Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-19614 March 27, 1971 JESUS M.

GABOYA, as Administrator of the Estate of DON MARIANO CUI, plaintiff-appellant, 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, intervenorsappellants, VICTORINO REYNES, defendant-in-counterclaim-appellee. Vicente Jayme for plaintiff-appellant. Hector L. Hofileña Candido Vasqueza and Jaime R. Nuevas for defendants-appellees. Jose W. Diokno for intervenors-appellants. 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 lotspro 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 abovementioned 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. 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.
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1949. that the usufructuary rights of the vendor were of the essence of the sale. nor was it intended to include. attorneys' fees and costs (Record on Appeal. if the usufruct extended to the building. that the vendor (Don Mariano Cui ) had waived and renounced the usufruct and that the defendants vendees gave the vendor P400. 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. 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. the rentals of the building subsequently constructed on the vacant lots. This motion was denied by Judge Piccio in his order of July 12. the basic and pivotal issue appears to be whether the usufruct reserved by the vendor in the deed of sale. From the Court of Appeals the case was brought to the Supreme Court. or that such usufruct was of the essence of the sale. In the third place.344. amounted to P100. whether the action for rescission due to breach of the contract could still be enforced and was not yet barred. while admitting the reserved usufruct and the collection of rentals of the building by the defendants. when the building was rented. Don Mariano Cui. 914. that the original complaint having sought fulfillment of the contract. 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. pages 67-68). nor was it intended to include. 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.80. 1951. 1947. 100 Phil. It prayed either for rescission with accounting. and their violation entitled him to rescind (or resolve) the sale. The guardian did not appeal from this order. but that it did entitle the usufructuary to receive a reasonable rental for the portion of the land occupied by the building. It also found no preponderant evidence that the seller. pages 12-38). From a consideration of the pleadings. Judge Saguin rendered a decision in civil case No. 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. and that the rentals for the land from November.088. some nine months after the present case was instituted in the court below (Record on Appeal. that the defendants retained those rentals for themselves.00 a month by way of aid. together with all the papers belonging to his ward. In essence. that such action is barred by res judicata (on account of the two previous decisions of the Supreme Court and by extinctive prescription. had . over the lots in question that were at the time vacant and unoccupied. should the two preceding issues be resolved affirmatively. Similarly. to 29 July 1952. The plaintiffs appealed to the Court of Appeals where the case is now pending. which the Court a quo fixed at Pl. 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. whether the failure of the vendees to pay over its rentals to the usufructuary entitled the latter to rescind. resolve the contract of sale. or for delivery of the rentals of the building with interests. plaintiff can not thereafter seek rescission.858. . in Cui vs.On June 15. denied that the usufructuary rights included or extended to the said rentals. or more properly.00 per month. 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. 1949. The amended answer.91 plus legal interest from Antonio Cui and Mercedes Cui (Record on Appeal. Cui. The court below declared that the reserved right of usufruct in favor of the vendor did not include. Plaintiffs denied the allegations in the counterclaim. when Don Mariano died. who had died on 29 July 1952. Defendants counterclaimed for actual and moral damages and attorney's fees. On May 22. pages 2-3) apparently as fruits due to his ward by virtue of his usufruct. the loan being secured by a mortgage over the lots sold.

Santamaria. planted or sown on the land of another. Both parties appealed in the decision of the court a quo. planter or sower. however. had. and the improvements or repairs made thereon. or buildings constructed by the owner of the land with materials owned by someone else. in order to enable them to construct a house or building thereon — provided. specially because the present case. Even if the law did not provide for accession the land-owner would necessarily own the building.00 and the reserved usufruct of the said lot in favor of the vendor. Article 445. Had it been designed to include also the rents of the buildings intended to be raised on the land. but they were sentenced to pay counsel fees to plaintiffs. 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. while Article 449 states: He who builds. in consideration of the sum of P64. 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 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.000. hence no res judicata existed. the servitudes established in its favor. in denying reconsideration of its second (1957) decision (100 Phil. treat of accession produced by the landowner's building. in general. since in both documents (heretofore quoted) the possibility of such construction was clearly envisaged and mentioned. The usufructuary shall have the right to enjoy any increase which the thing in usufruct may acquire through accession. prescribes that — Whatever is built. Thus. like the court of origin. (Emphasis supplied) Articles 447 and 445. because he has paid for the materials and labor used in constructing it. and that by law. 914). materials used to build thereon are concentrated on one and the same person. Mercedes and Antonio Cui. establishing the basic rule of industrial accession. was already pending in the Court of First Instance. Appellants. by virtue of Article 571 of the Civil Code of the Philippines (Article 479 of the Spanish Civil Code of 1889) prescribing that: Art. There is nothing in the authorities (Manresa. 571. plants or seeds belong to a third person other than the landowner or the builder. This argument is not convincing. as contended by the defendants. and Antonio Cui to borrow money. and at his own expense. in turn. however. Mariano Cui. inasmuch as (in the appellants' view) the building constructed by appellees was an accession to the land. loses what is built. . planting and sowing "with the materials of another" and when "the materials. as amplified by the deed of 7 January 1947. all the benefits inherent therein. refused to pass upon the extent of the usufructuary rights of the seller. and. belong to the owner of the land subject to the provisions of the following articles. was limited to the rentals of the land alone. authorizing Mercedes. plants or sows in bad faith on the land of another. As therein pointed out. clearly prove that the reserved usufruct in favor of the vendor. that the rents of said land shall not be impaired and will always received by me. the enjoyment of the rents of the building subsequently erected passed to the usufructuary.ever waived his right of usufruct. We deem it unnecessary to belabor this obvious point. We find no the decision appealed from. and that the Supreme Court. and Borrell cited by appellants that specifically deals with constructions made by a party on his own land with his own materials. an express provision would have been included to the effect. No attorney's fees were awarded to the defendants. argue that the terms of the deed constituting the usufruct are not determinative of the extent of the right conferred. planted or sown without right to indemnity. with the security of a mortgage over the entirety of the lots. 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. The authorities cited merely indicate the application in general . Rosario. Venezian.

The unproductive situation of barren lots would thus be prolonged for an indefinite time. Don Mariano Cui. that the loan . But as already stated above. hacer construcciones.758. We agree with the trial court that there was no adequate proof that the vendor. or make new plantings thereon if it be rural.). A mortgagor does not become directly liable for the payment of the loan secured by the mortgage.of the rules of accession. pages 288 to 297) . prescribing that — The owner may construct any works and make any improvements of which the immovable usufruct is susceptible. The author that specifically analyses the situation of the usufructuary visa-vis constructions made by the landowner with his own materials is Scaevola (Codigo Civil. and is supported solely by the testimony of Antonio Cui. la utilizacion sera comun en los frutos y productosde lo sembrado y plantado. y con respecto a las construcciones. such improvements could not diminish the value of the usufruct nor prejudice the right of the usufructuary. Appellants urge. ever renounced his usufruct. 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. in support of their stand.00 for the area occupied by their building. por la autoridad judicial (Author cit. Anyway. and his conclusion after elaborate discussion is that. the rule that appellants advocate would contradict the general interest and be against public policy. one of the alleged beneficiaries thereof. Since the proceeds of the loan was exclusively their property. Emphasis supplied). as pointed out in the appealed decision (Record on Appeal. 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. the Civil Code itself limits the cases of industrial accession to those involving land and materials belonging to different owners. 1 the building constructed with the funds loaned is likewise their own. That factor is irrelevant to the ownership of the building. Moreover. in the absence of stipulation to that effect. sin el consentimiento del usufructuario. The alleged waiver was purely verbal. at the most — (b) El nudo propietario no podra. and his subsidiary role as guarantor does not entitle him to the ownership of the money borrowed. Scaevola's opinion is entirely in harmony with Article 595 of the Civil Code of the Philippines. et seq. 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. plantaciones y siembras en el predio objecto del usufructo. in Civil . page 184. to the detriment of society. in previous pleadings sworn to by Antonio Cui himself. y en el caso de que aquel lascosintiese.. As a gratuitous renunciation of a real right over immovable property that as created by public document. for which the latter should be indemnified. because the money used for the building was loaned exclusively to the appellees. after mature consideration of the rental values of lands in the neighborhood. and the qualifications by Article 595 on the owner's right to build would be redundant. provided that such acts do not cause a diminuition in the value of the usufruct or prejudice the right of the usufructuary. en su defecto.el usufructuario tendra derecho a la renta que de mutuo acuerdo se fije a las mismas. and they were the ones primarily responsible for its repayment. 2d Edition. 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. the least to be expected in the regular course of business is that the waiver should also appear in writing. 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. for which the mortgage is mere security. In other words.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. commentators' opinions are not binding where not in harmony with the law itself.

TS of Spain. said parties can not be considered as having been in default (mora) for failure to turn over such monies to the usufructuary.91 plus interest.ñèt .. ruled that — lâwphî1. was only interposed after the death of the usufructuary in 1952. 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. inBanahaw." for the reason that without previous ascertainment of the exact amount that the. or anyone else in his behalf. The right to resolve or rescind a contract for non-performance of one of its stipulations is. and the time for paying such unliquidated claim can not be said to have accrued until the decisions under appeal was rendered. Commentaries to the Spanish Civil Code [5th Ed. TS of Spain. Vol. Article 1592 of the Civil Code of the Philippines that is invoked by appellants in. and never claimed that the real right had been renounced or waived. is not applicable: for said article (which is a mere variant of the general principle embodied in Article 1191. 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. page 134) that is of high persuasive value in the absence of local adjudications on the point .. y tenga aquel conocimiento por virtud de requirimiento o reclamacion judicial de lo que debe abonar (Sent. fixing the rental value of the land occupied by the building. No. is obviously of negligible probative value. nor had Don Mariano Cui. This Court. of the same Code) presupposes default of the purchasers in the fulfilment of their obligations. Dejarme 55 Phil. "J". therefore. ni condenar por tal razon al abono de intereses cuando no se conoce la cantidad liquida reclamable" (Sent. and as We have ruled. no se puede establecer que hay morosidad.00 per month as the value of his usufruct. seeking rescission of the sale as alternative remedy. 1. But as the rental value in question had not been ascertained or fixed either by the parties or the court. 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. 13 July 1904) . vs. did not place appellees in default. support of their all right to rescind the sale.Under the third paragraph of article 1124 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. Manresa. given after the usufructuary had been declared incompetent and could no longer contradict him. The filing of the initial complaint by Victoriano Reynes. can not be exclusively blamed upon the defendants-appellees. As already noted. if any. TS of Spain. "Ab illiquido non fit mora": this principle has been repeatedly declared by the jurisprudence of Spanish Supreme Court (v. if any. . defendants-appellees were obligated to turn over to the usufructuary by way of reasonable rental value of the land occupied by their building. The testimony of Antonio Cui on the alleged waiver. Turning now to the second issue tendered by herein appellants. 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. that theory was not legally tenable. not absolute. No puede estimarse que incurre en mora el obligado al pago de cantidad mientras esta no sea liquida.Case No. And the 1957 complaint in intervention. Seguin tiene declarado esta sala con repeticion. Inc.. es visto que no existiendo obligacion de entregar cantidad hasta tanto que se liquide no puede estimarse segun jurisprudencia. he and his sister Mercedes had contended that Don Mariano Cui had been receiving from them P400. then guardian of the late Don Mariano in 1951. prior to the decision of 31 October 1961. por tanto que hayan de pagar intereses legales de la cantidad que en su caso resulte (Sent. 599 and Special Proceeding 481-R of the Cebu Court of First Instance (Exhibits "I". Hence. 8. seeking to recover P126.344. made any previous demand for its payment. no such default or breach could occur before liquidation of the usufructuary's credit.. now under appeal. the default. and "20-A"). 29 April 1914) In the absence of default on the part of the defendants-vendees. 3 We have stated "the default.]. que los recurridos ineurran en mora. 29 November 1912) . 338.

We find and hold: (1) That the usufructuary rights of the late Don Mariano Cui. and that rental value was not liquidated when the complaints were filed in the court below. there was no default in its payment. reserved in the deed of sale (Exhibit "A" herein). Jesus Ma. Jorge Ma. this theory of appellants fails to take into account that Don Mariano could not retain ownership of the land and. Actually. conformably to Article 603. 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. Jose Ma. 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. Rosario Cui de Encarnacion. paragraph (1). 11). not subject to rescission.000. . Cui. For usufruct is essentially jus in re aliena. His intention of the usufructuary rights in itself imports that he was no longer its owner. 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). Cui. and to be a usufructuary of one's own property is in law a contradiction in terms. (2) That said usufructuary was entitled only to the reasonable rental value of the land occupied by the building aforementioned.80 up to the time the usufructuary died and the usufruct terminated. and a conceptual absurdity. Antonio and Mercedes Cui were not in default prior thereto.088. 5 the trial court had discretion to equitably award legal interest upon said sum of P100. at the same time. 2210 and 2213 of the Civil Code. Velez. be the usufructuary thereof. the reasonable rental value of the land occupied by the defendants' building totalled P100. of the Civil Code. considering that defendants Cui have enjoyed the said rental value of the land during all those years.and the consequent extinction of the usufruct.80.088. 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. (5) That pursuant to Articles 2208 (No. (4) That as found by the court below. and their failure to comply with their obligations under the usufruct prevented the vesting of title to the property in said appellees. Precilla C. hence. as well as P5. WHEREFORE. the same is hereby affirmed. 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.00 attorney's fees. Cui. Serafin Ma. finding no reversible error in the appealed decision. We need not consider this argument. and Lourdes C. and the deed of sale was therefore. Cui. Costs against appellant-intervenors. (3) That such rental value not having been liquidated until the judgment under appeal was rendered. Velez. Summing up.

on the issue of co-ownership. The trial court has the discretion to grant the debtor Don Mariano sold his 2 lots to two of his children. Article 1191 of the Civil Code grants the right to rescind but subject to the period that the court will grant. He only owned the rent for the portion of land occupied by the building. The deed expressly reserved only to his right to the fruits of the land. Much later. the court held that a co-owner cannot simultaneously be a usufructuary of the same land owned. The children are entitled to the rents of the building. (A usufruct on the land may be separate from the building. the estate could only claim the rent on that piece of land and not on the entire parcel of land. thus. The children then constructed a building on the land and collected rent from the lessee thereof. Later on. he and his children became co-owners of the property. (children) a period within which to pay the rental income from the portion of land owned by the building because the same has not yet been determined. . ISSUE: Whether or not Don Mariano had a right to fruits of the building? RULING: NO. CUI. Don Mariano executed a deed authorizing the children to apply for a loan w/ mortgage with a stipulation reserving his right to the fruits of the land.USUFRUCT There should be no rescission of the contract coz the exact amount of FACTS: rent due and owing to the Don Mariano’s estate is still unliquidated and undetermined. his estate was claiming the fruits of the building. Moreover. when Don Mariano died.GABOYA V.

Octubre 22. (d) Mas la suma de P2.574. It was respondent. GREY. respondent filed a motion praying that the court issue an order for the "payment of the appellate jurisdiction of the Court of Appeals. Madayag. 1950 to January 11. Montenegro.: Appeal taken by Rosario.00 como daños y perjuicios en forma de honorarios de abogado y gastos de litigio. DE ALBAR and JOSE M. naked owners. we hereby affirm the decision appealed from insofar as it holds that appellee's right of life usufruct subsist and is in full force and effect upon the Ongpin lot and the building now existing thereon. respondents. to petitioners. On appeal taken by petitioners. rendered judgment affirming that of the Court of Appeals with the modification that petitioners should not be made to reimburse the real estate taxes paid by respondent for the years 1945 to 1954. Upon a motion for reconsideration. and that she is entitled to receive from appellants 6% of the amount the latter actually received from the Philippine War Damage Commission. the Court of Appeals rendered judgment as follows: Wherefore.Republic of the Philippines SUPREME COURT Manila EN BANC G.00 percibidos como indemnizacion de guerra desde Enero 11. Because the improvements were destroyed during the battle for the liberation of the City of Manila. (c) Al reembolso de la suma de P1.R. No.27 pagados o abonados por la demandada como pagos de amillaramiento desde la fecha de la Contestacion. and of the building and other improvements existing thereon. 1962 ROSARIO GREY VDA. and the usufruct thereof to respondent for life. filed by petitioner. 11. Grey Vda. The record of the case having been remanded to the court of origin for execution. in turn. L-18003 September 29. Manila. however. Blanco for respondents. el Juzgado promulga decision a favor de la demandada usufructuaria. 1952. (b) Con derecho de percibir el 6% de la cantidad de P8.R. JOSEFA FABIE DE CARANDANG and THE COURT OF APPEALS (Second Division). sin que los demandantes tengan derecho de inmiscuirse en la administracion de dicha finca.989. 28196-R — an original action for certiorari filed by respondents Josefa Fabie de Carandang.000. who paid the real estate taxes due on the land for the years 1945 to 1954.27 paid by her for real estate taxes is deferred until the termination of the usufruct. 17674 in the Court of First Instance of Manila to limit respondent's usufruct to the legal interest on the value of the land. declarando: (a) Que su usufructo vitalicio continua sobre la finca en Ongpin con derecho exclusivo de percibir durante su vida la totalidad de sus rentas. Ambrosio Padilla and Santiago P. the Philippine War Damage Commission paid petitioners a certain sum of money war damage. DIZON. We. and that she is not entitled to any amount for attorney's fees. which are already due to the defendant usufructuary from the plaintiffs. Viola and Hernandez for petitioners. On October 2.989. vs. No. de Albar and Jose M. as legal . In her will the deceased Doña Rosario Fabie y Grey bequeathed the naked ownership of a parcel of land situated at Ongpin St. 1953.. declaring that reimbursement to appellee of the sum of P1. 1950. and we hereby reverse said decision. petitioners commenced Civil Case No. J. We further modified the appealed judgment by eliminating therefrom the portion requiring them to give security for the payment of legal interest on the amount of the war damage. (e) Con las costas a cargo de los demandantes. petitioners. Grey from the decision of the Court of Appeals CA-G. After due trial the court rendered judgment as follows: En virtud de todo lo cual. 1960. Deciding the appeal taken by petitioners.

the Court merely desires that the said judgment be enforced and executed in the correct and proper manner. as modified by our resolution of February 10. which. that respondent failed to repurchase the property despite the fact that she was under obligation to do so in order to maintain her usufruct thereon. The second paragraph of the same order was deemed necessary in view of the apparent conflict between the parties as to how to execute the decision. denied the motion in its order of August 25 of the same year. In view of this divergence of opinion between the parties. L-13361. 1955. Pilar T. respondent's usufruct over the property was extinguished and they are entitled to reimbursement for the amount of real estate taxes paid by them. after admitting some of the averments made in the petition for certiorari and denying the others. 1960 and August 25. that the Court of Appeals had no jurisdiction over the petition because the writ sought was not in aid of . and every year thereafter during the existence of the usufruct." Petitioners opposed the motion alleging that because respondent failed to pay the real estate taxes on the property for the years 1954 to 1959. Pilar T. as modified by the appellate courts. Respondents' answer. Mrs.nèt sum should be threshed out by the parties in a separate incident either in this action or in an independent litigation. representing the legal interest per annum payable on or before January 15.00. No. had already become final and executory. 1957 and 1959. rather. the same to be disposed of in such manner that the parties may thresh out between themselves in a separate incident or in an independent action. [defendant] the Sheriff of Manila is hereby ordered to withhold the sum of P3. On July 23. in the first paragraph of the questioned order. as well as the sum spent in repurchasing the property from the buyer at public auction. let a writ be issued for the execution of the said decision. Bautista. L-13361. 1960. Bautista. On July 2. said: The Court recognizes the fact that the decision had already become final and executory and has ordered the issuance of the property writ for the enforcement of the said decision. bringing the total amount of real estate taxes paid by them to P3. There is no intention to modify or impose any condition on the enforcement of the judgment.495. petitioners repurchased the same for P715. alleged as affirmative defenses. No. on the ground that the same were not in conformity with our decision in G. The disposition of the said 1awphîl . that. had already become executory. The court.32 every year. particularly with regard to the liability for real estate taxes on the property in question. that appeal in due time was the proper remedy against the orders complained of. No. In collecting and satisfying the sums adjudged in the judgment in favor of the plaintiffs. in part.90 which the plaintiffs claim to be reimbursable to them for real estate taxes paid on the property for the years 1954. On these grounds they prayed for the denial respondent's motion.R. 1959. however. or for the suspension of the issuance of the writ of execution until the question of the termination of respondent's usufruct has been finally settled. the property was declared delinquent and sold at public auction to Mrs.R. the Court considered it wise to withhold the disputed sum. 1960. 1960. the Court of First Instance of Manila issued the following order: On motion of the defendant and it appearing that the decision of this Court dated August 10.interest on the war damage payments received by the latter covering said ten years period and that plaintiffs be ordered to pay defendant usufructuary the amount of P196. 1960 respondent filed a motion for the reconsideration of the above order upon the ground that it imposes a condition on the execution of the judgment rendered in the case — which. 1961. consequently.495. as modified by the decisions of the Court of Appeals in CA-G. 1953. 11917-R and of the Supreme Court in G. that June 8.05 and paid all the back taxes due thereon up to 1957.R. inter alia. The difference of their views on this matter is very evident in the pleadings they have filed in connection with the issuance of the writ of execution. A petition for certiorari was thereafter filed by respondent Josefa Fabie de Carandang with the Court of Appeals to annul the orders of July 2.

and lastly. the review would have fallen under our exclusive appellate jurisdiction because it would have involved exclusively a question of law. Before Breslin and others filed their petition for certiorari with the Court of Appeals. prohibition. that the respondent judge.G. the final decision that would have been rendered by the Court of First Instance of Manila would have been appealable to the Court of Appeals considering the amount involved. it was actually appealed to said court (CA-G. No. 47 O. in issuing the aforesaid orders. 1170.its appellate jurisdiction. there had been no trial and decision on the merits in the principal case — which was for the recovery of a sum of money — because the trial court not only refused to admit their amended complaint but also dismissed the case on the ground that the plaintiffs had no cause of action against the defendant. 17674 of the Court of First Instance of Manila) had already been finally decided. Luzon Stevedoring Co. if said court has jurisdiction to review. 1948). by appeal or writ of error. our decision had become executory. It is not disputed that the Court of Appeals has original jurisdiction to issue writs of certiorari. Settled likewise is the view that anyone of the writs aforesaid is in aid of the appellate jurisdiction of the Court of Appeal within the meaning of the law.R No. first by the Court of First Instance of Manila.. however. and all other auxiliary writs in aid of its appellate jurisdiction (Section 30. as modified by our resolution of February 10. accordingly. because the writ sought therein was not in aid of its appellate jurisdiction. Petitioners reiterate now their contention that the Court of Appeals had no jurisdiction over the petition forcertiorari filed by herein respondent. by Us.. 1960 mentioned heretofore. 4609 and. 11917-R) and its decision was subsequently appealed to us (G. In the present case it is undisputed that the review of the final decision rendered by the Court of First Instance of Manila in Civil Case No. In Breslin vs. commonly known as Judiciary Act of. and ordering the respondent judge to issue the writ of execution in accordance with our decision of December 29. then by the Court of Appeals and lastly. The Court of Appeals forwarded the case to us in the belief that the writ sought by petitioners therein was not in aid of its appellate jurisdiction. did not commit any grave abuse of discretion. upon trial on the merits. by appeal or writ of error. de Carandang (CA-G. the main question raised by certiorari. 28196). 17674 instituted by herein petitioner against respondent Josefa Fabie de Carandang was within the appellate jurisdiction of the Court of Appeals. We find this contention to be meritorious. because the writ sought was in aid of its appellate jurisdiction. it was still reasonable and logical to say that the writ of certiorari sought in their petition was in aid of the appellate jurisdiction of the Court of Appeals because. Josefa Fabie Vda. we said that the reason relied upon had no bearing on the question of whether or not the writ of certiorari sought by the therein petitioners was in aid of the appellate jurisdiction of the Court of Appeals because the determining factor for the solution of that question was whether said court had appellate jurisdiction to review the final decision of the Court of First Instance on the merits of petitioners' action. there was absolutely nothing left of the . et al.R. No. The main case (Civil Case No. the Court of Appeals rendered the appealed decision annuling the orders of July 2 and August 25. In fact. we find it to be otherwise in view of one important fact that makes the aforesaid decision inapplicable to the present case. for which reason the record of the case was remanded below for purposes of execution. L-13361). In the present case such situation does not obtain.mandamus. Hence the present appeal. Republic Act 296. While from the above circumstances it might appear that — conformally with our decision in the Breslin case — the Court of Appeals had jurisdiction over the petition for certiorari filed by respondent Josefa Fabie de Carandang against herein petitioners and the Court of First Instance of Manila. The reason given in support of this view was that if petitioners in the case had sought a review of the orders complained of. Consequently. the final decision that might be rendered in the principal case by the court against which the writ is sought. Upon the issues thus submitted. 1960. in dismissing the case.R. In deciding whether or not the case was correctly forwarded to Us. was whether or not the Court of First Instance of Manila erred in denying admission of an amended complaint filed by the plaintiffs in Civil Case No. 1959.

. . the law in this jurisdiction that a decision. No. Garcia. Such being the case. which amount they claimed reimbursement from respondent Carandang.". 78 Phil. Sanchez. In view of the foregoing. That jurisdiction had already been exercised and exhausted with the rendition of the decision of the Court of Appeals in C." This order. of course. assuming that the orders complained of are appealable. that because Carandang failed to repurchase it.R. 778). 28196-R) is denied. we hold that the Court Appeals had no jurisdiction to entertain Carandang's petition for certiorari.00 as real estate taxes. where there has been a change in the situation of the parties which makes such execution inequitable (Chua Lee vs. 776.R. the appealed decision is set aside. providing further that "the disposition of said sum should be threshed out by the parties in a separate incident either in this action or in the independent litigation. It was in this connection precisely that the order of July 2.substance of the action to be resolved. whether or not the Court of First Instance of Manila had jurisdiction to issue the orders complained of. the prevailing party being entitled to its execution as a matter of right.05. de Albar. Grey. . as modified by our resolution of February 10. . No. Li Kim Tho vs. when petitioners opposed respondent Carandang's motion for execution. Mapa. and paid all the back taxes up to 1957 as well as those for the year 1959. we shall proceed to decide it on the merits as if it had been originally filed with Us. is beyond amendment. in order to save time and avoid unnecessary expenses for the parties — following the practice adopted in the Breslin case. But. in view of the fact that we have original jurisdiction to entertain said petition. namely. The question to be resolved is whether the order July 2 and August 25. Jose M..495. 1960 provided that "the Sheriff of Manila is hereby ordered to withhold the sum of P3. 51 Phil. G. having paid the total sum of P3.R. nor to the imposition of a condition upon its enforcement. the property was declared delinquent and sold at public auction. they could only be appealed to Us because the appeal would have necessarily involved nothing more than a question of law. as a result. 11917. but it is likewise settled that a stay of execution of a final judgment may be authorized if necessary to accomplish the aims of justice. as for instance. Upon the above facts — if proven — it would seem that petitioners had at least a prima facie case against the aforesaid respondent. 1960. No. there can be no reason to say that the Court of Appeals still had jurisdiction to review the final orders and decision of the Court of First Instance in said case. and the Hon.A. 759). that the writ of execution to be issued must form with the decision (Buenaventura vs. by appeal or writ of error. . they alleged that because the latter did not pay the real estate taxes on the property over which she had usufructuary rights. the writ prayed for in the petition for certiorari filed by Josefa Fabie de Carandang against Rosario Grey Vda. in our opinion.495. It is. petitioners made the purchase for the sum of P715. does not amount to a modification of our final decision in the principal case. As stated heretofore. 624625. It amounts to a mere stay of execution and is authorized by our decisions in the Chua Lee and Lim Kim Tho cases (supra). Conrado M. Vasquez (CAG. and. 1960 issued by the Court of First Instance of Manila modify our decision in G. once executory. 83 Phil. IN VIEW OF THE FOREGOING. Upon the other hand. for the years 1954 to 1959. With costs. The answer must be in the negative. as well as the sum spent in repurchasing the property .98 . L-13361.

Dissenting opinion: There is double benefit in either case. Otherwise. the usufructuary will be receiving interest on the reparation and rent from the Majority Opinion: The reparation should be treated as fruits. The reparation itself which is considered as the capital (which rightfully belongs to the naked owner) intended to replace the old building. the naked owner receives value for the building and the construction of a building at no expense to him. In the second. The owner is not doubly compensated because it was not his fault. the naked owner is enriched twice – first from building. The indemnity is the capital which belongs to the naked owner while the interest on the capital is the fruits which belong to the usufructuary. the new building should be considered as the capital. The Civil Code contemplates a situation where the owner pays for the construction of a new building.VDA DE ALBAR V. This is the reason why the court had a difficult time ascertaining who had the right to the indemnity given by the government for the destruction of the building due to the war. The intention was fulfilled when the Chinaman constructed a new one. CARANDANG. Usufructuary should get 6% of the reparation (from the time it was actually received to the tend of the life of the usufruct) because it was not used to construct a new building. Only the interest on the reparation up to the date that the new building was constructed time should be given to the usufructuary. Payment of interest should continue during the life of the usufruct (not . The reparation or indemnity given in exchange for the destruction of the building is the substitute for the building itself. 106 PHIL 855USUFRUCT the reparation and second from the fruits if payment of rent stops when the building is constructed. Thus. not the interest until the end of the usufruct. the twist in this case was that the naked owner did not have to construct a new one because the Chinaman had one built at his own expense. It was not the naked owner’s fault that he need not use the reparation to construct a new building. In the first. However. The naked owner should share the reparation with the usufructuary to prevent unjust enrichment. Notes: Ponente’s Opinion: The reparation should be treated as capital (NCC). and the reparation as fruits.

a Chinaman. or 20% of the monthly rental of P500.00 of said monthly rental. As the usufructuary 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 while on the other hand the naked owners maintain that the right of usufruct was extinguished when the building was destroyed. compromise whereby the naked owners would receive P100. as a consequence of the fire that gutted the building in many portions of Manila. and by a will left by her upon her death which was duly probated she devised the naked ownership of the whole property to Rosario Grey Vda. One Au Pit.00. The construction of the new building does not relieve the owners of the land used in the war damage payment from continuing the payment of interest. in order that the agreement of lease may be affected. et al.00 and the usufructuary the balance of 80% or P400. they would have been freed from paying interest – but they did not. The parties expressly reserved the right to litigate their respective claims after the termination of the contract of lease to determine which of said claims was legally correct. offered to lease the property for a period of five years. the parties agreed on a temporary Doña Rosario Fabie y Grey was the owner of the lot in the City of Manila with a building and improvements. leaving only the walls and other improvements that were not destroyed by the fire.just 6%) because the war damage is the equivalent to the building. at the same time agreeing to construct on the lot a new building provided the naked owners as well as the usufructuary sign the agreement of the lease. If they had used it to construct the building. subject to the right of usufruct of Josefa Fabie. the right of the usufructory being limited to the FACTS: legal interest on the value of the lot and the materials. but its usufruct to Josefa Fabie for life. de Albar. the building on the Ongpin lot was burned. 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 During liberation. .

the usufructuary has the discretion to reconstruct the building. 536. old Civil Code). (Diccionario Ingles-Español. 75 Phil. This has been clarified in the case of Fabie vs. We find. the United States War Damage Commission approved the claim that was presented for the damage caused to the property. it includes not only building but land as well. premises cannot be considered as having no rental value whatsoever. FABIE. to all intents and purposes is deemed as the administrator of the property. Of course. merit in the contention that the real estate taxes paid by respondent in her capacity as usufractuary for several years previous to the present litigation should be paid by her. the usufructuary paid the real estate taxes due on the property at Ongpin for the years 1945 to 1952." Moreover. this is addressed to the wisdom and discretion of the usufructuary who. Gutierrez David. it is clear that when the deceased constituted the life usufruct on the rentals "fincas situadas" in Ongpin and Sto. 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 ISSUE: of the thing subject of the encumbrance (Article 603. as she did.Court well said. And as this The usufructuary should pay the taxes. From the above. she meant to impose the encumbrance both the building and the land on which it is erected for indeed the building cannot exist without the land. which was litigated between the same parties and wherein the scope of the same provision of the will has been Whether or not the usufruct included the building and the land? W/N the usufructuary (FABIE) or naked owner (VDA DE ALBAR) should undertake the reconstruction? W/N the usufructuary should pay the real estate taxes? HELD: the subject of interpretation. por Martines Amador) Since only the building was destroyed and the usufruct is constituted not only on the building but on the land as well.. The usufruct for life extended to the land and the building. Cristo streets. in the Spanish language. the term "fincas" has a broad scope. however. instead of by petitioners not only because she . "The land. In the meantime. paid to and received by the naked owners. being an indispensable part of the rented By reason of the destruction of the building on the Ongpin property.

1569 of the Court of First Instance of Manila (Fabie vs. supra). In the case. which involved the same parties and the same properties subject to usufruct. respondent paid all the taxes for the years 1945 to 1954. and make all the necessary repairs on each of the properties covered by the usufruct and in accordance with said agreement. Gutierrez David. herein respondent. bound herself to pay all the real estate taxes. the parties submitted an amicable agreement which was approved by the court wherein the usufructuary. special assessment and insurance premiums. .bound herself to pay such taxes in a formal agreement approved by the court in Civil Case No.

Court of First Instance of Ilocos Norte. 2 At the pre-trial. and (2) that the plaintiff's cause of action if any had prescribed. 1964. RICARDO Y. Ilocos Norte. That neither the Party of the First Part nor the Party of the Second Part shall encumber.: Spouses Domingo Paraiso and Fidela Q. On or about February 2. (p. No.00. 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. NAVARRO. respondents. 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. MUÑOZ PALMA. 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. 28. Alipio V. Obencio. 3344 as amended. Branch I and ANTONIO OBEDENCIO. vs. J. who in fact is still in On thereof. Natividad Paraiso Obedencio. and that since the execution of the agreement of February 2. of approximately 223 square meters without any permanent improvements. Sarrat.R. 1974 by Natividad Obedencio to her son Antonio Obedencio. Nevertheless. Paraiso were the owners of a residential lot of around 480 square meters located in Sarrat. 3 On November 8. 1975 Antonio Obendencio filed with the Court of First Instance of Ilocos Norte the present complaint to recover the abovementioned residential lot from Avelino Baluran claiming that he is the rightful owner of said residential lot having acquired the same from his mother. Navarro rendered a decision the dispositive portion of which reads as follows: .Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G. 4. Rafael B. 1975. and that he needed the property for Purposes Of constructing his house thereon inasmuch as he had taken residence in his native town. rollo) On May 6. 1977 AVELINO BALURAN. in the event any of the children of Natividad P. That both the Party of the First Part and the Party of the Second Part shall enjoy the material possession of their respective properties. L-44428 September 30. petitioner. paid the taxes of the property. 1964 Avelino Baluran was in possession of the residential lot. 3. That inasmuch as the bartered properties are not yet accordance with Act No. 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. 496 or under the Spanish Mortgage Law. under the following conditions: 1. the trial Judge Ricardo Y. Presiding Judge. shall choose to reside in this municipality and build his own house in the residential lot. Flores for petitioner. Natividad Obedencio. the parties agreed to submit the case for decision on the basis of their stipulation of facts. Ilocos Norte. alienate or dispose of in any manner their respective properties as bartered without the consent of the other. 2. It was likewise admitted that the aforementioned residential lot was donated on October 4. HON. Ruiz for private respondent.1 Answering the complaint. daughter of the First Part. and constructed a house thereon with an value of P250. 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. the Party of the Second Part shall be obliged to return the lot such children with damages to be incurred.

all that was intended.exchange of respondent Antonio Obedencio had been barred by the statute of limitation. 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. should be fulfilled according to the literal sense of their stipulations. 9 Art. morals. 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. provided they are not contrary to law. good customs. term "barter" in describing the agreement of February 2. the defendant is hereby ordered to vacate the same with costs against defendant. 1306. however. vs. Inc." 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. 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. 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. shall choose to reside in the municipality and build his house on the residential lot. II — The lower Court erred in not holding that the right to rebarter or re. 1964. (p. Avelino Baluran. clauses. 1964. under condition No. for contracts are obligatory. the parties retained the right to alienate their respective properties which right is an element of ownership. 1964 which is entitled "Barter Agreement. see page I of this Decision) In fact. the agreement constitutes the law between the parties and the latter are bound by the terms thereof. all that the parties acquired was the right of usufruct which in essence is the right to enjoy the Property of another. With the material ion being the only one transferred. (Philippine American General Insurance Co. 14. if their terms are clear and leave no room for doubt as to the intention of the contracting parties. and it was so provided in the agreement. Mutuc. spouses Paraiso would harvest the crop of the unirrigated riceland while the other party. or public policy. A resolutory condition is one which extinguishes rights and obligations already existing. of action if any of respondent Obedencio had Prescribed after the lapse of .Consequently. whenever the essential requisites for their validity are present. terms and conditions as they may deem convenient.) The resolution of this appeal revolves on the nature of the undertaking contract of February 2. 3 of the agreement. (condition No. no matter what their form may be. Petitioner submits under the second assigned error that the causa. 8 When there is nothing contrary to law. subject. daughter of spouses Paraiso. 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. Obedencio (daughter of spouses Paraiso. Ibid. could build a house on the residential lot. that when any of the children of Natividad Paraiso Obedencio. Avelino Baluran shall be obliged to return the lot to said children "With damages to be incurred. 5 Thus. and good customs Or Public Policy in the stipulations of a contract. Party of the First Part) would reside in the municipality and build his house on the property. 1306 of the Civil Code states: Art. 2 of the Agreement) Thus. Avelino Baluran to whom We shall refer as petitioner. 1964. Morals. the plaintiff is hereby declared owner of the question. public order. in the instant case. 7 The right of "material possession" granted in the agreement of February 2. ends if and when any of the children of Natividad Paraiso. 1. 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. to the condition. Contracts which are the private laws of the contracting parties. The contracting parties may establish such stipulations.. is not controlling. the use of the. 6 Under the document in question. was to transfer the material possession thereof." (Condition No.

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. WHEREFORE. One last point raised by petitioner is his alleged right to recover damages under the agreement of February 2. considering that the parties agreed to submit the case for decision on a stipulation of facts. 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. in the case at bar. But inasmuch as reciprocal rights and obligations have arisen between the parties to the so-called "barter agreement". is not one of barter. 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. 1964. 1606 of the Civil Code. however. uncertain period. not until he acquired that right from his mother. exchange or even sale with right to repurchase. 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. It is argued that the remedy of plaintiff. and which he did acquire when his mother donated to him the residential lot on October 4. In view of our ruling that the "barter agreement" of February 2. We cannot close this case without touching on the unirrigated riceland which admittedly is in the possession of Natividad Obedencio. Art. However. in whose favor the resolutory condition was constituted. as We stated above. 1964. Book II. Title VI on Usufruct. 1606 of the Civil Code refers to conventional redemption which petitioner would want to apply to the present situation. 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. it follows that petitioner Baluran remains the owner of the unirrigated riceland and is now entitled to its Possession. removed such improvements. However. The usufructuary may make on the property held in usufruct such useful improvements or expenses for mere pleasure as he may deem proper. the respondent. He may. 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. did not transfer the ownership of the respective properties mentioned therein. Obedencio's present complaint was filed in May of 1975. Necessarily. 2) ordering Avelino Baluran to vacate the residential lot and removed improvements built by thereon. He may. 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. In the absence of evidence. provided he does not alter its form or substance. (Emphasis supplied) Finally. the right of usufruct of the parties is extinguished and each is entitled to a return of his property.four years from the date of execution of the document of February 2. 579. the agreement of the parties of February 2. 1964. but he shall have no right to be indemnified therefor. Even if We were to go along with petitioner in his argument that the fulfillment of the condition cannot be left to an indefinite. We have no basis for awarding damages to petitioner. With the happening of the resolutory condition provided for in the agreement. Art. barely several months after the property was donated to him. however. Natividad Obedencio. 1974. 1964. the plaintiff or respondent Obedencio could not demand for the recovery of possession of the residential lot in question. provided. The submission of petitioner is untenable. nonetheless. 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. should it be possible to do so without damage to the property. 1964. We apply Art. took immediate steps to terminate the right of petitioner herein to the use of the lot. . now respondent. but is one of or akin the other is the use or material ion or enjoyment of each other's real property.

Baluran will be allowed to construct a residential house on the land of Paraiso while Paraiso is entitled to reap the fruits of the riceland of Baluran. 579 allows the usufructuary to remove improvements he made. who was in possession. Therefore. Upon the happening of the condition. Baluran is obliged to return the lot. exchanged was not ownership. remove the house he constructed. but merely material possession or the right to enjoy the thing. Obedencio (grandchild of Paraiso) acquired the ownership of the residential lot from his mother and demanded that Baluran. the Obedencias were also in .USUFRUCT The manner of terminating the right of usufruct may be stipulated by the parties such as in this case. It is very clear that what the parties Baluran and Paraiso (ancestor of Obedencio) entered into a contract which they called barter. At the time of this case. Thus. the happening of a resolutory condition. First. The contract prohibited them from alienating the properties of the other and contained a stipulation that should the heirs of Paraiso desire to re-possess the residential lot. Indeed. the law allows the parties to stipulate the conditions including the manner of its extinguishment. vacate. In this case. ISSUE: Whether or not the contract was a barter or usufruct RULING: FACTS: IT IS USUFRUCT. because it is usufruct. NAVARRO . it was subject to a resolutory condition which is in case the heir of Paraiso (a third party) desires to repossess the property. So Ordered. But since Art. the contract is extinguished. One last point. the contract is what the law defines it to be and not what the parties call it. Now. Baluran must return the land to Obedencia. but in fact stipulated that they would only transfer the material possession of their respective properties to each other.Without pronouncement as to costs. years after. Baluran may Baluran now counters that the barter already transferred ownership. BALURAN V.

. the Court nevertheless decided on the matter and order the Obedencias to vacate the property inasmuch as there was an extinguishment of a reciprocal obligations and rights.possession of the riceland of Baluran. Although it was not proper to decide the issue of possession in this case.