Bachrach v.
Seifert
G.R. No. L-2659, October 12, 1950
1. E.M. Bachrach: …I also bequeath to my wife,
Mary, all the fruits and usufruct of the
remainder of all my estate but upon her death,
half of my estate will be divided among all my
legal heirs…
Setting: (Office) E.M. Bachrach is drafting a
will on his office table.
4. Seifert and Elianoff: We oppose! We all
know that the stock dividends are not severed
from the corporate assets. Such forms part not
of income but of capital; therefore, it belongs
not to the usufructuary but to us, the legal heirs
of E.M. Bachrach.
Setting: (Court) Judge and Mary are still in their
respective places but Seifert and Elianoff
appeared on the right side.
2. Mary: My husband’s estate will receive
54,000 shares of stock representing 50% stock
dividend of his 108,000 shares in Atok Mining
Company. I should petition for the delivery of
stock certificate on the basis of the will he left.
Setting: (Funeral home) Mary is sad because of
her husband’s passing away but must move on
with life.
5. Judge: Indeed, the stock dividends are not
severed from the corporate assets. However, our
Corporation Law states that all dividends
declared represents surplus profits/fruits. In
addition, the Civil Code provides that the
usufructuary (Mary) shall be entitled to receive
all the fruits (stock dividend) of the property in
usufruct.
Setting: (Court) Mary, Seifert and Elianoff are
now seated in their respective sides and the
judge now makes the decision.
3. Mary: I pray, as a usufructuary of the estate of
my husband, the delivery of stock certificate
representing 54,000 shares of stock in Atok
Mining Company.
RTC: Alright, but let us inform all other
interested parties first.
Setting: (Court) Judge in the middle and Mary is
on the left side.
6. In this case, the legal-heirs/oppositors banks on
Massachusetts rule in that that stock dividends
forms part of the capital; therefore, is not subject
to usufruct because usufruct only has fruits as its
object. The Court disagreed and said that
Pennsylvania rule is more in accord with our
corporation law which states that all dividends are
considered fruits. Therefore, the 54,000 shares of
stock, as fruits, are covered by Art. 560, Civil
Code in that they belong to Mary, the
usufructuary.
Christian Paul Lugo