G.R. No. 48882; March 17, 1943
FELICIDAD LOPEZ, petitioner-appellee, vs. MARCIANA CONSTANTINO, oppositor-appellant.

FACTS

In January 1936, appellant Marciana Constantino sold a parcel of land with its buildings in Manila to her daughter, appellee Felidad Lopez, for P4,000. In a prior civil case, the Court of First Instance of Manila rendered a final judgment finding the purchase price was far below market value and declaring the sale subject to the condition that the vendor (Constantino) would receive a life pension consisting of one-half of the rents from specified portions of the property. This condition was annotated on the certificate of title. On May 3, 1941, the buildings were totally destroyed by fire without the appellee’s fault. The appellee and appellant collected P5,000 and P1,000, respectively, from fire insurance on their respective interests. After the fire, the appellee filed a motion in the land registration case to cancel the annotation on the title, arguing her obligation to pay the life pension terminated upon the destruction of the buildings, which were the source of the rents. The trial court granted the motion and ordered the cancellation.

ISSUE

Whether the appellee’s obligation to pay the appellant a life pension from the rents was extinguished upon the destruction of the buildings, thereby justifying the cancellation of the annotation on the certificate of title.

RULING

No. The Supreme Court reversed the trial court’s order and denied the appellee’s petition for cancellation. The Court held that the appellant’s right to a life pension, as part of the consideration for the sale, was not extinguished by the destruction of the buildings. The sale’s subject was both the land and the buildings. The rents from the leased premises constituted earnings from the capital invested in both components. The land, which still exists, has rental value independently of any building, as evidenced by the appellee’s desire to lease the lot for a gasoline station. The appellant’s right to a pension depends on the existence of rents; the temporary absence of rents due to the building’s destruction does not extinguish that right, as the land can still be rented. Alternatively, even if the obligation were considered an incumbrance on the building alone, it constituted a usufruct over the fruits (rents) of the property. Under Article 517 of the Civil Code, if a usufruct is created on a building and it is destroyed, the usufructuary (or co-usufructuary, like the appellant) retains rights to the use of the land and materials, or is entitled to interest if the owner rebuilds. Therefore, the obligation subsists. The Court declined to rule on the appellant’s ancillary contention regarding the investment of the insurance proceeds, holding that matter was beyond the scope of the summary proceeding under Section 112 of Act No. 496 and must be raised in a separate appropriate action.