Co-ownership Notes PDF

7/18/2019 Co-ownership Notes PDF

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CO-OWNERSHIP

That form of ownership which exists whenever an undivided thing or right belongs to

different persons (Art. 484).

- By the nature of co-ownership, a co-owner cannot point to any specific portion of the

property owned in common as his own because his share in it remains intangible and

ideal (Avila et al. vs. Sps. Baabat G.R. No. 141993, May 17, 2006).

- The possession of a co-owner is like that of a trustee and shall not be regarded as

adverse to the other co-owner but in fact beneficial to all of them (Salvador vs. CA. G.R.

No. 109910, April 5, 1995)

REQUISITES:

1. 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

CHARACTERISTICS:

1. Plurality of subjects/owners

2. There is a single object which is not materially divided

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

6.

It is governed first of all by the contract of the parties; otherwise, by special legalprovisions; and in default of such provisions , by the provisions of Title III on co-

ownership

SOURCES:

1. Contract

2. Chance

3. Law

4. Occupation

5.

Succession6. Testamentary disposition or Donation inter vivos

Co-ownership vs. Partnership (Bar Question)

Co-ownership Partnership

Creation Can be created without the

formalities of a contract.

Can be created only by contract ,

express or implied.

Personality Has no juridical or legal personality. Has juridical personality distinct

from the partners.

Purpose Purpose is collective enjoyment of

the thing.

Purpose is to obtain profits.

Disposal of Share Co-owner can dispose of his shares

without the consent of the others

with the transferee automatically

becoming a co-owner.

A partner, unless authorized,

cannot dispose of his share and

substitute another as a partner in

his place.*

Mutual Agency There is no mutual representation. A partner can generally bind the

partnership



Distribution of

Profits

Distribution of profits must be

proportional to the respective

interests of the co-owners.

Distribution of profits is subject to

the stipulation of the parties

Effect of Death or

Incapacity

A co-ownership is not dissolved by

the death or incapacity of a co-owner

Death or incapacity dissolves the

partnership

Formal Requisites No public instrument is needed evenif the real property is the object of the

co-ownership

May be made in any form exceptwhen real property is contributed

Agreement as to

Period

An agreement to keep the thing

undivided for a period of more than

10 years is void

There may be agreement as to a

definite term without limit set by

law

Co-ownership Joint Ownership

Extent of ownership Each co-owner owns his idealshare in the whole property

Each joint-tenant and all ofthem own the whole property

Right to dispose share Each co-owner may dispose of

his ideal share without

consent of the others

Each joint-tenant cannot

dispose of his own share

without the consent of all the

others

Effect of Death In case of death, the share of

the co-owner descends to his

estate

In case of death, the share of

the joint-tenant goes or

accrues to the other joint-

tenants

Prescription Prescription runs against allco-owners, even if one of

them happens to be a minor

Prescription does not runagainst all the joint-tenants, if

one of them is a minor or is

under legal disability

RULES:

A. Rights of each co-owner as to the thing owned in common:

1. To use the thing owned in common (Art. 486)

Limitations:

a. Use according to the purpose for which it was intended

Note: mere tolerance on the part of co-owners cannot legalize the change in the

use of a thing from that intended by the parties.

b. Interest of the co-ownership must not be prejudiced

c. Other co-owners must not be prevented from using it according to their own

rights

2. To share in the benefits and charges in proportion to the interest of each. (Art. 485)

o

Any stipulation to the contrary is void because it is contrary to the essence of co-

ownership)

o Note: If a co-owner has paid the taxes to prevent forfeiture of the common

property for tax delinquency, he could compel contribution from his co-owners.

3. To the benefits of prescription: prescription by one co-owner benefits all.



4. Repairs and taxes: to compel the others to share in the expenses of preservation even

if incurred without prior notice.

o The co-owner being compelled may exempt himself from the payment taxes and

expenses by renouncing his share equivalent to such taxes and expenses (Art.

488). The value of the property at the time of the renunciation will be the basis ofthe portion to be renounced.

o Repairs for the preservation may be made at will of one of the co-owners, but he

must, if practicable, first notify his co-owners of the necessity for such repairs

(Art. 489).

Rules on renunciation:

a. If the renunciation is in favor of the CREDITOR who has not yet been paid, said

creditor must give consent. This is a case of dacion en pago.

b. If the renunciation is made in favor of the CO-OWNER/S, a novation (in the form

of substitution of debtor) would result. Thus, consent of said other co-owner/sAND of the creditor is required.

Note: Renunciation is NOT allowed if the co-ownership will be prejudiced, as in the case of a

house which is badly in need of repair in order to prevent a collapse, in which case the other co-

owner may proceed to have it repaired, and the co-owner who has made a previous

renunciation would still be liable.

- BUT, he must, if practicable, first notify his co-owners of the necessity of such repairs.

5. To oppose alterations made without the consent of all, even if beneficial (Art. 491).

Alteration is an act by virtue of which a co-owner changes the thing from the state in

which the others believe it should remain or withdraws if from the use to which they

desire it to be intended. It is not limited to material or physical changes.

o The co-owner who makes alteration without the express or implied consent of

the other co-owners acts in bad faith because he does so as if he were the sole

owner. As just punishment for his conduct, he should lose what he has spent; be

obliged to demolish the improvements done and be liable to pay for losses and

damages the community property of the other co-owners may have suffered.

BUT whatever benefits the co-ownership derives will belong to it. (3 Manresa468-472)

6. To protect against seriously prejudicial decisions of the majority

7. Legal redemption: to be exercised within 30 days from written notice of sale of an

undivided share of another co-owner to a stranger

8. To defend the co-ownership’s interest in court

o

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

9. To demand partition at any time

General Rule: Petition is demandable by any of the co-owners as a matter of right at

any time (Art. 494).



Exceptions:

a. When there is a stipulation against it; but not to exceed 10 years (Art. 494).

b. When the condition of indivision is imposed by the donor but not to exceed 20

years (Art. 494).

c.

When the legal nature of the community prevents partition.d. When partition would render the thing unserviceable (Art. 495)

e. When partition is prohibited by law (Art. 494).

f. When another co-owner had possessed the property as exclusive owner for a

period sufficient to acquire it by prescription.

PERPENDICULAR OWNERSHIP (Art. 490)

One where the different stories of a building belong to different persons, as distinguished

from an ordinary case of co-ownership where all the floors and everything else belong to all co-owner.

- The above form of ownership is different from condominium

- A horizontal co-ownership is one where various units are in one plane as when one-

story units all set on the ground.

Rules in the ABSENCE of contrary provision in the titles of ownership or agreement.

1. Proportionate contribution is required for the preservation of:

- The main walls;

- The party walls;

-

The roofs; and

- Other things used in common

2. Each floor owner must bear the expenses of his floor.

3. Stairs are to be maintained from story to story by the users.

Note: Ground floor, if any, is distinguished from the first story.

B. The following questions are governed by the majority of interests:

1. Management

Acts of Management (Castan)

a. Those that do not involve an alteration

b. Are renewable from time to time

c. Do not bind the community for a long time in the future

d. Do not give rise to a real right over the thing owned in common (Reyes-Puno, p.

73).

-Minority may appeal to the court against the majority’s decision if the same is

seriously prejudicial.2. Enjoyment

3. Improvement or embellishment

Majority – consists of co-owners who represent the controlling interest in the object of the co-

ownership



Limitations:

1. Before a decision is made, there should first be a notice to the minority so that they can

be heard

2. The majority would be justified in proceeding only when the urgency of the case and the

difficulty of meeting weith them render impracticable the giving of such notice3. Minority may appeal to the court when

o there is no real majority

o decision is prejudicial to individual rights of co-owners

o there is fraud

o alteration is agreed upon

Actions requiring the consent of Co-Owners

Actions Consent Needed

Repairs, ejectment actions One (Art. 489)Alterations or Acts of Ownership All (Art. 491)

All others (e.g. useful improvements,

embellishments, administration and better

enjoyment

Financial majority (Arts. 489 & 492)

C. Rights as to the ideal share of each co-owner (Art. 493)

1. Each has full ownership of his part and of his share of the fruits and benefits.

2.

Right to substitute another person in its enjoyment, EXCEPT when personal rightsare involved or for the purpose of giving the thing a different use from that agreed

upon.

Personal rights – used in its real meaning and not in its legal or technical sense; it is

the right which cannot be transferred because it affects the personal relations of the

co-owners with one another.

3. Right to alienate, dispose or encumber. (only your share)

This right is without prejudice to the exercise by the others of the right of legal

redemption under Art. 1620.

Sale or Mortgage of Common Property

a. Undivided portion – transferee does not acquire any specific or determinate

physical portion of property

b. Definite portion – valid; subject to the interest of the vendor

c. Whole property – valid only insofar as the co-owner’s share is concerned unless

the sale is authorized by the other co-owners

4. Right to renounce part of his interest to reimburse necessary expenses incurred by

another co-owner

5. Transactions entered into by each co-owner only affect his ideal share.

o When a co-owner sells the whole property as his, the sale affects only the seller’s

share pro indiviso (in an undivided state) and the transferee gets only what

corresponds to his grantor’s share in the partition of the property owned in



common. Since a co-owner is entitled to sell his undivided share, a sale of the

entire property by one co-owner without the consent of the other co-owners is

not void; only the rights of the co-owner/seller are transferred, thereby making

the buyer a co-owner of the property (Oesmer vs. Paraiso Dev’t. Corp., G.R. No.

157493, February 5, 2007)

o In such cases, the remedy is to ask for partition , not to ask for the nullity of the

sale. (Aguirre, et al. vs. CA et al. G.R. No. 122249, January 29, 2004)

Right of a co-owner to demand partition (Art. 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. *

Reason: to remain in the co-ownership is to subject a person to the desires of the rest; conflicts in

management being bound to rise.

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 (Avila vs. Sps. Barabat. G.R. No. 141993, March 17, 2006)

- An action for partition is at once an action for declaration of co-ownership and for

segregation and conveyance of a determinate portion of the properties involved (Balo

vs. CA. G.R. No. 129704)

- The policy of the law is not to favor co-ownership because it is not conducive to the

development of the community property particularly where it involves real estate.

- The thing itself may be physically divided or if not, its value may be partitioned. (7

Manresa 585)

- Partition is governed primarily by the Civil Code and suppletorily by the pertinent

provisions of the Rules of Court (Rule 69)

General Rule: Under Art. 494, prescription does not run in favour of or against a co-owner or

co-heir.

Reason: Possession of the co-owner or co-heir is ordinarily not adverse to the others, but, in fact, beneficial to all of them. The possession of a co-owner is similar to that of a trustee.

Exception: Where a co-owner or co-heir repudiates the co-ownership or co-heirship,

prescription begins to run from the time of repudiation, subject to the concurrence of the

following conditions:

1. The co-owner has performed unequivocal acts of repudiation amounting to an ouster of

the other co-owners;

2. Such positive acts of repudiation have been made known to the other co-owners;

3.

The evidence thereof is clear and convincing; and4. His possession is open, continuous, exclusive, and notorious (Robles vs. CA. G.R. No.

123509, March 14, 2000)

A co-owner cannot, without the conformity of the other co-owners or a judicial decree

pursuant to Rule 69 of the Rules of Court, adjudicate to himself in fee simple a



determinate portion of the lot owned in common, to the exclusion of the other co-

owners. (Del Blanco vs. IAC. G.R. No. L-66520, L-66520, August 30, 1988)

An agreement of partition, though ORAL, is valid and consequently binding upon the

parties. (Caro vs. CA. G.R. No. L-46001, March 25, 1982)

Mere receiving of rents or profits, payment of taxes, or construction of a fence or

building would not be sufficient proof of exclusive or adverse possession because

anyone in the co-ownership may do it. (Laguna vs. Levantino. G.R. No. L-47386, April

18, 1941)

The act of executing the affidavit of self-adjudication did not constitute sufficient act of

repudiation. In fact, there was bad faith of the co-heir in feigning sole ownership of the

property to the exclusion of the other co-heirs. (Galvez vs. CA. G.R. No. 157954, March

24, 2006).

While it is true that registration under the Torrens System is constructive notice of title,

the Torrens title does not furnish a shield for fraud. Thus, where one registered the

property in question in his name in fraud of his co-heirs, prescription can only be

deemed to have commenced from the time that the latter discovers the fraudulent act

(Adille vs. CA. G.R. No. L-46484, January 29, 1988).

Under the law, anyone of the co-owners may bring an action for ejectment (Art. 487).

This can be done without joining all other co-owners because the suit is presumed to

have been filed for the benefit of his co-owners. But if the suit is for the benefit of the

plaintiff alone who claims to be the sole owner and entitled to the possession of the

litigated property, the action should be dismissed and it will not prosper especially so

that there is evidence of co-ownership of the property, and there is no showing that they

waived their rights (Baloloy vs. Hular. G.R. No. 159723, September 9, 2004).

Redemption of the whole property by the co-owner does not vest in him sole ownership

over the said property. Redemption duly made within the period prescribed by law

inures to the benefit of the co-ownership and does not put an end to its existence

(Mariano vs. CA. G.R. No. 101522, May 28, 1993).

Rights/Participation of creditors and assignees of the co-owners in the partition (Art. 497)

1. Scope of creditors or assignees

o Creditors include all kinds of creditors provided they becase so during the

existence of the co-ownership

o Assignees are transferees of interests of one or more of the co-owners

2. Right of notice of partition

o While the law does not expressly require previous notice of the proposed

partition be given to the creditors and assignees, since they are granted the right

to participate, they have also the right to be notified thereof, such that in the

absence of such notice, the partition will not be binding on them. (De Santos vs.BPI. 58 Phil. 784 [1933])

3. Right to object to or impugn

o If not notice is given, the creditors or assignees may question the partition

already made

HOWEVER, they cannot impugn any partition already executed, unless:



1. There has been FRAUD; or

2. The partition was made notwithstanding a formal opposition presented to prevent it.

Note: The debtor or assignor has always the right to maintain its validity of the partition.

Partition in case co-owners cannot agree/ Legal Partition (Art. 498)

Whenever the thing is essentially indivisible and the owners cannot agree:

- Firstly, the property may be allotted to one of the co-owners, who shall indemnify the

other;

- Otherwise, it shall be sold and the proceeds distributed.

Protection on the rights of third persons (Art. 499)

-

The partition of a thing owned in common shall not prejudice third persons, who shallretain the rights of mortgage, servitude or any other real rights belonging to them before

the division was made.

- Personal rights pertaining to them against the co-ownership shall also remain in force,

notwithstanding the partition.

EFFECTS OF PARTITION (Arts. 500 and 501)

a. Mutual accounting for the benefits received;

b. Mutual reimbursements for expenses (i.e., necessary expenses, taxes, and others

in proper cases);

c. Indemnity for damages caused in case of negligence or fraud;

d.

Reciprocal warranty for defects of title or quality of the portion assigned to a co-

owner.

EXTINGUISHMENT OF CO-OWNERSHIP

1. Consolidation or merger in one co-owner

2. Acquisitive prescription in favour of a third person or a co-owner who repudiates the

co-ownership

3. Loss or destruction of property co-owned

4. Sale of property co-owned

5. Termination of period agreed upon by the co-owners

6.

Expropriation7. Judicial or extra-judicial partition

Causes of Termination of Co-ownership

1. By consolidation or merger in only one of the co-owners of all the interests of the others

2. By the destruction or loss of the property owned

3. By acquisitive prescription in favour of a third person or a co-owner who repudiates the

co-ownership

4. By the partition, judicial or extrajudicial, of the respective undivided shares of the co-

owners

5.

By the termination of the period agreed upon or imposed by the donor or testator, or ofthe period allowed by law

6. By the sale by the co-owners of the thing to a third person and the distribution of its

proceeds among them.

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