CO-OWNERSHIP

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.

ALTERATION – is a change
a. which is more or less permanent;
b. which changes the use of the thing and,
c. which prejudices the condition of the thing or its enjoyment by the others
d. it is an act of ownership

Examples of Alterations:

1. Is the Sale, Donation, Mortgage etc., of the Whole Property Valid?

If entire property is sold without consent of some co-owners, sale would not be valid
except with respect to the share of the co-owner seller. (Mindanao Academy v.
Ildefonso Yap, L-17681-82, Feb. 26, 1965).

2. Is the Sale, Donation, Mortgage, etc. of a specific part of the property co-owned valid?

This sale is not void; however it is subject to result of subsequent partition by co-
owners. (Lopez v. Cuaycong, 74 Phil. 601)

3. Voluntary Easement
4. Lease of Real Property if – real rights
a.) the lease is recorded or registered
b.) or the lease is for more than 1-year

5. Construction of a house on a lot owned in common

6. Other act of strict dominion or ownership, where the encumbrance or disposition is
deemed an act of alteration (Gala v. Rodriguez, 70 Phil. 124)

7. Contracts of long duration (Melencio v. Dy Tiaco, 55 Phil. 99)

ILLUSTRATIVE CASES OF ALTERATION:

1.) If a co-owner converts an agricultural land to a memorial park without knowledge

and consent of the other two co-owners, does this constitute an alteration? What is
the vote required in this case?

If a co-owner converts an agricultural land to a memorial park without knowledge

and consent of the other two co-owners, this constitutes an alteration, which by law

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 requires unanimity of all co-owners, unless a judicial order to the contrary is
obtained (Art. 491).

2.) If a spouse inherits property from her husband together with her children, can she
mortgage alone in her name the entire property to the bank?

Conjugal property which is inherited by the surviving spouse and the children is co-
owned. Therefore, the surviving spouse cannot mortgage alone the property. This
is an act of alteration which requires unanimous consent by the co-heirs. (PNB v.
CA, L-34404, June 25, 1980)

3. When is an Alteration considered as illegal?

Alteration considered as illegal when made without the express or implied consent
of the other co-owners.

4. What are the Effects of an Illegal Alteration?

They are as follows:
a.) The co-owner responsible may lose what he had spent
b.) Demolition can be compelled (in case of illegal construction)
c.) He would be liable for loses and damages
d.) But whatever benefits the co-ownership derives will belong to it
e.) In case a house is constructed on common lot, all the co-owners will be
entitled to a proportionate share of the rent.

o It is wrong to give all to the person who made the alteration and just let her
pay rent on the land. (Singson et al., v. Veloso et al 52 OG 370).

Exercise:
FACTS: X & Y inherited 20,000 shares of BPI stocks from their aunt who died and bestowed to her 2 nieces
X (60%) & Y (40%) of P10,000 shares of BPI on May 2. Y sold the 10,000 BPI stocks on July 20 when
its price rose to P95 without the knowledge and consent of X. Then on July 30, Y bought 10,000
stocks when the price dipped to P90, to replace the 10,000 BPI stocks she sold earlier.

Q. Did Y commit an alteration? Why?

o Yes. The act of Y in selling the stocks which include the 60% share of X, is an act of ownership which
requires the authority of her co-owner X.

Q. Will Y enjoy alone the profit of P50,000 she made from trading the BPI stocks on her own including X’s
6,000 shares (selling on 7/20 for P95 and buying back 7/30 for P90 the 10,000 BPI shares)?

 No. Y will have to share to X the profit or benefit made in proportion to their interests, i.e. P30,000
for X, and P20,000 for Y. (Art. 485 – proportional sharing in the benefits and charges)

Q. What about if on July 27, to prevent X from finding out her unauthorized sale, Y bought back the BPI
shares, but it now rose to P100 per share, or a loss of P5/share. Will the loss of P50,000 be shared by
the co-owners X and Y too?

 No. Y alone will suffer the loss of P50,000 in view of her illegal alteration – selling the stocks of X
without her consent.

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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 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 provisions shall apply only
to the part owned in common.

Majority = controlling interest = Financial majority

Acts of Administration or Management: All requisites listed below must Concur

a.) Those that do not involve alteration

b.) Those, which even if called an alteration, do not affect the substance or nature of
the thing
c.) Those that may be renewed from time to time
d.) Those that have transitory effects, that is, do not bind the co-ownership for a long
time in the future
e.) Those that do not give rise to a real right over the thing owned in common
f.) Those for the common benefit of all the co-owners and not only for one or some of
them.

Examples of Acts of Administration:

1.) Lease of one year or Less, of real property provided it is not registered.
2.) Appointment of manager or administrator or agent of the co-ownership
3.) Hiring of contractor to repair the property owned in common

Q. What are the Limitations to the Rights of Financial Majority?

1. Notice should first be made to the minority so that they can be heard.

2. Majority is justified to proceed only when the urgency of the case and the difficulty
of meeting with them render impracticable the giving of such notice.

3. The MINORITY may appeal to the court against the decision of the majority when,
for example –

a.) There is no real majority

b.) The resolution is seriously prejudicial to the rights of an individual co-owner

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 c.) When the majority refuses to correct abuse of administration or
maladministration
d.) When the minority is made the victim of fraud
e.) When an alteration instead of mere act of administration is agreed upon. In this
case,the court ma y even appoint an administrator.

Examples of Acts Seriously Prejudicial to Those Interested in Property of Co-

Ownership:

a.) When loans are made without sufficient security

b.) When an encumbrance or disposition is made since this would be an alteration
c.) When an abusive or inefficient administrator is not replaced.

Art. 493. Each co-owner shall have the full ownership of his part and 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.

This article deals only with the right to the IDEAL or abstract share of each co-owner.

Rules Regarding the Ideal Share of a Co-owner:

1. Each co-owner has full ownership of his part, and of his share of the fruits and
benefits.

2. A co-owner may alienate, assign or mortgage his ideal share (not one with
boundaries), but limited by the following:

a.) Other co-owners my redeem the share sold;

b.) A co-owner cannot sell his share to a stranger if it would result to a change in the
use of the common property resulting to prejudice and jeopardy of the interest of the
other co-owners;

c.) A co-owner may lease or even substitute another person in its enjoyment, except
when personal rights are involved.

3. He may exempt himself from necessary expenses and taxes by renouncing part of his
interest in the co-ownership.

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 SUMMARY OF SC RULINGS RE ART. 493

Issue: Whether or not a Co-owner can validly sell a specific or definite portion of the
property co-owned.

 No individual co-owner can claim title to any definite portion of the land or thing owned
in common until the partition thereof. Prior to that time, all that the co-owner has is an
ideal, or abstract, quota or proportionate share in the entire thing owned in common by
all the co-owners. (Diversified Credit Corp. v. Rosado et al, L-27933, Dec. 24, 1968).

 While a co-owner has the right to freely sell and dispose of his undivided interest, he
has no right to sell a divided part of the real estate owned in common. A co-owner may
not convey a physical portion of the land owned in common. (Lopez vs. Ilustre, 5 Phil.
567,)

 A co-owner may not even adjudicate to himself any determinate portion of land owned
in common. (Santos vs. Buenconsejo, L-20136, June 23, 1965)

 "If he is the owner of an undivided half of a tract of land, he has the right to sell and
convey an undivided half, but he has no right to divide the lot into two parts, and
convey the whole of one part by metes and bounds." (Mercado vs. Liwanag, L-14429,
June 20, 1962)

SUPREME COURT RULINGS related to ART. 493 :

1. Can an heir alienate, assign or mortgage or even substitute another person in the
enjoyment of his share in the property owned in common?

Q. What is its effect or limitation? Any exception, if any?

Yes, heirs as co-owners shall each have full ownership of his part and the fruits and
benefits pertaining to it. The co-owners, being owners of their respective aliquots or
undivided shares in the subject property, can validly and legally dispose of their shares
even without the consent of all other co-heirs. He can alienate, assign or mortgage it,
and even substitute another person in its enjoyment.

But the effect of the alienation or mortgage, with respect to the co-owners is limited
to the portion which may be allotted to him in the division upon termination of the co-
ownership. (Cabrera v. CA, GR 108547, Feb. 3, 1997; Calma v. Santos, 590 SCRA
359)

Exception - when personal rights are involved, substitution by a third party to enjoy
the co-owned property with the other co-owners may not be allowed. (Art. 493)

2. If one of the co-owners sells the entire property without the consent of the others, is
the sale deemed null and void?

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 others is not null and void. Even if a co-owner

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 sells the whole property as his, the sale will affect only his share, but not those of the
other co-owners who did not consent to the sale. (Paulmitan v. CA, 215 SCRA, 1992)
There being co-ownership of the ambergris caught by 22 fishermen who agreed not to
sell unless there is unanimous consent, the lone seller could not be allowed to sell all.
If he does, the sale is valid only with respect to his share (1/22). (Punzalan et al., v.
Boon Liat, et al., 44 Phil. 320)

3. A co-owner sold his share in the land co-owned. Thereafter, a partition of the
property was made by the co-owners. A co-owner later demands for the redemption of the
share of a co-owner who sold his share. Is this allowed?

Redemption of the share of a co-owner cannot be effected if there has been already a
partition of the property formerly owned in common. This is so even if the share had
been sold while the co-ownership was still existing. (Caro v. CA, L-46001, March 25,
1982).

4. If a co-owner sells his share to a stranger, and thereafter, the co-owners decided to
partition the property co-owned, who will participate in the partition?

If a co-owner sells his share to a stranger, it is the stranger who should participate in
the partition, and not the original co-owner, since the vendee has ceased to have an
interest in the co-ownership. (Lopez v. Ilustre, 5 Phil.567)

5. Is attachment of the share of a co-owner by a creditor in a suit legally allowed or

proper even if no liquidation or inventory of the property co-owned?

Attachment of the share of a co-owner by a creditor in a suit is proper even if no

liquidation or inventory or share participation had been made yet (Codag v. Trinamos,
40 OG)

6. If one of 4 heirs, sold the entire land owned in common, can the other 3 heirs
demand annulment insofar as their respective shares (3/4)?

In a case where one heir sold the entire land owned in common, the other 3 brothers-
heirs can demand annulment only insofar as their respective shares (3/4), excluding
that of the heir-seller who is deemed to have disposed his share (1/4) validly, even
without the consent of his co-heirs (Mainit v. Bandoy, 14 Phil. 730)

7. Three co-owners of land agreed that they would register their land under the
Torrens system, in the name of one co-owner who would act as trustee for the other two
co-owners/beneficiaries. But later, the trustee sold the same to an innocent buyer for
value. Can the other two co-owners sue the buyer in good faith for annulment of his
transfer certificate title?

An innocent buyer for value of land covered by a Torrens title without the knowledge of
the existence of co-ownership, or that the named owner in the title is a trustee of the
other co-owners is protected by the land registration law. The other co-owners cannot
now sue the buyer in good faith for annulment of his transfer certificate title. The
remedy open to the co-owners would be to demand indemnification from the
Assurance Fund under the Land Registration Law or from the Trustee/co-owner. (Govt.
v. Abalosa, 56 Phil. 504)
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 8. There are 2 co-owners of land, Basilia and Ramon. Without the consent of Basilia,
Ramon sold his undivided ½ share on the land to Pio. Thereafter, a Transfer Certificate
Title is issued in the name of Pio and Basilia pro-indiviso. Is Art. 493 violated?

Selling by one of the co-owners (Ramon Mercado) his undivided share (1/2) of the land
without defining the boundaries and the same being reflected in the Transfer
Certificate of Title issued now in the name of the buyer (Pio Liwanag) and the other co-
owner (Basilia Mercado), is allowed. Art. 493 has not been violated. (Ramon Mercado
et al. v. Pio Liwanag, L-14429, June 30, 1962)

9. What is the legal effect or consequence if there has been no partition of the
property owned in common, but a co-owner who sells his share, points out to his buyer the
boundaries of the part he was selling, and the other co-owners made no objection despite
their knowledge of the same?

If there has been no partition of the property owned in common, but a co-owner who
sells points out to his buyer the boundaries of the part he was selling, and the other co-
owners make no objection, there is in effect already of a partial partition, and the sale
of the definite portion can no longer be assailed. (Pamplona v. Moreto, L-33187, Mar.
31, 1980)

10. Luz co-owns a parcel of land with 12 other persons. On the same co-owned land,
Luz and her husband built a house. Later, the 12 other co-owners and Luz, sold the co-
owned land to Diversified Credit Construction. DCC then demanded delivery of the land.
But Felipe and Luz refused to vacate the land. They argued that under Art. 158 of the Civil
Code, the use of conjugal funds to construct a house, converted the 1/13 part of the land
(paraphernal property and share of Luz) into conjugal property. Thus, when Luz sold her
share in the land without the husband Felipe’s consent, the same is void.

o Since the share of the wife, Luz Jayme, was at no time physically determined, it cannot be
validly claimed that the house constructed by her husband was built on land belonging to
her, and Article 158 of the Civil Code can not apply.

o Certainly, on her 1/13 ideal or abstract undivided share, no house could be erected.
Necessarily, the claim of conversion of the wife's share from paraphernal to conjugal in
character as a result of the construction must be rejected for lack of factual or legal basis.

o It is a basic principle of co-ownership that no individual co-owner can claim title to any
definite portion of the property owned in common until partition thereof. All that a co-
owner has is an ideal or abstract proportionate share in the entire thing owned in common
by all co-owners.

o Consequently, spouses Rosado must vacate the land without reimbursement, since Felipe
knew that the land occupied by the house did not belong exclusively to his wife, but to the
other owners as well, and there is no proof on record that the house occupied only 1/13 of
the total area. The construction was not done in good faith.

o Read: Diversified Credit Corp. v. Rosado et al, L-27933, Dec. 24, 1968

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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 co-
ownership.

Q. When can a co-owner demand partition of the thing owned in common?

GEN. RULE: Each co-owner has a right to demand at any time the partition of the thing
owned in common, insofar as his share is concerned.

Q. What are the Reasons WHY partition is ALLOWED AT ANY TIME?

 To remain in co-ownership would be to subject a person to the will/desires of the
rest.
 Conflict of management is bound to arise; the law discourages co-ownership

EXCEPTION: A Co-owner May Not Demand Partition of the thing co-owned in the
following cases:

A. If by Agreement of co-owners partition is prohibited. (Art. 494, par. 2)

 Maximum period of agreement allowed is 10 years.

 Agreement’s term may be extended, but only after expiration of the original
period, so as not to defeat intention of law to limit period to 10 years only.

 But there is no limit to number of extensions or renewal of agreement.

 Q. If co-owners agree for term of non-partition for say, 15 yrs., is the

prohibition to partition totally void?

A. The less radical resolution is to make the prohibition valid up to 10 years

only; and what is beyond it is void.

 Partition may either be by agreement of the parties, or as a result of a

judicial proceeding.

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 B. When Partition is Prohibited by Donor or Testator (Art. 494, par. 3)
 Prohibition by donor/testator to divide the thing must not to exceed 20 yrs.
 If donor/testator provides for 50 yrs. prohibition of partition, does this make
the prohibition totally void?

A. The less radical resolution of the issue is to allow as valid the prohibition
up to maximum of 20 years only under Art. 494, par.3. This is to respect
and give effect to the spirit and intent of the donor/testator who gave the
property to the donee or heir.

 Even if donor/testator prohibits partition, co-ownership may also terminate

when:

a.) Any of the causes for which co-ownership is dissolved takes place (e.g.
consolidation of property in 1 owner; loss of property co-owned; prescription);
or --
b.) The court finds compelling reasons upon petition by any of the heirs, to
order division of the property co-owned.

C. When the Partition is Prohibited by Law. (Art. 494, par. 4)

Example: in case of conjugal partnership
Exception to exception: If for compelling reasons it must be partitioned. (e.g. in
case of legal separation or annulment of marriage)

D. When Physical Partition Renders the Property Unserviceable.

 Art. 498 will be applied -
 In this case, the property if indivisible, may be allotted to one of the co-owners,
who shall indemnify the others. If they cannot agree to allotment to one co-
owner, it will be sold and the proceeds distributed.

E. When the Legal Nature of the common property Does Not Allow Partition
(Example: party walls, roof shared in common)

Par. 5 - No Prescription Shall Run Between Co-Owners or Co-Heirs

GEN. RULE: A co-owner cannot acquire by prescription the whole property co-owned as
against the other co-owners.
EXCEPTION: When a co-owner repudiates the co-ownership, with knowledge of the
other co-owners, in the concept of owner, open, peaceful, public and
adverse possession within the period required by law.

 Period of prescription starts to run from repudiation of co-ownership.

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NOTE SC RULINGS re - par. 5, Art. 494:

1.) Juan v. Zuniga, L-17044, Apr. 28, 1962 – In a constructive trust prescription does
not run. Here one heir in a co-heirship, deprives thru fraud other co-heirs of their shares.

2.) Alzona et. V. Capunitan, et al., L-10228, Feb. 28, 1962; JM Tuason and Co.,
Magdangal, L-15539, Jan. 30, 1962 –

A constructive or implied trust can Prescribe.

Furthermore, and by the same token, the defendants-appellees being third persons, and
having repudiated the trust and expressed claim of ownership over litigated properties, by
themselves and by their predecessors-in-interest, they have also acquired the said
properties by the law of prescription. (Tolentino vs. Vitug, 39 Phil. 126; Government of the
Philippines vs. Abadilla, 46 Phil. 642).

Justice Paras opinion: Better rule is that - A constructive or implied trust can prescribe,
while an express trust cannot prescribe, as long as in the latter case, the relations
between the trustor and trustee is recognized.

 Heirs of Tranquilino Labiste v. Heirs of Jose Labiste, 587 SCRA 417

o For acquisitive prescription to bar the action of the beneficiary against the trustee in an
express trust for the recovery of the property held in trust, it must be shown that:
o (a) trustee has performed unequivocal acts of repudiation amounting to ouster of cestui
qui trust;
o (b) such acts of repudiation have been made known to the cestui qui trust;
o (c) evidence thereon is clear and conclusive.

What are the different WAYS A CO-OWNERSHIP MAY BE TERMINATED?

1. Partition
2. Consolidation of the common property in one owner
3. Destruction or Loss of the Property Owned
4. Prescription

Also read the case of : Mariano et al., v. Judge de Vega, GR 59974, Mar. 9, 1987

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