143 DARLUCIO

BALURAN V. NAVARRO

FACTS:
Baluran and Paraiso (ancestor of Obedencio) entered into a contract which they called
barter, but in fact stipulated that they would only transfer the material possession of their
respective properties to each other. Thus, 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. 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, Baluran is obliged to return the lot. Indeed, years after, Obedencio
(grandchild of Paraiso) acquired the ownership of the residential lot from his mother and
demanded that Baluran, who was in possession, vacate. Baluran now counters that the
barter already transferred ownership.

ISSUE:
Whether or not the contract was usufruct

RULING:
Yes. First, the contract is what the law defines it to be and not what the parties call it. It is
very clear that what the parties exchanged was not ownership, but merely material
possession or the right to enjoy the thing.

Now, because it is usufruct, the law allows the parties to stipulate the conditions including
the manner of its extinguishment. In this case, it was subject to a resolutory condition
which is in case the heir of Paraiso (a third party) desires to repossess the property. Upon
the happening of the condition, the contract is extinguished.
Therefore, Baluran must return the land to Obedencia. But since Art. 579 allows the
usufructuary to remove improvements he made, Baluran may remove the house he
constructed. One last point. At the time of this case, the Obedencias were also in
possession of the riceland of Baluran. Although it was not proper to decide the issue of
possession in this case, 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. The manner of terminating the right of usufruct may be
stipulated by the parties such as in this case, the happening of a resolutory condition.