SUBJECT: The Concept of ‘The Usufruct’ and the Right to Enjoy the Property of Another

I. Introduction

This memorandum provides an exhaustive analysis of the usufruct under the Philippine Civil Code, focusing on the rights of the usufructuary to the fruits and improvements of the property. A usufruct is a real right defined under Title VI, Usufruct (Articles 562 to 613) of the Civil Code. It grants a person, the usufructuary, the right to enjoy the property of another with the obligation of preserving its form and substance. This right is inherently temporary, lasting for the life of the usufructuary (in a usufruct constituted in favor of a natural person) or for a period not exceeding one hundred years (if in favor of a juridical person). The core of this enjoyment revolves around the entitlement to the fruits of the property, while the duty to preserve form and substance governs the treatment of improvements. This memo will delineate the legal framework, classifications, rights, obligations, and extinguishment of usufruct, with particular emphasis on the rules concerning fruits and improvements.

II. Definition and Legal Nature of Usufruct

Article 562 of the Civil Code defines usufruct as “the 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.” It is a real right (jus in re aliena) over a specific property owned by another (the naked owner). It is a dismemberment of ownership, separating the right of enjoyment (jus utendi and jus fruendi) from the right of disposition (jus abutendi). The usufructuary acquires a direct and immediate interest in the property, but full ownership remains with the naked owner, subject to the usufruct.

III. Classification of Usufruct

Usufruct may be classified as follows:

Legal usufruct: Created by operation of law, such as the usufruct of parents over the property of their unemancipated children (Article 225, Family Code).

Conventional usufruct: Established by the will of the parties through contracts, donations, or testaments.

Total usufruct: Comprises the entire property.

Partial usufruct: Limited to a portion of the property or specific rights.

Simple usufruct: Over a specific, determinate thing.

Multiple usufruct: Successive usufructs constituted over the same property in favor of different persons.

IV. Constitution and Duration of Usufruct

A usufruct is constituted by law, contract, donation, or last will. In cases of testamentary usufruct, the rules on legitime must be observed. The duration is governed by Article 603: if constituted in favor of a natural person, it lasts for his or her lifetime; if in favor of a juridical person, it shall not exceed thirty years, unless a different period is expressly stipulated (but in no case exceeding one hundred years under Article 605). A usufruct constituted for the time that may elapse before a third person reaches a certain age shall subsist for the number of years specified, even if the third person dies earlier.

V. Rights of the Usufructuary: General Enjoyment

The usufructuary is entitled to all the fruits of the property, whether natural, industrial, or civil (Article 566). He may personally enjoy the property, lease it to another, or make use of its fruits. The usufructuary has the right to any accessories and accessions the property may acquire during the usufruct (Article 571). He may make improvements or useful works at his own expense, but without right to indemnity, though he may remove them provided no damage is caused to the property (Article 579). The usufructuary may also institute any action for the protection of his possession and enjoyment.

VI. Specific Rules on Fruits (Articles 566-570)

The right to fruits is the principal attribute of the usufruct. The timing of the constitution of the usufruct determines entitlement.

Natural and Industrial Fruits: Considered as accruing daily and belong to the usufructuary in proportion to the time the usufruct lasts. The usufructuary is entitled to those existing at the commencement of the usufruct and those produced during its existence. He must bear the costs of cultivation, production, and harvesting.

Civil Fruits: Considered as accruing from day to day and belong to the usufructuary in the same proportion. These include rentals, pensions, and annuities. If a civil fruit (e.g., rent) is collected in advance by the naked owner for a period extending beyond the start of the usufruct, the usufructuary has no claim to it. Conversely, if the usufructuary collects rent in advance and the usufruct is later extinguished, he must account for the unearned portion to the naked owner.

VII. Specific Rules on Improvements, Useful Works, and Luxury Expenses

The usufructuary‘s rights and obligations regarding alterations to the property are strictly governed by the duty to preserve form and substance.

Improvements: The usufructuary may make improvements at his own expense, but he has no right to be indemnified for them upon termination of the usufruct. However, he may remove the improvements provided he does not damage the property and restores it to its original condition (Article 579).

Useful Works: The rules for useful works are the same as for improvements. They enhance the utility or income-producing capacity of the property but are not essential for its preservation.

Luxury Expenses: These are expenses incurred for mere pleasure or ornamentation. The usufructuary is not entitled to reimbursement. However, upon termination, the naked owner must either pay the amount spent or the increase in value which the property may have acquired by reason thereof, at the naked owner‘s option (Article 580). If the naked owner refuses to reimburse, the usufructuary may remove the ornaments, provided no injury is caused to the property.

Necessary Expenses: Expenses for the preservation of the property are borne by the usufructuary as part of his obligation of ordinary maintenance (Article 583). Extraordinary repairs are the responsibility of the naked owner; if the naked owner fails to make them, the usufructuary may do so and claim reimbursement at the termination of the usufruct (Article 592).

Type of Expenditure	Definition / Example	Who Bears Cost?	Right to Reimbursement / Removal
Necessary Expenses (Ordinary Repairs & Maintenance)	Expenses for the preservation of the property (e.g., minor roof repairs, repainting).	Usufructuary (Article 583).	No reimbursement. It is a duty of the usufructuary.
Extraordinary Repairs	Repairs necessitated by extraordinary events (e.g., rebuilding a collapsed wall, major structural repair).	Naked Owner (Article 592).	If usufructuary advances the cost, he is entitled to reimbursement upon termination of the usufruct.
Useful Works / Improvements	Works that increase the utility or income of the property without altering its form or substance (e.g., installing an irrigation system, new fencing).	Usufructuary (Article 579).	No right to indemnity. May remove them if no damage is caused to the property.
Luxury Expenses (Ornamental or Luxurious)	Expenses for mere pleasure or embellishment (e.g., decorative fountains, murals, non-essential landscaping).	Usufructuary (Article 580).	No automatic right. At termination, naked owner chooses: pay cost or increased value. If refuses, usufructuary may remove ornaments without causing injury.

VIII. Obligations of the Usufructuary

The usufructuary has significant obligations to the naked owner:

Obligation to Preserve Form and Substance: The fundamental duty (Article 562).

Inventory and Security: Before entering into enjoyment, the usufructuary must make an inventory of the property and give security for its form and substance, unless exempted by the donor or testator, or by law (Articles 583, 587).

Care of the Property: He must exercise the diligence of a good father of a family (Article 589).

Payment of Charges and Taxes: The usufructuary is responsible for annual charges (e.g., land tax) and interest on debts secured by the property during the usufruct (Articles 596-597).

Notification of Encumbrances: He must notify the naked owner of any act of a third party that may be prejudicial to the naked owner‘s rights (Article 591).

Return of the Property: Upon termination, he must return the property to the naked owner, barring any right of retention for lawful claims.

IX. Extinguishment of Usufruct

A usufruct is extinguished by (Article 603):

Death of the usufructuary (if a natural person) or expiration of the term (if a juridical person or a stipulated period).

Final consolidation of the usufruct and ownership in the same person.

Renunciation or express waiver by the usufructuary.

Total loss of the property subject to the usufruct.

Termination of the right of the person constituting the usufruct.

Prescription of the right through non-user for the period required by law.

Resolution of the right of the grantor of the usufruct.

Completion of the resolutory condition or expiration of the term in a usufruct constituted for a conditional period or specific purpose.

X. Conclusion

The usufruct is a comprehensive real right that grants extensive enjoyment of another’s property, centered on the right to all its fruits. The usufructuary‘s rights regarding improvements and expenses are carefully balanced against his paramount duty to preserve the form and substance of the property. While he may introduce improvements or useful works, he generally does so without expectation of indemnity, retaining only a limited right of removal. Luxury expenses are treated with even greater restriction, placing the option for reimbursement solely with the naked owner. This legal framework ensures that while the usufructuary derives full benefit from the property during the usufruct, the ultimate rights of the naked owner to the capital or substance of the property remain protected for the eventual return of the property upon termination.