Usufruct –case #7

Notwithstanding use of the term “barter”, the parties intended to transfer only the material possession, thus
what the parties acquired was the right of usufruct subject to a resolutory condition.

BALURAN V. NAVARRO
G.R. No. L-44428, Sept. 30, 1977
MUÑOZ PALMA, Jp

FACTS:
In 1964, Baluran and Paraiso (ancestor of Obedencio) entered into a contract which they entitled “BARTER”,
with the conditions that 1. they would only transfer the material possession of their respective properties to
each other. 2. Baluran will be allowed to construct a residential house on the land of Paraiso while Paraiso is
entitled to reap the fruits of the riceland of Baluran. 3. The contract prohibited them from alienating the
properties of the other and contained a stipulation that should the heirs of Paraiso desire to re-possess the
residential lot, Baluran is obliged to return the lot.

In 1975, Antonio Obendencio (the Paraisos’ grandson) filed with the CFI – Ilocos Norte a case for the recovery
of the residential lot.

Judge Navarro of CFI – Ilocos Norte decided in favor of the plaintiff Obendencio. Plaintiff was declared the
owner and Avelino Baluran was ordered to vacate the lot.
ISSUE:

Whether or not the contract was a barter or usufruct

RULING:

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

Now, because it is usufruct, the law allows the parties to stipulate the conditions including the manner of its
extinguishment. In this case, it was subject to a resolutory condition which is in case the heir of Paraiso (a third
party) desires to repossess the property. Upon the happening of the condition, the contract is extinguished.
Therefore, Baluran must return the land to Obedencia. But since Art. 579 allows the usufructuary to remove
improvements he made, Baluran may remove the house he constructed.

Lastly, at the time of this case, the Obedencias were also in possession of the riceland of Baluran. Although it
was not proper to decide the issue of possession in this case, the Court nevertheless decided on the matter
and order the Obedencias to vacate the property inasmuch as there was an extinguishment of a reciprocal
obligations and rights.