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Bachrach v. Seifert [G.R. No. L-2659. October 12, 1950.]

Facts:

The deceased E. M. Bachrach, who left no forced heir except his widow Mary

McDonald Bachrach, in his last will and testament made various legacies in cash

and willed the remainder of his estate. The estate of E. M. Bachrach, as owner of

108,000 shares of stock of the Atok-Big Wedge Mining Co., Inc., received from

the latter 54,000 shares representing 50 per cent stock dividend on the said 108,000

shares. On June 10, 1948, Mary McDonald Bachrach, as usufructuary or life tenant

of the estate, petitioned the lower court to authorize the Peoples Bank and Trust

Company, as administrator of the estate of E. M. Bachrach, to transfer to her thesaid 54,000 shares of stock dividend by indorsing and delivering to her the

corresponding certificate of stock, claiming that said dividend, although paid out in

the form of stock, is fruit or income and therefore belonged to her as usufructuary

or life tenant. Sophie Siefert and Elisa Elianoff, legal heirs of the deceased,

opposed said petition on the ground that the stock dividend in question was not

income but formed part of the capital and therefore belonged not to the

usufructuary but to the remainderman. While appellants admit that a cash dividend

is an income, they contend that a stock dividend is not, but merely represents an

addition to the invested capital.

Issue:

Whether or not a dividend is an income and whether it should go to the

usufructuary.

Held:

The usufructuary shall be entitled to receive all the natural, industrial, and civil

fruits of the property in usufruct. The 108,000 shares of stock are part of the

property in usufruct. The 54,000 shares of stock dividend are civil fruits of theoriginal investment. They represent profits, and the delivery of the certificate of

stock covering said dividend is equivalent to the payment of said profits. Said

shares may be sold independently of the original shares, just as the offspring of a

domestic animal may be sold independently of its mother. If the dividend be in fact

a profit, although declared in stock, it should be held to be income. A dividend,

whether in the form of cash or stock, is income and, consequently, should go to the

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USUFRUCT (ART. 562-612)

MRAMNHA v. CA

G.R. No. 148830

DOCTRINE: A usufruct gives a right to enjoy the property of another withthe obligation of preserving its form and substance, unless the titleconstituting it or the law otherwise provides.

FACTS:By virtue of Proclamation No. 481 issued by then Pres. Marcos, a portion ofland in Quezon City owned by NHA was reserved for the site of NationalGovernment Center (NGC).Subsequently, President Marcos issued

Proclamation No. 1670, which removed a seven-hectare portion from thecoverage of the NGC. Proclamation No. 1670 gave Manila Seedling BankFoundation, Inc. (MSBF) usufructuary rights over this segregated portion.

MSBF occupied the area granted by Proclamation No. 1670. However,over the years, MSBFs occupancy exceeded the seven-hectare areasubject to its usufructuary rights; it occupied approximately 16 hectares by1987. By then the land occupied by MSBF was bounded by Epifanio de losSantos Avenue (EDSA) to the west, Agham Road to the east, Quezon

Avenue to the south and a creek to the north.

On 18 August 1987, MSBF leased a portion of the area it occupied toBulacan Garden Corporation (BGC) and other stallholders. BGC leasedthe portion facing EDSA, which occupies 4,590 sq. m. of the 16-hectarearea.

On 11 November 1987, President Corazon Aquino issued MemorandumOrder No. 127 (MO 127). This revoked the reserved status of the 50hectares, more or less, remaining out of the 120 hectares of the NHA

property reserved as site of the NGC. MO 127 also authorized the NHA tocommercialize the area and to sell it to the public.

Acting on the power granted under MO 127, the NHA gave BGC 10 days tovacate its occupied area. Any structure left behind after the expiration ofthe 10-day period will be demolished by NHA.

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ISSUE:Whether or not the premises leased by BGC from MSBF is within the 7-hectare area that Proclamation No. 1670 granted to MSBF by way ofusufruct?

HELD:The Court held that MSBF abused their usufruct rights. Clearly, in thepresent case, Proclamation No. 1670 is the title constituting the usufruct.Proclamation No. 1670 categorically states that the 7-hectare area shall bedetermined by future survey under the administration of the Foundationsubject to private rights if there be any. MSBF, then, has the latitude todetermine the location of its 7-hectare usufruct portion within the 16-hectare area.

Although MSBF has the discretion to determine its 7-hectare usufruct,MSBF abused its right when it exceeded the 7-hectare portion granted to itby Proclamation No. 1670. The Court said that a usufruct is not simplyabout rights and privileges. A usufructuary has the duty to protect theowners interests. One such duty is found in Article 601 of the Civil Codewhich states:

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

A usufruct gives a right to enjoy the property of another with the obligationof preserving its form and substance, unless the title constituting it or thelaw otherwise provides.

The Court further said that at this point, the determination of the seven-hectare portion cannot be made to rely on a choice between the NHAs and

MSBFs survey. There is a need for a new survey, one conducted jointly bythe NHA and MSBF, to remove all doubts on the exact location of theseven-hectare area and thus avoid future controversies. This new surveyshould consider existing structures of MSBF. It should as much aspossible include all of the facilities of MSBF within the seven-hectareportion without sacrificing contiguity.

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It must be noted however that based on Art. 605, MSBF has only 22 yearsto exercise its usufruct since the Civil Code provides that the right can beexercised only within 50 years.