Property Digests WEEK 10
Dela Torre, Manliclic, Pasquil| AMPIL
1. Gaboys vs. Cui - 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.
Facts:
Don Mariano Cui, widower, as owner of 3 lots in Cebu City sold said three lots
to three of his children named Rosario C. de Encarnacion, Mercedes C. de
Ramas and Antonio Ma. Cui, pro indiviso. 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, 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.
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.
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.
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 executed an authority to
mortgage 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.
He did not however, join in the construction of the 12-door commercial building
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.
The 12-door commercial building was eventually constructed and the builder-
owners thereof Mercedes and Antonio received and continued to receive the
rents thereof and paying therefrom the installments due for payment on the
Aika G. Manliclic 2D
loan to the Rehabilitation Finance Corporation.
Then, two other children of Don Mariano named Jesus and Jorge brought an
action 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.
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. The petition was granted and Don
Mariano was declared incompetent and Victorino Reynes was appointed
guardian of his property.lwph1.t Thereafter, the complaint 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.
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 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 apparently as fruits due
to his ward by virtue of his usufruct.
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
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, inasmuch as (in the
appellants' view) the building constructed by appellees was an accession to the
land.
Issue: W/N 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 the funds borrowed from the RFC, the loan
being secured by a mortage over the lots sold.
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Held: No. The usufructuary has no right to receive from the rentals from the
commercial building. The usufruct extends to the land alone.
Ratio:
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.
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. .
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.
Summary:
(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.
Aika G. Manliclic 2D
Property Digests WEEK 10
Dela Torre, Manliclic, Pasquil| AMPIL
2. VDA DE ALBAR v. CARANGDANG - A life usufruct constituted on the
rentals of the building located on a certain place includes the rentals on both
the building and on the land on which it is erected, because the building cannot
exist without the land. Hence, the usufruct isnt extinguished by the
destruction of the building, for under the law, usufruct is extinguished only by
the total loss of the thing subject of the encumbrance.
Facts:
Doa Rosario Fabie was the owner of the lot in the City of Manila with
a building and improvements erected at 950-956 Ongpin and Sto Cristo St.,
and by a will left by her upon her death she gave the naked ownership of the
whole property to petitioner Rosario Grey Vda. de Albar but its usufruct to
respondent Josefa Fabie for life.
During the liberation after the war, the building was burned, leaving
only the walls and other improvements that were not destroyed by the fire.
Au Pit, a Chinaman, offered to lease the property for a period 5 years
for a monthly rental of P500 and at the same time agreed to construct on the
lot a new building worth P30,000 provided the naked owners as well as the
usufructuary sign the agreement of the lease.
As the usufructuary, respondent maintains that she has the exclusive
right to cede the property by lease and to receive the full rental value by virtue
of her right to usufruct. On the other hand, petitioners, the naked owners
maintain that the right of usufruct was extinguished when the building was
destroyed, the right of the usufructory being limited to the legal interest on the
value of the lot and the materials.
In order that the agreement of lease may be affected, the parties
agreed on a temporary compromise whereby the petitioner naked owners
would receive P100 (20% of the monthly rental) and the respondent
usufructuary P400 (80& of rental). It was likewise stipulated in the agreement
that the title to the building to be constructed would accrue to the land upon it
completion as an integral part of the lot covered by the transfer certificate of
title issued in the name of the naked owners but subject to the right of
usufruct of Josefa Fabie.
By reason of the destruction of the building on the Ongpin property,
the United States War Damage Commission approved the claim that was
presented for the damage caused to the property the amount in the amount of
P8,574 which was paid to petitioner naked owners. In the meantime, the
respondent usufructuary paid the real estate taxes due on the property at
Ongpin for the years 1945 to 1952 in the total amount of P1,989 as well as the
real estate taxes for the years 1953-1954.
Thereafter, petitioner Rosario Grey Vda. de Albar commenced an
action to settle the dispute regarding the rentals and alleged that respondents
right to receive rental has already ceased upon the destruction of the building.
The main issue to be determined hinges on the interpretation of that
portion of the will which accords respondent Josefa Fabie all the rentals of the
property.
Petitioner contend that this provision of the will should be
interpreted as constituting only a life usufruct on the rentals of the
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buildings erected on the lands and that once these buildings are
destroyed the usufruct is extinguished.
Respondent contends that the provision should be interpreted as
constituting a life usufruct both on the buildings and the lands
because the former cannot be separated from the latter.
Issue: Whether the usufruct was terminated when he building was burned
Held: No.
Ratio:
When both land and building belong to the same owner, as in this case, the
rents on the building constitute an earning of the capital invested in the
acquisition of both land and building. There can be a land without a building,
but there can be no building without land. The land, being an indispensable
part of the rented premises cannot be considered as having no rental value
whatsoever.
It is clear that when the deceased constituted the life usufruct on the rentals,
she meant to impose the encumbrance both the building and the land on which
it is erected for the building cannot exist without the land.
Since only the building was destroyed and the usufruct is
constituted not only on the building but on the land as well,
then the usufruct is not deemed extinguished by the
destruction of the building for under the law usufruct is
extinguished only by the total loss of the thing subject of the
encumbrance.
The case falls under Article 517 which provides: "if the usufruct is constituted
on immovable property of which a building forms part, and the latter should be
destroyed in any manner whatsoever, the usufractuary shall have a right to
make use of the land and materials."
Since the usufruct has not been extinguished by the destruction of the
building and the usufruct is for life as in this case, it is but fair that
the usufructuary continue to enjoy the use of the land and the
materials that they may be constructed on the land.
Who is called upon to undertake the new construction, and at
whose cost? respondent Josefa Fabie as the usufructuary
The usufructuary has the right to administer the property in question.
All the facts of administration to collect the rents for herself, and to
conserve the property by making all necessary repair and praying all
the taxes, special assessments, and insurance premiums.
Naked ownership belong to the petitioners. Beneficial ownership
belong to respondents
Aika G. Manliclic 2D
Property Digests WEEK 10
Dela Torre, Manliclic, Pasquil| AMPIL
3. BALURAN vs. NAVARRO + OBEDENCIO
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
Spouses Paraiso were owners of a residential lot in Ilocos Norte. Then they
executed a Barter agreement whereby as party of the first part they agreed to
barter and exchange with Spouses Baluran their lot with the Balurans
UNIRRIGATED RICELAND within the same province without any permanent
improvements, under the ff 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.
Then, 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
1. that he is the rightful owner of said residential lot having acquired the
same from his mother, Natividad Paraiso Obedencio, and
2. that he needed the property for Purposes Of constructing his house
thereon inasmuch as he had taken residence in his native town,
Sarrat.
3. 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.
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 by Natividad Obedencio to her son Antonio
Obedencio, and that since the execution of the agreement, 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. Judge Navarro ruled
that Obedencio is the owner of the property in question and that the Balurans
vacate the same property.
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 Property Digests WEEK 10
Dela Torre, Manliclic, Pasquil| AMPIL

herein to the use of the lot. Obedencio's present complaint was filed in
ISSUE/HELD May of 1975, barely several months after the property was donated to
Whether there was a transfer of ownership of the lot to Balurans by him.
virtue of the barter agreement Art. 579 of the Civil Code is applicable in this case -- Baluran will not
NONE. OBEDENCIO IS ENTITLED TO RECOVER POSSESSION OF THE forfeit the improvement he built on the lot but may remove the
DISPUTED PROPERTY. same without causing damage to the property.
Judgment is hereby rendered: o Art. 579. The usufructuary may make on the property held in
1. declaring the petitioner Avelino Baluran and respondent Antonio usufruct such useful improvements or expenses for mere pleasure as
Obedencio the respective owners the unirrigated riceland and he may deem proper, provided he does not alter its form or
residential lot mentioned in the "Barter Agreement" of February 2, substance; but he shall have no right to be indemnified therefor. He
1964; may, however. He may, however, removed such improvements,
2. ordering Avelino Baluran to vacate the residential lot and removed should it be possible to do so without damage to the property.
improvements built by thereon, provided, however that he shall not With the happening of the resolutory condition provided for in the
be compelled to do so unless the unirrigated riceland shall five been agreement, the right of usufruct of the parties is extinguished and each is
restored to his possession either on volition of the party concerned or entitled to a return of his property. It is true that Natividad Obedencio who
through judicial proceedings which he may institute for the purpose. is now in possession of the property and who has been made a party to
The stipulations in said document are clear enough to indicate that this case cannot be ordered in this proceeding to surrender the riceland.
there was no intention at all on the part of the signatories thereto But inasmuch as reciprocal rights and obligations have arisen between the
to convey the ownership of their respective properties; all that was parties to the so-called "barter agreement", We hold that the parties and
intended, and it was so provided in the agreement, was to transfer for their successors-in-interest are duty bound to effect a simultaneous
the material possession thereof. In fact, under condition No. 3 of the transfer of the respective properties if substance at justice is to be
agreement, the parties retained the right to alienate their respective effected.
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. 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."
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.
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

Aika G. Manliclic 2D 4