De Guia vs. Court of Appeals

A co-owner may bring an action for recovery of possession against a co-owner who takes exclusive possession of the entire co-owned property, but the only effect of such action is recognition of the co-ownership; it cannot result in an order to turn over a specific or determinate portion of the property prior to partition. The exclusive occupant must, however, pay reasonable rent to the other co-owner for the use of the latter’s undivided share, especially after the expiration of a previous lease agreement.

The property consisted of two parcels of fishpond land with a total area of 79,220 square meters in Meycauayan, Bulacan, originally co-owned by Primitiva Lejano and Lorenza Araniego, each holding a one-half undivided share. In 1974, the heirs of Lejano, with the consent of Teofilo Abejo (sole heir of Araniego), leased the entire fishpond to petitioner Manuel T. De Guia and another for a period ending 30 November 1979. After the lease expired, De Guia remained in exclusive possession without paying rent. On 22 November 1983, Teofilo Abejo sold his one-half undivided share to his son, respondent Jose B. Abejo. Despite demands to vacate — the last on 27 November 1983 — De Guia refused to surrender possession or pay rent.

• Nature of the Property and Co-ownership: The dispute concerned a 79,220-square meter fishpond in Ubihan, Meycauayan, Bulacan, covered by TCT No. 6358. The certificate of title reflected two undivided co-owners: Primitiva Lejano (½ share) and Lorenza Araniego, married to Juan Abejo (½ share). Lorenza Araniego’s one-half share was inherited by her sole heir, Teofilo Abejo. De Guia claimed that he acquired the Lejano heirs’ one-half share in February 1986, a claim not yet finally adjudicated.

• Lease and Exclusive Possession: On 30 July 1974, De Guia and one Aniano Victa entered into a “Salin ng Pamumusisyong ng Palaisdaan” (lease contract) with the heirs of Primitiva Lejano, covering the entire fishpond for ₱100,000, effective until 30 November 1979. The lease was executed with the knowledge and consent of Teofilo Abejo. After the lease expired, De Guia continued in sole, exclusive possession of the whole fishpond and derived income from it.

• Abejo’s Acquisition and Demands: Teofilo Abejo sold his undivided one-half share to his son, respondent Jose B. Abejo, on 22 November 1983. Teofilo Abejo and later Jose B. Abejo made several demands on De Guia to vacate and pay rent. The last written demand was dated 27 November 1983. De Guia did not heed the demands.

• Abejo’s Aborted Lease with Villarico: In anticipation of recovering possession, Abejo executed a notarized two-year lease contract with Ruperto C. Villarico on 21 December 1983 for the one-half undivided share at ₱25,000 per year. The contract was cancelled and the ₱50,000 consideration returned to Villarico because De Guia refused to vacate.

• De Guia’s Litigation Posture: In his pre-trial brief, De Guia limited the issue to the amount of damages (rent) and submitted an Offer to Compromise for ₱300,000, proposing to lease the entire fishpond to anyone Abejo chose. Despite contesting Abejo’s title in his Answer, he did not assert exclusive ownership over the whole fishpond during trial. The trial court found that De Guia’s claim of ownership over the Lejano half had not been finally adjudicated.

• Related Case (Civil Case No. 86-27-M): De Guia, for himself and as attorney-in-fact for the Lejano heirs, filed a complaint to annul a real estate mortgage and lease executed by Primitiva Lejano in 1979. The trial court dismissed the complaint and upheld the validity of the documents. The Court of Appeals affirmed the dismissal in CA-G.R. CV No. 38031 on 30 August 2002; De Guia’s motion for reconsideration remained pending at the time of this Decision.

• Cause of Action: Petitioner argued that the complaint failed to state a cause of action because a co-owner cannot demand a definite portion from property owned in common before partition, making recovery of possession an improper remedy.

• Turn-Over of Possession: Petitioner maintained that the trial and appellate courts erred in ordering him to turn over a one-half undivided portion while the property remained under co-ownership. Enforcement of such an order without prior partition would be impossible because no specific portion had been identified or segregated.

• Compensatory Damages: Petitioner contended that the award of ₱212,500 as rent was grossly exorbitant and unsupported by credible evidence. The notarized lease contract between Abejo and Villarico was assailed as self-serving, and petitioner insisted that the trial court should have given credence to the testimonies of his witnesses, Ben Ruben Camargo and Marta Fernando Peña, who attested to lower prevailing rental rates for fishponds in the area.

• Attorney’s Fees: Petitioner asserted that there was no legal or factual basis for the award of attorney’s fees, especially since he had made an offer to settle the case out of court.

• Propriety of Recovery of Possession: Respondent countered that the action for recovery of possession was proper even before partition, because De Guia’s exclusive occupation without paying rent violated Abejo’s right as co-owner to enjoy the property. The relief sought was not physical division but recognition of co-ownership and the right to possess and receive rent, with partition to follow if necessary.

• Award of Rent as Damages: Respondent argued that the notarized lease contract with Villarico was credible evidence of the fair rental value of the one-half share and carried greater evidentiary weight than the oral testimonies of petitioner’s witnesses. De Guia’s own pre-trial brief and compromise offer acknowledged the obligation to pay rent.

• Attorney’s Fees: Respondent maintained that De Guia’s unjustified refusal to vacate and pay rent compelled Abejo to litigate to protect his interest, justifying the award of attorney’s fees under Article 2208 of the Civil Code.

• Cause of Action and Proper Remedy: Whether the complaint for recovery of possession stated a cause of action and whether an order directing a co-owner to turn over a one-half undivided portion of co-owned property is proper before partition.

• Compensatory Damages: Whether the award of ₱212,500 as compensatory damages in the form of unpaid rent was supported by credible evidence.

• Attorney’s Fees: Whether the award of ₱20,000 in attorney’s fees was justified.

• Cause of Action and Proper Remedy: The complaint stated a cause of action. Under Article 487 of the Civil Code, any co-owner may bring an action in ejectment, a term that encompasses forcible entry and unlawful detainer, accion publiciana, and accion reivindicacion. When such an action is brought by a co-owner against another co-owner who takes exclusive possession of the entire common property, the only permissible effect is recognition of the co-ownership. A co-owner cannot obtain exclusion of the defendant-co-owner from a specific portion or recover a determinate material part of the property prior to partition. The right of a co-owner before partition is represented only by an ideal or abstract quota. Accordingly, the trial court’s order directing De Guia to turn over a one-half undivided portion was erroneous. The proper remedy for physical division and accounting of profits is a separate action for partition, which is imprescriptible and not subject to laches so long as the co-ownership is recognized. Pending partition, both co-owners are entitled to equal possession and enjoyment of the entire fishpond.

• Compensatory Damages: The award of ₱212,500 as rent from November 1983 to May 1992 was affirmed. The factual finding of the trial court, adopted by the Court of Appeals, that the fair yearly rental value of Abejo’s one-half share was ₱25,000 — based on the notarized Villarico lease contract — was not clearly baseless or irrational, and the Supreme Court will not disturb such factual findings on a Rule 45 petition. The testimonies of petitioner’s witnesses were found unconvincing by the lower courts. A co-owner who exclusively occupies common property after the expiration of a lease cannot continue to do so without paying rent, as this prejudices the other co-owner’s right to income. Interest at 6% per annum was imposed on the arrears from the date of extrajudicial demand (27 November 1983) until finality of the decision, and 12% per annum thereafter until full payment, pursuant to Article 2209 of the Civil Code and Eastern Shipping Lines, Inc. v. Court of Appeals.

• Attorney’s Fees: The award of ₱20,000 attorney’s fees was proper under paragraph (2) of Article 2208 of the Civil Code because De Guia’s acts compelled Abejo to incur expenses to protect his interest. De Guia, a lawyer, should have known that a co-owner cannot take exclusive possession of common property without compensation, and his settlement offer was made under conditions unacceptable to Abejo.

• Effect of Co-owner’s Action Against a Co-owner — When a co-owner files an action for recovery of possession against another co-owner who is in exclusive possession of the entire co-owned property, the only permissible effect is recognition of the co-ownership. The court cannot order the delivery of a determinate or physically segregated portion. The proper recourse to achieve physical division is an action for partition under Article 494 of the Civil Code, which is imprescriptible and not barred by laches while the co-ownership subsists.

• Nature of a Co-owner’s Right Before Partition — Before partition, a co-owner’s right over the common property is an ideal or abstract quota. A co-owner is the owner of the whole and exercises dominion over it, but is simultaneously the owner of an indeterminate portion that becomes concrete only upon actual division.

• Liability of Co-owner in Exclusive Possession — A co-owner who exclusively occupies the common property after the expiration of a lease agreement cannot retain possession without paying the proper rent. The co-ownership relationship does not permit one co-owner to exploit the property to the exclusion and prejudice of the other. The aggrieved co-owner is entitled to a proportionate share in profits or to reasonable compensation to prevent unjust enrichment.

• Prescription Among Co-owners — Under Article 494, prescription does not run in favor of a co-owner against another co-owner absent (1) a clear and conclusive act of repudiation of the co-ownership, (2) made known to the other co-owners, (3) accompanied by open, continuous, exclusive, and notorious possession for the period required by law.

• Legal Interest for Monetary Awards — When an obligation to pay a sum of money is breached and no interest rate is stipulated, the indemnity for damages is legal interest at 6% per annum from extrajudicial demand until finality of judgment, and 12% per annum from finality until full satisfaction (Article 2209, Civil Code; Eastern Shipping Lines, Inc. v. Court of Appeals).

• “A co-owner of an undivided parcel of land is an ‘owner of the whole, and over the whole he exercises the right of dominion, but he is at the same time the owner of a portion which is truly abstract.’”

• “It is a basic principle in civil law that before a property owned in common is actually partitioned, all that the co-owner has is an ideal or abstract quota or proportionate share in the entire property. A co-owner has no right to demand a concrete, specific or determinate part of the thing owned in common because until division is effected his right over the thing is represented only by an ideal portion. As such, the only effect of an action brought by a co-owner against a co-owner will be to obtain recognition of the co-ownership; the defendant cannot be excluded from a specific portion of the property because as a co-owner he has a right to possess and the plaintiff cannot recover any material or determinate part of the property.”

• Hermogena G. Engreso with Spouse Jose Engreso v. Nestoria De La Cruz and Herminio De La Cruz, G.R. No. 148727, 9 April 2003 — Reiterated the rule that a co-owner cannot recover a determinate part of common property before partition; cited as controlling on the effect of an action between co-owners.

• Si v. Court of Appeals, G.R. No. 122047, 12 October 2000, 342 SCRA 653 — Defined co-ownership and the abstract nature of a co-owner’s share; relied on to explain the dual character of a co-owner’s right.

• Javier v. Veridiano II, G.R. No. 48050, 10 October 1994, 237 SCRA 565 — Clarified that Article 487 of the Civil Code covers all kinds of actions for recovery of possession: forcible entry and unlawful detainer, accion publiciana, and accion reivindicacion.

• Villanueva v. Florendo, No. L-33158, 17 October 1985, 139 SCRA 329 — Explained that a co-owner’s portion remains abstract and indeterminate until partition.

• Santos v. Santos, G.R. No. 139524, 12 October 2000, 342 SCRA 753 — Enumerated the requisites for a valid repudiation of co-ownership that would allow prescription to run.

• Pardell v. Bartolome, 23 Phil 450 (1912) — Supported the rule that a co-owner who exclusively occupies common property after a lease must pay rent to prevent prejudice to the other co-owner.

• Araos v. Court of Appeals, G.R. No. 107057, 2 June 1994, 232 SCRA 770 — Defined fair rental value as reasonable compensation for the use and occupation of property; applied as basis for the yearly rate.

• Eastern Shipping Lines, Inc. v. Court of Appeals, G.R. No. 97412, 12 July 1994, 234 SCRA 78 — Prescribed the legal interest rates of 6% per annum from extrajudicial demand until finality of judgment, and 12% per annum thereafter; applied to the monetary awards.

• Article 484, Civil Code — Defines co-ownership as the ownership of an undivided thing or right belonging to different persons. Applied to characterize the parties’ relationship over the undivided fishpond.

• Article 487, Civil Code — Provides that any co-owner may bring an action in ejectment. Construed to include all forms of recovery of possession, but limited in effect to recognition of co-ownership when brought against another co-owner.

• Article 494, Civil Code — States that prescription does not run in favor of a co-owner against co-owners absent an express or implied recognition of the co-ownership. Underpins the imprescriptibility of an action for partition.

• Article 2208(2), Civil Code — Allows recovery of attorney’s fees where the defendant’s act or omission compels the plaintiff to litigate or incur expenses to protect his interest. Applied to justify the award of attorney’s fees in favor of Abejo.

• Article 2209, Civil Code — Provides that if an obligation consists in the payment of a sum of money and the debtor incurs delay, the indemnity for damages, absent stipulation, is the legal interest of 6% per annum. Applied to compute interest on unpaid rent from the date of extrajudicial demand.

Davide, Jr., C.J. (Chairman), Vitug, Ynares-Santiago, and Azcuna, JJ.

None.