Fabie v.
Gutierrez David The petitioner Josefa Fabie is the usufructuary of the income
G.R. No. L-123, December 12, 1945, 75 Phil. 536
FACTS:
The petitioner Josefa Fabie is the usufructuary of the income
of certain houses located at 372- 376 Santo Cristo, Binondo,
and 950-956 Ongpin, Santa Cruz, Manila, under the ninth
clause of the will of the deceased Rosario Fabie y Grey. The
owner of Santo Cristo property abovementioned is the
respondent Juan Grey, while those of the Ongpin property are
other person not concern herein. Previous to September 1944
litigation arose between Josefa Fabie as plaintiff and Juan
Grey as defendant and the owner of the Ongpin property as
intervenors, involving the administration of the houses
mentioned.
ISSUE:
Whether or not the action instituted by the petitioner Josefa
Fabie is a purely possessory action and as such within the
jurisdiction of said court, or an action founded on property
right and therefore beyond the jurisdiction of the municipal
court.
HELD:
Yes.
It is admitted by the parties that the petitioner Josefa Fabie is
the usufructuary of the income of the property in question and
that the respondent Juan Grey is the owner thereof. It is
likewise admitted that by virtue of a final judgment entered in
Civil Case No. 1659 of the Court of First Instance of Manila
between the usufructuary and the owner, the former has the
right to collect all the rents of said property for herself
with the obligation on her part to pay all the real
estate taxes, special assessments, and insurance premiums,
and make all necessary repairs thereon, and in case default on
her part the owner shall have the right to do all those things, in
which event he shall be entitled to collect all subsequent rents
of the property concerned until the amount paid by him and
the expenses of collection are fully satisfied, after which the
usufructuary shall again collect the rents. There is therefore no
dispute as to the title to or the respective interests of the
parties in the property in question. The naked title to the
property is to admittedly in the respondent Juan Grey, but the
right to all the rents thereof, with the obligation to pay the
taxes and insurance premiums and make the necessary repairs,
is, also admittedly, vested in the usufructuary, the petitioner
Josefa Fabie, during her lifetime.
Construing said judgment in the light of the ninth
clause of the will of the deceased Rosario Fabie y Grey, which
was quoted in the decision and by which Josefa Fabie was
made by the usufructuary during her lifetime of the income of
the property in question, we find that the said usufructuary has
the right to administer the property in question. All the acts of
administration — to collect the rents for herself, and to
conserve the property by making all necessary repairs and
paying all the taxes, special assessments, and insurance
premiums thereon — were by said judgment vested in the
usufructuary.
G.R. No. L-123 December 12, 1945
JOSEFA FABIE, vs. JOSE GUTIERREZ DAVID, Judge
of First Instance of Manila, NGO BOO SOO and JUAN
GREY,
of certain houses located at 372-376 Santo Cristo, Binondo,
and 950-956 Ongpin, Santa Cruz, Manila, under the ninth
clause of the will of the deceased Rosario Fabie y Grey, which
textually reads as follows:
NOVENO. — Lego a mi ahijada menor de edad,
Maria Josefa de la Paz Fabie, en usufructo vitalicio las rentas
de las fincas situadas en la Calle Santo Cristo Numeros 372 al
376 del Disrito de Binondo, de esta Ciudad de Manila, descrita
en el Certificado Original de Titulo No. 3824; y en la Calle
Ongpin, Numeros 950 al 956 del Distrito de Santa Cruz,
Manila descrita en el Certificado Original de Titulo No. 5030,
expedidos por el Registrador de Titulos de Manila, y prohibo
enajene, hipoteque, permute o transfiera de algun modo
mientras que ella sea menor de edad. Nombro a Serafin Fabie
Macario, mi primo por linea paterna tutor de la persona y
bienes de mi ahijada menor, Maria Josefa de la Paz Fabie.
The owner of Santo Cristo property abovementioned
is the respondent Juan Grey, while those of the Ongpin
property are other person not concern herein. Previous to
September 1944 litigation arose between Josefa Fabie as
plaintiff and Juan Grey as defendant and the owner of the
Ongpin property as intervenors, involving the administration
of the houses mentioned in clause 9 of the will above quoted
(civil case No. 1659 of the Court of First Instance of Manila).
That suit was decided by the court on September 2, 1944,
upon a stipulation in writing submitted by the parties to and
approved by the court. The pertinent portions of said
stipulation read as follows:
(4) Heretofore, the rent of said properties have been
collected at times by the respective owners of the properties, at
other times by the usufructuary, and lastly by the defendant
Juan Grey as agent under a written agreement dated March 31,
1942, between the owners of both properties and the
usufructuary.
(5) When the rents were collected by the owners, the
net amounts thereof were duly paid to the usufructuary after
the expenses for real estate taxes, repairs and insurance
premiums, including the documentary stamps, on the
properties and the expenses of collecting the rents had been
deducted, and certain amount set aside as a reserve for
contingent liabilities. When the rents were collected by the
usufructuary, she herself paid the expenses aforesaid. When
the rents are collected by the defendant Juan Grey under the
agreement of March 31, 1942, the net amounts thereof were
duly paid to the usufructuary, after deducting and setting aside
the items aforesaid, monthly, until the month of October 1943,
when the usufructuary refused to continue with the agreement
of March 31, 1942.
xxx xxx xxx
II. The parties hereto jointly petition the Court to
render judgment adopting the foregoing as finding of facts and
disposing that:
(8) Beginning with the month of September 1944, the
usufructuary shall collect all the rents of the both the Sto.
Cristo and the Ongpin properties.
(9) The usufructuary shall, at her own cost and
expense, pay all the real estate taxes, special assessments, and
insurance premiums, including the documentary stamps, and
make all the necessary repairs on each of the properties,
promptly when due or, in the case of repairs, when the
necessary, giving immediate, written notice to the owner or
owners of the property concerned after making such payment
or repairs. In case of default on the part of the usufructuary,
the respective owners of the properties shall have the right to
make the necessary payment, including penalties and interest,
if any, on the taxes and special assessments, and the repairs
and in that event the owner or owners shall entitled to collect
all subsequent rents of the property concerned until the
amount paid by him or them and the expenses of collection are
fully covered thereby, after which the usufructuary shall again
collect the rents in accordance herewith.
(10) The foregoing shall be in effect during the term
of the usufruct and shall be binding on the successors and
assigns of each of the parties.
(11) Nothing herein shall be understood as affecting
any right which the respective owners of the properties have
or may have as such and which is not specifically the subject
of this stipulation.
In June 1945 Josefa Fabie commenced an action of
unlawful detainer against the herein respondent Ngo Boo Soo
(who says that his correct name is Ngo Soo), alleging in her
amended complaint that the defendant is occupying the
premises located at 372-376 Santo Cristo on a month-to month
rental payable in advance not latter than the 5th of each month;
that she is the administratrix and usufructuary of said premises;
"that the defendant offered to pay P300 monthly rent payable
in advance not later than the 5th of every month, beginning the
month of April 1945, for the said of premises including the
one door which said defendant, without plaintiff's consent and
contrary to their agreement, had subleased to another Chinese,
but plaintiff refused, based on the fact that the herein plaintiff
very badly needs the said house to live in, as her house was
burned by the Japanese on the occasion of the entry of the
American liberators in the City and which was located then at
No. 38 Flores, Dominga, Pasay; that defendant was duly
notified on March 24 and April 14, 1945, to leave the said
premises, but he refused"; and she prayed for judgment of
eviction and for unpaid rentals.
The defendant answered alleging that he was and
since 1908 had been a tenant of the premises in question,
which he was using and had always used principally as a store
and secondarily for living quarters; that he was renting it from
its owner and administrator Juan Grey; "that plaintiff is merely
the usufructuary of the income therefrom, and by agreement
between her and said owner, which is embodied in a final
judgment of the Court of First Instance of Manila, her only
right as usufructuary of the income is to receive the whole of
such income; that she has no right or authority to eject tenants,
such right being in the owner and administrator of the house,
the aforesaid Juan Grey, who has heretofore petitioned this
Court for permission to intervene in this action; that plaintiff
herein has never had possession of said property; that
defendant's lease contract with the owner of the house is for 5-
year period, with renewal option at the end of each period, and
that his present lease due to expire on December 31, 1945 . . .;
that on June 1, 1945, defendant made a written offer to
plaintiff to compromise and settle the question of the amount
of rent to be paid by defendant . . . but said plaintiff rejected
the same for no valid reason whatever and instituted the
present action; that the reason plaintiff desires to eject
defendant from the property is that she wishes to lease the
same to other persons for a higher rent, ignoring the fact that
as usufructuary of the income of the property she has no right
to lease the property; that the defendant has subleased no part
of the house to any person whomsoever.
Juan Grey intervened in the unlawful detainer suit,
alleging in his complaint in intervention that he is the sole and
absolute owner of the premises in question; that the plaintiff
Josefa Fabie is the usufructuary of the income of said premises;
by virtue of a contract between him and the intervenor which
will expire on December 31, 1945, with the option to renew it
for another period of five years from and after said date; that
under the agreement between the intervenor and plaintiff
Josefa Fabie in civil case No. 1659 of the Court of First
Instance of Manila, which was approved by the court and
incorporated in its decision of September 2, 1944, the only
right recognized in favor of Josefa Fabie as usufructuary of the
income of said premises is to receive the rents therefrom when
due; and that as usufructuary she has no right nor authority to
administer the said premises nor to lease them nor to evict
tenants, which right and authority are vested in the intervenor
as owner of the premises.
The municipal court (Judge Mariano Nable presiding)
found that under paragraph 9 of the stipulation incorporated in
the decision of the Court First Instance of Manila in civil; case
No. 1659, the plaintiff usufructuary is the administratrix of the
premises in question, and that the plaintiff had proved her
cause. Judgment was accordingly rendered ordering the
defendant Ngo Soo to vacate the premises and to pay the rents
at the rate of P137.50 a month beginning April 1, 1945. The
complaint in intervention was dismissed.
Upon appeal to the Court of First Instance of Manila
the latter (thru Judge Arsenio P. Dizon) dismissed the case for
the following reason: "The main issue *** is not a mere
question of possession but precisely who is entitled to
administer the property subject matter of this case and who
should be the tenant, and the conditions of the lease. These
issues were beyond the jurisdiction of the municipal court.
This being case, this Court, as appellate court, is likewise
without jurisdiction to take cognizance of the present case." A
motion for reconsideration filed by the plaintiff was denied by
Judge Jose Gutierrez David, who sustained the opinion of
Judge Dizon.lawphi1.net
The present original action was instituted in this
Court by Josefa Fabie to annul the order of the dismissal and
to require to the Court of First Instance to try and decide the
case on the merits. The petitioner further prays that the appeal
of the intervenor Juan Grey be declared out of time on the
ground that he receive copy of the decision on August 3 but
did not file his notice of appeal until August 25, 1945.
1. The first question to determine is whether the
action instituted by the petitioner Josefa Fabie in the municipal
court is a purely possessory action and as such within the
jurisdiction of said court, or an action founded on property
right and therefore beyond the jurisdiction of the municipal
court. In other words, is it an action of unlawful detainer
within the purview of section 1 of Rule 72, or an action
involving the title to or the respective interests of the parties in
the property subject of the litigation?
Said section 1 of Rule 72 provides that "a landlord,
vendor, vendee, or other person against whom the possession
of any land or building is unlawfully withheld after the
expiration or termination of the right to hold possession, by
virtue of any contract, express or implied, or the legal
representatives or assigns of any such landlord, vendor vendee,
or other person, may, at any time within one year after such
unlawful deprivation of withholding of possession, bring an
action in the proper inferior court against the person or
persons unlawfully withholding or depriving of possession, or
any person or persons claiming under them, for the restitution
of such possession, together with the damages and costs."
It is admitted by the parties that the petitioner Josefa
Fabie is the usufructuary of the income of the property in
question and that the respondent Juan Grey is the owner
thereof. It is likewise admitted that by virtue of a final
judgment entered in civil case No. 1659 of the Court of First
Instance of Manila between the usufructuary and the owner,
the former has the right to collect all the rents of said property
for herself with the obligation on her part to pay all the real
estate taxes, special assessments, and insurance premiums, and
make all necessary repairs thereon, and in case default on her
part the owner shall have the right to do all those things, in
which event he shall be entitled to collect all subsequent rents
of the property concerned until the amount paid by him and
the expenses of collection are fully satisfied, after which the
usufructuary shall again collect the rents. There is therefore no
dispute as to the title to or the respective interests of the
parties in the property in question. The naked title to the
property is to admittedly in the respondent Juan Grey, but the
right to all the rents thereof, with the obligation to pay the
taxes and insurance premiums and make the necessary repairs,
is, also admittedly, vested in the usufructuary, the petitioner
Josefa Fabie, during her lifetime. The only question between
the plaintiff and the intervenor is: Who has the right to manage
or administer the property — to select the tenant and to fix the
amount of the rent? Whoever has that right has the right to the
control and possession of the property in question, regardless
of the title thereto. Therefore, the action is purely possessory
and not one in any way involving the title to the property.
Indeed, the averments and the prayer of the complaint filed in
the municipal court so indicate, and as a matter of fact the
defendant Ngo Soo does not pretend to be the owner of the
property, but on the contrary admits to be a mere tenant
thereof. We have repeatedly held that in determining whether
an action of this kind is within the original jurisdiction of the
municipal court or of the Court of First Instance, the
averments of the complaint and the character of the relief
sought are primarily to be consulted; that the defendant in
such an action cannot defeat the jurisdiction of the justice of
the peace or municipal court by setting up title in himself; and
that the factor which defeats the jurisdiction of said court is
the necessity to adjudicate the question of title.
(Mediran vs. Villanueva, 37 Phil., 752, 759;
Medel vs.Militante, 41 Phil., 526, 529; Sevilla vs. Tolentino,
51 Phil., 333; Supia and Batioco vs. Quintero and Ayala, 59
Phil., 312; Lizo vs. Carandang, G.R. No. 47833, 2 Off. Gaz.,
302; Aguilar vs. Cabrera and Flameño, G.R. No. 49129.)
The Court of First Instance was evidently confused
and led to misconstrue the real issue by the complaint in
intervention of Juan Grey, who, allying himself with the
defendant Ngo Soo, claimed that he is the administrator of the
property with the right to select the tenant and dictate the
conditions of the lease, thereby implying that it was he and not
the plaintiff Josefa Fabie who had the right to bring the action
and oust the tenant if necessary. For the guidance of that court
and to obviate such confusion in its disposal of the case on the
merits, we deem it necessary and proper to construe the
judgment entered by the Court of First Instance of Manila in
civil case No. 1659, entitled "Josefa Fabie and Jose Carandang,
plaintiffs, vs. Juan Grey, defendant, and Nieves G. Vda. de
Grey, et al., intervenors-defendants" which judgment was
pleaded by the herein respondents Juan Grey and Ngo Soo in
the municipal court. According the decision, copy of which
was submitted to this Court as Appendix F of the petition and
as Annex 1 of the answer, there was an agreement, dated
March 31, 1942, between the usufructuary Josefa Fabie and
the owner Juan Grey whereby the latter as agent collected the
rents of the property in question and delivered the same to the
usufructuary after deducting the expenses for taxes, repairs,
insurance premiums and the expenses of collection; that in the
month of October 1943 the usufructuary refused to continue
with the said agreement of March 31, 1942, and thereafter the
said case arose between the parties, which by stipulation
approved by the court was settled among them in the
following manner: Beginning with the month of September
1944 the usufructuary shall collect all the rents of the property
in question; shall, at her own cost and expense, pay all the real
estate taxes, special assessments, and insurance premiums,
including the documentary stamps, and make all the necessary
repairs on the property; and in case of default on her part the
owner shall the right to do any or all of those things, in which
event he shall be entitled to collect all subsequent rents until
the amounts paid by him are fully satisfied, after which the
usufructuary shall again collect the rents. It was further
stipulated by the parties and decreed by the court that "the
foregoing shall be in effect during the term of the usufruct and
shall be binding on the successors and assigns of each of the
parties."
Construing said judgment in the light of the ninth
clause of the will of the deceased Rosario Fabie y Grey, which
was quoted in the decision and by which Josefa Fabie was
made by the usufructuary during her lifetime of the income of
the property in question, we find that the said usufructuary has
the right to administer the property in question. All the acts of
administration — to collect the rents for herself, and to
conserve the property by making all necessary repairs and
paying all the taxes, special assessments, and insurance
premiums thereon — were by said judgment vested in the
usufructuary. The pretension of the respondent Juan Grey that
he is the administrator of the property with the right to choose
the tenants and to dictate the conditions of the lease is contrary
to both the letter and the spirit of the said clause of the will,
the stipulation of the parties, and the judgment of the court. He
cannot manage or administer the property after all the acts of
management and administration have been vested by the court,
with his consent, in the usufructuary. He admitted that before
said judgment he had been collecting the rents as agent of the
usufructuary under an agreement with the latter. What legal
justification or valid excuse could he have to claim the right to
choose the tenant and fix the amount of the rent when under
the will, the stipulation of the parties, and the final judgment
of the court it is not he but the usufructuary who is entitled to
said rents? As long as the property is properly conserved and
insured he can have no cause for complaint, and his right in
that regard is fully protected by the terms of the stipulation
and the judgment of the court above mentioned. To permit him
to arrogate to himself the privilege to choose the tenant, to
dictate the conditions of the lease, and to sue when the lessee
fails to comply therewith, would be to place the usufructuary
entirely at his mercy. It would place her in the absurd situation who chose not to answer the petition herein, would be
of having a certain indisputable right without the power to academic in view of the conclusions we have reached above
protect, enforce, and fully enjoy it. that the rights between him as owner and Josefa Fabie as
One more detail needs clarification. In her complaint usufructuary of the property in question have been definitely
for desahucio Josefa Fabie alleges that she needs the premises settled by final judgment in civil case No. 1659 of the Court of
in question to live in, as her former residence was burned. Has First Instance of Manila in the sense that the usufructuary has
she the right under the will and the judgment in question to the right to administer and possess the property in question,
occupy said premises herself? We think that, as a corollary to subject to certain specified obligations on her part.
her right to all the rent, to choose the tenant, and to fix the The orders of dismissal of the respondent Court of
amount of the rent, she necessarily has the right to choose First Instance, dated September 22 and October 31, 1945, in
herself as the tenant thereof, if she wishes to; and, as she the desahucio case (No. 71149) are set aside that court is
fulfills her obligation to pay the taxes and insure and conserve directed to try and decide the said case on the merits; with the
the property properly, the owner has no legitimate cause to costs hereof against the respondent Ngo Soo.
complain. As Judge Nable of the municipal court said in his
decision, "the pretension that the plaintiff, being a mere
usufructuary of the rents, cannot occupy the property, is
illogical if it be taken into account that that could not have
been the intention of the testatrix."
We find that upon the pleadings, the undisputed facts,
and the law the action instituted in the municipal court by the
petitioner Josefa Fabie against the respondent Ngo Soo is one
of unlawful detainer, within the original jurisdiction of said
court, and that therefore Judges Dizon and Gutierrez David of
the Court of First Instance erred in holding otherwise and in
quashing the case upon appeal.
2. The next question to determine is the propriety of
the remedy availed of by the petitioner in this Court. Judging
from the allegations and the prayer of the petition, it is in the
nature of certiorari and mandamus, to annul the order of
dismissal and to require the Court of First Instance to try and
decide the appeal on the merits. Under section 3 of Rule 67,
when any tribunal unlawfully neglects the performance of an
act which the law specifically enjoins as a duty resulting from
an office, and there is no other plain, speedy, and adequate
remedy in the ordinary course of law, it may be compelled
by mandamus to do the act required to be done to protect the
rights of the petitioner. If, as we find, the case before the
respondent judge is one of unlawful detainer, the law
specifically requires him to hear and decide that case on the
merits, and his refusal to do so would constitute an unlawful
neglect in the performance of that duty within section 3 of
Rule 67. Taking into consideration that the law requires that
an unlawful detainer case be promptly decided (sections 5 and
8, Rule 72),it is evident that an appeal from the order of
dismissal would not be a speedy and adequate remedy; and
under the authority of Cecilio vs. Belmonte (48 Phil., 243,
255), and Aguilar vs. Cabrera and Flameño (G.R. No. 49129),
we hold that mandamus lies in this case.
3. The contention of the petitioner that the appeal of
the intervenor Juan Grey was filed out of time is not well
founded. Although said respondent received copy of the
decision of the municipal court on August 3, 1945, according
to the petitioner (on August 6, 1945, according to the said
respondent), it appears from the sworn answer of the
respondent Ngo Soo in this case that on August 8 he filed a
motion for reconsideration, which was granted in part on
August 18. Thus, if the judgment was modified on August 18,
the time for the intervenor Juan Grey to appeal therefrom did
not run until he was notified of said judgment as modified, and
since he filed his notice of appeal on August 23, it would
appear that his appeal was filed on time. However, we observe
in this connection that said appeal of the intervenor Juan Grey,
National Housing Authority v CA, Bulacan Garden
Corporation and Manila Seedling Bank Foundation (2005)
National Housing Authority = NHA
Bulacan Garden Corporation = BGC
Manila Seedling Bank Foundation = MSBF
Facts
October 24, 1968: Proclamation 481 set aside 120ha owned
by NHA in Quezon City. It was reserved property for the site
of the National Government Center September 19, 1977:
Proclamation 1670 removed a 7ha portion from the 120ha. It
also gave MBSF usufructuary rights over the 7ha. The
Proclamation stated that the location of the 7ha within
the 120ha would be determined by a future survey under the
administration of MBSF.MBSF's occupancy gradually
exceeded the 7ha area. By 1987, it occupied around 16ha of
the 120ha. The land it occupied was bounded by EDSA to the
west, Agham Road to the east, Quezon Avenue to the south,
and a creek to the north .August 18, 1987: MBSF leased a
portion of the area it occupied to BGC and other stallholders.
BGC leased the portion facing EDSA. It occupied 4590 sq
m of the 16ha.November 11, 1987: Memorandum Order 127
revoked the reserved status of the50ha remaining from the
120ha NHA property reserved under Proclamation 481. It
authorized the NHA to commercialize the area and sell it to
the public .August 15, 1988: NHA gave BGC 10 days to
vacate its occupied area because it was outside the 7ha granted
to MBSF. After the 10 days, remaining structures would be
demolished by the NHA.BGC filed a complaint for injunction.
Trial court dismissed - NHA may demolish. NHA demolished
BGC's facilities. Court of appeals reversed.
WHETHER THE PREMISES LEASED BY
BGC FROM MSBF IS WITHIN THE SEVEN-
HECTARE AREA THAT PROCLAMATION
NO. 1670 GRANTED TO MSBF BY WAY OF
USUFRUCT.
A usufruct may be constituted for a specified term and under
such conditions as the parties may deem convenient subject to
the legal provisions on usufruct.[9] A usufructuary may lease
the object held in usufruct.[10] Thus, the NHA may not evict
BGC if the 4,590 square meter portion MSBF leased to BGC
is within the seven-hectare area held in usufruct by MSBF.
The owner of the property must respect the lease entered into
by the usufructuary so long as the usufruct exists.[11] However,
the NHA has the right to evict BGC if BGC occupied a
portion outside of the seven-hectare area covered by MSBFs
usufructuary rights.
In the present case, Proclamation No. 1670 is the title
constituting the usufruct. Proclamation No. 1670 categorically
states that the seven-hectare area shall be determined by future
survey under the administration of the Foundation subject to
private rights if there be any. The appellate court and the trial
court agree that MSBF has the latitude to determine the
location of its seven-hectare usufruct portion within the 16-
hectare area. The appellate court and the trial court disagree,
however, whether MSBF seasonably exercised this right.
It is clear that MSBF conducted at least two surveys. Although
both surveys covered a total of 16 hectares, the second survey
specifically indicated a seven-hectare area shaded in yellow.
MSBF made the first survey in 1984 and the second in 1986,
way before the present controversy started. MSBF conducted
the two surveys before the lease to BGC. The trial court ruled
that MSBF did not act seasonably in exercising its right to
conduct the survey. Confronted with evidence that MSBF did
in fact conduct two surveys, the trial court dismissed the two
surveys as self-serving. This is clearly an error on the part of
the trial court. Proclamation No. 1670 authorized MSBF to
determine the location of the seven-hectare area. This
authority, coupled with the fact that Proclamation No. 1670
did not state the location of the seven-hectare area, leaves no
room for doubt that Proclamation No. 1670 left it to MSBF to
choose the location of the seven-hectare area under its usufruct.
A usufruct gives a right to enjoy the property of another with
the obligation of preserving its form and substance, unless the
title constituting it or the law otherwise provides.[22] This
controversy would not have arisen had MSBF respected the
limit of the beneficial use given to it. MSBFs encroachment of
its benefactors property gave birth to the confusion that
attended this case. To put this matter entirely to rest, it is not
enough to remind the NHA to respect MSBFs choice of the
location of its seven-hectare area. MSBF, for its part, must
vacate the area that is not part of its usufruct. MSBFs rights
begin and end within the seven-hectare portion of its usufruct.
This Court agrees with the trial court that MSBF has abused
the privilege given it under Proclamation No. 1670. The direct
corollary of enforcing MSBFs rights within the seven-hectare
area is the negation of any of MSBFs acts beyond it.
The seven-hectare portion of MSBF is no longer easily
determinable considering the varied structures erected within
and surrounding the area. Both parties advance different
reasons why their own surveys should be preferred. At this
point, the determination of the seven-hectare portion cannot be
made to rely on a choice between the NHAs and MSBFs
survey. There is a need for a new survey, one conducted
jointly by the NHA and MSBF, to remove all doubts on the
exact location of the seven-hectare area and thus avoid future
controversies. This new survey should consider existing
structures of MSBF. It should as much as possible include all
of the facilities of MSBF within the seven-hectare portion
without sacrificing contiguity.
G.R. No. 148830. April 13, 2005]
NATIONAL HOUSING AUTHORITY, petitioner,
vs. COURT OF APPEALS, BULACAN GARDEN
CORPORATION and MANILA SEEDLING BANK
FOUNDATION, INC., respondents.
DECISION
CARPIO, J.:
The Case
This is a petition for review[1] seeking to set aside the
Decision[2] dated 30 March 2001 of the Court of Appeals
(appellate court) in CA-G.R. CV No. 48382, as well as its
Resolution dated 25 June 2001 denying the motion for
reconsideration. The appellate court reversed the Decision[3] of
Branch 87 of the Regional Trial Court of Quezon City (trial
court) dated 8 March 1994 in Civil Case No. Q-53464. The
trial court dismissed the complaint for injunction filed by
Bulacan Garden Corporation (BGC) against the National
Housing Authority (NHA). BGC wanted to enjoin the NHA
from demolishing BGCs facilities on a lot leased from Manila
Seedling Bank Foundation, Inc. (MSBF). MSBF allegedly has
usufructuary rights over the lot leased to BGC.
Antecedent Facts
On 24 October 1968, Proclamation No. 481 issued by then
President Ferdinand Marcos set aside a 120-hectare portion of
land in Quezon City owned by the NHA[4] as reserved
property for the site of the National Government Center
(NGC). On 19 September 1977, President Marcos issued
Proclamation No. 1670, which removed a seven-hectare
portion from the coverage of the NGC. Proclamation No. 1670
gave MSBF usufructuary rights over this segregated portion,
as follows:
Pursuant to the powers vested in me by the Constitution and
the laws of the Philippines, I, FERDINAND E. MARCOS,
President of the Republic of the Philippines, do hereby
exclude from the operation of Proclamation No. 481, dated
October 24, 1968, which established the National Government
Center Site, certain parcels of land embraced therein and
reserving the same for the Manila Seedling Bank Foundation,
Inc., for use in its operation and projects, subject to private
rights if any there be, and to future survey, under the
administration of the Foundation.
This parcel of land, which shall embrace 7 hectares, shall be
determined by the future survey based on the technical
descriptions found in Proclamation No. 481, and most
particularly on the original survey of the area, dated July 1910
to June 1911, and on the subdivision survey dated April 19-25,
1968. (Emphasis added)
MSBF occupied the area granted by Proclamation No. 1670.
Over the years, MSBFs occupancy exceeded the seven-hectare
area subject to its usufructuary rights. By 1987, MSBF
occupied approximately 16 hectares. By then the land
occupied by MSBF was bounded by Epifanio de los Santos
Avenue (EDSA) to the west, Agham Road to the east, Quezon
Avenue to the south and a creek to the north.
On 18 August 1987, MSBF leased a portion of the area it
occupied to BGC and other stallholders. BGC leased the
portion facing EDSA, which occupies 4,590 square meters of
the 16-hectare area.
On 11 November 1987, President Corazon Aquino issued
Memorandum Order No. 127 (MO 127) which revoked the
reserved status of the 50 hectares, more or less, remaining out
of the 120 hectares of the NHA property reserved as site of the
National Government Center. MO 127 also authorized the
NHA to commercialize the area and to sell it to the public.
On 15 August 1988, acting on the power granted under MO
127, the NHA gave BGC ten days to vacate its occupied area.
Any structure left behind after the expiration of the ten-day
period will be demolished by NHA.
BGC then filed a complaint for injunction on 21 April 1988
before the trial court. On 26 May 1988, BGC amended its
complaint to include MSBF as its co-plaintiff.
The Trial Courts Ruling
The trial court agreed with BGC and MSBF that Proclamation
No. 1670 gave MSBF the right to conduct the survey, which
would establish the seven-hectare area covered by MSBFs
usufructuary rights. However, the trial court held that MSBF
failed to act seasonably on this right to conduct the survey.
The trial court ruled that the previous surveys conducted by
MSBF covered 16 hectares, and were thus inappropriate to
determine the seven-hectare area. The trial court concluded
that to allow MSBF to determine the seven-hectare area now
would be grossly unfair to the grantor of the usufruct.
On 8 March 1994, the trial court dismissed BGCs complaint
for injunction. Thus:
Premises considered, the complaint praying to enjoin the
National Housing Authority from carrying out the demolition
of the plaintiffs structure, improvements and facilities in the
premises in question is hereby DISMISSED, but the
suggestion for the Court to rule that Memorandum Order 127
has repealed Proclamation No. 1670 is DENIED. No costs.
SO ORDERED.[5]
The NHA demolished BGCs facilities soon thereafter.
The Appellate Courts Ruling
Not content with the trial courts ruling, BGC appealed the trial
courts Decision to the appellate court. Initially, the appellate
court agreed with the trial court that Proclamation No. 1670
granted MSBF the right to determine the location of the seven-
hectare area covered by its usufructuary rights. However, the
appellate court ruled that MSBF did in fact assert this right by
conducting two surveys and erecting its main structures in the
area of its choice.
On 30 March 2001, the appellate court reversed the trial courts
ruling. Thus:
WHEREFORE, premises considered, the Decision dated
March 8, 1994 of the Regional Trial Court of Quezon City,
Branch 87, is hereby REVERSED and SET ASIDE. The
National Housing Authority is enjoined from demolishing the
structures, facilities and improvements of the plaintiff-
appellant Bulacan Garden Corporation at its leased premises
located in Quezon City which premises were covered by
Proclamation No. 1670, during the existence of the contract of
lease it (Bulacan Garden) had entered with the plaintiff-
appellant Manila Seedling Bank Foundation, Inc.
No costs.
SO ORDERED.[6]
The NHA filed a motion for reconsideration, which was
denied by the appellate court on 25 June 2001.
Hence, this petition.
The Issues
The following issues are considered by this Court for
resolution:
WHETHER THE PETITION IS NOW MOOT BECAUSE OF
THE DEMOLITION OF THE STRUCTURES OF BGC;
and
WHETHER THE PREMISES LEASED BY BGC FROM
MSBF IS WITHIN THE SEVEN-HECTARE AREA THAT
PROCLAMATION NO. 1670 GRANTED TO MSBF BY
WAY OF USUFRUCT.
The Ruling of the Court
We remand this petition to the trial court for a joint survey to
determine finally the metes and bounds of the seven-hectare
area subject to MSBFs usufructuary rights.
Whether the Petition is Moot because of the
Demolition of BGCs Facilities
BGC claims that the issue is now moot due to NHAs
demolition of BGCs facilities after the trial court dismissed
BGCs complaint for injunction. BGC argues that there is
nothing more to enjoin and that there are no longer any rights
left for adjudication.
We disagree.
BGC may have lost interest in this case due to the demolition
of its premises, but its co-plaintiff, MSBF, has not. The issue
for resolution has a direct effect on MSBFs usufructuary rights.
There is yet the central question of the exact location of the
seven-hectare area granted by Proclamation No. 1670 to
MSBF. This issue is squarely raised in this petition. There is a
need to settle this issue to forestall future disputes and to put
this 20-year litigation to rest.
On the Location of the Seven-Hectare Area Granted by
Proclamation No. 1670 to MSBF as Usufructuary
Rule 45 of the 1997 Rules of Civil Procedure limits the
jurisdiction of this Court to the review of errors of
law.[7] Absent any of the established grounds for
exception,[8] this Court will not disturb findings of fact of
lower courts. Though the matter raised in this petition is
factual, it deserves resolution because the findings of the trial
court and the appellate court conflict on several points.
The entire area bounded by Agham Road to the east, EDSA to
the west, Quezon Avenue to the south and by a creek to the
north measures approximately 16 hectares. Proclamation No.
1670 gave MSBF a usufruct over only a seven-hectare area.
The BGCs leased portion is located along EDSA.
A usufruct may be constituted for a specified term and under
such conditions as the parties may deem convenient subject to
the legal provisions on usufruct.[9] A usufructuary may lease
the object held in usufruct.[10] Thus, the NHA may not evict
BGC if the 4,590 square meter portion MSBF leased to BGC
is within the seven-hectare area held in usufruct by MSBF.
The owner of the property must respect the lease entered into
by the usufructuary so long as the usufruct exists.[11] However,
the NHA has the right to evict BGC if BGC occupied a
portion outside of the seven-hectare area covered by MSBFs
usufructuary rights.
MSBFs survey shows that BGCs stall is within the seven-
hectare area. On the other hand, NHAs survey shows
otherwise. The entire controversy revolves on the question of
whose land survey should prevail.
MSBFs survey plots the location of the seven-hectare portion
by starting its measurement from Quezon Avenue going
northward along EDSA up until the creek, which serves as the
northern boundary of the land in question. Mr. Ben Malto
(Malto), surveyor for MSBF, based his survey method on the
fact that MSBFs main facilities are located within this area.
On the other hand, NHAs survey determines the seven-hectare
portion by starting its measurement from Quezon Avenue
going towards Agham Road. Mr. Rogelio Inobaya (Inobaya),
surveyor for NHA, based his survey method on the fact that he
saw MSBFs gate fronting Agham Road.
BGC presented the testimony of Mr. Lucito M. Bertol (Bertol),
General Manager of MSBF. Bertol presented a map,[12] which
detailed the area presently occupied by MSBF. The map had a
yellow-shaded portion, which was supposed to indicate the
seven-hectare area. It was clear from both the map and Bertols
testimony that MSBF knew that it had occupied an area in
excess of the seven-hectare area granted by Proclamation No.
1670.[13] Upon cross-examination, Bertol admitted that he
personally did not know the exact boundaries of the seven-
hectare area.[14] Bertol also admitted that MSBF prepared the
map without consulting NHA, the owner of the property. [15]
BGC also presented the testimony of Malto, a registered
forester and the Assistant Vice-President of Planning,
Research and Marketing of MSBF. Malto testified that he
conducted the land survey, which was used to construct the
map presented by Bertol.[16] Bertol clarified that he authorized
two surveys, one in 1984 when he first joined MSBF, and the
other in 1986.[17]In both instances, Mr. Malto testified that he
was asked to survey a total of 16 hectares, not just seven
hectares. Malto testified that he conducted the second survey
in 1986 on the instruction of MSBFs general manager.
According to Malto, it was only in the second survey that he
was told to determine the seven-hectare portion. Malto further
clarified that he based the technical descriptions of both
surveys on a previously existing survey of the property. [18]
The NHA presented the testimony of Inobaya, a geodetic
engineer employed by the NHA. Inobaya testified that as part
of the NHAs Survey Division, his duties included conducting
surveys of properties administered by the NHA.[19] Inobaya
conducted his survey in May 1988 to determine whether BGC
was occupying an area outside the seven-hectare area MSBF
held in usufruct.[20] Inobaya surveyed the area occupied by
MSBF following the same technical descriptions used by
Malto. Inobaya also came to the same conclusion that the area
occupied by MSBF, as indicated by the boundaries in the
technical descriptions, covered a total of 16 hectares. He
further testified that the seven-hectare portion in the map
presented by BGC,[21] which was constructed by Malto, does
not tally with the boundaries BGC and MSBF indicated in
their complaint.
Article 565 of the Civil Code states:
ART. 565. The rights and obligations of the usufructuary shall
be those provided in the title constituting the usufruct; in
default of such title, or in case it is deficient, the provisions
contained in the two following Chapters shall be observed.
In the present case, Proclamation No. 1670 is the title
constituting the usufruct. Proclamation No. 1670 categorically
states that the seven-hectare area shall be determined by future
survey under the administration of the Foundation subject to
private rights if there be any. The appellate court and the trial
court agree that MSBF has the latitude to determine the
location of its seven-hectare usufruct portion within the 16-
hectare area. The appellate court and the trial court disagree,
however, whether MSBF seasonably exercised this right.
It is clear that MSBF conducted at least two surveys. Although
both surveys covered a total of 16 hectares, the second survey
specifically indicated a seven-hectare area shaded in yellow.
MSBF made the first survey in 1984 and the second in 1986,
way before the present controversy started. MSBF conducted
the two surveys before the lease to BGC. The trial court ruled
that MSBF did not act seasonably in exercising its right to
conduct the survey. Confronted with evidence that MSBF did
in fact conduct two surveys, the trial court dismissed the two
surveys as self-serving. This is clearly an error on the part of
the trial court. Proclamation No. 1670 authorized MSBF to
determine the location of the seven-hectare area. This
authority, coupled with the fact that Proclamation No. 1670
did not state the location of the seven-hectare area, leaves no
room for doubt that Proclamation No. 1670 left it to MSBF to
choose the location of the seven-hectare area under its usufruct.
More evidence supports MSBFs stand on the location of the
seven-hectare area. The main structures of MSBF are found in
the area indicated by MSBFs survey. These structures are the
main office, the three green houses, the warehouse and the
composting area. On the other hand, the NHAs delineation of
the seven-hectare area would cover only the four hardening
bays and the display area. It is easy to distinguish between
these two groups of structures. The first group covers
buildings and facilities that MSBF needs for its operations.
MSBF built these structures before the present controversy
started. The second group covers facilities less essential to
MSBFs existence. This distinction is decisive as to which
survey should prevail. It is clear that the MSBF intended to
use the yellow-shaded area primarily because it erected its
main structures there.
Inobaya testified that his main consideration in using Agham
Road as the starting point for his survey was the presence of a
gate there. The location of the gate is not a sufficient basis to
determine the starting point. MSBFs right as a usufructuary as
granted by Proclamation No. 1670 should rest on something
more substantial than where MSBF chose to place a gate.
To prefer the NHAs survey to MSBFs survey will strip MSBF
of most of its main facilities. Only the main building of MSBF
will remain with MSBF since the main building is near the
corner of EDSA and Quezon Avenue. The rest of MSBFs
main facilities will be outside the seven-hectare area.
On the other hand, this Court cannot countenance MSBFs act
of exceeding the seven-hectare portion granted to it by
Proclamation No. 1670. A usufruct is not simply about rights
and privileges. A usufructuary has the duty to protect the
owners interests. One such duty is found in Article 601 of the
Civil Code which states:
ART. 601. The usufructuary shall be obliged to notify the
owner of any act of a third person, of which he may have
knowledge, that may be prejudicial to the rights of ownership,
and he shall be liable should he not do so, for damages, as if
they had been caused through his own fault.
A usufruct gives a right to enjoy the property of another with
the obligation of preserving its form and substance, unless the
title constituting it or the law otherwise provides.[22] This
controversy would not have arisen had MSBF respected the
limit of the beneficial use given to it. MSBFs encroachment of
its benefactors property gave birth to the confusion that
attended this case. To put this matter entirely to rest, it is not
enough to remind the NHA to respect MSBFs choice of the
location of its seven-hectare area. MSBF, for its part, must
vacate the area that is not part of its usufruct. MSBFs rights
begin and end within the seven-hectare portion of its usufruct.
This Court agrees with the trial court that MSBF has abused
the privilege given it under Proclamation No. 1670. The direct
corollary of enforcing MSBFs rights within the seven-hectare
area is the negation of any of MSBFs acts beyond it.
The seven-hectare portion of MSBF is no longer easily
determinable considering the varied structures erected within
and surrounding the area. Both parties advance different
reasons why their own surveys should be preferred. At this
point, the determination of the seven-hectare portion cannot be
made to rely on a choice between the NHAs and MSBFs
survey. There is a need for a new survey, one conducted
jointly by the NHA and MSBF, to remove all doubts on the
exact location of the seven-hectare area and thus avoid future
controversies. This new survey should consider existing
structures of MSBF. It should as much as possible include all
of the facilities of MSBF within the seven-hectare portion
without sacrificing contiguity.
A final point. Article 605 of the Civil Code states:
ART. 605. Usufruct cannot be constituted in favor of a
town, corporation, or association for more than fifty years.
If it has been constituted, and before the expiration of such
period the town is abandoned, or the corporation or
association is dissolved, the usufruct shall be extinguished by
reason thereof. (Emphasis added)
The law clearly limits any usufruct constituted in favor of a
corporation or association to 50 years. A usufruct is meant
only as a lifetime grant. Unlike a natural person, a corporation
or associations lifetime may be extended indefinitely. The
usufruct would then be perpetual. This is especially invidious
in cases where the usufruct given to a corporation or
association covers public land. Proclamation No. 1670 was
issued 19 September 1977, or 28 years ago. Hence, under
Article 605, the usufruct in favor of MSBF has 22 years left.
MO 127 released approximately 50 hectares of the NHA
property as reserved site for the National Government Center.
However, MO 127 does not affect MSBFs seven-hectare area
since under Proclamation No. 1670, MSBFs seven-hectare
area was already exclude[d] from the operation of
Proclamation No. 481, dated October 24, 1968, which
established the National Government Center Site.
WHEREFORE, the Decision of the Court of Appeals dated
30 March 2001 and its Resolution dated 25 June 2001 in CA-
G.R. CV No. 48382 are SET ASIDE. This case is
REMANDED to Branch 87 of the Regional Trial Court of
Quezon City, which shall order a joint survey by the National
Housing Authority and Manila Seedling Bank Foundation, Inc.
to determine the metes and bounds of the seven-hectare
portion of Manila Seedling Bank Foundation, Inc. under
Proclamation No. 1670. The seven-hectare portion shall be
contiguous and shall include as much as possible all existing
major improvements of Manila Seedling Bank Foundation, Inc.
The parties shall submit the joint survey to the Regional Trial
Court for its approval within sixty days from the date ordering
the joint survey. SO ORDERED.
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.
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.
G.R. No. L-44428 September 30, 1977
AVELINO BALURAN, Petitioner, vs. HON. RICARDO Y.
NAVARRO, Presiding Judge, Court of First Instance of
Ilocos Norte, Branch I and ANTONIO
OBEDENCIO, Respondents.
MUÑOZ PALMA, J.:
Spouses Domingo Paraiso and Fidela Q. Paraiso were the
owners of a residential lot of around 480 square meters located
in Sarrat, Ilocos Norte. On or about February 2, 1964, the
Paraisos executed an agreement entitled "BARTER" whereby
as party of the first part they agreed to "barter and exchange"
with spouses Avelino and Benilda Baluran their residential lot
with the latter's unirrigated riceland situated in Sarrat, Ilocos
Norte, of approximately 223 square meters without any
permanent improvements, under the following conditions:
1. That both the Party of the First Part and the Party of the
Second Part shall enjoy the material possession of their
respective properties; the Party of the First Part shall reap the
fruits of the unirrigated riceland and the Party of the Second
Part shall have a right to build his own house in the residential
lot.
2. Nevertheless, in the event any of the children of Natividad P.
Obencio, daughter of the First Part, shall choose to reside in
this municipality and build his own house in the residential lot,
the Party of the Second Part shall be obliged to return the lot
such children with damages to be incurred.
3. That neither the Party of the First Part nor the Party of the
Second Part shall encumber, alienate or dispose of in any
manner their respective properties as bartered without the
consent of the other.
4. That inasmuch as the bartered properties are not yet
accordance with Act No. 496 or under the Spanish Mortgage
Law, they finally agreed and covenant that this deed be
registered in the Office of the Register of Deeds of Ilocos
Norte pursuant to the provisions of Act No. 3344 as amended.
(p. 28, rollo)
On May 6, 1975 Antonio Obendencio filed with the Court of
First Instance of Ilocos Norte the present complaint to recover
the above-mentioned residential lot from Avelino Baluran
claiming that he is the rightful owner of said residential lot
having acquired the same from his mother, Natividad Paraiso
Obedencio, and that he needed the property for Purposes Of
constructing his house thereon inasmuch as he had taken
residence in his native town, Sarrat. Obedencio accordingly
prayed that he be declared owner of the residential lot and that
defendant Baluran be ordered to vacate the same forfeiting his
(Obedencio) favor the improvements defendant Baluran had
built in bad faith.1
Answering the complaint, Avelino Baluran alleged inter alia
(1) that the "barter agreement" transferred to him the
ownership of the residential lot in exchange for the unirrigated
riceland conveyed to plaintiff's Predecessor-in-interest,
Natividad Obedencio, who in fact is still in On thereof, and (2)
that the plaintiff's cause of action if any had prescribed. 2
At the pre-trial, the parties agreed to submit the case for
decision on the basis of their stipulation of facts. It was
likewise admitted that the aforementioned residential lot was
donated on October 4, 1974 by Natividad Obedencio to her
son Antonio Obedencio, and that since the execution of the
agreement of February 2, 1964 Avelino Baluran was in
possession of the residential lot, paid the taxes of the property,
and constructed a house thereon with an value of
P250.00. 3 On November 8, 1975, the trial Judge Ricardo Y.
Navarro rendered a decision the dispositive portion of which
reads as follows:
Consequently, the plaintiff is hereby declared owner of the
question, the defendant is hereby ordered to vacate the same
with costs against defendant.
Avelino Baluran to whom We shall refer as petitioner, now
seeks a review of that decision under the following assignment
of errors:
I - The lower Court erred in holding that the barter agreement
did not transfer ownership of the lot in suit to the petitioner.
II - The lower Court erred in not holding that the right to re-
barter or re- exchange of respondent Antonio Obedencio had
been barred by the statute of limitation. (p. 14, Ibid.)
The resolution of this appeal revolves on the nature of the
undertaking contract of February 2, 1964 which is entitled
"Barter Agreement."
It is a settled rule that to determine the nature of a contract
courts are not bound by the name or title given to it by the
contracting parties. 4This Court has held that contracts are not
what the parties may see fit to call them but what they really
are as determined by the principles of law. 5Thus, in the
instant case, the use of the, term "barter" in describing the
agreement of February 2, 1964, is not controlling. The
stipulations in said document are clear enough to indicate that
there was no intention at all on the part of the signatories
thereto to convey the ownership of their respective properties;
all that was intended, and it was so provided in the agreement,
was to transfer the material possession thereof. (condition No.
1, see page I of this Decision) In fact, under condition No. 3 of
the agreement, the parties retained the right to alienate their
respective properties which right is an element of ownership.
With the material ion being the only one transferred, all that
the parties acquired was the right of usufruct which in essence
is the right to enjoy the Property of another. 6 Under the
document in question, spouses Paraiso would harvest the crop
of the unirrigated riceland while the other party, Avelino
Baluran, could build a house on the residential lot, subject,
however, to the condition, that when any of the children of
Natividad Paraiso Obedencio, daughter of spouses Paraiso,
shall choose to reside in the municipality and build his house
on the residential lot, Avelino Baluran shall be obliged to
return the lot to said children "With damages to be incurred."
(Condition No. 2 of the Agreement) Thus, the mutual
agreement - each party enjoying "material possession" of the
other's property - was subject to a resolutory condition the
happening of which would terminate the right of possession
and use.
A resolutory condition is one which extinguishes rights and
obligations already existing. 7The right of "material
possession" granted in the agreement of February 2, 1964,
ends if and when any of the children of Natividad Paraiso,
Obedencio (daughter of spouses Paraiso, Party of the First Part)
would reside in the municipality and build his house on the
property. Inasmuch as the condition opposed is not dependent
solely on the will of one of the parties to the contract - the
spouses Paraiso - but is Part dependent on the will of third
persons - Natividad Obedencio and any of her children - the
same is valid. 8
When there is nothing contrary to law, morals, and good
customs Or Public Policy in the stipulations of a contract, the
agreement constitutes the law between the parties and the
latter are bound by the terms thereof. 9
Art. 1306 of the Civil Code states: The contracting parties may
establish such stipulations, clauses, terms and conditions as
they may deem convenient, provided they are not contrary to
law, Morals, good customs, public order, or public policy.
Contracts which are the private laws of the contracting parties,
should be fulfilled according to the literal sense of their
stipulations, if their terms are clear and leave no room for
doubt as to the intention of the contracting parties, for
contracts are obligatory, no matter what their form may be,
whenever the essential requisites for their validity are present.
(Philippine American General Insurance Co., Inc. vs. Mutuc,
61 SCRA 22)
The trial court therefore correctly adjudged that Antonio
Obedencio is entitled to recover the possession of the
residential lot Pursuant to the agreement of February 2, 1964.
Petitioner submits under the second assigned error that the
causa, of action if any of respondent Obedencio had
Prescribed after the lapse of four years from the date of
execution of the document of February 2, 1964. It is argued
that the remedy of plaintiff, now respondent, Was to ask for
re-barter or re-exchange of the properties subject of the
agreement which could be exercised only within four years
from the date of the contract under Art. 1606 of the Civil Code.
The submission of petitioner is untenable. Art. 1606 of the
Civil Code refers to conventional redemption which petitioner
would want to apply to the present situation. However, as We
stated above, the agreement of the parties of February 2, 1964,
is not one of barter, exchange or even sale with right to
repurchase, but is one of or akin the other is the use or
material ion or enjoyment of each other's real property.
Usufruct may be constituted by the parties for any period of
time and under such conditions as they may deem convenient
and beneficial subject to the provisions of the Civil Code,
Book II, Title VI on Usufruct. The manner of terminating or
extinguishing the right of usufruct is primarily determined by
the stipulations of the parties which in this case now before Us
is the happening of the event agreed upon. Necessarily, the
plaintiff or respondent Obedencio could not demand for the
recovery of possession of the residential lot in question, not
until he acquired that right from his mother, Natividad
Obedencio, and which he did acquire when his mother
donated to him the residential lot on October 4, 1974. Even if
We were to go along with petitioner in his argument that the
fulfillment of the condition cannot be left to an indefinite,
uncertain period, nonetheless, in the case at bar, the
respondent, in whose favor the resolutory condition was
constituted, took immediate steps to terminate the right of
petitioner herein to the use of the lot. Obedencio's present
complaint was filed in May of 1975, barely several months
after the property was donated to him.
In view of our ruling that the "barter agreement" of February 2,
1964, did not transfer the ownership of the respective
properties mentioned therein, it follows that petitioner Baluran
remains the owner of the unirrigated riceland and is now
entitled to its Possession. With the happening of the resolutory
condition provided for in the agreement, the right of usufruct
of the parties is extinguished and each is entitled to a return of
his property. it is true that Natividad Obedencio who is now in
possession of the property and who has been made a party to
this case cannot be ordered in this proceeding to surrender the
riceland. But inasmuch as reciprocal rights and obligations
have arisen between the parties to the so-called "barter
agreement", We hold that the parties and for their successors-
in-interest are duty bound to effect a simultaneous transfer of
the respective properties if substance at justice is to be
effected.
WHEREFORE, Judgment is hereby rendered: 1) declaring the
petitioner Avelino Baluran and respondent Antonio Obedencio
the respective owners the unirrigated riceland and residential
lot mentioned in the "Barter Agreement" of February 2, 1964;
2) ordering Avelino Baluran to vacate the residential lot and
removed improvements built by thereon, provided,
however that he shall not be compelled to do so unless the
unirrigated riceland shall five been restored to his possession
either on volition of the party concerned or through judicial
proceedings which he may institute for the purpose. Without
pronouncement as to costs. So Ordered.

One last point raised by petitioner is his alleged right to

recover damages under the agreement of February 2, 1964. In
the absence of evidence, considering that the parties agreed to
submit the case for decision on a stipulation of facts, We have
no basis for awarding damages to petitioner.

However, We apply Art. 579 of the Civil Code and hold that
petitioner will not forfeit the improvement he built on the lot
but may remove the same without causing damage to the
property.

Art. 579. The usufructuary may make on the property held in

usufruct such useful improvements or expenses for mere
pleasure as he may deem proper, provided he does not alter its
form or substance; but he shall have no right to be indemnified
therefor. He may, however. He may, however, removed such
improvements, should it be possible to do so without damage
to the property. (Emphasis supplied)

Finally, We cannot close this case without touching on the

unirrigated riceland which admittedly is in the possession of
Natividad Obedencio.

GABOYA V. CUI 38 SCRA 85
FACTS:
Don Mariano Cui, widower, as owner of 3 lots situated in the
City of Cebu, sold said three lots to three of his children
named Rosario C. de Encarnacion, Mercedes C. de Ramas and
Antonio Ma. Cui, pro indiviso for the sum of P64,000.
However one-third of the property corresponding to Rosario C.
de Encarnacion was returned to the vendor because she was
not able to pay for the purchase price which resulted to the
cancellation of the 1/3 sale. Because of the sale of these
lots pro indiviso and because of the cancellation of the sale to
one of the three original vendees, Don Mariano and his
children Mercedes and Antonio became co-owners of the
whole mass in equal portions. In the deed of sale vendor Don
Mariano retained for himself the usufruct of the property.
Subsequently, a building was erected on a portion of this mass
facing Calderon street and was occupied by a Chinese
businessman for which he paid Don Mariano P600 a month as
rental. The date when the building, was constructed and by
whom do not appear in the record.
Sometime after the sale to Mercedes and Antonio the two
applied to the Rehabilitation Finance Corporation (RFC) for a
loan of P130,000 with which to construct a 12-door
commercial building presumably on a portion of the entire
parcel corresponding to their share. On January 7, 1947 Don
Mariano, executed an authority to mortgage authorizing his
two children co-owners to mortgage his share. The loan was
eventually granted and was secured by a mortgage on the three
lots in question, Don Mariano being included as one of the
three mortgagors and signing the corresponding promissory
note with his two co-owners. He did not however, join in the
construction of the 12-door commercial building.
The 12-door commercial building was eventually constructed
and the builder-owners thereof Mercedes and Antonio
received and continued to receive the rents thereof amounting
to P4,800 a month and paying therefrom the installments due
for payment on the loan to the Rehabilitation Finance
Corporation.
The complaint alleges that the usufructuary right reserved in
favor of Don Mariano Cui extends to and includes the rentals
of the building constructed by Antonio Cui and Mercedes Cui
on the land sold to them by their father; that the defendants
retained those rentals for themselves; that the usufructuary
rights of the vendor were of the essence of the sale, and their
violation entitled him to rescind (or resolve) the sale. It prayed
either for rescission with accounting, or for delivery of the
rentals of the building with interests, attorneys’ fees and costs.
Issue:
W/N the usufruct extended to the rentals of the building
subsequently built by the 2 children co-owners
Whether or not the failure of the vendees to pay over its
rentals to the usufructuary entitled the latter to rescind, or
more properly, resolve the contract of sale.
Held:
1. 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.
The usufruct over the land did not entitle the
usufructuary to either the gross or the net income of
the building erected by the vendees, but only to the
rental value of the portion of the land occupied by the
structure (in so far as the usufructuary was prevented
from utilizing said portion), and that rental value was
not liquidated when the complaints were filed in the
court below, hence, there was no default in its
payment. Actually, this theory of appellants fails to
take into account that Don Mariano could not retain
ownership of the land and, at the same time, be the
usufructuary thereof. His intention of the
usufructuary rights in itself imports that he was no
longer its owner. For usufruct is essentially jus in re
aliena; and to be a usufructuary of one’s own
property is in law a contradiction in terms, and a
conceptual absurdity.
2. In the absence of default on the part of the
defendants-vendees, Article 1592 of the Civil Code
of the Philippines that is invoked by appellants in,
support of their all right to rescind the sale, is not
applicable: for said article (which is a mere variant of
the general principle embodied in Article 1191, of the
same Code) presupposes default of the purchasers in
the fulfilment of their obligations. As already noted,
no such default or breach could occur before
liquidation of the usufructuary's credit; and the time
for paying such unliquidated claim cannot be said to
have accrued until the decisions under appeal was
rendered, fixing the rental value of the land occupied
by the building.
The usufruct over the land did not entitle the
usufructuary to either the gross or the net income of
the building erected by the vendees, but only to the
rental value of the portion of the land occupied by the
structure (in so far as the usufructuary was prevented
from utilizing said portion), and that rental value was
not liquidated when the complaints were filed in the
 court below, hence, there was no default in its
payment. Actually, this theory of appellants fails to
take into account that Don Mariano could not retain
ownership of the land and, at the same time, be the
usufructuary thereof. His intention of the
usufructuary rights in itself imports that he was no
longer its owner. For usufruct is essentially jus in re
aliena; and to be a usufructuary of one's own
property is in law a contradiction in terms, and a
conceptual absurdity.
G.R. No. L-19614 March 27, 1971
JESUS M. GABOYA, as Administrator of the Estate of
DON MARIANO CUI, plaintiff-appellant,
vs.
ANTONIO MA. CUI, MERCEDES CUI-RAMAS and
GIL RAMAS, defendants-appellees, JESUS MA. CUI,
JOSE MA. CUI, SERAFIN MA. CUI, JORGE MA. CUI,
ROSARIO CUI DE ENCARNACION, PRECILLA C.
VELEZ, and LOURDES C. VELEZ, intervenors-
appellants, VICTORINO REYNES, defendant-in-
counterclaim-appellee.
Vicente Jayme for plaintiff-appellant.
Hector L. Hofileña Candido Vasqueza and Jaime R. Nuevas
for defendants-appellees.
Jose W. Diokno for intervenors-appellants.
REYES, J.B.L., J.:
Direct appeal (before Republic Act 5440) from a
decision of the Court of First Instance of Cebu (in its Civil
Case No. R-1720) denying resolution of a contract of sale of
lots 2312, 2313 and 2319 executed on 20 March 1946 by the
late Don Mariano Cui in favor of three of his children Antonio
Ma. Cui, Mercedes Cui de Ramas and Rosario Cui de
Encarnacion, but sentencing the first two, Antonio Cui and
Mercedes; Cui, to pay, jointly and severally (in solidum), to
the Judicial Administrator of the Estate of Mariano Cui
(appellant Jesus M. Gaboya the amount of P100,088.80, with
legal interest from the interposition of the complaint (5
November 1951), plus P5,000.00 attorney's fees and the costs.
The antecedents of the case are stated in the previous decision
of this Supreme Court rendered on 31 July 1952, in the case
of Antonio and Mercedes Cui vs. Judge Piccio, et al., 91 Phil.
712.
Don Mariano Cui, widower, as owner of lots
Nos. 2312, 2313 and 2319 situated in the
City of Cebu, with an area of 152 square
meters, 144 square meters and 2,362 square
meters, respectively, or a total extension of
2,658 square meters, on March 8, 1946, sold
said three lots to three of his children named
Rosario C. de Encarnacion, Mercedes C. de
Ramas and Antonio Ma. Cui, pro
indiviso for the sum of P64,000. Because
Rosario C. de Encarnacion for lack of funds
was unable to pay her corresponding share
of the purchase price, the sale to her was
cancelled and the one-third of the property
corresponding to her was returned to the
vendor. These three lots are commercial.
The improvements thereon were destroyed
during the last Pacific War so that at the
time of the sale in 1946, there were no
buildings or any other improvements on
them. Because of the sale of these lots pro
indiviso and because of the cancellation of
the sale to one of the three original vendees,
Don Mariano and his children Mercedes and
Antonio became co-owners of the whole
mass in equal portions. In the deed of sale
vendor Don Mariano retained for himself the
usufruct of the property in the following
words:
"...do hereby sell, transfer,
and convey to Messrs.
Rosario C. de
Encarnacion, Mercedes C.
de Ramas and Antonio
Ma. Cui, the above-
mentioned parcel of land
in equal parts, ... and the
further consideration, that
I, shall enjoy the fruits and
rents of the same, as long
as my natural life shall
last. Granting and
conveying unto the said
buyers the full rights as
owners to enjoy the
constructive possession of
the same, improve,
construct and erect a
building in the lot, or do
whatever they believe to
be proper and wise, ..."
Subsequently, a building was erected on a
portion of this mass facing Calderon street
and was occupied by a Chinese businessman
for which he paid Don Mariano P600 a
month as rental. The date when the building,
was constructed and by whom do not appear
in the record.
Sometime after the sale to Mercedes and
Antonio the two applied to the
Rehabilitation Finance Corporation (RFC)
for a loan of P130,000 with which to
construct a 12-door commercial building
presumably on a portion of the entire parcel
corresponding to their share. In order to
facilitate the granting of the loan and
inasmuch as only two of the three co-owners
applied for the loan, Don Mariano on
January 7, 1947, executed an authority to
mortgage (Annex U) authorizing his two
children co-owners to mortgage his share,
the pertinent portion of said authority
reading thus:
"That by virtue of these presents, I hereby
agree, consent permit and authorize my said
co-owners to mortgage, pledge my share so
that they may be able to construct a house
or building in the said property, provided
however, that the rents of the said land shall
not be impaired and will always be received
by me."
The loan was eventually granted and was
secured by a mortgage on the three lots in
question, Don Mariano being included as
one of the three mortgagors and signing the
corresponding promissory note with his two
co-owners. He did not however, join in the
construction of the 12-door commercial
building as may be gathered from the
"Convenio de Asignacion de Parte' (Annex
V) wherein it was agreed among the three
co-owners to assign to Don Mariano that
one-third of the whole mass facing Calderon
street and on which was erected the building
already referred to as being occupied by a
Chinese businessman and for which he was
paying Don Mariano P600 a month rental.
The area of this one-third portion was fixed
at 900 square meters approximately one-
third of the total area of the three lots. The
pertinent Portion of this Annex V reads as
follows:
"Que como quiera que, la propiedad arriba
descrita esta actualmente hipotecada a la
Rehabilitation Finance Corporation para
garantizar la construccion que mis
condueños cnotruyeron en la parte que les
correponde;
"Y que como quiera que, el Sr. Don Mariano
Cui, uno de los condueños, no ha querido
unirse a la construccion de dicho edificio, y
desea que la parte que le corresponda sea la
1/3 que este dando frente a la Calle
Calderon."
The 12-door commercial building was
eventually constructed and the builder-
owners thereof Mercedes and Antonio
received and continued to receive the rents
thereof amounting to P4,800 a month and
paying therefrom the installments due for
payment on the loan to the Rehabilitation
Finance Corporation.
On March 25, 1948, two other children of
Don Mariano named Jesus and Jorge
brought an action (Civil case No. 599R) in
the Court of First Instance of Cebu for the
purpose of annulling the deed of sale of the
three lots in question on the ground that they
belonged to the conjugal partnership of Don
Mariano and his deceased wife Antonia
Perales. Thereafter, plaintiffs Jesus and
Jorge applied for the appointment of a
receiver to take charge of the lots and of the
rentals of the building. This petition was
denied on November 8, 1948.
On March 19, 1949, Rosario C.
Encarnacion, that daughter of Don Mariano
who was one of the original vendees, filed a
petition to declare her father incompetent
and to have a guardian appointed for his
property, in Special Proceeding No. 481-R
of the Court of First Instance of Cebu. In
May 1949 the petition was granted and Don
Mariano was declared incompetent and
Victorino Reynes was appointed guardian of
his property.lâwphî1.ñèt Thereafter, the
complaint in civil case No. 599-R seeking to
annul the deed of sale of the three lots in
favor of Mercedes and Antonio was
amended so as to include as plaintiffs not
only the guardian Victorino Reynes but also
all the other children of Don Mariano.
On June 15, 1949, guardian Victorino
Reynes filed a motion in the guardianship
proceedings seeking authority to collect the
rentals from the three lots in question and
asking the Court to order Antonio and
Mercedes to deliver to him as guardian all
the rentals they had previously collected
from the 12-door commercial building,
together with all the papers belonging to his
ward. This motion was denied by Judge
Piccio in his order of July 12, 1949. The
guardian did not appeal from this order.
On May 22, 1951, Judge Saguin rendered a
decision in civil case No. 599-R and found
that the three lots in question were not
conjugal property but belonged exclusively
to Don Mariano and so upheld the sale of
two-thirds of said lots to Antonio and
Mercedes. The plaintiffs appealed to the
Court of Appeals where the case is now
pending.
From the Court of Appeals the case was brought to the
Supreme Court, and the decision of Judge Saguin upholding
the validity of the sale in favor of Antonio and Mercedes Cui
was finally affirmed on 21 February 1957, in Cui vs. Cui, 100
Phil, 914.
This third case now before Us was started by the
erstwhile guardian of Don Mariano Cui (while the latter was
still alive) in order to recover P126,344.91 plus legal interest
from Antonio Cui and Mercedes Cui (Record on Appeal,
pages 2-3) apparently as fruits due to his ward by virtue of his
usufruct. The guardian's complaint was supplemented and
amplified by a 1957 complaint in intervention (duly admitted)
filed by the other compulsory heirs of Mariano Cui, who had
died on 29 July 1952, some nine months after the present case
was instituted in the court below (Record on Appeal, pages
67-68).
In essence, the complaint alleges that the
usufructuary right reserved in favor of Don Mariano Cui
extends to and includes the rentals of the building constructed
by Antonio Cui and Mercedes Cui on the land sold to them by
their father; that the defendants retained those rentals for
themselves; that the usufructuary rights of the vendor were of
the essence of the sale, and their violation entitled him to
rescind (or resolve) the sale. It prayed either for rescission
with accounting, or for delivery of the rentals of the building
with interests, attorneys' fees and costs (Record on Appeal,
pages 12-38).
The amended answer, while admitting the reserved
usufruct and the collection of rentals of the building by the
defendants, denied that the usufructuary rights included or
extended to the said rentals, or that such usufruct was of the
essence of the sale; that the vendor (Don Mariano Cui ) had
waived and renounced the usufruct and that the defendants
vendees gave the vendor P400.00 a month by way of aid; that
the original complaint having sought fulfillment of the
contract, plaintiff can not thereafter seek rescission; that such
action is barred by res judicata (on account of the two
previous decisions of the Supreme Court and by extinctive
prescription. Defendants counterclaimed for actual and moral
damages and attorney's fees.
Plaintiffs denied the allegations in the counterclaim. .
From a consideration of the pleadings, the basic and
pivotal issue appears to be whether the usufruct reserved by
the vendor in the deed of sale, over the lots in question that
were at the time vacant and unoccupied, gave the usufructuary
the right to receive the rentals of the commercial building
constructed by the vendees with funds borrowed from the
Rehabilitation and Finance Corporation, the loan being
secured by a mortgage over the lots sold. Similarly, if the
usufruct extended to the building, whether the failure of the
vendees to pay over its rentals to the usufructuary entitled the
latter to rescind, or more properly, resolve the contract of sale.
In the third place, should the two preceding issues be resolved
affirmatively, whether the action for rescission due to breach
of the contract could still be enforced and was not yet barred.
The court below declared that the reserved right of
usufruct in favor of the vendor did not include, nor was it
intended to include, nor was it intended to include, the rentals
of the building subsequently constructed on the vacant lots,
but that it did entitle the usufructuary to receive a reasonable
rental for the portion of the land occupied by the building,
which the Court a quo fixed at Pl,858.00 per month; and that
the rentals for the land from November, 1947, when the
building was rented, to 29 July 1952, when Don Mariano died,
amounted to P100,088.80. It also found no preponderant
evidence that the seller, Don Mariano Cui, had ever waived
his right of usufruct, as contended by the defendants; and that
the Supreme Court, in denying reconsideration of its second
(1957) decision (100 Phil. 914), had, like the court of origin,
refused to pass upon the extent of the usufructuary rights of
the seller, specially because the present case, was already
pending in the Court of First Instance, hence no res
judicata existed. No attorney's fees were awarded to the
defendants, but they were sentenced to pay counsel fees to
plaintiffs.
Both parties appealed in the decision of the court a quo.
We find no the decision appealed from. As therein
pointed out, the terms of the 1946 deed of sale of the vacant
lots in question made by the late Don Mariano Cui in favor of
his three children, Rosario, Mercedes and Antonio Cui, in
consideration of the sum of P64,000.00 and the reserved
usufruct of the said lot in favor of the vendor, as amplified by
the deed of 7 January 1947, authorizing Mercedes, and
Antonio Cui to borrow money, with the security of a mortgage
over the entirety of the lots, in order to enable them to
construct a house or building thereon —
provided, however, that the rents of said
land shall not be impaired and will always
received by me.
clearly prove that the reserved usufruct in favor of the vendor,
Mariano Cui, was limited to the rentals of the land alone. Had
it been designed to include also the rents of the buildings
intended to be raised on the land, an express provision would
have been included to the effect, since in both documents
(heretofore quoted) the possibility of such construction was
clearly envisaged and mentioned.
Appellants, however, argue that the terms of the deed
constituting the usufruct are not determinative of the extent of
the right conferred; and that by law, the enjoyment of the rents
of the building subsequently erected passed to the
usufructuary, by virtue of Article 571 of the Civil Code of the
Philippines (Article 479 of the Spanish Civil Code of 1889)
prescribing that:
Art. 571. The usufructuary shall have the
right to enjoy any increase which the thing
in usufruct may acquire through accession,
the servitudes established in its favor, and,
in general, all the benefits inherent therein,
inasmuch as (in the appellants' view) the building constructed
by appellees was an accession to the land.
This argument is not convincing. Under the articles
of the Civil Code on industrial accession by modification on
the principal land (Articles 445 to 456 of the Civil Code) such
accession is limited either to buildings erected on the land of
another, or buildings constructed by the owner of the land
with materials owned by someone else.
Thus, Article 445, establishing the basic rule of industrial
accession, prescribes that —
Whatever is built, planted or sown on the
land of another, and the improvements or
repairs made thereon, belong to the owner of
the land subject to the provisions of the
following articles.
while Article 449 states:
He who builds, plants or sows in bad faith
on the land of another, loses what is built,
planted or sown without right to indemnity.
(Emphasis supplied)
Articles 447 and 445, in turn, treat of accession produced by
the landowner's building, planting and sowing "with the
materials of another" and when "the materials, plants or seeds
belong to a third person other than the landowner or the
builder, planter or sower.
Nowhere in these articles on industrial accession is
there any mention of the case of landowner building on his
own land with materials owned by himself (which is the case
of appellees Mercedes and Antonio Cui). The reason for the
omission is readily apparent: recourse to the rules of accession
are totally unnecessary and inappropriate where the ownership
of land and of the, materials used to build thereon are
concentrated on one and the same person. Even if the law did
not provide for accession the land-owner would necessarily
own the building, because he has paid for the materials and
labor used in constructing it. We deem it unnecessary to
belabor this obvious point. .
There is nothing in the authorities (Manresa,
Venezian, Santamaria, and Borrell cited by appellants that
specifically deals with constructions made by a party on his
own land with his own materials, and at his own expense. The
authorities cited merely indicate the application in general of
the rules of accession. But as already stated above, the Civil
Code itself limits the cases of industrial accession to those
involving land and materials belonging to different owners.
Anyway, commentators' opinions are not binding where not in
harmony with the law itself.
The author that specifically analyses the situation of
the usufructuary vis-a-vis constructions made by the
landowner with his own materials is Scaevola (Codigo Civil,
2d Edition, pages 288 to 297) ; and his conclusion after
elaborate discussion is that, at the most —
(b) El nudo propietario no podra, sin el
consentimiento del usufructuario, hacer
construcciones, plantaciones y siembras en
el predio objecto del usufructo; y en el caso
de que aquel lascosintiese, la utilizacion sera
comun en los frutos y productosde lo
sembrado y plantado, y con respecto a las
construcciones,el usufructuario tendra
derecho a la renta que de mutuo acuerdo se
fije a las mismas; en su defecto, por la
autoridad judicial (Author cit., Emphasis
supplied).
Scaevola's opinion is entirely in harmony with Article 595 of
the Civil Code of the Philippines, prescribing that —
The owner may construct any works and
make any improvements of which the
immovable usufruct is susceptible, or make
new plantings thereon if it be rural, provided
that such acts do not cause a diminuition in
the value of the usufruct or prejudice the
right of the usufructuary.
Note that if the income from constructions made by the owner
during the existence of the usufruct should be held to accrue
automatically to the usufructuary under Article 571, such
improvements could not diminish the value of the usufruct nor
prejudice the right of the usufructuary; and the qualifications
by Article 595 on the owner's right to build would be
redundant. The limitations set by Article 595 to the
construction rights of the naked owner of the land are
evidently premised upon the fact that such constructions
would necessarily reduce the area of the land under usufruct,
for which the latter should be indemnified. This is precisely
what the court a quo has done in sentencing the appellee
owners of the building to pay to the usufructuary a monthly
rent of P1,758.00 for the area occupied by their building, after
mature consideration of the rental values of lands in the
neighborhood.
Additional considerations against the thesis sustained
by appellants are (1) that the amount invested in the building
represents additional capital of the landowners not foresee"
when the usufruct was created; and (2) that no land-owner
would be willing to build upon vacant lots under usufruct if
the gain therefrom were to go to the usufructuary while the
depreciation of the value of the building (as distinguished
from the necessary repairs) and the amortization of its cost
would burden exclusively the owner of the land. The
unproductive situation of barren lots would thus be prolonged
for an indefinite time, to the detriment of society. In other
words, the rule that appellants advocate would contradict the
general interest and be against public policy.
Appellants urge, in support of their stand, that the
loan .for the construction of the building was obtained upon
the security of a mortgage not only upon the share of appellees
but also upon the undivided interest of Don Mariano Cui in the
lots in question. That factor is irrelevant to the ownership of
the building, because the money used for the building was
loaned exclusively to the appellees, and they were the ones
primarily responsible for its repayment. Since the proceeds of
the loan was exclusively their property, 1 the building
constructed with the funds loaned is likewise their own. A
mortgagor does not become directly liable for the payment of
the loan secured by the mortgage, in the absence of stipulation
to that effect; and his subsidiary role as guarantor does not
entitle him to the ownership of the money borrowed, for which
the mortgage is mere security.
We agree with the trial court that there was no
adequate proof that the vendor, Don Mariano Cui, ever
renounced his usufruct. The alleged waiver was purely verbal,
and is supported solely by the testimony of Antonio Cui, one
of the alleged beneficiaries thereof. As a gratuitous
renunciation of a real right over immovable property that as
created by public document, the least to be expected in the
regular course of business is that the waiver should also
appear in writing. Moreover, as pointed out in the appealed
decision (Record on Appeal, page 184, et seq.), in previous
pleadings sworn to by Antonio Cui himself, in Civil Case No.
599 and Special Proceeding 481-R of the Cebu Court of First
Instance (Exhibits "I", "J", and "20-A"), he and his sister
Mercedes had contended that Don Mariano Cui had been
receiving from them P400.00 per month as the value of his
usufruct, and never claimed that the real right had been
renounced or waived.lâwphî1.ñèt The testimony of Antonio
Cui on the alleged waiver, given after the usufructuary had
been declared incompetent and could no longer contradict
him, is obviously of negligible probative value.
Turning now to the second issue tendered by herein
appellants, that the non-compliance with the provisions
concerning the usufruct constituted sufficient ground for the
rescission (or resolution) of the sale under the tacit resolutory
condition established by Article 1191 of the Civil Code. What
has been stated previously in discussing the import of Don
Mariano's usufruct shows that the alleged breach of contract
by the appellees Antonio and Mercedes Cui could only consist
in their failure to pay to the usufructuary the rental value of
the area occupied by the building constructed by them. But as
the rental value in question had not been ascertained or fixed
either by the parties or the court, prior to the decision of 31
October 1961, now under appeal, nor had Don Mariano Cui,
or anyone else in his behalf, made any previous demand for its
payment, the default, if any, can not be exclusively blamed
upon the defendants-appellees. Hence, the breach is not it "so
substantial and fundamental as to defeat the object of the
parties in making the agreement" 2 as to justify the radical
remedy of rescission. This Court, in Banahaw, Inc. vs.
Dejarme 55 Phil. 338, ruled that —
...Under the third paragraph of article
1124 3 of the Civil Code, the court is given a
discretionary power to allow a period within
which a person in default may be permitted
to perform the stipulation upon which the
claim for resolution of the contract is based.
The right to resolve or rescind a contract for
non-performance of one of its stipulations is,
therefore, not absolute.
We have stated "the default, if any," for the reason that
without previous ascertainment of the exact amount that the,
defendants-appellees were obligated to turn over to the
usufructuary by way of reasonable rental value of the land
occupied by their building, said parties can not be considered
as having been in default (mora) for failure to turn over such
monies to the usufructuary. "Ab illiquido non fit mora": this
principle has been repeatedly declared by the jurisprudence of
Spanish Supreme Court (v. Manresa, Commentaries to the
Spanish Civil Code [5th Ed.], Vol. 8, No. 1, page 134) that is
of high persuasive value in the absence of local adjudications
on the point .
No puede estimarse que incurre en mora el
obligado al pago de cantidad mientras esta
no sea liquida, y tenga aquel conocimiento
por virtud de requirimiento o reclamacion
judicial de lo que debe abonar (Sent. TS of
Spain, 13 July 1904) .
Seguin tiene declarado esta sala con
repeticion, no se puede establecer que hay
morosidad, ni condenar por tal razon al
abono de intereses cuando no se conoce la
cantidad liquida reclamable" (Sent. TS of
Spain, 29 November 1912)
... es visto que no existiendo obligacion de
entregar cantidad hasta tanto que se liquide
no puede estimarse segun jurisprudencia,
que los recurridos ineurran en mora, por
tanto que hayan de pagar intereses legales de
la cantidad que en su caso resulte (Sent, TS
of Spain, 29 April 1914)
In the absence of default on the part of the defendants-
vendees, Article 1592 of the Civil Code of the Philippines that
is invoked by appellants in, support of their all right to rescind
the sale, is not applicable: for said article (which is a mere
variant of the general principle embodied in Article 1191, of
the same Code) presupposes default of the purchasers in the
fulfilment of their obligations. As already noted, no such
default or breach could occur before liquidation of the
usufructuary's credit; and the time for paying such
unliquidated claim can not be said to have accrued until the
decisions under appeal was rendered, fixing the rental value of
the land occupied by the building.
The filing of the initial complaint by Victoriano
Reynes, then guardian of the late Don Mariano in 1951,
seeking to recover P126,344.91 plus interest, did not place
appellees in default, for that complaint proceeded on the
theory that the usufructuary was entitled to all the rentals of
the building constructed by the appellees on the lot under
usufruct; and as We have ruled, that theory was not legally
tenable. And the 1957 complaint in intervention, seeking
rescission of the sale as alternative remedy, was only
interposed after the death of the usufructuary in 1952, and the WHEREFORE, finding no reversible error in the appealed
consequent extinction of the usufruct, conformably to Article decision, the same is hereby affirmed. Costs against appellant-
603, paragraph (1), of the Civil Code. intervenors, Jesus Ma. Cui, Jose Ma. Cui, Serafin Ma. Cui,
Jorge Ma. Cui, Rosario Cui de Encarnacion, Precilla C. Velez,
It is also urged by the appellants that the usufruct was and Lourdes C. Velez.
a condition precedent to the conveyance of ownership over the
land in question to herein appellees, and their failure to
comply with their obligations under the usufruct prevented the
vesting of title to the property in said appellees. We need not
consider this argument, since We have found that the usufruct
over the land did not entitle the usufructuary to either the gross
or the net income of the building erected by the vendees, but
only to the rental value of the portion of the land occupied by
the structure (in so far as the usufructuary was prevented from
utilizing said portion), and that rental value was not liquidated
when the complaints were filed in the court below, hence,
there was no default in its payment. Actually, this theory of
appellants fails to take into account that Don Mariano could
not retain ownership of the land and, at the same time, be the
usufructuary thereof. His intention of the usufructuary rights
in itself imports that he was no longer its owner. For usufruct
is essentially jus in re aliena; and to be a usufructuary of one's
own property is in law a contradiction in terms, and a
conceptual absurdity.

The decision (Exhibit "30") as well as the resolution

of this Court upon the motion to reconsider filed in the
previous case (100 Phil 914) refusing to adjudicate the
usufructuary rights of Don Mariano in view of the pendency
of the present litigation (Exhibit "22") amply support the trial
court's overruling of the defense of res judicata.

Summing up, We find and hold:

(1) That the usufructuary rights of the late Don Mariano Cui,
reserved in the deed of sale (Exhibit "A" herein), was over the
land alone and did not entitle him to the rents of the building
later constructed thereon by defendants Mercedes and Antonio
Cui at their own expense.

(2) That said usufructuary was entitled only to the reasonable

rental value of the land occupied by the building
aforementioned.

(3) That such rental value not having been liquidated until the
judgment under appeal was rendered, Antonio and Mercedes
Cui were not in default prior thereto, and the deed of sale was
therefore, not subject to rescission.

(4) That as found by the court below, the reasonable rental

value of the land occupied by the defendants' building totalled
P100,088.80 up to the time the usufructuary died and the
usufruct terminated.

(5) That pursuant to Articles 2208 (No. 11), 2210 and 2213 of
the Civil Code, 5 the trial court had discretion to equitably
award legal interest upon said sum of P100,088.80, as well as
P5,000.00 attorney's fees, considering that defendants Cui
have enjoyed the said rental value of the land during all those
years.
G.R. No. 152809 August 3, 2006
MERCEDES MORALIDAD, vs. SPS. DIOSDADO
PERNES and ARLENE PERNES,
Under consideration is this petition for review on certiorari
under Rule 45 of the Rules of Court to nullify and set aside the
following issuances of the Court of Appeals (CA) in CA-G.R.
SP No. 61610, to wit:
1. Decision dated September 27, 2001, 1 affirming an earlier
decision of the Regional Trial Court (RTC) of Davao City
which reversed that of the Municipal Trial Court in Cities
(MTCC), Davao City, Branch 1, in an action for unlawful
detainer thereat commenced by the petitioner against the
herein respondents; and
2. Resolution dated February 28, 2002, 2 denying petitioner’s
motion for reconsideration.
At the heart of this controversy is a parcel of land located in
Davao City and registered in the name of petitioner Mercedes
Moralidad under Transfer Certificate of Title (TCT) No. T-
123125 of the Registry of Deeds of Davao City.
In her younger days, petitioner taught in Davao City, Quezon
City and Manila. While teaching in Manila, she had the good
fortune of furthering her studies at the University of
Pennsylvania, U.S.A. While schooling, she was offered to
teach at the Philadelphia Catholic Archdiocese, which she did
for seven (7) years. Thereafter, she worked at the Mental
Health Department of said University for the next seventeen
(17) years.
During those years, she would come home to the Philippines
to spend her two-month summer vacation in her hometown in
Davao City. Being single, she would usually stay in Mandug,
Davao City, in the house of her niece, respondent Arlene
Pernes, a daughter of her younger sister, Rosario.
Back in the U.S.A. sometime in 1986, she received news from
Arlene that Mandug at the outskirts of Davao City was
infested by NPA rebels and many women and children were
victims of crossfire between government troops and the
insurgents. Shocked and saddened about this development, she
immediately sent money to Araceli, Arlene’s older sister, with
instructions to look for a lot in Davao City where Arlene and
her family could transfer and settle down. This was why she
bought the parcel of land covered by TCT No. T-123125.
Petitioner acquired the lot property initially for the purpose of
letting Arlene move from Mandug to Davao City proper but
later she wanted the property to be also available to any of her
kins wishing to live and settle in Davao City. Petitioner made
known this intention in a document she executed on July 21,
1986. 3 The document reads:
I, MERCEDES VIÑA MORALIDAD, of legal age, single,
having been born on the 29th day of January, 1923, now
actually residing at 8021 Lindbergh Boulevard, Philadelphia,
Pennsylvania, U.S.A., wishes to convey my honest intention
regarding my properties situated at Palm Village Subdivision,
Bajada, Davao City, 9501, … and hereby declare:
1. That it is my desire that Mr. and Mrs. Diosdado M. Pernes
may build their house therein and stay as long as they like;
2. That anybody of my kins who wishes to stay on the
aforementioned real property should maintain an atmosphere
of cooperation, live in harmony and must avoid bickering with
one another;
3. That anyone of my kins may enjoy the privilege to stay
therein and may avail the use thereof. Provided, however, that
the same is not inimical to the purpose thereof;
4. That anyone of my kins who cannot conform with the
wishes of the undersigned may exercise the freedom to look
for his own;
5. That any proceeds or income derived from the
aforementioned properties shall be allotted to my nearest kins
who have less in life in greater percentage and lesser
percentage to those who are better of in standing.
Following her retirement in 1993, petitioner came back to the
Philippines to stay with the respondents’ on the house they
build on the subject property. In the course of time, their
relations turned sour because members of the Pernes family
were impervious to her suggestions and attempts to change
certain practices concerning matters of health and sanitation
within their compound. For instance, Arlene’s eldest son,
Myco Pernes, then a fourth year veterinary medicine student,
would answer petitioner back with clenched fist and at one
time hurled profanities when she corrected him. Later, Arlene
herself followed suit. Petitioner brought the matter to the local
barangay lupon where she lodged a complaint for slander,
harassment, threat and defamation against the Pernes Family.
Deciding for petitioner, the lupon apparently ordered the
Pernes family to vacate petitioner’s property but not after they
are reimbursed for the value of the house they built thereon.
Unfortunately, the parties could not agree on the amount, thus
prolonging the impasse between them.
Other ugly incidents interspersed with violent confrontations
meanwhile transpired, with the petitioner narrating that, at one
occasion in July 1998, she sustained cuts and wounds when
Arlene pulled her hair, hit her on the face, neck and back,
while her husband Diosdado held her, twisting her arms in the
process.
Relations having deteriorated from worse to worst, petitioner,
on July 29, 1998, lodged a formal complaint before the
Regional Office of the Ombudsman for Mindanao, charging
the respondent spouses, who were both government
employees, with conduct unbecoming of public servants. This
administrative case, however, did not prosper.
Then, on August 3, 1998, petitioner filed with the MTCC of
Davao City an unlawful detainer suit against the respondent
spouses. Petitioner alleged that she is the registered owner of
the land on which the respondents built their house; that
through her counsel, she sent the respondent spouses a letter
demanding them to vacate the premises and to pay rentals
therefor, which the respondents refused to heed.
In their defense, the respondents alleged having entered the
property in question, building their house thereon and
maintaining the same as their residence with petitioner’s full
knowledge and express consent. To prove their point, they
invited attention to her written declaration of July 21, 1986,
supra, wherein she expressly signified her desire for the
spouses to build their house on her property and stay thereat
for as long as they like.
The MTCC, resolving the ejectment suit in petitioner’s favor,
declared that the respondent spouses, although builders in
good faith vis-à-vis the house they built on her property,
cannot invoke their bona fides as a valid excuse for not
complying with the demand to vacate. To the MTCC,
respondents’ continued possession of the premises turned
unlawful upon their receipt of the demand to vacate, such
possession being merely at petitioner’s tolerance, and sans any
rental. Accordingly, in its decision dated November 17,
1999, 4 the MTCC rendered judgment for the petitioner, as
plaintiff therein, to wit:
WHEREFORE, judgment is hereby rendered in favor of
herein plaintiff and against the defendants, as follows:
a) Directing the defendants, their agents and other persons
acting on their behalf to vacate the premises and to yield
peaceful possession thereof to plaintiff;
b) Ordering defendants to pay P2,000.00 a month from the
filing of this complaint until they vacate premises;
c) Sentencing defendants to pay the sum of P120,000.00 5 as
attorney’s fees and to pay the cost of suit.
Defendants counterclaim are hereby dismissed except with
respect to the claim for reimbursement of necessary and useful
expenses which should be litigated in an ordinary civil actions.
(sic)
Dissatisfied, the respondent spouses appealed to the RTC of
Davao City.
In the meantime, petitioner filed a Motion for Execution
Pending Appeal. The motion was initially granted by the RTC
in its Order of February 29, 2000, but the Order was later
withdrawn and vacated by its subsequent Order dated May 9,
2000 6 on the ground that immediate execution of the appealed
decision was not the prudent course of action to take,
considering that the house the respondents constructed on the
subject property might even be more valuable than the land
site.
Eventually, in a decision 7 dated September 30, 2000, the RTC
reversed that of the MTCC, holding that respondents’
possession of the property in question was not, as ruled by the
latter court, by mere tolerance of the petitioner but rather by
her express consent. It further ruled that Article 1678 of the
Civil Code on reimbursement of improvements introduced is
inapplicable since said provision contemplates of a lessor-
lessee arrangement, which was not the factual milieu obtaining
in the case. Instead, the RTC ruled that what governed the
parties’ relationship are Articles 448 and 546 of the Civil
Code, explaining thus:
Since the defendants-appellees [respondents] are admittedly
possessors of the property by permission from plaintiff
[petitioner], and builders in good faith, they have the right to
retain possession of the property subject of this case until they
have been reimbursed the cost of the improvements they have
introduced on the property.
Indeed, this is a substantive right given to the defendants by
law, and this right is superior to the procedural right to [sic]
plaintiff to immediately ask for their removal by a writ of
execution by virtue of a decision which as we have shown is
erroneous, and therefore invalid. (Words in brackets supplied),
and accordingly dismissed petitioner’s appeal, as follows:
WHEREFORE, in view of the foregoing, the Decision
appealed from is REVERSED and declared invalid.
Consequently, the motion for execution pending appeal is
likewise denied.
Counter-claims of moral and exemplary damages claimed by
defendants are likewise dismissed. However, attorney’s fees in
the amount of fifteen thousand pesos is hereby awarded in
favor of defendants-appellants, and against plaintiffs.
SO ORDERED. 8
Therefrom, petitioner went to the CA in CA-G.R. SP No.
61610.
On September 27, 2001, the CA, while conceding the
applicability of Articles 448 and 546 of the Civil Code to the
case, ruled that it is still premature to apply the same
considering that the issue of whether respondents’ right to
possess a portion of petitioner’s land had already expired or
was already terminated was not yet resolved. To the CA, the
unlawful detainer suit presupposes the cessation of
respondents’ right to possess. The CA further ruled that what
governs the rights of the parties is the law on usufruct but
petitioner failed to establish that respondents’ right to possess
had already ceased. On this premise, the CA concluded that
the ejectment suit instituted by the petitioner was premature.
The appellate court thus affirmed the appealed RTC decision,
disposing:
WHEREFORE, premises considered, the instant petition for
review is hereby denied for lack of merit. Accordingly, the
petitioner’s complaint for Unlawful Detainer is DISMISSED.
SO ORDERED.
With the CA’s denial of her motion for reconsideration in its
Resolution of February 28, 2002, petitioner is now before this
Court raising the following issues:
I. WHETHER OR NOT THE COURT OF APPEALS
ERRED IN DISMISSING THE UNLAWFUL DETAINER
CASE FOR BEING PREMATURE WHICH DECISION
IS NOT IN ACCORDANCE WITH LAW AND
JURISPRUDENCE.
II. WHETHER OR NOT THE COURT OF APPEALS
ERRED IN APPLYING ARTICLES 448 AND 546 AND
THE PROVISIONS OF THE CODE ON USUFRUCT
INSTEAD OF ARTICLE 1678 OF THE CIVIL CODE.
The Court rules for the petitioner. The Court is inclined to
agree with the CA that what was constituted between the
parties herein is one of usufruct over a piece of land, with the
petitioner being the owner of the property upon whom the
naked title thereto remained and the respondents being two (2)
among other unnamed usufructuaries who were simply
referred to as petitioner’s kin. The Court, however, cannot go
along with the CA’s holding that the action for unlawful
detainer must be dismissed on ground of prematurity.
Usufruct is defined under Article 562 of the Civil Code in
the following wise:
ART. 562. Usufruct gives a right to enjoy the property of
another with the obligation of preserving its form and
substance, unless the title constituting it or the law
otherwise provides.
Usufruct, in essence, is nothing else but simply allowing
one to enjoy another’s property. 9 It is also defined as the
right to enjoy the property of another temporarily,
including both the jus utendi and the jus fruendi, 10 with
the owner retaining the jus disponendi or the power to
alienate the same. 11
It is undisputed that petitioner, in a document dated July
21, 1986, supra, made known her intention to give
respondents and her other kins the right to use and to
enjoy the fruits of her property. There can also be no
quibbling about the respondents being given the right "to
build their own house" on the property and to stay thereat
"as long as they like." Paragraph #5 of the same document
earmarks "proceeds or income derived from the
aforementioned properties" for the petitioner’s "nearest kins
who have less in life in greater percentage and lesser
percentage to those who are better of (sic) in standing." The
established facts undoubtedly gave respondents not only the
right to use the property but also granted them, among the
petitioner’s other kins, the right to enjoy the fruits thereof. We
have no quarrel, therefore, with the CA’s ruling that usufruct
was constituted between petitioner and respondents. It is thus
pointless to discuss why there was no lease contract between
the parties.
However, determinative of the outcome of the ejectment case
is the resolution of the next issue, i.e., whether the existing
usufruct may be deemed to have been extinguished or
terminated. If the question is resolved in the affirmative, then
the respondents’ right to possession, proceeding as it did from
their right of usufruct, likewise ceased. In that case,
petitioner’s action for ejectment in the unlawful detainer case
could proceed and should prosper.
The CA disposed of this issue in this wise:
xxx Section 1, Rule 70 of the 1997 Rules of Civil Procedure,
as amended, provides xxx
From the foregoing provision, it becomes apparent that for an
action for unlawful detainer to prosper, the plaintiff [petitioner]
needs to prove that defendants’ [respondents’] right to possess
already expired and terminated. Now, has respondents’ right
to possess the subject portion of petitioner’s property expired
or terminated? Let us therefore examine respondents’ basis for
occupying the same.
It is undisputed that petitioner expressly authorized
respondents o occupy portion of her property on which their
house may be built. Thus – "it is my desire that Mr. and Mrs.
Diosdado M. Pernes may build their house therein and stay as
long as they like." From this statement, it seems that petitioner
had given the respondents the usufructuary rights over the
portion that may be occupied by the house that the latter
would build, the duration of which being dependent on how
long respondents would like to occupy the property. While
petitioner had already demanded from the respondents the
surrender of the premises, this Court is of the opinion that the
usufructuary rights of respondents had not been terminated by
the said demand considering the clear statement of petitioner
that she is allowing respondents to occupy portion of her land
as long as the latter want to. Considering that respondents still
want to occupy the premises, petitioner clearly cannot eject
respondents. 12
We disagree with the CA’s conclusion of law on the matter.
The term or period of the usufruct originally specified
provides only one of the bases for the right of a usufructuary
to hold and retain possession of the thing given in usufruct.
There are other modes or instances whereby the usufruct shall
be considered terminated or extinguished. For sure, the Civil
Code enumerates such other modes of extinguishment:
ART. 603. Usufruct is extinguished:
(1) By the death of the usufructuary, unless
a contrary intention clearly appears;
(2) By expiration of the period for which it
was constituted, or by the fulfillment of any
resolutory condition provided in the title creating the
usufruct;
(3) By merger of the usufruct and ownership
in the same person;
(4) By renunciation of the usufructuary;
(5) By the total loss of the thing in usufruct;
(6) By the termination of the right of the
person constituting the usufruct;
(7) By prescription. (Emphasis supplied.)
The document executed by the petitioner dated July 21, 1986
constitutes the title creating, and sets forth the conditions of,
the usufruct. Paragraph #3 thereof states "[T]hat anyone of my
kins may enjoy the privilege to stay therein and may avail the
use thereof. Provided, however, that the same is not inimical
to the purpose thereof" (Emphasis supplied). What may be
inimical to the purpose constituting the usufruct may be
gleaned from the preceding paragraph wherein petitioner made
it abundantly clear "that anybody of my kins who wishes to
stay on the aforementioned property should maintain an
atmosphere of cooperation, live in harmony and must avoid
bickering with one another." That the maintenance of a
peaceful and harmonious relations between and among kin
constitutes an indispensable condition for the continuance of
the usufruct is clearly deduced from the succeeding Paragraph
#4 where petitioner stated "[T]hat anyone of my kins who
cannot conform with the wishes of the undersigned may
exercise the freedom to look for his own." In fine, the
occurrence of any of the following: the loss of the atmosphere
of cooperation, the bickering or the cessation of harmonious
relationship between/among kin constitutes a resolutory
condition which, by express wish of the petitioner,
extinguishes the usufruct.
From the pleadings submitted by the parties, it is indubitable
that there were indeed facts and circumstances whereby the
subject usufruct may be deemed terminated or extinguished by
the occurrence of the resolutory conditions provided for in the
title creating the usufruct, namely, the document adverted to
which the petitioner executed on July 21, 1986.
As aptly pointed out by the petitioner in her Memorandum,
respondents’ own evidence before the MTCC indicated that
the relations between the parties "have deteriorated to almost
an irretrievable level." 13 There is no doubt then that what
impelled petitioner to file complaints before the local
barangay lupon, the Office of the Ombudsman for Mindanao,
and this instant complaint for unlawful detainer before the
MTCC is that she could not live peacefully and harmoniously
with the Pernes family and vice versa.
Thus, the Court rules that the continuing animosity between
the petitioner and the Pernes family and the violence and
humiliation she was made to endure, despite her advanced age
and frail condition, are enough factual bases to consider the
usufruct as having been terminated.
To reiterate, the relationship between the petitioner and
respondents respecting the property in question is one of
owner and usufructuary. Accordingly, respondents’ claim for
reimbursement of the improvements they introduced on the
property during the effectivity of the usufruct should be
governed by applicable statutory provisions and principles on
usufruct. In this regard, we cite with approval what Justice
Edgardo Paras wrote on the matter:
If the builder is a usufructuary, his rights will be governed by
Arts. 579 and 580. In case like this, the terms of the contract
and the pertinent provisions of law should govern (3 Manresa
215-216; se also Montinola vs. Bantug, 71 Phil.
449). 14 (Emphasis ours.)
By express provision of law, respondents, as usufructuary, do
not have the right to reimbursement for the improvements they
may have introduced on the property. We quote Articles 579
and 580 of the Civil Code:
Art. 579. The usufructuary may make on the property held in
usufruct such useful improvements or expenses for mere
pleasure as he may deem proper, provided he does not alter its
form or substance; but he shall have no right to be indemnified
therefor. He may, however, remove such improvements,
should it be possible to do so without damage to the property.
(Emphasis supplied.)
Art. 580. The usufructuary may set off the improvements he
may have made on the property against any damage to the
same.
Given the foregoing perspective, respondents will have to be
ordered to vacate the premises without any right of
reimbursement. If the rule on reimbursement or indemnity
were otherwise, then the usufructuary might, as an author
pointed out, improve the owner out of his property. 15 The
respondents may, however, remove or destroy the
improvements they may have introduced thereon without
damaging the petitioner’s property.
Out of the generosity of her heart, the petitioner has allowed
the respondent spouses to use and enjoy the fruits of her
property for quite a long period of time. They opted, however,
to repay a noble gesture with unkindness. At the end of the
day, therefore, they really cannot begrudge their aunt for
putting an end to their right of usufruct. The disposition herein
arrived is not only legal and called for by the law and facts of
the case. It is also right.

WHEREFORE, the petition is GRANTED. The assailed

Decision and Resolution of the CA are REVERSED and SET
ASIDE. Accordingly, the decision of the MTCC is
REINSTATED with MODIFICATION that all of respondents’
counterclaims are dismissed, including their claims for
reimbursement of useful and necessary expenses.

No pronouncement as to costs.
SO ORDERED.