My father and uncle inherited a piece of land from their parents. The title of the land was transferred in their names as co-owners. My uncle needed money so he went to my father and borrowed the owner’s duplicate title of the land and mortgaged it to a friend. As my uncle cannot pay the loan, his friend foreclosed the mortgage. We were surprised one day to receive a demand letter from my uncle’s friend informing us that he is now the new owner of the whole property as the redemption period already expired and ordering us to vacate the property. Does this mean that my father no longer owns the other half of the property because of the mortgage? What are we going to do, we have no money to repurchase the property? Please help.
Co-owners may sell, mortgage or transfer to another person their rights over their shares in the property which is owned in common. This is explicitly provided by Article 493 of the New Civil Code of the Philippines which states as follows:
“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.”
No less than the Supreme Court of the Philippines in the case of Nilo A. Mercado vs. The Court of Appeals (G.R. No. 108952, January 26, 1995) elucidated this provision in this wise, to wit:
“Pursuant to this law, a co-owner has the right to alienate his pro-indiviso share in the co-owned property even without the consent of the other co-owners. Nevertheless, as a mere part owner, he cannot alienate the shares of the other co-owners. The prohibition is premised on the elementary rule that “no one can give what he does not have” (Nemo dat guod non habet).”
As can be gleaned from the foregoing, your uncle has the right to mortgage his share in the property they inherited from their parents. However, the mortgage which he entered into with a friend does not bind your father insofar as that part of the property which belongs to the latter is concerned. In other words, even if the mortgage is foreclosed, it does not affect the share of your father. Your father shall remain the owner of his share notwithstanding the change of ownership of the other share in the property.
Be that as it may, since co-ownership still exists, as a co-owner of the property, your father may demand the partition of the property. This is clearly provided by the New Civil Code of the Philippines which provides:
“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.
Again, we find it necessary to mention that this opinion is solely based on the facts you have narrated and our appreciation of the same. The opinion may vary when the facts are changed or elaborated.
We hope that we were able to enlighten you on the matter.