Page |

1
[G.R. No. L-123. December 12, 1945.]
JOSEFA FABIA, petitioner, vs. JOSE GUTIERREZ DAVID,
Judge of First Instance of Manila, NGO BOO SOO and
JUAN GREY, respondents.
SYLLABUS
1. ACTIONS; UNLAWFUL DETAINER; WHAT
DETERMINES WHETHER MUNICIPAL COURT OR COURT
OF FIRST INSTANCE HAS ORIGINAL JURISDICTION. In
determining whether a possessory action is within the original
jurisdiction of the municipal court or of the Court of First
Instance, the averments of the complaint and character of the
relief sought are primarily to be consulted. The defendant in such
an action cannot defeat the jurisdiction of the justice of the peace
or municipal court by setting up title in himself. The factor which
defeats the jurisdiction of said court is the necessity to adjudicate
the question of title.
2. LANDLORD AND TENANT; RIGHT OF
USUFRUCTUARY OF RENTS TO OCCUPY PROPERTY.
A usufructuary of the rents, as a corollary to the right to all the
rents, to choose the tenant, and to fix the amount of the rent,
necessarily has the right to choose himself as the tenant, provided
that the obligations he has assumed towards the owner of the
property are fulfilled.
3. MANDAMUS; REFUSAL OF JUDGE OF FIRST
INSTANCE TO HEAR AND DECIDE UNLAWFUL
DETAINER CASE APPEALED FROM MUNICIPAL COURT.
Under section 3 of Rule 67, when any tribunal unlawfully
neglects the performance of an act which the law specifically
enjoins as a duty resulting from an office, and there is no other
plain, speedy, and adequate remedy in the ordinary course of law,
it may be compelled by mandamus to do the act required to be
done to protect the rights of the petitioner. It appearing that the
case before the respondent judge is one of unlawful detainer
appealed from the municipal court, the law specifically requires
him to hear and decide that case on the merits, and his refusal to
do so would constitute an unlawful neglect in the performance of
that duty. Taking into consideration that the law requires that an
unlawful detainer case be promptly decided (secs. 5 and 8, Rule
72), it is evident that an appeal from the order of dismissal would
not be a speedy and adequate remedy and that mandamus lies in
this case.
4. APPEAL; JUDGMENT OF MUNICIPAL COURT; WHEN
DOES PERIOD TO APPEAL BEGIN TO RUN IN CASE OF
SUBSEQUENT MODIFICATION. When a judgment of the
municipal court is subsequently modified, the time to appeal
therefrom, does not run until after the party concerned is notified
of said judgment as modified.
__________
The petitioner Josefa Fabie is the usufructuary of the income of
certain houses located at 372-376 Santo Cristo, Binondo, and
950-956 Ongpin, Santa Cruz, Manila, under the ninth clause of
the will of the deceased Rosario Fabie y Grey, which textually
reads as follows:
"NOVENO. Lego a mi ahijada menor de edad, Maria Josefa
de la Paz Fabie, en usufructo vitalicio las rentas de las fincas
situadas en la Calle Santo Cristo Numeros 372 al 376 del Distrito
de Binondo, de esta Ciduad de manila, descrita en el Certificado
Original de Titulo No. 3824; y en la Calle Ongpin, Numeros 950
al 956 del Distrito de Santa Cruz, Manila, descrita en el
Certificado Original de Titulo No. 5030, expedidos por el
Registrador de Titulos de Manila, y prohibo enajene, hipoteque,
permute o transfiera de algun modo mientras que ella sea menor
de edad. Nombro a Serafin Fabie Macario, mi primo por linea
patena tutor de la persona y bienes de mi ahijada menor, Maria
Josefa de la Paz Fabie."
The owner of the Santo Cristo property above mentioned is the
respondent Juan Grey, while those of the Ongpin property are
other persons not concerned herein. Previous to September 1944
litigation arose between Josefa Fabie as plaintiff and Juan Grey as
defendant and the owners of the Ongpin property as intervenors,
involving the administration of the houses mentioned in clause 9
of the will above quoted (civil case No. 1659 of the Court of First
Instance of Manila). That suit was decided by the court on
September 2, 1944, upon a stipulation in writing submitted by the
parties to and approved by the court. The pertinent portions of
said stipulation read as follows:
xxx xxx xxx
"(4) Heretofore, the rents of said properties have been collected at
times by the respective owners of the properties, at other times by
the usufructuary, and lastly by the defendant Juan Grey as agent
under a written agreement dated March 31, 1942, between the
owners of both properties and the usufructuary.
"(5) When the rents were collected by the owners, the net
amounts thereof were duly paid to the usufructuary after the
expenses for real estate taxes, repairs and insurance premiums,
including the documentary stamps, on the properties and the
expenses of collecting the rents had been deducted, and a certain
amount set aside as a reserve for contingent liabilities. When the
rents were collected by the usufructuary, she herself paid the
expenses aforesaid. When the rents were collected by the
defendant Juan Grey under the agreement of March 31, 1942, the
net amounts thereof were duly paid to the usufructuary, after
deducting and setting aside the items aforesaid, monthly, until the
month of October 1943, when the usufructuary refused to
continue with the agreement of March 31, 1942.
xxx xxx xxx
"II. The parties hereto jointly petition the Court to render
judgment adopting the foregoing as finding of facts and disposing
that:
"(8) Beginning with the month of September 1944, the
usufructuary shall collect all the rents of both the Sto. Cristo and
the Ongpin properties.
"(9) The usufructuary shall, at her won cost and expense, pay all
the real estate taxes, special assessments, and insurance
premiums, including the documentary stamps, and make all the
necessary repairs on each of the properties, promptly when due
or, in the case of repairs, when necessary, giving immediate,
written notice to the owner or owners of the property concerned
after making such payment or repairs. In case of default on the
part of the usufructuary, the respective owners of the properties
shall have the right to make the necessary payment, including
penalties and interest, if any, on the taxes and special
assessments, and the repairs, and in that event the owner or
owners shall be entitled to collect all subsequent rents of the
property concerned until the amount paid by him or them and the
expenses of collection are fully covered thereby, after which the
usufructuary shall again collect the rents in accordance herewith.
"(10) The foregoing shall be in effect during the term of the
usufruct and shall be binding on the successors and assigns of
each of the parties.
"(11) Nothing herein shall be understood as affecting any right
which the respective, owners of the properties have or may have
as such and which is not specifically the subject of this
stipulation."
In June 1945 Josefa Fabie commenced an action of unlawful
detainer against the herein respondent Ngo Boo Soo (who says
that his correct name is Ngo Soo), alleging in her amended
complaint that the defendant is occupying the premises located at
372-376 Santo Cristo on a month-to-month rental payable in
advance not later than the 5th of each month; that she is the
administratrix and usufructuary of said premises; "that the
defendant offered to pay P300 monthly rent payable in advance
not later than the 5th of every month, beginning the month of
April 1945, for the said premises including the one door which
said defendant, without plaintiff's consent and contrary to their
agreement, had subleased to another Chinese, but plaintiff

Page |
2
refused, based on the fact that the herein plaintiff very badly
needs the said house to live in, as her house was burned by the
Japanese on the occasion of the entry of the American liberators
in the City and which was located then at No. 38 Flores,
Dominga, Pasay; that defendant was duly notified on March 24 of
April 14, 1945, to leave the said premises, but he refused"; and
she prayed for judgment of eviction and or unpaid rentals.
The defendant answered alleging that he was a since 1908 had
been a tenant of the premises in question, which he was using and
had always used principally as a store and secondarily for living
quarters; that he was renting it from its owner and administrator
Juan Grey; "that plaintiff is merely the usufructuary of the income
therefrom, and by agreement between her and said owner, which
is embodied in a final judgment of the Court of First Instance of
Manila, her only right as usufructuary of the income is to receive
the whole of such income; that she has no right or authority to
eject tenants, such right being in the owner and administrator of
the house, the aforesaid Juan Grey, who has heretofore petitioned
this Court for permission to intervene in this action; that plaintiff
herein has never had possession of said property; that defendant's
lease contract with the owner of the house is for 5-year period,
with renewal option at the end of each period, and that his present
lease is due to expire on December 31, 1945 . . .; that on June 1,
1945, defendant made a written offer to plaintiff to compromise
and settle the question of the amount of rent to be paid by
defendant . . . but said plaintiff rejected the same for no valid
reason whatever and instituted the present action; that the reason
plaintiff desires to eject defendant from the property is that she
wishes to lease the same to other persons for a higher rent,
ignoring the fact that as usufructuary of the income of the
property she has no right to lease the property; that the defendant
has subleased no part of the house to any person whomsoever."
Juan Grey intervened in the unlawful detainer suit, alleging in his
complaint in intervention that he is the sole and absolute owner of
the premises in question; that the plaintiff Josefa Fabie is the
usufructuary of the income of said premises; that the defendant
Ngo Soo is the tenant of said premises by virtue of a contract
between him and the intervenor which will expire on December
31, 1945, with the option to renew it for another period of five
years from and after said date; that under the agreement between
the intervenor and the plaintiff Josefa Fabie in civil case No. 1659
of the Court of First Instance of Manila, which was approved by
the court and incorporated in its decision of September 2, 1944,
the only right recognized in favor of Josefa Fabie as usufructuary
of the income of said premises is to receive the rents therefrom
when due; and that as usufructuary she has no right nor authority
to administer the said premises nor to lease them nor to evict
tenants, which right and authority are vested in the intervenor as
owner of the premises.
The municipal court (Judge Mariano Nable presiding found that
under paragraph 9 of the stipulation incorporated in the decision
of the Court of First Instance of Manila in civil case No. 1659, the
plaintiff usufructuary is the administratrix of the premises in
question, and that the plaintiff had proved her cause. Judgment
was accordingly rendered ordering the defendant Ngo Soo to
vacate the premises and to pay the rents at the rate of P137.50 a
month beginning April 1, 1945. The complaint in intervention as
dismissed.
Upon appeal to the Court of First Instance of Manila the latter
(thru Judge Arsenio P. Dizon) dismissed the case for the
following reason: "The main issue . . . is not a mere question of
possession but precisely who is entitled to administer the property
subject matter of this case and who should be the tenant, and the
conditions of the lease. These issues were beyond the jurisdiction
of the municipal court. This being the case, this Court, as
appellate court, is likewise without jurisdiction to take cognizance
of the present case." A motion for reconsideration filed by the
plaintiff was denied by Judge Jose Gutierrez David, who
sustained the opinion of Judge Dizon.
The present original action was instituted in this Court by Josefa
Fabie to annul the order of dismissal and to require the Court of
First Instance to try and decide the case on the merits. The
petitioner further prays that the appeal of the intervenor Juan
Grey be declared out of time on the ground that he received copy
of the decision on August 3 but did not file his notice of appeal
until August 25, 1945.
1. The first question to determine is whether the action instituted
by the petitioner Josefa Fabie in the municipal court is a purely
possessory action and as such within the jurisdiction of said court,
or an action founded on property right and therefore beyond the
jurisdiction of the municipal court. In other words, is it an action
of unlawful detainer within the purview of section 1 of Rule 72,
or an action involving the title to or the respective interests of the
parties in the property subject of the litigation?
Said section 1 of Rule 72 provides that "a landlord, vendor,
vendee, or other person against whom the possession of any land
or building is unlawfully withheld after the expiration or
termination of the right to hold possession, by virtue of any
contract, express or implied, or the legal representatives or
assigns of any such landlord, vendor, vendee, or other person,
may at any time within one year after such unlawful deprivation
or withholding of possession, bring an action in the proper
inferior court against the person or person unlawfully withholding
or depriving of possession, or any person or persons claiming
under them, for the restitution of such possession, together with
damages and costs."
It is admitted by the parties that the petitioner Josefa Fabie is the
usufructuary of the income of the property in question and that
the respondent Juan Grey is the owner thereof. It is likewise
admitted that by virtue of a final judgment entered in civil case
No. 1659 of the Court of First Instance of Manila between the
usufructuary and the owner, the former has the right to collect all
the rents of said property for herself with the obligation on her
part to pay all the real estate taxes, special assessments, and
insurance premiums, and make all the necessary repairs thereon,
and in case of default on her part the owner shall have the right to
do all those things, in which event he shall be entitled to collect
all subsequent rents of the property concerned until the amount
paid by him and the expenses of collection are fully satisfied,
after which the usufructuary shall again collect the rents. There is
therefore no dispute as to the title to or the respective interests of
the parties in the property in question. The naked title to the
property is admittedly in the respondent Juan Grey, but the right
to all the rents thereof, with the obligation to pay the taxes and
insurance premiums and make the necessary repairs, is, also
admittedly, vested in usufructuary, the petitioner Josefa Fabie,
during her lifetime. The only question between the plaintiff and
the intervenor is, Who has the right to manage or administer the
property to select the tenant and to fix the amount of the rent?
Whoever has that right has the right to the control and possession
of the property in question, regardless of the title thereto.
Therefore, the action is purely possessory and not one in any way
involving the title to the property. Indeed, the averments and the
prayer of the complaint filed in the municipal court so indicate,
and as a matter of fact the defendant Ngo Soo does not pretend to
be the owner of the property but on the contrary admits to be a
mere tenant thereof. We have repeatedly held that in determining
whether an action of this kind is within the original jurisdiction of
the municipal court or of the Court of First Instance, the
averments of the complaint and the character of the relief sought
are primarily to be consulted; that the defendant in such an action
cannot defeat the jurisdiction of the justice of the peace or
municipal court by setting up title in himself; and that the factor
which defeats the jurisdiction of said court is the necessity to
adjudicate the question of title. (Mediran vs. Villanueva, 37 Phil.,
752; Medel vs. Militante, 41 Phil., 526, 529;
Sevilla vs. Tolentino, 51 Phil., 333; Supia and
Batioco vs. Quintero and Ayala, 59 Phil., 312;
Lizo vs. Carandang, G. R. No. 47833, 2 Off. Gaz., 302;
Aguilar vs. Cabrera and Flameno, G. R. No. 49129.)
The Court of First Instance was evidently confused and led to
misconstrue the real issue by the complaint in intervention of
Juan Grey, who, allying himself with the defendant Ngo Soo,
claimed that he is the administrator of the property with the right
to select the tenant and dictate the conditions of the lease, thereby
implying that it was he and not the plaintiff Josefa Fabie who had
the right to bring the action and oust the tenant if necessary. For

Page |
3
the guidance of that court and to obviate such confusion in its
disposal of the case on the merits, we deem it necessary and
proper to construe the judgment entered by the Court of First
Instance of Manila in civil case No. 1659, entitled "Josefa Fabie
and Jose Carandang, plaintiffs, vs. Juan Grey, defendant, and
Nieves G. Vda. de Grey, et al., intervenors-defendants," which
judgment was pleaded by the herein respondents Juan Grey and
Ngo Soo in the municipal court. According to the decision, copy
of which was submitted to this Court as Appendix F of the
petition and as Annex 1 of the answer, there was an agreement
dated March 31, 1942, between the usufructuary Josefa Fabie and
the owner Juan Grey whereby the latter as agentcollected the
rents of the property in question and delivered the same to the
usufructuary after deducting the expenses for taxes, repairs,
insurance premiums, and the expenses of collection; that in the
month of October 1943 the usufructuary refused to continue with
the said agreement of March 31, 1942, and thereafter the said case
arose between the parties, which by stipulation approved by the
court was settled among them in the following manner: Beginning
with the month of September 1944 the usufructuary shall collect
all the rents of the property in question; shall, at her own cost and
expense, pay all the real estate taxes, special assessments, and
insurance premiums, including the documentary stamps, and
make all the necessary repairs on the property; and in case of
default on her part the owner shall have the right to de any or all
of those things, in which event he shall be entitled to collect all
subsequent rents until the amounts paid by him are fully satisfied,
after which the usufructuary shall again collect the rents. It was
further stipulated by the parties and decreed by the court that "the
foregoing shall be in effect during the term of the usufruct and
shall be binding on the successors and assigns of each of the
parties."
Construing said judgment in the light of the ninth clause of the
will of the deceased Rosario Fabie y Grey, which was quoted in
the decision and by which Josefa Fabie was made the
usufructuary during her lifetime of the income of the property in
question, we find that the said usufructuary has the right to
administer the property in question. All the acts of administration
to collect the rents for herself, and to conserve the property by
making all necessary repairs and paying all the taxes, special
assessments, and insurance premiums thereon were by said
judgment vested in the usufructuary. The pretension of the
respondent Juan Grey that he is the administrator of the property
with the right to choose the tenants and to dictate the conditions
of the lease is contrary to both the letter and the spirit of the said
clause of the will, the stipulation of the parties, and the judgment
of the court. He cannot manage or administer the property after
all the acts of management or administration have been vested by
the court, with his consent, in the usufructuary. He admitted that
before said judgment he had been collecting the rents as agent of
the usufructuary under an agreement with the latter. What legal
justification or valid excuse could he have to claim the right to
choose the tenant and fix the amount of the rent when under the
will, the stipulation of the parties, and the final judgment of the
court it is not he but the usufructuary who is entitled to said rents?
As long as the property is properly conserved and insured he can
have no cause for complaint, and his right in that regard is fully
protected by the terms of the stipulation and the judgment of the
court above mentioned. To permit him to arrogate to himself the
privilege to choose the tenant, to dictate the conditions of the
lease, and to sue when the lessee fails to comply therewith, would
be to place the usufructuary entirely at his mercy. It would place
her in the absurd situation of having a certain indisputable right
without the power to protect, enforce, and fully enjoy it.
One more details needs clarification: In her complaint
for desahucio Josefa Fabie alleges that she needs the premises in
question to live in, as her former residence was burned. Has she
the right under the will and the judgment in question to occupy
said premises herself? We think that, as a corollary said premises
herself? We think that, as a corollary to her right to all the rent, to
choose the tenant, and to fix the amount of the rent, she
necessarily has the right to choose herself as the tenant thereof, if
she wishes to; and, as long as she fulfills her obligation to pay the
taxes and insure and conserve the property properly, the owner
has no litigate cause to complain. As Judge Nable of the
municipal court said in his decision, "the pretension that the
plaintiff, being a mere usufructuary of the rents, cannot occupy
the property, is illogical if it be taken into account that could not
have been the intention of the testatrix."
We find that upon the pleadings, the undisputed facts, and the law
the action instituted in the municipal court by the petitioner Josefa
Fabie against the respondent Ngo Soo is one of unlawful detainer,
within the original jurisdiction of said court, and that therefore
Judges Dizon and Gutierrez David of the Court First Instance
erred in holding otherwise and in quashing the case upon appeal.
2. The next question to determine is the propriety of the remedy
availed of by the petitioner in this Court. Judging from the
allegations and the prayer of the petition, it is in the nature of
certiorari and mandamus, to annul the order of dismissal and to
require the court of First Instance to try and decide the appeal on
the merits. Under section 3 of Rule 67, when any tribunal
unlawfully neglects the performance of an act which the law
specifically enjoins as a duty resulting from an office, and there is
no other plain, speedy, and adequate remedy in the ordinary
course of law, it may be compelled by mandamus to do the act
required to be done to protect the rights of the petitioner. If, as we
find, the case before the respondent judge is one of unlawful
detainer, the law specifically requires him to hear and decide that
case on the merits, and his refusal to do so would constitute an
unlawful neglect in the performance of that duty within section 3
of Rule 67. Taking into consideration that the law requires that an
unlawful detainer case be promptly decided (sections 5 and 8,
Rule 72), it is evident that an appeal from the order of dismissal
would not be a speedy and adequate remedy; and under the
authority of Cecilio vs. Belmonte (48 Phil., 243, 255), and
Aguilar vs. Cabrera and Flameno (G. R. No. 49129), we hold that
mandamus lies in this case.
3. The contention of the petitioner that the appeal of the
intervenor Juan Grey was filed out of time is not well founded.
Although said respondent received copy of the decision of the
municipal court on August 3, 1945, according to the petitioner
(on August 6, 1945, according to the said respondent), it appears
from the sworn answer of the respondent Ngo Soo in this case
that on August 8 he filed a motion for reconsideration, which was
granted in part on August 18. Thus if the judgment was modified
on August 18, the time for the intervenor Juan Grey to appeal
therefrom did not run until he was notified of appeal on August
23, it would appear that his appeal was filed on time. However,
we observe in this connection that said appeal of the intervenor
Juan Grey, who chose not to answer the petition herein, would be
academic in view of the conclusions we have reached above that
the rights between him as owner and Josefa Fabie as usufructuary
of the property in question have been definitely settled by final
judgment in civil case No. 1659 of the Court of First Instance of
Manila in the sense that the usufructuary has the right to
administer and possess the property in question, subject to certain
specified obligations on her part.
The orders of dismissal of the respondent Court of First Instance,
dated September 22 and October 31, 1945, in the desahucio case
(No. 71149) are set aside and that court is directed to try and
decide the said case on the merits: with the costs hereof against
the respondent Ngo Soo.
||| (Fabia v. David, G.R. No. L-123, December 12, 1945)






Page |
4
[G.R. No. L-28034. February 27, 1971.]
THE BOARD OF ASSESSMENT APPEALS OF
ZAMBOANGA DEL SUR and PLACIDO L. LUMBAY, in
his capacity as Provincial Assessor of Zamboanga del
Sur, petitioners, vs. SAMAR MINING COMPANY, INC. and
THE COURT OF TAX APPEALS, respondents.
D E C I S I O N
ZALDIVAR, J p:
Appeal from the decision of the Court of Tax Appeals, in its CTA
Case No. 1705, declaring respondent Samar Mining Company,
Inc. (hereinafter referred to as Samar, for short) exempt from
paying the real property tax assessed against it by the Provincial
Assessor of Zamboanga del Sur.
There is no dispute as to the facts of this case. Samar is a
domestic corporation engaged in the mining industry. As the
mining claims and the mill of Samar are located inland and at a
great distance from the loading point or pier site, it decided to
construct a gravel road as a convenient means of hauling its ores
from the mine site at Buug to the pier area at Pamintayan,
Zamboanga del Sur; that as an initial step in the construction of a
42-kilometer road which would traverse public lands Samar, in
1958 and 1959, filed with the Bureau of Lands and the Bureau of
Forestry miscellaneous lease applications for a road right of way
on lands under the jurisdiction of said bureaus where the
proposed road would traverse; that having been given temporary
permit to occupy and use the lands applied for by it, said
respondent constructed a road thereon, known as the Samico
road; that although the gravel road was finished in 1959, and had
since then been used by the respondent in hauling its iron from its
mine site to the pier area, and that its lease applications were
approved on October 7, 1965, the execution of the corresponding
lease contracts were held in abeyance even up to the time this
case was brought to the Court of Tax Appeals. 1
On June 5, 1964, Samar received a letter from the Provincial
Assessor of Zamboanga del Sur assessing the 13.8 kilometer
road 2 constructed by it for real estate tax purposes in the total
sum of P1,117,900.00. On July 14, 1964, Samar appealed to the
Board of Assessment Appeals of Zamboanga del Sur, (hereinafter
referred to as Board, for short), contesting the validity of the
assessment upon the ground that the road having been constructed
entirely on a public land cannot be considered an improvement
subject to tax within the meaning of section 2 of Commonwealth
Act 470, and invoking further the decision of this Court in the
case of Bislig Bay Lumber Company, Inc. vs. The Provincial
Government of Surigao, G.R. No. L-9023, promulgated on
November 13, 1956. On February 10, 1965, after the parties had
submitted a stipulation of facts, Samar received a resolution of the
Board, dated December 22, 1964, affirming the validity of the
assessment made by the Provincial Assessor of Zamboanga del
Sur under tax declaration No. 3340, but holding in abeyance its
enforceability until the lease contracts were duly executed.
On February 16, 1965, Samar moved to reconsider the resolution
of the Board, praying for the cancellation of tax declaration No.
3340, and on August 3, 1965, Samar received Resolution No. 13
not only denying its motion for reconsideration but modifying the
Board's previous resolution of December 22, 1964 declaring the
assessment immediately enforceable, and that the taxes to be paid
by Samar should accrue or commence with the year 1959. When
its second motion for reconsideration was again denied by the
Board, Samar elevated the case to the Court of Tax Appeals.
The jurisdiction of the Court of Tax Appeals to take cognizance
of the case was assailed by herein petitioners (the Board and the
Provincial Assessor of Zamboanga del Sur) due to the failure of
Samar to first pay the realty tax imposed upon it before
interposing the appeal, and prayed that the resolution of the Board
appealed from be affirmed. On June 28, 1967, the Court of Tax
Appeals ruled that it had jurisdiction to entertain the appeal and
then reversed the resolution of the Board. The Court of Tax
Appeals ruled that since the road is constructed on public lands
such that it is an integral part of the land and not an independent
improvement thereon, and that upon the termination of the lease
the road as an improvement will automatically be owned by the
national government, Samar should be exempt from paying the
real estate tax assessed against it. Dissatisfied with the decision of
the Court of Tax Appeals, petitioners Board and Placido L.
Lumbay, as Provincial Assessor of Zamboanga del Sur,
interposed the present petition for review before this Court.
The issue to be resolved in the present appeal is whether or not
respondent Samar should pay realty tax on the assessed value of
the road it constructed on alienable or disposable public lands that
are leased to it by the government.
Petitioners maintain that the road is an improvement and,
therefore, taxable under Section 2 of the Assessment Law
(Commonwealth Act No. 470) which provides as follows:
"Sec. 2. Incidence of real property tax. Except in chartered
cities, there shall be levied, assessed, and collected, an annual, ad
valorem tax on real property including land, buildings,
machinery, and other improvements not hereinafter specifically
exempted."
There is no question that the road constructed by respondent
Samar on the public lands leased to it by the government is an
improvement. But as to whether the same is taxable under the
aforequoted provision of the Assessment Law, this question has
already been answered in the negative by this Court. In the case
of Bislig Bay Lumber Co., Inc. vs. Provincial Government of
Surigao, 100 Phil. 303, where a similar issue was raised as to
whether the timber concessionaire should be required to pay
realty tax for the road it constructed at its own expense within the
territory of the lumber concession granted to it, this Court, after
citing Section 2 of Commonwealth Act 470, held:
"Note that said section authorizes the levy of real tax not only on
lands, buildings, or machinery that may be erected thereon, but
also on any other improvements, and considering the road
constructed by appellee on the timber concession granted to it as
an improvement, appellant assessed the tax now in dispute upon
the authority of the above provision of the law.
"It is the theory of appellant that, inasmuch as the road was
constructed by appellee for its own use and benefit it is subject to
real tax even if it was constructed on a public land. On the other
hand, it is the theory of appellee that said road exempt from real
tax because (1) the road belongs to the national government by
right of accession, (2) the road belongs to the be removed or
separated from the land on which it is constructed and so it is part
and parcel of the public land, and (3), according to the evidence,
the road was built not only for the use and benefit of appellee but
also of the public in general.
"We are inclined to uphold the theory of appellee. In the first
place, it cannot be disputed that the ownership of the road that
was constructed by appellee belongs to the government by right
of accession not only because it is inherently incorporated or
attached to the timber land leased to appellee but also because
upon the expiration of the concession, said road would ultimately
pass to the national government (Articles 440 and 445, new Civil
Code; Tobatabo vs. Molero, 22 Phil., 418). In the second place,
while the road was constructed by appellee primarily for its use
and benefit, the privilege is not exclusive, for, under the lease
contract entered into by the appellee and the government, its use
can also be availed of by the employees of the government and by
the public in general. . . . In other words, the government has
practically reserved the rights to use the road to promote its varied
activities. Since, as above shown, the road in question cannot be
considered as an improvement which belongs to appellee,
although in part is for its benefit, it is clear that the same cannot
be the subject of assessment within the meaning of section 2
of Commonwealth Act No. 470.
"We are not oblivious of the fact that the present assessment was
made by appellant on the strength of an opinion rendered by the
Secretary of Justice, but we find that the same is predicated on
authorities which are not in point, for they refer to improvements
that belong to the lessees although constructed on lands belonging

Page |
5
to the government. It is well settled that a real tax, being a burden
upon the capital, should be paid by the owner of the land and not
by a usufructuary (Mercado vs. Rizal, 67 Phil., 608; Article 597,
new Civil Code). Appellee is but a partial usufructuary of the
road in question."
Again, in the case of Municipality of Cotabato, et al. vs. Santos,
et al., 105 Phil. 963, this Court ruled that the lessee who
introduced improvements consisting of dikes, gates and guard-
houses on swamp lands leased to him by the Bureau of Fisheries,
in converting the swamps into fishponds, is exempt from payment
of realty taxes on those improvements. This Court held:
"We however believe that the assessment on the improvements
introduced by defendant on the fishpond has included more than
what is authorized by law. The improvements as assessed consist
of dikes, gates and guard-houses and bodegas totals P6,850.00
which appellants are not now questioning, but they dispute the
assessment on the dikes and gates in this wise: 'After the swamps
were leased to appellants, the latter cleared the swamps and built
dikes, by pushing the soil to form these dikes in the same way
that paddies are built on lands intended for the cultivation of
palay, the only difference being that dikes used in fishponds are
relatively much larger than the dikes used in ricelands.' We
believe this contention to be correct, because those dikes can
really be considered as integral parts of the fishponds and not as
independent improvements. They cannot be taxed under the
assessment law. The assessment, therefore, with regard to
improvements should be modified excluding the dikes and gates."

It is contended by petitioners that the ruling in the Bislig case is
not applicable in the present case because if the concessionaire in
the Bislig case was exempt from paying the realty tax it was
because the road in that case was constructed on a timberland or
on an indisposable public land, while in the instant case what is
being taxed is 13.8 kilometer portion of the road
traversing alienable public lands. This contention has no merit.
The pronouncement in the Bislig case contains no hint
whatsoever that the road was not subject to tax because it was
constructed on inalienable public lands. What is emphasized in
the lease is that the improvement is exempt from taxation because
it is an integral part of the public land on which it is constructed
and the improvement is the property of the government by right
of accession. Under Section 3(a) of the Assessment Law (Com.
Act 470), all properties owned by the government, without any
distinction, are exempt from taxation.
It is also contended by petitioners that the Court of Tax Appeals
can not take cognizance of the appeal of Samar from the
resolution of the Board assessing realty tax on the road in
question, because Samar had not first paid under protest the realty
tax assessed against it as required under the provisions of Section
54 of the Assessment Law (Com. Act 470), which partly reads as
follows:
"SEC. 54. Restriction upon power of Court to impeach tax. No
court shall entertain any suit assailing the validity of a tax
assessment under 'this Act until the taxpayer shall have paid
under protest the taxes assessed against him, no shall any court
declare any tax invalid by reason . . ."
The extent and scope of the jurisdiction of the Court of Tax
Appeals regarding matters related to assessment or real property
taxes are provided for in Section 7, paragraph (3) and Section 11
of Republic Act No. 1125, which partly read as follows:
"SEC. 7. Jurisdiction. The Court of Tax Appeals shall exercise
exclusive appellate jurisdiction to review by appeal, as herein
provided
xxx xxx xxx
(3) Decisions of provincial or city Board of Assessment Appeals
in cases involving the assessment and taxation of real property or
other matters arising under the Assessment Law, including rules
and regulations relative thereto."
"SEC. 11. Who may appeal; effect of appeal. Any person,
association or corporation adversely affected by a decision or
ruling of . . . any provincial or city Board of Assessment Appeals
may file an appeal in the Court of Tax Appeals within thirty days
after the receipt of such decision or ruling."
In this connection the Court of Tax Appeals, in the decision
appealed from, said:
"Prior to the enactment of Republic Act No. 1125, all civil actions
involving the legality of any tax, impost or assessment were under
the jurisdiction of the Court of First Instance (Sec. 44, Republic
Act No. 296). It is clear, therefore, that before the creation of the
Court of Tax Appeals all cases involving the legality of
assessments for real property taxes, as well as the refund thereof,
were properly brought and taken cognizance by the said court.
However, with the passage by Congress and the approval by the
President of Republic Act No. 1125, the jurisdiction over cases
involving the validity of realty tax assessment were transferred
from the Court of First Instance to the Court of Tax Appeals (See
Sec. 22, Rep. Act No. 1125). The only exception to the grant of
exclusive appellate jurisdiction to the Tax Court relates tocases
involving the refund of real property taxes which remained with
the Court of First Instance (See of Cabanatuan, et al. vs.
Gatmaitan, et al., G.R. No. L-19129, February 28, 1963).
"A critical and analytical study of Section 7 of Republic Act No.
1125, in relation to subsections (1), (2) and (3) thereof, will
readily show that it was the intention of Congress to lodge in the
Court of Tax Appeals the exclusive appellate jurisdiction over
cases involving the legality of real property tax assessment. as
distinguished from cases involving the refund of real property
taxes. To require the taxpayer, as contended by respondents, to
pay first the disputed real property tax before he can file an
appeal assailing the legality and validity of the realty tax
assessment will render nugatory the appellate jurisdictional power
of the Court of Tax Appeals as envisioned in Section 7 (3), in
relation to Section 11, of Republic Act No. 1125. If we follow the
contention of respondents to its logical conclusion, we cannot
conceive of a case involving the legality and validity of real
property tax assessment, decided by the Board of Assessment
Appeals, which can be appealed to the Court of Tax Appeals, The
position taken by respondents is, therefore, in conflict with the
Explanatory Note contained in House Bill No. 175, submitted
during the First Session, Third Congress of the Republic of the
Philippines, and the last paragraph of Section 21 of Republic Act
No. 1125 which provide as follows:
SEC. 21. General provisions.
xxx xxx xxx
Any law or part of law, or any executive order, rule or regulation
or part thereof, inconsistent with the provisions of this Act is
hereby repealed.
"Accordingly, we hold that this Court can entertain and give due
course to petitioner's appeal assailing the legality and validity of
the real property tax assessment here in question without paying
first the disputed real property tax as required by Section 54 of
the Assessment Law."
We agree with the foregoing view of the Court of Tax Appeals. It
should be noted that what is involved in the present case is simply
an assessment of realty tax, as fixed by the Provincial Assessor of
Zamboanga del Sur, which was disputed by Samar before the
Board of Assessment Appeals of said province. There was no
demand yet for payment of the realty tax. In fact the letter of
Provincial Assessor, of June 5, 1964, notifying Samar of the
assessment, states as follows:
"Should you find the same to be not in accordance with law or its
valuation to be not satisfactory, you may appeal this assessment
under Section 17 ofCommonwealth Act 470 to the Board of
Assessment Appeals, through the Municipal Treasurer of Buug,
Zamboanga del Sur, within 60 days from the date of your receipt
hereof." 3

Page |
6
Accordingly Samar appealed to the Board questioning the validity
of the assessment. The Board rendered a resolution over-ruling
the contention of Samar that the assessment was illegal. Then
Samar availed of its right to appeal from the decision of the Board
to the Court of Tax Appeals as provided in Section 11
of Republic Act 1125. Section 11 does not require that before an
appeal from the decision of the Board of Assessment Appeals can
be brought to the Court of Tax Appeals it must first be shown that
the party disputing the assessment had paid under protest the
realty tax assessed. In the absence of such a requirement under
the law, all that is necessary for a party aggrieved by the decision
of the Board of Assessment Appeals is to file his notice of appeal
to the Court of Tax Appeals within 30 days after receipt of the
decision of the Board of Assessment Appeals, as provided in
Section 11 of Republic Act 1125.
This Court, in the case of City of Cabanatuan vs.
Gatmaitan, 4 said:
". . . if the real estate tax has already been paid it is futile for a
taxpayer to take the matter to the City Board of Assessment
Appeals for the jurisdiction of that body is merely confined to the
determination of the reasonableness of the assessment or taxation
of the property and is not extended to the authority of requiring
the refund of the tax unlike cases involving assessment of internal
revenue taxes. In the circumstances, we hold that this case comes
under the jurisdiction of the proper court of first instance it
involving the refund of a real estate tax which does not come
under the appellate jurisdiction of the Court of Tax Appeals."
From the aforequoted portion of the decision of this Court, We
gather that the only question that may be brought before the City
or Provincial Board of Assessment Appeals is the question which
relates to the reasonableness or legality of the realty tax that is
assessed against a taxpayer. Such being the case, it would be
unjust to require the realty owner to first pay the tax, that he
precisely questions, before he can lodge an appeal to the Court of
Tax Appeals. We believe that it is not the intendment of the law
that in questioning before the Court of Tax Appeals the validity or
reasonableness of the assessment approved by the Board of
Assessment Appeals the taxpayer should first pay the questioned
tax. It is Our view that in so far as appeals from the decision or
resolution of the Board of Assessment Appeals, Section 54
of Commonwealth Act 470 does not apply, and said section can
be considered as impliedly repealed by Sections 7, 11 and 21
of Republic Act 1125.
IN VIEW OF THE FOREGOING, the decision of the Court of
Tax Appeals, appealed from, is affirmed, without pronouncement
as to costs. It is so ordered.
||| (Board of Assessment Appeals of Zamboanga del Sur v. Samar
Mining Co., Inc., G.R. No. L-28034, February 27, 1971)



Page |
7
[G.R. No. 148830. April 13, 2005.]
NATIONAL HOUSING AUTHORITY, petitioner, vs.
COURT OF APPEALS, BULACAN GARDEN
CORPORATION and MANILA SEEDLING BANK
FOUNDATION, INC., respondents.
The Case
This is a petition for review 1 seeking to set aside the
Decision 2 dated 30 March 2001 of the Court of Appeals
("appellate court") in CA-G.R. CV No. 48382, as well as its
Resolution dated 25 June 2001 denying the motion for
reconsideration. The appellate court reversed the Decision 3 of
Branch 87 of the Regional Trial Court of Quezon City ("trial
court") dated 8 March 1994 in Civil Case No. Q-53464. The trial
court dismissed the complaint for injunction filed by Bulacan
Garden Corporation ("BGC") against the National Housing
Authority ("NHA"). BGC wanted to enjoin the NHA from
demolishing BGC's facilities on a lot leased from Manila
Seedling Bank Foundation, Inc. ("MSBF"). MSBF allegedly has
usufructuary rights over the lot leased to BGC.
Antecedent Facts
On 24 October 1968, Proclamation No. 481 issued by then
President Ferdinand Marcos set aside a 120-hectare portion of
land in Quezon City owned by the NHA 4 as reserved property
for the site of the National Government Center ("NGC"). On 19
September 1977, President Marcos issued Proclamation No.
1670, which removed a seven-hectare portion from the coverage
of the NGC. Proclamation No. 1670 gave MSBF usufructuary
rights over this segregated portion, as follows:
Pursuant to the powers vested in me by the Constitution and the
laws of the Philippines, I, FERDINAND E. MARCOS, President
of the Republic of the Philippines, do hereby exclude from the
operation of Proclamation No. 481, dated October 24, 1968,
which established the National Government Center Site, certain
parcels of land embraced therein and reserving the same for the
Manila Seedling Bank Foundation, Inc., for use in its operation
and projects, subject to private rights if any there be, and to future
survey, under the administration of the Foundation. ADEHTS
This parcel of land, which shall embrace 7 hectares, shall be
determined by the future survey based on the technical
descriptions found in Proclamation No. 481, and most particularly
on the original survey of the area, dated July 1910 to June 1911,
and on the subdivision survey dated April 19-25, 1968. (Emphasis
added)
MSBF occupied the area granted by Proclamation No. 1670. Over
the years, MSBF's occupancy exceeded the seven-hectare area
subject to its usufructuary rights. By 1987, MSBF occupied
approximately 16 hectares. By then the land occupied by MSBF
was bounded by Epifanio de los Santos Avenue ("EDSA") to the
west, Agham Road to the east, Quezon Avenue to the south and a
creek to the north.
On 18 August 1987, MSBF leased a portion of the area it
occupied to BGC and other stallholders. BGC leased the portion
facing EDSA, which occupies 4,590 square meters of the 16-
hectare area.
On 11 November 1987, President Corazon Aquino issued
Memorandum Order No. 127 ("MO 127") which revoked the
reserved status of "the 50 hectares, more or less, remaining out of
the 120 hectares of the NHA property reserved as site of the
National Government Center." MO 127 also authorized the NHA
to commercialize the area and to sell it to the public. cDCaTS
On 15 August 1988, acting on the power granted under MO 127,
the NHA gave BGC ten days to vacate its occupied area. Any
structure left behind after the expiration of the ten-day period will
be demolished by NHA.
BGC then filed a complaint for injunction on 21 April 1988
before the trial court. On 26 May 1988, BGC amended its
complaint to include MSBF as its co-plaintiff.
The Trial Court's Ruling
The trial court agreed with BGC and MSBF that Proclamation
No. 1670 gave MSBF the right to conduct the survey, which
would establish the seven-hectare area covered by MSBF's
usufructuary rights. However, the trial court held that MSBF
failed to act seasonably on this right to conduct the survey. The
trial court ruled that the previous surveys conducted by MSBF
covered 16 hectares, and were thus inappropriate to determine the
seven-hectare area. The trial court concluded that to allow MSBF
to determine the seven-hectare area now would be grossly unfair
to the grantor of the usufruct.
On 8 March 1994, the trial court dismissed BGC's complaint for
injunction. Thus:
Premises considered, the complaint praying to enjoin the National
Housing Authority from carrying out the demolition of the
plaintiff's structure, improvements and facilities in the premises in
question is hereby DISMISSED, but the suggestion for the Court
to rule that Memorandum Order 127 has repealed Proclamation
No. 1670is DENIED. No costs.
SO ORDERED. 5
The NHA demolished BGC's facilities soon thereafter. SDHacT
The Appellate Court's Ruling
Not content with the trial court's ruling, BGC appealed the trial
court's Decision to the appellate court. Initially, the appellate
court agreed with the trial court that Proclamation No.
1670 granted MSBF the right to determine the location of the
seven-hectare area covered by its usufructuary rights. However,
the appellate court ruled that MSBF did in fact assert this right by
conducting two surveys and erecting its main structures in the
area of its choice.
On 30 March 2001, the appellate court reversed the trial court's
ruling. Thus:
WHEREFORE, premises considered, the Decision dated March
8, 1994 of the Regional Trial Court of Quezon City, Branch 87, is
hereby REVERSED and SET ASIDE. The National Housing
Authority is enjoined from demolishing the structures, facilities
and improvements of the plaintiff-appellant Bulacan Garden
Corporation at its leased premises located in Quezon City which
premises were covered by Proclamation No. 1670, during the
existence of the contract of lease it (Bulacan Garden) had entered
with the plaintiff-appellant Manila Seedling Bank Foundation,
Inc.
No costs.
SO ORDERED. 6
The NHA filed a motion for reconsideration, which was denied
by the appellate court on 25 June 2001.
Hence, this petition.
The Issues
The following issues are considered by this Court for resolution:
WHETHER THE PETITION IS NOW MOOT BECAUSE OF
THE DEMOLITION OF THE STRUCTURES OF BGC; and
WHETHER THE PREMISES LEASED BY BGC FROM MSBF
IS WITHIN THE SEVEN-HECTARE AREA
THAT Proclamation No. 1670 GRANTED TO MSBF BY WAY
OF USUFRUCT.HSDaTC
The Ruling of the Court

Page |
8
We remand this petition to the trial court for a joint survey to
determine finally the metes and bounds of the seven-hectare area
subject to MSBF's usufructuary rights.
Whether the Petition is Moot because of the
Demolition of BGC's Facilities
BGC claims that the issue is now moot due to NHA's demolition
of BGC's facilities after the trial court dismissed BGC's complaint
for injunction. BGC argues that there is nothing more to enjoin
and that there are no longer any rights left for adjudication.
We disagree.
BGC may have lost interest in this case due to the demolition of
its premises, but its co-plaintiff, MSBF, has not. The issue for
resolution has a direct effect on MSBF's usufructuary rights.
There is yet the central question of the exact location of the
seven-hectare area granted by Proclamation No. 1670 to MSBF.
This issue is squarely raised in this petition. There is a need to
settle this issue to forestall future disputes and to put this 20-year
litigation to rest.
On the Location of the Seven-Hectare Area Granted by
Proclamation No. 1670 to MSBF as Usufructuary
Rule 45 of the 1997 Rules of Civil Procedure limits the
jurisdiction of this Court to the review of errors of law. 7 Absent
any of the established grounds for exception, 8 this Court will not
disturb findings of fact of lower courts. Though the matter raised
in this petition is factual, it deserves resolution because the
findings of the trial court and the appellate court conflict on
several points.
The entire area bounded by Agham Road to the east, EDSA to the
west, Quezon Avenue to the south and by a creek to the north
measures approximately 16 hectares.Proclamation No. 1670 gave
MSBF a usufruct over only a seven-hectare area. The BGC's
leased portion is located along EDSA.
A usufruct may be constituted for a specified term and under such
conditions as the parties may deem convenient subject to the legal
provisions on usufruct. 9 A usufructuary may lease the object
held in usufruct. 10 Thus, the NHA may not evict BGC if the
4,590 square meter portion MSBF leased to BGC is within the
seven-hectare area held in usufruct by MSBF. The owner of the
property must respect the lease entered into by the usufructuary
so long as the usufruct exists. 11 However, the NHA has the right
to evict BGC if BGC occupied a portion outside of the seven-
hectare area covered by MSBF's usufructuary rights. DTEScI
MSBF's survey shows that BGC's stall is within the seven-hectare
area. On the other hand, NHA's survey shows otherwise. The
entire controversy revolves on the question of whose land survey
should prevail.
MSBF's survey plots the location of the seven-hectare portion by
starting its measurement from Quezon Avenue going northward
along EDSA up until the creek, which serves as the northern
boundary of the land in question. Mr. Ben Malto ("Malto"),
surveyor for MSBF, based his survey method on the fact that
MSBF's main facilities are located within this area.
On the other hand, NHA's survey determines the seven-hectare
portion by starting its measurement from Quezon Avenue going
towards Agham Road. Mr. Rogelio Inobaya ("Inobaya"),
surveyor for NHA, based his survey method on the fact that he
saw MSBF's gate fronting Agham Road.
BGC presented the testimony of Mr. Lucito M. Bertol ("Bertol"),
General Manager of MSBF. Bertol presented a map, 12 which
detailed the area presently occupied by MSBF. The map had a
yellow-shaded portion, which was supposed to indicate the seven-
hectare area. It was clear from both the map and Bertol's
testimony that MSBF knew that it had occupied an area in excess
of the seven-hectare area granted by Proclamation No.
1670. 13 Upon cross-examination, Bertol admitted that he
personally did not know the exact boundaries of the seven-hectare
area. 14 Bertol also admitted that MSBF prepared the map
without consulting NHA, the owner of the property. 15

BGC also presented the testimony of Malto, a registered forester
and the Assistant Vice-President of Planning, Research and
Marketing of MSBF. Malto testified that he conducted the land
survey, which was used to construct the map presented by
Bertol. 16 Bertol clarified that he authorized two surveys, one in
1984 when he first joined MSBF, and the other in 1986. 17 In
both instances, Mr. Malto testified that he was asked to survey a
total of 16 hectares, not just seven hectares. Malto testified that he
conducted the second survey in 1986 on the instruction of
MSBF's general manager. According to Malto, it was only in the
second survey that he was told to determine the seven-hectare
portion. Malto further clarified that he based the technical
descriptions of both surveys on a previously existing survey of
the property. 18
The NHA presented the testimony of Inobaya, a geodetic
engineer employed by the NHA. Inobaya testified that as part of
the NHA's Survey Division, his duties included conducting
surveys of properties administered by the NHA. 19 Inobaya
conducted his survey in May 1988 to determine whether BGC
was occupying an area outside the seven-hectare area MSBF held
in usufruct. 20 Inobaya surveyed the area occupied by MSBF
following the same technical descriptions used by Malto. Inobaya
also came to the same conclusion that the area occupied by
MSBF, as indicated by the boundaries in the technical
descriptions, covered a total of 16 hectares. He further testified
that the seven-hectare portion in the map presented by
BGC, 21 which was constructed by Malto, does not tally with the
boundaries BGC and MSBF indicated in their complaint.
Article 565 of the Civil Code states:
ART. 565. The rights and obligations of the usufructuary shall be
those provided in the title constituting the usufruct; in default of
such title, or in case it is deficient, the provisions contained in the
two following Chapters shall be observed.
In the present case, Proclamation No. 1670 is the title constituting
the usufruct. Proclamation No. 1670 categorically states that the
seven-hectare area shall be determined "by future survey under
the administration of the Foundation subject to private rights if
there be any." The appellate court and the trial court agree that
MSBF has the latitude to determine the location of its seven-
hectare usufruct portion within the 16-hectare area. The appellate
court and the trial court disagree, however, whether MSBF
seasonably exercised this right.
It is clear that MSBF conducted at least two surveys. Although
both surveys covered a total of 16 hectares, the second survey
specifically indicated a seven-hectare area shaded in yellow.
MSBF made the first survey in 1984 and the second in 1986, way
before the present controversy started. MSBF conducted the two
surveys before the lease to BGC. The trial court ruled that MSBF
did not act seasonably in exercising its right to conduct the
survey. Confronted with evidence that MSBF did in fact conduct
two surveys, the trial court dismissed the two surveys as self-
serving. This is clearly an error on the part of the trial
court. Proclamation No. 1670 authorized MSBF to determine the
location of the seven-hectare area. This authority, coupled with
the fact that Proclamation No. 1670 did not state the location of
the seven-hectare area, leaves no room for doubt thatProclamation
No. 1670 left it to MSBF to choose the location of the seven-
hectare area under its usufruct. EHTISC
More evidence supports MSBF's stand on the location of the
seven-hectare area. The main structures of MSBF are found in the
area indicated by MSBF's survey. These structures are the main
office, the three green houses, the warehouse and the composting
area. On the other hand, the NHA's delineation of the seven-
hectare area would cover only the four hardening bays and the
display area. It is easy to distinguish between these two groups of
structures. The first group covers buildings and facilities that
MSBF needs for its operations. MSBF built these structures

Page |
9
before the present controversy started. The second group covers
facilities less essential to MSBF's existence. This distinction is
decisive as to which survey should prevail. It is clear that the
MSBF intended to use the yellow-shaded area primarily because
it erected its main structures there.
Inobaya testified that his main consideration in using Agham
Road as the starting point for his survey was the presence of a
gate there. The location of the gate is not a sufficient basis to
determine the starting point. MSBF's right as a usufructuary as
granted by Proclamation No. 1670 should rest on something more
substantial than where MSBF chose to place a gate.
To prefer the NHA's survey to MSBF's survey will strip MSBF of
most of its main facilities. Only the main building of MSBF will
remain with MSBF since the main building is near the corner of
EDSA and Quezon Avenue. The rest of MSBF's main facilities
will be outside the seven-hectare area.
On the other hand, this Court cannot countenance MSBF's act of
exceeding the seven-hectare portion granted to it by Proclamation
No. 1670. A usufruct is not simply about rights and privileges. A
usufructuary has the duty to protect the owner's interests. One
such duty is found in Article 601 of the Civil Code which states:
ART. 601. The usufructuary shall be obliged to notify the owner
of any act of a third person, of which he may have knowledge,
that may be prejudicial to the rights of ownership, and he shall be
liable should he not do so, for damages, as if they had been
caused through his own fault.
A usufruct gives a 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. 22 This controversy
would not have arisen had MSBF respected the limit of the
beneficial use given to it. MSBF's encroachment of its
benefactor's property gave birth to the confusion that attended this
case. To put this matter entirely to rest, it is not enough to remind
the NHA to respect MSBF's choice of the location of its seven-
hectare area. MSBF, for its part, must vacate the area that is not
part of its usufruct. MSBF's rights begin and end within the
seven-hectare portion of its usufruct. This Court agrees with the
trial court that MSBF has abused the privilege given it
under Proclamation No. 1670. The direct corollary of enforcing
MSBF's rights within the seven-hectare area is the negation of
any of MSBF's acts beyond it.
The seven-hectare portion of MSBF is no longer easily
determinable considering the varied structures erected within and
surrounding the area. Both parties advance different reasons why
their own surveys should be preferred. At this point, the
determination of the seven-hectare portion cannot be made to rely
on a choice between the NHA's and MSBF's survey. There is a
need for a new survey, one conducted jointly by the NHA and
MSBF, to remove all doubts on the exact location of the seven-
hectare area and thus avoid future controversies. This new survey
should consider existing structures of MSBF. It should as much as
possible include all of the facilities of MSBF within the seven-
hectare portion without sacrificing contiguity. CAaDTH
A final point. Article 605 of the Civil Code states:
ART. 605. Usufruct cannot be constituted in favor of a town,
corporation, or association for more than fifty years. If it has been
constituted, and before the expiration of such period the town is
abandoned, or the corporation or association is dissolved, the
usufruct shall be extinguished by reason thereof. (Emphasis
added)
The law clearly limits any usufruct constituted in favor of a
corporation or association to 50 years. A usufruct is meant only as
a lifetime grant. Unlike a natural person, a corporation or
association's lifetime may be extended indefinitely. The usufruct
would then be perpetual. This is especially invidious in cases
where the usufruct given to a corporation or association covers
public land. Proclamation No. 1670 was issued 19 September
1977, or 28 years ago. Hence, under Article 605, the usufruct in
favor of MSBF has 22 years left.
MO 127 released approximately 50 hectares of the NHA property
as reserved site for the National Government Center. However,
MO 127 does not affect MSBF's seven-hectare area since
under Proclamation No. 1670, MSBF's seven-hectare area was
already "exclude[d] from the operation of Proclamation No. 481,
dated October 24, 1968, which established the National
Government Center Site."
WHEREFORE, the Decision of the Court of Appeals dated 30
March 2001 and its Resolution dated 25 June 2001 in CA-G.R.
CV No. 48382 are SET ASIDE. This case is REMANDED to
Branch 87 of the Regional Trial Court of Quezon City, which
shall order a joint survey by the National Housing Authority and
Manila Seedling Bank Foundation, Inc. to determine the metes
and bounds of the seven-hectare portion of Manila Seedling Bank
Foundation, Inc. under Proclamation No. 1670. The seven-hectare
portion shall be contiguous and shall include as much as possible
all existing major improvements of Manila Seedling Bank
Foundation, Inc. The parties shall submit the joint survey to the
Regional Trial Court for its approval within sixty days from the
date ordering the joint survey.
SO ORDERED.
||| (National Housing Authority v. Court of Appeals, G.R. No.
148830, April 13, 2005)

[G.R. No. L-12666. May 22, 1959.]
JUAN CLARIDAD, substituted by TRINIDAD
BELONIO, plaintiff-appellant, vs. ISABEL
NOVELLA, defendant-appellee.
SYLLABUS
1. SALE WITH PACTO DE RETRO; INADEQUACY OF
PRICE, NOT GROUND FOR ANNULMENT. In a sale with
pacto de retro, the inadequacy of the price cannot be considered a
ground for annulling the contract. The practice is to fix a
relatively reduced price to afford the vendor a retro every facility
to redeem the land unlike in an absolute sale where the vendor, in
permanently giving away his property, tries to get, as
compensation, its real value.
2. ID.; RIGHT OF VENDEE A RETRO TO ENJOY
USUFRUCT OF LAND. The fact that the vendee a retro was
given the right to enjoy the usufruct of the land during the period
of redemption, far from being a factor favoring an equitable
mortgage is an argument in favor os sale with pacto de retro, for
usufruct is an element of ownership which is involved in a
contract of sale.
D E C I S I O N
BAUTISTA ANGELO, J p:
On April 25, 1932, spouses Lorenzo Claridad and Isabel Togle
executed a deed of sale with right to repurchase of a parcel of
land situated in Bago, Negros Occidental, in favor of Paterno
Aposagas on condition that the vendors may repurchase the same
within a period of 10 years from said date. It was also agreed that
during the period of 10 years the vendee may enjoy the land as
usufructuary.
On March 10,1936, Aposagas transferred all his rights and
interests in the sale to Isabel Novella subject to the same
conditions stipulated in the contract executed on April 25, 1932.
On May 20, 1942, twenty-four days after the expiration of the 10-
year period agreed upon for redemption, Isabel Novella
consolidated her ownership over the land for failure of the
vendors to exercise their right of redemption. On March 27, 1944,
the vendors a retro deposited the sum of P800.00 in Japanese
notes with the clerk of court of Negros Occidental by way of
consignation in an attempt to redeem the land from the vendee
Isabel Novella.

Page |
10
In the meantime, spouses Lorenzo Claridad and Isabel Togle,
original vendors a retro, died and because of the refusal of Isabel
Novella to allow the redemption of the property notwithstanding
the tender of payment they had made, the heirs of said spouses
filed on March 13, 1944 an action before the Court of First
Instance of Negros Occidental against Isabel Novella praying that
the latter be ordered to reconvey the land to them after acceptance
of the deposit of P800.00 they had made and that she be ordered
to pay damages and costs. On May 5, 1944, after due trial, the
court, Judge Francisco Arellano presiding, rendered a decision
dismissing the complaint and ordering that the deposit of P800.00
made by the plaintiffs be returned to them, with costs. In due
time, plaintiffs took the case on appeal to the Court of Appeals,
but no action thereon was taken until the records of the case were
destroyed as a result of the battle for liberation.
Plaintiffs, instead of reconstituting the records that were
destroyed, filed on June 3, 1950 a new case before the same court
covering the same subject matter as in the original case.
Defendant filed a motion to dismiss on the ground that the action
was barred by a prior judgment, referring to the decision rendered
by Judge Francisco Arellano. This motion was sustained by Judge
Jose Teodoro, Sr. in an order entered on August 11, 1950.
Plaintiffs appealed this order to the Supreme Court (G.R.No.L-
4207), and on October 24, 1952, the latter rendered decision
reversing the order of Judge Teodoro, Sr. and ordering that the
case be remanded to the court below for further proceedings.
While the case was pending trial on the merits as ordered by the
Supreme Court, it was discovered that the records of the original
case which involved the same parties and subject matter were not
destroyed and so, in line with the ruling of this Court in the case
of Nacua vs. Alo, 93 Phil., 595; 49 Off. Gaz., 3353, both parties
filed a joint motion praying for the dismissal of the case and for
the revival of the original Case No. 54, giving to plaintiffs-
appellants a period of 30 days within which to present a new
record on appeal, notice of appeal and appeal bond for elevation
to the Court of Appeals. This was done and so the original case
then pending appeal in the Court of Appeals was deemed duly
reconstituted and submitted for decision with the only hitch that,
upon examination of the records as reconstituted, it was found
that while the stenographic notes taken during the trial were
intact, they have not however been transcribed. And on May 23,
1957, considering that the only issue involved in the appeal is one
of law, the Court of Appeals certified the case to us for
adjudication under the Judiciary Act of 1948, as amended.
Appellants contend that the trial court erred in not entertaining
their claim that they had offered to repurchase the land from
appellee sometime in March, 1942 or before the expiration of the
10-year period of redemption which the latter unreasonably
refused to accept for which reason they deposited the sum of
P800.00 with the clerk of court by way of consignation as
required by law. The trial court, after analyzing the evidence
submitted by both parties, made on this point the following
findings:
"Cuando se considera que Juan Claridad en Marzo 27, 1944, casi
doe anos despues de expirar el plazo para el retracto, al ofrecer la
recompra del lote en cuestion, hubo de hacerse acompanar por
Antonio Canellada que le corroboro, para presenciar v atestiguar
este el acto, en cambio, ni en Marzo de 1942 ni en igual mes de
1943, en que pretende haber hecho igual oferta, no solo dejo de
tomar igual o similar precaucion, sino que no tomo absolutamente
ninguna, a falta de satisfactorio explicacion, el Juzgado abriga
serias dudas sobre la veracidad de su pretension y declaracion. Y
si a este se anade que no hizo consignacio de pago, cuando, como
pretende, le fue rechazada la oferta en 1942 o en 1943, cosa que
lo hizo en 1944 con extra-ordinaria prontitud, estando como
estaba el Juzgado funcionando normalmente en Marzo y Abril
hasta el 20 de Mayo de 1942 y en todo el ano 1943, el Juzgado
llega a la conclusion de que los demandantes no hicieron tal
oferta de recompra en 1942, y al no hacerlo, la venta a retro a
favor de la demandada queda convertida despues del 25 de Abril
de 1942, en una venta absoluta y definitiva. La conducta de Juan
Claridad durante su testimonio ha sido altamente suspechoso para
el Juzgado; sus contestaciones no eran espontaneas tenian la
apariencia de una atestacion estudiada y forzada. Por el contrario,
la conducta de la demandada en el banquillo testifical esa natural,
y sus declaraciones son, en opinion del Juzgado, espontaneas y
sinceras y llevan el sello de la verdad. Habiendo llegado el
Juzgado a esta conclusion, la consignacion (Exh. 'A') hecha por
los demandantes del precio de la recompra un ano y once meses
despues de haber expirado el plazo para el retracto, es una
consignacion hecha fuera de tiempo, y por tanto es
improcedente."
Since the issue involved in this agreement of error is one of fact,
or one which involves an evaluation of the evidence, the same
cannot now be looked into since this case was certified to us on
purely questions of law.
It is however contended that even if it be considered that
appellants, or their predecessors in interest, have failed to redeem
the land within the period stipulated, such failure is of no
consequence for the reason that the real contract entered into
between appellants' predecessors in interest and appellee is not
none of sale with right to repurchase but only an equitable
mortgage and so appellants should still be allowed to reacquire
the property by paying the obligation that may be due the
appellee. And in support of this contention, they advance the
following arguments: (1) inadequacy of price, that is, the price of
the sale is P800.00 when the land sold has an assessed value of
P1,710.00; (2) the vendee a retro was given, under the contract,
the usufruct of the land during the entire period of redemption;
and (3) the contract employs the Spanish term "devolviesemos"
when referring to the right of the vendor a retro to repurchase the
property.
To begin with, the contention that the contract in question
involves merely an equitable mortgage is a belated one for right
along appellants have always claimed that the transaction
concluded by their predecessors in interest is one of sale with
right to repurchase. This is borne out not only by the original
complaint filed by appellants' predecessors in interest on March
13, 1944 but also by the complaint filed by them on June 3, 1950
wherein the same averments of sale with right to repurchase
appear. In fact, this is the issue submitted by them to the trial
court when this case was originally tried and said court held that
the alleged contract is one of sale with option to repurchase.
In the second place, the claim regarding inadequacy of price is
insubstantial considering that the transaction in question is a sale
with pacto de retro and not an absolute sale. In transactions of this
nature, the practice is to fix a relatively reduced price to afford the
vendor a retro every facility to redeem the land unlike in an
absolute sale where the actual market value of the property is
considered. At any rate, such a reduced price cannot be
considered a ground for annulling the contract, as was held by
this Court in a number of cases. Thus, in Feliciano vs. Limjuco,
41 Phil., 147, this Court laid down the following doctrine:
"Without deciding that the assessed value of a parcel of land is its
true value on sale, the difference between the price of P500
agreed upon by the parties and the assessed value of P1,010 does
not, in the absence of sufficient evidence of the true value, of
itself justify the annulment of a sale wiht the right to repurchase.
The testimony of persons interested in the case is no sufficient
proof of the value of the land. The price fixed in a sale with the
right to repurchase is not necessarily the true value of the land
sold. (De Ocampo y Custodio vs. Lim, 38 Phil., 579.) And this
must be true, because in this kind of sale as distinguished from
absolute sales in which the vendor, in permanently giving away
his property, tries to get, as compensation, its real value, the hope
of redeeming the land sold and the facility of returning the price
received are important factors and in order that this hope may be
realized easily the vendor generally fixes a price less than the real
value." 1
Finally, the fact that the vendee a retro was given the right to
enjoy the usufruct of the land during the period of redemption, far
from being a factor favoring an equitable mortgage, is an
argument in favor of appellee's theory, for usufruct is an element
of ownership which is involved in a contract of sale. And as
regards the Spanish term "devolviesemos" employed in the
contract, appellants' claim cannot be of any help, for that term in

Page |
11
English terminology also conveys the idea of repayment which is
in line with a right of repurchase.
Wherefore, the decision appealed from is affirmed, with costs
against appellants.
||| (Claridad v. Novella, G.R. No. L-12666, May 22, 1959)

[G.R. No. 45534. April 27, 1939.]
JOSEFA RIZAL MERCADO, ET AL., plaintiffs-
appellants, vs. ALFREDO HIDALGO REAL, defendant-
appellee.
SYLLABUS
1. PAYMENT OF LAND TAX; USUFRUCTUARY; NAKED
OWNER. Pursuant the provision of article 505 of the Civil
Code, the tax; directs burdens the capital, that is, the real value of
the property and should be paid by the owner (One Lengco vs.
Monroy, G. R. No. 19411, July 18, 1923). It is contended,
however, that under the second paragraph of the aforesaid article,
if the usufructuary should pay the tax, he would be entitled to
reimbursement for the amount thereof only upon the inspiration
of the usufruct, and the usufruct being still afoot, it is premature
for the plaintiffs as usufructuarics who advanced the payment of
the tax, to bring the action for the recovery of What they paid.
There is, however, no basis for this reasoning. The plaintiffs did
not pay the tea. They objected to this payment. They did not
consent to the deduction thereof from their player in the products,
and much less to the application thereof to this payment which
they believe they are not bound to make. In fact they did not
make the payment; the naked owners were the ones who made it
without their consent and with money belonging to them as their
share of the fruits coming to them in their capacity as
usufructuaries.
D E C I S I O N
AVANCEA, C.J p:
The properties left by the deceased Paciano Rizal y Mercado
belonged, in usufruct, to nine heirs and, in naked ownership, to
seven others. The plaintiffs are two of the nine usufructuaries and
the defendant is one of the naked owners.
In 1932, 1933 and 1934, the amount of P6,503.80 was paid for
the tax of these lands. Of this amount the naked owners made the
plaintiffs pay P1,445.29, or P722.64 each, representing one-ninth
of the taxes paid during the aforesaid years. As the plaintiffs were
not agreeable to this payment, by cause they were mere
usufructuaries, and they contend that the duty devolves upon the
naked owners, this amount was deducted from the products
corresponding to them and applied to the payment of land tax.
The plaintiffs alleged that, the naked owners being the ones under
a duty to pay the tax for the lands, they should recover the amount
which was deducted from their share of the fruits and applied,
against their will, to the payment of the tax. The naked owners,
with the exception of the defendant, agreed with this contention
and paid to each of the plaintiffs the sum of P206.47, which is
one-seventh of the P1,445.29 deducted from the products of the
land corresponding to the plaintiffs.
The present action was brought to compel the defendant to pay
also to the plaintiffs the amount of P206.47.
A demurrer was interposed to the complaint for failure to allege
facts sufficient to constitute a cause of action. The court sustained
the demurrer on the ground that the action is premature under
article 505 of the Civil Code providing:
"Any taxes which may be imposed directly upon the capital,
during the usufruct, shall be chargeable to the owner.
"If paid by the latter, the usufructuary shall pay him the proper
interest on any sums he may have disbursed by reason thereof; if
the usufructuary should advance the amounts of such taxes he
shall recover them upon the expiration of the usufruct."
This ruling of the trial court is erroneous.
Pursuant to the aforequoted provision, the tax directly burdens the
capital, that is, the real value of the property and should be paid
by the owner (Ong Lengco vs. Monroy, G. R. No. 19411, July 18,
1923). It is contended, however, that under the second paragraph
of the aforequoted article, if the usufructuary should pay the tax,
he would be entitled to reimbursement for the amount thereof
only upon the expiration of the usufruct, and the usufruct being
still afoot, it is premature for the plaintiffs, as usufructuaries who
advanced the payment of the tax, to bring the action for the
recovery of what they paid. There is, however, no basis for this
reasoning. The plaintiffs did not pay the tax. They objected to this
payment. They did not consent to the deduction thereof from their
share in the products, and much less to the application thereof to
this payment which they believe they are not bound to make. In
fact they did not make the payment; the naked owners were the
ones who made it without their consent and with money
belonging to them as their share of the fruits coming to them in
their capacity as usufructuaries.
The plaintiffs, in claiming the amount of P206.47, do not rely on
paragraph 2 of article 505 of the Civil Code above quoted, for
having paid the tax on the lands, but on the first paragraph thereof
because it is their contention that, as usufructuaries, they are not
the ones called upon to make this payment.
Reversing the resolutions of the trial court excepted to, the
demurrer interposed to the complaint is overruled, and it is
ordered that the case be remanded to the court of origin so that it
may act in accordance with this decision and go forward with the
case until it is finally decided, without special pronouncement as
to the costs in this instance. So ordered.
||| (Mercado v. Real, G.R. No. 45534, April 27, 1939)
[G.R. No. L-13361. December 29, 1959.]
ROSARIO GREY VDA. DE ALBAR and JOSE M.
GREY, petitioners, vs. JOSEFA FABIE DE
CARANGDANG, respondent.
Jose W. Diokno for petitioners.
SYLLABUS
1. USURFRUCT; RENTALS ON LAND AND BUILDING;
EFFECT OF DESTRUCTION OF BUILDING. A life
usufruct constituted on the rentals of the "fincas situadas" located
at a certain place includes the rentals both on the building and the
land on which it is rejected, because the building can not exist
without the land. hence, the usufruct is not extinguished by the
destruction of the building, for under the law usufruct is
extinguished only by the total loss of the thing subject of the
encumbrance.
D E C I S I O N
BAUTISTA ANGELO, J p:
Doa Rosario Fabie y Grey was the owner of a lot situated in the
City of Manila with a building and improvements thereon erected
at 950-956 Ongpin as evidenced by Original Certificate of Title
No. 5030, and by a will left by her upon her death which was duly
probated she devised the naked ownership of the whole property
to Rosario Grey Vda. de Albar, et al. but its usufruct to Josefa
Fabie for life.
The pertinent provision of the will reads as follows: "Lego a mi a
ahijada menor de edad, Maria Josefa de la Paz Fabie, en usufructo
vitalicio las rentas de las fincas . . . en la calle Ongpin, Numeros
950 al 956 del Distrito de Santa Cruz, Manila, . . . y prohibo
enajene, hipoteque, permuta o transfiera de algun modo mientras
que ella sea menor de edad." Said property was registered in the
name of Rosario Grey Vda. de Albar, et al. as naked owners and
the right of Josefa Fabie as life usufructuary was expressly noted

Page |
12
on the new title. Pursuant to the 9th clause of the will, an
encumbrance was likewise noted on the title prohibiting the
usufructuary from selling, mortgaging or transferring her right of
usufruct during her minority.
During liberation, as a consequence of the fire that gutted the
buildings in many portions of Manila, the building on the Ongpin
lot was burned, leaving only the walls and other improvements
that were not destroyed by the fire.
One Au Pit, a Chinaman, offered to lease the property for a period
of five years at a monthly rental of P500.00, at the same time
agreeing to construct on the lot a new building worth P30,000.00
provided the naked owners as well as the usufructuary sign the
agreement of lease. As the usufructuary maintains that she has the
exclusive right to cede the property by lease and to receive the
full rental value by virtue of her right of usufruct while on the
other hand the naked owners maintain that the right of usufruct
was extinguished when the building was destroyed, the right of
the usufructuary being limited to the legal interest on the value of
the lot and the materials, in order that the agreement of lease may
be effected, the parties agreed on a temporary compromise
whereby the naked owners would receive P100.00, or 20% of the
monthly rental of P500.00 and the usufructuary the balance of
80% or P400.00 of said monthly rental. It was likewise stipulated
in the agreement that the title to the building to be constructed
would accrue to the land upon its completion as an integral part of
the lot covered by the transfer certificate of title issued in the
name of the naked owners but subject to the right of usufruct of
Josefa Fabie. The parties expressly reserved the right to litigate
their respective claims after the termination of the contract of
lease to determine which of said claims was legally correct.
By reason of the destruction of the building on the Ongpin
property, the United States War Damage Commission approved
the claim that was presented for the damage caused to the
property in the amount of P8,574.00 which was paid to and
received by the naked owners. In the meantime, the usufructuary
paid the real estate taxes due on the property at Ongpin for the
years 1945 to 1952 in the total amount of P1,989.27, as well as
the real estate taxes for the years 1953 and 1954 in the annual
sum of P295.80.
On October 2, 1952, Rosario Grey Vda. de Albar, et al.
commenced the present action to settle the dispute and conflicting
views entertained by the parties in line with their agreement and
prayed that judgment be rendered declaring that the usufruct in
favor of Josefa Fabie is now only limited to receiving the legal
interest on the value of the land, and that her right to receive any
rental under the contract entered into between the parties has
already ceased.
On August 10, 1953, the trial court rendered judgment the
dispositive part of which reads:
"EN VIRTUD DE TODO LO CUAL, el Juzgado promulga
decisin a favor de la demandada usufructuaria, declarando:
(a) Que su usufructo vitalicio continua sobre la finca en Ongpin
con derecho exclusivo de percibir durante su vida la totalidad de
sus rentas, sin que los demandantes tengan derecho de
inmiscuirse en la administracion de dicha finca;
(b) Con derecho de percibir el 6% de la cantidad de P8,574.00
percibidos como indemnizacion de guerra desde Enero 11, 1950;
(c) Al reembolso de la suma de P1,989.27 pagados o abonados
por la demandada como pagos del amillaramiento desde la fecha
de la Contestacion, Octubre 22, 1953;
(d) Mas la suma de P2,000.00 como daos y perjuicios en forma
de honorarios de abogado y gastos de litigio.
(e) Con las costas a cargo de los demandantes."
On appeal by plaintiffs, the Court of Appeals modified the
decision as follows:
"Wherefore, we hereby affirm the decision appealed from in so
far as it holds that appellee's right of life usufruct subsists and is
in full force and effect upon the Ongpin lot and the building now
existing thereon, and that she is entitled to receive from appellants
the legal interest or 6% interest per annum of the amount of
P3,272.00 from the time it was actually received from the
Philippine War Damage Commission for the whole period of the
usufruct, and appellants are hereby required to give sufficient
security for the payment of such interest, and we hereby reverse
said decision, declaring that reimbursement to appellee of the sum
of P1,987.27 paid by her for real estate taxes is deferred until the
termination of the usufruct, and that she is not entitled to any
amount for attorney's fees. Without pronouncement regarding
costs."
Plaintiffs interposed the present petition for review.
The main issue to be determined hinges on the interpretation of
that portion of the will which devises to Josefa Fabie all the
rentals of the property situated in Ongpin and Sto. Cristo Streets,
City of Manila. The pertinent provision of the will reads: "Lego a
mi ahijada menor de edad Maria Josefa de la Paz Fabie, en
usufructo vitalicio las rentas de las fincas situadas en la calle
Santo Cristo . . . y en la calle Ongpin, Numeros 950 al 956 del
Distrito de Santa Cruz, Manila." Petitioners contend that this
provision of the will should be interpreted as constituting only a
life usufruct on the rentals of the buildings erected on the lands
and that once these buildings are destroyed the usufruct is
extinguished. Respondent, on the other hand, contends that that
provision should be interpreted as constituting a life usufruct both
on the buildings and the lands because the former cannot be
separated from the latter.
In Lopez vs. Constantino, 74 Phil., 160, we said:
"It may indeed seem at first blush that the rents out of which the
pension was payable were earned by or paid for the building only,
independently of the lot on which it was erected; but further
reflection will show that such impression is wrong. When both
land and building belong to the same owner, as in this case, the
rents on the building constitute an earning of the capital invested
in the acquisition of both land and building. There can be a land
without a building,but there can be no building without land. The
land, being an indispensable part of the rented premises cannot be
considered as having no rental value whatsoever." (Emphasis
supplied)
In another part of the decision, this Court said: "Since appellant's
participation in the rents of the leased premises by way of life
pension was part of the consideration of the sale, it cannot be
deemed extinguished so long as she lives and so long as the land
exists, because that land may be rented to anyone who may desire
to erect a building thereon." (Emphasis supplied)
From the above, it is clear that when the deceased constituted the
life usufruct on the rentals of the "fincas situadas" in Ongpin and
Sto. Cristo streets, she meant to impose the encumbrance both on
the building and the land on which it is erected for indeed the
building cannot exist without the land. And as this Court well
said, "The land, being an indispensable part of the rented
premises cannot be considered as having no rental value
whatsoever." Moreover, in the Spanish language, the term
"fincas" has a broad scope; it includes not only building but land
as well. (Diccionario Ingles- Espaol, por Martines Amador)
Since only the building was destroyed and the usufruct is
constituted not only on the building but on the land as well, then
the usufruct is not deemed extinguished by the destruction of the
building for under the law usufruct is extinguished only by
the total loss of the thing subject of the encumbrance (Article 603,
old Civil Code).
In our opinion, this case comes under Article 517 of the same
Code which provides: "If the usufruct is constituted on
immovable property of which a building forms part, and the latter
should be destroyed in any manner whatsoever, the usufructuary
shall have a right to make use of the land and materials." This is a
temporary measure calculated to maintain the usufruct alive until
the very thing that has been destroyed be reconstructed or

Page |
13
replaced. The reason is obvious: since the usufruct has not been
extinguished by the destruction of the building and the usufruct is
for life as in this case, it is but fair that the usufructuary continue
to enjoy the use of the land and the materials that may have been
left by the fire or to the use of the new building that may be
constructed on the land. To hold otherwise would be to affirm
that the usufruct has been extinguished.
The question that now arises is: Who is called upon to undertake
the new construction, and at whose cost? Of course, this is
addressed to the wisdom and discretion of the usufructuary who,
to all intents and purposes is deemed as the administrator of the
property. This has been clarified in the case of Fabie vs. Gutierrez
David, 75 Phil., 536, which was litigated between the same
parties and wherein the scope of the same provision of the will
has been the subject of interpretation. The following is what this
Court said:
"Construing said judgment in the light of the ninth clause of the
will of the deceased Rosario Fabie y Grey, which was quoted in
the decision and by which Josefa Fabie was made the
usufructuary during her lifetime of the income of the property in
question, we find that the said usufructuary has the right to
administer the property in question. All the acts of administration
to collect the rents for herself, and to conserve the property by
making all necessary repair and paying all the taxes, special
assessments, and insurance premiums thereon were by said
judgment vested in the usufructuary. The pretension of the
respondent Juan Grey that he is the administrator of the property
with the right to choose the tenants and to dictate the conditions
of the lease is contrary to both the letter and spirit of the said
clause of the will, the stipulation of the parties, and the judgment
of the court. He cannot manage or administer the property after
all the acts of management or administration have been vested by
the court, with his consent, in the usufructuary."
In the instant case, however, a happy compromise was reached by
the parties in view of the offer of one Chinaman to lease the land
for five years and to construct thereon a building worth
P30,000.00 upon the condition that upon its completion the
building would become an integral part of the land on which it is
erected. This means that its naked ownership should belong to
petitioners and its beneficial ownership to respondent. This is a
happy medium which fits into the purpose contemplated in
Article 517 above referred to: that the usufruct should continue on
the land and the new improvement that may be constructed
thereon.
We therefore hold that the Court of Appeals did not err in finding
that appellee's right of usufruct subsists and is in full force and
effect upon the Ongpin lot and the building existing thereon,
affirming the decision of the trial court.
Petitioners' contention that the Court of Appeals erred in ruling
that the damages paid by the War Damage Commission to said
petitioners was intended to be an indemnity for the destruction of
the building in question and in ordering them to pay respondent
6% interest per annum on the amount of the damage paid is also
untenable, for it cannot be denied that a war damage payment is
intended to replace part of the capital invested in the building
destroyed or to assuage somewhat the material loss of its owner.
It cannot be maintained that war damage payments are intended
to be a mere gesture of appreciation of the people of the United
States of America towards our people for it is a well-known fact
that countless of our countrymen who suffered in the last war or
whose kin-folks lost their lives did not receive any war damage
payment because they have no damaged property that could be
indemnified. The ruling that 6% interest per annum of such war
damage payment should be paid to respondent from the time it
was actually received to the end of the life of the usufruct should,
in my opinion, be modified in the sense that that obligation
should only be valid up to the date the new building was
constructed by the Chinaman who leased the property upon the
theory that the amount of damage paid by the War Damage
Commission which was intended to replace the old building has
in turn been replaced by the new. However, the majority is of the
opinion that the same should also be subject to usufruct for life
because it has not been used in the construction of the new
building, although they suggested the alternative that the naked
owners may turn over the money to the usufructuary so that she
may use it during her lifetime subject to its return to them after
her death if they desire to be relieved of this encumbrance.
We find, however, merit in the contention that the real estate
taxes paid by respondent in her capacity as usufructuary for
several years previous to the present litigation should be paid by
her, as she did, instead of by petitioners not only because she is
the only recipient of all the benefits of the property but because
she bound herself to pay such taxes in a formal agreement
approved by the court in Civil Case No. 1659 of the Court of First
Instance of Manila (Fabie vs. Gutierrez David, supra). In that
case, which involved the same parties and the same properties
subject of usufruct, the parties submitted an amicable agreement
which was approved by the court wherein the usufructuary, herein
respondent, bound herself to pay all the real estate taxes, special
assessment and insurance premiums, and make all the necessary
repairs on each of the properties covered by the usufruct and in
accordance with said agreement, respondent paid all the taxes for
the years 1945 to 1954. In said agreement, it was also stipulated
that the same "shall be in effect during the term of the usufruct
and shall be binding on the successors and assigns of each of the
parties." There is therefore no valid reason why petitioners should
now be ordered to reimburse respondent for all the real taxes she
had paid on the property. In this respect, the decision of the Court
of Appeals should be modified.
Wherefore, with the modification that petitioners should not be
made to reimburse the real estate taxes paid by the respondent for
the years abovementioned, the decision appealed from is affirmed
in all other respects, without pronouncement as to costs.
Labrador, Endencia, Barrera and Gutierrez David, JJ., concur.
||| (Vda. De Albar v. De Carangdang, G.R. No. L-13361,
December 29, 1959)

[G.R. No. 1511. July 26, 1905.]
MIGUEL PASCUAL, plaintiff-appellant, vs. MACARIO
ANGELES, defendant-appellee.
SYLLABUS
1. LANDLORD AND TENANT; ACTION; EJECTMENT;
REALTY. Where the existence of a lease has been proved and
it is satisfactorily shown that the lessee has failed to pay rent for
several years; Held, That a sufficient reason existed for the
ejectment of the tenant and the lessor has a cause of action against
him. (Following the doctrine laid down by the supreme court of
Spain in its decision of April 19, 1873, November 3, 1881, and
May 5, 1893.)
2. ID.; ID.; ID.; ID.; POSSESSION; TITLE; CIVIL
PROCEDURE. In an action for ejectment it is presumed that
the plaintiff is the owner of the property, or that he has a right to
the possession of the same, and he can not accordingly be
compelled to show his title thereto. The tenant is not permitted to
deny the title of his landlord at the time of the commencement of
the relation of landlord and tenant between them. (Sec. 333,
paragraph 2 of the Code of Civil Procedure; judgments of the
supreme court of Spain of December 6, 1882, and October 12,
1889.)
3. ID.; ID.; ID.; ID.; ID.; USUFRUCTUARY. Those in the
actual possession of the land under a claim of ownership, right of
usufruct, or any other right entitling them to the use of the same,
can maintain an action for the ejectment of the person wrongfully
in possession.
4. ID.; ID.; ID.; CONTRACT; CIVIL PROCEDURE. An
admission that a written lease received in evidence is genuine, is a
bar to a subsequent allegation tending to defeat its validity or
authenticity, particularly in view of the fact that a contract is
presumed to have been executed for a good and sufficient

Page |
14
consideration. (Sec. 334, paragraph 36 of the Code of Civil
Procedure.)
5. HEIRS. The heir succeeds by law to all the rights, actions,
and obligations of the deceased which were not extinguished by
his death.
6. PRESCRIPTION, EXTRAORDINARY; EJECTMENT.
The party alleging title by extraordinary prescription in an action
for ejectment and who denies that he was in possession as a
tenant, can not deny the identity of the land if from the allegations
of both parties it appears that there is but one certain tract of land
in dispute.
7. LANDLORD AND TENANT; ACTION; EJECTMENT. In
an action for forcible entry and detainer no question can be
incidentally raised or decided tending to defeat the title or right of
possession of the plaintiff.
D E C I S I O N
TORRES, J p:
On January 15, 1903, Miguel Pascual brought this action to
recover the possession of a certain tract of land unlawfully
occupied by the defendant, Macario Angeles, an for the payment
of rent due, damages, and costs. It was alleged in the complaint
that the defendant, Angeles, then held under a lease a certain tract
of land 15 yards square in the barrio of Uaua, municipality of San
Jose de Navotas; that the land formerly belonged to Ciriaca
Pascual, his sister, from whom he inherited it; that the defendant
owed him 30 pesos for the use of the land during the years 1899,
1900, and 1901 under the terms of the lease written in Tagalog
and attached to the complaint; that the demand was made upon
the defendant for payment of the rent due for the first two years,
he asked for and obtained an extension; that by virtue of this
extension the lease was continued in force; that a subsequent
demand was made upon the defendant about the end of the year
1901 for the payment of rent due and for the possession of the
land; that the defendant refused to do either; and that he had since
been in the wrongful possession of the land.
The defendant, Angeles, entered a general denial to the
complaint. He denied specifically under the oath the genuineness
and due execution of the lease attached to the complaint, alleging
as a special defense that he was the actual occupant of the land
claimed, and had been in adverse, quiet, peaceful, public, and
uninterrupted possession of the same for more than thirty years,
having during that period built houses and planted trees thereon.
The court, after hearing the evidence, rendered judgment June 20,
1902, in favor of the defendant, with costs to the plaintiff. To this
judgment the plaintiff excepted on the ground that the findings of
fact and the conclusions of law contained in the judgment were
against the law and the weight of evidence, and thereupon
presented a motion for a new trial, alleging in support thereof that
it was not necessary to show that the land in question had been
alloted to the plaintiff in the partition of the estate of the deceased
Ciriaca Pascual, since it satisfactorily appeared that Macario
Angeles ha paid rent to plaintiff under the lease in question thus
recognizing him as the lawful heir and successor of Ciriaca
Pascual. That there was no conflict between the testimony of the
witness Agustin Siangyo and Mariano Sengco, because the paid
rent in 1901 was due from previous years; that he had sufficiently
proved the identity of the land described in the complaint with
that referred to in the lease, both being in the same barrio of
Uaua, Navotas; that it had been shown that the camarin belonging
to the defendant was built upon the land involved in this case; that
it did not appear that another lease existed between the parties;
that no question had been raised during the trial as to the identity
of the land referred to in the complaint with that which was
subject of the lease; that this point accordingly was not discussed.
He finally gave notice of his intention to appeal in case the
motion for a new trial was denied.
The motion for a new trial being denied, appellant excepted and
presented his bill of exceptions, which was settled and certified to
this court by the court below.
In the lease of January 2, 1886, written in Tagalog (p. 15, bill of
exceptions), it is stated, among other things, that Ciriaca Pascual
thereby leased to Macario Angeles a tract of land 15 yards square
in the barrio of Uaua, San Jose de Navotas, for the sum of 10
pesos per annum, from January to December; that the lessee could
built thereon a nipa but not a stone house, and could not devote
the land to any but residential purposes nor inclose the same with
a stone wall without the written consent of the owner; that the
lessee could neither sell, mortgage, sublet, nor make any
alterations of improvements upon a lot; that the wife and children
of the lessee could not succeed him in the occupation of the land
under the lease; and that if the lessee failed to comply with any of
the provisions stipulated in the lease he should forthwith return
the land and in case of litigation pay the expenses thereof. This
lease appears to have been signed in the presence of the two
witnesses, Miguel Pascual, and by the lessee, Macario Angeles.
As appears on page 10 of the bill of exceptions, Angeles admitted
that his signature in the lease was genuine.
The existence of the lease under which Macario Angeles held the
land in question having been proved, and it appearing that he
failed to pay the rent for several years, a sufficient cause existed
for the ejectment of the tenant. (Judgments of the supreme court
of Spain of April 19, 1873; November 3, 1881; May 5, 1893, an
others.)
This action arises out of the contract of lease and presupposes in
the lessor a right to the ownership or possession of the property.
For this reason he can not be compelled to prove his title hereto.
The tenant can not deny the title of his landlord at the time of the
commencement of the relation of landlord and tenant between
them. (Sec. 333 of the Code of Civil Procedure; judgments of the
supreme court of Spain of December 6, 1882, an October 12,
1889.)
Those in the actual possession of the land under a claim of
ownership, right to usufruct, or any other right entitling them to
use of the same may maintain an action for ejectment against a
wrongful possessor.
Miguel Pascual, as testamentary heir of his sister, was in the
actual and adverse possession of a tract of land in Uaua, Navotas,
of which the land inquestion was a part. His possession dated
from the death of the testatrix who must have died prior to April
7, 1894, when her executor asked for and obtained a copy of her
will executed in January of the same year. The plaintiff was
recognized by the lessee, Macario Angeles, as such owner and
lawful possessor and as heir and successor to the deceased Ciriaca
Pascual. Angeles paid him rent for the land from the time of death
of the former lessor until the year 1898, as shown by the record. It
was not until the year 1901, when he decided to keep the land,
that defendant refused to pay rent for that and the two preceding
years, 1899 and 1900.
If the judicial personality of the deceased testatrix is transmitted
to the heir and the latter is considered as identified with his
devisor, to whose rights, actions, and obligations, not
extinguished any her death, he succeeded, the there is no doubt
that the plaintiff, as testamentary successor of the deceased sister
Ciriaca, as appears from the will on page 17 of the bill of
exceptions, had a right to oust the defendant, Angeles, for failure
to pay the stipulated rent. (Art. 659 of the Civil Code; judgments
of the supreme court of Spain of February 10, 1879; September
13, 1882, and January 28, 1892.)
Miguel Pascual is now vested with the rights of the lessor. To
him, as successor of the deceased, Angeles had been paying rent
from 1894 to 1898. Angeles is now barred from questioning the
rights of the deceased owner of the land an much less Pascual's
capacity and rights in the lease, under her will, which is not the
only basis of the judicial claim. (Sec. 333 of the Code of Civil
Procedure.)
Again, the defendant can not question the genuineness and due
execution of the written lease, a copy of which appears on page
15 of the bill of exceptions. He himself recognize it and it was
admitted in evidence during the trial, the court stating that it
established a fact relating to the question at issue. (Bill of

Page |
15
exceptions, p.11.) The presumption, therefore is that the contract
was execute for a good and sufficient consideration. (Sec. 334,
par. 36, of the Code of Civil Procedure.)
As to identify of the land referred to in the complaint, it may be
said that this was fully established not only by the lease and the
evidence introduced at the trial but by defendant's answer as well.
He stated that he had not been in possession of the land in
question as tenant but as owner, and that his possession covered a
period of more than thirty years. This shows that both parties
agree that there is but one certain tract of land in dispute.
It is an established fact that Macario Angeles used the land, and is
at present in possession thereof, under the terms of the lease.
Therefore this defense can not be sustained. There is no proof to
support it. On the contrary, the defendant has contradicted
himself. He stated that the action arising out of the lease had been
extinguished one year after the execution of the contract. He gives
no reason, however, for it. This shows that he occupied the land
as tenant an not as an owner.
In an action for ejectment no questions can be raised or decided
incidentally tending to defeat the title or right of possession
evidenced by the documents introduced by plaintiff. (Judgments
of the supreme court of Spain dated June 16, 1883, and April 21,
1884.)
For the foregoing reasons we are of opinion that the plaintiff is
entitled to recover, and that the judgment of the court below
should be accordingly reversed, giving the defendant thirty days
within which to vacate the land wrongfully occupied by him and
to return the same to Miguel Pascual, at the end of which period,
in case of his failure to vacate, he may be ejected. The defendant
is further ordered to pay to the plaintiff all the rent due with costs.
After the expiration of twenty days let judgment be entered in
accordance herewith, and let and let the case be remanded to the
court below for execution. So ordered.
Arellano, C.J., Mapa, Johnson, and Carson, JJ., concur.
||| (Pascual v. Angeles, G.R. No. 1511, July 26, 1905)

[G.R. No. 4452. October 1, 1908.]
JUANA PICHAY, plaintiff-appellee, vs. EULALIO
QUEROL, ET AL., defendants-appellants.
SYLLABUS
1. PARTITION; EFFECT UPON USUFRUCTUARY RIGHTS.
A partition made by the owners of land is binding upon a
person who has a usufructuary right in an undivided part of the
land, although the latter took no part in the partition of the
property.
2. PLEADING AND PRACTICE; BILL OF EXCEPTION;
REVIEW. Plaintiff excepted to the judgment, but presented no
bill of exceptions. Held, That, in the absence of such a bill, the
errors assigned could not be discussed. (Naval vs. Benavides, 8
Phil. Rep., 250; Puruganan vs. Martin, 8 Phil. Rep., 519; Ullmann
&. Ullmann & Co., 10 Phil. Rep., 459.)
D E C I S I O N
WILLARD, J p:
From the admissions made in the pleadings, and from the facts
agreed upon in the court below, it appears that the plaintiff, Juana
Pichay, in April, 1905, conveyed to the defendants an undivided
one-third interest in twenty-five parcels of land situated in the
Province of Ilocos Sur, as payment of a debt of P1,500 which she
owed them. The contract by which this conveyance was made
contained the following clause:
"Third. The one-third part of these lands belongs to me, it being
my share in the inheritance left by my deceased parents; but I
have requested my said creditors to allow me to enjoy the
usufruct of the same until my death, notwithstanding the fact that
I have conveyed the said lands to them in payment of my debt,
and I bind myself not to sell. mortgage, or leave the said lands as
inheritance to any person."
The defendants and appellants claim that this clause above quoted
gave plaintiff no right of usufruct in the land, saying that it
appears that she only asked for this right and it does not appear
that the defendants gave it to her. This contention can not be
sustained. The only reason for inserting this clause in the contract
was for the purpose of securing to the plaintiff the right which is
therein set out. The form of the words used is not sufficient to
defeat this purpose.
On the 10th of August, 1905, the owners of the twenty-five
parcels of land made a partition thereof among themselves, in
which the plaintiff took no part, and in this partition certain
specific tracts of land were assigned to the defendants as the third
to which they were entitled by reason of the conveyance from the
plaintiff to them; They have been in possession of the tracts so
assigned to them in the partition since the date thereof, and are
now in such possession, and have refused to recognize in the
plaintiff any right of usufruct therein.
In February, 1907, the plaintiff brought this action against the
defendants, asking that it be declared that she had a right of
usufruct in a third of the twenty-five parcels of land; that she had
the right to the administration of all of the land, and that the
appellees pay to her the rents which they had received during the
time of her dispossession.
The court rendered the following judgment:
"In view of the allegations and evidence adduced by the parties,
the court concludes: (1) That all the lands described in the
complaint be delivered to Juana Pichay for administration; (2)
that Juana Pichay has a right of usufruct in a third part of the said
lands until her death; (3) that the partition of the said lands, made
by the coowners of Juana Pichay can not affect the latter; (4)
Eulalio Querol is hereby directed to deliver to Juana Pichay two
crops from the third part of the lands in question, or the
equivalent thereof, taking as a basis the present crop that is,
the crop to be harvested within a short time and (5) Juana
Pichay is sentenced to indemnify Eulalio Querol in the sum of
P300 on account of the past suit, without costs."
The first proposition contained in this judgment finds no support
in the record, and there is nothing therein to show that the
plaintiff had any acquired right to the administration of all the
lands described in the complaint.
The second proposition finds its support in the record if it is
limited to the lands which were assigned to the defendants in the
partition.
The third proposition can not be supported. Article 490 of the
Civil Code is as follows:
"ART. 490. The usufructuary of part of a thing held in common
shall exercise all the rights corresponding to the owner thereof
with regard to the administration and collection of fruits or
interests. Should the community cease by reason of the division
of the thing possessed in common, the usufruct of the part
awarded to the owner or coowner shall appertain to the
usufructuary."
As to the fourth proposition, the agreed statement of facts shows
that, while the defendants were in possession of the tracts which
had been assigned to them, they received the crops for only two
years; that the crop for the year 1906 amounted to 14 uyones and
13 manojos, of the value of P4. for each uyon, and that the crop of
1907 amounted to 15 uyones and 4 manojos, of the value of P6.25
for each uyon. These are the only amounts which the plaintiff is
entitled to recover.
As to the fifth proposition, while it appears that the plaintiff
excepted to the judgment. and stated that she desired to present a
bill of exceptions, yet she in fact did not present any. The error,

Page |
16
therefore, assigned by her with reference to this fifth proposition
can not be considered. (Naval vs. Benavides, 8 Phil. Rep., 250;
Puruganan vs. Martin, 8 Phil. Rep., 519; Ullmann vs. Ullmann &
Co., 10 Phil. Rep., 459.)
The judgment of the court below is reversed and the case
remanded, with directions to enter a judgment in favor of the
plaintiff to the effect that she is entitled to the right of usufruct in
the lands assigned to the defendants by the partition of August 10,
1905, and to enter a judgment against the plaintiff and in favor of
the defendant Querol for P149.48 without costs to either party.
No costs will be allowed to either party in this court. So ordered.
Arellano, C.J., Torres, Mapa, Carson and Tracey, JJ., concur.
||| (Pichay v. Querol, G.R. No. 4452, October 01, 1908)