Usufruct

Define usufruct

Usufruct is a real right by virtue of which a person is given 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 (Art. 562, CC)

Requisites of usufruct

1. The right to enjoy the property of another (essential requisite)

2. The obligation of preserving the form and substance of such property. (accidental requisite)

The latter is accidental because the title constituting the usufruct or the law may otherwise provide, as in the case of abnormal usufruct.

Usufruct vs. Ownership

While ownership has for its attributes: (1) the right to enjoy, (2) the right to dispose, and the right to vindicate or recover property, usufruct is limited merely to the enjoyment of the property.

Usufruct vs Lease

1. As to nature of right - Usufruct is always a real right, whereas lease becomes a real right only when registered.

2. As to constitution - Usufruct is constituted by law, by the will of private persons express in acts inter vivos or in a last will and testament, and by prescription, whereas lease is as a rule constituted by contract.

3. As to the person constituting it - In usufruct, the person constituting it is the owner, whereas in lease, the person constituting need not be the owner.

4. As to extent - Usufruct includes the right to use and to enjoy the fruits of the thing, whereas lease is more limited.

5. As to repairs - The usufructuary is responsible for ordinary repairs, whereas the lessee is not.

6. As to taxes - The usufructuary is responsible for taxes on the fruits, whereas in lease the lessee is not

How may usufruct be constituted?

Usufruct is constituted 

1. by law, 

2. by the will of private persons expressed in acts inter vivos or in a last will and testament, 

3. by prescription. (Art. 563, CC)

Extent

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. (Art. 564, CC)

Rules governing a usufruct

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. (Art. 565, CC)

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Obligations of the Usufructuary

What are the obligations of the usufructuary?

The obligations of the usufructuary are the following:

At the commencement of the usufruct

1. To make an inventory of the property; and

2. To give the necessary security. (Art. 583, CC)

During the pendency of the usufruct

1. To take care of the property as a good father of a family (Art. 589, CC)

2.  To make ordinary repairs on the property (Art. 592, CC)

3. To notify the owner in case the need for extraordinary repairs on the property is urgent (Art. 593, CC)

4. To pay the annual charges and taxes and those considered as a lien on the fruits (Art. 596, CC)

5. To notify the owner of any act of a third person that may be prejudicial to the right of ownership. (Art. 601, CC)

6. To pay the expenses, costs and liabilities in suits with regard to the usufruct. (Art. 602, CC)

Upon the termination of the usufruct

His obligation upon the termination of the usufruct is to deliver the thing to the owner, without prejudice to the right of retention pertaining to him or his heirs for taxes and extraordinary expenses which should be reimbursed. (Art. 612, CC)

When is the usufructuary excused from the obligation of giving a bond or security?

There are 4 instances when the usufructuary is excused from such obligation. They are:

1. When no one will be injured by the lack of a bond or security (Art. 585, CC)

2. When the donor has reserved the usufruct of the property donated (Art. 584, CC)

3. In case of parents who are usufructuaries of their unemancipated children's property, except when the parents contract a second marriage (Art. 584, CC)

4. In the case of usufructs subject to caucion juratoria under Art. 587 of the Civil Code.

If the usufructuary incurs necessary, useful and ornamental expenses, what are his rights?

The usufructuary shall have the right to demand reimbursement from the owner of all necessary expenses which he might have incurred for the preservation of the property. This right, however, is not available to him with regard to useful and ornamental expenses, but he may remove the improvements provided that it is possible to do so without damage to the property. In addition, he may set off such improvements against any damage to the same. (Arts. 546, 579, 580, CC)

In usufructs, who are responsible for repairs and taxes?

In case of repairs, we must distinguish. As far as ordinary repairs, or those required by the wear and tear due to the natural use of the thing and are indispensable for its preservation are concerned, the usufructuary is responsible; however, as far as extraordinary repairs, or those which are neither required by the wear and tear due to the natural use of the thing and are indispensable for its preservation are concerned, the naked owner is responsible (Arts. 592, 593, CC)

In case of taxes, again, we must distinguish. As far as those imposed upon or which constitutes a lein on the fruits are concerned, the usufructuary is responsible; however, as far as those imposed directly on the thing or capital itself are concerned, the naked owner is responsible (Arts. 596, 597, CC)

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Extinguishment of Usufructuary

When is usufruct extinguished?

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. (Art 603, Civil Code)

What is the effect if the thing given in usufruct is partially lost?

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

Can usufruct be constituted in favor of towns, corporations or associations for more than 50 years?

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. (Art 605, Civil Code)

What is the effect if a third person is granted a usufruct for elapsed time before he attains a certain age and that person dies before the period expires? Exception.

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. (Art 606, Civil Code)

Usufruct on a building and/or land 

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. (Art 607, Civil Code)

Payment of insurance on tenement held in usufruct

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. (Art 608, Civil Code)

Rules in case of expropriation 

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. (Art 609, Civil Code)

Effect of bad use of property held in usufruct 

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. (Art 610, Civil Code)

When shall a multiple usufruct be extinguished?

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. (Art 611, Civil Code)

Rights and obligations upon termination of usufruct

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. (Art 612, Civil Code)

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Donation

Define donation

Donation is an act of liberality whereby a person disposes gratuitously of a thing or right in favor of another, who accepts it. (Art. 725, CC)

When a person gives to another a thing or right on account of the latter's merits or of the services rendered by him to the donor, provided they do not constitute a demandable debt, or when the gift imposes upon the donee a burden which is less than the value of the thing given, there is also a donation. (Art. 726, CC)

Requisites

1) Decrease or reduction of the patrimony of the donor;

2) Increase of the patrimony of the donee; and

3) Animus dodandi or the intent to make a donation

Different kinds of donation

A. As to their effectivity

1. Donations inter vivos - those which take effect upon independently of the donor's death.

a. Simple donations, or acts of pure liberality a person disposes gratuitously of a thing or right in favor of another, who accepts it. (Art. 725, CC)

b. Remunerative donations, or those which a person gives to another on account of the services rendered by the latter to the former, provided that they do not constitute a demandable debt. (Art. 726, CC)

c. Conditional donations, or those where the donor imposes upon the donee a burden or charge which is less than the value of the thing given. (Art. 726, CC)

d. Onerous donations, or those which a person gives to another in consideration of demandable debts (Art. 733, CC)

2. Donations mortis causa - those which are effective upon the donor's death and must therefore be governed by the rules on testamentary succession.

B. As to their perfection or extinguishment

1. Pure donations - those which are immediately demandable

2. Donations with a condition - those whose effectivity are subordinated to the fulfillment of non-fulfillment of a future and uncertain fact or event

3. Donations with a term - those whose effectivity or extinguishment is subject to the expiration of a term or period.

Distinction between donation inter vivos and donation mortis causa

1. DIV takes effect independently of the donor's death, whereas DMC takes effect upon the death of the donor;

2. In DIV title or ownership is conveyed to the transferee before the death of the transferor, whereas in DMC, such title or ownership is conveyed only upon the death of the transferor;

3. DIV is valid if the transferor should survive the transferee, whereas DMC is void;

4. DIV is, as a general rule, irrevocable during the transferor's lifetime, whereas DMC is always revocable; and

5. DIV must, as a general rule, comply with the formalities prescribed by Arts. 748 and 749 of the Civil Code, whereas DMC must always comply with the formalities required for the the execution of wills.

Why is there a need to distinguish a donation inter vivos from a donation mortis causa

There is a need of distinguishing a donation inter vivos from a donation mortis causa in order to determine:

1. When the donation shall take effect.

2. Whether or not there is a transfer of title or ownership during the lifetime of the donor.

3. Whether or not the donation is revocable.

4. The effect if the donor survives the donee.

5. The formalities which must be complied with in their execution.


(Source: Desiderio P. Jurado, Civil Law Reviewer, 2006 ed.)

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Who May Donate?

Who may donate?

All persons who may contract and dispose of their property may make a donation. (Art. 735, CC)

Requisites

In order that a person can make a donation, three requisites are necessary. They are:

1. He must have the capacity to enter into contracts;

2. He mast be able to dispose of his property; and,

3. He must not be prohibited or disqualified by law from making the donation.   

Can guardians and trustees donate the property entrusted to them?

Guardians and trustees cannot donate the property entrusted to them. (Art. 736, CC)

When shall the donor's capacity be determined?

The donor's capacity shall be determined as of the time of the making of the donation. (Art. 737, CC)

Can a person donate a property which is not owned by him?

A donation would not be legally feasible if the donor has neither ownership nor real right that he can transmit to the donee. A donation, under Art. 712, CC in relation to Art. 725, CC is also a mode of acquiring and transmitting ownership and other real rights by an act of liberality whereby a person disposes gratuitously that ownership or real right in favor of another who accepts it. It would be an inefficacious process if the donor would have nothing to convey at the time it is made. (Hemedes vs. CA, et al., GR. No. 107132, October 8, 1999)

Source: Desiderio P. Jurado, Civil Law Reviewer, 2006 ed. 

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Who May Receive a Donation?

Who may become donees?

Al those who are not specially disqualified by law therefor may accept donations (Art. 738, CC)

Requisite

In order that a person can accept a donation, only one requisite is necessary. He must not be prohibited or disqualified by law from accepting the donation.

What donations are prohibited by law?

1) Those made between persons who were guilty of adultery or concubinage at the time of the donation;

2) Those made between persons found guilty of the same criminal offense, in consideration thereof;

3) Those made to a public officer or his wife, descendants and ascendants, by reason of his office;

4) Those made to priest who heard the confession of the donor during his last illness, or the minister of the gospel who extended spiritual aid to him during the same period;

5) Those made to relatives of such priest or minister of the gospel within the fourth degree, the church, order, chapter, community, organization, or institution to which such priest or minister may belong;

6) Those made by a ward to the guardian before the final accounts of the guardianship have been approved, unless the guardian is an ascendant, descendant, brother, sister;

7) Those made to the attesting witness of the execution of the donation, if there is any, or to the spouse, parents, or children, or any one claiming under such witness, spouse, parents, or children;

8) Those made to the physician, surgeon, nurse, health officer or druggist who took care of the donor during his last illness;

9) Those made by individuals, associations and corporations not permitted by law to make donations;

10) Those made by the spouses to each other during the marriage, or to the persons of whom the other spouse is a presumptive heir.

Incapacity to succeed by will

Incapacity to succeed by will shall be applicable to donations inter vivos. (Art. 740, CC)

May minors and others who cannot enter into a contract become donees? Who shall accept the donation?

Minors and others who cannot enter into a contract may become donees but acceptance shall be done through their parents or legal representatives. (Art. 741, CC)

May conceived and unborn children become donees? Who shall accept the donation?

Yes. Donations made to conceived and unborn children may be accepted by those persons who would legally represent them if they were already born. (Art. 742, CC)

Donations made to incapacitated persons void

Donations made to incapacitated persons shall be void, though simulated under the guise of another contract or through a person who is interposed. (Art. 743, CC)

Rule on double donation

Donations of the same thing to two or more different donees shall be governed by the provisions concerning the sale of the same thing to two or more different persons. (Art. 744, CC)

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Revocation and Reduction of Donations

What are the different special modes by which donations inter vivos may be revoked?

There are 4 specials modes:

1. Supervening birth, survival, or adoption of a child (Art. 760, CC)

2. Non-fulfillment of the condition or charge imposed (Art. 760, CC)

3. Acts of ingratitude by the donee (Art. 765, CC)

4. Inofficious donations (Art. 771, CC)

What are the different special modes by which donations inter vivos may be reduced?

There are 3 special modes:

1. That the donor did not reserve sufficient means for his support as well as for the support of all relatives who, at the time of the donation, are by law entitled to be supported by such donor (Art. 750, CC)

2.  Supervening birth, survival, or adoption of a child (Art. 760, CC)

3. Inofficious donations (Art. 771, CC)

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