BALURAN VS NAVARRO AND OBEDENCIO

G.R. NO. L-44428 ; SEPTEMBER 30, 1987

Facts:
Baluran and Paraiso (ancestor of Obedencio) entered into a contract which
they called barter, but in fact stipulated that they would only transfer the material
possession of their respective properties to each other. Thus, Baluran will be allowed
to construct a residential house on the land of Paraiso while Paraiso is entitled to
reap the fruits of the riceland of Baluran. The contract prohibited them from
alienating the properties of the other and contained a stipulation that should the
heirs of Paraiso desire to re-possess the residential lot, Baluran is obliged to return
the lot. Indeed, years after, Obedencio (grandchild of Paraiso) acquired the
ownership of the residential lot from his mother and demanded that Baluran, who
was in possession, vacate. Baluran now counters that the barter already transferred
ownership.
Issue:
Whether or not the contract in the case at bar is one of barter or one of a
usufruct.

Held:
The contract herein is a usufruct. First, the contract is what the law defines it
to be and not what the parties call it. It is very clear that what the parties
exchanged was not ownership, but merely material possession or the right to enjoy
the thing.
Now, because it is usufruct, the law allows the parties to stipulate the
conditions including the manner of its extinguishment. In this case, it was subject to
a resolutory condition which is in case the heir of Paraiso (a third party) desires to
repossess the property. Upon the happening of the condition, the contract is
extinguished.Therefore, Baluran must return the land to Obedencio.
However, Article 579 allows the usufructuary to remove improvements he
made. Baluran may therefore remove the house he constructed.

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