Title III. Co-ownership

Question 1

What is the definition of co-ownership?

Answer 1

Co-ownership is defined as:

(1) A manifestation of ownership; that form of ownership which exists whenever an undivided thing or right belongs to different persons.
(2) the right of common dominion which two or more persons have in a spiritual or ideal part of a thing which is not materially or physically divided.

Question 2

When is there co-ownership?

Answer 2

According to Art. 484 of the Civil Code, “There is co-ownership whenever the ownership of an undivided thing or right belongs to different persons.”

Question 3

When shall the provisions on Co-ownership of the Civil Code apply?

Answer 3

The provisions of the Civil Code on Co-ownership shall apply “[i]n default of contracts, or of special provisions.” [Art. 484 par.2].

Question 4

What are the requisites of co-ownership?

Answer 4

The requisites of co-ownership are:

(1) There must be a plurality of owners;
(2) The object of ownership must be a thing or right which is undivided;
(3) Each co-owner’s right must be limited only to his ideal share of the physical whole.

Question 5

What are the characteristics of co-ownership?

Answer 5

The following are the characteristics of co-ownership:

(1) There are two or more co-owners;
(2) There is a single object which is not materially or physically divided and over which and his ideal share of the whole, each co-owner exercises ownership, together with the other co-owners;
(3) There is no mutual representation by the co-owners;
(4) It exists for the common enjoyment of the co-owners;
(5) It has no distinct legal personality; and
(6) It is governed first of all by the contract of the parties; otherwise, by special legal provisions, and in default of such provisions, by the provisions of Title III on Co-ownership.

Question 6

May a co-owner adjudicate to himself in fee simple a determinate physical portion of real estate?

Answer 6

No because until division is effected, a co-owner’s ownership is limited to his ideal or abstract quota. He cannot point to a particular portion of the property as his very own.

Question 7

What are the sources of co-ownership?

Answer 7

The sources of co-ownership are:

(1) Contract;
(2) Law;
(3) Succession;
(4) Testamentary disposition or donation inter vivos;
(5) Fortuitous event or by chance;
(6) Occupancy

Question 8

Distinguish Co-ownership from joint ownership.

Answer 8

Co-ownership, a.k.a. “tenancy in common,” vs. joint ownership, a.k.a. “joint tenancy:

(1) Ownership of share - co-ownership: each co-owner is the owner of the whole undivided thing or right but at the same time of his own ideal part thereof; joint tenancy: there is no abstract share ownership by the co-owners, the rights of joint tenants are inseparable (as if they are one);
(2) Disposition of shares - co-ownership: co-owner may dispose of his share or interest in the property without the consent of the others; joint tenancy: joint tenant is not permitted to dispose of his share or interest without the consent of the others (but there is no share for joint-tenants);
(3) Effect of death - co-ownership: heirs of the deceased co-owner inherit the share; join tenancy: ownership of the joint tenant dies with him and survivors are subrogated to the rights of the deceased immediately upon the death of the latter by virtue of their right of survivorship or jus accrescendi;
(4) Legal disability or incapacity - co-ownership: disability of co-owner does not inure to the benefit of co-owners for purposes of prescription; joint tenancy: disability of a joint tenant inures to the benefit of the others for purposes of prescription

Question 9

Distinguish co-ownership from partnership.

Answer 9

Co-ownership vs. partnership:

(1) Creation - co-ownership may be created without formalities of a contract; partnership can only be created by a contract, express or implied;
(2) Personality - co-ownership has no juridical or legal personality; partnership has distinct juridical personality distinct from the partners;
(3) Purpose - co-ownership’s purpose is collective enjoyment of the thing (or right); partnership is to obtain profits;
(4) Disposal of share - co-owner can dispose his share without consent of others; partnership: a partner cannot substitute another partner without consent of others;
(5) Mutual agency - co-ownership has no mutual representation; partnership: a partner can generally bind the partnership;
(6) Distribution of profits - co-ownership: proportional to shares; partnership: based on stipulation;
(7) Effect of death - co-ownership is not dissolved by the death or incapacity of a co-owner; partnership is disolved upon death of one of the partners;
(8) Duration - co-ownership: agreement to keep thing undivided for a period more than ten years is void (although extendable); partnership duration may last without limit;

Question 10

Distinguish co-ownership from easement.

Answer 10

Co-ownership vs. easement:

(1) In co-ownership, there is in each co-owner a right of dominion over the whole property and over his undivided share, whereas easement is precisely a limitation on the right of dominion; and
(2) In co-ownership, the right of ownership rests solely on each and every co-owner over a single object, while in easement, the right of dominion is in favor of one or more persons and over two or more different things.

Question 11

What is the general rule regarding the share of the co-owners?

Answer 11

The share of the co-owners, in the benefits as well as in the charges, shall be proportional to their respective interests. [Art. 485]

Question 12

What is the effect of a stipulation in a contract contrary to the rule of proportionality of the share of co-owners?

Answer 12

The stipulation shall be void. Art 485 provides, “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.”

Question 13

What is the presumed proportion of shares of each co-owner in a co-ownership?

Answer 13

Art. 485 par. 2. The portions belonging to the co-owners in the co-ownership shall be presumed equal, unless the contrary is proved.

Question 14

What are the limitations upon the co-owner’s right to use the thing owned in common?

Answer 14

Art. 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.

Question 15

Can co-owner invoke the tolerance of other co-owners to change the purpose of the thing owned in common?

Answer 15

No. According to De Leon, citing Manresa, “In the absence of agreement, express or implied, mere tolerance on the part of the co-owners cannot be invoked by a co-owner to legalize a change in the use of the thing owned in common according to the purpose for which it is intended; neither can prescription be invoked by a co-owner to establish a right to such different use because prescription cannot be based on acts of mere tolerance by the other co-owners.

Question 16

Who may bring an action in ejectment in a co-ownership?

Answer 16

Art. 487. Anyone of the co-owners may bring an action in ejectment.

Question 17

What is the right of the co-owner regarding necessary expenses of the co-owned property?

Answer 17

Art. 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. Anyone 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.

Question 18

What are the principles governing the renunciation of a co-owner to his share in co-ownership in order to waive the payment of necessary expenses?

Answer 18

1. Renunciation need not be total;
2. The renunciation is in a nature of a dacion en pago;
3. Renunciation is a free act and the failure of a co-owner to contribute pro rata his share does not amount to a renunciation; and
4. Renunciation is not allowed when it is prejudicial to the co-ownership [e.g. co-owner having means cannot renounce his share to pay for expenses to repair a ruinous building].

Question 19

May one co-owner decide to make repairs upon the property?

Answer 19

Yes, but only repairs for preservation and he must notify his co-owners. If it is expenses for embellishment, it must be decided by a majority.

Art. 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 Art. 492.

Question 20

How are the main party walls, the roof and other things used in common, preserved?

Answer 20

In the absence of agreement, “The main party walls, the roof and 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.” (Art. 490)

Question 21

What shall be the obligation of each co-owner who live in different stories of a house belonging to different owners?

Answer 21

In the absence of an agreement, “Each owner shall bear the cost of maintaining the floor of his story; the floor of the entrance, the front door, common yard and sanitary works common to all shall be maintained at the expense of all the owners pro rata;” (Art. 490)

Question 22

Who shall maintain the stairs from the entrance to the first story?

Answer 22

In the absence of an agreement, “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.” (Art. 490)

Question 23

May the co-owners make alterations to the property on their own?

Answer 23

No. Art. 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 court may afford adequate relief.

Question 24

What is an alteration?

Answer 24

Alteration contemplates:

1. A change of the thing from the state or essence in which the others believe it should remain; or
2. withdrawal of the thing from the use to which they wish it to be intended; or
3. any other transformation which prejudices the condition or substance of the thing or its enjoyment by the others.

This includes subjecting the property to an encumbrance, servitude, registered lease, lease of property, mortgage, or pledge.

Question 25

What is the liability upon the owner who makes such alteration without the express or implied consent of the other co-owners?

Answer 25

As just punishment for his conduct he should:

1. lose what he has spent;
2. be obliged to demolish the improvements done; and
3. be liable to pay for losses and damages the community property or the other co-owners may have suffered.

Question 26

How shall acts of administration in co-owned properties be governed?

Answer 26

Art. 492. par. 1. For the administration and better enjoyment of the thing owned in common, the resolutions of the majority of the co-owners shall be binding.

Question 27

What constitutes a majority in resolving issues regarding acts of administration in co-owned properties?

Answer 27

Art. 492 par. 2. There shall be no majority unless the resolutions is approved y the co-owners who represent the controlling interest in the object of the co-ownership.

Question 28

What will happen if there is no majority, or the resolution of the majority is prejudicial to the co-owned property in cases of resolving issues regarding acts of administration?

Answer 28

Art. 492. par. 3. 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.

Question 29

What is an act of administration?

Answer 29

An act of administration contemplate acts or decisions for the common benefit of all the co-owners and not for the benefit of only one or some of them. It is distinguished from alteration in that while alteration is more or less permanent, acts of administration have transitory effects (not of long duration) and have for their purpose, the preservation, preparation and better enjoyment of the thing and which do not affect its essence, nature or substance.

Question 30

What are the rights of each co-owner?

Answer 30

Art. 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.

In summary:

1. Under Art. 493 - full ownership of the property, fruits and benefits; right to alienate and assign or mortgage his share; substitute another person;
2. Legal rights of redemption - co-owner may redeem shares of all the other co-owners or any of them when the shares are sold to a third person;
3. Renunciation of interest

Question 31

May co-owner demand partition of the thing owned in common?

Answer 31

Yes.

Art. 494. No co-owner shall be obliged in the co-ownership. Each co-owner may demand at any time at 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 of 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 as long as h expressly or impliedly recognizes the co-ownership.

Question 32

How is co-ownership terminated?

Answer 32

Co-ownership is terminated in different ways, as follows:

1. consolidation or merger in only one of the co-owners of all the interests of the others;
2. destruction or loss of the property co-owned
3. acquisitive prescription in favor of a third person or a co-owner who repudiates the co-ownership;
4. partition, judicial or extra-judicial
5. termination of the period agreed upon or indorsed by the donor or testator, or of the period allowed by law;
6. the sale by the co-owners of the thing to a third person and the distribution of its proceeds among them.

Question 33

What is partition?

Answer 33

Partition is the division between two or more persons of real or personal property which they own in common so that each may enjoy and possess his sole estate to the exclusion of and without interference from the others.

Question 34

When may demand for partition of co-owned property be not allowed?

Answer 34

Exceptions to the right to demand partition:

1. When the co-owners have agreed to keep the thing undivided for a certain period of time, not exceeding ten years;
2. When the partition is prohibited by the donor or testator for a certain period not exceeding twenty years;
3. When the partition is prohibited by law;
4. When partition would render the thing unserviceable for the use for which it is intended;
5. When another co-owner has possessed the property as exclusive owner and for a period sufficient to acquire it by prescription;
6. Art. 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 ay be terminated in accordance with Article 498;

Question 35

How may partition be made?

Answer 35

Art. 495. 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.

Note: Under Art. 1082 of the Civil Code, “every act which is intended to put an end to indivision among co-heirs and legatees or devisees is deemed to be a partition although it should purport to be a sale, an exchange, a compromise, or any other transaction.” (Sanchez v. CA)

Question 36

Must partition be made in a written instrument?

Answer 36

The Statue of Frauds does not apply to partition because it is not legally deemed a conveyance or a sale of property resulting in a change of ownership but simply a segregation and designation of the part of the property which belongs to each co-owners. Partition is therefore valid and enforceable although made orally where no third persons are involved.

Question 37

Do creditors or assignees have the right to take part in the division of a thing owned in common?

Answer 37

Yes. Art. 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.

Question 38

Art. 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 […].

Answer 38

Art. 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.

Question 39

Art. 499. The partition of a thing owned in common shall not prejudice […]. Personal rights pertaining to third persons against the co-ownership shall also remain in force, notwithstanding the partition.

Answer 39

Art. 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.

Question 40

Art. 500. Upon partition, there shall be a […] received and […] for expenses made. Likewise, each co-owner shall […].

Art. 501. Every co-owner shall, after partition, be […].

Answer 40

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

Art. 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.