3. Mercado vs Rizal 67 Phil 608 VDA DE ALBAR v.

CARANDANG, 106 PHIL 855- Usufruct

FACTS:
The properties left by the deceased Paciano Rizal y The reparation or indemnity given in exchange for the
Mercado belonged, in usufruct, to nine heirs and, in naked destruction of the building is the substitute for the
ownership, to seven others. The plaintiffs are two of the building itself. The indemnity is the capital which belongs
nine usufructuaries and the defendant is one of the naked to the naked owner while the interest on the capital is the
owners. From 1932 to 1934 taxes were paid for the fruits which belong to the usufructuary.
properties. Of this amount the naked owners made the Notes:
plaintiffs pay portions of the taxes paids. As the plaintiffs The Civil Code contemplates a situation where the owner
were not agreeable to this payment, this amount was pays for the construction of a new building. However, the
deducted from the products corresponding to them and twist in this case was that the naked owner did not have
applied to the payment of land tax. The plaintiff alleged to construct a new one because the Chinaman had one
that, the naked owners being the ones under a duty to pay built at his own expense. This is the reason why the court
the tax for the lands. The naked owners, with the exception had a difficult time ascertaining who had the right to the
of the defendant, agreed with this contention and paid to indemnity given by the government for the destruction of
each of the plaintiffs the sum deducted from the products the building due to the war.
of the land corresponding to the latter. The present action
was brought to compel the defendant to pay to the Majority Opinion: The reparation should be treated as
plaintiffs the amount of P206.47 (the amount charged to fruits. Usufructuary should get 6% of the reparation (from
the plaintiff) . A demurrer interposed to the complaint for the time it was actually received to the tend of the life of
failure to allege facts sufficient to constitute a cause of the usufruct) because it was not used to construct a new
action was sustained ground that the action is premature building. Otherwise, the naked owner is enriched twice –
under article 505 of the Civil Code. first from the reparation and second from the fruits if
payment of rent stops when the building is constructed.
ISSUE: Thus, the new building should be considered as the
WON the trial court erred in applying the provisions of Art. capital, and the reparation as fruits. The naked owner
505 par. 2 to the case at bar. should share the reparation with the usufructuary to
prevent unjust enrichment.
RULING:
YES Art 505 of the Civil Code (now 597 of the NCC): Any Ponente’s Opinion: The reparation should be treated as
taxes which may be imposed directly upon the capital, capital (NCC). Only the interest on the reparation up to
during the usufruct, shall be chargeable to the owner. If the date that the new building was constructed time
paid the latter, the usufructuary shall payhim the proper should be given to the usufructuary, not the interest until
interest on any sums he may have disbursed by reason the end of the usufruct. The reparation itself which is
thereof; if the usufructuary should advance the amounts of considered as the capital (which rightfully belongs to the
such taxes he shall recover them upon the expiration of the naked owner) intended to replace the old building. The
usufruct. Pursuant to the afore-quoted provision, the tax intention was fulfilled when the Chinaman constructed a
directly burdens the capital should be paid by the new one. It was not the naked owner’s fault that he need
owner.The second paragraph however, does not apply to not use the reparation to construct a new building. The
the plaintiffs. The plaintiffs did not pay the tax. They owner is not doubly compensated because it was not his
objected to this payment. In fact they did not make the fault.
payment. The resolution of the trial court was reversed, the
demurrer interposed to the complaint is overruled, and it is Dissenting opinion: There is double benefit in either case.
ordered that the case be remanded to the court of origin In the first, the usufructuary will be receiving interest on
toy act in accordance with SC decision and go forward with the reparation and rent from the building. In the second,
the case until it is finally decided. the naked owner receives value for the building and the
construction of a building at no expense to him.

Payment of interest should continue during the life of the

usufruct (not just 6%) because the war damage is the
equivalent to the building. The construction of the new
building does not relieve the owners of the land used in
the war damage payment from continuing the payment of
interest. If they had used it to construct the building, they ISSUE:
would have been freed from paying interest – but they Whether or not the usufruct included the building and the
did not. land? W/N the usufructuary (FABIE) or naked owner (VDA
********************************* DE ALBAR) should undertake the reconstruction? W/N the
FACTS: usufructuary should pay the real estate taxes?
Doña Rosario Fabie y Grey was the owner of the lot in the
City of Manila with a building and improvements, and by a HELD:
will left by her upon her death which was duly probated The usufruct for life extended to the land and the
she devised the naked ownership of the whole property building. From the above, it is clear that when the
to Rosario Grey Vda. de Albar, et al. but its usufruct to deceased constituted the life usufruct on the rentals
Josefa Fabie for life. "fincas situadas" in Ongpin and Sto. Cristo streets, she
meant to impose the encumbrance both the building and
During liberation, as a consequence of the fire that gutted the land on which it is erected for indeed the building
the building in many portions of Manila, the building on cannot exist without the land. And as this Court well said,
the Ongpin lot was burned, leaving only the walls and "The land, being an indispensable part of the rented
other improvements that were not destroyed by the fire. premises cannot be considered as having no rental value
whatsoever." Moreover, in the Spanish language, the
One Au Pit, a Chinaman, offered to lease the property for term "fincas" has a broad scope; it includes not only
a period of five years, at the same time agreeing to building but land as well. (Diccionario Ingles-Español, por
construct on the lot a new building provided the naked Martines Amador) Since only the building was destroyed
owners as well as the usufructuary sign the agreement of and the usufruct is constituted not only on the building
the lease. As the usufructuary maintains that she has the but on the land as well, then the usufruct is not deemed
exclusive right to cede the property by lease and to extinguished by the destruction of the building for under
receive the full rental value by virtue of her right to the law usufruct is extinguished only by the total loss of
usufruct while on the other hand the naked owners the thing subject of the encumbrance (Article 603, old
maintain that the right of usufruct was extinguished when Civil Code).
the building was destroyed, the right of the usufructory FABIE, the usufructuary has the discretion to reconstruct
being limited to the legal interest on the value of the lot the building. Of course, this is addressed to the wisdom
and the materials, in order that the agreement of lease and discretion of the usufructuary who, to all intents and
may be affected, the parties agreed on a temporary purposes is deemed as the administrator of the property.
compromise whereby the naked owners would receive This has been clarified in the case of Fabie vs. Gutierrez
P100.00, or 20% of the monthly rental of P500.00 and the David, 75 Phil., 536, which was litigated between the
usufructuary the balance of 80% or P400.00 of said same parties and wherein the scope of the same provision
monthly rental. It was likewise stipulated in the of the will has been the subject of interpretation.
agreement that the title to the building to be constructed
would accrue to the land upon it completion as an The usufructuary should pay the taxes. We find, however,
integral part of the lot covered by the transfer certificate merit in the contention that the real estate taxes paid by
of title issued in the name of the naked owners but respondent in her capacity as usufractuary for several
subject to the right of usufruct of Josefa Fabie. The parties years previous to the present litigation should be paid by
expressly reserved the right to litigate their respective her, as she did, instead of by petitioners not only because
claims after the termination of the contract of lease to she bound herself to pay such taxes in a formal
determine which of said claims was legally correct. agreement approved by the court in Civil Case No. 1569 of
the Court of First Instance of Manila (Fabie vs. Gutierrez
By reason of the destruction of the building on the Ongpin David, supra). In the case, which involved the same
property, the United States War Damage Commission parties and the same properties subject to usufruct, the
approved the claim that was presented for the damage parties submitted an amicable agreement which was
caused to the property, paid to and received by the naked approved by the court wherein the usufructuary, herein
owners. In the meantime, the usufructuary paid the real respondent, bound herself to pay all the real estate taxes,
estate taxes due on the property at Ongpin for the years special assessment and insurance premiums, and make all
1945 to 1952. the necessary repairs on each of the properties covered
by the usufruct and in accordance with said agreement,
respondent paid all the taxes for the years 1945 to 1954.
The municipality of Paoay VS. MANAOIS municipal corporations are created, and that to subject
FACT: said properties and public funds to execution would
materially impede, even defeat and in some instances
The municipality of Paoay leased 6 fishery lots to destroy said purpose.
Francisco V. Duque for a period of four years but the
latter failed to comply with the terms of the lease Property however, which is patrimonial and which is held
contract. Thus, the municipality approved a resolution by municipality in its proprietary capacity is treated by
confiscating said lots and advertised its lease for public great weight of authority as the private asset of the town
bidding. Teodoro Manaois, being the highest bidder, was and may be levied upon and sold under an ordinary
awarded the lease. However, Manaois was not able to execution. The same rule applies to municipal funds
exercise his right to possession because Duque continued derived from patrimonial properties, for instance, it has
to claim possession over the properties and, despite the been held that shares of stocks held by municipal
appeal to the Municipality of Paoay to put him in corporations are subject to execution. If this is true, with
possession and the efforts of the municipality to oust more reason should income or revenue coming from
Duque, Duque succeeded in continuing in his possession these shares of stock, in the form of interest or dividends,
and keeping Manaois and his men out. be subject to execution.

Manaois filed a case against the Municipality of Paoay to The fishery or municipal waters of the town of Paoay,
recover the sum paid by him for the lease of the fishery Ilocos Norte, which had been parceled out or divided into
lots plus damages. The trial court ruled in his favor and a lots and later let out to private persons for fishing
writ of execution and attachment were issued to enforce purposes at an annual rental are clearly not subject to
the judgment. The municipality filed a petition asking for execution. In the first place, they do not belong to the
the dissolution of that attachment of levy of the municipality. They may well be regarded as property
properties but it was denied. Thus, the municipality filed a of State. What the municipality of Paoay hold is merely
petition for certiorari with the writ of preliminary what may be considered the usufruct or the right to use
injunction, asking that the order of the trial court be said municipal waters, granted to it by section 2321 of the
reversed and that the attachment of the properties of the Revised Administrative Code.
municipality be dissolved. The municipality contended
that the properties attached by the sheriff for purposes of Now, is this particular usufruct of the municipality of
execution are not subject to levy because they are Paoay over its municipal waters, subject to execution to
properties for public use. enforce a judgment against the town? No. First, it is not a
usufruct based on or derived from an inherent right of the
Issue: town. It is based merely on a grant made by the
Legislature. These marine waters are ordinarily for public
May the fishery or municipal waters of the town of Paoay use, open to navigation and fishing by the people. The
or its usufruct may be levied upon and subject to municipality of Paoay is not holding this usufruct or right
execution? How about the revenue or income derived of fishery in a permanent or absolute manner so as to
from the renting of these fishery lots? enable it to dispose of it or to allow it to be taken away
from it as its property through execution. The Legislature
Held: thru section 2321 of the Administrative Code, as already
stated, saw fit to grant the usufruct of said marine waters
No. There can be no question that properties for public for fishery purpose, to the towns bordering said waters.
use held by municipal corporation are not subject to levy Said towns have no vested right over said marine waters.
and execution. Properties for public use like trucks used The Legislature, for reasons it may deem valid or as a
for sprinkling the streets, police patrol wagons, police matter of public policy, may at any time, repeal or modify
stations, public markets, together with the land on which said section 2321 and revoke this grant to coastal towns
they stand are exempt from execution. Even public and open these marine waters to the public. Or the
revenues of municipal corporations destined for the Legislature may grant the usufruct or right of fishery to
expenses of the municipality are also exempt from the the provinces concerned so that said provinces may
execution. The reason behind this exemption extended to operate or administer them by leasing them to private
properties for public use, and public municipal revenues is parties. All this only goes to prove that the municipality of
that they are held in trust for the people, intended and Paoay is not holding this usufruct or right of fishery in a
used for the accomplishment of the purposes for which permanent or absolute manner so as to enable it to
dispose of it or to allow it to be taken away from it as its connection with said fishing business, with the income
property through execution. derived therefrom.

Second, if this were to be allowed and this right sold on In conclusion, we hold that the fishery lots numbering
execution, the buyer would immediately step into the about forty in the municipality of Paoay, mentioned at the
shoes of the judgment-debtor municipality. Such buyer beginning of this decision are not subject to execution.
presumably buys only the right of the municipality. He For this reason, the levy and attachment made by the
does not buy the fishery itself nor the municipal waters Provincial Sheriff of Ilocos Norte of theses fishery lots is
because that belongs to the State. All that the buyer void and the order of the Court of First Instance of
might do would be to let out or rent to private individuals Pangasinan insofar as it failed to dissolve the attachment
the fishery rights over the lots into which the municipal made on these lots is reversed. However, the amount of
waters had been parceled out or divided, and that is, after P1,712.01 in the municipal treasury of Paoay representing
public bidding. Then, we shall have a situation rather the rental paid by Demetrio Tabije on fishery lots let out
anomalous to be sure, of a private individual conducting by the municipality of Paoay is a proper subject of levy,
public bidding, renting to the highest bidders fishery lots and the attachment made thereon by the Sheriff is
over municipal waters which are property of the State, valid. (Municipality of Paoay vs. Manaois, G.R. No. L-3485,
and appropriating the results to his own private use. The June 30, 1950)
impropriety, if not illegality, of such a contingency is
readily apparent. The situation imagined implies the Fabie v. David
deprivation of the municipal corporation of a source of a G.R. No. L-123, December 12, 1945
substantial income, expressly provide by law. Because of Ozaeta, J.
all this, we hold that the right or usufruct of the town of FACTS:
Paoay over its municipal waters is not subject to Josefa Fabie is the usufructuary of the income of certain
execution. houses located at 372-376Santo Cristo, Binondo, and 950-
956 Ongpin, Santa Cruz, Manila, under the ninth clause
But we hold that the revenue or income coming from the of the will of the deceased Rosario Fabie y Grey.
renting of these fishery lots is certainly subject to The owner of Santo Cristo property is
execution. It may be profitable, if not necessary, to therespondent Juan Grey. Litigation arose between
distinguish this kind of revenue from that derived from Josefa Fabie as plaintiff and Juan Grey asdefendant and
taxes, municipal licenses and market fees are provided for the owner of the Ongpin property as intervenors,
and imposed by the law, they are intended primarily and involving the administrationof the houses mentioned in
exclusively for the purpose of financing the governmental clause 9 of the will referred to above.In June 1945 Josefa
activities and functions of municipal corporations. Not so Fabie commenced an action of unlawful detainer against
with the income derived from fisheries. In the first place, Ngo BooSoo (who says that his correct name is Ngo Soo),
the usufruct over municipal waters was granted by the alleging that the defendant is occupyingt h e p r e m i s e s
Legislature merely to help or bolster up the economy of located at 372-
municipal government. This kind of revenue is not 376 Santo Cristo on a month-
indispensable for the performance of governmental to month rental
functions. In the second place, the amount of this income payable ina d v a n c e n o t l a t e r t h a n t h e 5 t
is far from definite or fixed. It depends upon the amounts h of each month; that she is the admin
which prospective bidders or lessees are willing to pay. In i s t r a t r i x a n d usufructuary of said premises; that the
other words, too many municipalities engaged in this defendant offered to pay P300 monthly rent payablein
business of letting out municipal waters for fishing advance not later than the 5th of every month, beginning
purposes, it is a sort of sideline, so that even without it the month of April 1945, for thesaid of premises including
the municipality may still continue functioning and the one door which said defendant, without plaintiff’s
perform its essential duties as such municipal consent andcontrary to their agreement, had subleased
corporations. to another Chinese, but plaintiff refused, basedon the
fact that the plaintiff very badly needs the said
We call this activity of municipalities in renting municipal house to live in, as her house wasburned by the
waters for fishing purposes as a business for the reasons Japanese on the occasion of the entry of the American
that the law itself allowed said municipalities to engage in liberators in the City;that defendant was duly notified
it for profit. And it is but just that a town so engaged to leave the said premises, but he refused; and she
should pay and liquidate obligations contracted in prayedfor judgment of eviction and for unpaid
rentals. The defendant answered alleging that he was and ment with the latter. As long as the propert
since 1908 had been a tenant of the premises in question, y i s p r o p e r l y conserved and insured he can have no
which he was using and had always used principally as a cause for complaint, and his right in that regard
store andsecondarily for living quarters; that he was isf u l l y p r o t e c t e d b y t h e t e r m s o f t h e
renting it from its owner and administrator JuanGrey; that stipulation and the judgment of the
plaintiff is merely the usufructuary of the income c o u r t a b o v e mentioned. To permit him to
therefrom, and by agreementbetween her and said arrogate to himself the privilege to choose the
owner, her only right as usufructuary of the income is to tenant, todictate the conditions of the lease, and
receive thewhole of such income; that she has no right or to sue when the lessee fails to comply
authority to eject tenants, such right being inthe owner therewith,would be to place the usufructuary
and administrator of the house, Juan Grey; that plaintiff entirely at his mercy. It would place her in the
has never had possessionof said property; that absurdsituation of having a certain indisputable
defendant’s lease contract with the owner of the house is right without the power to protect, enforce,
for 5-yearperiod, with renewal option at the end of andfully enjoy it.
each period, and that his present lease due
toexpire on December 31, 1945; that on June 1,
1945, defendant made a written offer Bachrach v. Seifert [G.R. No. L-2659. October 12, 1950.]
top l a i n t i f f t o c o m p r o m i s e a n d s e t t l e t h
e question of the amount of rent to be
p a i d b y defendant but said plaintiff rejected the same Jul4
for no valid reason whatever and institutedthe present
action; that the reason plaintiff desires to eject defendant Facts:
from the property isthat she wishes to lease the same to
other persons for a higher rent, ignoring the fact thatas The deceased E. M. Bachrach, who left no forced heir
usufructuary of the income of the property she has no except his widow Mary McDonald Bachrach, in his last will
right to lease the property. and testament made various legacies in cash and willed
ISSUE: the remainder of his estate. The estate of E. M. Bachrach,
Who is entitled to administer the property subject matter as owner of 108,000 shares of stock of the Atok-Big
of this case and who shouldbe the tenant? Wedge Mining Co., Inc., received from the latter 54,000
HELD: shares representing 50 per cent stock dividend on the said
The usufructuary has the right to administer the property 108,000 shares. On June 10, 1948, Mary McDonald
in question. All the acts of administration — to collect the Bachrach, as usufructuary or life tenant of the estate,
rents for herself, and to conserve the property by making petitioned the lower court to authorize the Peoples Bank
allnecessary repairs and paying all the taxes, special and Trust Company, as administrator of the estate of E.
assessments, and insurance premiumst h e r e o n — M. Bachrach, to transfer to her the said 54,000 shares of
were by court judgment vested in the usufr stock dividend by indorsing and delivering to her the
u c t u a r y . T h e p r e t e n s i o n o f t h e respondent Juan corresponding certificate of stock, claiming that said
Grey that he is the administrator of the property with the dividend, although paid out in the form of stock, is fruit or
right to choose income and therefore belonged to her as usufructuary or
life tenant. Sophie Siefert and Elisa Elianoff, legal heirs of
the deceased, opposed said petition on the ground that
the stock dividend in question was not income but formed
the tenants and to dictate the conditions of the lease is part of the capital and therefore belonged not to the
contrary to both the letter and thespirit of the said usufructuary but to the remainderman. While appellants
clause of the will, the stipulation of the parties, admit that a cash dividend is an income, they contend
and the judgment of thecourt. He cannot manage or that a stock dividend is not, but merely represents an
administer the property after all the acts of management addition to the invested capital.
andadministration have been vested by the court,
with his consent, in the usufructuary. Issue:
Hea d m i t t e d t h a t b e f o r e
said judgment he had been collecting the Whether or not a dividend is an income and whether it
rents should go to the usufructuary.
as agent of theusufructuary under an agree
Held: Whether or not Bautista could foreclose the land made as
a security for the debt.
The usufructuary shall be entitled to receive all the
natural, industrial, and civil fruits of the property in Held:
usufruct. The 108,000 shares of stock are part of the
property in usufruct. The 54,000 shares of stock dividend No, the mortgage was void and ineffective because
are civil fruits of the original investment. They represent Marcos was not yet the owner of the land when the
profits, and the delivery of the certificate of stock mortgage was executed. Hence, Marcos could not
covering said dividend is equivalent to the payment of encumber the same to Bautista.
said profits. Said shares may be sold independently of the
original shares, just as the offspring of a domestic animal Neither could the subsequent acquisition by Marcos of
may be sold independently of its mother. If the dividend title over the land through the issuance of a free patent
be in fact a profit, although declared in stock, it should be validate and legalize the mortgage since upon the
held to be income. A dividend, whether in the form of issuance of the said patent, the land was brought under
cash or stock, is income and, consequently, should go to the operations of the Public Land Law that prohibits the
the usufructuary, taking into consideration that a stock taking of said land for the satisfaction of debts contracted
dividend as well as a cash dividend can be declared only prior to the expiration of 5 years from the issuance of the
out of profits of the corporation, for if it were declared patent.
out of the capital it would be a serious violation of the
law. Marcos had possessory rights over the land before the
title was vested in her name, and these possessory rights
Under the Massachusetts rule, a stock dividend is could validly be transferred to Bautista, as Marcos did in
considered part of the capital and belongs to the the deed of mortgage.
remainderman; while under the Pennsylvania rule, all
earnings of a corporation, when declared as dividends in
GABOYA V. CUI- Usufruct
whatever form, made during the lifetime of the
usufructuary, belong to the latter. The Pennsylvania rule
is more in accord with our statutory laws than the
Massachusetts rule. FACTS:

Vda. De Baustista v. Marcos, G.R. No. L-17072 (October

31, 1961) Case Digest Don Mariano sold his 2 lots to two of his children. Later
Ownership > Ownership in General > Rights of an Owner > on, he and his children became co-owners of the
Use, Possession, Fruits and Disposition property. Don Mariano executed a deed authorizing the
Facts: children to apply for a loan w/ mortgage with a stipulation
reserving his right to the fruits of the land. The children
Marcos obtained a loan from Bautista secured by a then constructed a building on the land and collected rent
mortgage of an unregistered parcel of land. It was to last
for 3 years and the possession of the land mortgaged was from the lessee thereof. Much later, when Don Mariano
to be turned over to Bautista by way of usufruct. died, his estate was claiming the fruits of the building.

Marcos filed an application for the issuance of a free

patent over the land. The free patent was issued to her
and the land was registered in her name. ISSUE:

Marcos was unable to pay her debt to Bautista so the Whether or not Don Mariano had a right to fruits of the
latter filed for the foreclosure of her mortgage on the building?
land given as a security.

Issue:
RULING: NO.
The deed expressly reserved only to his right to the fruits the highest bidder. A new title was subsequently issued in
favor the R&B. The annotation of usufruct in favor of Justa
of the land. He only owned the rent for the portion of Kausapin was maintained in the new title.
land occupied by the building; thus, the estate could only
claim the rent on that piece of land and not on the entire Despite the earlier conveyance of the subject land in favor
of Maxima Hemedes, Justa Kausapin executed a
parcel of land. The children are entitled to the rents of the “Kasunduan” whereby she transferred the same land to
building. (A usufruct on the land may be separate from her stepson Enrique D. Hemedes, pursuant to the
the building. resolutory condition in the deed of donation executed in
her favor by her late husband Jose Hemedes. Enrique D.
Hemedes obtained two declarations of real property,
when the assessed value of the property was raised. Also,
There should be no rescission of the contract coz the
he has been paying the realty taxes on the property from
exact amount of rent due and owing to the Don Mariano’s the time Justa Kausapin conveyed the property to him. In
estate is still unliquidated and undetermined. The trial the cadastral survey, the property was assigned in the
name of Enrique Hemedes. Enrique Hemedes is also the
court has the discretion to grant the debtor (children) a named owner of the property in the records of the
period within which to pay the rental income from the Ministry of Agrarian Reform office at Calamba, Laguna.
portion of land owned by the building because the same Enriques D. Hemedes sold the property to Dominium
Realty and Construction Corporation (Dominium).
has not yet been determined. Article 1191 of the Civil
Code grants the right to rescind but subject to the period Dominium leased the property to its sister corporation
that the court will grant. Asia Brewery, Inc. (Asia Brewery) who made constructions
therein. Upon learning of Asia Brewery’s constructions, R
& B Insurance sent it a letter informing the former of its
ownership of the property. A conference was held
Moreover, on the issue of co-ownership, the court held
between R & B Insurance and Asia Brewery but they failed
that a co-owner cannot simultaneously be a usufructuary to arrive at an amicable settlement.
of the same land owned.
Maxima Hemedes also wrote a letter addressed to Asia
Brewery asserting that she is the rightful owner of the
subject property and denying the execution of any real
HEMEDES vs CA Case Digest
estate mortgage in favor of R&B.
HEMEDES vs CA
316 SCRA 347
Dominium and Enrique D. Hemedes filed a complaint with
FACTS: Jose Hemedes executed a document entitled
the CFI for the annulment of TCT issued in favor of R & B
“Donation Inter Vivos With Resolutory Conditions”
Insurance and/or the reconveyance to Dominium of the
conveying ownership a parcel of land, together with all its
subject property alleging that Dominion was the absolute
improvements, in favor of his third wife, Justa Kauapin,
owner of the land. The trial court ruled in favor of
subject to the resolutory condition that upon the latter’s
Dominium and Enrique Hemedes.
death or remarriage, the title to the property donated
shall revert to any of the children, or heirs, of the DONOR
ISSUE:
expressly designated by the DONEE.
W/N the donation in favor of Enrique Hemedes was valid?
Pursuant to said condition, Justa Kausapin executed a
“Deed of Conveyance of Unregistered Real Property by
HELD:
Reversion” conveying to Maxima Hemedes the subject
NO. Enrique D. Hemedes and his transferee, Dominium,
property.
did not acquire any rights over the subject property. Justa
Maxima Hemedes and her husband Raul Rodriguez
Kausapin sought to transfer to her stepson exactly what
constituted a real estate mortgage over the subject
she had earlier transferred to Maxima Hemedes – the
property in favor of R & B Insurance to serve as security
ownership of the subject property pursuant to the first
for a loan which they obtained.
condition stipulated in the deed of donation executed by
R & B Insurance extrajudicially foreclosed the mortgage
her husband. Thus, the donation in favor of Enrique D.
since Maxima Hemedes failed to pay the loan even. The
Hemedes is null and void for the purported object thereof
land was sold at a public auction with R & B Insurance as
did not exist at the time of the transfer, having already
been transferred to his sister. Similarly, the sale of the Now, because it is usufruct, the law allows the parties to
subject property by Enrique D. Hemedes to Dominium is stipulate the conditions including the manner of its
also a nullity for the latter cannot acquire more rights extinguishment. In this case, it was subject to a resolutory
than its predecessor-in-interest and is definitely not an condition which is in case the heir of Paraiso (a third
innocent purchaser for value since Enrique D. Hemedes party) desires to repossess the property. Upon the
did not present any certificate of title upon which it happening of the condition, the contract is extinguished.
relied.
The declarations of real property by Enrique D. Hemedes, Therefore, Baluran must return the land to Obedencia.
his payment of realty taxes, and his being designated as But since Art. 579 allows the usufructuary to remove
owner of the subject property in the cadastral survey of improvements he made, Baluran may remove the house
Cabuyao, Laguna and in the records of the Ministry of he constructed.
Agrarian Reform office in Calamba, Laguna cannot defeat
a certificate of title, which is an absolute and indefeasible One last point. At the time of this case, the Obedencias
evidence of ownership of the property in favor of the were also in possession of the riceland of Baluran.
person whose name appears therein. Particularly, with Although it was not proper to decide the issue of
regard to tax declarations and tax receipts, this Court has possession in this case, the Court nevertheless decided on
held on several occasions that the same do not by the matter and order the Obedencias to vacate the
themselves conclusively prove title to land. property inasmuch as there was an extinguishment of a
reciprocal obligations and rights.
BALURAN V. NAVARRO - Usufruct
The manner of terminating the right of usufruct may be
stipulated by the parties such as in this case, the
happening of a resolutory condition.

FACTS:
Baluran and Paraiso (ancestor of Obedencio) entered into
a contract which they called barter, but in fact stipulated
that they would only transfer the material possession of
their respective properties to each other. Thus, Baluran
will be allowed to construct a residential house on the
land of Paraiso while Paraiso is entitled to reap the fruits
of the riceland of Baluran. The contract prohibited them
from alienating the properties of the other and contained
a stipulation that should the heirs of Paraiso desire to re-
possess the residential lot, Baluran is obliged to return the
lot. Indeed, years after, Obedencio (grandchild of Paraiso)
acquired the ownership of the residential lot from his
mother and demanded that Baluran, who was in
possession, vacate.

Baluran now counters that the barter already transferred

ownership.

ISSUE:
Whether or not the contract was a barter or usufruct

RULING:
IT IS USUFRUCT. First, the contract is what the law defines
it to be and not what the parties call it. It is very clear that
what the parties exchanged was not ownership, but
merely material possession or the right to enjoy the thing.