PROPERTY CASE DIGESTS (ATTY.

AMPIL) 10th week

Imperial Sia Plazo Noel De Los Santos Bleza Cimagala Bedural | 2D 2012|

1. GABOYA V. CUI
A co-owner cannot be a usufructuary at the same
time (as emphasized by Sir Ampil).
FACTS
Don Mariano sold his 2 lots to two of his children. Later
on, he and his children became co-owners of the
property. Don Mariano executed a deed authorizing the
children to apply for a loan w/ mortgage with a
stipulation reserving his right to the fruits of the land.
The children then constructed a building on the land
and collected rent from the lessee thereof. Much later,
when Don Mariano died, his estate was claiming the
fruits of the building.
ISSUE: w/n Don Mariano had a right to fruits of the
building?
RULING: NO.
The deed expressly reserved only to his right to the
fruits of the land. He only owned the rent for the
portion of land occupied by the building; thus, the
estate could only claim the rent on that piece of land
and not on the entire parcel of land. The children are
entitled to the rents of the building. (A usufruct on the
land may be separate from the building.
There should be no rescission of the contract coz the
exact amount of rent due and owing to the Don
Marianos
estate
is
still
unliquidated
and
undetermined. The trial court has the discretion to
grant the debtor (children) a period within which to
pay the rental income from the portion of land owned
by the building because the same has not yet been
determined. Article 1191 of the Civil Code grants the
right to rescind but subject to the period that the court
will grant.
Moreover, on the issue of co-ownership, the court held
that a co-owner cannot simultaneously be a
usufructuary of the same land owned.
VDA DE ALBAR v. CARANDANG, 106 PHIL 855
The reparation or indemnity given in exchange for
the destruction of the building is the substitute for
the building itself. The indemnity is the capital
which belongs to the naked owner while the
interest on the capital is the fruits which belong to
the usufructuary.
* Notes from Sir Ampil *
The Civil Code contemplates a situation where the
owner pays for the construction of a new building.
However, the twist in this case was that the naked
owner did not have to construct a new one because the
Chinaman had one built at his own expense. This is the

reason why the court had a difficult time ascertaining

who had the right to the indemnity given by the
government for the destruction of the building due to
the war.
Majority Opinion: The reparation should be treated as
fruits. Usufructuary should get 6% of the reparation
(from the time it was actually received to the tend of
the life of the usufruct) because it was not used to
construct a new building. Otherwise, the naked owner
is enriched twice first from the reparation and second
from the fruits if payment of rent stops when the
building is constructed. Thus, the new building should
be considered as the capital, and the reparation as
fruits. The naked owner should share the reparation
with the usufructuary to prevent unjust enrichment.
Ponentes Opinion: The reparation should be treated
as capital (NCC). Only the interest on the reparation up
to the date that the new building was constructed time
should be given to the usufructuary, not the interest
until the end of the usufruct. The reparation itself
which is considered as the capital (which rightfully
belongs to the naked owner) intended to replace the
old building. The intention was fulfilled when the
Chinaman constructed a new one. It was not the naked
owners fault that he need not use the reparation to
construct a new building. The owner is not doubly
compensated because it was not his fault.
Dissenting opinion: There is double benefit in either
case. In the first, the usufructuary will be receiving
interest on the reparation and rent from the building.
In the second, 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 would have been freed from paying
interest but they did not.
*********************************
FACTS:
Doa Rosario Fabie y Grey was the owner of the lot in
the City of Manila with a building and improvements,
and by a will left by her upon her death which was duly
probated she devised the naked ownership of the whole
property to Rosario Grey Vda. de Albar, et al. but its
usufruct to Josefa Fabie for life.
During liberation, as a consequence of the fire that
gutted the building in many portions of Manila, the
building on the Ongpin lot was burned, leaving only the

PROPERTY CASE DIGESTS (ATTY. AMPIL) 10th week

Imperial Sia Plazo Noel De Los Santos Bleza Cimagala Bedural | 2D 2012|

walls and other improvements that were not destroyed

by the fire.
One Au Pit, a Chinaman, offered to lease the property
for a period of five years, at the same time agreeing to
construct on the lot a new building provided the naked
owners as well as the usufructuary sign the agreement
of the lease. As the usufructuary maintains that she has
the exclusive right to cede the property by lease and to
receive the full rental value by virtue of her right to
usufruct while on the other hand the naked owners
maintain that the right of usufruct was extinguished
when the building was destroyed, the right of the
usufructory being limited to the legal interest on the
value of the lot and the materials, in order that the
agreement of lease may be affected, the parties
agreed on a temporary compromise whereby the naked
owners would receive P100.00, or 20% of the monthly
rental of P500.00 and the usufructuary the balance of
80% or P400.00 of said monthly rental. It was likewise
stipulated in the agreement that the title to the
building to be constructed would accrue to the land
upon it completion as an integral part of the lot
covered by the transfer certificate of title issued in the
name of the naked owners but subject to the right of
usufruct of Josefa Fabie. The parties expressly reserved
the right to litigate their respective claims after the
termination of the contract of lease to determine
which of said claims was legally correct.
By reason of the destruction of the building on the
Ongpin property, the United States War Damage
Commission approved the claim that was presented for
the damage caused to the property, paid to and
received by the naked owners. In the meantime, the
usufructuary paid the real estate taxes due on the
property at Ongpin for the years 1945 to 1952.
ISSUE:
W/N the usufruct included the building and the land?
W/N the usufructuary (FABIE) or naked owner (VDA DE
ALBAR) should undertake the reconstruction? W/N the
usufructuary should pay the real estate taxes?
HELD:
The usufruct for life extended to the land and the
building. From the above, it is clear that when the
deceased constituted the life usufruct on the rentals
"fincas situadas" in Ongpin and Sto. Cristo streets, she
meant to impose the encumbrance both the building
and the land on which it is erected for indeed the
building cannot exist without the land. And as this
Court well said, "The land, being an indispensable part
of the rented premises cannot be considered as having
no rental value whatsoever." Moreover, in the Spanish
language, the term "fincas" has a broad scope; it
includes not only building but land as well. (Diccionario
Ingles-Espaol, por Martines Amador) Since only the
building was destroyed and the usufruct is constituted

not only on the building but on the land as well, then

the usufruct is not deemed extinguished by the
destruction of the building for under the law usufruct is
extinguished only by the total loss of the thing subject
of the encumbrance (Article 603, old Civil Code).
FABIE, the usufructuary has the discretion to
reconstruct the building. Of course, this is addressed to
the wisdom and discretion of the usufructuary who, to
all intents and purposes is deemed as the administrator
of the property. This has been clarified in the case of
Fabie vs. Gutierrez David, 75 Phil., 536, which was
litigated between the same parties and wherein the
scope of the same provision of the will has been the
subject of interpretation.
The usufructuary should pay the taxes. We find,
however, merit in the contention that the real estate
taxes paid by respondent in her capacity as
usufractuary for several years previous to the present
litigation should be paid by her, as she did, instead of
by petitioners not only because she bound herself to
pay such taxes in a formal agreement approved by the
court in Civil Case No. 1569 of the Court of First
Instance of Manila (Fabie vs. Gutierrez David, supra). In
the case, which involved the same parties and the
same properties subject to usufruct, the parties
submitted an amicable agreement which was approved
by the court wherein the usufructuary, herein
respondent, bound herself to pay all the real estate
taxes, special assessment and insurance premiums, and
make all 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
3. BALURAN V. NAVARRO I OBEDENCIO
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.

PROPERTY CASE DIGESTS (ATTY. AMPIL) 10th week

Imperial Sia Plazo Noel De Los Santos Bleza Cimagala Bedural | 2D 2012|

ISSUE:
W/N 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.
Now, because it is usufruct, the law allows the parties
to stipulate the conditions including the manner of its
extinguishment. In this case, it was subject to a
resolutory condition which is in case the heir of Paraiso
(a third party) desires to repossess the property. Upon
the happening of the condition, the contract is
extinguished.
Therefore, Baluran must return the land to Obedencia.
But since Art. 579 allows the usufructuary to remove
improvements he made, Baluran may remove the house
he constructed.
One last point. At the time of this case, the Obedencias
were also in possession of the riceland of Baluran.
Although it was not proper to decide the issue of
possession in this case, the Court nevertheless decided
on the matter and order the Obedencias to vacate the
property inasmuch as there was an extinguishment of a
reciprocal obligations and rights.
2.