which can be complicated if your intention is to own the entire property.
Future Partition: If you buy only a share, you may file an action for partition later to physically split or sell the property (if feasible) and obtain your proportional share.

6. Common Complications

Hidden/Unknown Heirs: If an heir is missing or unknown at the time of sale and later appears, that heir can assert his or her share, complicating the sale.
Minors as Heirs: Minors need court approval or representation through a judicial guardianship proceeding for their share to be validly sold.
Unsettled Debts or Liens: If the estate still has obligations or the property is encumbered, creditors can question the sale.
Disagreements Among Co-Owners: Some heirs may dispute the sale price, the method of division, or the general conditions of the sale. These disagreements often necessitate a judicial proceeding.

7. Legal Remedies

Extrajudicial Settlement with Sale: Fastest and most cost-effective, but requires consensus and compliance with procedural requirements.
Judicial Partition: If heirs cannot agree, an action for partition or settlement in court is the next step.
Declaratory Relief or Court Intervention: In certain instances, heirs or buyers may seek a court declaration to clarify rights, especially if the authenticity or validity of titles, documents, or the status of heirs is in dispute.

8. Practical Tips for Heirs and Buyers

Clear Communication: Heirs should discuss and align on the decision to sell before taking any step.
Check the Title and Public Records: Ensure the property is free from liens, adverse claims, or pending legal disputes.
Heir Certification: Secure a notarized certification listing all known heirs, or secure a court or local civil registrar certification if necessary.
Draft a Detailed Extrajudicial Settlement (if applicable): Specify how the proceeds of the sale will be shared, how taxes will be handled, and how any minor heirs or guardians will participate.
Timely Payment of Taxes: Late payment of estate tax, CGT, or DST leads to penalties and surcharges.
Consult a Lawyer: Given how easily complications arise (especially with multiple heirs), professional legal guidance is recommended.

9. Conclusion

Selling an inherited property in the Philippines without first effecting a formal partition is permissible only to the extent that each heir may dispose of his or her undivided share. An heir or group of heirs cannot unilaterally sell the entire property without the consent of all co-owners.

To avoid potential disputes, the best practice is for all heirs to settle the estate—whether extrajudicially or through the courts—before proceeding with any sale. This ensures a clear title for the buyer, the correct distribution of proceeds for the heirs, and overall legal certainty.

Again, the above information is provided for general reference. Specific circumstances can vary widely, and it is advisable to consult a lawyer or legal professional in the Philippines for personal legal advice.