1_HEMEDES vs CA 316 SCRA 347

FACTS: Jose Hemedes executed a document entitled Donation Inter Vivos With
Resolutory Conditions conveying ownership a parcel of land, together with all its
improvements, in favor of his third wife, Justa Kauapin, subject to the resolutory
condition that upon the latters death or remarriage, the title to the property donated
shall revert to any of the children, or heirs, of the DONOR expressly designated by the
DONEE.

Maxima Hemedes also wrote a letter addressed to Asia Brewery asserting that she is
the rightful owner of the subject property and denying the execution of any real estate
mortgage in favor of R&B.
Dominium and Enrique D. Hemedes filed a complaint with the CFI for the annulment
of TCT issued in favor of R & B Insurance and/or the reconveyance to Dominium of
the subject property alleging that Dominion was the absolute owner of the land.
The trial court ruled in favor of Dominium and Enrique Hemedes.

Pursuant to said condition, Justa Kausapin executed a Deed of Conveyance of

Unregistered Real Property by Reversion conveying to Maxima Hemedes the subject
property.
Maxima Hemedes and her husband Raul Rodriguez constituted a real estate
mortgage over the subject property in favor of R & B Insurance to serve as security for
a loan which they obtained.
R & B Insurance extrajudicially foreclosed the mortgage since Maxima Hemedes failed
to pay the loan even. The land was sold at a public auction with R & B Insurance as
the highest bidder. A new title was subsequently issued in favor the R&B. The
annotation of usufruct in favor of Justa Kausapin was maintained in the new title.
Despite the earlier conveyance of the subject land in favor of Maxima Hemedes, Justa
Kausapin executed a Kasunduan whereby she transferred the same land to her
stepson Enrique D. Hemedes, pursuant to the resolutory condition in the deed of
donation executed in her favor by her late husband Jose Hemedes. Enrique D.
Hemedes obtained two declarations of real property, when the assessed value of the
property was raised. Also, he has been paying the realty taxes on the property from
the time Justa Kausapin conveyed the property to him. In the cadastral survey, the
property was assigned in the name of Enrique Hemedes. Enrique Hemedes is also
the named owner of the property in the records of the Ministry of Agrarian Reform
office at Calamba, Laguna.
Enriques D. Hemedes sold the property to Dominium Realty and Construction
Corporation (Dominium).
Dominium leased the property to its sister corporation Asia Brewery, Inc. (Asia
Brewery) who made constructions therein. Upon learning of Asia Brewerys
constructions, R & B Insurance sent it a letter informing the former of its ownership of
the property. A conference was held between R & B Insurance and Asia Brewery but
they failed to arrive at an amicable settlement.

ISSUE: W/N the donation in favor of Enrique Hemedes was valid?

HELD: NO. Enrique D. Hemedes and his transferee, Dominium, did not acquire any
rights over the subject property. Justa Kausapin sought to transfer to her stepson
exactly what she had earlier transferred to Maxima Hemedes the ownership of the
subject property pursuant to the first condition stipulated in the deed of donation
executed by her husband. Thus, the donation in favor of Enrique D. Hemedes is null
and void for the purported object thereof did not exist at the time of the transfer,
having already been transferred to his sister. Similarly, the sale of the subject property
by Enrique D. Hemedes to Dominium is also a nullity for the latter cannot acquire
more rights than its predecessor-in-interest and is definitely not an innocent purchaser
for value since Enrique D. Hemedes did not present any certificate of title upon which
it relied.
The declarations of real property by Enrique D. Hemedes, his payment of realty taxes,
and his being designated as owner of the subject property in the cadastral survey of
Cabuyao, Laguna and in the records of the Ministry of Agrarian Reform office in
Calamba, Laguna cannot defeat a certificate of title, which is an absolute and
indefeasible evidence of ownership of the property in favor of the person whose name
appears therein. Particularly, with regard to tax declarations and tax receipts, this
Court has held on several occasions that the same do not by themselves conclusively
prove title to land.

2_ Alunan vs Veloso
This case deals with an account filed in these intestate proceedings for the settlement
of the estate of the deceased Rosendo Hernaez by his judicial administrator, Rafael
Alunan, and approved by the court below. Jose Hernaez, one of the heirs interested in
this proceedings, assigned the whole of his portion to Eleuteria Ch. Veloso, and the
latter objects to some of the items of the account filed, assigning four errors to the
resolution of the court below.
One of the alleged errors is made to consist in the lower court having admitted the
partition proposed by the administrator in his account. According to this account, the
total amount to be partitioned among the heirs is P88,979.08, which the administrator
distributed equally among all the heirs, including the widow's, each one receiving
P11,122.38.
This partition with respect to the widow is being objected. It is alleged that the
distributed amount is in money, and since the widow's right is only a usufruct, and as
there can be no usufruct of money, since it is a fungible thing, the adjudication made
to the widow was erroneous. It is incorrect to say that there can be no usufruct of
money, because it is a fungible thing (art. 482, Civil Code).
It is likewise alleged, that, at any rate, this amount which should go to the widow
should be offset by the P55,000 which she has already received as a pension. Neither
do we find any ground for this error, since, according to the agreement of the heirs
already referred to, her portion in the inheritance either wholly or in part.
Lastly, it is alleged, that the portion given to the widow is not in accordance with law.
We find the objection with respect to this point to be correct. The widow, according to
the law, only has a right to a portion of the estate equal to that of the legitime of each
of the children without betterment. In the instant case none of the children received a
betterment. Consequently, the widow should receive a portion equal to the share of
each in the two-thirds of the distributable amount making up the legitime, to be taken
from the one-third forming the betterment. Then, the other free third, which the
decedent failed to dispose of, must be partitioned among the heirs to the exclusion of
the widow, as an addition to their legitime. Working out the computations on this basis,
the widow should receive only P8,474.19.
Therefore, it being understood that there be eliminated from the decision the holding
that the Panaogao Hacienda, which was adjudged to the appellant, should answer for
the amount of P20,000 as a lien in favor of Rafael Alunan should the latter be ordered
to pay it in civil case No. 6391 of the Court of First Instance of Iloilo, and it being
further understood that the widow's portion is only P8,474.19, the remainder of the

P88,979.08 which is distributable, pertaining to the heirs, share and share alike,
excluding the widow, the judgment appealed from is affirmed, without special
pronouncement as to costs. So ordered.

3_ bachrach v seifert
Facts:
The deceased E. M. Bachrach, who left no forced heir except his widow Mary
McDonald Bachrach, in his last will and testament made various legacies in cash and
willed the remainder of his estate. The estate of E. M. Bachrach, as owner of 108,000
shares of stock of the Atok-Big Wedge Mining Co., Inc., received from the latter
54,000 shares representing 50 per cent stock dividend on the said 108,000 shares.
On June 10, 1948, Mary McDonald Bachrach, as usufructuary or life tenant of the
estate, petitioned the lower court to authorize the Peoples Bank and Trust Company,
as administrator of the estate of E. M. Bachrach, to transfer to her the said 54,000
shares of stock dividend by indorsing and delivering to her the corresponding
certificate of stock, claiming that said dividend, although paid out in the form of stock,
is fruit or income and therefore belonged to her as usufructuary or life tenant. Sophie
Siefert and Elisa Elianoff, legal heirs of the deceased, opposed said petition on the
ground that the stock dividend in question was not income but formed part of the
capital and therefore belonged not to the usufructuary but to the remainderman. While
appellants admit that a cash dividend is an income, they contend that a stock dividend
is not, but merely represents an addition to the invested capital.
Issue: Whether or not a dividend is an income and whether it should go to the
usufructuary.
Held: The usufructuary shall be entitled to receive all the natural, industrial, and civil
fruits of the property in usufruct. The 108,000 shares of stock are part of the property
in usufruct. The 54,000 shares of stock dividend are civil fruits of the original
investment. They represent profits, and the delivery of the certificate of stock covering
said dividend is equivalent to the payment of said profits. Said shares may be sold
independently of the original shares, just as the offspring of a domestic animal may be
sold independently of its mother. If the dividend be in fact a profit, although declared in
stock, it should be held to be income. A dividend, whether in the form of cash or stock,
is income and, consequently, should go to the usufructuary, taking into consideration
that a stock dividend as well as a cash dividend can be declared only out of profits of
the corporation, for if it were declared out of the capital it would be a serious violation
of the law.

Under the Massachusetts rule, a stock dividend is considered part of the capital and
belongs to the remainderman; while under the Pennsylvania rule, all earnings of a
corporation, when declared as dividends in whatever form, made during the lifetime of
the usufructuary, belong to the latter. The Pennsylvania rule is more in accord with our
statutory laws than the Massachusetts rule.

4_Fabie v. David G.R. No. L-123, December 12, 1945

FACTS:
Josefa Fabie is the usufructuary of the income of certain houses located at
372-376 Santo Cristo, Binondo, and 950-956 Ongpin, Santa Cruz, Manila, under the
ninth clause of the will of the deceased Rosario Fabie y Grey. The owner of Santo
Cristo property is the respondent Juan Grey. Litigation arose between Josefa Fabie as
plaintiff and Juan Grey as defendant and the owner of the Ongpin property as
intervenors, involving the administration of the houses mentioned in clause 9 of the
will referred to above.

In June 1945 Josefa Fabie commenced an action of unlawful detainer

against Ngo Boo Soo (who says that his correct name is Ngo Soo), alleging that the
defendant is occupying the premises located at 372-376 Santo Cristo on a month-to
month rental payable in advance not later than the 5th of each month; that she is the
administratrix and usufructuary of said premises; that the defendant offered to pay
P300 monthly rent payable in advance not later than the 5th of every month,
beginning the month of April 1945, for the said of premises including the one door
which said defendant, without plaintiffs consent and contrary to their agreement, had
subleased to another Chinese, but plaintiff refused, based on the fact that the plaintiff
very badly needs the said house to live in, as her house was burned by the Japanese
on the occasion of the entry of the American liberators in the City; that defendant was
duly notified to leave the said premises, but he refused; and she prayed for judgment
of eviction and for unpaid rentals.

The defendant answered alleging that he was and since 1908 had been a tenant of
the premises in question, which he was using and had always used principally as a
store and secondarily for living quarters; that he was renting it from its owner and
administrator Juan Grey; that plaintiff is merely the usufructuary of the income
therefrom, and by agreement between her and said owner, her only right as
usufructuary of the income is to receive the whole of such income; that she has no
right or authority to eject tenants, such right being in the owner and administrator of
the house, Juan Grey; that plaintiff has never had possession of said property; that
defendants lease contract with the owner of the house is for 5-year period, with
renewal option at the end of each period, and that his present lease due to expire on
December 31, 1945; that on June 1, 1945, defendant made a written offer to plaintiff to
compromise and settle the question of the amount of rent to be paid by defendant but
said plaintiff rejected the same for no valid reason whatever and instituted the present
action; that the reason plaintiff desires to eject defendant from the property is that she
wishes to lease the same to other persons for a higher rent, ignoring the fact that as
usufructuary of the income of the property she has no right to lease the property.

ISSUE: Who is entitled to administer the property subject matter of this case and
who should be the tenant?
HELD:
The usufructuary has the right to administer the property in question. All the
acts of administration to collect the rents for herself, and to conserve the property
by making all necessary repairs and paying all the taxes, special assessments, and
insurance premiums thereon were by court judgment vested in the usufructuary.
The pretension of the respondent Juan Grey that he is the administrator of the
property with the right to choose the tenants and to dictate the conditions of the lease
is contrary to both the letter and the spirit of the said clause of the will, the stipulation
of the parties, and the judgment of the court. He cannot manage or administer the
property after all the acts of management and administration have been vested by the
court, with his consent, in the usufructuary. He admitted that before said judgment he
had been collecting the rents as agent of the usufructuary under an agreement with
the latter. As long as the property is properly conserved and insured he can have no
cause for complaint, and his right in that regard is fully protected by the terms of the
stipulation and the judgment of the court above mentioned. To permit him to arrogate
to himself the privilege to choose the tenant, to dictate the conditions of the lease, and
to sue when the lessee fails to comply therewith, would be to place the usufructuary
entirely at his mercy. It would place her in the absurd situation of having a certain
indisputable right without the power to protect, enforce, and fully enjoy it.

IT IS USUFRUCT. 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.

6_ 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 repossess 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 a barter or usufruct
RULING:

8_ VDA DE ALBAR v. CARANDANG, 106 PHIL 855- Usufruct

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.
Ponentes 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 owners 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.
FACTS:
Doa Rosario Fabie y Grey was the owner of the lot in the City of Manila with a
building and improvements, 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. de Albar, et al. but its usufruct to Josefa Fabie for life.
During liberation, as a consequence of the fire that gutted the building in many
portions of Manila, the building on the Ongpin lot was burned, leaving only the walls
and other improvements that were not destroyed by the fire.

One Au Pit, a Chinaman, offered to lease the property for a period of five years, 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. 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, 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 naked owners would receive
P100.00, or 20% of the monthly rental of P500.00 and the usufructuary the balance of
80% or P400.00 of said monthly 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. 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.
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, paid to and received by the naked owners. In the meantime,
the usufructuary paid the real estate taxes due on the property at Ongpin for the years
1945 to 1952.

ISSUE:
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 usufruct for life extended to the land and the building. From the above, it is clear
that 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. And as this Court well said, "The land, being an indispensable part of the
rented premises cannot be considered as having no rental value whatsoever."
Moreover, in the Spanish language, the term "fincas" has a broad scope; it includes
not only building but land as well. (Diccionario Ingles-Espaol, 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, 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 603, old Civil Code).
FABIE, the usufructuary has the discretion to reconstruct the building. Of course, this
is addressed to the wisdom and discretion of the usufructuary who, to all intents and
purposes is deemed as the administrator of the property. This has been clarified in the
case of Fabie vs. Gutierrez David, 75 Phil., 536, which was litigated between the same
parties and wherein the scope of the same provision of the will has been the subject of
interpretation.
The usufructuary should pay the taxes. We find, however, 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, as she did, instead of by
petitioners not only because she bound herself to pay such taxes in a formal
agreement approved by the court in Civil Case No. 1569 of the Court of First Instance
of Manila (Fabie vs. Gutierrez David, supra). In the case, which involved the same
parties and the same properties subject to usufruct, the parties submitted an amicable
agreement which was approved by the court wherein the usufructuary, herein
respondent, bound herself to pay all the real estate taxes, special assessment and
insurance premiums, and make all the necessary repairs on each of the properties
covered by the usufruct and in accordance with said agreement, respondent paid all
the taxes for the years 1945 to 1954.