A usufruct is a real right that authorizes the temporary use and enjoyment of another's property with the basic obligation of preserving its form and substance and returning it at a designated time. The one having the usufruct of property is called the usufructuary, while the one who actually owned the property under usufruct is called the naked owner.
Elements of Usufruct
A usufruct has the following elements:
- essential element - the right to temporarily use and enjoy the property of another. This element must be present in any usufruct.
- natural elemnent - the obligation to preserve the form and substance of the property of another. This element may not be present in case of irregular or imperfect usufruct.
- accidental element - the subject/s established or stipulated, such as the duration of the usufruct.
Rights of Usufructuary
The usufructuary has the basic right to temporarily use and enjoy the property of another. Along with this right, he also has:
- Right to all the fruits of the property, whether they are natural, industrial, or civil.
- including those fruits that are growing or pending at the commencement of the usufruct after they had been gathered by the usufructuary. The usufructuary has no obligation to refund the owner any expenses incurred for those fruits prior to the usufruct.
- excluding those fruits that are growing or pending at the termination of the usufruct that shall belong to the naked owner. The naked owner has the obligation to reimburse the usufructuary ordinary expenses incurred for the cultivation of those fruits at the time of the termination.
- Right to make use of any increase which the property in usufruct may acquire through accession, easement/servitude, and all the benefits inherent to that property.
- Right to alienate or lease his right of usufruct to a third person, even by gratuitous title and without the consent of the naked owner.
- the contracts that alienate right shall terminate upon the expiration the usufruct, except in the lease of rural lands, which shall be deemed to continue up to the end of the agricultural year in order to allow the lessee who may be cultivating the land to continue with the production and gathering.
- the usufructuary, not the naked owner, is entitled to determine the tenants to whom he would rent or lease the tenantable property.
- Right to bring a court action to recover property under usufruct.
- the naked owner is obligated to give the usufructuary the authority to bring such action and to furnish proofs he may have.
- the acquisition of the property by the usufructuary as a consequence of the action shall limit the usufruct to the fruits while the ownership (dominion) remains with the owner.
- Right to make useful and luxurious improvements to the property under usurfruct, provided that.
- the usufructuary does not alter the form or substance of the property.
- the usufructuary have no right to reimburse but he may remove the improvements if such removal would not cause substantial damage to the property in usufruct.
- Right to set-off improvements that augmented the value of the property against any damages for which he may be liable.
- if the damage exceeds the value of the improvements, the usufructuary is still liable for the difference.
- if the value of the improvements exceeds the damage, the usufructuary is not entitled to a partial refund of the difference, which instead accrues in favor of the naked owner, unless there is a stipulation to the contrary.
- Right to recover from the naked owner the increase in value which the immovable property in usufruct may have acquired by reason of extraordinary repairs made by the usufructuary that are needed for the preservation of that property.
The usufructuary has no right to possessed any hidden treasure found in the property under usufruct since it is the naked owner who is entitled to such. However, if he is the finder, the usufructuary may be entitled to one-half of the treasure under the 'hidden treasure rule'.
Obligations of Usufructuary
The usufructuary has the following basic obligations:
- to preserve the form and substance of the property of another.
- to make an inventory of the properties under usufruct.
- to give a security as a guarantee of his obligations as a usufructuary.
Obligation to Preserve
The usufuctuary has the basic obligation to preserve the form and substance of the property of another.
- he is obligated to indemnify for damages if the property in usufruct suffered injury or damage due to his fault or negligence.
- he is not obligated to indemnify the loss of value if the property in usufruct deteriorated or impaired due to unavoidable 'ordinary wear and tear'.
The usufructuary should also take care of the property with the diligence of a good father of a family. Hence, he is required:
- to make ordinary repairs to the property.
- to make extra-ordinary repairs that are needed for the preservation of the property if the naked owner does not make such repairs.
- to notify the owner of urgency of extraordinary repairs and of any acts which may be detrimental to ownership.
The neglect or bad use of the property will not extinguish the usufruct, but may dispossessed the usufructuary of that property upon the demand of the naked owner if it causes considerable injury to him.
The alienation or lease of the usufruct would not relieve the usufructuary from his obligation to preserve the property even if it is no longer under his actual possession. Hence, the usufructuary would still be responsible to any damages that the property may suffer through the fault or negligence of the third person to whom he alienated his right.
Basically, the property in usufruct should be returned in the condition in which it may be at the time of the termination of the usufruct, whereby:
- the usufructuary has the right of retention of the property in case he is still entitled to reimbursement by the naked owner.
- the security shall be cancelled upon the delivery of the property.
Obligation to Make Inventory
The usufuctuary may also have the obligation to make an inventory, which shall:
- be made after notice to the owner or his legitimate representative.
- be made at the expense of the usufructuary
- contain an appraisal of the movables and a description of the condition of the immovable.
An inventory is not required:
- if the absence of an inventory will not injure anyone, provided that the naked owner consents.
- if there is a waiver of such requirement by the naked owner or by the law or by a stipulation in the will or contract.
The failure of a usufructuary to make the required inventory would have the following effects:
- he cannot possess the property until an inventory is made.
- he cannot administer the property, hence, he cannot lease it to a third person.
- he cannot collect and invest any matured credits which form part of the usufruct, unless the naked owner or the court consents.
- he can alienate his right to the usufruct.
An inventory may not be necessary upon the commencement of the usufruct, but would become necessary in order to begin the physical possession and enjoyment of the property. There could be a usufruct without physical possession, so the naked owner will have all the rights granted to him by the usufruct even if the usufructuary fails to make an inventory.
Obligation to Give Security
The usufuctuary may also have the obligation to give a security sufficient to guarantee his compliance with his obligations as a usufructuary. A security is not required:
- if the absence of a security will not injure anyone, provided that the naked owner consents.
- if there is a waiver by the naked owner or by the stipulation in the will or contract.
- if the usufructuary is the donor of the property in usufruct.
- if there is parental usufruct (usufruct by parents). [exceptions in page 40 of Law on Property]
- if there is caucion juratoria, whereby the court grants the usufruct of a certain property to a usufructuary upon his promise under oath to fulfill properly his duties and under conditions prescribed.