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FIRSTDIVISION

[G.R.No.148830.April13,2005]

NATIONAL HOUSING AUTHORITY, petitioner, vs. COURT OF APPEALS,

BULACAN GARDEN CORPORATION and MANILA SEEDLING BANK
FOUNDATION,INC.,respondents.
DECISION
CARPIO,J.:

TheCase
[1]
[2]
This is a petition for review seeking to set aside the Decision dated 30 March 2001 of the
CourtofAppeals(appellatecourt)inCAG.R.CVNo.48382,aswellasitsResolutiondated25June
[3]
2001denyingthemotionforreconsideration.TheappellatecourtreversedtheDecision ofBranch
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 BGCs facilities on a lot leased from Manila Seedling Bank Foundation, Inc. (MSBF).
MSBFallegedlyhasusufructuaryrightsoverthelotleasedtoBGC.
AntecedentFacts
On24October1968,ProclamationNo.481issuedbythenPresidentFerdinandMarcossetaside
[4]
a120hectareportionoflandinQuezonCityownedbytheNHA asreservedpropertyforthesiteof
the National Government Center (NGC). On 19 September 1977, President Marcos issued
Proclamation No. 1670, which removed a sevenhectare portion from the coverage of the NGC.
ProclamationNo.1670gaveMSBFusufructuaryrightsoverthissegregatedportion,asfollows:
PursuanttothepowersvestedinmebytheConstitutionandthelawsofthePhilippines,I,FERDINANDE.
MARCOS,PresidentoftheRepublicofthePhilippines,doherebyexcludefromtheoperationofProclamation
No.481,datedOctober24,1968,whichestablishedtheNationalGovernmentCenterSite,certainparcelsof
landembracedthereinandreservingthesamefortheManilaSeedlingBankFoundation,Inc.,foruseinits
operationandprojects,subjecttoprivaterightsifanytherebe,andtofuturesurvey,underthe
administrationoftheFoundation.
Thisparcelofland,whichshallembrace7hectares,shallbedeterminedbythefuturesurveybasedonthe
technicaldescriptionsfoundinProclamationNo.481,andmostparticularlyontheoriginalsurveyofthearea,
datedJuly1910toJune1911,andonthesubdivisionsurveydatedApril1925,1968.(Emphasisadded)
MSBFoccupiedtheareagrantedbyProclamationNo.1670.Overtheyears,MSBFsoccupancy
exceeded the sevenhectare area subject to its usufructuary rights. By 1987, MSBF occupied
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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
creektothenorth.
On18August1987,MSBFleasedaportionoftheareaitoccupiedtoBGCandotherstallholders.
BGCleasedtheportionfacingEDSA,whichoccupies4,590squaremetersofthe16hectarearea.
On11November1987,PresidentCorazonAquinoissuedMemorandumOrderNo.127(MO127)
whichrevokedthereservedstatusofthe50hectares,moreorless,remainingoutofthe120hectares
oftheNHApropertyreservedassiteoftheNationalGovernmentCenter.MO127alsoauthorizedthe
NHAtocommercializetheareaandtosellittothepublic.
On15August1988,actingonthepowergrantedunderMO127,theNHAgaveBGCtendaysto
vacate its occupied area. Any structure left behind after the expiration of the tenday period will be
demolishedbyNHA.
BGCthenfiledacomplaintforinjunctionon21April1988beforethetrialcourt.On26May1988,
BGCamendeditscomplainttoincludeMSBFasitscoplaintiff.
TheTrialCourtsRuling
ThetrialcourtagreedwithBGCandMSBFthatProclamationNo.1670gaveMSBFtherightto
conduct the survey, which would establish the sevenhectare area covered by MSBFs usufructuary
rights. However, the trial court held that MSBF failed to act seasonably on this right to conduct the
survey.ThetrialcourtruledthattheprevioussurveysconductedbyMSBFcovered16hectares,and
werethusinappropriatetodeterminethesevenhectarearea.Thetrialcourtconcludedthattoallow
MSBFtodeterminethesevenhectareareanowwouldbegrosslyunfairtothegrantoroftheusufruct.
On8March1994,thetrialcourtdismissedBGCscomplaintforinjunction.Thus:
Premisesconsidered,thecomplaintprayingtoenjointheNationalHousingAuthorityfromcarryingoutthe
demolitionoftheplaintiffsstructure,improvementsandfacilitiesinthepremisesinquestionishereby
DISMISSED,butthesuggestionfortheCourttorulethatMemorandumOrder127hasrepealedProclamation
No.1670isDENIED.Nocosts.
[5]

SOORDERED.

TheNHAdemolishedBGCsfacilitiessoonthereafter.
TheAppellateCourtsRuling
Not content with the trial courts ruling, BGC appealed the trial courts Decision to the appellate
court.Initially,theappellatecourtagreedwiththetrialcourtthatProclamationNo.1670grantedMSBF
the right to determine the location of the sevenhectare area covered by its usufructuary rights.
However,theappellatecourtruledthatMSBFdidinfactassertthisrightbyconductingtwosurveys
anderectingitsmainstructuresintheareaofitschoice.
On30March2001,theappellatecourtreversedthetrialcourtsruling.Thus:
WHEREFORE,premisesconsidered,theDecisiondatedMarch8,1994oftheRegionalTrialCourtofQuezon
City,Branch87,isherebyREVERSEDandSETASIDE.TheNationalHousingAuthorityisenjoinedfrom
demolishingthestructures,facilitiesandimprovementsoftheplaintiffappellantBulacanGardenCorporationat
itsleasedpremiseslocatedinQuezonCitywhichpremiseswerecoveredbyProclamationNo.1670,duringthe
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existenceofthecontractofleaseit(BulacanGarden)hadenteredwiththeplaintiffappellantManilaSeedling
BankFoundation,Inc.
Nocosts.
[6]

SOORDERED.

TheNHAfiledamotionforreconsideration,whichwasdeniedbytheappellatecourton25June
2001.
Hence,thispetition.
TheIssues
ThefollowingissuesareconsideredbythisCourtforresolution:
WHETHERTHEPETITIONISNOWMOOTBECAUSEOFTHEDEMOLITIONOFTHE
STRUCTURESOFBGCand
WHETHERTHEPREMISESLEASEDBYBGCFROMMSBFISWITHINTHESEVEN
HECTAREAREATHATPROCLAMATIONNO.1670GRANTEDTOMSBFBYWAYOF
USUFRUCT.
TheRulingoftheCourt
We remand this petition to the trial court for a joint survey to determine finally the metes and
boundsofthesevenhectareareasubjecttoMSBFsusufructuaryrights.
WhetherthePetitionisMootbecauseofthe
DemolitionofBGCsFacilities
BGC claims that the issue is now moot due to NHAs demolition of BGCs facilities after the trial
courtdismissedBGCscomplaintforinjunction.BGCarguesthatthereisnothingmoretoenjoinand
thattherearenolongeranyrightsleftforadjudication.
Wedisagree.
BGCmayhavelostinterestinthiscaseduetothedemolitionofitspremises,butitscoplaintiff,
MSBF,hasnot.TheissueforresolutionhasadirecteffectonMSBFsusufructuaryrights.Thereisyet
thecentralquestionoftheexactlocationofthesevenhectareareagrantedbyProclamationNo.1670
toMSBF.Thisissueissquarelyraisedinthispetition.Thereisaneedtosettlethisissuetoforestall
futuredisputesandtoputthis20yearlitigationtorest.
OntheLocationoftheSevenHectareAreaGrantedby
ProclamationNo.1670toMSBFasUsufructuary
Rule45ofthe1997RulesofCivilProcedurelimitsthejurisdictionofthisCourttothereviewof
[7]
[8]
errors of law. Absent any of the established grounds for exception, this Court will not disturb
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findings of fact of lower courts. Though the matter raised in this petition is factual, it deserves
resolutionbecausethefindingsofthetrialcourtandtheappellatecourtconflictonseveralpoints.
TheentireareaboundedbyAghamRoadtotheeast,EDSAtothewest,QuezonAvenuetothe
southandbyacreektothenorthmeasuresapproximately16hectares.ProclamationNo.1670gave
MSBFausufructoveronlyasevenhectarearea.TheBGCsleasedportionislocatedalongEDSA.
Ausufructmaybeconstitutedforaspecifiedtermandundersuchconditionsasthepartiesmay
[9]
deemconvenientsubjecttothelegalprovisionsonusufruct. A usufructuary may lease the object
[10]
heldinusufruct.
Thus,theNHAmaynotevictBGCifthe4,590squaremeterportionMSBFleased
toBGCiswithinthesevenhectareareaheldinusufructbyMSBF.Theownerofthepropertymust
[11]
respect the lease entered into by the usufructuary so long as the usufruct exists.
However, the
NHAhastherighttoevictBGCifBGCoccupiedaportionoutsideofthesevenhectareareacovered
byMSBFsusufructuaryrights.
MSBFssurveyshowsthatBGCsstalliswithinthesevenhectarearea.Ontheotherhand,NHAs
surveyshowsotherwise.Theentirecontroversyrevolvesonthequestionofwhoselandsurveyshould
prevail.
MSBFs survey plots the location of the sevenhectare portion by starting its measurement from
Quezon Avenue going northward along EDSA up until the creek, which serves as the northern
boundaryofthelandinquestion.Mr.BenMalto(Malto),surveyorforMSBF,basedhissurveymethod
onthefactthatMSBFsmainfacilitiesarelocatedwithinthisarea.
On the other hand, NHAs survey determines the sevenhectare 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 MSBFs gate fronting Agham
Road.
BGCpresentedthetestimonyofMr.LucitoM.Bertol(Bertol),GeneralManagerofMSBF.Bertol
[12]
presentedamap,
which detailed the area presently occupied by MSBF. The map had a yellow
shaded portion, which was supposed to indicate the sevenhectare area. It was clear from both the
map and Bertols testimony that MSBF knew that it had occupied an area in excess of the seven
[13]
hectareareagrantedbyProclamationNo.1670.
Uponcrossexamination,Bertoladmittedthathe
[14]
personallydidnotknowtheexactboundariesofthesevenhectarearea.
Bertolalsoadmittedthat
[15]
MSBFpreparedthemapwithoutconsultingNHA,theowneroftheproperty.
BGCalsopresentedthetestimonyofMalto,aregisteredforesterandtheAssistantVicePresident
of Planning, Research and Marketing of MSBF. Malto testified that he conducted the land survey,
[16]
whichwasusedtoconstructthemappresentedbyBertol.
Bertolclarifiedthatheauthorizedtwo
[17]
surveys, one in 1984 when he first joined MSBF, and the other in 1986.
In both instances, Mr.
Malto testified that he was asked to survey a total of 16 hectares, not just seven hectares. Malto
testifiedthatheconductedthesecondsurveyin1986ontheinstructionofMSBFsgeneralmanager.
AccordingtoMalto,itwasonlyinthesecondsurveythathewastoldtodeterminethesevenhectare
portion.Maltofurtherclarifiedthathebasedthetechnicaldescriptionsofbothsurveysonapreviously
[18]
existingsurveyoftheproperty.
The NHA presented the testimony of Inobaya, a geodetic engineer employed by the NHA.
InobayatestifiedthataspartoftheNHAsSurveyDivision,hisdutiesincludedconductingsurveysof
[19]
properties administered by the NHA.
Inobaya conducted his survey in May 1988 to determine
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[20]
whether BGC was occupying an area outside the sevenhectare area MSBF held in usufruct.
Inobaya surveyed the area occupied by MSBF following the same technical descriptions used by
Malto.InobayaalsocametothesameconclusionthattheareaoccupiedbyMSBF,asindicatedby
the boundaries in the technical descriptions, covered a total of 16 hectares. He further testified that
[21]
thesevenhectareportioninthemappresentedbyBGC,
whichwasconstructedbyMalto,does
nottallywiththeboundariesBGCandMSBFindicatedintheircomplaint.
Article565oftheCivilCodestates:
ART.565.Therightsandobligationsoftheusufructuaryshallbethoseprovidedinthetitleconstitutingthe
usufructindefaultofsuchtitle,orincaseitisdeficient,theprovisionscontainedinthetwofollowingChapters
shallbeobserved.
In the present case, Proclamation No. 1670 is the title constituting the usufruct. Proclamation No.
1670categoricallystatesthatthesevenhectareareashallbedeterminedbyfuturesurveyunderthe
administrationoftheFoundationsubjecttoprivaterightsiftherebeany.Theappellatecourtandthe
trial court agree that MSBF has the latitude to determine the location of its sevenhectare usufruct
portionwithinthe16hectarearea.Theappellatecourtandthetrialcourtdisagree,however,whether
MSBFseasonablyexercisedthisright.
ItisclearthatMSBFconductedatleasttwosurveys.Althoughbothsurveyscoveredatotalof16
hectares, the second survey specifically indicated a sevenhectare area shaded in yellow. MSBF
made the first survey in 1984 and the second in 1986, way before the present controversy started.
MSBFconductedthetwosurveysbeforetheleasetoBGC.ThetrialcourtruledthatMSBFdidnotact
seasonably in exercising its right to conduct the survey. Confronted with evidence that MSBF did in
factconducttwosurveys,thetrialcourtdismissedthetwosurveysasselfserving.Thisisclearlyan
erroronthepartofthetrialcourt.ProclamationNo.1670authorizedMSBFtodeterminethelocation
of the sevenhectare area. This authority, coupled with the fact that Proclamation No. 1670 did not
statethelocationofthesevenhectarearea,leavesnoroomfordoubtthatProclamationNo.1670left
ittoMSBFtochoosethelocationofthesevenhectareareaunderitsusufruct.
More evidence supports MSBFs stand on the location of the sevenhectare area. The main
structuresofMSBFarefoundintheareaindicatedbyMSBFssurvey.Thesestructuresarethemain
office,thethreegreenhouses,thewarehouseandthecompostingarea.Ontheotherhand,theNHAs
delineationofthesevenhectareareawouldcoveronlythefourhardeningbaysandthedisplayarea.
Itiseasytodistinguishbetweenthesetwogroupsofstructures.Thefirstgroupcoversbuildingsand
facilities that MSBF needs for its operations. MSBF built these structures before the present
controversy started. The second group covers facilities less essential to MSBFs existence. This
distinctionisdecisiveastowhichsurveyshouldprevail.ItisclearthattheMSBFintendedtousethe
yellowshadedareaprimarilybecauseiterecteditsmainstructuresthere.
Inobaya testified that his main consideration in using Agham Road as the starting point for his
surveywasthepresenceofagatethere.Thelocationofthegateisnotasufficientbasistodetermine
thestartingpoint.MSBFsrightasausufructuaryasgrantedbyProclamationNo.1670shouldreston
somethingmoresubstantialthanwhereMSBFchosetoplaceagate.
ToprefertheNHAssurveytoMSBFssurveywillstripMSBFofmostofitsmainfacilities.Onlythe
mainbuildingofMSBFwillremainwithMSBFsincethemainbuildingisnearthecornerofEDSAand
QuezonAvenue.TherestofMSBFsmainfacilitieswillbeoutsidethesevenhectarearea.
On the other hand, this Court cannot countenance MSBFs act of exceeding the sevenhectare
portiongrantedtoitbyProclamationNo.1670.Ausufructisnotsimplyaboutrightsandprivileges.A
usufructuaryhasthedutytoprotecttheownersinterests.OnesuchdutyisfoundinArticle601ofthe
CivilCodewhichstates:

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ART.601.Theusufructuaryshallbeobligedtonotifytheownerofanyactofathirdperson,ofwhichhemay
haveknowledge,thatmaybeprejudicialtotherightsofownership,andheshallbeliableshouldhenotdoso,
fordamages,asiftheyhadbeencausedthroughhisownfault.
Ausufructgivesarighttoenjoythepropertyofanotherwiththeobligationofpreservingitsformand
[22]
substance,unlessthetitleconstitutingitorthelawotherwiseprovides.
Thiscontroversywouldnot
havearisenhadMSBFrespectedthelimitofthebeneficialusegiventoit.MSBFsencroachmentofits
benefactorspropertygavebirthtotheconfusionthatattendedthiscase.Toputthismatterentirelyto
rest,itisnotenoughtoremindtheNHAtorespectMSBFschoiceofthelocationofitssevenhectare
area.MSBF,foritspart,mustvacatetheareathatisnotpartofitsusufruct.MSBFsrightsbeginand
endwithinthesevenhectareportionofitsusufruct.ThisCourtagreeswiththetrialcourtthatMSBF
has abused the privilege given it under Proclamation No. 1670. The direct corollary of enforcing
MSBFsrightswithinthesevenhectareareaisthenegationofanyofMSBFsactsbeyondit.
The sevenhectare portion of MSBF is no longer easily determinable considering the varied
structureserectedwithinandsurroundingthearea.Bothpartiesadvancedifferentreasonswhytheir
ownsurveysshouldbepreferred.Atthispoint,thedeterminationofthesevenhectareportioncannot
bemadetorelyonachoicebetweentheNHAsandMSBFssurvey.Thereisaneedforanewsurvey,
oneconductedjointlybytheNHAandMSBF,toremovealldoubtsontheexactlocationoftheseven
hectareareaandthusavoidfuturecontroversies.Thisnewsurveyshouldconsiderexistingstructures
ofMSBF.ItshouldasmuchaspossibleincludeallofthefacilitiesofMSBFwithinthesevenhectare
portionwithoutsacrificingcontiguity.
Afinalpoint.Article605oftheCivilCodestates:
ART.605.Usufructcannotbeconstitutedinfavorofatown,corporation,orassociationformorethan
fiftyyears.Ifithasbeenconstituted,andbeforetheexpirationofsuchperiodthetownisabandoned,orthe
corporationorassociationisdissolved,theusufructshallbeextinguishedbyreasonthereof.(Emphasisadded)
Thelawclearlylimitsanyusufructconstitutedinfavorofacorporationorassociationto50years.
A usufruct is meant only as a lifetime grant. Unlike a natural person, a corporation or associations
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.
ProclamationNo.1670wasissued19September1977,or28yearsago.Hence,underArticle605,
theusufructinfavorofMSBFhas22yearsleft.
MO127releasedapproximately50hectaresoftheNHApropertyasreservedsitefortheNational
Government Center. However, MO 127 does not affect MSBFs sevenhectare area since under
Proclamation No. 1670, MSBFs sevenhectare 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
dated25June2001inCAG.R.CVNo.48382areSETASIDE.ThiscaseisREMANDEDtoBranch
87oftheRegionalTrialCourtofQuezonCity,whichshallorderajointsurveybytheNationalHousing
Authority and Manila Seedling Bank Foundation, Inc. to determine the metes and bounds of the
sevenhectare portion of Manila Seedling Bank Foundation, Inc. under Proclamation No. 1670. The
sevenhectare 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
theRegionalTrialCourtforitsapprovalwithinsixtydaysfromthedateorderingthejointsurvey.
SOORDERED.
Davide,Jr.,C.J.,(Chairman),Quisumbing,YnaresSantiago,andAzcuna,JJ.,concur.

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[1]
[2]

[3]
[4]
[5]
[6]
[7]

NHAvsCA:148830:April13,2005:J.Carpio:FirstDivision:Decision

UnderRule45ofthe1997RulesonCivilProcedure.
Penned by Justice Bennie AdefuinDela Cruz, with Associate Justices Andres B. Reyes, Jr. and Josefina Guevara
Salonga,concurring.
PennedbyJudgeElsieLigotTelan.
UnderTCTNo.309814.Records,p.286.
Rollo,p.43.
Ibid.,p.31.
Section1ofRule45states:

SECTION1.FilingofpetitionwithSupremeCourt.Apartydesiringtoappealby certiorarifromajudgmentorfinalorderor
resolutionoftheCourtofAppeals,theSandiganbayan,theRegionalTrialCourtorothercourtswheneverauthorized
by law, may file with the Supreme Court a verified petition for review on certiorari. The petition shall raise only
questionsoflawwhichmustbedistinctlysetforth.
[8]

AslaidoutinBPICreditCorporationv.CourtofAppeals,G.R.96755,4December1991,204SCRA601:

(1)Whentheconclusionisafindinggroundedentirelyonspeculation,surmisesandconjectures
(2)Whentheinferencemadeismanifestlymistaken,absurdorimpossible
(3)Whenthereisagraveabuseofdiscretion
(4)Whenthejudgmentisbasedonamisapprehensionoffacts
(5)Whenthefindingsoffacts[ofthetrialcourtandtheappellatecourt]areconflicting
(6) When the [appellate court] in making its findings, went beyond the issues of the case and the same is contary to the
admissionsofbothappellantandappellee
(7)Whenthefindingsofthe[appellatecourt]arecontrarytothoseofthetrialcourt
(8)Whenthefindingsoffactsareconclusionswithoutcitationofspecificevidenceonwhichtheyarebased
(9) When the facts set forth in the petition as well as in the petitioners main and reply briefs are not disputed by the
respondentsand
(10)Whenthefindingoffactofthe[appellatecourt]ispremisedonthesupposedabsenceofevidenceandiscontradicted
bytheevidenceonrecord.
[9]

Baluranv.Navarro,G.R.No.L44428,30September1977,79SCRA309.

[10]
[11]

CivilCode,Art.572.

Ibid.

[12]
[13]
[14]
[15]
[16]
[17]

ExhibitA,Recordsp.117.
TSN,12January1989,pp.410.
Ibid.,p.11.
Ibid.,pp.1112.
TSN,19January1989,pp.23.
Ibid.,p.3.

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[18]
[19]
[20]
[21]
[22]

NHAvsCA:148830:April13,2005:J.Carpio:FirstDivision:Decision

Ibid.,pp.45.
TSN,5April1989,p.2.
Ibid.,p.7.
ExhibitA,supranote12.
CivilCode,Art.562.

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