Bachrach v.

Seifert and Elianoff

G.R. No. L-2659, October 12, 1950, 87 Phil. 483
Ozaeta, J.

FACTS: The deceased E. M. Bachrach, who left no forced heir except his widow Mary McDonald
Bachrach, in his last will and testament made various legacies in cash and willed the remainder
of his estate. The estate of E. M. Bachrach, as owner of 108,000 shares of stock of the Atok-Big
Wedge Mining Co., Inc., received from the latter 54,000 shares representing 50 per cent stock
dividend on the said 108,000 shares. On June 10, 1948, Mary McDonald Bachrach, as
usufructuary or life tenant of the estate, petitioned the lower court to authorize the Peoples
Bank and Trust Company, as administrator of the estate of E. M. Bachrach, to transfer to her
the said 54,000 shares of stock dividend by indorsing and delivering to her the corresponding
certificate of stock, claiming that said dividend, although paid out in the form of stock, is fruit or
income and therefore belonged to her as usufructuary or life tenant. Sophie Seifert and Elisa
Elianoff, legal heirs of the deceased, opposed said petition on the ground that the stock
dividend in question was not income but formed part of the capital and therefore belonged not
to the usufructuary but to the remainderman. While appellants admit that a cash dividend is an
income, they contend that a stock dividend is not, but merely represents an addition to the
invested capital.

ISSUE: Whether or not a dividend is an income and whether it should go to the usufructuary.

HELD: Yes. The usufructuary shall be entitled to receive all the natural, industrial, and civil fruits
of the property in usufruct. The 108,000 shares of stock are part of the property in usufruct.
The 54,000 shares of stock dividend are civil fruits of the original investment. They represent
profits, and the delivery of the certificate of stock covering said dividend is equivalent to the
payment of said profits. Said shares may be sold independently of the original shares, just as
the offspring of a domestic animal may be sold independently of its mother. If the dividend be
in fact a profit, although declared in stock, it should be held to be income. A dividend, whether
in the form of cash or stock, is income and, consequently, should go to the usufructuary, taking
into consideration that a stock dividend as well as a cash dividend can be declared only out of
profits of the corporation, for if it were declared out of the capital it would be a serious
violation of the law.

Under the Massachusetts rule, a stock dividend is considered part of the capital and belongs to
the remainderman; while under the Pennsylvania rule, all earnings of a corporation, when
declared as dividends in whatever form, made during the lifetime of the usufructuary, belong to
the latter. The Pennsylvania rule is more in accord with our statutory laws than the
Massachusetts rule.

Hemedes v. Court of Appeals,

G.R. No. 107132, October 8, 1999, 316 SCRA 347
Gonzaga – Reyes, J.

FACTS: Jose Hemedes, father of Maxima Hemedes and Enrique D. Hemedes. Jose Hemedes
executed a document entitled "Donation Inter Vivos with Resolutory Conditions" whereby he
conveyed ownership over the subject land, together with all its improvements, in favor of his
third wife, Justa Kausapin, subject to the following resolutory conditions that upon her death or
marriage, the donee shall revert the said property to anyone of Jose Hemedes children. On
September 27, 1960 a "Deed of Conveyance of Unregistered Real Property by Reversion" was
made conveying to Maxima Hemedes. She had it titled and mortgage it to R & B Insurance with
an annotation of “Usufruct” in favor of her stepmother, Justa Kausapin.  Unable to pay the
mortgage, R & B Insurance extra-judicially foreclosed the property. However, Justa Kausapin
executed another agreement or Kasunduan on May 27, 1971 to his stepson, Enrique D.
Hemedes.  He obtained tax declarations and pay realty taxes from thereon.  The Ministry of
Agrarian Reform Office conducted a cadastral survey and indicated Enrique Hemedes as the
owner. Enrique Hemedes sold the property to Dominium Realty Const. Corp. (Dominium), a
sister company of Asia Brewery. Asia Brewery started to introduce some improvements already
when R & B insurance informed them that they are the owners of the property where these
improvements are being built.

ISSUE: Whether or not the kasunduan executed by Justa Kausapin in favor of Enrique D.
Hemedes was valid.

HELD: No. The court dismissed the petition and affirmed the decision of the CA.  It held that
Maxima failed to comply with the requirements of Art. 1332 of the civil code and also failed to
repudiate Justa Kausapin’s allegation that she did not execute such a deed and she never
allowed to use the land as security for the loan. It was found that the deed of conveyance to
Maxima was spurious and it follows that the original title she had for the property was also null
and void so as the mortgage to R & B Insurance.  On the other hand, Kausapin executed an
affidavit to affirm the authenticity of the the kasundudan in favor of his stepson, Enrique
Hemedes whom she is dependent from for her financial support. 

Fabie v. Gutierrez David

G.R. No. L-123, December 12, 1945, 75 Phil. 536
Ozaeta, J.

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

Vda. De Aranas v. Aranas

G.R. No. L-56249, May 29, 1987, 150 SCRA 415
Paras, J.

FACTS: Fr. Teodoro Aranas, a priest of the Roman Catholic Church, died on January 19, 1953. He
had executed on June 6, 1946 his Last Will and Testament which was admitted to probate on
August 31, 1956. In said Last Will and Testament, Fr. Teodoro Aranas stipulated the special
administration of the remainder of his estate (after returning to his brothers Aniceto and
Carmelo or their heirs all properties acquired by him including 10 parcels of land inherited by
him from his parents) by Vicente Aranas, a faithful and serviceable nephew and designating him
also as recipient of 1/2 of the produce of said properties after deducting the expenses for the
administration and the other 1/2 of the produce to be given to the Catholic Church for the
eternal repose of the testator's soul. Said pertinent provision reads as follows: “It is my will that
the lands I had bought from other persons should be converged and placed under a special
administrator. The special administrator of these lands, for his office, should receive one half of
all the produce from which shall be deducted the expenses for the administration, and the other
half of the produce should be received by the Roman Catholic Church and should be spent for
my soul, Vicente B. Aranas (Tingting), because he is a faithful and serviceable nephew, should
be the first special administrator of said properties, without bond, until his death or until he
should not want to hold the said office anymore. Anyone of the sons of my brother Carmelo
Aranas can hold the said office of special administrator, and none other than they. Their father,
my brother Carmelo Aranas shall be the one to decide who among them shall hold the said
office, but upon the death of my said brother Carmelo Aranas, his said sons will have power to
select the one among them ourselves. The special administration is perpetual.”

ISSUE: Whether or not perpetual inalienability and administration of the estate of the late Fr.
Teodoro Aranas is null and void for being violative of Article 870 of the NCC.

HELD: No. Vicente Aranas as a usufructuary has the right to enjoy the property of his uncle with
all the benefits which result from the normal enjoyment (or exploitation) of another's property,
with the obligation to return, at the designated time, either the same thing, or in special cases
its equivalent. This right of Vicente to enjoy the fruits of the properties is temporary and
therefore not perpetual as there is a limitation namely his death or his refusal. Likewise his
designation as administrator of these properties is limited by his refusal and/or death and
therefore it does not run counter to Art. 870 of the Civil Code relied upon by the petitioners. Be
it noted that Vicente Aranas is not prohibited to dispose of the fruits and other benefits arising
from the usufruct. Neither are the naked owners (the other heirs) of the properties, the
usufruct of which has been given to Vicente Aranas prohibited from disposing of said naked
ownership without prejudice of course to Vicente's continuing usufruct. To void the designation
of Vicente Aranas as usufructuary and/or administrator is to defeat the desire and the dying
wish of the testator to reward him for his faithful and unselfish services rendered during the
time when said testator was seriously ill or bed-ridden.

Locsin v. Valenzuela
G.R. No. L-51333, May 18, 1989, 173 SCRA 454
Feliciano, J.

FACTS: Petitioners were co-owners of a large tract of agricultural land known as “Hacienda Villa
Regalado”. A portion of this land known as Lot No. 2-C-A-3 was subject to lifetime usufructuary
rights of respondent Helen Schon. The bulk of this lot was cultivated by the lessees who
customarily delivered the rentals to respondent. In 1972, PD 27 was enacted, decreasing the
“Emancipation of Tenants”. The tract of land owned in common by the petitioners, including
the portion thereof subject to petitioner’s usufructuary rights, fell within the scope of the
“Operation Land Transfer”. Petitioners sought the opinion of the Department of Agrarian
Reform(DAR) as to who should be entitled to receive the rental payments which continued to
be made by the tenants to respondent. The DAR District Officer rendered the opinion that the
rental payments were properly considered as amortization payments for the land and as such
should pertain to the landowners and not the usufructuary.
ISSUE: Whether or not the usufructuary was extinguished by PD 27 and who, between the
naked owner and the usufructuary, should be entitled to the amounts paid by the tenants
beginning October 21, 1972.

HELD: Yes. The usufruct which had therefore existed as a jus in re aliena in favour of Helen
Schon was effectively extinguished by PD 27. To hold, as private respondent apparently urges
would obviously defeat the purpose of the land reform statute. PD 27 was enacted to
emancipate the tenants from “bondage of the soil” by giving to the tenant-farmers ownership
of the land which they were cultivating. Ownership over the lands subjected to the Operation
Land Transfer moved from the registered owner to the tenants. The Court holds that Lot No. 2-
C-A-3 having been declared part of the land reform area and subjected to the Operation Land
Transfer, the payments made on October 21, 1972 by the tenant-farmers constituted
amortization payments on the cost of the land that they were required to pay under PD 27.
These payments, therefore, legally pertain to the petitioners as part of the compensation for
the dominion over the land of which they were deprived of by operation of PD 27.