Case No.

29
AVELINO BALURAN, petitioner, vs. HON. RICARDO Y. NAVARRO, Presiding Judge,
Court of First Instance of Ilocos Norte, Branch I and ANTONIO
OBEDENCIO, respondents.

FACTS:

Baluran and Paraiso (ancestor of Obedencio) entered into a contract which they
called barter, but in fact stipulated that they would only transfer the material possession
of their respective properties to each other. Thus, Baluran will be allowed to construct a
residential house on the land of Paraiso while Paraiso is entitled to reap the fruits of the
riceland of Baluran. The contract prohibited them from alienating the properties of the
other and contained a stipulation that should the heirs of Paraiso desire to re-possess
the residential lot, Baluran is obliged to return the lot. Indeed, years after, Obedencio
(grandchild of Paraiso) acquired the ownership of the residential lot from his mother
and demanded that Baluran, who was in possession, vacate. Baluran now counters that
the barter already transferred ownership.

ISSUE:

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