Hemedes v.

CA

FACTS:
A parcel of land was originally owned by the late Jose Hemedes, father of Maxima Hemedes and Enrique
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 Kauapin, subject to the following resolutory conditions:

(a) Upon the death or remarriage of the DONEE, the title to the property donated shall revert to
any of the children, or their heirs, of the DONOR expressly designated by the DONEE in a public
document conveying the property to the latter; or
(b) In absence of such an express designation made by the DONEE before her death or
remarriage contained in a public instrument as above provided, the title to the property shall
automatically revert to the legal heirs of the DONOR in common.

Pursuant to the first condition above mentioned, Justa Kausapin executed a Deed of Conveyance of
Unregistered Real Property by Reversion conveying to Maxima Hemedes the subject property. An
Original Certificate of Title was issued in the name of Maxima Hemedes by the Registry of Deeds of
Laguna, with the annotation that Justa Kausapin shall have the usufructuary rights over the parcel of
land herein described during her lifetime or widowhood.

Maxima Hemedes and her husband Raul Rodriguez constituted a real estate mortgage over the subject
property in its favor to serve as security for a loan which they obtained in the amount of P6,000.00 from
R & B Insurance. The latter extrajudicially foreclosed the mortgage since Maxima Hemedes failed to pay
the loan even after it became due. The land was sold at a public auction with R & B Insurance as the
highest bidder and a certificate of sale was issued by the sheriff in its favor. The annotation of usufruct in
favor of Justa Kausapin was maintained in the new title.

Despite the earlier conveyance of the subject land in favor of Maxima Hemedes, Justa Kausapin executed
a Kasunduan whereby she transferred the same land to her stepson Enrique Hemedes, pursuant to the
resolutory condition in the deed of donation executed in her favor by her late husband Jose Hemedes.
Enrique Hemedes later sold the property to Dominium Realty and Construction Corporation
(Dominium). Justa Kausapin executed an affidavit affirming the conveyance of the subject property in
favor of Enrique Hemedes as embodied in the Kasunduan, and at the same time denying the conveyance
made toMaxima Hemedes.

Dominium leased the property to its sister corporation Asia Brewery, Inc. (AsiaBrewery) who, even before
the signing of the contract of lease, constructed two warehouses made of steel and asbestos costing about
P10,000,000. each. Upon learning of AsiaBrewerys constructions upon the subject property, R & B
Insurance sent it a letter informing the former of its ownership of the property and of its right to
appropriate the constructions since Asia Brewery is a builder in bad faith. A conference was held between
R & B Insurance and Asia Brewery but they failed to arrive at an amicable settlement.
Maxima Hemedes also wrote a letter addressed to Asia Brewery wherein she asserted that she is the
rightful owner of the subject property and that, as such, she has the right to appropriate Asia Brewerys
constructions, to demand its demolition, or to compel AsiaBrewery to purchase the land. In another letter
of the same date addressed to R & B Insurance, Maxima Hemedes denied the execution of any real estate
mortgage in favor of the latter.

ISSUE:
whether or not R & B Insurance should be considered an innocent purchaser of the land in question

HELD:
Yes. The annotation of usufructuary rights in favor of Justa Kausapin upon Maxima Hemedes OCT does
not impose upon R & B Insurance the obligation to investigate the validity of its mortgagors title.

Usufruct gives a right to enjoy the property of another with the obligation of preserving its form and
substance. The usufructuary is entitled to all the natural, industrial and civil fruits of the property and
may personally enjoy the thing in usufruct, lease it to another, or alienate his right of usufruct, even by a
gratuitous title, but all the contracts he may enter into as such usufructuary shall terminate upon the
expiration of the usufruct. Clearly, only the jus utendi and jus fruendi over the property is transferred to
the usufructuary. The owner of the property maintains the jus disponendi or the power to alienate,
encumber, transform, and even destroy the same. This right is embodied in the Civil Code, which provides
that the owner of property the usufruct of which is held by another, may alienate it, although he cannot
alter the propertys form or substance, or do anything which may be prejudicial to the usufructuary.

There is no doubt that the owner may validly mortgage the property in favor of a third person and the law
provides that, in such a case, the usufructuary shall not be obliged to pay the debt of the mortgagor, and
should the immovable be attached or sold judicially for the payment of the debt, the owner shall be liable
to the usufructuary for whatever the latter may lose by reason thereof. Based on the foregoing, the
annotation of usufructuary rights in favor of Justa Kausapin is not sufficient cause to require R & B
Insurance to investigate Maxima Hemedes title, contrary to public respondents ruling, for the reason
that Maxima Hemedes ownership over the property remained unimpaired despite such encumbrance. R
& B Insurance had a right to rely on the certificate of title and was not in bad faith in accepting the
property as a security for the loan it extended to Maxima Hemedes.

Fabie v. David

FACTS:
Josefa Fabie is the usufructuary of the income of certain houses located at Binondo, Manila, under the will
of the deceased Rosario Fabie y Grey. The owner of Santo Cristo property is the respondent Juan Grey.
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

In June 1945 Josefa Fabie commenced an action of unlawful detainer against Ngo Soo, alleging that the
defendant is occupying the premises on a month-to month rental payable in advance not later than the
5th of each month; beginning the month of April 1945, without plaintiffs consent and contrary to their
agreement, had subleased to another Chinese, but plaintiff refused for fact that the plaintiff very badly
needs the said house to live in, as her house wasburned by the Japanese on the occasion of the entry of the
American liberators in the City; that defendant was duly notified 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, 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, Juan Grey; that plaintiff has
never had possession of said property; that defendants lease contract with the owner of the house is for 5-
year period, with renewal option at the end of each period.

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.

ISSUE:
Who is entitled to administer the property subject matter of this case and who should be the tenant?

HELD:
The 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 court 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 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. 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 abovementioned. 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 of having a certain indisputable right without the power to protect,
enforce, and fully enjoy it.

Moralidad v. Pernes

FACTS:
Petitioner is the registered owner of a parcel of land in Davao City which is the subject of the controversy.
The petitioner had worked in U.S.A. for years until retirement. Being single, she would usually stay in the
house of her niece, respondent Arlene Pernes, at Mandug, Davao City during her vacation and that in
1986, when she received news from Arlene that Mandug was infested by NPA rebels and many women
and children were victims of crossfire between government troops and the insurgents, she immediately
sent money to buy a lot in Davao City proper where Arlene and her family could transfer and settle down.
Petitioner wanted the property to be also available to any of her kins wishing to live and settle in Davao
City and made known this intention in a document she executed which reads:

I, MERCEDES VIA MORALIDAD, of legal age, single, 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.

In her retirement, 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 which resulted
in violent confrontations and the filing of suits at the barangay lupon and to the Ombudsman for conduct
unbecoming of public servants and at the MTCC, an ejectment suit for unlawful detainer.

The MTCC rendered judgment for the petitioner directing the defendants to vacate the premises and to
yield peaceful possession thereof to plaintiff. Respondent spouses appealed to the RTC where the decision
of the MTCC was reversed, holding that respondents possession of the property in question was not 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 in applicable 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.

Petitioner went to the CA wherein her petition was denied on the ground that it is still premature to apply
Articles 448 and 546 of the Civil Code considering that the issue of whether respondents right to possess
a portion of petitioners land had already expired or was already terminated was not yet resolved. 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.

ISSUES:
What provisions of the Civil Code should govern the rights of the parties?
Whether or not the respondents right to possess the land had been terminated.

HELD:
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 anothers property. It is also defined
as the right to enjoy the property of another temporarily, including both the jus utendi and the jus
fruendi, with the owner retaining the jus disponendi or the power to alienate the same.

It is undisputed that petitioner, in a document, made known her intention to give respondents and her
other kins the right to use and to enjoy the fruits of her property and the respondents were being given the
right to build their own house on the property and to stay thereat as long as they like.

The established facts undoubtedly gave respondents not only the right to use the property but also
granted them, among the petitioners other kins, the right to enjoy the fruits thereof.

There are other modes or instances whereby the usufruct shall be considered terminated or extinguished.

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.
the loss of the atmosphere of cooperation, the bickering or the cessation of harmonious relationship
between/among kins constitutes a resolutory condition which, by express wish of the petitioner,
extinguishes the usufruct.

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.

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, If the builder is a usufructuary, his rights
will be governed by Arts. 579 and 580. 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.