OBLIGATIONS OF THE USUFRUCTUARY – continuation . . .

Art. 598. If the usufruct be constituted on the whole of a patrimony, and if at the time
of its constitution the owner has debts, the provisions of Articles 758 and 759 relating
to donations shall be applied, both with respect to the maintenance of the usufruct
and to the obligation of the usufructuary to pay such debts.

The same rule shall be applied in case the owner is obliged, at the time the usufruct is
constituted, to make periodical payments, even if there should be no known capital.

Q. What is the legal effect if the usufruct is constituted or established on the whole of a
patrimony, if at the time of its constitution, the owner has debts?

Q. Is the usufructuary obliged to pay such debts?

A. It depends.

1.) If there is a stipulation in the usufruct for the usufructuary to pay such debts, the following
rules apply: (Art. 758 applied)

a. Pay only debts incurred BEFORE constitution of usufruct, but not after, unless there
is stipulation to this effect;

b. Pay only for debts UP TO THE VALUE OF THE PROPERTY subject of usufruct,
unless the contrary is stipulated or intended by the parties.

2.) If there is NO stipulation for the usufructuary to pay such debts, he is NOT required to
pay the debts of the naked owner (Art. 759).

Exception: When the usufruct is made IN FRAUD OF CREDITORS, at the time it was
constituted. (Art. 759).

 Here, the usufructuary may be made responsible for the payment of

the debt.

Badge of Fraud; Presumption: If at the time the usufruct was constituted, the naked
owner did not reserve sufficient property to pay his debts before the usufruct was
created. This presumption is however disputable and not conclusive; may be rebutted by
contrary proof.

The Rules above apply when –

a.) The Usufruct is UNIVERSAL, that is, constituted on whole of the patrimony, and;
the Naked Owner has debts, or is obliged to make periodical payments, whether or
not there be known capital. [Art. 598]

b.) The person donates ALL his property but reserves to himself their Usufruct. [Art. 750]

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Art. 599. The usufructuary may claim any matured credits which form a part of the
usufruct if he has given or gives the proper security. If he has been excused from
giving security or has not been able to give it, or if that given is not sufficient, he shall
need the authorization of the owner, or of the court in default thereof, to collect such
credits.

The usufructuary who has given security may use the capital he has collected in any
manner he may deem proper. The usufructuary who has not given security shall
invest the said capital at interest upon agreement with the owner; in default of such
agreement, with judicial authorization; and, in every case, with security sufficient to
preserve the integrity of the capital in usufruct. (507)

Q. What is the right of the usufructuary in case there are MATURED CREDITS or
CAPITAL which form part of the usufruct?

A. 1st Paragraph, Art. 599; (differentiate rights of usufructuary who has or has
not given or has given deficient security)

1.) If U gave security – U collect and invest the matured credit, or use the
capital, WITHOUT need of approval by court or naked owner.

2.) If U gave No security or was exempted – U can only collect the mature
credit, and invest said capital at interest upon agreement with the naked
owner;

 If there is no such agreement with owner, then get judicial

authorization; and,
 In every case, with security sufficient to preserve the integrity of the
capital in usufruct.

Art. 600. The usufructuary of a mortgaged immovable shall not be obliged to pay the
debt for the security of which the mortgage was constituted.

Should the immovable be attached or sold judicially for the payment of the debt, the
owner shall be liable to the usufructuary for whatever the latter may lose by reason
thereof.

***
“A” obtain a P1M loan in Jan. 2000 from XBank for the development of his
farmland payable in Feb. 2001. A gave to B the usufruct of this farmland
when B married in June 1, 2000 to end in June 1, 2003. The debt
matured in Feb 2001, but A was unable to pay the loan. Thus, XBank
foreclosed the mortgaged.

Q. Is the usufructuary B, required by law to pay the debt of A in this case to preserve the
land?

Q. If the object of the usufruct is an immovable, and this immovable is mortgaged by the
naked owner, is the usufructuary required to pay the debt for the security mortgage?

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Answer: 1st Par., Art. 600 - The usufructuary of a mortgaged immovable shall not be
obliged to pay the debt for the security of which the mortgage was constituted.

Q. If the farm is foreclosed and because A the naked owner is unable to redeem it within the
period, XBank sold it to buyer Y. B lost his usufruct over the farm. Is the naked owner-A
liable to Usuf. B for the loss of his usufruct?

Q. What is the obligation of the naked owner to the usufructuary should the immovable
subject of the usufruct, be attached or foreclosed and sold judicially?

Answer: 2nd par., Art. 600

 Should the immovable be attached or sold judicially for the payment of the debt,
the owner shall be liable to the usufructuary for whatever the latter may lose by
reason thereof.

Q. What are the ways or remedies that the Naked Owner may avail to extinguish his Liability
to the Usufructuary?

A. His Liability may be extinguished by:

1. Constituting a usufruct over an equivalent estate
2. Paying the Usuf. a periodical pension equal to the loss
3. In other similar ways.

Art. 601. The usufructuary shall be obliged to notify the owner of any act of a third
person, of which he may have knowledge, that may be prejudicial to the rights of
ownership, and he shall be liable should he not do so, for damages, as if they had
been caused through his own fault.

Q. In what instances is NOTIFICATION to owner by USUFRUCTUARY required?

Q. What are the effects of failure by the usufructuary to notify the naked owner?

1.) Art. 601 - any act of a third person, that may be prejudicial to the rights of
ownership and this is known to USUFRUCTUARY.

 Effect of Non-notification: Usuf. is liable for damages as if he had

caused it thru his fault

2.) Art. 593 - In case of urgent extraordinary repairs are needed

 Effect of Non-notification: The law is silent on the liability, if any, of the
Usuf., for there are different kinds of extraordinary repairs that may be
required.

But he may be allowed to make the extraordinary repairs essential to

preserve the thing, and he will be entitled to the following rights: (Art.
594).
a.) Demand from the owner the increase in value of the thing
acquired due to the repairs, at end of usufruct;

b.) Right of retention until paid therefor

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  If he failed to notify owner he may lose the rights in a & b above.
(Art. 594)

3.) Art. 583 – In an inventory made at the start of usufruct

Effect of Non-notification: Inventory can proceed. But naked owner may

later question discrepancies, or omissions in the inventory.

Art. 602. The expenses, costs and liabilities in suits brought with regard to the
usufruct shall be borne by the usufructuary.

Example 1: X gave the usufruct of his mango farm to Y in 2000-2005. In

2001, Z entered the mango farm when the mangoes were ripe and he
intended to harvest the mangoes, on the ground that X failed to pay his debt
to Z on due date. The ripe mangoes will serve as X’s payment to Z.

1. If Usufructuary Y filed a forcible entry case to recover the land and moved
for an injunction against Z to prevent him from harvesting the mangoes, who
shall be liable for the costs and liabilities in this suit?

Example 2: : X gave the usufruct of his mango farm to Y in 2000-2005. In

2001, Z entered the mango farm and took possession thereof like an owner.
Z informs X that he is the rightful owner of the farm, because the Will of the
testator A which gave the farm to X earlier was actually revoked by a new
and later Will, which gave the farm to Z. Being the true owner, Z will not be
bound by the usufruct agreement between X and Y.

2. Should Y inform X for the act of Z?

3. Who shall be liable for the recovery action to be filed against Z in this case?

ANSWERS:
1. Usufructuary - as the case involves the defense of his right to the industrial
fruits.
2. Yes, Usufructuary is obliged to inform the owner of any acts of third person
that may be prejudicial to the ownership. Otherwise, Usuf. may be held liable
for damages as if he caused it thru his fault. (Art. 601)

3. X shall be liable for the costs of the suit in Example 2, as this a defense and
recovery of ownership of the land itself.

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 Chapter 4
EXTINGUISHMENT OF USUFRUCT

Art. 603. Usufruct is extinguished:

(1) By the death of the usufructuary, unless a contrary intention clearly
appears;
(2) By the 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.

D I S C U S S I O N:

1. Gen. Rule: Death of usufructuary ends the usufruct.

Q. What is the effect if the prevailing party in an ejectment case is a

usufructuary who died when the judgment restoring possession in his
favor, can the heirs succeed and substitute him in the usufruct?

A. The right to the usufruct is now rendered moot by the death of Wilfredo
since death extinguishes a usufruct under Article 603(1) of the Civil Code.
This development deprives the heirs of the usufructuary the right to retain
or to reacquire possession of the property even if the ejectment judgment
directs its restitution.

Thus, what actually survives under the circumstances is the award of

damages, by way of compensation. (Rivera-Calingasan v. Rivera, G.R.No. 171555,
April 17, 2013)

Exceptions:
a.) In case of Multiple Usufruct which will end only upon the death of the
last survivor (Art. 611)
b.) There is a period fixed based on the number of years that would elapse
before a person would reach a certain age.

Exception to exception: Unless the period was expressly granted only in

consideration of the existence of such person, in which case it ends at the
death of said person. (Art. 606)

Exception 1. (In case of multiple usufructs constituted simultaneously or successively)

 Art. 611. A usufruct constituted in favor of several persons living at the time of
its constitution shall not be extinguished until death of the last survivor.

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  Multiple Usufruct may be constituted SIMULTANEOUSLY or SUCCESSIVELY.

Q. In case of death of any usufructuaries in a multiple usufruct, to whom

will the usufruct of the dead Usufructuaries accrue – surviving Usufr. or
Naked Owner?

 In case of death of any of the usufructuaries before the multiple usufruct

ends, the Usufruct of the dead usufructuary will be given to or will accrue
in favor of the surviving usufructuaries, NOT to the heirs of the usufructuary
nor the naked owner.

 Reason: The usufruct continues or does not end until the death of the last
survivor. (Art. 611)
 The above rule also apply in case of successive usufructs.

Exception 2. (Usufruct for a period fixed based on the number of years that
may elapse before a person would reach a certain age.)

 Art. 606. A usufruct granted for the time that may elapse before a third person
attains a certain age, shall subsist for the number of years specified, even if
the third person should die before the period expires, unless such usufruct has
been expressly granted only in consideration of the existence of such person.

Rule: A usufruct granted for the time that may elapse before a third
person attains a certain age, shall subsist or be effective for the number
of years specified.

 Art. 606 is an Exception to Gen. Rule in Art. 603 (1) which provides that:

Art. 603 (1) – “Usufruct is extinguished: (1) By the death of the

usufructuary, unless a contrary intention clearly appears;”

 Exception to exception: Unless such usufruct has been expressly

granted only, in consideration of the existence of such 3rd person.

ILLUSTRATE:

As New Year’s gift, father “F” gave to his son “S” the usufruct of the 2nd flr. of his
building for rent (P50,000/mo.) effective 01 Jan. 1991, and will end until his
grandchild “G” turns 25 years old on Jan. 1, 2006. In 1991, G was only 10 yrs
old. (Period: 15 years usufruct)

1. If G dies at the age of 15 yrs. in 1996, will the usufruct of “S” on the 2nd
flr. building now end, or still continue?

2. If in the usufruct agreement, “F” also stipulated that:

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 a.) “The income from the 2nd flr. building shall be used mainly to finance and provide
the best education possible for G until he turns 25 years old;

b.) Any excess funds shall be placed in a trust, to be given to G on his 26th bday.”

Q. Assume that F and G died in a plane crash on their way to Disneyland

HK. And now, the 2nd new wife of F and their single daughter D, would like
to include in the collation of the estate of F, the 2nd flr. bldg. and its rent
income for purposes of distribution and settlement of F’s estate.

o Would S’ usufruct on the 2nd floor building still subsist in this case,
despite G’s death in 1996, when he was just 15 yrs. old ?
o Should F’s estate continue to pay the P50,000 income until 2006 or
not?

2. Expiration of the Period.

a.) The usufruct ends at the lapse of the period provided in the Title constituting
the usufruct, unless the usufruct dies prior to the end of the period.

b.) If the usufruct is on real property, or on a real right on real property, the
period must be recorded to bind third persons. (Art. 709)

c.) The term should not exceed fifty (50) years if the usufructuary is a juridical
person (town, corp., association). Premature abandonment or dissolution of
the juridical entity extinguishes the usufruct (Art. 605).

Art. 605. Usufruct cannot be constituted in favor of a town, corporation or

association for more than fifty years. If it has been constituted, and before the
expiration of such period the town is abandoned, or the corporation or
association is dissolved, the usufruct shall be extinguished by reason thereof.

Note:
1.) Sec. 11, Corp. Code – 50 yrs. existence of private corp.; Max. 50 yrs. -
life of usufruct constituted in favor of town, corp. & association

2.) Abandonment of town, or the dissolution of the corp./assoc. extinguish

the usufruct.

Q. After lapse of fifty years usufruct of a Town.Corp.Assoc., can this be

subject of renewal to another 50 years or less no. of years?

NATIONAL HOUSING AUTHORITY, petitioner, vs. COURT OF APPEALS, BULACAN

GARDEN CORPORATION and MANILA SEEDLING BANK FOUNDATION, INC.,
respondents, G.R. No. 148830. April 13, 2005

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 “The law clearly limits any usufruct constituted in favor of a corporation or
association to 50 years. A usufruct is meant only as a lifetime grant. Unlike a
natural person, a corporation or association’s lifetime may be extended indefinitely.
The usufruct would then be perpetual. This is especially invidious in cases where
the usufruct given to a corporation or association covers public land. Proclamation
No. 1670 was issued 19 September 1977, or 28 years ago. Hence, under Article
605, the usufruct in favor of MSBF has 22 years left.”

3. Fulfillment of the Resolutory Condition

a.) If the usufruct is on real property or on real right over real property, the resolutory
condition must be registered to bind third persons. (Art. 709)

b.) 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 or
among kin constitutes a resolutory condition which, by express wish of the petitioner,
extinguishes the usufruct. (Moralidad v. Pernes, GR 152809, Aug. 3, 2006)

4. Merger of the Usufruct & Ownership in the Same Person

Example: A was usufructuary of land owned by B. B died leaving in his will naked
ownership of the land to A. The usufruct is extinguished, as A is now both the naked
owner and usufructuary. (Chingen v. Arguelles, 7 Phil. 296)

5. Renunciation or Waiver by the Usufructuary

a.) Voluntary waiver and renunciation of the usufruct extinguishes it.

See case: City of Manila v. Monte de Piedad, (5 Phil. 234), p. 629, Paras, id.

 Renunciation under the law refers to a voluntary surrender of the rights of the
usufructuary made with intent to surrender them.

 If there was claim of ownership and a forced surrender, there is no renunciation or

waiver.

b.) May be made expressly or impliedly, as long as it is done clearly, with intent to
renounce. If made expressly, formalities of donation must be complied with. (Art.
1270)

c.) Q. Does renunciation by Usufructuary need the naked owner´s consent?

Two School of Thoughts:
 Amandi - No, as there is mere abandonment of one´s own right.
 Paras – Yes. Not mere abandonment. There is in effect donation or remission,
acts of liberality requiring recipient´s consent.

6. Total Loss of the Thing in Usufruct

a.) Total loss ends the usufruct.

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 But not partial loss - for usufruct continues on the remaining part (Art. 604)
 Art. 604. If the thing given in usufruct should be lost only in part,
the right shall continue on the remaining part.

b.) For total loss of a building (See Arts. 607-608 discussion later)
c.) For legal loss (e.g. expropriation; see Art. 609)

7. Termination of the Right of the Person Constituting the Usufruct

a.) See example p. 630, Paras id.

b.) If the usufructuary has a sub-usufructuary, the sub-usufructuary ends at the time the
usufruct is extinguished, because by that time, the right of the usufructuary to
constitute the sub-usufruct has ended. If the sub-usufructuary dies ahead of the
usufructuary, the sub-usufruct ends, unless a contrary intention appears.

c.) Death of the Naked Owner does NOT extinguish the usufruct, for the rights of the
naked owner are transmitted to his own heirs.

8. Prescription

a.) Refers to acquisitive prescription by a STRANGER either of the usufruct,

(usufructuary is no longer entitled to usufruct), or of the naked ownership (here right
of the person constituting the usufruct has been terminated or resolved).

b.) Mere non-use by usufructuary of the usufruct does not terminate the usufruct, unless
it is also a renunciation.

9. Other Causes for the Extinguishment of Usufruct

a.) Annulment
b.) Rescission
c.) Mutual Withdrawal
d.) Legal causes ending legal usufruct
Example: Legal causes ending legal usufruct, as when attainment of the age of
majority extinguishes parental usufruct.
Note:
1. Abuse or misuse of the usufruct does not extinguish it, unless by virtue of such
abuse or misuse, the thing has been totally lost.

2. Non-fulfillment of a suspensive condition does not extinguish usufruct, for the

simple reason that the usufruct never came into existence.

e.) Alienation by innocent purchaser for value (Art. 709)

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 LOSS OF THE THING IN USUFRUCT :

Art. 607. If the usufruct is constituted on immovable property of which a building

forms part, and the latter should be destroyed in any manner whatsoever, the
usufructuary shall have a right to make use of the land and the materials.

The same rule shall be applied if the usufruct is constituted on a building only and the
same should be destroyed. But in such a case, if the owner should wish to construct
another building, he shall have a right to occupy the land and to make use of the
materials, being obliged to pay to the usufructuary, during the continuance of the
usufruct, the interest upon the sum equivalent to the value of the land and of the
materials.

Q. What is the legal effect or rule if the usufruct is constituted on BOTH LAND AND
BUILDING, and the building is destroyed or totally lost before expiry of the usufruct?

A. 1. Usufruct on the building ends, and may use any materials remaining.
2. Usufruct shall continue on the land. (Arts. 607, 604)
 Art. 604. If the thing given in usufruct should be lost only in part, the right shall
continue on the remaining part.

3. If naked owner wants to rebuild the building, usufructuary may refuse for his usufruct
over the land subsists for the duration of the usufruct period.

Q. What is the legal effect or rule if the usufruct is constituted on the BUILDING ALONE,
and the building is destroyed or totally lost before the usufruct ends?

A. 1. Usufruct on the building ends, but usufructuary may use any materials remaining.

2. Usufructuary may still use the land. (Why? In using the building, use of the land is
automatically granted, even if no usufruct on the land was constituted.)

3. If naked owner wants to build another building on the land, he may occupy the land
and make use of the materials. This right prevails even if usufructuary refuses.

o However, in this case, the naked owner is also obliged to pay the usufructuary,
legal interest on the materials and the land for the remaining period of the usufruct.

Art. 608. If the usufructuary shares with the owner the insurance of the tenement
given in usufruct, the former shall, in case of loss, continue in the enjoyment of the
new building, should one be constructed, or shall receive the interest on the
insurance indemnity if the owner does not wish to rebuild.

Should the usufructuary have refused to contribute to the insurance, the owner
insuring the tenement alone, the latter shall receive the full amount of the insurance
indemnity in case of loss, saving always the right granted to the usufructuary in the
preceding article. (518a)

READ and STUDY the annotation and Summary of the RULES on pp. 636-638, Paras, Vol.
II, 2008 ed.

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Art. 609. Should the thing in usufruct be expropriated for public use, the owner shall
be obliged either to replace it with another thing of the same value and of similar
conditions, or to pay the usufructuary the legal interest on the amount of the
indemnity for the whole period of the usufruct. If the owner chooses the latter
alternative, he shall give security for the payment of the interest. (519)

Facts: A, in his Will, gave the Usufruct of his land to his sister S during her lifetime, and
the naked ownership to his nephew N. If this land is expropriated by the local govt., the
following RULES may be applied:

1. If Naked Owner Alone was paid just compensation by the govt., he has the following
obligations or options:

a. Replace the property with equivalent thing;

b. Pay the usufructuary Legal Interest on the indemnity or just compensation paid,
for the entire duration of the usufruct. In this case, naked owner must give
security for the payment of the interest.

2. If BOTH Owner and Usufructuary were given just compensation or indemnity by

expropriator, separately, Each will own the indemnity given to him. The usufruct is
now deemed extinguished.

3. If Usufructuary Alone was given just compensation or indemnity by expropriator, he

must give this to the naked owner. His rights will be to – (a) demand that owner
replace the property with equivalent thing, or; (b) pay him legal interest on the
indemnity given for the duration of the usufruct.

Art. 610. A usufruct is not extinguished by bad use of the thing in usufruct; but if the
abuse should cause considerable injury to the owner, the latter may demand that the
thing be delivered to him, binding himself to pay annually to the usufructuary the net
proceeds of the same, after deducting the expenses and the compensation which may
be allowed him for its administration.

Q. What is the EFFECT of BAD USE of the Thing in Usufruct?

A. It depends on the kind of Bad Use.
a.) BAD USE – Not causing considerable injury to the owner
Effect:
 Usufruct continues;
 Naked owner cannot demand delivery of the thing and its administration.

b.) BAD USE – causing considerable injury to the owner (e.g. no security by usuf.)
Effect:
 Usufruct continues;
 Naked owner can demand delivery of the thing and its administration.

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  But owner is obliged to pay annually, to the Usufructuary, the Net Proceeds of the
same, Less the owner’s administration fee and expenses.

Q. Who will determine whether or not there is considerable injury to the naked owner?
A. The Court.

Art. 612. Upon the termination of the usufruct, the thing in usufruct shall be delivered
to the owner, without prejudice to the right of retention pertaining to the usufructuary
or his heirs for taxes and extraordinary expenses which should be reimbursed. After
the delivery has been made, the security or mortgage shall be cancelled.

RIGHTS & OBLIGATIONS AT END OF USUFRUCT –

1. USUFRUCTUARY:
 Return the property to owner, subject to the following rights:
a. Reimbursements for taxes on capital and extraordinary expenses he may have
paid to preserve the thing and caused its increase in value;

b. Retain the property until he is reimbursed by naked owner. (See: Arts. 594; 597)
c. Remove improvements if no substantial damage is caused to the principal thing,
(Art. 579), or set them off against damages he has caused. (Art. 580)

2. NAKED OWNER:
a. After delivery of the thing, the security shall be cancelled.
b. In case of rural leases, respect leases made by the usufructuary until the end of
the agricultural year. (Art. 572)
c. Pay reimbursements to the usufructuary, in proper cases (Arts. 594, 597)

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