Use for free or sale without consent by a co-owner of property

When multiple individuals share ownership of a property they are co-owners. In such a scenario, there are several possible sources of tension between co-owners such disagreements over whether or not to sell the property as well as use by one co-owner of the property without compensating the others.

This could happen when children inherit properties from their parents and become co-owners of the properties.

In a case decided by the Supreme Court, Vicente, Mariano, Carlos and Jesus, were co-owners of several properties including one Lot No. 4389 located in Cebu. Jesus filed a case with the Court to partition their co-owned properties. About nine years later they settled the case and agreed to jointly sell the properties.

Vicente, Mariano and Carlos inspected the property and discovered that a certain Lorenzo was occupying a portion of the 3,000 sqm property of Lot No. 4389. It was then when they discovered that Jesus had, in the meantime, sold to Lorenzo his share of the property.

Because of this, Vicente, Mariano and Carlos filed a complaint with the court where they asked the Court to declare the Deed of Absolute Sale between Jesus and Lorenzo void on the ground that the sale of a definite portion of a co-owned property without notice to the other co-owners is void. They also asked the Court to order Lorenzo to pay them rental fees amounting to ₱1,000.00 per month for occupation and use of the property as well as damages. (Torres, et al. v. Lapinid, et al., G.R. No. 187987, November 26, 2014)

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The Court decided against Vicente, Mariano and Carlos and laid down several important legal principles as follows:

1. A co-owner can sell his share in the co-owned property even without notice or the consent of the other co-owners

As a co-owner, Jesus had absolute ownership of his undivided and pro-indiviso share in the co-owned property which comes with the right to alienate, assign and mortgage it. His rights also included substituting a third person in the enjoyment of the property for as long as no personal rights will be affected. (citing Art. 493, Civil Code)

Notably, any sale, disposition, transfer or mortgage, by one co-owner, shall only be limited to the portion which may be allocated to that co-owner when the co-ownership terminates.

A co-owner is an owner of the whole upon, can exercise its right of dominion and ownership over the whole, but at the same time, is only an owner of a portion. This portion is abstract or yet undefined. The other co-owners have no right to enjoin a co-owner that intends to alienate or substitute its abstract portion or substitute a third person in its enjoyment.

Applying this to the case of Jesus, the Court declared that Jesus may sell his co-owned property to Lorenzo, free from any opposition from the other co-owners. Lorenzo, as the transferee of Jesus, validly obtained the same rights of Jesus from the date of the Execution of a valid sale and “steps into the shoes” of Jesus as a co-owner of an ideal and proportionate share in the property held in common.

2. A sale by a co-owner of a definite or concrete portion of the co-owned property does not render the sale void

The other co-owners also claimed that the sale by Jesus to Lorenzo was invalid because not only was made before partition was completed but also that Jesus sold a definite portion of the co-owned property.

The Court declared that the sale was still valid.

It is true that no individual co-owner can claim title to a definite portion before partition of co-owned property. Each co-owner only possesses a right to sell or alienate his ideal share after partition.

In case a co-owner disposes his share before partition, the disposition does not make the sale void. What will be affected by the sale is only the proportionate share, subject to the results of the partition. The buyer only acquires the proportionate abstract share in the property held in common and those co-owners that did consent to the sale are not affected.

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3. Use by 1 co-owner of the property does not make it liable to pay rent to the other co-owners

The Supreme Court declared that Lorezno, who was occupying and using the property, was not liable to pay the other co-owners rental.

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. (Art. 486, Civil Code)

While the general rule is that a co-owner using the property is not liable to pay rentals to the other co-owners, the exception is when the use by the co-owner prevents the other co-owners from using it or the co-owners’ actions are injurious to the interest of the co-ownership.

An example of this is the case where one of the co-owners refused to vacate the house and lot co-owned by them which prevented the sale of the property. The Court ordered the occupying co-owner to vacate the house and lot so it may be sold as well as the payment of rentals by the occupying co-owner for its use. (Aguilar v. Court of Appeals, GR 76351, October 29, 1993)

(The author, Atty. John Philip C. Siao, is a practicing lawyer and founding Partner of Tiongco Siao Bello & Associates Law Offices, an Arbitrator of the Construction Industry Arbitration Commission of the Philippines, and teaches law at the De La Salle University Tañada-Diokno School of Law. He may be contacted at [email protected]. The views expressed in this article belong to the author alone.)