G.R. No. L-123 December 12, 1945 II.
, 1945 II. The parties hereto jointly petition the Court to render judgment adopting the
JOSEFA FABIE vs. JOSE GUTIERREZ DAVID, Judge of First Instance of Manila, NGO
BOO SOO and JUAN GREY
OZAETA, J.:
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, 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
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 of having a certain indisputable right without the power to protect, enforce, and fully
enjoy it.
One more detail needs clarification. In her complaint for desahucio Josefa Fabie alleges that
she needs the premises in question to live in, as her former residence was burned. Has she
the right under the will and the judgment in question to occupy said premises herself? We
think that, as a corollary to her right to all the rent, to choose the tenant, and to fix the amount
of the rent, she necessarily has the right to choose herself as the tenant thereof, if she wishes
to; and, as she fulfills her obligation to pay the taxes and insure and conserve the property
properly, the owner has no legitimate cause to 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,
who chose not to answer the petition herein, would be academic in view of the conclusions
we have reached above that the rights between him as owner and Josefa Fabie as
usufructuary of the property in question have been definitely settled by final judgment in civil
case No. 1659 of the Court of First Instance of Manila in the sense that the usufructuary has
the right to administer and possess the property in question, subject to certain specified
obligations on her part.
The orders of dismissal of the respondent Court of First Instance, dated September 22 and
October 31, 1945, in the desahucio case (No. 71149) are set aside that court is directed to
try and decide the said case on the merits; with the costs hereof against the respondent Ngo
Soo.
LANDLORD AND TENANT; RIGHT OF USUFRUCTUARY OF RENTS TO OCCUPY PROPERTY.—A
usufructuary of the rents, as a corollary to the right to all the rents, to choose the tenant, and to fix
the amount of the rent, necessarily has the right to choose himself as the tenant, provided that the
obligations he has assumed towards the owner of the property are fulfilled.
G.R. No. L-19614 March 27, 1971
JESUS M. GABOYA, as Administrator of the Estate of DON MARIANO CUI, 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.
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 11243 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 consequent extinction of the usufruct, conformably to Article 603, paragraph
(1), of the Civil Code.
It is also urged by the appellants that the usufruct was 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.
WHEREFORE, finding no reversible error in the appealed decision, the same is hereby
affirmed. Costs against appellant-intervenors, Jesus Ma. Cui, Jose Ma. Cui, Serafin Ma. Cui,
Jorge Ma. Cui, Rosario Cui de Encarnacion, Precilla C. Velez, and Lourdes C. Velez.
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.
Alipio V. Flores for petitioner.
Rafael B. Ruiz for private respondent.
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. 4 This 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. 5 Thus, 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. 7 The
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:
 Art. 1306. 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.
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.
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.
Contracts; Barter; The courts are not bound by the name contracting parties given to their
contracts.—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. This 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.
Thus, in the instant case, the use of the term “barter” in describing the agreement of February 2,
1964, is not controlling.
Usurfruct; No barter agreement for purposes of transferring ownership of lands can be inferred
when it is clear that the parties merely intended to transfer material possession thereof.—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 1 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 possession 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. 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.
Same; Same; Same; Same; The manner of terminating the right of usufruct is primarily determined
by the stipulation of the parties, such as the happening of a resolutory condition.—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.
Same; Same; Same; Usufructuary may remove improvements on property subject of usufruct as
provided for in Article 579 of the new Civil Code.—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.
G.R. No. 152809 August 3, 2006
MERCEDES MORALIDAD, Petitioner,
vs.
SPS. DIOSDADO PERNES and ARLENE PERNES, Respondents.
DECISION
GARCIA, J.:
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.
xxx xxx xxx
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
xxx xxx 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.
Usufruct; Words and Phrases; Usufruct, in essence, is nothing else but simply allowing one to enjoy
another’s 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.—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. 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.
Same; 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.—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.
Same; By express provision of law, the usufructuaries do not have the right to reimbursement for
the improvements they may have introduced on the property.—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). (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.
Same; If the rule on reimbursement or indemnity were otherwise, then the usufructuary might
improve the owner out of his property.—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. The respondents may, however, remove or destroy the improvements
they may have introduced thereon without damaging the petitioner’s property.
Same; Equity; The disposition herein arrived is not only legal and called for by the law and facts of
the case—it is also right.—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. Moralidad vs.
Parnes, 497 SCRA 532, G.R. No. 152809 August 3, 2006

G.R. No.171555 April 17, 2013
EVANGELINE RIVERA-CALINGASAN and E. RICAL ENTERPRISES, Petitioners,
vs.
WILFREDO RIVERA, substituted by MA. LYDIA S. RlVERA, FREIDA LEAH S. RIVERA
and WILFREDO S. RIVERA, .JR., Respondents.
DECISION
BRION, J.:
We resolve the petition for review on certiorari,1 filed by petitioners Evangeline Rivera-
Calingasan and E. Rical Enterprises,2 assailing the February 10, 2006 decision3 of the Court
of Appeals ( CA) in CA-G.R. SP No. 90717. The CA decision affirmed with modification the
April 6, 2005 Decision4 and the July 8, 2005 order5 of the Regional Trial Court (RTC) of Lipa
City, Branch 85, in Civil Case No. 2003-0982.
The Factual Antecedents
During their lifetime, respondent Wilfredo Rivera and his wife, Loreto Inciong, acquired
several parcels of land in Lipa City, Batangas, two of which were covered by Transfer
Certificate of Title (TCT) Nos. T-22290 and T-30557.6 On July 29, 1982, Loreto died, leaving
Wilfredo and their two daughters, Evangeline and Brigida Liza, as her surviving heirs.7
About eleven (11) years later, or on March 29, 1993, Loreto’s heirs executed an extrajudicial
settlement of her one-half share of the conjugal estate, adjudicating all the properties in favor
of Evangeline and Brigida Liza; Wilfredo waived his rights to the properties, with a reservation
of his usufructuary rights during his lifetime.8 On September 23, 1993, the Register of Deeds
of Lipa City, Batangas cancelled TCT Nos. T-22290 and T-30557 and issued TCT Nos. T-
87494 and T-87495 in the names of Evangeline and Brigida Liza, with an annotation of
Wilfredo’s usufructuary rights.9
Almost a decade later, or on March 13, 2003,10 Wilfredo filed with the Municipal Trial Court in
Cities (MTCC) of Lipa City a complaint for forcible entry against the petitioners and Star
Honda, Inc., docketed as Civil Case No. 0019-03.
Wilfredo claimed that he lawfully possessed and occupied the two (2) parcels of land located
along C.M. Recto Avenue, Lipa City, Batangas, covered by TCT Nos. T-87494 and T-87495,
with a building used for his furniture business. Taking advantage of his absence due to his
hospital confinement in September 2002, the petitioners and Star Honda, Inc. took
possession and caused the renovation of the building on the property. In December 2002, the
petitioners and Star Honda, Inc., with the aid of armed men, barred him from entering the
property.11
Both the petitioners and Star Honda, Inc. countered that Wilfredo voluntarily renounced his
usufructuary rights in a petition for cancellation of usufructuary rights dated March 4,
1996,12 and that another action between the same parties is pending with the RTC of Lipa
City, Branch 13 (an action for the annulment of the petition for cancellation of usufructuary
rights filed by Wilfredo), docketed as Civil Case No. 99-0773.
The MTCC Ruling
In its December 2, 2003 decision,13 the MTCC dismissed the complaint. It found no evidence
of Wilfredo’s prior possession and subsequent dispossession of the property. It noted that
Wilfredo admitted that both E. Rical Enterprises and Star Honda, Inc. occupied the property
through lease contracts from Evangeline and her husband Ferdinand.
Wilfredo appealed to the RTC.
The RTC Ruling
In its November 30, 2004 decision,14 the RTC affirmed the MTCC’s findings. It held that
Wilfredo lacked a cause of action to evict the petitioners and Star Honda, Inc. since
Evangeline is the registered owner of the property and Wilfredo had voluntarily renounced his
usufructuary rights.
Wilfredo sought reconsideration of the RTC’s decision and, in due course, attained this
objective; the RTC set aside its original decision and entered another, which ordered the
eviction of the petitioners and Star Honda, Inc.
In its April 6, 2005 decision,15 the RTC held that Wilfredo’s renunciation of his usufructuary
rights could not be the basis of the complaint’s dismissal since it is the subject of litigation
pending with the RTC of Lipa City, Branch 13. The RTC found that the MTCC overlooked the
evidence proving Wilfredo’s prior possession and subsequent dispossession of the property,
namely: (a) Evangeline’s judicial admission of "J. Belen Street, Rosario, Batangas" as her
residence since May 2002; (b) the Lipa City Prosecutor’s findings, in a criminal case for
qualified trespass to dwelling, that the petitioners are not residents of the property; (c) the
affidavit of Ricky Briones, Barangay Captain of Barangay 9, Lipa City where the property is
located, attesting to Wilfredo’s prior possession and the petitioners’ entry to the property
during Wilfredo’s hospital confinement; and (d) the petitioners, with the aid of armed men,
destroyed the padlock of the building on the property. The RTC ordered the petitioners and
Star Honda, Inc. to pay ₱620,000.00 as reasonable compensation for the use and occupation
of the property, and ₱20,000.00 as attorney’s fees.
The petitioners and Star Honda, Inc. filed separate motions for reconsideration.
In its July 8, 2005 order,16 the RTC modified its April 6, 2005 decision by absolving Star
Honda, Inc. from any liability. It found no evidence that Star Honda, Inc. participated in the
dispossession.
The petitioners then filed a Rule 42 petition for review with the CA.
The CA Ruling
In its February 10, 2006 decision,17 the CA affirmed with modification the RTC’s findings,
noting that: (a) Evangeline’s admission of "J. Belen Street, Rosario, Batangas" as her
residence (a place different and distinct from the property) rendered improbable her claim of
possession and occupation; and (b) Evangeline’s entry to the property (on the pretext of
repairing the building) during Wilfredo’s hospital confinement had been done without
Wilfredo’s prior consent and was done through strategy and stealth. The CA, however,
deleted the award of ₱20,000.00 as attorney’s fees since the RTC decision did not contain
any discussion or justification for the award.
The petitioners then filed the present petition.
Wilfredo died on December 27, 2006 and has been substituted by his second wife, Ma. Lydia
S. Rivera, and their children, Freida Leah S. Rivera and Wilfredo S. Rivera, Jr.
(respondents).18
The Petition
The petitioners submit that the CA erred in equating possession with residence since
possession in forcible entry cases means physical possession without qualification as to the
nature of possession, i.e., whether residing or not in a particular place. They contend that the
pronouncements of the RTC of Lipa City, Branch 13, in Civil Case No. 99-0773, in the March
11, 2003 order,19 that they have been "occupying the premises since 1997"20 and Wilfredo’s
own admission that he padlocked the doors of the building contradict Wilfredo’s claim of prior
possession.
The Case for the Respondents
The respondents counter that the petitioners mistakenly relied on the statements of the RTC
of Lipa City, Branch 13, in Civil Case No. 99-0773 on the petitioners’ occupation since 1997;
such statements had been rendered in an interlocutory order, and should not prevail over
Evangeline’s admission in her answer of "Poblacion, Rosario, Batangas" 21 as her residence,
compared to Wilfredo’s admission in his complaint of "C.M. Recto Avenue, Lipa City,
Batangas" as his residence, the exact address of the disputed property. 22
The Issue
The case presents to us the issue of who, between the petitioners and Wilfredo, had been in
prior physical possession of the property.
Our Ruling
The petition lacks merit.
Ejectment cases involve only physical possession or possession de facto.
"Ejectment cases - forcible entry and unlawful detainer - are summary proceedings designed
to provide expeditious means to protect actual possession or the right to possession of the
property involved. The only question that the courts resolve in ejectment proceedings is: who
is entitled to the physical possession of the premises, that is, to the possession de facto and
not to the possession de jure. It does not even matter if a party's title to the property is
questionable."23 Thus, "an ejectment case will not necessarily be decided in favor of one who
has presented proof of ownership of the subject property."24
Indeed, possession in ejectment cases "means nothing more than actual physical
possession, not legal possession in the sense contemplated in civil law." 25 In a forcible entry
case, "prior physical possession is the primary consideration."26 "A party who can prove prior
possession can recover such possession even against the owner himself. Whatever may be
the character of his possession, if he has in his favor prior possession in time, he has the
security that entitles him to remain on the property until a person with a better right lawfully
ejects him."27 "The party in peaceable, quiet possession shall not be thrown out by a strong
hand, violence, or terror."28
The respondents have proven prior physical possession of the property.
In this case, we are convinced that Wilfredo had been in prior possession of the property and
that the petitioners deprived him of such possession by means of force, strategy and stealth.
The CA did not err in equating residence with physical possession since residence is a
manifestation of possession and occupation. Wilfredo had consistently alleged that he resided
on "C.M. Recto Avenue, Lipa City, Batangas," the location of the property, whereas
Evangeline has always admitted that she has been a resident of "J. Belen Street, Rosario,
Batangas." The petitioners failed to prove that they have occupied the property through some
other person, even if they have declared their residence in another area.
We note that in another proceeding, a criminal complaint for qualified trespass to dwelling,
the Lipa City Prosecutor also observed that the petitioners did not reside on or occupy the
property on December 16, 2002,29 about three (3) months before Wilfredo filed the complaint
for forcible entry on March 13, 2003. The petitioners also alleged therein that they are
residents of "J. Belen St., Rosario, Batangas" and not "No. 30 C.M. Recto Ave., Lipa City." 30
Furthermore, the petitioners failed to rebut the affidavit of Barangay Captain Briones attesting
to Wilfredo’s prior possession and the petitioners’ unlawful entry to the property during
Wilfredo’s hospital confinement.31
The petitioners’ claim of physical possession cannot find support in the March 11, 2003
order32 of the RTC of Lipa City, Branch 13, in Civil Case No. 99-0773 stating that the
petitioners "have been occupying the premises since 1997." We note that the order was a
mere interlocutory order on Wilfredo’s motion for the issuance of a cease and desist order.
An interlocutory order does not end the task of the court in adjudicating the parties'
contentions and determining their rights and liabilities against each other. "It is basically
provisional in its application."33 It is the nature of an interlocutory order that it is subject to
modification or reversal that the result of further proceedings may warrant. Thus, the RTC’s
pronouncement on the petitioners’ occupation "since 1997" is not res judicata on the issue of
actual physical possession.
WHEREFORE, we hereby DENY the appeal and accordingly AFFIRM the February 10, 2006
decision of the Court of Appeals in CA-G.R. SP No. 90717 with the MODIFICATION that, with
the termination, upon his death, of respondent Wilfredo Rivera’s usufructory over the disputed
property, the issue of restitution of possession has been rendered moot and academic; on
the other hand, the monetary award of ₱620,000.00, as reasonable compensation for the use
and occupation of the property up to the time of the Regional Trial Court decision on April 6,
2005, survives and accrues to the estate of the deceased respondent Wilfredo Rivera, to be
distributed to his heirs pursuant to the applicable law on succession. Additional compensation
accrues and shall be added to the compensation from the time of the Regional Trial Court
decision up to respondent Wilfredo Rivera’s death. For purposes of the computation of this
additional amount and for the execution of the total amount due under this Decision, we
hereby remand the case to the Regional Trial Court, as court of origin, for appropriate action.
Costs against petitioners Evangeline Rivera-Calingasan and E. Rical Enterprises.
SO ORDERED.

In sum, we find no reversible error in the decision appealed from and, therefore, affirm it.

Wilfredo’s death did not render moot the forcible entry case.

The death of Wilfredo introduces a seeming complication into the case and on the disposition
we shall make. To go back to basics, the petition before us involves the recovery of
possession of real property and is a real action that is not extinguished by the death of a party.
The judgment in an ejectment case is conclusive between the parties and their successors-
in-interest by title subsequent to the commencement of the action; hence, it is enforceable by
or against the heirs of the deceased.1âwphi1 This judgment entitles the winning party to: (a)
the restitution of the premises, (b) the sum justly due as arrears of rent or as reasonable
compensation for the use and occupation of the premises, and (c) attorney’s fees and costs.

The complicating factor in the case is the nature and basis of Wilfredo’s possession; he was
holding the property as usufructuary, although this right to de jure possession was also
disputed before his death, hand in hand with the de facto possession that is subject of the
present case. Without need, however, of any further dispute or litigation, the right to the
usufruct is now rendered moot by the death of Wilfredo since death extinguishes a usufruct
under Article 603(1) of the Civil Code. This development deprives the heirs of the usufructuary
the right to retain or to reacquire possession of the property even if the ejectment judgment
directs its restitution.

Thus, what actually survives under the circumstances is the award of damages, by way of
compensation, that the RTC originally awarded and which the CA and this Court affirmed.
This award was computed as of the time of the RTC decision (or roughly about a year before
Wilfredo’s death) but will now have to take into account the compensation due for the period
between the RTC decision and Wilfredo’s death. The computation is a matter of execution
that is for the RTC, as court of origin, to undertake. The heirs of Wilfredo shall succeed to the
computed total award under the rules of succession, a matter that is not within the authority
of this Court to determine at this point.