BALURAN v NAVARRO
Usufruct| September 30, 1977 | Munoz Palma, J.
Nature of Case: Petition for Certiorari
SUMMARY:
The Sps. Paraiso and Sps. Baluran entered into a “barter agreement” where
they agreed to exchange the material possession of the former’s residential
lot with the latter’s unirrigated rice land with the condition that should any
grandchildren of the Sps. Paraiso decided to live in the municipality, the Sps.
Baluran shall return the lot with damages incurred. Antonio Obendencio (a
grandchild to which the lot was donated by the daughter of the Paraisos)
filed a complaint to recover the property and prayed that he be declared the
owner. The CFI ruled in favor of Obendencio and ordered the Balurans to
vacate. The Balurans opposed the allegations stating that the barter
agreement conferred ownership to them. They alleged that the action made
by Obendencio is one of re-barter or re-exchange and has prescribed. The
SC ruled that the barter agreement did not confer ownership and was only
for usufruct and extinguishes by stipulation of the parties. DOCTRINE: The
manner of terminating or extinguishing the right of usufruct is primarily
determined by the stipulations of the parties.
FACTS:
• On February 2, 1964, the Spouses Domingo and Fidela
Paraiso executed an agreement entitled “BARTER” whereby
they agreed to “barter and exchange” with Spouses Avelino
and Benilda Baluran their 480 sqm residential lot with the
latter’s 223 sqm unirrigated riceland without improvements,
both properties situated in Sarrat, Ilocos Norte. The conditions
of the contract are as follows:
o Both parties shall enjoy material possession of their
respective properties. The Paraisos shall reap the fruits of
the riceland and the Balurans shall have a right to build a
house in the residential lot.
o In the event that any of the children of Natividad
Obendencio (Paraiso’s daughter) choose to reside in the
municipality and build his house in the residential lot, the
Balurans shall be obliged to return the lot to such children
with damages to be incurred.
o Neither party shall encumber, alienate or dispose of in any
manner their respective properties as bartered without the
consent of the other.
o Inasmuch as the bartered properties are not yet in
accordance with Act 496 or under the Spanish Mortgage
Law, they agree and covenant that the deed be registered
in the Office of the Register of Deeds of Ilocos Norte
pursuant to Act 3344.
• May 1975, Antonio Obendencio filed with CFI Ilocos Norte a
complaint to recover the residential lot from Antonio Baluran
claiming that he is the rightful owner having acquired it from his
mother Natividad. He said he needed the property for the
purposes of constructing a house as he had taken his
residence in Sarrat. He prayed that he be declared the owner
of the residential lot and the Balurans be ordered to vacate the
same forfeiting in his (Obendencio) favor the improvements
Baluran built in bad faith.
• Answering the complaint, Baluran alleged that the barter
agreement transferred to him the ownership of the lot in
exchange for the rice land and that the plaintiff’s cause of
action, if any, has prescribed.
• It was admitted in the pre-trial that the residential lot was
donated by Natividdad to his son, Antonio Obendencio in
October 1974 and since the execution of the barter, Baluran
was in possession of the residential lot, paid the taxes of the
property and constructed a house thereon worth P250.
• November 1975, Judge Navarro rendered a decision in favor of
Obendencio declaring him the owner of the property and
ordered Baluran to vacate. Baluran now seeks a review of the
decision stating that the barter agreement transferred
ownership of the lot to him and that the “right to re-barter or re-
exchange” of Obendencio has prescribed.
ISSUE/S & RATIO:
WoN the barter agreement transferred ownership to Baluran – NO
It is a settled rule that to determine the nature of a contract courts are not
bound by the name or title given to it by the contracting parties. In this case,
the use of the, term "barter" in describing the agreement is not controlling.
The stipulations in the document are clear enough to indicate that there was
no intention on the part of the signatories thereto to convey the ownership of
their respective properties; all that was intended was to transfer the material
possession thereof. In fact, under condition No. 3 of the agreement, the
parties retained the right to alienate their respective properties which right is
an element of ownership.
With the material possession being the only one transferred, all that the
parties acquired was the right of usufruct which in essence is the right to
enjoy the property of another. Under the document in question, spouses
Paraiso would harvest the crop of the unirrigated riceland while the other
party, Baluran, could build a house on the residential lot, subject, however,
to the condition, that when any of the children of Natividad shall choose to
reside in the municipality and build his house on the residential lot, Baluran
shall be obliged to return the lot to said children "with damages to be
incurred." Thus, the mutual agreement — each party enjoying "material
possession" of the other's property — was subject to a resolutory condition
the happening of which would terminate the right of possession and use.
respondent Obedencio could not demand for the recovery of possession of
the residential lot in question, not until he acquired that right from his mother
and which he did acquire when his mother donated to him the residential lot.
WoN the unirrigated riceland should be returned to Baluran – YES
Since the "barter agreement" did not transfer the ownership of the respective
properties mentioned therein, it follows that petitioner Baluran remains the
owner of the unirrigated riceland and is now entitled to its Possession. With
the happening of the resolutory condition, the right of usufruct of the parties
is extinguished and each is entitled to a return of his property. It is true that
Natividad who is now in possession of the property and who has been made
a party to this case cannot be ordered in this proceeding to surrender the
riceland. But inasmuch as reciprocal rights and obligations have arisen
between the parties to the so-called "barter agreement", the Court held that
the parties and for their successors-in-interest are duty bound to effect a
simultaneous transfer of the respective properties if substance at justice is to
be effected.

The right of "material possession" granted in the agreement ends if and WoN the improvements are forfeited in favor of Obendencio – NO
when any of the
children of Natividad would reside in the municipality and build his house on Baluran will not forfeit the improvement he built on the lot but he may
the remove the same without causing damage to the property pursuant to Art
property. Inasmuch as the condition opposed is not dependent solely on the 579 of the Civil Code.
will of one of the
parties to the contract — the spouses Paraiso — but is Part dependent on
the will of third
persons — Natividad Obedencio and any of her children — the same is
valid.

WoN the remedy sought for by Obendencio is re-barter and has prescribed –
NO

The agreement of the parties is not one of barter, exchange or even sale
with right to repurchase, but is one of or akin the other is the use or material
possession or enjoyment of each other's real property. Usufruct may be
constituted by the parties for any period of time and under such conditions
as they may deem convenient and beneficial subject to the provisions of the
Civil Code. The manner of terminating or extinguishing the right of usufruct is
primarily determined by the stipulations of the parties which in this case is
the happening of the event agreed upon. Necessarily, the plaintiff or