PROPERTY CASE DIGESTS | 10TH WEEK

(1) GABOYA V. CUI

FACTS: Don Mariano sold his three lots pro diviso to his
three children. One of his children, due to lack of funds,
was not able to purchase part of the land. This reverted
back to the father. As part of the sale, the father
reserved for himself the usufruct of the property. He coowned the land with his children then. A building was
then constructed in a portion of the land, wherein the
rentals was given to the father. Thereafter, he two
children who were co-owners obtained a loan, secured by
a mortgage, with authority of the father, to construct a
commercial building. The father alleges that since he has
a usufruct over the land, he has usufruct or share in the
rentals earned through the constructed building.
ISSUE: W/N the usufruct extended to the rentals of the
building subsequently built by the 2 children co-owners
HELD: NO. The reserved right of vendor on a parcel of
land does NOT include rentals from the building
subsequently constructed on the vacant lots, but that it
did entitle the usufructuary (Don Mariano) to a reasonable
rent for the portion of the land being occupied by the
building.

(2) VDA. DE ALBAR V. CARANGDANG

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
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:
(1) W/N the usufruct included the building and the
land?
(2) W/N the usufructuary (FABIE) or naked owner
(VDA DE ALBAR) should undertake the
reconstruction?
(3) 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

PROPERTY CASE DIGESTS | 10TH WEEK

(4) BALURAN V. NAVARRO
DOCTRINE: 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: W/N the contract was a barter or something else
(hula ko lang 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.