Author: Karenina Lampa
6. They reached a temporary compromise where the naked
VDA DE ALBAR v. CARANGDANG
Petitioner: ROSARIO GREY VDA. DE ALBAR and JOSE
M. GREY
Respondent: JOSEFA FABIE DE CARANDANG
Ponencia: Bautista Angelo, J.
DOCTRINE: A life usufruct constituted on the rentals of the
“fincas situadas” located at a certain place includes the rentals
both on the building and the land on which it is erected because
the building can not exist without the land. Hence, the usufruct
is not extinguished by the destruction of the building, for under
the law usufruct is extinguished only by the total loss of the
thing subject of encumbrance.
FACTS:
1. Doña Rosario Fabie y Grey owned a lot in Ongpin, Manila
with a building and improvements.
2. By a will left by her upon her death, she devised the naked
ownership of the whole property to Rosario Grey Vda De
Albar (petitioner) but its usufruct to Josefa Fabie
(respondent) for life.
3. During liberation, because of a fire that gutted the building,
the lot was burned. Only the walls and other improvements
were not destroyed
4. Au Pit, a Chinaman, then offered to lease the property at 500
pesos per month for a period of 5 years. He also agreed to
construct thereon a new bulding, provided that the naked
owner and the usufructuary sign the agreement of the lease.
5. THEIR CLAIMS:
a. Fabie (usufructuary): she has exclusive right to cede
the property by lease and to receive the full rental
value by virtue of her right to usufruct
b. De Albar (naked owners): Fabie’s right to usufruct
was extinguished when the building was destroyed,
and is now limited to the legal interest on the value
of the lot and the materials.
owners would get P100 (20%) and usufructary P400 (80%)
of the monthly rentals.
7. It was also stipulated that the title to the building to be
constructed would accrue to the land upon 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.
8. Because of the destruction of the building, the United States
War Damage Commission paid for the damage caused to
the property to the naked owners. Meanwhile, the
usufructuary paid the real estate taxes.
9. Rosario Grey Vda. De Albar then filed a case to settle the
dispute between the parties. She seeks to declare that the
usufruct in favor of Albie be limited to the legal interest on
the value of the land.
ISSUE:
1. WoN the usufruct extended to both the building and the land
2. WoN it is the usufructuary who should undertake the
construction
3. WoN the usufructuary should pay the real estate taxes
RULING + RATIO:
1. YES. It extended to both the building and the land.
• When the deceased constituted the life usufruct on the
rentals "fincas situadas" in Ongpin and Sto. Cristo streets,
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.
• 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.
• Article 517 of the Old Civil Code applies: "if the usufruct is
constituted on immovable property of which a building forms
part, and the latter should be destroyed in any manner
Author: Karenina Lampa
whatsoever, the usufractuary shall have a right to make use
of the land and materials."
2. YES.
• The reconstruction of the building is addressed to the
wisdom and discretion of the usufructuary who, to all intents
and purposes is deemed as the administrator of the property.
3. YES. The usufructuary should pay the real estate taxes.
• Fabie not only bound herself to pay such taxes in a formal
agreement approved by the court.
• The parties also submitted to an amicable agreement which
was approved by the court wherein the usufructuary (Fabie)
bound herself to pay all the real estate taxes, special
assessment and insurance premiums, and make all the
necessary repairs
• In said agreement, it was also stipulated that the same "shall
be in effect during the term of the usufruct of each of the
parties."
• There is no reason to make petitioners reimburse the
respondents then.
(see next page)
TAKEN FROM: http://www.batasnatin.com/law-library/civil-
law/property/1931-vda-de-albar-v-carandang-106-phil-855-
usufruct.html
The reparation or indemnity given in exchange for the destruction of
the building is the substitute for the building itself. 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.
Notes:
The Civil Code contemplates a situation where the owner pays for
the construction of a new building. However, 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. 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.
Majority Opinion: The reparation should be treated as fruits.
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. Otherwise, the naked owner is
enriched twice – first from the reparation and second from the fruits if
payment of rent stops when the building is constructed. Thus, the
new building should be considered as the capital, and the reparation
as fruits. The naked owner should share the reparation with the
usufructuary to prevent unjust enrichment.
Ponente’s Opinion: The reparation should be treated as capital
(NCC). Only the interest on the reparation up to the date that the new
building was constructed time should be given to the usufructuary,
not the interest until the end of the usufruct. The reparation itself
which is considered as the capital (which rightfully belongs to the
naked owner) intended to replace the old building. The intention was
fulfilled when the Chinaman constructed a new one. It was not the
naked owner’s fault that he need not use the reparation to construct
a new building. The owner is not doubly compensated because it
was not his fault.
Dissenting opinion: There is double benefit in either case. In the
first, the usufructuary will be receiving interest on the reparation and
rent from the building. In the second, the naked owner receives value
for the building and the construction of a building at no expense to
him.
Payment of interest should continue during the life of the usufruct
(not just 6%) because the war damage is the equivalent to the
building. 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. If they had used it to construct the building,
they would have been freed from paying interest – but they did not.
Author: Karenina Lampa
Gaboya v. Cui
Plaintiff: Gaboya as administrator
Defendant:
Ponencia: Reyes JBL.
DOCTRINE:
If the usufruct was meant to extend to the buildings erected in a
land, then such stipulation must be expressed.
FACTS:
1. Don Mariano Cui owns three lots Nos. 2312, 2313, and 2319
situated in Cebu. He then sold the three lots to his children
Rosario, Mercedes, and Antonio, with the sale to Rosario
being rescinded for non payment. Because of the sale being
pro indiviso and the sale to Rosario being rescinded, Don
Mariano, Mercedes, and Antonio became the co-owners of
equal portions, however the usufruct was retained by Don
Mariano. Mariano stipulated that as long as he lives he is
bound to receive fruits and rent, and that the new co owners
may construct a building or erect any improvements so long
as his right to the usufruct is not prejudiced.
2. After the sale a building was erected on the portion facing
Calderon Street. Moreover Mercedes and Antonio applied for
a loan in order to construct a 12-door commercial apartment.
In order to facilitate this application they needed Don
Mariano to mortgage his share. Don Mariano complied with
the mortgage however stipulated that the rents of the LAND
shall not be impaired and will always be received by him.
3. The building was eventually built with it receiving rent for
P4800 a month. After the building was completed suits were
filed against Mercedes and Antonio. The first one was filed
by Jesus and Jorge, the other children of Don Mariano, who
claims that the lots were conjugal property of Don and his
deceased wife Antonia. This was quickly dismissed by the
court. The next suit was filed by the guardian of the Don
Mariano’s property, Victorino Reynes, after the former was
declared incompetent.
4. Victorino Reynes claims that he is entitled to collect rentals
from the 12 door apartment constructed by Mercedes and
Antonio, by virtue of his usufruct. In essence he alleges that
the usufruct of Don Mariano extends to the buildings
constructed on the land sold by Don Mariano. The
defendants denied such and claimed that Don Mariano had
waived his usufruct over said rentals.
ISSUES:
W/N the usufruct reserved by the vendor Don Mariano over the
lots in question, gave the usufructury the right to receive rentals
of the commercial building constructed by the vendees?
PROVISION:
Arts. 445, 449, 571, 595
RULING + RATIO:
No, the reserved right of the usufruct in favor of the vendor did not
include, nor was intended to include the rentals of the building
subsequently constructed, but it did entitle the usufructuary to
receive a reasonable rent, which the court fixed at P1858 per month.
The reason for such ruling is that the stipulation in the deed of sale
only expressly stated a usufruct over the land, thus it was limited to
the rentals of the land alone. Had it been designed to include also
the rents of the buildings intended to be raised then an express
provision would have been included.
Appellants however argue that the usufruct extended to the buildings
by virtue of Art 571 which entitles the usufructuary to enjoy any
increase with which the thing subject of the usufruct shall acquire via
accession. However the court opines that this theory is misplaced as
the accession contemplated in the Civil Code (Arts 445 and 449)
does not involve a situation wherein a landowner constructs a
building on his own land, which is what transpired in this case.
Therefore recourse recourse to the rules on accession are
unnecessary.
Author: Karenina Lampa
DISPOSITION:
Judgement in favor of the appellees affirmed.
Other issues not relevant but may be asked
- The plaintiffs alleged that they are entitled to rescind the
contract of sale because the defendants failed to comply with
the usufruct by not paying the rental value. However the
courts opined that the failure of the defendants to pay was
due to the late fixing of the rental value which does not
amount to a substantial damage.
- Court states that Don Mariano did not waive his right to the
usufruct because it was not expressed and made in writing.
BALURAN v NAVARRO (1977)
Petitioner: AVELINO BALURAN
Respondent: HON. RICARDO Y. NAVARRO, Presiding Judge,
Court of First Instance of Ilocos Norte, Branch I and ANTONIO
OBEDENCIO
Ponencia: MUÑOZ PALMA, J.
DOCTRINE:
FACTS:
1. Spouses Paraiso owned a residential lot in Ilocos Norte. In
1964, The Paraisos executed a “Barter agreement” with
petitioners Avelino and Benilda Baluran to exchange their
residential lot with petitioner’s latter's Riceland under the
following conditions:
a. Both parties shall enjoy material possession of
the properties. Paraiso can harvest from Riceland
while petitioners may build a house
b. in the event any of the children of Natividad P.
Obencio, daughter of Paraiso, shall choose to
reside the residential lot, the Petitioners are
obliged to return the lot to the children with
damages.
c. Neither party shall encumber, alienate or dispose
of in any manner their respective properties as
bartered without the consent of the other.
2. In 1975, respondent OBEDENCIO, child of Natividad, filed a
case to CFI Ilocos Norte to recover lot from petitioner.
3. Petitioner argues that he acquired ownership of the land due
to the “Barter agreement” and that respondent
OBEDENCIO’s action had prescribed.
4. Lower court ruled for respondent, hence this petition
ISSUES:
1. W/N Barter agreement is really a barter agreement
2. W/N Respondent OBEDENCIO may recover the land (and if
yes, W/N action has prescribed)
3. W/N Petitioner may recover damages.
PROVISIONS:
Art. 579. The usufructuary may make on the property held in
usufruct such useful improvements or expenses for mere pleasure as
he may deem proper, provided he does not alter its form or
substance; but he shall have no right to be indemnified therefor. He
may, however. He may, however, removed such improvements,
should it be possible to do so without damage to the property
RULING + RATIO:
1. NO, IT IS IN FACT A USUFRUCT.
− Contracts are not what the parties call them but what
they really are as determined by the principles of
law.
− In this case, it was obvious that the “Barter
agreement” did not transfer ownership, but
transferred mere material possession.
− In fact, under condition No. 3 of the agreement, the
parties retained the right to alienate their respective
properties which right is an element of ownership.
Author: Karenina Lampa

2. YES, IT IS CLEARLY SPELLED OUT IN CONDITION NO.2 the party concerned or through judicial proceedings
OF THE BARTER AGREEMENT which he may institute for the purpose.
− The mutual agreement, each party enjoying
"material possession" of the other's property, was
subject to a resolutory condition of the children
choosing to live on the lot, the happening of which
would terminate possession.
− It has also NOT prescribed. 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, in this case, the said
agreement.

3. NO, BUT HE MAY REMOVE THE IMPROVEMENTS

− Explicitly laid out in Art 579. He may not be
indemnified for useful expenses, but he may remove
them if it does not cause damage to the property

NOTE (might be important if AmpilPH asks): Since the agreement

was in fact a usufruct agreement, the happening of the resolutory
condition provided for in the agreement, extinguished the usufruct
between the parties and each is entitled to a return of his property.
Thus, the Riceland should be returned by Paraiso to Petitioner.

DISPOSITION: MODIFIED:
1. petitioner Avelino Baluran and respondent Antonio
Obedencio the respective owners the unirrigated
riceland and residential lot mentioned in the "Barter
Agreement"
2. Ordering Avelino Baluran to vacate the residential
lot provided, however that he shall not be compelled
to do so unless the unirrigated riceland shall have
been restored to his possession either on volition of