USUFRUCTUARY - There are 7 ways of extinguishing a usufruct.

One is by the fulfillment of any

resolutory condition provided in the title creating the usufruct. (See Art. 603)
1. Moralidad v. Pernes | Usufruct - Concept (Art. 562) - Based on the document evidencing the usufruct, the SC held that the loss of the
- Mercedes Moralidad was a teacher in Davao, QC, and Manila. While teaching in atmosphere of cooperation and the cessation of harmonious relationship
Manila, she was given the opportunity to study at the University of between/among kin constitutes a resolutory condition which, by express wish of
Pennsylvania. While schooling, she taught at Philadelphia Catholic Archdiocese Moralidad, extinguished the usufruct.
for 7 years and thereafter worked at the Mental Health Department of said - Also, the law provides that the Pernes, as usufructuary, do not have the right to
University for the next 17 years. During those years she would come home to reimbursement for the improvements they have made. (See Art. 579 & 580)
Davao and stay in the house of her niece Arlene Pernes since she was single.
- While she was in the US in 1986 she heard news that Mandug, Davao was now 2. Hemedes v. CA | Obligation to preserve form and substance
infested by NPA rebels and there were a lot of collateral victims caught in the - Take note:
crossfire between the rebels and the government. She sent money home with - Father: Jose Hemedes
instructions to look for a lot in Davao City where Arlene and her family could - 3rd wife: Justa Kausapin
look for a place to transfer and settle down. . - Children of Jose: Maxima Hemes and Enrique D. Hemedes
- She executed a document where she stated that Mr and Mrs Pernes may build - R&B Insurance - Mortgagee of Maxima
their house on the lot and stay as long as they like; that if anybody of her kin - Dominium - Buyer of Enrique, Lessor of Asia Brewery
would wish to stay in the property they should maintain an atmosphere of - Asia Brewery - Sister company and lessee of Dominium
cooperation and live in harmony; that the purpose of staying should not be - Jose executed a “Donation Inter Vivos With Resolutory Conditions” in favor of
inimical (with damage); etc. Justa wherein he conveyed ownership over the a 21,773 sq meter land in Sala,
- After her retirement in 1993, she came home and stayed at the house on the Cabuyao, Laguna. The donation had a resolutory condition ​(Basically, pag
property she bought. However her relations with the Pernes turned sour as they namatay o nagpakasal ulit si Justa the title will revert back to the kids - Maxima
family did not adhere to her suggestions to certain practices concerning matters or Enrique. Pwede pumili si Justa kung kanino sa dalawa niya ibibigay pero
of health and sanitation. The Pernes’ eldest son would threaten the then pag hindi siya pumili, the two kids will own it in common)
70-year-old woman with fists and profanities. There were other violent - Pursuant to the condition mentioned, Justa executed a “Deed of Conveyance of
confrontations where she sustained cuts and bruises. ☹ Unregistered Real Property by Reversion” conveying to Maxima the property
- She then filed a complaint in the barangay asking the family to vacate, but they with a stipulation that “the possession and enjoyment of the said property which
wanted to be reimbursed. They couldn’t agree on a price so conflict ensued. shall remain vested in me during my lifetime, or widowhood and which upon
- Moralidad then filed in the MTCC for unlawful detainer and won. MTCC my death or remarriage shall also automatically revert to, and be transferred to
declared that the Pernes, although builders in good faith, have no excuse for not my designee, Maxima Hemedes.
complying with the demand to vacate. RTC reversed stating that their possession - Maxima was able to secure an OCT with an annotation that “Justa Kausapin
was not by mere tolerance but by express consent by her declaration in 1986. shall have the usufructuary rights over the parcel of land herein described during
CA affirmed the RTC stating that this case involves a usufruct but Moralidad her lifetime or widowhood”
failed to establish that the Pernes right to possess had already ceased, making the - R&B Insurance (R&B) now claims that Maxima and her husband Raul
ejectment suit premature. Rodrigues constituted a real estate mortgage over the subject property to serve
- ISSUE: W/N ​the usufructuary relations between the parties have ceased? - ​YES as a security for a P6,000 loan. Maxima failed to pay and R&B forclosed on the
- DOCTRINE: (See Art. 562) ​A usufruct is simply allowing one to enjoy property. Land was auctioned off and R&B was the highest bidder. Maxima
another’s property. It is also defined as the right to enjoy the property of another failed to redeem the property hence R&B executed an Affidavit of
temporarily, including both jus utendi and jus fruendi, with the owner retaining Consolidation. The annotation of usufruct in favor of Justa Kausapin was
the jus disponendi or the power to alienate the same. maintained in the new title
- It is true that Moralidad, through a document, gave the Pernes and her kin the - Despite the first conveyance to Maxima, Justa executed a “Kasunduan” whereby
right to use and to enjoy the fruits of her property. Hence, there was a usufruct she transferred the same land to her stepson, Enrique D. Hemedes, pursuant to
constituted between the parties. But if it is proven that the usufruct had already the resolutory condition in the deed of donation. Enrique sold the property to
ceased, then the Pernes’ have no right to use and enjoy the property anymore Dominium Realty and Construction Corporation (Dominium). Justa executed an
and the unlawful detainer case should prosper. affidavit affirming the conveyance to Enrique and denying the one to Maxima.
- Dominium lease the property to its sister corporation Asia Brewery, Inc (Asia - (the mortgagee in good/bad faith was an issue raised by R&B because CA found
Brewery) who constructed two warehouses made of steel and asbestos costing them to be in bad faith, them being in good faith would mean they acquired the
about P10,000,000. title validly, subject only to the usufructuary rights of Justa)
- Upon learning of Asia Brewery’s constructions upon the subject property, R & - ASSUMING ARGUENDO: that R & B Insurance was obligated to look beyond
B Insurance sent it a letter to the former informing them of its ownership and the certificate of title and investigate the title of its mortgagor, still, it would not
thus their right to appropriate since Asia Brewery was in bad faith. Maxima also have discovered any better rights in favor of private respondents
wrote a letter to Asia Brewery saying she is the owner and denies the execution - the land was mortgaged to R & B Insurance as early as 1964, while the
of the estate mortgage. She is asserting her right to appropriate, or to compel “Kasunduan” was executed only in 1971 and the affidavit of Justa Kausapin
Asia Brewery to buy the land or to demand the demolition of the warehouses. affirming the conveyance in favor of Enrique D. Hemedes was executed in
- Dominium and Enrique D. Hemedes filed a complaint with the Court of First 1981. Thus, even if R & B Insurance investigated the title of Maxima Hemedes,
Instance of Binan, Laguna for the annulment of TCT No. 41985 issued in favor it would not have discovered any adverse claim to the land in derogation of its
of R & B Insurance and/or the reconveyance to Dominium of the subject mortgagor’s title. We reiterate that at no point in time could private respondents
property. establish any rights or maintain any claim over the land.
- CFI ruled in favor of Dominium and Enrique. CA affirmed in toto - ANOTHER ISSUE ​(if u want for flex):​ The valid conveyance was that of
- ISSUE: WON R&B is a mortgagee in good faith? - YES Maxima’s and not Enrique’s.
- Findings of the CA showed that Maxima Hemedes did in fact execute a - During the trial, it was showed that Justa was simply denying the conveyance.
mortgage over the subject property in favor of R&B. However, the CA ruled that The court said a party to a contract cannot evade compliance by the simple
R&B are not mortgagee in bad faith because there was a usufructuary expedient of denying the execution of such contract
encumbrance on the title and R&B did not investigate it. - CA relied on Justa’s repudiation of the deed of conveyance but SC says there
- SC now says, R&B was a mortgagee in good faith because there is no reason for are strong indications that she is a biased witness - she is dependent on
them to look beyond the four corners of the titles Enrique for financial assistance ​(Justa is already 80 yrs old)
- The annotation of usufructuary rights in favor of Justa Kausapin upon Maxima - Art 1332 does not apply to this case. This article is about the burden of
Hemedes’ OCT does not impose upon R & B Insurance the obligation to proving that the contract was explained to the party who is unable to read or
investigate the validity of its mortgagor’s title. understand the language the contract was written in. Justa claims that Maxima
- Usufruct gives a right to enjoy the property of another with the obligation of took advantage of the fact that the former cannot understand english.
preserving its form and substance However, Justa said she never saw the deed of conveyance, not until it was
- Only the jus utendi and jus fruendi over the property is transferred to the shown in court. The SC said it is impossible to prove that the deed was
usufructuary. The owner of the property maintains the jus disponendi or the explained to Justa when Justa herself declares she has never seen it. Justa’s
power to alienate, encumber, transform, and even destroy the same. defense of Art 1332 fails due to her own assertions.
- the owner of property the usufruct of which is held by another, may alienate it, - NOTE: this case has a dissenting and concurring opinion, if you’d like to read
although he cannot alter the property’s form or substance, or do anything which that :)
may be prejudicial to the usufructuary
- DOCTRINE: There is no doubt that the owner may validly mortgage the 3. Eleizegui v. Manila Lawn Tennis Club | Obligation to preserve form and
property in favor of a third person and the law provides that, in such a substance - 1903 case
case, the usufructuary shall not be obliged to pay the debt of the mortgagor, - A piece of land was leased by Eleizegui (lessor) to Manila Lawn Tennis Club
and should the immovable be attached or sold judicially for the payment of (lessee), an English association represented by Mr. Williamson, for fixed
the debt, the owner shall be liable to the usufructuary for whatever the consideration (P25/month) and for as long as the lessee wills. Such lessee was
latter may lose by reason thereof. authorized to make improvements upon the land, by erecting permanent and
- Based on the foregoing, the annotation of usufructuary rights in favor of Justa temporary buildings, by making fills, laying pipes, and making such other
Kausapin is not sufficient cause to require R & B Insurance to investigate improvements for the comfort and amusement of the Tennis members.
Maxima Hemedes’ title, contrary to public respondent’s ruling, for the reason - Eleizegui decided to terminate the lease in the first month. Manila Lawn argues
that Maxima Hemedes’ ownership over the property remained unimpaired that the lease contract provides that the contract can only be terminated
despite such encumbrance. R & B Insurance had a right to rely on the certificate according to their (lessee’s) will. This forced Eleizegui to file for a case of
of title and was not in bad faith in accepting the property as a security for the unlawful detainer for the restitution of the land, basing his claim on Article 1569
loan it extended to Maxima Hemedes. of the Civil Code which allows a lessor to dispossess a lessee after the lapse of
 the conventional (by agreement of the parties) or legal term. Eleizegui argues - The estate of E. M. Bachrach, as owner of 108,000 shares of stock of the
that according to 1581, the term of the lease shall be determined by the lessor if Atok-Big Wedge Mining Co., Inc., received 54,000 shares representing 50 per
such was not provided. (1581 provided that the lease shall be for months if the cent stock dividend on the said 108,000 shares.
rent was paid on a monthly basis which is the case here). As such, Eleizegui - M.M. Bachrach petitioned the lower court to authorize the Peoples Bank and
argued that he had terminated the contract after the first month and is no longer Trust Company as administrator of the estate of E. M. Bachrach, to endorse and
bound to the succeeding months, except if there is tacit renewal. deliver to her the 54,000 share of stock dividend, claiming that said dividend is
- The lower court agreed, that the contract was terminated after lessor Eleizegui fruit or income and belonged to her as usufructuary.
gave notice. - Sophie Siefert and Elisa Elianoff, legal heirs of the E.M. Bachrach, opposed said
- Issue​: W/N the term of the lease shall be according to the lessor? ​No petition on the ground that the stock dividend in question was not income but
- The parties agreed upon a term although it is based on the will of one of the formed part of the capital and therefore belonged not to the usufructuary but to
parties. Therefore Article 1581 cannot be applied. However, the SC said that the the remainderman.
lease cannot be understood to be an emphyteusis (perpetual lease). The contract - While they admit that a cash dividend is an income, appellants contend that a
of lease is a bilateral one and the determination of the period rests upon the stock dividend is not, as it merely represents an addition to the invested capital.
debtor-lessee. Article 1128 should be applied—the courts must fix a period. The - According to the Massachusetts rule, cash dividends, however large, are
proper relief is not unlawful detainer but to petition the court to fix the proper regarded as income, and stock dividends, however made, as capital.
period. - On the other hand, the Pennsylvania rule declares that all earnings of the
- Discussion on usufruct: “Usufruct is a right of superior degree to that which corporation made prior to the death of the testator stockholder belong to the
arises from a lease. It is a real right and includes all the jus utendi and jus corpus of the estate, and that all earnings, when declared as dividends in
fruendi. Nevertheless, the utmost period for which a usufruct can endure, if whatever form, made during the lifetime of the usufructuary.
constituted in favor of a natural person, is the lifetime of the usufructuary (art. - W/N the stock dividends belong to M.M. Bachrach? - YES
513), and if in favor of a juridical person, it cannot be created for more than - The Pennsylvania rule is more in line with our laws.
thirty years. (Art. 515.) If the lease might be perpetual, in what would it be - Under section 16 of our Corporation Law, no corporation may make or declare
distinguished from an emphyteusis? Why should the lessee have a greater right any dividend except from the surplus profits arising from its business. ​Any
than the usufructuary, as great as that of an emphyteuta, with respect to the dividend, therefore, whether cash or stock, represents surplus profits.
duration of the enjoyment of the property of another? Why did they not contract - Article 471 provides that the usufructuary shall be entitled to receive ​all the
for a usufruct or an emphyteusis? It was repeatedly stated in the document that it natural, industrial, and civil fruits of the property in usufruct.
was a lease, and nothing but a lease, which was agreed upon. If it is a lease, then - Art. 475 further states that: When a usufruct is created on the right to
it must be for a determinate period. (Art 1543.) By its very nature it must be receive an income or periodical revenue, either in money or fruits, or the
temporary, just as by reason of its nature an Emphyteusis must be perpetual, or interest on bonds or securities payable to bearer, each matured payment
for an unlimited period. (Art. 1608.)” shall be considered as the proceeds or fruits such right.
- Basically the Supreme Court said that a usufruct ceases when the usufructuary - The 108,000 shares of stock are part of the property in usufruct. The 54,000
expires (for natural persons). And that if the parties really intended to for the shares of stock dividend are civil fruits of the original investment. They
rent to be perpetual then they would have contracted for a emphyteusis or they represent profits, and the delivery of the certificate of stock covering said
could have made explicit a usufruct. In this case, it was clear that what was dividend is equivalent to the payment of said profits. Said shares may be sold
agreed upon was a lease. independently of the original shares.
- Take note that the articles here are based on the old Civil Code.
- SC remanded the case with instructions for the lower court to rule in favor of
Manila Lawn Tennis Club. (​what a wild time to be a supreme court!)​ 5. Mercado v. Rizal | Pay the annual charges and taxes imposed on the fruits
- Plaintiffs: Josefa Rizal Mercado et al. (Mercado); Defendant: Alfredo Hidalgo
4. Bachrach vs Seifert | Obligation to preserve form and substance Rizal (Rizal)
- E.M. Bachrach died. In his will, he left all the fruits and usufruct of his estate to - Paciano Rizal y Mercado (JOSE RIZAL’S ACTUAL BRO) left properties to
his wife, M.M. Bachrach. In case of her death, ½ of the estate shall be nine heirs in usufruct (Mercados), and naked ownership to seven others (Rizal).
distributed among his heirs except his brothers. - P6,503.80 tax was paid for 1932 to 1934. The naked owners made the
usufructuaries pay P1,455.29 of the whole tax. As the Mercados did not agree to
 this, being merely usufructuaries, this was deducted by the owners from their the total sum of ₱1,117,900. This pertains to the part of the road that are on
share of the fruits and applied to the payment of land tax against their will. alienable and public lands.
- MERCADOS: owners have the duty to pay the tax, Mercados should recover the - SAMAR contested the validity of the assessment to the petitioner BOARD upon
amount deducted from their share of the fruits. All of the naked owners except the ground that the road was constructed entirely on a public land, thus cannot
Rizal agreed to this, paying P206.47 to each of the nine usufructuaries. be considered an improvement subject to tax within the meaning of section 2 of
- The two Mercados filed this action to compel Rizal to also pay P206.47. Commonwealth Act 470 as held by the SC in ​Bislig v. Surigao​.
- RIZAL: demurrer of complaint; failure to allege facts sufficient to sustain a - Petitioner BOARD upheld the assessment, but held its enforceability in
cause of action - SUSTAINED BY THE TRIAL COURT. abeyance because the lease contracts from the MLAs were not yet executed.
- Trial Court: Action is premature under Par. 2 Article 505 of the Old Civil Code. - SAMAR moved for reconsideration. The BOARD not only denied it but made
- ISSUE: ​W/N Rizal should reimburse the Mercados - YES. the assessment immediately enforceable.
- Article 505: Any taxes which may be imposed directly upon the capital, - SAMAR appealed to the CTA. The CTA ruled in favor of SAMAR, stating that
during the usufruct, shall be chargeable to the owner. since the road is constructed on public lands such that it is an integral part of the
- If paid by the latter, the usufructuary shall pay him the proper interest on any land and not an independent improvement thereon, and that upon the termination
sums he may have disbursed by reason thereof; ​if the usufructuary should of the lease the road as an improvement will automatically be owned by the
advance the amounts of such taxes he shall recover them upon the national government, SAMAR should be exempt from paying the real estate tax
expiration of the usufruct. assessed against it.
- The trial court erred in ruling that the case was premature reasoning that under - The BOARD appeals.
the second paragraph: if the usufructuary should pay the tax, they would be - ISSUE: W/N SAMAR is liable for real property taxes over improvements it
entitled to reimbursement only when the usufruct expires. (WRONG because made on alienable or disposable public lands?
PAY =/= ADVANCE) - The SC states that it has already answered the issue at hand in ​Bislig​, as properly
- However, it could not have been advanced by the Mercados because they did not relied on by SAMAR.
consent to the deduction and, in fact, it was the naked owners who made it with - The BOARD contended that the ​Bislig case involved inalienable public lands,
the share of the usufructuaries in the fruits. and is thus not applicable to this case. The SC disagreed, as the nature of the
- The Mercados, in claiming the P206.47, do not rely on Par. 2 ​but the first public land was not the crux of SC’s doctrine.
paragraph, since, as usufructuaries, they are not the ones called upon to - First, it cannot be disputed that the ownership of the road that was constructed
make this payment. by SAMAR belongs to the government by right of accession not only because it
- The demurrer is overruled, and it is ordered that the case be remanded to the is inherently incorporated or attached to the land leased to SAMAR but also
court of origin. because upon the expiration of the concession, said road would ultimately pass
- DOCTRINE: Pursuant to Article 505 of the Old Civil Code: the tax directly to the national government.
burdens the capital, that is, the real value of the property and should be - Second, while the road was constructed by appellee primarily for its use and
paid by the owner(s). benefit, the privilege is not exclusive, for, under the lease contract entered into
by SAMAR and the government, its use can also be availed of by the employees
6. Board of Assessment Appeals of Zamboanga del Sur v. Samar Mining | Pay of the government and by the public in general.
the annual charges and taxes imposed on the fruits - Since, as above shown, the road in question cannot be considered as an
- SAMAR Mining Company is a domestic corporation engaged in the mining improvement which belongs to appellee, although in part is for its benefit, it is
industry. clear that the same cannot be the subject of assessment within the meaning of
- The mining claims and the mill of SAMAR are located inland and at a great section 2 of Commonwealth Act No. 470.
distance from the loading point or pier site in Zamboanga del Sur. It decided to - DOCTRINE: ​It is well settled that a real tax, being a burden upon the capital,
construct a 42km gravel road as a convenient means of hauling its ores from the should be paid by the owner of the land and not by a usufructuary ​(Mercado v.
mine site to the pier area. It was called the Samico Road. Rizal​). Appellee is but a partial usufructuary of the road in question.
- Since the road would traverse public lands, SAMAR applied for a miscellaneous
lease application with the Bureau of Lands and the Bureau of Forestry. 7. NHA v. CA | DEATH of the usufructuary
- SAMAR received a letter from the Provincial Assessor of Zamboanga del Sur - 24 OCT 1968, then president Marcos issued proclamation 481, which set aside a
assessing the 13.8 kilometer road constructed by it for real estate tax purposes in 120 hectare portion of a land in Quezon City owned by the NHA as reserved
property for the site of the National Government Center (NGC).
- 19 SEPT 1977, he then issued proclamation 1670 which removed a 7 hectare using either of the 2 surveys aforementioned. So the SC remanded this case
portion of the aforementioned lot from the coverage of what as to be NGC, and down to the RTC so that MSBF and NHA, together, can survey the land for the
instead gave Manila Seedling Bank Foundation (MSBF) usufructuary rights over 7 hectares belonging to NHA.
[that 7 hectares]. This also ordered MSBF to survey the area to delineate what 7 - (DOCTRINE) PERO ITO YUNG GUSTO MARINIG NI MAAM​:
hectares are theirs According to Article 605 of the CC, a usufruct cannot be constituted in favor of
- MSBF then occupied that 7 hectares given to them. But as the years went on a [corporation/association] for more than 50 years. Since Proc1670 was issued in
MSBF's occupancy began exceeding the 7 hectare area covered by proc1670. 1977, at the time of this case (2005, so 28 years have passed) it had 22 more
That by 1987, they were already occupying 16 hectares. years to go, or until 2027. The reckoning point is not proc481, but proc1670;
- 18 AUG 1987, MSBF began leasing portions of the 16 hectare area they were since it was proc1670 that birthed the usufruct.
occupying. One such lessor was BGC.
- 11 NOV 1987, now president Aquino issued memorandum order 127 (MO127)
which revoked the reserved status of "the 50 hectares, more or less, remaining
out of the 120 hectares of the NHA property reserved as site of the National
Government Center." MO 127 also authorized the NHA to commercialize the
area and to sell it to the public.
- 15 AUG 1988, NHA tells BGC that it has 10 days to vacate the area it was
occupying, or else NHA will demolish. BGC files a complaint for injunction
against NHA.
- RTC - agreed with BGC and MSBF, but MSBG never surveyed which 7
hectares was theirs. Instead when they surveyed it, they were already occupying
the 16 hectares, thus the proper 7 hectares cannot be delineated from such
survey. And that to allow MSBF to now determine what the 7 hectares are
would be grossly unfair. Ultimately, RTC RULED IN FAVOR OF NHA AND
TELLS MSBF AND BGC TO GTFO. >> NHA then demolished the buildings
of BGC on the land that remained a short time after this judgment. But
MSBF/BGC appealed to CA.
- CA - does not agree with RTC, and claims that MSBF did determine their 7
hectares by conducting 2 surveys and erecting "its main structures in the area of
its choice". CA RULES THAT NHA IS ENJOINED FROM DEMOLISHING
THE STRUCTURES BUILT BY BGC/MSBF ON THE LAND (kaso na
demolish na nga eh so ewan). >> NHA appeals to the SC
- ISSUE: Whether the area leased to BGC is within the 7 hectare area given to
MSBF as usufruct? Shit, even the SC doesn’t know, they remanded the case to
the RTC to conduct the survey
- RATIO: The SC does not question that MSBF has the right to the 7 hectares.
The RTC and CA agree that MSBF has the latitude to determine the location of
the 7 hectares within the 16 hectares they are occupying by reason of proc1670.
But the two courts disagree if MSBF exercised this right in a timely manner.
- MSBF made 2 suverys, one in 1984, and in 1986. Both covered 16 hectares, but
the 2nd survey indicated a 7 hectare area shaded in yellow. Article 565 of the
Civil Code provides that the rights and obligations of the usufruct are contained
in the title giving the same, in this case proc1670; for MSBF to make the survey
to ascertain the 7 hectares. But since they failed to survey, and applying Art 601
of the civil code which provides that the usufruct shall be liable to damages the
real owner shall suffer by the usufructs negligence, MSBF is now estopped from