E. Co-Ownership (See also RA 4726, as amended by RA 7899)

7. Co-Ownership

a. Definition b. Quantitative and Qualitative Concept of Co-ownership c. Consequences of Co-ownership d. Right of Legal Redemption given to Co-owners of a co-owner selling his or her ideal share i. Requisites ii. Distinguished from the right of legal redemption given to co-heirs under Article 1080 of the Civil Code e. Partition f. Prescription among co-owners

E. Co-Ownership (Civil Code, arts. 484-501); Condominium Act (R.A. No. 4726, as amended)

Co-Ownership, arts. 484-501

TITLE III

CO-OWNERSHIP

Article 484. There is co-ownership whenever the ownership of an undivided thing or right belongs to different persons.

In default of contracts, or of special provisions, co-ownership shall be governed by the provisions of this Title. (392)

Article 485. The share of the co-owners, in the benefits as well as in the charges, shall be proportional to their respective interests. Any stipulation in a contract to the contrary shall be void.

The portions belonging to the co-owners in the co-ownership shall be presumed equal, unless the contrary is proved. (393a)

Article 486. Each co-owner may use the thing owned in common, provided he does so in accordance with the purpose for which it is intended and in such a way as not to injure the interest of the co-ownership or prevent the other co-owners from using it according to their rights. The purpose of the co-ownership may be changed by agreement, express or implied. (394a)

Article 487. Any one of the co-owners may bring an action in ejectment. (n)

Article 488. Each co-owner shall have a right to compel the other co-owners to contribute to the expenses of preservation of the thing or right owned in common and to the taxes. Any one of the latter may exempt himself from this obligation by renouncing so much of his undivided interest as may be equivalent to his share of the expenses and taxes. No such waiver shall be made if it is prejudicial to the co-ownership. (395a)

Article 489. Repairs for preservation may be made at the will of one of the co-owners, but he must, if practicable, first notify his co-owners of the necessity for such repairs. Expenses to improve or embellish the thing shall be decided upon by a majority as determined in article 492. (n)

Article 490. Whenever the different stories of a house belong to different owners, if the titles of ownership do not specify the terms under which they should contribute to the necessary expenses and there exists no agreement on the subject, the following rules shall be observed:

(1) The main and party walls, the roof and the other things used in common, shall be preserved at the expense of all the owners in proportion to the value of the story belonging to each;

(2) Each owner shall bear the cost of maintaining the floor of his story; the floor of the entrance, front door, common yard and sanitary works common to all, shall be maintained at the expense of all the owners pro rata;

(3) The stairs from the entrance to the first story shall be maintained at the expense of all the owners pro rata, with the exception of the owner of the ground floor; the stairs from the first to the second story shall be preserved at the expense of all, except the owner of the ground floor and the owner of the first story; and so on successively. (396)

Article 491. None of the co-owners shall, without the consent of the others, make alterations in the thing owned in common, even though benefits for all would result therefrom. However, if the withholding of the consent by one or more of the co-owners is clearly prejudicial to the common interest, the courts may afford adequate relief. (397a)

Article 492. For the administration and better enjoyment of the thing owned in common, the resolutions of the majority of the co-owners shall be binding.

There shall be no majority unless the resolution is approved by the co-owners who represent the controlling interest in the object of the co-ownership.

Should there be no majority, or should the resolution of the majority be seriously prejudicial to those interested in the property owned in common, the court, at the instance of an interested party, shall order such measures as it may deem proper, including the appointment of an administrator.

Whenever a part of the thing belongs exclusively to one of the co-owners, and the remainder is owned in common, the preceding provision shall apply only to the part owned in common. (398)

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. (399)

Article 494. No co-owner shall be obliged to remain in the co-ownership. Each co-owner may demand at any time the partition of the thing owned in common, insofar as his share is concerned.

Nevertheless, an agreement to keep the thing undivided for a certain period of time, not exceeding ten years, shall be valid. This term may be extended by a new agreement.

A donor or testator may prohibit partition for a period which shall not exceed twenty years.

Neither shall there be any partition when it is prohibited by law.

No prescription shall run in favor of a co-owner or co-heir against his co-owners or co-heirs so long as he expressly or impliedly recognizes the co-ownership. (400a)

Article 495. Notwithstanding the provisions of the preceding article, the co-owners cannot demand a physical division of the thing owned in common, when to do so would render it unserviceable for the use for which it is intended. But the co-ownership may be terminated in accordance with article 498. (401a)

Article 496. Partition may be made by agreement between the parties or by judicial proceedings. Partition shall be governed by the Rules of Court insofar as they are consistent with this Code. (402)

Article 497. The creditors or assignees of the co-owners may take part in the division of the thing owned in common and object to its being effected without their concurrence. But they cannot impugn any partition already executed, unless there has been fraud, or in case it was made notwithstanding a formal opposition presented to prevent it, without prejudice to the right of the debtor or assignor to maintain its validity. (403)

Article 498. Whenever the thing is essentially indivisible and the co-owners cannot agree that it be allotted to one of them who shall indemnify the others, it shall be sold and its proceeds distributed. (404)

Article 499. The partition of a thing owned in common shall not prejudice third persons, who shall retain the rights of mortgage, servitude or any other real rights belonging to them before the division was made. Personal rights pertaining to third persons against the co-ownership shall also remain in force, notwithstanding the partition. (405)

Article 500. Upon partition, there shall be a mutual accounting for benefits received and reimbursements for expenses made. Likewise, each co-owner shall pay for damages caused by reason of his negligence or fraud. (n)

Article 501. Every co-owner shall, after partition, be liable for defects of title and quality of the portion assigned to each of the other co-owners. (n)

What is Co-Ownership?

It is a form of ownership, which exists whenever an undivided thing or right belongs to different persons. (Art. 484)

What are the Elements of Co-ownership? (PUI)

• Plurality of subjects – many owners
• Object of ownership must be Undivided
• Recognition of Ideal shares; no one is an owner of a specific portion of the property until it is partitioned.

How is Co-ownership Created? (C-FOLDS)

• Law
• Contracts
• Succession
• Fortuitous event/chance (i.e., commixtion)
• Occupancy (i.e.,2 persons catch a wild animal)
• Donation

What are the Kinds of Co-ownership?

• Ordinary – right of partition exists
• Compulsory– no right of partition exists (party wall)
• Legal – created by law
• Singular/Particular – over particular/ specific thing
• Incidental – exists independently of the will of the parties
• Universal – over universal things (co-heirs)
• Contractual - created by contract

Individual Interest

Right to alienate, assign or mortgage own part; except personal rights like right to use and habitation.

A co-owner cannot give valid consent to another to build a house on co-owned property as such an act would be tantamount to making an alteration in the thing owned in common. Entry into the land without the knowledge of the other co-owners can be categorized as possession by stealth and W’s act of getting only the consent of one co-owner can be considered as “strategy.” Thus, it would be a case of forcible entry. (Cruz v. Catapang, GR No. 164110, 2008)

SALE OF CO-OWNER OF WHOLE PROPERTY OR DEFINITE PORTION

Entire Property

Any co-owner may file an action under Article 487 not only against a third person but also against another co-owner who takes exclusive possession and asserts exclusive ownership of the property. (De Guia vs. CA, GR No. 120864, 2003)

A co-owner can sell an undivided part of the property co-owned, but its validity is limited to his share. Hence, there is no need for consent of the other co-owners as to said sale. (Arambulo v. Nolasco, GR No. 189420, 2014) Same rule applies in a mortgage by a co-owner of his share. (Rural Bank of Cabadbaran v. Nulecio-Yap, GR No. 178451, 2014)

According to Art. 493 of the Civil Code, “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, xxx, 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.” Hence, the effect of the alienation or the mortgage with respect to the co-owners, shall be limited, by mandate of the same article, to the portion which may be allotted to him in the division upon the termination of the co-ownership. A co-owner has no right to sell or alienate a concrete, specific, or determinate part of the thing in common to the exclusion of the other co-owners because his right over the thing is represented by an abstract or ideal portion without any physical adjudication. (Ulay v. Bustamante, GR 231721 & 231722)

General Rule:

• If a co-owner sells the entire co-owned property before partition, the sale is effective only as to that co-owner’s undivided share and does not bind the other co-owners’ shares (Panganiban v. Oamil, G.R. No. 149313, 2008)
• Co-owner sells definite portion prior to partition sale is void as to other co-owner but valid as to his spiritual share if the buyer would have still bought such spiritual share had he known that he would not acquire the definite portion sold. (Lopez v. Cuaycong, G.R. No. L-46079, 1944) (citation requires verification)

What is the Right of Redemption?

The right of redemption is the right of a co-owner to recover or get back any share or interest sold by another co-owner to a stranger or third party. Legal redemption of a sold undivided share is distinct from redemption of the whole commonly owned property; the latter may inure to the benefit of all co-owners, subject to reimbursement.

NOTE: To be exercised within 30 days from written notice of sale of undivided share of another co-owner to a stranger.

Redemption of the whole property by a co-owner does not vest in him sole ownership over said property. Redemption within the period prescribed by law of the whole property by a co-owner may inure to the benefit of all co-owners, subject to reimbursement. Hence, it will not put an end to existing co-ownership. (Mariano v. CA, GR No. L-51283, 1989)

Co-owners have the right to alienate their pro indiviso shares even without the knowledge or consent of another co-owner as long as the alienation covers only their shares interests in the common property. Under the NCC, each co-owner “shall have the full ownership of his part and may therefore alienate it.” The effect, however, of the alienation with respect to the co-owners shall be limited only to the portion which may be allotted to him in the division upon the termination of the co-ownership. (Tabasondra v. Constantino, GR No. 196403, 2016)

A co-owner has no right to sell or alienate a concrete, specific or determinate part of the thing owned in common, because his right over the thing is represented by quota or ideal portion without any physical adjudication. (Cabrera v. Ysaac G.R. No. 166790, 2014)

Exceptions to the rule on the effect of sale of a definite portion by a co-owner

• A co-owner’s purported sale of a definite portion does not bind the other co-owners as to that specific portion; it may operate on the seller’s undivided interest, subject to partition under Civil Code, Art. 493. (Mindanao Academy, Inc. v. Yap, G.R. No. L-17681, 1965)
• A sale of the entire commonly owned property binds all co-owners only if all consent or otherwise validly authorize the sale; consent to the disposition of a particular portion must likewise be assessed against the rights of every affected co-owner. (Pamplona v. Moreto, G.R. No. L-33187, 1980)
• Co-owner sells 1 of 2 commonly owned lands and does not turn over ½ of the proceeds, other co-owner, by law and equity, has exclusive claim over remaining land. (Imperial v. CA, G.R. No. 102037, 1996)

Requisites:

• There must be co-ownership of a thing;
• There must be an alienation of all or of any of the shares of the other co-owners;
• The sale must be to a third person or stranger; and
• The sale must be before the partition.

What are the elements of Benefits/ Fruits/ Interest/ Income?

• Right to benefits proportional to respective interest
• Stipulation to contrary is void
• Right to full ownership of his part and fruits. (Art. 493)

What are the elements of Use/ Possession?

• Right to use thing co-owned
• For purpose for which it is intended
• Without prejudice to interest of ownership
• Without preventing other co-owners from making use thereof. (Art. 486)

What are the rights when it comes to Management/Administration?

• Right to change purpose of co-ownership by agreement. (Art. 486)
• Right to bring action in ejectment in behalf of other co-owner. (Art. 487)
• Right to compel co-owners to contribute to necessary expenses for preservation of thing and taxes. (Art. 488)
• Right to exempt himself from obligation of paying necessary expenses and taxes by renouncing so much of his undivided interest as is equivalent to his share of those expenses and taxes; but can’t be made if prejudicial to co-ownership. (Art. 488)
• Right to make repairs for preservation of things; can be made at will of one co-owner; receive reimbursement therefrom; notice of necessity of such repairs must be given to co-owners, if practicable. (Art. 489)
• Right to ask for partition anytime. (Art. 494)
• Right of legal redemption when a co-owner’s share is sold to a stranger, subject to statutory requirements. (Arts. 1620 and 1623)

PARTITION

General rule: A co-owner cannot be required to remain in a co-ownership. Each co-owner may demand partition of the property at any time with respect to that co-owner’s share. (Art. 494)

Exceptions: Partition may not be demanded in the following circumstances:

• The co-owners have agreed not to partition the property for a period of up to 10 years. The agreement may be renewed. (Art. 494)
• The donor or testator from whom the property came has prohibited partition for a period of up to 20 years. (Art. 494)
• Partition is prohibited by law. (Art. 494)
• Physical partition would make the property unserviceable. In that case, the property may be allotted to one co-owner, who must indemnify the others, or it may be sold and the proceeds distributed. (Art. 495)
• The legal nature of the common property does not permit partition.

What are the Requisites of Repudiation? (UKEO)

• Unequivocal acts of repudiation of the coownership amounting to an ouster of the other coowners
• Positive acts of repudiation have been made Known
• Evidence is clear and conclusive
• Open, continuous, exclusive, notorious possession.

(Santos v. Heirs of Crisostomo, 41 Phil. 342, 1921)

Q: A filed a complaint for partition of 8 parcels of land against B. TCTs all indicate that A and B are co-owners of the properties. A based his right under Article 494 of the New Civil Code. B alleged that while the TCTs reflected A’s name, he was not a co-owner because he never contributed to the acquisition and for the maintenance or taxes of the property. Is A entitled to the partition of the property.

A: Yes. A is a co-owner. Public documents pointing to the existence of co-ownership carry with it the legal presumption of regularity, thus the opposing party has the burden of proving with clear, convincing and persuasive evidence to repudiate the co-ownership. Here, eight certificates of title all clearly and unequivocally identify petitioner A as one of the coowners of the subject properties. In land registration, the certificate of title serves as evidence of an indefeasible and incontrovertible title to the property in favor of the person whose name appears therein. It is the best proof of ownership of a parcel of land. Further, one's assertion of ownership is further strengthened and buttressed by the fact of possession coupled with the lack of opposition to such possession. Here, A possesses a portion of the subject property with no opposition by the other parties, aside from B, who disclaimed petitioner A’s status as co-owner only after more than two decades since the execution of the Deed of Absolute Sale, and only as a mere reaction to the Complaint for Partition filed by A.

Assuming for argument's sake that A did not contribute in the payment of the purchase price of the subject properties, it does not necessarily mean that he could not become a co-owner of the subject properties who can compel partition. According to Sec. 1, Rule 69 of the Rules of Court, in relation to Articles 484 and 494 of the Civil Code, a person may exercise the right to compel the partition of real estate if he/she sets forth in his/her complaint the nature and extent of his title and subsequently proves the same. The law does not make a distinction as to how the coowner derived his/her title, may it be through gratuity or through onerous consideration. (Logrosa v. Sps. Azares, G.R. No. 217611, March 27, 2019)

What are the consent requirements for co-owners in acts of preservation, acts of administration and acts of alteration?

• Share in charges proportional to respective interest; stipulation to contrary is void. (Art. 485)
• Each co-owner may compel the others to contribute proportionately to preservation expenses and taxes. (Art. 488)
• Pay useful and luxurious expenses – if determined by majority
• Duty to obtain consent of all if thing is to be altered even if beneficial; resort to court if non-consent is manifestly prejudicial. (Art. 491)
• Duty to obtain consent of majority with regard to administration and better enjoyment of the thing; majority means majority in the interest not in the number of co-owners; court intervention if prejudicial – appointment of administrator. (Art. 492)
• No prescription to run in favor co-owner as long as he recognizes the co-ownership; (Art. 494) Note: For acquisitive prescription to run in favor of a co-owner, the requisites are:
• He must have repudiated the coownership through unequivocal acts;
• Such act of repudiation is made known to other co-owners
• Evidence must be clear and convincing
• Co-owners cannot ask for physical division if it would render thing unserviceable; but can terminate co-ownership. (Art. 495)
• After partition, duty to render mutual accounting of benefits and reimbursements for expenses. (Art. 500)
• Each co-owner has full ownership of his undivided share and of the fruits and benefits pertaining thereto, and he may alienate, assign, or mortgage that share; the effect of the disposition is limited to the portion which may be allotted to him upon the termination of the co-ownership. (Art. 493)

What are the rights and obligations at the end or termination of the co-ownership or upon partition?

• Creditors of assignees may take part in division and object if being effected without their concurrence but cannot impugn unless there is fraud or made notwithstanding their formal opposition. (Art. 497)
• Non-intervenors – retain rights of mortgage and servitude and other real rights and personal rights belonging to them before partition was made. (Art. 499)

[Condominium Act (R.A. No. 4726, as amended)](/431807223b1b4edca1d5712bbcd8991a?pvs=25)

Condominium - an interest in real property consisting of a separate interest in a unit in a residential, commercial or industrial building and an undivided interest in common, directly or indirectly, in the land on which it is located and in other common areas of the building.

Any transfer or conveyance of a unit or an apartment office or store or other space therein shall include the transfer and conveyance of the undivided interest in the common areas or in a proper case, the membership or shareholdings in the condominium: provided however, that where the common areas in the condominium project are held by the owners of separate units as co- owners thereof, no condominium unit therein shall be conveyed or transferred to persons other than Filipino citizens or corporations at least 60% of the capital stock of which belong to Filipino citizens, except in cases of hereditary succession.

General Rule: Common areas shall remain undivided, and there shall be no judicial partition thereof

Exceptions:

• When the project has not been rebuilt or repaired substantially to its state prior to its damage or destruction 3 years after damage or destruction which rendered a material part thereof unfit for use;
• When damage or destruction has rendered ½ or more of the units untenable and that the condominium owners holding more than 30% interest in the common areas are opposed to restoration of the projects;
• When the project has been in existence for more than 50 years, is obsolete and uneconomic, and the condominium owners holding in aggregate more than 50% interest in the common areas are opposed to repair, restoration, remodeling or modernizing;
• When a project or a material part thereof has been condemned or expropriated and the project is no longer viable or that the condominium owners holding in aggregate more than 70% interest in the common areas are opposed to the continuation of the condominium regime.
• When conditions for partition by sale set forth in the declaration of restrictions duly registered have been met.

Rules:

• Mixture by the will of the owners
• Rights governed by stipulations
• Without stipulation: each acquires a right or interest in proportion to the value of his material. (Paras, supra, p. 297)
• Mixture caused by an owner in good faith or by chance
• Each share shall still be in proportion to the value of their thing (Santos v. Bernabe, 54 Phil. 19, 1929)
• Mixed caused by owner in bad faith
• The actor forfeits his thing;
• Liable for damages. (Paras, supra, p. 297)

Specification - Imparting of a new form to the material belonging to another; or the making of the material of another into a thing of a different kind. (Art. 474)

Co-ownership under Art. 148

Co-ownership may ensue in case of cohabitation where, for instance, one party has a pre-existing valid marriage, provided that the parties prove their actual joint contribution of money, property or industry and only to the extent of their proportionate interest thereon. (Francisco v. Master Iron Works Construction Corp., G.R. No. 151967, February 16, 2005)

Q: Romeo and Juliet lived together as husband and wife without the benefit of marriage. During their cohabitation, they acquired a house. When they broke up, they executed an agreement where he agreed to leave the house provided Juliet will pay his entire share in their properties. She failed to do so but she also ignored his demand for her to vacate. Romeo sued her for ejectment which the court granted. Was the court correct in granting the same?

A: NO. Under Art. 147 of the Family Code, the property is co- owned by the parties. In the absence of proof to the contrary, any property acquired by common-law spouses during their cohabitation is presumed to have been obtained thru their joint efforts and is owned by them in equal shares. Their property relationship in such a case is essentially governed by the rules on co-ownership. Thus, Romeo cannot seek the ejectment of Juliet therefrom. As a co- owner, she is as much entitled to enjoy its possession and ownership as him. (Abing v. Waeyan, G.R. No. 146294, July 31, 2006)

Q: Bert and Joe, both male and single, lived together as common law spouses and agreed to raise a son of Bert’s living brother as their child without legally adopting him. Bert worked while Joe took care of the child; during their cohabitation, they acquired real estate assets registered in their names as co-owners. Unfortunately, Bert died of cardiac arrest, leaving no will. Bert was survived by his biological siblings, Joe and the boy.

Can Article 147 on co-ownership apply to Bert and Joe, whereby all properties they acquired will be presumed to have been acquired by their joint industry and shall be owned by them in equal shares?

If Bert and Joe had decided in the early years of their cohabitation to jointly adopt the boy, would they have been legally allowed to do so? Explain with legal basis.

A:

• NO. Article 147 of the Family Code cannot apply to Bert and Joe because the law only applies to a man and a woman who are capacitated to marry each other who live together as husband and wife without the benefit of marriage or under a void marriage. In the case of Bert and Joe, they are both men, so the law does not apply.
• NO. Joint adoption is allowed between husband and wife, even if Bert and Joe are cohabiting with each other, they are not vested with the right to jointly adopt under the Family Code or even under the Domestic Adoption Act. (Sec. 7, R.A. 8552)

Q: Benjamin is married to Azucena. While Azucena is out of country, Benjamin developed a romantic relationship with Sally, but her father was against this. In order to appease her father, Sally convinced Benjamin to sign a purported marriage contract. Eventually, their relationship ended a few years later. Benjamin asked the court for the partition of the properties he acquired with Sally in accordance with Article 148 of the FC, for his appointment as administrator of the properties during the pendency of the case. Among the 44 properties which were the subject of the partition, 7 were enumerated by Benjamin while Sally named 37 properties in her answer. Is Benjamin’s contention correct?

A: YES. The property relations of Benjamin and Sally is governed by Article 148 of the Family Code. They cohabitated without the benefit of marriage. Thus, only the properties acquired by them through their actual joint contribution of money, property, or industry shall be owned by them in common in proportion to their respective contributions. Sally’s claim of co-ownership over the 37 properties was dismissed; cohabitation alone does not establish co-ownership. As regards the seven remaining properties, only one of them is registered in the names of the parties as spouses. The other four were registered in the name of either one of them with the description “married to” and the last two were named to Sally as an individual. The words “married to” preceding the name of a spouse are merely descriptive of the civil status of the registered owner, which do not prove co-ownership. Without proof of actual contribution from either or both spouses, there can be no co-ownership under Article 148 of the Family Code. (Go-Bangayan v. Bangayan, G.R. No. 201061, July 3, 2013)

Co-ownership under Art. 148

Co-ownership may ensue in case of cohabitation where, for instance, one party has a pre-existing valid marriage, provided that the parties prove their actual joint contribution of money, property or industry and only to the extent of their proportionate interest thereon. (Francisco v. Master Iron Works Construction Corp., G.R. No. 151967, 16 Feb. 2005)