G.R. No.

152809 August 3, 2006

MERCEDES MORALIDAD, Petitioner,
vs.
SPS. DIOSDADO PERNES and ARLENE PERNES, Respondents.
DECISION
GARCIA, J.:
Under consideration is this petition for review on certiorari under Rule 45 of the Rules of
Court to nullify and set aside the following issuances of the Court of Appeals (CA) in
CA-G.R. SP No. 61610, to wit:
1

1. Decision dated September 27, 2001, affirming an earlier decision of the Regional
Trial Court (RTC) of Davao City which reversed that of the Municipal Trial Court in Cities
(MTCC), Davao City, Branch 1, in an action for unlawful detainer thereat commenced by
the petitioner against the herein respondents; and
2. Resolution dated February 28, 2002, 2 denying petitioners motion for reconsideration.
At the heart of this controversy is a parcel of land located in Davao City and registered
in the name of petitioner Mercedes Moralidad under Transfer Certificate of Title (TCT)
No. T-123125 of the Registry of Deeds of Davao City.
In her younger days, petitioner taught in Davao City, Quezon City and Manila. While
teaching in Manila, she had the good fortune of furthering her studies at the University
of Pennsylvania, U.S.A. While schooling, she was offered to teach at the Philadelphia
Catholic Archdiocese, which she did for seven (7) years. Thereafter, she worked at the
Mental Health Department of said University for the next seventeen (17) years.
During those years, she would come home to the Philippines to spend her two-month
summer vacation in her hometown in Davao City. Being single, she would usually stay
in Mandug, Davao City, in the house of her niece, respondent Arlene Pernes, a
daughter of her younger sister, Rosario.
Back in the U.S.A. sometime in 1986, she received news from Arlene that Mandug at
the outskirts of Davao City was infested by NPA rebels and many women and children
were victims of crossfire between government troops and the insurgents. Shocked and
saddened about this development, she immediately sent money to Araceli, Arlenes
older sister, with instructions to look for a lot in Davao City where Arlene and her family
could transfer and settle down. This was why she bought the parcel of land covered by
TCT No. T-123125.

Petitioner acquired the lot property initially for the purpose of letting Arlene move from
Mandug to Davao City proper but later she wanted the property to be also available to
any of her kins wishing to live and settle in Davao City. Petitioner made known this
intention in a document she executed on July 21, 1986. 3 The document reads:
I, MERCEDES VIA MORALIDAD, of legal age, single, having been born on the 29th
day of January, 1923, now actually residing at 8021 Lindbergh Boulevard, Philadelphia,
Pennsylvania, U.S.A., wishes to convey my honest intention regarding my properties
situated at Palm Village Subdivision, Bajada, Davao City, 9501, and hereby declare:
1. That it is my desire that Mr. and Mrs. Diosdado M. Pernes may build their house
therein and stay as long as they like;
2. That anybody of my kins who wishes to stay on the aforementioned real property
should maintain an atmosphere of cooperation, live in harmony and must avoid
bickering with one another;
3. That anyone of my kins may enjoy the privilege to stay therein and may avail the use
thereof. Provided, however, that the same is not inimical to the purpose thereof;
4. That anyone of my kins who cannot conform with the wishes of the undersigned may
exercise the freedom to look for his own;
5. That any proceeds or income derived from the aforementioned properties shall be
allotted to my nearest kins who have less in life in greater percentage and lesser
percentage to those who are better of in standing.
xxx xxx xxx
Following her retirement in 1993, petitioner came back to the Philippines to stay with the
respondents on the house they build on the subject property. In the course of time, their
relations turned sour because members of the Pernes family were impervious to her
suggestions and attempts to change certain practices concerning matters of health and
sanitation within their compound. For instance, Arlenes eldest son, Myco Pernes, then
a fourth year veterinary medicine student, would answer petitioner back with clenched
fist and at one time hurled profanities when she corrected him. Later, Arlene herself
followed suit. Petitioner brought the matter to the local barangay lupon where she
lodged a complaint for slander, harassment, threat and defamation against the Pernes
Family. Deciding for petitioner, the lupon apparently ordered the Pernes family to vacate
petitioners property but not after they are reimbursed for the value of the house they
built thereon. Unfortunately, the parties could not agree on the amount, thus prolonging
the impasse between them.

Other ugly incidents interspersed with violent confrontations meanwhile transpired, with
the petitioner narrating that, at one occasion in July 1998, she sustained cuts and
wounds when Arlene pulled her hair, hit her on the face, neck and back, while her
husband Diosdado held her, twisting her arms in the process.

Defendants counterclaim are hereby dismissed except with respect to the claim for
reimbursement of necessary and useful expenses which should be litigated in an
ordinary civil actions. (sic)
Dissatisfied, the respondent spouses appealed to the RTC of Davao City.

Relations having deteriorated from worse to worst, petitioner, on July 29, 1998, lodged a
formal complaint before the Regional Office of the Ombudsman for Mindanao, charging
the respondent spouses, who were both government employees, with conduct
unbecoming of public servants. This administrative case, however, did not prosper.
Then, on August 3, 1998, petitioner filed with the MTCC of Davao City an unlawful
detainer suit against the respondent spouses. Petitioner alleged that she is the
registered owner of the land on which the respondents built their house; that through
her counsel, she sent the respondent spouses a letter demanding them to vacate the
premises and to pay rentals therefor, which the respondents refused to heed.
In their defense, the respondents alleged having entered the property in question,
building their house thereon and maintaining the same as their residence with
petitioners full knowledge and express consent. To prove their point, they invited
attention to her written declaration of July 21, 1986, supra, wherein she expressly
signified her desire for the spouses to build their house on her property and stay thereat
for as long as they like.
The MTCC, resolving the ejectment suit in petitioners favor, declared that the
respondent spouses, although builders in good faith vis--vis the house they built on her
property, cannot invoke their bona fides as a valid excuse for not complying with the
demand to vacate. To the MTCC, respondents continued possession of the premises
turned unlawful upon their receipt of the demand to vacate, such possession being
merely at petitioners tolerance, and sans any rental. Accordingly, in its decision dated
November 17, 1999, 4 the MTCC rendered judgment for the petitioner, as plaintiff
therein, to wit:

In the meantime, petitioner filed a Motion for Execution Pending Appeal. The motion
was initially granted by the RTC in its Order of February 29, 2000, but the Order was
later withdrawn and vacated by its subsequent Order dated May 9, 2000 6 on the ground
that immediate execution of the appealed decision was not the prudent course of action
to take, considering that the house the respondents constructed on the subject property
might even be more valuable than the land site.
Eventually, in a decision 7 dated September 30, 2000, the RTC reversed that of the
MTCC, holding that respondents possession of the property in question was not, as
ruled by the latter court, by mere tolerance of the petitioner but rather by her express
consent. It further ruled that Article 1678 of the Civil Code on reimbursement of
improvements introduced is inapplicable since said provision contemplates of a lessorlessee arrangement, which was not the factual milieu obtaining in the case. Instead, the
RTC ruled that what governed the parties relationship are Articles 448 and 546 of the
Civil Code, explaining thus:
Since the defendants-appellees [respondents] are admittedly possessors of the property
by permission from plaintiff [petitioner], and builders in good faith, they have the right to
retain possession of the property subject of this case until they have been reimbursed
the cost of the improvements they have introduced on the property.
Indeed, this is a substantive right given to the defendants by law, and this right is
superior to the procedural right to [sic] plaintiff to immediately ask for their removal by a
writ of execution by virtue of a decision which as we have shown is erroneous, and
therefore invalid. (Words in brackets supplied),

WHEREFORE, judgment is hereby rendered in favor of herein plaintiff and against the
defendants, as follows:

and accordingly dismissed petitioners appeal, as follows:

a) Directing the defendants, their agents and other persons acting on their behalf to
vacate the premises and to yield peaceful possession thereof to plaintiff;

WHEREFORE, in view of the foregoing, the Decision appealed from is REVERSED and
declared invalid. Consequently, the motion for execution pending appeal is likewise
denied.

b) Ordering defendants to pay P2,000.00 a month from the filing of this complaint until
they vacate premises;
c) Sentencing defendants to pay the sum of P120,000.00 5 as attorneys fees and to pay
the cost of suit.

Counter-claims of moral and exemplary damages claimed by defendants are likewise

dismissed. However, attorneys fees in the amount of fifteen thousand pesos is hereby
awarded in favor of defendants-appellants, and against plaintiffs.
SO ORDERED. 8

Therefrom, petitioner went to the CA in CA-G.R. SP No. 61610.

On September 27, 2001, the CA, while conceding the applicability of Articles 448 and
546 of the Civil Code to the case, ruled that it is still premature to apply the same
considering that the issue of whether respondents right to possess a portion of
petitioners land had already expired or was already terminated was not yet resolved. To
the CA, the unlawful detainer suit presupposes the cessation of respondents right to
possess. The CA further ruled that what governs the rights of the parties is the law on
usufruct but petitioner failed to establish that respondents right to possess had already
ceased. On this premise, the CA concluded that the ejectment suit instituted by the
petitioner was premature. The appellate court thus affirmed the appealed RTC decision,
disposing:
WHEREFORE, premises considered, the instant petition for review is hereby denied for
lack of merit. Accordingly, the petitioners complaint for Unlawful Detainer is
DISMISSED.
SO ORDERED.
With the CAs denial of her motion for reconsideration in its Resolution of February 28,
2002, petitioner is now before this Court raising the following issues:
I. WHETHER OR NOT THE COURT OF APPEALS ERRED IN DISMISSING THE
UNLAWFUL DETAINER CASE FOR BEING PREMATURE WHICH DECISION IS NOT
IN ACCORDANCE WITH LAW AND JURISPRUDENCE.
II. WHETHER OR NOT THE COURT OF APPEALS ERRED IN APPLYING ARTICLES
448 AND 546 AND THE PROVISIONS OF THE CODE ON USUFRUCT INSTEAD OF
ARTICLE 1678 OF THE CIVIL CODE.
The Court rules for the petitioner.
The Court is inclined to agree with the CA that what was constituted between the parties
herein is one of usufruct over a piece of land, with the petitioner being the owner of the
property upon whom the naked title thereto remained and the respondents being two (2)
among other unnamed usufructuaries who were simply referred to as petitioners kin.
The Court, however, cannot go along with the CAs holding that the action for unlawful
detainer must be dismissed on ground of prematurity.
Usufruct is defined under Article 562 of the Civil Code in the following wise:

ART. 562. Usufruct gives a right to enjoy the property of another with the obligation of
preserving its form and substance, unless the title constituting it or the law otherwise
provides.
Usufruct, in essence, is nothing else but simply allowing one to enjoy anothers
property. 9 It is also defined as the right to enjoy the property of another temporarily,
including both the jus utendi and the jus fruendi, 10 with the owner retaining the jus
disponendi or the power to alienate the same. 11
It is undisputed that petitioner, in a document dated July 21, 1986, supra, made known
her intention to give respondents and her other kins the right to use and to enjoy the
fruits of her property. There can also be no quibbling about the respondents being given
the right "to build their own house" on the property and to stay thereat "as long as they
like." Paragraph #5 of the same document earmarks "proceeds or income derived from
the aforementioned properties" for the petitioners "nearest kins who have less in life in
greater percentage and lesser percentage to those who are better of (sic) in standing."
The established facts undoubtedly gave respondents not only the right to use the
property but also granted them, among the petitioners other kins, the right to enjoy the
fruits thereof. We have no quarrel, therefore, with the CAs ruling that usufruct was
constituted between petitioner and respondents. It is thus pointless to discuss why there
was no lease contract between the parties.
However, determinative of the outcome of the ejectment case is the resolution of the
next issue, i.e., whether the existing usufruct may be deemed to have been
extinguished or terminated. If the question is resolved in the affirmative, then the
respondents right to possession, proceeding as it did from their right of usufruct,
likewise ceased. In that case, petitioners action for ejectment in the unlawful detainer
case could proceed and should prosper.
The CA disposed of this issue in this wise:
xxx Section 1, Rule 70 of the 1997 Rules of Civil Procedure, as amended, provides xxx
xxx xxx xxx
From the foregoing provision, it becomes apparent that for an action for unlawful
detainer to prosper, the plaintiff [petitioner] needs to prove that defendants
[respondents] right to possess already expired and terminated. Now, has respondents
right to possess the subject portion of petitioners property expired or terminated? Let us
therefore examine respondents basis for occupying the same.
It is undisputed that petitioner expressly authorized respondents o occupy portion of her
property on which their house may be built. Thus "it is my desire that Mr. and Mrs.
Diosdado M. Pernes may build their house therein and stay as long as they like." From

this statement, it seems that petitioner had given the respondents the usufructuary
rights over the portion that may be occupied by the house that the latter would build, the
duration of which being dependent on how long respondents would like to occupy the
property. While petitioner had already demanded from the respondents the surrender of
the premises, this Court is of the opinion that the usufructuary rights of respondents had
not been terminated by the said demand considering the clear statement of petitioner
that she is allowing respondents to occupy portion of her land as long as the latter want
to. Considering that respondents still want to occupy the premises, petitioner clearly
cannot eject respondents. 12
We disagree with the CAs conclusion of law on the matter. The term or period of the
usufruct originally specified provides only one of the bases for the right of a usufructuary
to hold and retain possession of the thing given in usufruct. There are other modes or
instances whereby the usufruct shall be considered terminated or extinguished. For
sure, the Civil Code enumerates such other modes of extinguishment:
ART. 603. Usufruct is extinguished:
(1) By the death of the usufructuary, unless a contrary intention clearly appears;
(2) By expiration of the period for which it was constituted, or by the fulfillment of any
resolutory condition provided in the title creating the usufruct;
(3) By merger of the usufruct and ownership in the same person;
(4) By renunciation of the usufructuary;
(5) By the total loss of the thing in usufruct;
(6) By the termination of the right of the person constituting the usufruct;
(7) By prescription. (Emphasis supplied.)
The document executed by the petitioner dated July 21, 1986 constitutes the title
creating, and sets forth the conditions of, the usufruct. Paragraph #3 thereof states
"[T]hat anyone of my kins may enjoy the privilege to stay therein and may avail the use
thereof. Provided, however, that the same is not inimical to the purpose thereof"
(Emphasis supplied). What may be inimical to the purpose constituting the usufruct may
be gleaned from the preceding paragraph wherein petitioner made it abundantly clear
"that anybody of my kins who wishes to stay on the aforementioned property should
maintain an atmosphere of cooperation, live in harmony and must avoid bickering with
one another." That the maintenance of a peaceful and harmonious relations between
and among kin constitutes an indispensable condition for the continuance of the

usufruct is clearly deduced from the succeeding Paragraph #4 where petitioner stated
"[T]hat anyone of my kins who cannot conform with the wishes of the undersigned may
exercise the freedom to look for his own." In fine, the occurrence of any of the following:
the loss of the atmosphere of cooperation, the bickering or the cessation of harmonious
relationship between/among kin constitutes a resolutory condition which, by express
wish of the petitioner, extinguishes the usufruct.
From the pleadings submitted by the parties, it is indubitable that there were indeed
facts and circumstances whereby the subject usufruct may be deemed terminated or
extinguished by the occurrence of the resolutory conditions provided for in the title
creating the usufruct, namely, the document adverted to which the petitioner executed
on July 21, 1986.
As aptly pointed out by the petitioner in her Memorandum, respondents own evidence
before the MTCC indicated that the relations between the parties "have deteriorated to
almost an irretrievable level." 13 There is no doubt then that what impelled petitioner to
file complaints before the local barangay lupon, the Office of the Ombudsman for
Mindanao, and this instant complaint for unlawful detainer before the MTCC is that she
could not live peacefully and harmoniously with the Pernes family and vice versa.
Thus, the Court rules that the continuing animosity between the petitioner and the
Pernes family and the violence and humiliation she was made to endure, despite her
advanced age and frail condition, are enough factual bases to consider the usufruct as
having been terminated.
To reiterate, the relationship between the petitioner and respondents respecting the
property in question is one of owner and usufructuary. Accordingly, respondents claim
for reimbursement of the improvements they introduced on the property during the
effectivity of the usufruct should be governed by applicable statutory provisions and
principles on usufruct. In this regard, we cite with approval what Justice Edgardo Paras
wrote on the matter:
If the builder is a usufructuary, his rights will be governed by Arts. 579 and 580. In case
like this, the terms of the contract and the pertinent provisions of law should govern (3
Manresa 215-216; se also Montinola vs. Bantug, 71 Phil. 449). 14 (Emphasis ours.)
By express provision of law, respondents, as usufructuary, do not have the right to
reimbursement for the improvements they may have introduced on the property. We
quote Articles 579 and 580 of the Civil Code:
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, remove such improvements, should it be possible to do so

without damage to the property. (Emphasis supplied.)
Art. 580. The usufructuary may set off the improvements he may have made on the
property against any damage to the same.
Given the foregoing perspective, respondents will have to be ordered to vacate the
premises without any right of reimbursement. If the rule on reimbursement or indemnity
were otherwise, then the usufructuary might, as an author pointed out, improve the
owner out of his property. 15 The respondents may, however, remove or destroy the
improvements they may have introduced thereon without damaging the petitioners
property.
Out of the generosity of her heart, the petitioner has allowed the respondent spouses to
use and enjoy the fruits of her property for quite a long period of time. They opted,
however, to repay a noble gesture with unkindness. At the end of the day, therefore,
they really cannot begrudge their aunt for putting an end to their right of usufruct. The
disposition herein arrived is not only legal and called for by the law and facts of the
case. It is also right.
WHEREFORE, the petition is GRANTED. The assailed Decision and Resolution of the
CA are REVERSED and SET ASIDE. Accordingly, the decision of the MTCC is
REINSTATED with MODIFICATION that all of respondents counterclaims are
dismissed, including their claims for reimbursement of useful and necessary expenses.
No pronouncement as to costs.
SO ORDERED.

G.R. No. L-2659

October 12, 1950

In the matter of the testate estate of Emil Maurice Bachrach, deceased. MARY
McDONALD BACHRACH,petitioner-appellee,
vs.
SOPHIE SEIFERT and ELISA ELIANOFF, oppositors-appellants.

OZAETA, J.:
Is a stock dividend fruit or income, which belongs to the usufructuary, or is it capital or
part of the corpus of the estate, which pertains to the remainderman? That is the
question raised in the appeal.
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 as follows:
Sixth: It is my will and do herewith bequeath and devise to my beloved wife
Mary McDonald Bachrach for life all the fruits and usufruct of the remainder of
all my estate after payment of the legacies, bequests, and gifts provided for
above; and she may enjoy said usufruct and use or spend such fruits as she
may in any manner wish.
The will further provided that upon the death of Mary McDonald Bachrach, one-half of
the all his estate "shall be divided share and share alike by and between my legal heirs,
to the exclusion of my brothers."
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 her the said 54,000 share of stock dividend by endorsing 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. And they have appealed from the order granting the petition and
overruling their objection.
While appellants admits that a cash dividend is an income, they contend that a stock
dividend is not, but merely represents an addition to the invested capital. The so-called
Massachusetts rule, which prevails in certain jurisdictions in the United States, supports
appellants' contention . It regards cash dividends, however large, as income, and stock
dividends, however made, as capital. (Minot vs. Paine, 99 Mass., 101; 96 Am. Dec.,
705.) It holds that a stock dividend is not in any true sense any true sense any dividend
at all since it involves no division or severance from the corporate assets of the
dividend; that it does not distribute property but simply dilutes the shares as they existed
before; and that it takes nothing from the property of the corporation, and nothing to the
interests of the shareholders.

On the other hand, so called Pennsylvania rule, which prevails in various other
jurisdictions in the United States, supports appellee's contention. This rule declares that
all earnings of the corporation made prior to the death of the testator stockholder belong
to the corpus of the estate, and that all earnings, when declared as dividends in
whatever form, made during the lifetime of the usufructuary or life tenant. (Earp's
Appeal, 28 Pa., 368.)
. . . It is clear that testator intent the remaindermen should have only the
corpus of the estate he left in trust, and that all dividends should go the life
tenants. It is true that profits realized are not dividends until declared by the
proper officials of the corporation, but distribution of profits, however made, in
dividends, and the form of the distribution is immaterial. (In re Thompson's
Estate, 262 Pa., 278; 105 Atl. 273, 274.)
In Hite vs. Hite (93 Ky., 257; 20 S. W., 778, 780), the Court of Appeals of Kentucky,
speaking thru its Chief Justice, said:
. . . Where a dividend, although declared in stock, is based upon the earnings
of the company, it is in reality, whether called by one name or another, the
income of the capital invested in it. It is but a mode of distributing the profit. If it
be not income, what is it? If it is, then it is rightfully and equitably the property
of the life tenant. If it be really profit, then he should have it, whether paid in
stock or money. A stock dividend proper is the issue of new shares paid for by
the transfer of a sum equal to their par value from the profits and loss account
to that representing capital stock; and really a corporation has no right to a
dividend, either in cash or stock, except from its earnings; and a singular state
of case it seems to us, an unreasonable one is presented if the company,
although it rests with it whether it will declare a dividend, can bind the courts as
to the proper ownership of it, and by the mode of payment substitute its will for
that of that of the testator, and favor the life tenants or the remainder-men, as it
may desire. It cannot, in reason, be considered that the testator contemplated
such a result. The law regards substance, and not form, and such a rule might
result not only in a violation of the testator's intention, but it would give the
power to the corporation to beggar the life tenants, who, in this case, are the
wife and children of the testator, for the benefit of the remainder-men, who may
perhaps be unknown to the testator, being unborn when the will was executed.
We are unwilling to adopt a rule which to us seems so arbitrary, and devoid of
reason and justice. If the dividend be in fact a profit, although declared in
stock, it should be held to be income. It has been so held in Pennsylvania and
many other states, and we think it the correct rule. Earp's Appeal, 28 Pa. St.
368; Cook, Stocks & S. sec. 554. . . .
We think the Pennsylvania rule is more in accord with our statutory laws than the
Massachusetts rule. Under section 16 of our Corporation Law, no corporation may make

or declare any dividend except from the surplus profits arising from its business. Any
dividend, therefore, whether cash or stock, represents surplus profits. Article 471 of the
Civil Code provides that the usufructuary shall be entitled to receive all the natural,
industrial, and civil fruits of the property in usufruct. And articles 474 and 475 provide as
follows:
ART. 474. Civil fruits are deemed to accrue day by day, and belong to the
usufructuary in proportion to the time the usufruct may last.
ART. 475. When a usufruct is created on the right to receive an income or
periodical revenue, either in money or fruits, or the interest on bonds or
securities payable to bearer, each matured payment shall be considered as the
proceeds or fruits such right.
When it consists of the enjoyment of the benefits arising from an interest in an
industrial or commercial enterprise, the profits of which are not distributed at
fixed periods, such profits shall have the same consideration.lawphil.net
In either case they shall be distributed as civil fruits, and shall be applied in
accordance with the rules prescribed by the next preceding article.
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.
The order appealed from, being in accordance with the above-quoted provisions of the
Civil Code, his hereby affirmed, with costs against the appellants.
Moran, C. J., Paras, Feria, Pablo, Bengzon, Tuason, Montemayor and Reyes, JJ.,
concur.

G.R. No. L-19614 March 27, 1971

JESUS M. GABOYA, as Administrator of the Estate of DON MARIANO CUI, plaintiffappellant,
vs.
ANTONIO MA. CUI, MERCEDES CUI-RAMAS and GIL RAMAS, defendantsappellees, JESUS MA. CUI, JOSE MA. CUI, SERAFIN MA. CUI, JORGE MA. CUI,

ROSARIO CUI DE ENCARNACION, PRECILLA C. VELEZ, and LOURDES C. VELEZ,

intervenors-appellants, VICTORINO REYNES, defendant-in-counterclaim-appellee.
Vicente Jayme for plaintiff-appellant.
Hector L. Hofilea 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 lots pro
indiviso and because of the cancellation of the sale to one of the three
original vendees, Don Mariano and his children Mercedes and
Antonio became co-owners of the whole mass in equal portions. 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 above-mentioned
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 condueos cnotruyeron en la parte que les
correponde;
"Y que como quiera que, el Sr. Don Mariano Cui, uno de los
condueos, 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.lwph1.t 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.

On June 15, 1949, guardian Victorino Reynes filed a motion in the

guardianship proceedings seeking authority to collect the rentals from
the three lots in question and asking the Court to order Antonio and
Mercedes to deliver to him as guardian all the rentals they had
previously collected from the 12-door commercial building, together
with all the papers belonging to his ward. This motion was denied by
Judge Piccio in his order of July 12, 1949. The guardian did not
appeal from this order.
On May 22, 1951, Judge Saguin rendered a decision in civil case No.
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. The plaintiffs
appealed to the Court of Appeals where the case is now pending.
From the Court of Appeals the case was brought to the Supreme Court, 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, in Cui vs. Cui, 100 Phil, 914.
This third case now before Us was started by the erstwhile guardian of Don Mariano Cui
(while the latter was still alive) in order to recover P126,344.91 plus legal interest from
Antonio Cui and Mercedes Cui (Record on Appeal, pages 2-3) apparently as fruits due
to his ward by virtue of his usufruct. 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, who had died on 29 July 1952, some nine months
after the present case was instituted in the court below (Record on Appeal, pages 6768).
In essence, the complaint alleges that the usufructuary right reserved in favor of Don
Mariano Cui extends to and includes the rentals of the building constructed by Antonio
Cui and Mercedes Cui on the land sold to them by their father; that the defendants
retained those rentals for themselves; that the usufructuary rights of the vendor were of
the essence of the sale, and their violation entitled him to rescind (or resolve) the sale. It
prayed either for rescission with accounting, or for delivery of the rentals of the building
with interests, attorneys' fees and costs (Record on Appeal, pages 12-38).
The amended answer, while admitting the reserved usufruct and the collection of rentals
of the building by the defendants, denied that the usufructuary rights included or
extended to the said rentals, or that such usufruct was of the essence of the sale; that
the vendor (Don Mariano Cui ) had waived and renounced the usufruct and that the
defendants vendees gave the vendor P400.00 a month by way of aid; that the original
complaint having sought fulfillment of the contract, plaintiff can not thereafter seek
rescission; that such action is barred by res judicata (on account of the two previous

decisions of the Supreme Court and by extinctive prescription. Defendants

counterclaimed for actual and moral damages and attorney's fees.
Plaintiffs denied the allegations in the counterclaim. .
From a consideration of the pleadings, the basic and pivotal issue appears to be
whether the usufruct reserved by the vendor in the deed of sale, over the lots in
question that were at the time vacant and unoccupied, gave the usufructuary the right to
receive the rentals of the commercial building constructed by the vendees with funds
borrowed from the Rehabilitation and Finance Corporation, the loan being secured by a
mortgage over the lots sold. Similarly, if the usufruct extended to the building, whether
the failure of the vendees to pay over its rentals to the usufructuary entitled the latter to
rescind, or more properly, resolve the contract of sale. In the third place, should the two
preceding issues be resolved affirmatively, whether the action for rescission due to
breach of the contract could still be enforced and was not yet barred.
The court below declared that the reserved right of usufruct in favor of the vendor did
not include, nor was it intended to include, nor was it intended to include, the rentals of
the building subsequently constructed on the vacant lots, but that it did entitle the
usufructuary to receive a reasonable rental for the portion of the land occupied by the
building, which the Court a quo fixed at Pl,858.00 per month; and that the rentals for the
land from November, 1947, when the building was rented, to 29 July 1952, when Don
Mariano died, amounted to P100,088.80. It also found no preponderant evidence that
the seller, Don Mariano Cui, had ever waived his right of usufruct, as contended by the
defendants; and that the Supreme Court, in denying reconsideration of its second
(1957) decision (100 Phil. 914), had, like the court of origin, refused to pass upon the
extent of the usufructuary rights of the seller, specially because the present case, was
already pending in the Court of First Instance, hence no res judicata existed. No
attorney's fees were awarded to the defendants, but they were sentenced to pay
counsel fees to plaintiffs.
Both parties appealed in the decision of the court a quo.
We find no the decision appealed from. As therein pointed out, 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, Rosario, Mercedes and Antonio Cui, in consideration of the sum of
P64,000.00 and the reserved usufruct of the said lot in favor of the vendor, as amplified
by the deed of 7 January 1947, authorizing Mercedes, and Antonio Cui to borrow
money, with the security of a mortgage over the entirety of the lots, in order to enable
them to construct a house or building thereon
provided, however, that the rents of said land shall not be impaired
and will always received by me.

clearly prove that the reserved usufruct in favor of the vendor, Mariano Cui, 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 on the land, an express provision would have been
included to the effect, since in both documents (heretofore quoted) the possibility of
such construction was clearly envisaged and mentioned.
Appellants, however, argue that the terms of the deed constituting the usufruct are not
determinative of the extent of the right conferred; and that by law, the enjoyment of the
rents of the building subsequently erected passed to the usufructuary, by virtue of Article
571 of the Civil Code of the Philippines (Article 479 of the Spanish Civil Code of 1889)
prescribing that:
Art. 571. The usufructuary shall have the right to enjoy any increase
which the thing in usufruct may acquire through accession, the
servitudes established in its favor, and, in general, all the benefits
inherent therein,
inasmuch as (in the appellants' view) the building constructed by appellees was an
accession to the land.
This argument is not convincing. Under the articles of the Civil Code on industrial
accession by modification on the principal land (Articles 445 to 456 of the Civil Code)
such accession is limited either to buildings erected on the land of another, or buildings
constructed by the owner of the land with materials owned by someone else.
Thus, Article 445, establishing the basic rule of industrial accession, prescribes that
Whatever is built, planted or sown on the land of another, and the
improvements or repairs made thereon, belong to the owner of the
land subject to the provisions of the following articles.
while Article 449 states:
He who builds, plants or sows in bad faith on the land of another,
loses what is built, planted or sown without right to indemnity.
(Emphasis supplied)
Articles 447 and 445, in turn, treat of accession produced by the landowner's building,
planting and sowing "with the materials of another" and when "the materials, plants or
seeds belong to a third person other than the landowner or the builder, planter or sower.
Nowhere in these articles on industrial accession is there any mention of the case of
landowner building on his own land with materials owned by himself (which is the case

of appellees Mercedes and Antonio Cui). The reason for the omission is readily
apparent: recourse to the rules of accession are totally unnecessary and inappropriate
where the ownership of land and of the, materials used to build thereon are
concentrated on one and the same person. Even if the law did not provide for accession
the land-owner would necessarily own the building, because he has paid for the
materials and labor used in constructing it. We deem it unnecessary to belabor this
obvious point. .
There is nothing in the authorities (Manresa, Venezian, Santamaria, and Borrell cited by
appellants that specifically deals with constructions made by a party on his own land
with his own materials, and at his own expense. The authorities cited merely indicate
the application in general of the rules of accession. But as already stated above, the
Civil Code itself limits the cases of industrial accession to those involving land and
materials belonging to different owners. Anyway, commentators' opinions are not
binding where not in harmony with the law itself.
The author that specifically analyses the situation of the usufructuary vis-avis constructions made by the landowner with his own materials is Scaevola (Codigo
Civil, 2d Edition, pages 288 to 297) ; and his conclusion after elaborate discussion is
that, at the most
(b) El nudo propietario no podra, sin el consentimiento del
usufructuario, hacer construcciones, plantaciones y siembras en el
predio objecto del usufructo; y en el caso de que aquel lascosintiese,
la utilizacion sera comun en los frutos y productosde lo sembrado y
plantado, y con respecto a las construcciones,el usufructuario tendra
derecho a la renta que de mutuo acuerdo se fije a las mismas; en su
defecto, por la autoridad judicial (Author cit., Emphasis supplied).
Scaevola's opinion is entirely in harmony with Article 595 of the Civil Code of the
Philippines, prescribing that
The owner may construct any works and make any improvements of
which the immovable usufruct is susceptible, or make new plantings
thereon if it be rural, provided that such acts do not cause a
diminuition in the value of the usufruct or prejudice the right of the
usufructuary.
Note that if the income from constructions made by the owner during the existence of
the usufruct should be held to accrue automatically to the usufructuary under Article
571, such improvements could not diminish the value of the usufruct nor prejudice the
right of the usufructuary; and the qualifications by Article 595 on the owner's right to
build would be redundant. The limitations set by Article 595 to the construction rights of
the naked owner of the land are evidently premised upon the fact that such

constructions would necessarily reduce the area of the land under usufruct, for which
the latter should be indemnified. This is precisely what the court a quo has done in
sentencing the appellee owners of the building to pay to the usufructuary a monthly rent
of P1,758.00 for the area occupied by their building, after mature consideration of the
rental values of lands in the neighborhood.
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; 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. The unproductive situation of barren lots would thus be prolonged for
an indefinite time, to the detriment of society. In other words, the rule that appellants
advocate would contradict the general interest and be against public policy.
Appellants urge, in support of their stand, that the loan .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. That factor is irrelevant to the ownership of the building, because the money
used for the building was loaned exclusively to the appellees, and they were the ones
primarily responsible for its repayment. Since the proceeds of the loan was exclusively
their property, 1 the building constructed with the funds loaned is likewise their own. A
mortgagor does not become directly liable for the payment of the loan secured by the
mortgage, in the absence of stipulation to that effect; and his subsidiary role as
guarantor does not entitle him to the ownership of the money borrowed, for which the
mortgage is mere security.
We agree with the trial court that there was no adequate proof that the vendor, Don
Mariano Cui, ever renounced his usufruct. The alleged waiver was purely verbal, and is
supported solely by the testimony of Antonio Cui, one of the alleged beneficiaries
thereof. As a gratuitous renunciation of a real right over immovable property that as
created by public document, the least to be expected in the regular course of business
is that the waiver should also appear in writing. Moreover, as pointed out in the
appealed decision (Record on Appeal, page 184, et seq.), in previous pleadings sworn
to by Antonio Cui himself, in Civil Case No. 599 and Special Proceeding 481-R of the
Cebu Court of First Instance (Exhibits "I", "J", and "20-A"), he and his sister Mercedes
had contended that Don Mariano Cui had been receiving from them P400.00 per month
as the value of his usufruct, and never claimed that the real right had been renounced
or waived.lwph1.t The testimony of Antonio Cui on the alleged waiver, given after
the usufructuary had been declared incompetent and could no longer contradict him, is
obviously of negligible probative value.

Turning now to the second issue tendered by herein appellants, that the noncompliance 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. 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.
But as the rental value in question had not been ascertained or fixed either by the
parties or the court, prior to the decision of 31 October 1961, now under appeal, nor had
Don Mariano Cui, or anyone else in his behalf, made any previous demand for its
payment, the default, if any, can not be exclusively blamed upon the defendantsappellees. Hence, 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. This Court, inBanahaw, Inc. vs. Dejarme 55 Phil. 338, ruled that
...Under the third paragraph of article 1124 3 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. The right to
resolve or rescind a contract for non-performance of one of its
stipulations is, therefore, not absolute.

intereses legales de la cantidad que en su caso resulte (Sent, TS of

Spain, 29 April 1914)
In the absence of default on the part of the defendants-vendees, Article 1592 of the Civil
Code of the Philippines that is invoked by appellants in, support of their all right to
rescind the sale, is not applicable: for said article (which is a mere variant of the general
principle embodied in Article 1191, of the same Code) presupposes default of the
purchasers in the fulfilment of their obligations. As already noted, no such default or
breach could occur before liquidation of the usufructuary's credit; and the time for
paying such unliquidated claim can not be said to have accrued until the decisions
under appeal was rendered, fixing the rental value of the land occupied by the building.
The filing of the initial complaint by Victoriano Reynes, then guardian of the late Don
Mariano in 1951, seeking to recover P126,344.91 plus interest, did not place appellees
in default, 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;
and as We have ruled, that theory was not legally tenable. And the 1957 complaint in
intervention, seeking rescission of the sale as alternative remedy, was only interposed
after the death of the usufructuary in 1952, and the consequent extinction of the
usufruct, conformably to Article 603, paragraph (1), of the Civil Code.

No puede estimarse que incurre en mora el obligado al pago de

cantidad mientras esta no sea liquida, y tenga aquel conocimiento por
virtud de requirimiento o reclamacion judicial de lo que debe abonar
(Sent. TS of Spain, 13 July 1904) .

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, and their failure
to comply with their obligations under the usufruct prevented the vesting of title to the
property in said appellees. We need not consider this argument, 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, 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), and that rental value was not liquidated when the
complaints were filed in the court below, hence, there was no default in its payment.
Actually, this theory of appellants fails to take into account that Don Mariano could not
retain ownership of the land and, at the same time, be the usufructuary thereof. His
intention of the usufructuary rights in itself imports that he was no longer its owner. For
usufruct is essentially jus in re aliena; and to be a usufructuary of one's own property is
in law a contradiction in terms, and a conceptual absurdity.

Seguin tiene declarado esta sala con repeticion, no se puede

establecer que hay morosidad, ni condenar por tal razon al abono de
intereses cuando no se conoce la cantidad liquida reclamable" (Sent.
TS of Spain, 29 November 1912)

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.

... es visto que no existiendo obligacion de entregar cantidad hasta

tanto que se liquide no puede estimarse segun jurisprudencia, que
los recurridos ineurran en mora, por tanto que hayan de pagar

Summing up, We find and hold:

We have stated "the default, if any," for the reason that without previous ascertainment
of the exact amount that the, defendants-appellees were obligated to turn over to the
usufructuary by way of reasonable rental value of the land occupied by their building,
said parties can not be considered as having been in default (mora) for failure to turn
over such monies to the usufructuary. "Ab illiquido non fit mora": this principle has been
repeatedly declared by the jurisprudence of Spanish Supreme Court (v. Manresa,
Commentaries to the Spanish Civil Code [5th Ed.], Vol. 8, No. 1, page 134) that is of
high persuasive value in the absence of local adjudications on the point .

(1) That the usufructuary rights of the late Don Mariano Cui, reserved in the deed of
sale (Exhibit "A" herein), was over the land alone and did not entitle him to the rents of
the building later constructed thereon by defendants Mercedes and Antonio Cui at their
own expense.

VICENTE REYES, plaintiff-appellant,

vs.
JOSE GREY, ET AL., defendants-appellees.

(2) That said usufructuary was entitled only to the reasonable rental value of the land
occupied by the building aforementioned.

TRENT, J.:

(3) That such rental value not having been liquidated until the judgment under appeal
was rendered, Antonio and Mercedes Cui were not in default prior thereto, and the deed
of sale was therefore, not subject to rescission.

Judgment having been rendered by the Court of First Instance of the city of Manila, the
Hon. Charles S. Lobingier presiding, dismissing the complaint in this case upon its
merits, the plaintiff appealed.

(4) That as found by the court below, the reasonable rental value of the land occupied
by the defendants' building totalled P100,088.80 up to the time the usufructuary died
and the usufruct terminated.

The only question raised by this appeal is purely one of law.1awphil.net

(5) That pursuant to Articles 2208 (No. 11), 2210 and 2213 of the Civil Code, 5 the trial
court had discretion to equitably award legal interest upon said sum of P100,088.80, as
well as P5,000.00 attorney's fees, considering that defendants Cui have enjoyed the
said rental value of the land during all those years.
WHEREFORE, finding no reversible error in the appealed decision, the same is hereby
affirmed. Costs against appellant-intervenors, Jesus Ma. Cui, Jose Ma. Cui, Serafin Ma.
Cui, Jorge Ma. Cui, Rosario Cui de Encarnacion, Precilla C. Velez, and Lourdes C.
Velez.
Concepcion, C.J., Dizon, Makalintal, Zaldivar, Teehankee, Barredo, Villamor and
Makasiar, JJ., concur. Castro and Fernando, JJ., took no part .

G.R. No. 6969 December 20, 1911

Remedios Grey, wife of the plaintiff, died intestate in 1905 without ascendants or
descendants, leaving a surviving husband and one sister and three brothers. Under the
law, the sisters and brothers are called to inherit all of the estate of the deceased,
subject only to the right of the surviving husband, the plaintiff, to a usufructuary interest
in one-half thereof.
Administration proceedings in the estate of the deceased wife not taken out until June
15, 1907, when Jose Grey, one of the defendants, was appointed administrator. In these
administration proceedings, the Court of First Instance of this city issued a decree on
December 3, 1910, declaring that each one of the defendants in the case at the bar was
entitled to one-fourth part of the estate of the deceased Remedios Grey, subject to the
plaintiff's (Vicente Reyes') right to usufruct.
Prior to the appointment of the administrator for the estate of the deceased Remedios
Grey, and as the result of certain judicial proceedings had against her surviving
husband (the plaintiff in the case at bar), his usufructuary interest in the estate of his
deceased wife was sold under execution and deeds issued therefor to the purchaser,
the defendant Jose Grey. Such deeds still subsist in full force and effect, no steps ever
having been taken either to annul or set them aside or to redeem the interest of the
plaintiff thus sold.1awphil.net
The plaintiff, as surviving husband of the deceased Remedios Grey, now sues the sister
and brothers of his deceased wife, claiming of them the payment of his usufructuary
interest in the property of the deceased, basing his claim upon two grounds: first, that
the execution sale and the sheriff's deeds executed pursuant thereto did not divest him
of his usufructuary interest in the property and that the defendants still remain charge
with its payment; and second, the defendants having failed to appear from the order of
the probate court dated December 3, 1910, which order was issued some three years
after an attempt was made to sell under execution the plaintiff's usufructuary interest,

and that order having become final, it settled the plaintiffs right to a usufructuary
interest, and the defendants can not now deny this fact.

the sheriff sold the plaintiff's usufructuary right by virtue of an execution, he had no
further interest in said property.

Counsel for the plaintiff now insists that a usufructuary interest in real property is not
such an interest or right as can be sold under execution. With this connection we can
not agree. Section 450 of the Code of Civil Procedure provides as follows:

The plaintiff's second contention that the defendants, by failing to appeal from the order
of the court in the administration proceedings dated December 3, 1910, wherein the
right of plaintiff to a usufructuary interest in the property was recognized, have lost their
right to refuse such payment to him at this time, is not well founded. The plaintiff had no
interest in this property at the time the probate court issued this order. The order only
set out the fact that under the law the plaintiff was entitled to a usufructuary interest in
one-half of the estate of his deceased wife. It was not a finding that in the meantime the
plaintiff had not sold, leased, or otherwise disposed of or lost such right of participation.
This order merely fixed the legal status of the plaintiff and did not have the effect of
canceling or annulling the sale made by the sheriff. Again, the plaintiff instituted the
action in the case at bar on June 1, 1910, several months prior to the order of
December 3, 1910. The right to recover was traversed by the defendants on July 1 of
that same year, and the question was pending and undetermined at the time the
probate court issued its order.

SEC. 450. Property liable to execution. All goods, chattels, moneys, and
other property, both real and personal, or any interest therein of the judgment
debtor, not excempt by law, and all property and rights of property seized and
held under attachment in the action, shall be liable to execution. Shares and
interests in any corporation or company, and debts, credits, and all other
property, both real and personal, or any interest in either real or personal
property, and all other property not capable of manual delivery, may be
attached on execution, in like manner as upon writs of attachment.itc-alf
The term "property" as here applied to lands comprehends every species of title,
inchoate or complete; legal or equitable. This statute authorizes the sale under
execution of every kind of property, and every interest in property which is, or may be,
the subject of private ownership and transfer. It deals with equitable rights and interests
as it deals with legal, without anywhere expressly recognizing or any distinction
between them.

The validity of the execution sale was not an issue in those administration proceedings,
and the order of December 3d cannot, under any circumstances, be held to affect the
validity of such sale.
The judgment appealed from is therefore affirmed, with costs against the appellant.

Article 480 of the Civil Code reads:

Arellano, C.J., Torres, Mapa, Johnson, Carson and Moreland, JJ., concu
The usufructuary may personally enjoy the thing in usufruct, lease it to another
person, or alienate his right to the usufruct, even for a good consideration; . . . .
If the usufructuary right is one which may be leased or sold, it must logically and
necessarily follow that such a right is an "interest" in real property within the meaning of
section 450 of the Code of Civil Procedure, above quoted. It was the plaintiff's
usufructuary right in real property which was sold under execution. This right was
conferred upon him at the death of his wife by operation of law, and by virtue of such a
right he was entitled to receive all the natural, industrial, and civil fruits of said real
property in usufruct. He was entitled to hold the actual, material possession of such
property during his lifetime, and was obligated only to preserve its form and substance.
In other words, he was entitled, subject to his restriction, to use the property as his own.
He was the real owner of this interest, and article 480, supra, conferred upon him the
right to enjoy the possession of the property or lease it to another or to sell such interest
outright. We think the real test, as to whether or not property can be attached and sold
upon execution
is does the judgment debtor hold such a beneficial interest in such property that he
can sell or otherwise dispose of it for value? If he does, then the property is subject to
execution and payment of his debts. The right of usufruct is such an interest, and when

[G.R. No. 45534. April 27, 1939.]

JOSEFA RIZAL MERCADO, ET AL., Plaintiffs-Appellants, v. ALFREDO

HIDALGO REAL, Defendant-Appellee.
Jose Perez Cardenas for Appellants.
Jose C. Abreu for Appellee.

G.R. No. L-18003

SYLLABUS
1. PAYMENT OF LAND TAX; USUFRUCTUARY; NAKED OWNER. Pursuant the
provision of article 505 of the Civil Code, the tax; directs burdens the capital,
that is, the real value of the property and should be paid by the owner (One
Lengco v. Monroy, G. R. No. 19411, July 18, 1923). It is contended, however,
that under the second paragraph of the aforesaid article, if the usufructuary
should pay the tax, he would be entitled to reimbursement for the amount
thereof only upon the inspiration of the usufruct, and the usufruct being still
afoot, it is premature for the plaintiffs as usufructuarics who advanced the
payment of the tax, to bring the action for the recovery of What they paid. There
is, however, no basis for this reasoning. The plaintiffs did not pay the tea. They
objected to this payment. They did not consent to the deduction thereof from
their player in the products, and much less to the application thereof to this
payment which they believe they are not bound to make. In fact they did not
make the payment; the naked owners were the ones who made it without their
consent and with money belonging to them as their share of the fruits coming to
them in their capacity as usufructuaries.

September 29, 1962

ROSARIO GREY VDA. DE ALBAR and JOSE M. GREY, petitioners,

vs.
JOSEFA FABIE DE CARANDANG and THE COURT OF APPEALS (Second
Division), respondents.
Montenegro, Madayag, Viola and Hernandez for petitioners.
Ambrosio Padilla and Santiago P. Blanco for respondents.

DIZON, J.:
Appeal taken by Rosario, Grey Vda. de Albar and Jose M. Grey from the decision of the
Court of Appeals CA-G.R. No. 28196-R an original action for certiorari filed by
respondents Josefa Fabie de Carandang.

DECISION

AVANCEA, C.J. :

The properties left by the deceased Paciano Rizal y Mercado belonged, in

usufruct, to nine heirs and, in naked ownership, to seven others. The plaintiffs
are two of the nine usufructuaries and the defendant is one of the naked
owners.
In 1932, 1933 and 1934, the amount of P6,503.80 was paid for the tax of these
lands. Of this amount the naked owners made the plaintiffs pay P1,445.29, or
P722.64 each, representing one-ninth of the taxes paid during the aforesaid
years. As the plaintiffs were not agreeable to this payment, by cause they were
mere usufructuaries, and they contend that the duty devolves upon the naked
owners, this amount was deducted from the products corresponding to them and
applied to the payment of land tax.
The plaintiffs alleged that, the naked owners being the ones under a duty to pay
the tax for the lands, they should recover the amount which was deducted from
their share o

In her will the deceased Doa Rosario Fabie y Grey bequeathed the naked ownership
of a parcel of land situated at Ongpin St., Manila, and of the building and other
improvements existing thereon, to petitioners, and the usufruct thereof to respondent for
life. Because the improvements were destroyed during the battle for the liberation of the
City of Manila, the Philippine War Damage Commission paid petitioners a certain sum of
money war damage. It was respondent, however, who paid the real estate taxes due on
the land for the years 1945 to 1954.
On October 2, 1952, petitioners commenced Civil Case No. 17674 in the Court of First
Instance of Manila to limit respondent's usufruct to the legal interest on the value of the
land. After due trial the court rendered judgment as follows:
En virtud de todo lo cual, el Juzgado promulga decision a favor de la
demandada usufructuaria, 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, sin que los
demandantes tengan derecho de inmiscuirse en la administracion de dicha
finca;

(b) Con derecho de percibir el 6% de la cantidad de P8,574.00 percibidos

como indemnizacion de guerra desde Enero 11, 1950;

(d) Mas la suma de P2,000.00 como daos y perjuicios en forma de

honorarios de abogado y gastos de litigio;

repurchase the property despite the fact that she was under obligation to do so in order
to maintain her usufruct thereon; that June 8, 1959, petitioners repurchased the same
for P715.05 and paid all the back taxes due thereon up to 1957, bringing the total
amount of real estate taxes paid by them to P3,495.00; that, consequently, respondent's
usufruct over the property was extinguished and they are entitled to reimbursement for
the amount of real estate taxes paid by them. On these grounds they prayed for the
denial respondent's motion, 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.

(e) Con las costas a cargo de los demandantes.

On July 2, 1960, the Court of First Instance of Manila issued the following order:

(c) Al reembolso de la suma de P1,989.27 pagados o abonados por la

demandada como pagos de amillaramiento desde la fecha de la Contestacion,
Octubre 22, 1953;

Deciding the appeal taken by petitioners, the Court of Appeals rendered judgment as
follows:
Wherefore, 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, and that she is entitled to
receive from appellants 6% of the amount the latter actually received from the
Philippine War Damage Commission, and we hereby reverse said decision,
declaring that reimbursement to appellee of the sum of P1,989.27 paid by her
for real estate taxes is deferred until the termination of the usufruct, and that
she is not entitled to any amount for attorney's fees.
On appeal taken by petitioners, We, in turn, 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, filed by petitioner, 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.
The record of the case having been remanded to the court of origin for execution,
respondent filed a motion praying that the court issue an order for the "payment of the
appellate jurisdiction of the Court of Appeals, 11, 1950 to January 11, 1960, which are
already due to the defendant usufructuary from the plaintiffs, naked owners, as legal
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
P196.32 every year, representing the legal interest per annum payable on or before
January 15, 1961, and every year thereafter during the existence of the
usufruct."1awphl.nt
Petitioners opposed the motion alleging that because respondent failed to pay the real
estate taxes on the property for the years 1954 to 1959, the property was declared
delinquent and sold at public auction to Mrs. Pilar T. Bautista; that respondent failed to

On motion of the defendant and it appearing that the decision of this Court
dated August 10, 1953, as modified by the decisions of the Court of Appeals in
CA-G.R. No. 11917-R and of the Supreme Court in G.R. No. L-13361, had
already become final and executory, let a writ be issued for the execution of
the said decision.
In collecting and satisfying the sums adjudged in the judgment in favor of the
plaintiffs, [defendant] the Sheriff of Manila is hereby ordered to withhold the
sum of P3,495.90 which the plaintiffs claim to be reimbursable to them for real
estate taxes paid on the property for the years 1954, 1955, 1957 and 1959, as
well as the sum spent in repurchasing the property from the buyer at public
auction, Mrs. Pilar T. Bautista. The disposition of the said sum should be
threshed out by the parties in a separate incident either in this action or in an
independent litigation.
On July 23, 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, as modified by the appellate courts, had already become
executory. The court, however, denied the motion in its order of August 25 of the same
year, which, in part, 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, in the first paragraph of the questioned order.
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,
particularly with regard to the liability for real estate taxes on the property in
question. 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. In view of this divergence of opinion between the parties, the Court
considered it wise to withhold the disputed sum, 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. There is no intention to modify

or impose any condition on the enforcement of the judgment; rather, the Court
merely desires that the said judgment be enforced and executed in the correct
and proper manner.
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, 1960 and August 25, 1960, on
the ground that the same were not in conformity with our decision in G.R. No. L-13361,
as modified by our resolution of February 10, 1960.
Respondents' answer, after admitting some of the averments made in the petition
for certiorari and denying the others, alleged as affirmative defenses, inter alia, that
appeal in due time was the proper remedy against the orders complained of; that the
Court of Appeals had no jurisdiction over the petition because the writ sought was not in
aid of its appellate jurisdiction, and lastly, that the respondent judge, in issuing the
aforesaid orders, did not commit any grave abuse of discretion.
Upon the issues thus submitted, the Court of Appeals rendered the appealed decision
annuling the orders of July 2 and August 25, 1960 mentioned heretofore, and ordering
the respondent judge to issue the writ of execution in accordance with our decision of
December 29, 1959, as modified by our resolution of February 10, 1960. Hence the
present appeal.
Petitioners reiterate now their contention that the Court of Appeals had no jurisdiction
over the petition for certiorari filed by herein respondent, Josefa Fabie Vda. de
Carandang (CA-G.R. No. 28196), because the writ sought therein was not in aid of its
appellate jurisdiction. We find this contention to be meritorious.
It is not disputed that the Court of Appeals has original jurisdiction to issue writs
of certiorari, prohibition, mandamus, and all other auxiliary writs in aid of its appellate
jurisdiction (Section 30, Republic Act 296, commonly known as Judiciary Act of, 1948).
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, if said court has
jurisdiction to review, by appeal or writ of error, the final decision that might be rendered
in the principal case by the court against which the writ is sought.
In Breslin vs. Luzon Stevedoring Co., et al., 47 O.G. 1170, the main question raised
by certiorari, 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. 4609 and,
accordingly, in dismissing the case. 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. The reason given in support of this view was that if petitioners in the case
had sought a review of the orders complained of, by appeal or writ of error, the review
would have fallen under our exclusive appellate jurisdiction because it would have

involved exclusively a question of law. In deciding whether or not the case was correctly
forwarded to Us, however, 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. 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. 17674 instituted by herein
petitioner against respondent Josefa Fabie de Carandang was within the appellate
jurisdiction of the Court of Appeals. In fact, it was actually appealed to said court (CAG.R No. 11917-R) and its decision was subsequently appealed to us (G.R. No. L13361).
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, because the writ sought was in aid of its
appellate jurisdiction, we find it to be otherwise in view of one important fact that makes
the aforesaid decision inapplicable to the present case.
Before Breslin and others filed their petition for certiorari with the Court of Appeals, 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. Consequently, 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, upon trial on the merits, 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.
In the present case such situation does not obtain. The main case (Civil Case No.
17674 of the Court of First Instance of Manila) had already been finally decided, first by
the Court of First Instance of Manila, then by the Court of Appeals and lastly, by Us; our
decision had become executory, for which reason the record of the case was remanded
below for purposes of execution; there was absolutely nothing left of the substance of
the action to be resolved. Such being the case, 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, by appeal or writ of error. That jurisdiction had already
been exercised and exhausted with the rendition of the decision of the Court of Appeals
in C.A. G.R. No. 11917. Upon the other hand, assuming that the orders complained of
are appealable, they could only be appealed to Us because the appeal would have
necessarily involved nothing more than a question of law, namely, whether or not the
Court of First Instance of Manila had jurisdiction to issue the orders complained of.

In view of the foregoing, we hold that the Court Appeals had no jurisdiction to entertain
Carandang's petition for certiorari, and, as a result, the appealed decision is set aside.
But, in view of the fact that we have original jurisdiction to entertain said petition, we
shall proceed to decide it on the merits as if it had been originally filed with Us, in order
to save time and avoid unnecessary expenses for the parties following the practice
adopted in the Breslin case.
The question to be resolved is whether the order July 2 and August 25, 1960 issued by
the Court of First Instance of Manila modify our decision in G.R. No. L-13361, as
modified by our resolution of February 10, 1960. The answer must be in the negative.
It is, of course, the law in this jurisdiction that a decision, once executory, is beyond
amendment, the prevailing party being entitled to its execution as a matter of right; that
the writ of execution to be issued must form with the decision (Buenaventura vs. Garcia,
78 Phil. 759); 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, where there
has been a change in the situation of the parties which makes such execution
inequitable (Chua Lee vs. Mapa, 51 Phil. 624-625, Li Kim Tho vs. Sanchez, 83 Phil.
776, 778).
As stated heretofore, when petitioners opposed respondent Carandang's motion for
execution, they alleged that because the latter did not pay the real estate taxes on the
property over which she had usufructuary rights, for the years 1954 to 1959, the
property was declared delinquent and sold at public auction; that because Carandang
failed to repurchase it, petitioners made the purchase for the sum of P715.05, and paid

all the back taxes up to 1957 as well as those for the year 1959, having paid the total
sum of P3,495.00 as real estate taxes, which amount they claimed reimbursement from
respondent Carandang.
Upon the above facts if proven it would seem that petitioners had at least a prima
facie case against the aforesaid respondent. It was in this connection precisely that the
order of July 2, 1960 provided that "the Sheriff of Manila is hereby ordered to withhold
the sum of P3,495.98 . . ., as well as the sum spent in repurchasing the property . . .",
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." This order, in
our opinion, does not amount to a modification of our final decision in the principal case,
nor to the imposition of a condition upon its enforcement. It amounts to a mere stay of
execution and is authorized by our decisions in the Chua Lee and Lim Kim Tho cases
(supra).
IN VIEW OF THE FOREGOING, the writ prayed for in the petition for certiorari filed by
Josefa Fabie de Carandang against Rosario Grey Vda. de Albar, Jose M. Grey, and the
Hon. Conrado M. Vasquez (CA-G.R. No. 28196-R) is denied. With costs.
Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Barrera,
Paredes and Makalintal, JJ., concur.