Co-Ownership

Articles 484 -501

DEFINITION:
 The form of ownership when the ownership of an undivided thing or right
belongs to different persons. [NCC 484]
REQUISITES:
(1) Plurality of owners
(2) Object must be an undivided thing or right
(3) Each co-owner’s right must be limited only to his ideal or abstract
share of the physical whole
WHAT GOVERNS CO-OWNERSHIP:
(1) Contracts
(2) Special provisions
(3) Civil Code
 Co-Ownership
Articles 484 -501
 Co-ownership is the right of common dominion which 2 or more persons have in a
spiritual (a.k.a. ideal or aliquot) part of a thing which is not physically divided.
 In co-ownership, there is only 1 ownership, but ii is shared ownership.
 Each co-owner owns a fractional or an ideal part of the object but they cannot point to
a specific part of the object.
 Co-ownership is not encouraged since it is very unwieldy. It is very easy to have
disagreements between co-owners.
 A. Sources of Co-Ownership
1) By law - Law may mandate co-ownership (i.e., party wall)
2) By contract
3) By chance - Examples are commixtion or confusion
4) By occupation - In one case the SC said that the fishermen are co-owners of the
whale they caught.
5) By succession ( testamentary, intestate)
 CHARACTERRISTICS OF CO-OWNERSHIP
1) More than 1 owner
2) 1 physical unit or whole divided into ideal or fractional shares
3) Each fractional share is definite in amount but not physically segregated from
the rest
4) As to the physical unit, each co-owner must respect the other co-owners in its
common use, enjoyment and preservation (Article 483)
5) As to the aliquot share, each co-owner holds absolute control (Article 493)
6) No juridical personality of its own
Art. 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.
 A co-owners share in the fruits and expenses is always dependent on the co-
owners interest. Any agreement to the contrary is void.
 Although Art. 485 refers to contractual agreements, it should extend to other
sources of co-ownership since Art. 485 is an expression of public policy.
 Co-Ownership

Article 485 – The share of the co-owners, in the benefit as well as the
charges, shall be proportional to their respective interests. Any stipulation 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.
 THERE ARE IDEAL SHARES DEFINED BUT NOT PHYSICALLY IDENTIFIED [
NCC 485 ]
(1) The share of the co-owners, in the benefits as well as in the charges, shall be
proportional to their respective interests.
(2) Any stipulation in a contract to the contrary shall be void.
(3) The portions belonging to the co-owners in the co-ownership shall be
presumed equal, unless the contrary is proved
 Each co-owner has absolute control over his ideal share Every co-owner has
absolute ownership of his undivided interest in the co-owned property and is free to
alienate, assign or mortgage his interest except as to purely personal rights. While a
co-owner has the right to freely sell and dispose of his undivided interest,
nevertheless, as a co-owner, he cannot alienate the shares of his other co-owners –
nemo dat qui non habet. [Acabal v. Acabal]
 Co-Ownership
Mutual respect among co-owners with regard to use, enjoyment, and
preservation of the things as a whole
(1) The property or thing held pro-indiviso is impressed with a
fiduciary character: each co-owner becomes a trustee for the benefit of his
co-owners and he may not do any act prejudicial to the interest of his co-
owners.
(2) Until a judicial division is made, the respective part of each holder
cannot be determined. The effects of this would be:
(a) Each co-owner exercises, together with the others, joint
ownership over the pro indiviso property, in addition to his use and
enjoyment of the same
(b) Each co-owner may enjoy the whole property and use it.
 Only limitation: a co-owner cannot use or enjoy the property in a manner
that shall injure the interest of his other co-owners. [Pardell v. Bartolome]
 Co-Ownership
SOURCES OF CO-OWNERSHIP Law, contract, succession, testamentary
disposition or donation inter vivos, fortuitous event or chance, and by
occupancy
LAW
(1) Cohabitation: co-ownership between common law spouses
 The Family Code, in the following provisions, made the rules on
co-ownership apply
(a) Article 147: between a man and a woman capacitated to
marry each other
b) Article 148: between a man and a woman not capacitated
to marry each other
(c) Article 90: if the matter is not provided in the FC Chapter
on ACP, then rules on co-ownership will apply .
 Co-Ownership

(2) Purchase creating implied trust: co-ownership between persons

who agree to purchase property If two or more persons agree to purchase
property and by common consent the legal title is taken in the name of
one of them for the benefit of all, a trust is created by force of law in favor
of the others in proportion to the interest of each [NCC 1452]
(3) Easement of Party Wall: co-ownership of partowners of a party wall
(NCC 658)
(4) Condominium Law: co-ownership of the common areas by holders
of units Sec. 6, RA 4726. The Condominium Act. Unless otherwise
expressly provided in the enabling or master deed or the declaration of
restrictions, the incidents of a condominium grant are as follows:
(a) Unless otherwise, provided, the common areas are held in
common by the holders of units, in equal shares, one for each unit.
 Co-Ownership
CONTRACTS By Agreement of Two or More Persons
 Article 494, Civil Code. 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 coheir against his co-owners
or co-heirs so long as he expressly or impliedly recognizes the co-ownership.
(1) Two or more persons may agree to create a coownership
( 2) Note: there is a 10-year term limit for ownership by agreement; BUT:
Term may be extended by a new agreement
 Co-Ownership
SUCCESSION
Intestate succession: co-ownership between the heirs before partition of the
estate
 NCC 1078. Where there are two or more heirs, the whole estate of the
decedent is, before its partition, owned in common by such heirs, subject to
the payment of debts of the deceased.
 For as long as the estate is left undivided the heirs will be considered co-
owners of the inheritance.
 If one of the heirs dies, his heirs will in turn be coowners of the surviving
original heirs.
TESTAMENTARY DISPOSITION OR DONATION INTER VIVOS
(1) When a donation is made to several persons jointly, it is understood to
be in equal shares, and there shall be no right of accretion among them, unless
the donor has otherwise provided [NCC 753]
(2) A donor or testator may prohibit partition for a period which shall not
exceed 20 years.
 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.
NOTES:
 Co-owners must respect the rights of the other co-owners.
 In Pardell vs. Bartolome, 2 sisters owned a 2 story building. The first floor was by
rented out. The second floor was being occupied by 1 sister. The other sister was in
Spain. The SC said that the sister occupying the second floor need not pay rent. The
fact that she used the whole second floor is irrelevant. She did not prejudice the rights
of her sister in Spain precisely because she was in Spain. But with respect to the first
floor which was occupied by the husband of one of the sister‘s, the husband should
pay his sister-in-law ½ of the rent for such portion. Otherwise, his sister-in-law would be
prejudiced.
 As a co-owner, one can use all of the physical unit. For example, a co-owner uses the
entire car, not just a portion of the car. A co-owner does not have to pay rent for the
use of the thing co-owned.
 Art. 487. Any one of the co-owners may bring an action in
ejectment.
NOTES:
 Any one of the co-owners may bring an action in ejectment.
 A, B, C, D, and E are co-owners of a lot which is being squatted. A files an
ejectment suit. A wins. All the other co-owners benefit. Do the other co-owners
share in the expense? Yes, one can argue that it‘s a necessary expense.
 A, B, C, D, and E are co-owners of a lot which is being squatted. A files an
ejectment suit. A loses. May the other sue for ejectment? No, it is barred by
prior judgment.
 A,B, and C bought a book on credit. They are co-owners of a book. In an
action by the creditor against the co-owners, the creditor must sue all.
 Article 487 contemplates a situation when it is the co-owner who files the suit
not when they are the defendants.
 Article 487 is a case where 1 co-owner can bind the other. The other instance
is Article 489.
 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. 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.
 Expenses for the preservation of the thing owned in common as well as
taxes must be shouldered by every co-owner in proportion to their interest.
 A co-owner has 2 options:
1) Pay for the necessary expenses or taxes
2) Can forfeit so much of his share which is equivalent to his interest
to the co-owner who paid for the necessary expenses or taxes
 The co-owner who made the advance has a right of reimbursement. The
advancing co-owner only has the right to require payment. He may not
demand the share of the co-owner.
 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. 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.
 Expenses for the preservation of the thing owned in common as well as
taxes must be shouldered by every co-owner in proportion to their interest.
A co-owner has 2 options:
1) Pay for the necessary expenses or taxes
2) Can forfeit so much of his share which is equivalent to his interest
to the co-owner who paid for the necessary expenses or taxes
 The co-owner who made the advance has a right of reimbursement. The
advancing co-owner only has the right to require payment. He may not
demand the share of the co-owner.
 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 article 492.
 Repairs for preservation may be made at the will of 1 of the co-owners.
 As much as possible, notice should be given to the other co-owners. The
lack of notice only gives rise to the presumption that the repairs were not
necessary. However, this can be proven otherwise.
 Article 489 is a case where 1 co-owner can bind the other. The other
instance is Article 487.
 Useful or ornamental expenses need a majority. Majority is computed not
by counting heads but by majority of the controlling interest in the co-
ownership.
 Art. 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.
•
 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 courts may afford
adequate relief.
NOTES:
 In order to make alterations, the consent of all co-owners is needed.
 An alteration is an act of strict ownership (i.e. any act of
encumbrance) or one which involves a change in the use of the thing
(i.e. bought Tamarax FX to carpool and then decide to rent it out).
 However, if the withholding of the consent by 1 or more of the creditors is
clearly prejudicial to the common interest, the court may intervene and
afford adequate relief.
 Art. 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 coownership.
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.
 Acts of administration need a majority. Majority is computed not by counting
heads but by majority of the controlling interest in the co-ownership.
 An example of an act of administration is replacing the tires of a car owned in
common with another brand of tires.
 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 coownership.
 Article 493 is the rule regarding fractional interest.
 The partner provision of Article 493 is Article 486.
 Article 493 provides that 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.
 Article 486 provides that 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.
 A co-owner may lease his fractional or ideal share.
 A co-owner may not dispose of the entire property owned in common. If he does so,
the transaction is valid in so far as his ideal share is concern.
 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.
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 coownership.
GENERAL RULE:
Partition is demandable by any of the co-owners as a matter of right at any
time. If the other co-owners do not consent, then go to court.
EXCEPTIONS:
a) When there is an agreement to keep the thing undivided
b) When prohibited by the donor or testator
c) When prohibited by law
Exception to the exception: When compelling reasons it must be partitioned
(i.e., Article 159, Family Code)
d) When partition renders the thing unserviceable
NOTES:
 The maximum period for such an agreement is 10 years.
 The agreement can be extended. Such an extension must not go beyond 10 years.
There is no limit as to the number of extensions.
 The less radical view would say that it is valid for only 10 years.
NOTES:
 The prohibition by the donor or testator cannot exceed 20 years.
 What if donor states that the prohibition is for 30 years, is the prohibition
totally void or it is good for only 20 years? The less radical view would say
that it is valid for only 20 years.
 Even though the testator or donor prohibits partition, the co-ownership
shall terminate when:
a) Any of the causes for which partnership (co-ownership) is
dissolved takes place; or
b) The court finds compelling reasons that division should be ordered
upon petition of one of the co-heirs
 Under Article 498, when 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 the its proceeds be distributed.