Title V.

- POSSESSION

CHAPTER 1
POSSESSION AND THE KINDS THEREOF

Possession is the holding of a thing or the enjoyment of a right. (523)

Requisites of Possession (EPAP)

1. Existence of the thing or right;
2. Possession in fact or holding or control of a thing or right;
3. Animus possidendi or the deliberate intention to possess;
4. Possession is by Virtue of one’s own right, either as an owner or as a holder.

Right to Possession vs Right of Possession

Right TO Possession Right OF Possession
Jus possidendi Jus possessionis
An incident or attribute of ownership over a thing An independent right, separate from ownership
e.g. the owner of a house is entitled to possess it e.g. the lessee of a property, who is not the owner
thereof, is entitled to possess it for the period of the lease

Degrees of possession
1. Possession with no right or title (Grammatical Degree) – possessor knows that his possession is wrongful; e.g. possession by a
thief.
2. With Juridical title (Juridicial Possession) – title is not one of ownership. Possession peaceably acquired and will not ripen into full
ownership as long as there is no repudiation of the concept under which property is held; e.g. possession of a tenant, depositary.
3. With Just title sufficient to transfer ownership, but not from the true owner (Real Possessory Right) – ripens to full ownership by
the lapse of time; e.g. possession of a buyer of a car purchased from one who pretends to be the owner.
4. With a title in fee Simple (Dominium Possession) – arises from ownership; highest degree of possession; perfect possession.

Classess of Possession
1. According to the name used as to its existence
• Possession may be exercised in one's own name or in that of another. (524)
a. In one’s own name – possessor claims the thing for himself (NCC, Art. 524).
b. In the name of another – held by the possessor for another; agent, subject to authority and ratification; if not authorized,
negotiorum gestio (NCC, Art. 524).
i. Voluntary – by virtue of an agreement; e.g. possession of an agent.
ii. Legal – by virtue of law; e.g. possession in behalf of incapacitated.

2. According to the concept of possession

• The possession of things or rights may be had in one of two concepts: (525)
a. in the concept of owner (en concepto de dueno) – possessor, by his actions, is believed by others as the owner, whether
he is in good or bad faith. (NCC, Art. 525). Such possessor is presumed to possess just title (NCC, Art. 540).

Tax declarations are not conclusive evidence of ownership

Although tax declarations or realty tax payment of property are not conclusive evidence of ownership, nevertheless, they
are good indicia of possession in the concept of owner for no one in his right mind would be paying taxes for a property that
is not in his actual or at least constructive possession. They constitute at least proof that the holder has a claim of title over
the property. The voluntary declaration of a piece of property for taxation purposes manifests not only one’s sincere and
honest desire to obtain title to the property and announces his adverse claim against the State and all other interested
parties, but also the intention to contribute needed revenues to the Government. Such an act strengthens one’s bona fide
claim of acquisition of ownership (Ganila v. CA, G.R. No. 150755, June 28, 2005).
b. in that of the holder of the thing or right to keep or enjoy it, the ownership pertaining to another person. e.g. usufructuary
with respect to the thing itself
NOTE: None of these holders may assert a claim of ownership for himself over the thing but they may be considered as
possessors in the concept of an owner, or under a claim of ownership, with respect to the right they respectively exercise
over the thing.
There can be possession in concept of both owner and holder or in either.

3. According to the condition of the mind

a. Possessor in good faith – one who is not aware that there exists in his title or mode of acquisition any flaw which invalidates
it. (526)
 ✓ Good faith is always presumed, and upon him who alleges bad faith on the part of a possessor rests the burden of proof.
(527)
✓ Possession acquired in good faith does not lose this character except in the case and from the moment facts exist which
show that the possessor is not unaware that he possesses the thing improperly or wrongfully. (528)
✓ Requisites
1 Ostensible title or mode of acquisition;
2 Vice or defect in the title;
3 Possessor is ignorant of the vice or defect and must have an honest belief that the thing belongs to him.
Cessation of possession in good faith
Possession in good faith ceases from the moment defects in his title are made known to the possessor by extraneous
evidence or by suit for recovery by the true owner.

This interruption of good faith may take place

1 At the date of summons; or
2 That of the answer if the date of summons does not appear.

Effect of cessation of possession in good faith

Possessor is now considered as a possessor in bad faith and he may be required to pay rent or vacate the property. In both
cases he is required to pay damages to the lawful owner or possessor of the property.
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Q: Jose offered to sell his lot to Rosario which the latter accepted. They executed a document containing the sale. Later,
Rosario sought the execution of the formal deed of sale, but Jose could not continue the sale because he sold the lot to
Emma with whom he executed a formal deed of sale. Informed that the sale in favor of Emma was not registered, Rosario
registered her adverse claim. Later, Emma registered her deed of sale and a TCT was issued to her but with Rosario’s
adverse claim. Emma then took possession of the lot.
a.) Who has a better right to the land?
b.) Is Emma entitled to the improvements she introduced in the lot?
A:
a.) ROSARIO has a better right. Rosario’s prior purchase of the land was made in good faith; she was the only buyer at that
time. Her good faith did not cease after Jose told him of the second sale to Emma. In order to protect her right, Rosario
registered her adverse claim. Said recording is deemed to be in good faith and emphasized Emma’s bad faith (Carbonell v.
CA G.R. No. L-29972, January 26, 1976).
b.) NO. The possessor in bad faith has neither the right of retention of useful improvements nor the right to demand refund
for useful expenses (Art. 546 & 547; Carbonell v. CA G.R. No. L-29972, January 26, 1976).

Mistake upon a doubtful or difficult question of law

Mistake upon a doubtful or difficult question of law (provided that such ignorance is not gross and therefore inexcusable)
may be the basis of good faith (BAR) (526). Ignorance of the law may be based on an error of fact.

b. Possessor in bad faith – possessor is aware of the invalidating defect in his own title
NOTE: Only personal knowledge of the flaw in one’s title or mode of acquisition can make him possessor in bad faith. Bad
faith is not transmissible from a person to another, even an heir is not affected by bad faith of the deceased predecessor.
Possession in good faith ceases from the moment defects in his title are made known to the possessor.
NOTE: No tacking of bad faith, unless the successors in interest had learned of the defect in the title and still purchased it.
It is presumed that possession continues to be enjoyed in the same character in which it was acquired, until the contrary is
proved. (529)

Requisites to constitute possession whether in good faith or in bad faith

1. Possessor has a title/mode of acquisition;
2. There is a flaw or defect in said title/mode;
3. The possessor is aware or unaware of the flaw or defect.

Summary of rights of a possessor

GOOD FAITH BAD FAITH
As to fruits received
Entitled to the fruits received before the possession is Shall reimburse the fruits received and those which the
legally interrupted (Art. 544). legitimate possessor could have received and shall have the
a right only to necessary expenses (Art. 546, par. 1) and
expenses in the production, gathering and preservation of
such fruits (NCC, Art. 443).
As to pending fruits
 Liable with legitimate possessor for expenses of None.
cultivation and shall share in the net harvest in proportion
to the time of their possession (NCC, Art. 545).
As to expenses:
(Necessary expenses)
Right of reimbursement and retention. Right of reimbursement only.
(Useful expenses)
Right of reimbursement, retention and limited right of None.
removal.
(Ornamental Expenses)
Shall not be refunded but he has a limited right of Shall not be refunded but he has a limited right of removal, i.e.
removal, i.e. he may remove if the principal thing suffers he may remove if the principal thing suffers no injury thereby,
no injury thereby, and if the lawful possessor does not and if the lawful possessor does not prefer to retain them by
prefer to refund the amount expended. paying its value at the time he enters into possession.
As to liability in case of deterioration or loss
No liability Always liable.
XPN: if due to his fraudulent act or negligence, or after
service of summons.

Possessor in good faith has the right of retention until he has been fully reimbursed
A possessor in good faith has the right of retention of the property until he has been fully reimbursed for all the necessary
and useful expenses made by him on the property. Its object is to guarantee the reimbursement for the expenses, such as
those for the preservation of the property, or for the enhancement of its utility or productivity. It permits the actual possessor
to remain in possession while he has not been reimbursed by the person who defeated him in the possession for those
necessary expenses and useful improvements made by him on the thing possessed (Ortiz v. Kayanan, G.R. No. L-32974,
July 30, 1979).

4. According to extent of possession

a Actual possession – occupancy in fact of the whole or at least substantially the whole property.
b Constructive possession – occupancy of part, in the name of the whole, under such circumstances that the law extends the
occupancy to the possession of the whole.

Doctrine of constructive possession

The possession of a part is a possession of the whole. To be considered in possession, one need not have actual or physical
occupation of every square inch of the property at all times (Habagat Grill v. DMC-Urban Property Developer, Inc., G.R. No.
155110, March 31, 2005).
Requisites of Constructive Possession
1 Possessor was in actual possession of a portion or part of the property
2 Claim of ownership of the whole area
3 Remainder of the area must not be in the adverse possession of another person
4 Area claimed must be reasonable

Possession vs Occupation
POSSESSION OCCUPATION
Apply to properties whether with or without an owner. Applies only to property without an owner.
Possession does not confer ownership. Occupation confers ownership.
There can be possession without ownership. There can be no occupation without ownership.

Person declared as the owner of a certain property may still not be entitled to its possession
Possession and ownership are distinct legal concepts. Ownership confers certain rights to the owner among which are the right to
enjoy the thing owned and the right to exclude other persons from possession thereof. On the other hand, possession is defined as
the holding of a thing or the enjoyment of a right. Literally, to possess means to actually and physically occupy a thing with or without
a right. Thus a person may be declared an owner but not entitled to possession (Heirs of Roman Soriano v. CA, G.R. No. 128177,
August 15, 2001).

GR: Object of possession - Only things and rights which are susceptible of being appropriated may be the object of possession.
EXP:
1. Res communes;
2. Property of public dominion;
 3. Easement;
4. Prohibited by law.

CHAPTER 2
ACQUISITION OF POSSESSION
How possession is acquired (Modes of acquiring Possession) (531)
1. By Material Occupation (detention) of a thing or the exercise of a right (quasi-possession)
a Constitutum possessorium – when the possessor who is the owner of the property continues his possession no longer
under a title of ownership but under a title less than ownership, i.e. lessee, depositary, etc.
b Traditio brevi manu – when the possessor who is possessing the thing by a title other than ownership, continues to possess
it under a new title, now of ownership.
2. By exercise of a right, or the fact that it is subject to the action of our will which does not require actual physical detention or
seizure.
a Traditio longa manu – delivery by consent or mere pointing.
b Traditio simbolica – delivery of a mere symbol (e.g. key) placing the thing under the control of the transferee.
3. By constructive possession or proper acts and legal formalities established by law for acquiring such right such as succession,
donation, execution of public instruments.

Essential elements of acquiring possession

1 Corpus – refers to the existence of the thing and its holding; and
2 Animus – refers to the intent to possess the thing.

Actual possession distinguished from constructive possession

Actual possession consists in the manifestation of acts of dominion over property of such a nature as a party would naturally
exercise over his own; Constructive possession may be had through succession, donation, execution of public instruments, or
the possession by a sheriff by virtue of a court order (Remington Industrial Sales Corp v. CYMCAPI, G.R. No. 171858, January
22, 2007).

Who may acquire possession (Acquisition of possession according to person of possessor) (532)
1. Personal – possession is acquired by the same person who is to enjoy it, either the owner or a mere holder.
Requisites
a Capacity to possess
b Intent to possess; and
c Object must be capable of being possessed
2. Through an authorized person – acquisition of possession through a legal representative or by appointing an agent
Requisites:
a Intent to possess for principal;
b Authority or capacity to possess (for another) of the representative or agent; and
c Principal has intent and capacity to possess
3. Through a person without authority (but only if subsequently ratified) - acquisition of possession through a person who is not
clothed with authority by the supposed “principal.”
Requisites:
a Intent to possess for the “principal”;
b Capacity of the “principal” to possess; and
c Ratification by “principal”
NOTE: The ratification does not suppress the consequences of negotiorum gestio (Art. 2144). The principal is deemed to
have acquired possession from the time the gestor had voluntarily took the management of the affairs of the former (Pineda,
2009).
If the possession is acquired by a stranger
Where possession is acquired not by an agent or representative but by a stranger without agency, possession is not acquired
until the act of the agent or representative is ratified, without prejudice to the juridical consequences of negotiorum gestio in
a proper case (NCC, Art. 532).

• The possession of hereditary property is deemed transmitted to the heir without interruption and from the moment of the death of
the decedent, in case the inheritance is accepted. (533)
• One who validly renounces an inheritance is deemed never to have possessed the same. (533)
• On who succeeds by hereditary title shall not suffer the consequences of the wrongful possession of the decedent, if it is not
shown that he was aware of the flaws affecting it; but the effects of possession in good faith shall not benefit him except from the
date of the death of the decedent. (534)

Acquisition of minors or incapacitated persons

Minors and incapacitated persons may acquire the possession of things; but they need the assistance of their legal representatives
in order to exercise the rights which from the possession arise in their favor. (535)
NOTE: Minors and incapacitated persons may acquire property or rights by prescription, either personally or thru their parents,
guardians, or legal representatives (NCC, Art. 1107).

Acts which do not give rise to possession (FAT-V) (BAR)

1. Through Force or intimidation as long as there is a possessor who objects thereto (NCC, Art. 536). (2006 BAR)
In no case may possession be acquired through force or intimidation as long as there is a possessor who objects thereto. He
who believes that he has an action or a right to deprive another of the holding of a thing, must invoke the aid of the competent
court, if the holder should refuse to deliver the thing. (536)
2. Through Acts executed clandestinely and without the knowledge of the possessor which means that:
a. Acts are not public; and
b. Unknown to the owner or possessor
3. Mere Tolerance by the owner or the lawful possessor.
4. Acts executed by Violence (NCC, Art 537).
Acts merely tolerated, and those executed clandestinely and without the knowledge of the possessor of a thing, or by violence,
do not affect possession. (537)

Rule when two or more persons claim possession over the same property
GR: Possession cannot be recognized in two different personalities.
EXP: In case of co-possession when there is no conflict.

Criteria in case there is a dispute of possession of two or more persons

1. Present/Actual possessor shall be preferred
2. If there are 2 possessors, the one longer in possession
3. If the dates of possession are the same, the one with a title

If all of the above are equal, the fact of possession shall be judicially determined, and in the meantime, the thing shall be placed in
judicial deposit (NCC, Art. 538).
Possession as a fact cannot be recognized at the same time in two different personalities except in the cases of co-possession.
Should a question arise regarding the fact of possession, the present possessor shall be preferred; if there are two possessors,
the one longer in possession; if the dates of the possession are the same, the one who presents a title; and if all these conditions
are equal, the thing shall be placed in judicial deposit pending determination of its possession or ownership through proper
proceedings. (538)

CHAPTER 3
EFFECTS OF POSSESSION

Every possessor has a right to be respected in his possession; and should he be disturbed therein he shall be protected in or restored
to said possession by the means established by the laws and the Rules of Court. (539)
A possessor deprived of his possession through forcible entry may within ten days from the filing of the complaint present a motion
to secure from the competent court, in the action for forcible entry, a writ of preliminary mandatory injunction to restore him in his
possession. The court shall decide the motion within thirty (30) days from the filing thereof. (539)

RIGHTS OF A POSSESSOR
1. To be respected in his possession;
2. To be protected in said possession by legal means;
3. To secure in an action for forcible entry the proper writ to restore him in his possession;
4. To secure from a competent court in an action for forcible entry the Writ of preliminary mandatory injunction to restore him in his
possession (NCC, Art. 539).

Possession contemplated by law is legal possession – thief cannot exercise possession. Such possession is exercised by every
possessor – in good faith or bad faith.

Q: During his lifetime, Velasco acquired Lot A from spouses Sacluti and Obial evidenced by a deed of sale. In 1987, spouses Padilla
entered the said property as trustees by virtue of a deed of sale executed by the Rural Bank. The Padilla’s averred that the Solomon
spouses owned the property which was identified as Lot B. However, it was proved during trial that the land occupied by spouses
Padilla was Lot A in the name of Velasco, whereas the land sold by the bank to the spouses Padilla was Lot B. The heirs of Velasco
demanded that spouses Padilla vacate the property, but they refused. Thus, the heirs filed a complaint for accion publiciana.
a) Who has the better right of possession?
b) Has the action already prescribed?
A:
a) The HEIRS OF VELASCO has the better right. Accion publiciana, recovery of the right to possess, is an action filed in the RTC to
determine the better right to possession of realty independently of the title. The objective of the plaintiffs in accion publiciana is to
recover possession only, not ownership. Lot A was the subject of a cadastral case. The OCT was issued to Sacluti and Obial who
sold the same to Artemio. From the date of sale, until Artemio’s death, he was in continuous possession of the land.
b) NO. The remedy of accion publiciana prescribes after the lapse of ten years. The action was filed with the RTC in 1991. Spouses
Padilla dispossessed the heirs of Velasco of the property in 1987. At the time of the filing of the complaint, only 4 years had elapsed
from the time of dispossession (Spouses Padilla v. Velasco, G.R. No. 169956, January 19, 2009).

Acquisitive Prescription - Only the possession acquired and enjoyed in the concept of owner can serve as a title for acquiring
dominion. (540)

Possession has to be in the concept of an owner, public, peaceful and uninterrupted.

Presumptions in favor of a possessor (GCENCE)

1. Good faith;
2. Continuity of initial good faith;
3. Enjoyment in the same character in which possession was acquired until the contrary is proved;
4. Non-interruption in favor of the present possessor;
5. Continuous possession by the one who recovers possession of which he was wrongfully deprived;
6. Extension of possession of real property to all movables contained therein.

NOTE: There exists a disputable legal presumption in favor of a possessor in the concept of owner that he possesses with a just title
and he cannot be obliged to show or prove it (NCC, Art. 541). Also, the possession of real property presumes that of the movables
therein, as long as it is not shown or proved that they should be excluded. (NCC, Art. 542) (2008 BAR)

• Art. 543. Each one of the participants of a thing possessed in common shall be deemed to have exclusively possessed the part
which may be allotted to him upon the division thereof, for the entire period during which the co-possession lasted. Interruption
in the possession of the whole or a part of a thing possessed in common shall be to the prejudice of all the possessors. However,
in case of civil interruption, the Rules of Court shall apply. (543)

RIGHT TO PENDING FRUITS

A possessor in good faith is entitled to the fruits received before the possession is legally interrupted. (544)
1 Natural and industrial fruits – considered received from the time they are gathered or severed;
2 Civil fruits – from the time of their accrual or due date and not their actual receipt or payment which may be late (NCC, Art. 544).
Civil fruits are deemed to accrue daily and belong to the possessor in good faith in that proportion. (544)

Q: What if there are natural or industrial fruits at the time good faith ceases?
A: The possessor shall have the right to a part of the expenses of cultivation, and to a part in the net harvest both in proportion to
the time of possession (NCC, Art 545) (2000, 2008 BAR).

Options of the owner in case there are pending fruits at the time good faith ceases
1 To pay the possessor in good faith indemnity for his cultivation expenses and charges and his share in the net harvest; or
2 To allow him to finish the cultivation and gathering of the growing fruits as an indemnity for his share in the expenses.
If the possessor refuses, for any reason, to finish the cultivation and gathering, he forfeits the right to be indemnified in any other
manner [NCC, Art. 545(3)].

RIGHT TO BE REIMBURSED
Necessary expenses – Necessary expenses are expenses incurred to preserve the property, without which, said property will
physically deteriorate or be lost.
Shall be refunded to every possessor; but only the possessor in good faith may retain the thing until he has been reimbursed therefor.
(546)
NOTE: Only the possessor in good faith has the right to retain the thing until he has been reimbursed (NCC, Art. 546). The right to
retain is a lien over the property. Hence, the possessor in good faith need not pay rent during the period of retention.

Right of removal of necessary expenses

There is NO right of removal of necessary expenses whether in good faith or bad faith. Necessary expenses affect the existence or
substance of the property itself.
NOTE: Improvements are so incorporated to the principal thing that their separation must necessarily reduce the value of the thing
not curable by ordinary repairs.
Useful expenses – Those which increase the value or productivity of the property.
Useful expenses shall be refunded only to the possessor in good faith with the same right of retention, the person who has defeated
him in the possession having the option of refunding the amount of the expenses or of paying the increase in value which the thing
may have acquired by reason thereof. (546)

Effect of voluntary surrender of property

The voluntary surrender of property is a waiver of the possessor’s right of retention but his right to be refunded may still be enforced
XPN: he also waived the same.

Removal of useful improvements introduced by the possessor

If the useful improvements can be removed without damage to the principal thing, the possessor in good faith may remove them,
unless the person who recovers the possession exercises the option under paragraph 2 of the preceding article. (547)
NOTE: This right of removal is subordinate to the owner’s right to keep the improvements himself by paying the expenses incurred
or the concomitant increase in the value of the property caused by the improvements.

Expenses for pure luxury

Luxurious expenses – are expenses incurred for improvements introduced for pure luxury or mere pleasure.
Luxurious expenses are not refundable even if made by a possessor is in good faith.
Expenses for pure luxury or mere pleasure shall not be refunded to the possessor in good faith; but he may remove the ornaments
with which he has embellished the principal thing if it suffers no injury thereby, and if his successor in the possession does not prefer
to refund the amount expended. (548)

NOTE: No tacking of bad faith, unless the successors in interest had learned of the defect in the title and still purchased it.
Bad faith is not transmissible from a person to another, even an heir is not affected by bad faith of the deceased predecessor.

Requisites to constitute possession whether in good faith or in bad faith

1 Possessor has a title/mode of acquisition;
2 There is a flaw or defect in said title/mode;
3 The possessor is aware or unaware of the flaw or defect.

• The possessor in bad faith shall reimburse the fruits received and those which the legitimate possessor could have received, and
shall have a right only to the expenses mentioned in paragraph 1 of Article 546 and in Article 443. The expenses incurred in
improvements for pure luxury or mere pleasure shall not be refunded to the possessor in bad faith, but he may remove the objects
for which such expenses have been incurred, provided that the thing suffers no injury thereby, and that the lawful possessor does
not prefer to retain them by paying the value they may have at the time he enters into possession. (549)
• The costs of litigation over the property shall be borne by every possessor. (550)
• Improvements caused by nature or time shall always insure to the benefit of the person who has succeeded in recovering
possession. (551)
• A possessor in good faith shall not be liable for the deterioration or loss of the thing possessed, except in cases in which it is
proved that he has acted with fraudulent intent or negligence, after the judicial summons. (552)
• A possessor in bad faith shall be liable for deterioration or loss in every case, even if caused by a fortuitous event. (552)
• One who recovers possession shall not be obliged to pay for improvements which have ceased to exist at the time he takes
possession of the thing. (553)

Principle of Continuous Possession

A present possessor who shows his possession at some previous time, is presumed to have held possession also during the
intermediate period, in the absence of proof to the contrary. (554)

LOSS/TERMINATION
A possessor may lose his possession:
(1) By the abandonment of the thing;
(2) By an assignment made to another either by onerous or gratuitous title;
(3) By the destruction or total loss of the thing, or because it goes out of commerce;
(4) By the possession of another, subject to the provisions of Article 537, if the new possession has lasted longer than one year. But
the real right of possession is not lost till after the lapse of ten years. (555)
Possession is lost through (PRADA)
1 Possession of another subject to the provisions of Art. 537, if a person is not in possession for more than one year but less than
10 years he losses possession de facto. He can no longer bring an action of forcible entry or unlawful detainer, since the
prescriptive period is one year for such actions. But he may still institute an accion publiciana to recover possession de jure,
possession as a legal right or the real right of possession (NCC, Art. 555; Paras, 2008).
 NOTE: Acts merely tolerated, and those executed clandestinely and without the knowledge of the possessor of a thing, or by
violence, do not affect possession (NCC, Art. 537) (2001, 2009 BAR).
2 Abandonment (NCC, Art.555)
NOTE: Abandonment involves a voluntary renunciation of all rights over a thing.
Requisites
a. The abandoner must have been a possessor in the concept of owner (either an owner or mere possessor may respectively
abandon either ownership or possession);
b. The abandoner must have the capacity to renounce or to alienate (for abandonment is the repudiation of property right);
c. There must be physical relinquishment of the thing or object;
d. There must be no spes recuperandi (expectation to recover) and no more animus revertendi (intention to return or get back)
(Paras, 2008).
3 Recovery of the thing by the legitimate owner.
4 Destruction or total loss of the thing – a thing is lost when it perishes or goes out of commerce, or disappears in such a way that
its existence is unknown, or it cannot be recovered
5 Assignment – complete transmission of the thing/right to another by any lawful manner

LOSS OR UNLAWFUL DEPRAVATION OF A MOVABLE

The possession of movables is not deemed lost so long as they remain under the control of the possessor, even though for the time
being he may not know their whereabouts. (556)
A lost thing is one previously under the lawful possession and control of a person but is now without any possessor.
NOTE: An abandoned property is not considered as a lost thing (Pineda, 1999).

FINDER OF LOST MOVABLE

Rule regarding the right of a possessor who acquires a movable claimed by another
If the possessor is in:
1. Bad faith – no right
2. Good faith – presumed ownership. It is equivalent to title.
Requisites:
a. Possession in good faith
b. Owner has voluntarily parted with the possession of the thing; and
c. Possessor is in the concept of an owner.

Possession of movable property acquired in good faith

GR: Doctrine of irrevindicability – the possession of movable property acquired in good faith is equivalent to title. (559)
Nevertheless, one who has lost any movable or has been unlawfully deprived thereof may recover it from the person in possession
of the same. (559)
If the possessor of a movable lost or which the owner has been unlawfully deprived, has acquired it in good faith at a public sale, the
owner cannot obtain its return without reimbursing the price paid therefor. (559)
NOTE: This is merely presumptive as it can be defeated by the true owner (NCC, Art. 559).
XPNs:
1. When the owner has lost; or
2. Has been unlawfully deprived of a movable.
In which case the possessor cannot retain the thing as against the owner, who may recover it without paying any indemnity
XPN to the XPNs: Where the movable is acquired in good faith at a public sale, the owner must reimburse to recover [NCC, Art.
559(2)].

Duty of a finder of a lost movable (Art. 719)

Whoever finds a lost movable, which is not a treasure, must return it to its previous possessor. If the latter is unknown, the finder
shall immediately deposit it with the mayor of the city or municipality where the finding has taken place. The mayor in turn must
publicly announce the finding of the property for two consecutive weeks.
Authorized public auction of lost movable
If the movable cannot be kept without deterioration, or without expenses which considerably diminish its value, it shall be sold at
public auction eight days after the publication.
Awarding of the lost movable to the finder
If the owner or previous possessor did not appear after 6 months from the publication, the thing found or its value or proceeds if there
was a sale, shall be awarded to the finder. The finder, however, shall pay for the expenses incurred for the publication (NCC, Art.
719).
Duty of the owner who appeared
1. Give a reward to the finder equivalent to one-tenth (1/10) of the sum or of the price of the thing found. (NCC, Art. 720)
2. Reimburse to the finder for the latter’s expenses incurred for the preservation of the thing (NCC, Art. 546) and expenses spent for
the location of the owner.
3. Reimburse the expenses for publication if there was a public auction sale (Pineda, 1999).

Estafa is considered as unlawful deprivation

Q: Using a falsified manager's check, Justine, as the buyer, wasable to take delivery of a second hand car which she had
just bought from United Car Sales Inc. The sale was registered with the Land Transportation Office. A week later, the seller
learned that the check had been dishonored, but by that time, Justine was nowhere to be seen. It turned out that Justine
had sold the car to Jerico, the present possessor who knew nothing about the falsified check. In a suit by United Car Sales,
Inc. against Jerico for recovery of the car, plaintiff alleges it had been unlawfully deprived of its property through fraud and
should, consequently, be allowed to recover it without having to reimburse the defendant for the price the latter had paid.
Should the suit prosper? (1998 BAR)
A: The suit should prosper because the criminal act of estafa should be deemed to come within the meaning of unlawful deprivation
under Art. 559 as without it United Car Sales would not have parted with the possession of its car. Thus, it was allowed to recover
the property without having to reimburse the defendant.
• The possession of immovables and of real rights is not deemed lost, or transferred for purposes of prescription to the prejudice
of third persons, except in accordance with the provisions of the Mortgage Law and the Land Registration laws. (557)
• Acts relating to possession, executed or agreed to by one who possesses a thing belonging to another as a mere holder to enjoy
or keep it, in any character, do not bind or prejudice the owner, unless he gave said holder express authority to do such acts, or
ratifies them subsequently. (558)
• Wild animals are possessed only while they are under one's control; domesticated or tamed animals are considered domestic or
tame if they retain the habit of returning to the premises of the possessor. (560)
• One who recovers, according to law, possession unjustly lost, shall be deemed for all purposes which may redound to his benefit,
to have enjoyed it without interruption. (561)

Title VI. – USUFRUCT

CHAPTER 1
USUFRUCT IN GENERAL

Usufruct is the right of a person called usufructuary, to enjoy the property of another called the owner, with the obligation of returning
it at the designated time and preserving its form and substance, unless the title constituting it or the law provides otherwise (Pineda,
2009).
NOTE: A usufruct can be constituted in favor of a town, corporation or association, but it cannot be for more than 50 years. (NCC,
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. (515a)

Characteristics of usufruct (ENA)

1 Essential – those without which it cannot be termed as usufruct:
a Real right (whether registered in the registry of property or not);
b Constituted on property
i Real;
ii Personal;
iii Consumable;
iv Non-consumable;
v Tangible;
vi Intangible
c Temporary duration;
d Purpose: to enjoy the benefits and derive all advantages from the object as a consequence of normal use or exploitation.
2 Natural – that which ordinarily is present, but a contrary stipulation can eliminate it because it is not essential.
a The obligation of conserving or preserving the form and substance (value) of the thing.
b b. Transmissible
3 Accidental – those which may be present or absent depending upon the stipulation of parties
a Whether it be pure or a conditional usufruct
b The number of years it will exist
c Whether it is in favor of one person or several, etc.

Obligation to preserve the form and substance of the thing in usufruct

GR: The usufructuary is bound to preserve the form and substance of the thing in usufruct. This is to prevent extraordinary
exploitation, prevent abuse of property and prevent impairment.
XPN: In case of an abnormal usufruct, whereby the law or the will of the parties may allow the modification of the substance of the
thing.
---
Q: Chayong owned a parcel of land which she mortgaged to Michael. Upon the OCT was an annotation of usufructuary
rights in favor of Cheddy. Is Michael obliged to investigate Chayong’s title?
A: NO. The annotation is not sufficient cause to require Michael to investigate Chayong’s title because the latter’s ownership over
the property remains unimpaired despite such encumbrance. Only the jus utendi and jus fruendi over the property are transferred to
the usufructuary. The owner of the property maintains the jus disponendi or the power to alienate, encumber, transform, and even
destroy the same (Hemedes v. CA, G.R. Nos. 107132 & 108472, October 8, 1999).
---
KINDS OF USUFRUCT
1. As to Origin:
a Legal – created by law such as usufruct of the parents over the property of their unemancipated children;
NOTE: The right of the parents over the fruits and income of the child’s property shall be limited primarily to the child’s
support and secondarily to the collective daily needs of the family. (Art. 226, FC)
b Voluntary – created by will of the parties either by act inter vivos (e.g. donation) or by act mortis causa (e.g. in a last will and
testament);
c Mixed (or prescriptive) – created by both law and act of the person (e.g. acquired by prescription: I possessed in good faith
a parcel of land which really belonged to another. Still in good faith, I gave in my will to X, the naked ownership of land and
to Y, the usufruct. In due time, Y may acquire the ownership of the usufruct by acquisitive prescription.) (Paras, 2008)
2. As to Number of beneficiary
a Simple – if only one usufructuary enjoys the usufruct;
b Multiple – if several usufructuaries enjoy the usufruct;
i Simultaneous – at the same time
ii Successive – one after the other
NOTE: In case usufructuary is created by donation, apply Art. 756. If the usufruct is testamentary, apply Rules on Fidei
Commisary substitution under Art. 863 and 869.
3. As to Extent of object:
a. Total – constituted on the whole thing
b. artial – constituted only on a part
4. As to Subject matter:
a Over things
i Normal (or perfect or regular) – involves non-consumable things where the form and substance are preserved;
ii Abnormal (or imperfect or irregular) – Involves consumable things – that which involves things which would be useless
to the usufructuary unless they are consumed or expanded;
b Over rights – involves intangible property; rights must not be personal or intransmissible in character so present or future
support cannot be an object of usufruct.
5. As to Effectivity or extinguishment:
a. Pure – no term or condition
b. With a term – there is a period which may be either suspensive or resolutory
i ex die – from a certain day
ii ii. in diem – up to a certain day
iii iii. ex die in diem – from a certain day up to a certain day.
c. Conditional – subject to a condition which may be either suspensive or resolutory.
NOTE: No form is required in constituting a usufruct. Even an oral usufruct may be constituted.
XPNs:
1. Usufruct over real property must be registered to bind 3rd person
2. Statute of Frauds apply in case Real Property is involved. If Personal property, Statute of Frauds will apply where the value
is Php 500 or higher and in case the agreement is not to be performed in one year;
3. A usufruct by donation or by will must comply with formalities of a donation or will
Rules governing usufruct
4. The agreement of the parties or the title giving the usufruct.
5. In case of deficiency, the provisions on Civil Code (NCC, Art. 565).

Usufruct v. Lease
BASIS USUFRUCT LEASE
Nature of the right Always a real right. Real right only if, as in the case of a lease over
real property, the lease is registered, or is for
more than one year, otherwise it is a personal
right.
 Creator of Right Owner or his agent. May not be the owner, as in the case of a sub-
lessor or a usufructuary.
Origin By law, By contract, by way of exception by law (as in
contract, the case of an implied new lease under Art.
will of testator or 1670), or when a builder has built in good faith
by prescription. on the land of another a building, when the
land is considerably worth more in value than
the building.
Extent of Enjoyment All fruits, uses and benefits. Only those particular or specific use.
Cause A passive owner who allows the An active owner who makes the lessee enjoy.
usufructuary to enjoy the object of
usufruct.
Repairs and Taxes Usufructuary pays for ordinary repairs and Lessee is not obliged to pay for repairs/taxes
pays for annual charges and taxes on the unless agreed upon.
fruits.
Limitation on the use of property Usufructuary may lease the property to The lessee cannot constitute a usufruct on the
another but cannot alienate the thing itself. property leased.

• 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. (562)
• Usufruct is constituted by law, by the will of private persons expressed in acts inter vivos or in a last will and testament, and by
prescription. (563)
• Usufruct may be constituted on the whole or a part of the fruits of the thing, in favor of one more persons, simultaneously or
successively, and in every case from or to a certain day, purely or conditionally. It may also be constituted on a right, provided
it is not strictly personal or intransmissible. (564)
• The rights and obligations of the usufructuary shall be those provided in the title constituting the usufruct; in default of such title,
or in case it is deficient, the provisions contained in the two following Chapters shall be observed. (565)

CHAPTER 2
RIGHTS OF THE USUFRUCTUARY

Rights of the usufructuary as to the thing and its fruits (RIRICRES)

1. To Receive the natural, industrial, and civil fruits of the property in usufruct and half of the hidden treasure he accidentally finds
on the property (usufructuary is considered a stranger) (566);
2. 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. (571)
3. To Retain the thing until he is reimbursed for advances for extraordinary expenses and taxes on the capital (NCC, Art. 612);
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. (522a)

4. To make such Improvements or expenses on the property he may deem proper and to remove the improvements provided no
damage is caused to the property (NCC, Art. 579);
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. (487)
5. To Collect reimbursements from the owner for indispensable extra ordinary repairs, taxes on the capital he advanced, and
damages caused to him;
6. To Remove improvements made by him if the same will not injure the property.
7. To personally Enjoy the thing or lease it to another (NCC, Arts. 572-577) generally for the same or shorter period as the usufruct
Art. 575. The usufructuary of fruit-bearing trees and shrubs may make use of the dead trunks, and even of those cut off or
uprooted by accident, under the obligation to replace them with new plants. (483a)
Art. 576. If in consequence of a calamity or extraordinary event, the trees or shrubs shall have disappeared in such considerable
number that it would not be possible or it would be too burdensome to replace them, the usufructuary may leave the dead, fallen
or uprooted trunks at the disposal of the owner, and demand that the latter remove them and clear the land. (484a)
Art. 577. The usufructuary of woodland may enjoy all the benefits which it may produce according to its nature.
If the woodland is a copse or consists of timber for building, the usufructuary may do such ordinary cutting or felling as the owner
was in the habit of doing, and in default of this, he may do so in accordance with the custom of the place, as to the manner,
amount and season.
In any case the felling or cutting of trees shall be made in such manner as not to prejudice the preservation of the land.
In nurseries, the usufructuary may make the necessary thinnings in order that the remaining trees may properly grow.
 With the exception of the provisions of the preceding paragraphs, the usufructuary cannot cut down trees unless it be to restore
or improve some of the things in usufruct, and in such case shall first inform the owner of the necessity for the work.

NOTE: As to the thing itself, the usufructuary may lease the thing to another, even without the consent of the owner.
8. To Set-off the improvements he may have made on the property against any damage to the same (NCC, Art. 580);
Art. 580. The usufructuary may set off the improvements he may have made on the property against any damage to the same.
(488)
---
Q: 120-hectares of land from the NHA property were reserved for the site of the National Government Center. 7 hectares
from which were withdrawn from the operation. These revoked lands were reserved for the Manila Seedling Bank
Foundation, Inc. (MSBF). However, MSBF occupied approximately 16 hectares and leased a portion thereof to Bulacan
Garden Corporation (BGC). BGC occupies 4,590 sqm. Implementing such revocation, NHA ordered BGC to vacate its
occupied area. BGC then filed a complaint for injunction. Has BGC any right over the leased premises?
A: A usufructuary may lease the object held in usufruct. The owner of the property must respect the lease entered into by the
usufructuary so long as the usufruct exists. MSBF was given a usufruct over only a 7-hectare area. NHA cannot evict BGC if the
4,590 square meter portion MSBF leased to BGC is within the 7-hectare area held in usufruct by MSBF. However, the NHA has the
right to evict BGC if BGC occupied a portion outside of the 7-hectare area covered by MSBF's usufructuary rights (NHA v. CA, G.R.
No. 148830, April 13, 2005).
---
Rights of a usufructuary on pending natural and industrial fruits
Growing: Rights of the usufructuary
At the beginning of the usufruct Not bound to refund to the owner the expenses of cultivation and production but without
prejudice to the right of third persons.
At the termination of the usufruct Belong to the owner but he is bound to reimburse the usufructuary of the ordinary
cultivation expenses (NCC, Art. 545) out of the fruits received (NCC, Art. 443). The right
of innocent third parties should not be prejudiced.

Natural or industrial fruits growing at the time the usufruct begins, belong to the usufructuary. Those growing at the time the usufruct
terminates, belong to the owner.
In the preceding cases, the usufructuary, at the beginning of the usufruct, has no obligation to refund to the owner any expenses
incurred; but the owner shall be obliged to reimburse at the termination of the usufruct, from the proceeds of the growing fruits, the
ordinary expenses of cultivation, for seed, and other similar expenses incurred by the usufructuary. The provisions of this article shall
not prejudice the rights of third persons, acquired either at the beginning or at the termination of the usufruct. (567)

When the expenses of cultivation and production exceeds the proceeds of the growing fruits
If the expenses exceed the proceeds of the growing fruits, the owner has no obligation to reimburse the difference (NCC, Art. 567).
Limitations to Usufructuary Rights
1. cannot sell, pledge or mortgage the property itself because he is not the owner
2. cannot sell future crops (growing crops at the termination of the usufruct belong to the owner)
3. cannot lease the thing for a period longer than the term of the usufruct without the consent of owner

XPN: lease of rural lands which subsist during current agricultural year
---
Q: Can a usufruct be constituted on an encumbered or mortgaged land?
A: YES. The mortgage remains inactive until the debt is not paid and the mortgage is not for the purpose of limiting the use of the
fruits.
---
Right of usufructuary to make useful or luxurious improvements
1. The usufructuary may construct and make improvements on the property as he may deem proper.

XPN: If there’s an express prohibition

2. Limitation: provided he does not alter its form and substance.
3. Removal: usufructuary may generally remove provided no injury is made on the principal even against the will of the naked owner.
If he has chosen not to remove he cannot be compelled to remove them; and
4. Indemnity: no right to be indemnified if the improvements cannot be removed. He may however set-off the value of the
improvements against the amount of damage he had caused to the property (Pineda, 2009).

NOTE: If the right of the usufructuary to remove improvements is not registered in the registration proceedings of the land in usufruct,
an innocent purchaser for value of the property is not bound to respect the right.
Offsetting of damages and improvements introduced by the usufructuary
Requisites before set-off can be made:
1. Damage must have been caused by the usufructuary
2. Improvements must have augmented the value of the property; and
3. Notice of intention to set-off

If the damages exceed the value of the improvements, the usufructuary is liable for the difference as indemnity.
If the improvements exceed the amount of damages, the usufructuary may remove the portion of the improvements representing the
excess in value if it can be done without injury; otherwise, the excess in value accrues to the owner.
---
Q: Why do improvements accrue to the owner?
A: Because there is no indemnity for improvements.
---
Rights of the usufructuary as to the usufruct itself
1. To Alienate, pledge or mortgage the right of usufruct, even by gratuitous title (NCC, Art. 572).
2. In a usufruct to Recover property/real right, or any movable property, to bring the action and to oblige the owner thereof to give
him the proper authority and the necessary proof to bring the action. If in consequence of the enforcement of the action he acquires
the thing claimed, the usufruct shall be limited to the fruits, the dominion remaining with the owner. (578)
3. In a usufruct of part of a Common property, to exercise all the rights pertaining to the co-owner with respect to the administration
and collection of fruits or interests.

Lease, Alienation and Encumbrance of the property subject to usufruct

The usufructuary, not being the owner of the thing subject to usufruct, cannot alienate, pledge or mortgage the thing itself.
However, the usufructuary may lease to another, alienate, pledge or mortgage his right of usufruct, even by gratuitous title; but all
the contracts he may enter into as such usufructuary shall terminate upon the expiration of the usufruct, saving leases of rural lands,
which shall be considered as subsisting during the agricultural year (572).
Transfer of the usufruct
The transferee can enjoy the rights transferred to him by the usufructuary until the expiration of the usufruct. Transfer of usufructuary
rights, gratuitous or onerous, is co-terminous with the term of usufruct.
Exercise of acts of ownership by a usufructuary
GR: A usufructuary cannot exercise acts of ownership such as alienation or conveyance.
XPNs: When what is to be alienated or conveyed is a:
1. Consumable
2. Property intended for sale;
3. Property which has been appraised when delivered (NCC, Art. 574).
Whenever the usufruct includes things which cannot be used without being consumed, the usufructuary shall have the right to
make use of them under the obligation of paying their appraised value at the termination of the usufruct, if they were appraised
when delivered. In case they were not appraised, he shall have the right to return at the same quantity and quality, or pay their
current price at the time the usufruct ceases. (574)

NOTE: If it has not yet been appraised or if it is not a consumable, return the same quality (mutuum)
Rights of usufructuary at the expiration of the usufruct
1. To collect reimbursement from the owner:
a. For indispensable extraordinary repairs made by the usufructuary (NCC, Art. 593);
b. For taxes on the capital advanced by the usufructuary (NCC, Art. 597);

c. For damages caused by the naked owner;

d. For payment of increase in value of the immovable by reason of repairs provided the owner is notified of the urgency of such
repairs but the latter failed to make said repairs despite the notification, and the repair is necessary for the preservation of the
property (NCC, Art. 594).
Art. 594. If the owner should make the extraordinary repairs, he shall have a right to demand of the usufructuary the legal interest on
the amount expended for the time that the usufruct lasts.
Should he not make them when they are indispensable for the preservation of the thing, the usufructuary may make them; but he
shall have a right to demand of the owner, at the termination of the usufruct, the increase in value which the immovable may have
acquired by reason of the repairs. (502a)

2. To retain the thing until reimbursement is made (NCC, Art. 612).

Art. 568. If the usufructuary has leased the lands or tenements given in usufruct, and the usufruct should expire before the termination
of the lease, he or his heirs and successors shall receive only the proportionate share of the rent that must be paid by the lessee.
(473)
Art. 569. Civil fruits are deemed to accrue daily, and belong to the usufructuary in proportion to the time the usufruct may last. (474)
Art. 570. Whenever a usufruct is constituted on the right to receive a rent or periodical pension, whether in money or in fruits, or in
the interest on bonds or securities payable to bearer, each payment due shall be considered as the proceeds or fruits of such right.
Whenever it consists in the enjoyment of benefits accruing from a participation in any industrial or commercial enterprise, the date of
the distribution of which is not fixed, such benefits shall have the same character.
In either case they shall be distributed as civil fruits, and shall be applied in the manner prescribed in the preceding article. (475)
Art. 573. Whenever the usufruct includes things which, without being consumed, gradually deteriorate through wear and tear, the
usufructuary shall have the right to make use thereof in accordance with the purpose for which they are intended, and shall not be
obliged to return them at the termination of the usufruct except in their condition at that time; but he shall be obliged to indemnify the
owner for any deterioration they may have suffered by reason of his fraud or negligence. (481)
Art. 581. The owner of property the usufruct of which is held by another, may alienate it, but he cannot alter its form or substance, or
do anything thereon which may be prejudicial to the usufructuary. (489)
Art. 582. The usufructuary of a part of a thing held in common shall exercise all the rights pertaining to the owner thereof with respect
to the administration and the collection of fruits or interest. Should the co-ownership cease by reason of the division of the thing held
in common, the usufruct of the part allotted to the co-owner shall belong to the usufructuary. (490)

CHAPTER 3
OBLIGATIONS OF USUFRUCTUARY

Art. 583. The usufructuary, before entering upon the enjoyment of the property, is obliged:
(1) To make, after notice to the owner or his legitimate representative, an inventory of all the property, which shall contain an appraisal
of the movables and a description of the condition of the immovables;
(2) To give security, binding himself to fulfill the obligations imposed upon him in accordance with this Chapter. (491)
Art. 584. The provisions of No. 2 of the preceding article shall not apply to the donor who has reserved the usufruct of the property
donated, or to the parents who are usufructuaries of their children's property, except when the parents contract a second marriage.
(492a)

1. Before the usufruct (NCC, Art. 583)

a. Make an inventory
b. Give security
NOTE: The purpose of giving security is to insure fulfillment by the usufruct of the obligation imposed upon him.
After the security has been given by the usufructuary, he shall have a right to all the proceeds and benefits from the day on which,
in accordance with the title constituting the usufruct, he should have commenced to receive them (retroactive effect of security) (NCC,
Art. 588).
Art. 588. After the security has been given by the usufructuary, he shall have a right to all the proceeds and benefits from the day on
which, in accordance with the title constituting the usufruct, he should have commenced to receive them. (496)

Requirements for the inventory

The naked owner or representative must be previously notified;
NOTE: The purpose is to enable him to correct errors in the inventory if he desires. His absence is a waiver for corrections. If there
is non-notification, the inventory can go on but the naked owner may later on point out discrepancies and omissions in the inventory.
Conditions of immovables must be described;
Movables must be appraised;
NOTE: As a rule, no form is required, except when there are real properties. Expenses are to be borne by the usufructuary (Paras,
2008).
When inventory is not required
a. Waived;
b. No one will be injured; (NCC, Art. 585)
Art. 585. The usufructuary, whatever may be the title of the usufruct, may be excused from the obligation of making an inventory or
of giving security, when no one will be injured thereby. (493)
c. Usufruct over rights; or
d. Agreement of both parties
Effects of failure to post a bond or security
Art. 586. Should the usu583fructuary fail to give security in the cases in which he is bound to give it, the owner may demand that the
immovables be placed under administration, that the movables be sold, that the public bonds, instruments of credit payable to order
or to bearer be converted into registered certificates or deposited in a bank or public institution, and that the capital or sums in cash
and the proceeds of the sale of the movable property be invested in safe securities.
The interest on the proceeds of the sale of the movables and that on public securities and bonds, and the proceeds of the property
placed under administration, shall belong to the usufructuary.
Furthermore, the owner may, if he so prefers, until the usufructuary gives security or is excused from so doing, retain in his possession
the property in usufruct as administrator, subject to the obligation to deliver to the usufructuary the net proceeds thereof, after
deducting the sums which may be agreed upon or judicially allowed him for such administration. (494)
1. The owner shall have the following options (Art. 586):
a. Receivership of realty;
b. Sale of movables;
c. Deposit of securities; or
d. Investment of money; or
e. Retention of the property as administrator.
2. The net product shall be delivered to the usufructuary;
3. The usufructuary cannot collect credit due or make investments of the capital without the consent of the owner or of the court until
the bond is given.
Effects of failure to give security
1. On the rights of the naked owner
a. May deliver the property to the usufructuary;
b. May choose retention of the property as administrator;
c. May demand receivership or administration of the real property, sale of movable, conversion or deposit of credit instruments or
investment of cash or profits
2. On the rights of the usufructuary
a. Cannot possess the property until he gives security;
b. Cannot administer property;
c. Cannot collect credits that have matured nor invest them
XPN: if the court or naked owner consents;
d. May alienate his right to usufruct.
Exemption of usufructuary from the obligation to give security
Usufructuary may be exempt from the obligation to give security when:
4. No one will be injured by the lack of the bond;
5. The donor (or parent) reserved the usufruct of the property donated;
6. When there is waiver by the naked owner;
7. When there is parental usufruct (Art. 225, FC);
8. The usufruct is subject to caucion juratoria where:
a. The usufructuary takes an oath to take care of the things and restore them to its previous state before the usufruct is constituted.
b. The property subject to such cannot be alienated or encumbered or leased.
Caucion juratoria – “by virtue of a promise under oath”
The usufructuary, being unable to file the required bond or security, may file a verified petition in the proper court asking for the
delivery of the house and furniture necessary for himself and his family so that he and his family be allowed to live in a house included
in the usufruct and retain it until the termination of the usufruct without any bond or security.
The same rule shall be observed with respect to implements, tools and other movable property necessary for an industry or vocation
in which he is engaged (NCC, Art. 587).
Art. 587. If the usufructuary who has not given security claims, by virtue of a promise under oath, the delivery of the furniture
necessary for his use, and that he and his family be allowed to live in a house included in the usufruct, the court may grant this
petition, after due consideration of the facts of the case.
The same rule shall be observed with respect to implements, tools and other movable property necessary for an industry or vocation
in which he is engaged.
If the owner does not wish that certain articles be sold because of their artistic worth or because they have a sentimental value, he
may demand their delivery to him upon his giving security for the payment of the legal interest on their appraised value. (495)

2. During the usufruct

a. Take care of property
b. Replace the young of animals that die or are lost or become prey when the usufruct is constituted on a flock or herd of livestock;
c. Make ordinary repairs
d. Notify the owner of urgent extraordinary repairs
e. Permit works & improvements by the naked owner not prejudicial to the usufruct
f. Pay annual taxes and charges on the fruits
g. Pay interest on taxes on capital paid by the naked owner
h. Pay debts when usufruct is constituted on the whole patrimony
i. Secure the naked owner’s/court's approval to collect credits in certain cases
j. Notify the owner of any prejudicial act committed by 3rd persons
k. Pay for court expenses and costs
Usufructuary’s liability for ordinary repairs
The usufructuary is obliged to make the ordinary repairs needed by the thing given in usufruct. It includes such as are required by
the wear and tear due to the natural use of the thing and are indispensable for its preservation (NCC, Art. 592).
Art. 592. The usufructuary is obliged to make the ordinary repairs needed by the thing given in usufruct.
By ordinary repairs are understood such as are required by the wear and tear due to the natural use of the thing and are indispensable
for its preservation. Should the usufructuary fail to make them after demand by the owner, the latter may make them at the expense
of the usufructuary. (500)

NOTE: If the naked owner demanded the repair and the usufructuary still fails to do so, the owner may make them personally or thru
another, at the expense of the usufructuary (NCC, Art. 592).
Extraordinary repairs (Art. 593)
Art. 593. Extraordinary repairs shall be at the expense of the owner. The usufructuary is obliged to notify the owner when the need
for such repairs is urgent. (501)
It includes:
3. Those required by the wear and tear due to the natural use of the thing but not indispensable for its preservation.

Liabilities:
a. The naked owner should be held liable, whether or not he is notified by the usufructuary.
b. The law does not require the naked owner to make them; what is important is that he will bear the expenses made by the
usufructuary. (Paras, 2008)
4. Those caused by exceptional circumstances and are indispensable for its preservation.

Liabilities:
a. The naked owner shall be held liable
b. The usufructuary is allowed to make them with the right to get the increase in value and the right of retention at the termination of
usufruct, provided there was notification by the usufructuary and failure to repair by the naked owner (Paras, 2008).
5. Those caused by exceptional circumstances but are not needed for its preservation.

Liabilities:
a. The naked owner is liable
b. The usufructuary cannot compel the naked owner to make such repairs and he is not allowed to make them even if the naked
owner has failed to make them (Paras, 2008).

NOTE: Extraordinary repairs shall be at the expense of the owner. The usufructuary is obliged to notify the owner when the need for
such repairs is urgent.
Right of retention of the usufructuary
The usufructuary has a right of retention even after the termination of the usufruct until he is reimbursed for the increase in value of
the property caused by extraordinary repairs for preservation.
Charges or taxes which the usufructuary must pay
1. The annual charges (in the fruits);
2. The annual taxes on the fruits; and

Taxes imposed directly on the capital

These shall be at the expense of the owner provided they are not annual (Paras, 2008).
Rules:
a. If paid by the naked owner, he can demand legal interest on the sum paid; or
b. If advanced by the usufructuary, he shall recover the amount thereof at the termination of the usufruct [NCC, Art. 597(2)].

3. At the termination
a. Return the thing in usufruct to the naked owner unless there is a right of retention
b. Pay legal interest for the time that the usufruct lasts
c. Indemnify the naked owner for any losses due to his negligence or of his transferees

NOTE: The usufructuary may be liable for the damages suffered by the naked owner on account of fraud committed by him or through
his negligence.
XPN: the usufructuary is not liable for deterioration due to:
1. Wear and tear; or
2. Fortuitous event

RIGHTS OF THE OWNER

Rights of a naked owner and the limitations imposed upon him
RIGHTS LIMITATIONS
Alienation Can alienate the thing in usufruct.
Alteration Cannot alter the form and substance.
Enjoyment Cannot do anything prejudicial to the usufructuary.
Construction and Improvement Can construct any works and make any improvement provided it does not diminish the value
or the usufruct or prejudice the rights of the usufructuary.

Effect of the death of the naked owner on the usufruct

The usufruct does not terminate the usufruct. The naked owner’s rights are transmitted to his heirs.
Improper use of the thing by the usufructuary
The owner may demand the delivery of and administration of the thing with responsibility to deliver net fruits to usufructuary.
---
Q: On 1 January 1980, Minerva, the owner of a building granted Petronila a usufruct over the property until 01 June 1998
when Manuel, a son of Petronila, would have reached his 30th birthday. Manuel, however, died on 1 June 1990 when he was
only 26 years old.
Minerva notified Petronila that the usufruct had been extinguished by the death of Manuel and demanded that the latter
vacate the premises and deliver the same to the former. Petronila refused to vacate the place on the ground that the usufruct
in her favor would expire only on 1 June 1998 when Manuel would have reached his 30th birthday and that the death of
Manuel before his 30th birthday did not extinguish the usufruct. Whose contention should be accepted? (1997 BAR)
A: Petronila’s contention should be accepted. A usufruct granted for the time that may elapse before a third person reaches a
certain age shall subsist for the number of years specified even if the third person should die unless there is an express stipulation
in the contract that states otherwise (NCC, Art. 606). There is no express stipulation that the consideration for the usufruct is the
existence of Petronila’s son. Thus, the general rule and not the exception should apply in this case.
---
OBLIGATIONS OF THE OWNER
3. To make reimbursement for advances of the usufructuary (NCC, Art. 597);
Art. 597. The taxes which, during the usufruct, may be imposed directly on the capital, shall be at the expense of the owner.
If the latter has paid them, the usufructuary shall pay him the proper interest on the sums which may have been paid in that character;
and, if the said sums have been advanced by the usufructuary, he shall recover the amount thereof at the termination of the usufruct.
(505)

4. To cancel the security, upon discharge of the usufructuary’s obligations (NCC, Art. 612);
5. To respect leases of rural lands by the usufructuary for the balance of the agricultural year (NCC, Art. 572).

EXTINCTION/TERMINATION
Usufruct is extinguished by: (PLDT-ERM)
1. Acquisitive Prescription

NOTE: The use by a third person and not the non-use by the usufructuary. Mere non-use of the usufructuary does not terminate the
usufruct
XPN: unless it is also a renunciation.
2. Total Loss of the thing

NOTE: If the loss is only partial, the usufruct continues with the remaining part.
3. Death of the usufructuary

GR: Death of the usufructuary generally ends the usufruct since a usufruct is constituted essentially as a lifetime benefit for the
usufructuary or in consideration of his person.
XPNs:
a. In the case of multiple usufructs, it ends on the death of the last survivor (NCC, Art. 611);
b. In case there is a period fixed based on the number of years that would elapse before a person would reach a certain age, 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); or
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. (516)

c. In case the contrary intention clearly appears.

4. Termination of right of the person constituting the usufruct

5. Expiration of the period or fulfilment of the resolutory condition

NOTE: If the usufructuary is a juridical person, the term should not exceed 50 years.
6. Renunciation by the usufructuary.
NOTE: It partakes the nature of a condonation or donation. It can be made expressly or impliedly as long as done clearly. If done
expressly, it must conform with forms of donation. Renunciation of usufructuary’s rights is NOT an assignment of right. It is really
abandonment by the usufructuary of his right and does not require the consent of the naked owner but it is subject to the rights of
creditors. There can be a partial waiver except if it is a universal usufruct.
7. Merger of the usufruct and ownership in the same person who becomes the absolute owner thereof (NCC, Art. 1275).

Other Causes of termination of usufruct

a. Annulment of the act or title constituting the usufruct;
b. Rescission;
c. Expropriation;
d. Mutual withdrawal;
e. Legal causes for terminating legal usufruct;
f. Abandonment or dissolution of juridical entity (e.g. corporation) granted with usufruct before the lapse of the period.

Usufruct cannot be constituted in favor of a town, corporation or association for more than fifty years
Any usufruct constituted in favor of a corporation or association cannot be constituted for more than fifty years (NCC, Art. 605). 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 (NHA v. CA, G.R. No. 148830, April 13, 2005).
Usufruct on a building and/or land concerned
Rules:
1. If the usufruct is both on the building and the land but the building is destroyed in any manner whatsoever before the expiration of
the period of usufruct:
a. The usufruct on the building ends, but the usufruct on the land continues (usufructuary is still entitled to the use of the land and
remaining materials of the building)
b. If the naked owner wants to rebuild but the usufructuary refuses, the latter prevails but the use of the land is still his for the
remainder of the period (Paras, 2008).

2. The usufruct is on the building alone (but the building is destroyed before the termination of the period):
a. The usufruct on the building ends, but the usufructuary can still make use of whatever materials of the building remain;
b. The usufructuary is entitled to the use of the land but the naked owner enjoys preferential right to its use (Paras, 2008).

NOTE: While the usufruct on a building does not expressly include the land on which it is constructed, the land should be deemed
included, because there can be no building without land (De Leon, 2006).
Payment of insurance on a building held in usufruct (NCC, Art. 608)
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)

1. If the naked owner and usufructuary share in the premiums and the property is destroyed:
a. If the owner constructs a new building, the usufruct continues on the new building.
i. If the cost of the new building is less than the insurance indemnity, the usufructuary should get legal interests on the difference.
ii. If the cost is more than the insurance indemnity, the usufructuary enjoys the new building completely with no obligation to give
interest on the additional cost of the naked owner.
b. If the naked owner does not construct a new building or rebuild, the naked owner gets the insurance indemnity but he should pay
the interest thereon to the usufructuary (Paras, 2008).

2. If the naked owner alone pays the insurance indemnity and the usufructuary refused to share:
a. The naked owner gets the whole indemnity (with no obligation to give the interest thereon to the usufructuary).
b. If the usufruct was on the building and the land, the usufruct continues on the land and the material.
c. If the usufruct was on the building alone, the naked owner may rebuild, with or without the approval of the usufructuary, but he
must pay interest on the value of the land and the old
materials that may have been used (NCC, Art. 607).
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. (517)

3. If the naked owner alone paid for the insurance but there is failure or omission on the part of the usufructuary to share:
The effect is the same as if there was a sharing, but the usufructuary must reimburse the owner of the usufructuary’s share in the
insurance premium.
4. If the usufructuary alone pays the insurance premium:
a. The insurance indemnity goes to the usufructuary alone, with no obligation to share it with, nor to give legal interest thereon to,
the naked owner.
b. The usufruct continues on the land for the remaining period (unless usufruct has been constituted on the building alone).

Rule in case of expropriation of the property (NCC, Art. 609)

In case the property held in usufruct is expropriated for public use:
1. If the naked owner alone was given the indemnity, he has the option to:
a. Replace it with another thing of the same value and of similar condition; or
b. Pay legal interest to usufructuary on the amount of indemnity for the whole period of the usufruct, not just the unexpired period.
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)

NOTE: If the owner chooses the latter alternative, he shall give security for the payment of interest (NCC, Art. 609).
2. If both the naked owner and the usufructuary were separately given indemnity, each owns the indemnity given to him, the usufruct
being totally extinguished.
3. If the usufructuary alone was given the indemnity, he must give it to the naked owner and compel the latter to return either the
interest or to replace the property. He may deduct the interest himself if the naked owner fails to object (Paras, 2008).

Effect of bad use of the property held in usufruct

GR: Usufruct is not extinguished by bad use of the thing in usufruct
XPN: If the abuse should cause considerable injury to the owner, the latter may demand delivery to and administration by him, but
he will be obliged to pay net proceeds to the usufructuary (NCC, Art. 610).
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. (520)

Rules in case of multiple usufructs

1. If constituted simultaneously, all the usufructuaries must be alive at the time of the constitution. The death of the last survivor
extinguishes the usufruct (NCC, Art. 611).
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. (521)

2. If constituted successively by virtue of a donation, all the donee-usufructuaries must be living at the time of the constitution-
donation of the usufruct (NCC, Art. 756).
3. If constituted successively by virtue of a last will, there should only be two successive usufructuaries, and both must have been
alive at the time of testator’s death.

Art. 589. The usufructuary shall take care of the things given in usufruct as a good father of a family. (497)
Art. 590. A usufructuary who alienates or leases his right of usufruct shall answer for any damage which the things in usufruct may
suffer through the fault or negligence of the person who substitutes him. (498)
Art. 591. If the usufruct be constituted on a flock or herd of livestock, the usufructuary shall be obliged to replace with the young
thereof the animals that die each year from natural causes, or are lost due to the rapacity of beasts of prey.
If the animals on which the usufruct is constituted should all perish, without the fault of the usufructuary, on account of some
contagious disease or any other uncommon event, the usufructuary shall fulfill his obligation by delivering to the owner the remains
which may have been saved from the misfortune.
Should the herd or flock perish in part, also by accident and without the fault of the usufructuary, the usufruct shall continue on the
part saved.
Should the usufruct be on sterile animals, it shall be considered, with respect to its effects, as though constituted on fungible things.
(499a)
Art. 595. The owner may construct any works and make any improvements of which the immovable in usufruct is susceptible, or
make new plantings thereon if it be rural, provided that such acts do not cause a diminution in the value of the usufruct or prejudice
the right of the usufructuary. (503)
Art. 596. The payment of annual charges and taxes and of those considered as a lien on the fruits, shall be at the expense of the
usufructuary for all the time that the usufruct lasts. (504)
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. (506)
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 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)
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. (509)
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. (511)
Art. 602. The expenses, costs and liabilities in suits brought with regard to the usufruct shall be borne by the usufructuary. (512)

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. (513a)
Art. 604. If the thing given in usufruct should be lost only in part, the right shall continue on the remaining part. (514)