G.R. No.

L-123 December 12, 1945

JOSEFA FABIE, petitioner,
vs.
JOSE GUTIERREZ DAVID, Judge of First Instance of Manila, NGO BOO SOO and JUAN GREY,respondents.
OZAETA, J.:
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 Disrito de Binondo, de esta Ciudad 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 paterna tutor de la persona y
bienes de mi ahijada menor, Maria Josefa de la Paz Fabie.
The owner of Santo Cristo property abovementioned is the respondent Juan Grey, while those of the Ongpin property are other person not
concern herein. Previous to September 1944 litigation arose between Josefa Fabie as plaintiff and Juan Grey as defendant and the owner 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:
(4) Heretofore, the rent 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 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 are 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.
x x x x x x x x x
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 the both the Sto. Cristo and the
Ongpin properties.
(9) The usufructuary 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 each of the properties, promptly when due or,
in the case of repairs, when the 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 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 latter 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 of premises including the one door which said defendant, without plaintiff's consent and contrary to their
agreement, had subleased to another Chinese, but plaintiff 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 and April 14, 1945, to leave the said premises, but he
refused"; and she prayed for judgment of eviction and for unpaid rentals.
The defendant answered alleging that he was and 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 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; 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 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
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 was 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 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.lawphi1.net
The present original action was instituted in this Court by Josefa Fabie to annul the order of the dismissal and to require to 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 receive 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 of withholding of possession, bring an action in the proper inferior court against the person or persons unlawfully withholding or
depriving of possession, or any person or persons claiming under them, for the restitution of such possession, together with the 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 necessary
repairs thereon, and in case 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 to 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 the 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,
759; 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 Flameo, 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 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 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 agent collected 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 the right to do 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 by 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 and 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 detail 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 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 she fulfills her obligation to pay the taxes and insure and conserve the property
properly, the owner has no legitimate 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 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 of 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 ofCecilio vs. Belmonte (48 Phil., 243, 255),
and Aguilar vs. Cabrera and Flameo (G.R. No. 49129), we hold thatmandamus 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 said judgment as modified, and since he filed his notice 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 that court is directed to try and decide the said case on the merits; with the costs hereof against the respondent Ngo
Soo.
Moran, C.J., Paras, Jaranilla, Feria, De Joya, Pablo, Perfecto, Bengzon, and Briones, JJ., concur.
Separate Opinions
HILADO, J., concurring:
I concur on the sole ground that, in my opinion, the amended complaint, dated July 12, 1945, filed by plaintiff in the Municipal Court of
Manila, expressly alleges an agreement between her and defendant Ngo Boo Soo regarding the leasing of the premises in question, and that
said amended complaint contains further allegations which, together with the allegations of said agreement, under a liberal construction (Rule
1, section 2, Rules of the Court), would constitute a prima facie showing that the case is one of unlawful detainer. Of course, this is only said
in view of the allegations of the amended complaint, without prejudice to the evidence which the parties may adduce at the trial in the merits,
in view of which the court will judge whether or not, in point of fact, the case is one of unlawful detainer.


[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, v. SAMAR MINING COMPANY, INC. and THE COURT OF TAX APPEALS, Respondents.

Solicitor General Antonio P. Barredo, Assistant Solicitor General Pacifico P. de Castro and Solicitor Lolita O. Gal-lang,
for Petitioners.

Pacifico de Ocampo and Sofronio G. Sayo for respondent Samar Mining Company, Inc.


D E C I S I O N


ZALDIVAR, J.:


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. v. 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 Boards 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:jgc:chanrobles.com.ph

"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."cralaw virtua1aw library

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. v. 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:jgc:chanrobles.com.ph

"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 v. 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 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 v. Rizal, 67 Phil., 608; Article 597, new Civil Code). Appellee is but a
partial usufructuary of the road in question."cralaw virtua1aw library

Again, in the case of Municipality of Cotabato, Et. Al. v. 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:jgc:chanrobles.com.ph

"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."cralaw virtua1aw library

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:jgc:chanrobles.com.ph

"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 .
. ."cralaw virtua1aw library

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:jgc:chanrobles.com.ph

"SEC. 7. Jurisdiction. The Court of Tax Appeals shall exercise exclusive appellate jurisdiction to review by appeal, as herein provided
x x x


(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."cralaw virtua1aw library

"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."cralaw virtua1aw library

In this connection the Court of Tax Appeals, in the decision appealed from, said:jgc:chanrobles.com.ph

"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 to cases
involving the refund of real property taxes which remained with the Court of First Instance (See of Cabanatuan, Et. Al. v. 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:chanrob1es virtual 1aw library

SEC. 21. General provisions.
x x x


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 petitioners 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."cralaw virtua1aw library

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:jgc:chanrobles.com.ph

"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 of Commonwealth 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

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 v. Gatmaitan, 4 said:jgc:chanrobles.com.ph

". . . 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."cralaw virtua1aw library

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.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Castro, Fernando, Teehankee, Villamor and Makasiar, JJ., concur.

Barredo, J., took no part.

Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-44428 September 30, 1977
AVELINO BALURAN, petitioner,
vs.
HON. RICARDO Y. NAVARRO, Presiding Judge, Court of First Instance of Ilocos Norte, Branch I and ANTONIO
OBEDENCIO, respondents.
Alipio V. Flores for petitioner.
Rafael B. Ruiz for private respondent.

MUOZ PALMA, J.:
Spouses Domingo Paraiso and Fidela Q. Paraiso were the owners of a residential lot of around 480 square meters located in Sarrat, Ilocos
Norte. On or about February 2, 1964, the Paraisos executed an agreement entitled "BARTER" whereby as party of the first part they agreed to
"barter and exchange" with spouses Avelino and Benilda Baluran their residential lot with the latter's unirrigated riceland situated in Sarrat,
Ilocos Norte, of approximately 223 square meters without any permanent improvements, under the following conditions:
1. That both the Party of the First Part and the Party of the Second Part shall enjoy the material possession of their
respective properties; the Party of the First Part shall reap the fruits of the unirrigated riceland and the Party of the
Second Part shall have a right to build his own house in the residential lot.
2. Nevertheless, in the event any of the children of Natividad P. Obencio, daughter of the First Part, shall choose to reside
in this municipality and build his own house in the residential lot, the Party of the Second Part shall be obliged to return
the lot such children with damages to be incurred.
3. That neither the Party of the First Part nor the Party of the Second Part shall encumber, alienate or dispose of in any
manner their respective properties as bartered without the consent of the other.
4. That inasmuch as the bartered properties are not yet accordance with Act No. 496 or under the Spanish Mortgage Law,
they finally agreed and covenant that this deed be registered in the Office of the Register of Deeds of Ilocos Norte
pursuant to the provisions of Act No. 3344 as amended. (p. 28, rollo)
On May 6, 1975 Antonio Obendencio filed with the Court of First Instance of Ilocos Norte the present complaint to recover the above-
mentioned residential lot from Avelino Baluran claiming that he is the rightful owner of said residential lot having acquired the same from his
mother, Natividad Paraiso Obedencio, and that he needed the property for Purposes Of constructing his house thereon inasmuch as he had
taken residence in his native town, Sarrat. Obedencio accordingly prayed that he be declared owner of the residential lot and that defendant
Baluran be ordered to vacate the same forfeiting his (Obedencio) favor the improvements defendant Baluran had built in bad faith.
1

Answering the complaint, Avelino Baluran alleged inter alia (1) that the "barter agreement" transferred to him the ownership of the residential
lot in exchange for the unirrigated riceland conveyed to plaintiff's Predecessor-in-interest, Natividad Obedencio, who in fact is still in On
thereof, and (2) that the plaintiff's cause of action if any had prescribed.
2

At the pre-trial, the parties agreed to submit the case for decision on the basis of their stipulation of facts. It was likewise admitted that the
aforementioned residential lot was donated on October 4, 1974 by Natividad Obedencio to her son Antonio Obedencio, and that since the
execution of the agreement of February 2, 1964 Avelino Baluran was in possession of the residential lot, paid the taxes of the property, and
constructed a house thereon with an value of P250.00.
3
On November 8, 1975, the trial Judge Ricardo Y. Navarro rendered a decision the
dispositive portion of which reads as follows:
Consequently, the plaintiff is hereby declared owner of the question, the defendant is hereby ordered to vacate the same
with costs against defendant.
Avelino Baluran to whom We shall refer as petitioner, now seeks a review of that decision under the following assignment of errors:
I The lower Court erred in holding that the barter agreement did not transfer ownership of the lot in suit to the
petitioner.
II The lower Court erred in not holding that the right to re-barter or re- exchange of respondent Antonio Obedencio
had been barred by the statute of limitation. (p. 14, Ibid.)
The resolution of this appeal revolves on the nature of the undertaking contract of February 2, 1964 which is entitled "Barter Agreement."
It is a settled rule that to determine the nature of a contract courts are not bound by the name or title given to it by the contracting
parties.
4
This Court has held that contracts are not what the parties may see fit to call them but what they really are as determined by the
principles of law.
5
Thus, in the instant case, the use of the, term "barter" in describing the agreement of February 2, 1964, is not controlling.
The stipulations in said document are clear enough to indicate that there was no intention at all on the part of the signatories thereto to
convey the ownership of their respective properties; all that was intended, and it was so provided in the agreement, was to transfer the
material possession thereof. (condition No. 1, see page I of this Decision) In fact, under condition No. 3 of the agreement, the parties
retained the right to alienate their respective properties which right is an element of ownership.
With the material ion being the only one transferred, all that the parties acquired was the right of usufruct which in essence is the right to
enjoy the Property of another.
6
Under the document in question, spouses Paraiso would harvest the crop of the unirrigated riceland while the
other party, Avelino Baluran, could build a house on the residential lot, subject, however, to the condition, that when any of the children of
Natividad Paraiso Obedencio, daughter of spouses Paraiso, shall choose to reside in the municipality and build his house on the residential lot,
Avelino Baluran shall be obliged to return the lot to said children "With damages to be incurred." (Condition No. 2 of the Agreement) Thus,
the mutual agreement each party enjoying "material possession" of the other's property was subject to a resolutory condition the
happening of which would terminate the right of possession and use.
A resolutory condition is one which extinguishes rights and obligations already existing.
7
The right of "material possession" granted in the
agreement of February 2, 1964, ends if and when any of the children of Natividad Paraiso, Obedencio (daughter of spouses Paraiso, Party of
the First Part) would reside in the municipality and build his house on the property. Inasmuch as the condition opposed is not dependent
solely on the will of one of the parties to the contract the spouses Paraiso but is Part dependent on the will of third persons Natividad
Obedencio and any of her children the same is valid.
8

When there is nothing contrary to law, morals, and good customs Or Public Policy in the stipulations of a contract, the agreement constitutes
the law between the parties and the latter are bound by the terms thereof.
9

Art. 1306 of the Civil Code states:
Art. 1306. The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem
convenient, provided they are not contrary to law, Morals, good customs, public order, or public policy.
Contracts which are the private laws of the contracting parties, should be fulfilled according to the literal sense of their
stipulations, if their terms are clear and leave no room for doubt as to the intention of the contracting parties, for
contracts are obligatory, no matter what their form may be, whenever the essential requisites for their validity are
present. (Philippine American General Insurance Co., Inc. vs. Mutuc, 61 SCRA 22)
The trial court therefore correctly adjudged that Antonio Obedencio is entitled to recover the possession of the residential lot Pursuant to the
agreement of February 2, 1964.
Petitioner submits under the second assigned error that the causa, of action if any of respondent Obedencio had Prescribed after the lapse of
four years from the date of execution of the document of February 2, 1964. It is argued that the remedy of plaintiff, now respondent, Was to
ask for re-barter or re-exchange of the properties subject of the agreement which could be exercised only within four years from the date of
the contract under Art. 1606 of the Civil Code.
The submission of petitioner is untenable. Art. 1606 of the Civil Code refers to conventional redemption which petitioner would want to apply
to the present situation. However, as We stated above, the agreement of the parties of February 2, 1964, is not one of barter, exchange or
even sale with right to repurchase, but is one of or akin the other is the use or material ion or enjoyment of each other's real property.
Usufruct may be constituted by the parties for any period of time and under such conditions as they may deem convenient and beneficial
subject to the provisions of the Civil Code, Book II, Title VI on Usufruct. The manner of terminating or extinguishing the right of usufruct is
primarily determined by the stipulations of the parties which in this case now before Us is the happening of the event agreed upon.
Necessarily, the plaintiff or respondent Obedencio could not demand for the recovery of possession of the residential lot in question, not until
he acquired that right from his mother, Natividad Obedencio, and which he did acquire when his mother donated to him the residential lot on
October 4, 1974. Even if We were to go along with petitioner in his argument that the fulfillment of the condition cannot be left to an
indefinite, uncertain period, nonetheless, in the case at bar, the respondent, in whose favor the resolutory condition was constituted, took
immediate steps to terminate the right of petitioner herein to the use of the lot. Obedencio's present complaint was filed in May of 1975,
barely several months after the property was donated to him.
One last point raised by petitioner is his alleged right to recover damages under the agreement of February 2, 1964. In the absence of
evidence, considering that the parties agreed to submit the case for decision on a stipulation of facts, We have no basis for awarding damages
to petitioner.
However, We apply Art. 579 of the Civil Code and hold that petitioner will not forfeit the improvement he built on the lot but may remove the
same without causing damage to the property.
Art. 579. The usufructuary may make on the property held in usufruct such useful improvements or expenses for mere
pleasure as he may deem proper, provided he does not alter its form or substance; but he shall have no right to be
indemnified therefor. He may, however. He may, however, removed such improvements, should it be possible to do so
without damage to the property. (Emphasis supplied)
Finally, We cannot close this case without touching on the unirrigated riceland which admittedly is in the possession of Natividad Obedencio.
In view of our ruling that the "barter agreement" of February 2, 1964, did not transfer the ownership of the respective properties mentioned
therein, it follows that petitioner Baluran remains the owner of the unirrigated riceland and is now entitled to its Possession. With the
happening of the resolutory condition provided for in the agreement, the right of usufruct of the parties is extinguished and each is entitled to
a return of his property. it is true that Natividad Obedencio who is now in possession of the property and who has been made a party to this
case cannot be ordered in this proceeding to surrender the riceland. But inasmuch as reciprocal rights and obligations have arisen between
the parties to the so-called "barter agreement", We hold that the parties and for their successors-in-interest are duty bound to effect a
simultaneous transfer of the respective properties if substance at justice is to be effected.
WHEREFORE, Judgment is hereby rendered: 1) declaring the petitioner Avelino Baluran and respondent Antonio Obedencio the respective
owners the unirrigated riceland and residential lot mentioned in the "Barter Agreement" of February 2, 1964; 2) ordering Avelino Baluran to
vacate the residential lot and removed improvements built by thereon, provided, however that he shall not be compelled to do so unless the
unirrigated riceland shall five been restored to his possession either on volition of the party concerned or through judicial proceedings which
he may institute for the purpose.
Without pronouncement as to costs. So Ordered.
Teehankee (Chairman), Makasiar, Martin, Fernandez and Guerrero, JJ., concur.
---------------
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.
D E C I S I O N
CARPIO, J.:
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 BGCs 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.
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, MSBFs 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.
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 Courts 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 MSBFs 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 BGCs complaint for injunction. Thus:
Premises considered, the complaint praying to enjoin the National Housing Authority from carrying out the demolition of the plaintiffs
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. 1670 is DENIED. No costs.
SO ORDERED.
[5]

The NHA demolished BGCs facilities soon thereafter.
The Appellate Courts Ruling
Not content with the trial courts ruling, BGC appealed the trial courts 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 courts 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.
The Ruling of the Court
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 MSBFs usufructuary rights.
Whether the Petition is Moot because of the
Demolition of BGCs Facilities
BGC claims that the issue is now moot due to NHAs demolition of BGCs facilities after the trial court dismissed BGCs 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 MSBFs 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 BGCs 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 MSBFs usufructuary rights.
MSBFs survey shows that BGCs stall is within the seven-hectare area. On the other hand, NHAs survey shows otherwise. The entire
controversy revolves on the question of whose land survey should prevail.
MSBFs 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 MSBFs main facilities are located within this area.
On the other hand, NHAs 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 MSBFs 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 Bertols 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 MSBFs 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 NHAs
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 that Proclamation No. 1670 left it to MSBF to choose the location of the seven-hectare
area under its usufruct.
More evidence supports MSBFs stand on the location of the seven-hectare area. The main structures of MSBF are found in the area
indicated by MSBFs survey. These structures are the main office, the three green houses, the warehouse and the composting area. On the
other hand, the NHAs 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 before the present controversy started. The second group covers facilities less essential to MSBFs 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. MSBFs 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 NHAs survey to MSBFs 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 MSBFs main facilities will be outside the
seven-hectare area.
On the other hand, this Court cannot countenance MSBFs 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 owners 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.
MSBFs encroachment of its benefactors 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 MSBFs choice of the location of its seven-hectare area. MSBF, for its part, must vacate the area
that is not part of its usufruct. MSBFs 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 MSBFs rights within the
seven-hectare area is the negation of any of MSBFs 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 NHAs and MSBFs 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.
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 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. 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 MSBFs seven-hectare area since under Proclamation No. 1670, MSBFs 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.
Davide, Jr., C.J., (Chairman), Quisumbing, Ynares-Santiago, and Azcuna, JJ., concur.