National Housing Authority vs. Court of Appeals

A usufructuary granted the right to determine the location of the usufruct area within a larger tract may exercise that right by conducting surveys, but where conflicting surveys exist and the usufructuary has occupied area in excess of the grant, the exact metes and bounds must be determined through a joint survey ordered by the trial court; furthermore, usufructs granted to corporations are limited to 50 years under Article 605 of the Civil Code, and the usufructuary must vacate any area outside the granted usufruct.

The dispute originated from land in Quezon City originally reserved as the National Government Center (NGC) site under Proclamation No. 481 (1968). In 1977, President Marcos issued Proclamation No. 1670, granting MSBF usufructuary rights over 7 hectares within the NGC to be determined by future survey under MSBF's administration. MSBF proceeded to occupy approximately 16 hectares. In 1987, President Aquino issued Memorandum Order No. 127, revoking the reserved status of the NGC property and authorizing the NHA to commercialize the area, leading to demolition threats against BGC, which had leased a 4,590-square-meter portion from MSBF.

• Filed in RTC Quezon City (Branch 87) as Civil Case No. Q-53464 — BGC filed a complaint for injunction against NHA on April 21, 1988; amended on May 26, 1988 to include MSBF as co-plaintiff
• Decision of RTC — Dismissed the complaint for injunction on March 8, 1994; held that MSBF failed to act seasonably in exercising its right to survey the 7-hectare area
• Appealed to CA (CA-G.R. CV No. 48382) — BGC appealed the RTC dismissal
• Decision of CA — Reversed the RTC on March 30, 2001; enjoined NHA from demolishing BGC's structures within the leased premises covered by Proclamation No. 1670
• Motion for Reconsideration — NHA filed MR; denied by CA on June 25, 2001
• Elevated to SC — NHA filed petition for review under Rule 45

• Proclamation No. 481 (October 24, 1968) — Reserved 120 hectares of NHA-owned land in Quezon City as the National Government Center site
• Proclamation No. 1670 (September 19, 1977) — Granted MSBF usufructuary rights over 7 hectares within the NGC; provided that the area "shall be determined by the future survey based on the technical descriptions found in Proclamation No. 481... under the administration of the Foundation"
• MSBF Occupancy — By 1987, MSBF occupied approximately 16 hectares bounded by EDSA (west), Agham Road (east), Quezon Avenue (south), and a creek (north)
• Lease to BGC — On August 18, 1987, MSBF leased a 4,590-square-meter portion facing EDSA to BGC
• Memorandum Order No. 127 (November 11, 1987) — Revoked the reserved status of the remaining NGC property; authorized NHA to commercialize and sell the area
• NHA Demolition Threat — On August 15, 1988, NHA gave BGC ten days to vacate, threatening demolition of any remaining structures
• Conflicting Surveys
• MSBF Surveys (1984 and 1986) — Conducted by Ben Malto; both covered 16 hectares, but the 1986 survey specifically delineated a 7-hectare area (shaded yellow) starting from Quezon Avenue going northward along EDSA toward the creek; MSBF's main structures (main office, three green houses, warehouse, composting area) located within this area
• NHA Survey (May 1988) — Conducted by Rogelio Inobaya; determined the 7-hectare portion starting from Quezon Avenue going toward Agham Road; based on the location of a gate fronting Agham Road; would place only four hardening bays and the display area within the 7-hectare limit
• Admission by MSBF — Lucito Bertol, MSBF General Manager, admitted that MSBF occupied area in excess of 7 hectares and did not know the exact boundaries of the 7-hectare area; also admitted that MSBF prepared its map without consulting NHA

• The petition is not moot despite the demolition of BGC's structures because MSBF, as co-plaintiff, retains a substantial interest in determining the exact location of its usufructuary rights to prevent future disputes
• The CA erred in reversing the RTC decision and in ruling that MSBF seasonably exercised its right to conduct the survey
• MSBF's surveys were self-serving, conducted without NHA consultation, and covered 16 hectares rather than strictly 7 hectares
• The location of the 7-hectare area should not be determined solely by MSBF's unilateral choice but should consider objective criteria; the presence of MSBF's main facilities in the area indicated by its survey is not dispositive
• MSBF exceeded the 7-hectare limit granted by Proclamation No. 1670 and abused its privilege by encroaching on NHA property

• BGC: The petition is moot because NHA demolished BGC's facilities after the RTC dismissal; no justiciable controversy remains as BGC no longer has structures to protect
• MSBF/BGC: Proclamation No. 1670 expressly granted MSBF the right to determine the location of the 7-hectare area through survey under its administration
• MSBF seasonably exercised this right by conducting surveys in 1984 and 1986, prior to the lease to BGC and before any controversy arose
• The RTC erred in dismissing these surveys as self-serving; the authority to choose the location rests with MSBF under Proclamation No. 1670
• The location of MSBF's main structures (office, green houses, warehouse) within the area indicated by its survey proves MSBF's intent to locate the usufruct there, and stripping MSBF of this area would render the usufruct meaningless

• Procedural: Whether the petition is moot because of the demolition of BGC's structures
• Substantive: 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

• Procedural: The petition is not moot. While BGC may have lost interest due to the demolition of its facilities, MSBF retains a substantial interest in the resolution of the central question regarding the exact location of the 7-hectare usufruct area. Settling this issue is necessary to forestall future disputes and put the 20-year litigation to rest.
• Substantive: The SC set aside the CA decision and remanded the case to the RTC for a joint survey. The SC held that:
  • Right to Determine Location: Proclamation No. 1670, as the title constituting the usufruct, granted MSBF the authority to determine the location of the 7-hectare area. The RTC erred in dismissing MSBF's surveys as self-serving; MSBF exercised this right seasonably by conducting surveys in 1984 and 1986, prior to the controversy.
  • Preference for MSBF's Survey: MSBF's survey should prevail over NHA's survey because MSBF located its main operational structures (main office, green houses, warehouse, composting area) within the area indicated by its survey, demonstrating intent to establish the usufruct there. NHA's survey, based merely on the location of a gate fronting Agham Road, would strip MSBF of most essential facilities.
  • Duty to Respect Limits: MSBF abused its privilege by occupying approximately 16 hectares when only 7 hectares were granted. Under Article 601 of the Civil Code, MSBF has a duty to protect the owner's interests and must vacate the area exceeding the 7-hectare usufruct.
  • Joint Survey Required: Given conflicting surveys and MSBF's encroachment, a definitive determination requires a joint survey conducted by both NHA and MSBF under RTC supervision. The 7-hectare portion must be contiguous and include as much as possible all existing major MSBF improvements.
  • 50-Year Limit: Under Article 605 of the Civil Code, usufructs in favor of corporations are limited to 50 years. Proclamation No. 1670 was issued in 1977; thus, in 2005, the usufruct had 22 years remaining.
  • Effect of MO 127: Memorandum Order No. 127 does not affect MSBF's 7-hectare area because Proclamation No. 1670 had already excluded that portion from the NGC reservation.

• Usufruct (Article 562, Civil Code) — A real 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. The SC applied this to hold that MSBF had the right to enjoy the 7 hectares but must preserve the owner's rights and not exceed the grant.
• Rights and Obligations of Usufructuary (Article 565, Civil Code) — The rights and obligations of the usufructuary are those provided in the title constituting the usufruct; in default of such title, the Civil Code provisions apply. The SC held that Proclamation No. 1670, as the title, granted MSBF the specific right to determine the location of the 7-hectare area through survey.
• Lease by Usufructuary (Article 572, Civil Code) — The usufructuary may lease the object held in usufruct. The SC applied this to hold that NHA must respect the lease between MSBF and BGC if the leased premises fall within the 7-hectare usufruct area.
• Duty to Notify Owner (Article 601, Civil Code) — The usufructuary must notify the owner of any act of a third person that may be prejudicial to ownership rights. The SC cited this to emphasize that MSBF owes duties to NHA as the owner, including the duty not to encroach beyond the usufruct area.
• 50-Year Limit on Corporate Usufructs (Article 605, Civil Code) — Usufruct cannot be constituted in favor of a corporation or association for more than fifty years; if the corporation is dissolved before expiration, the usufruct is extinguished. The SC applied this to note that MSBF's usufruct (granted 1977) had 22 years remaining in 2005, and explained that this limit prevents perpetual usufructs over public land since corporations may exist indefinitely unlike natural persons.
• Exceptions to Rule 45 Limitation — While Rule 45 limits the SC to questions of law, exceptions exist when:
  1. The conclusion is grounded entirely on speculation, surmises, and conjectures;
  2. The inference is manifestly mistaken, absurd, or impossible;
  3. There is grave abuse of discretion;
  4. The judgment is based on a misapprehension of facts;
  5. The findings of fact of the trial court and the appellate court are conflicting;
  6. The appellate court went beyond the issues and its findings are contrary to admissions;
  7. The findings of the appellate court are contrary to those of the trial court;
  8. The findings are conclusions without citation of specific evidence;
  9. The facts set forth are not disputed by the respondents; or
  10. The finding of fact is premised on supposed absence of evidence but is contradicted by evidence on record.

• "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."
• "The law clearly limits any usufruct constituted in favor of a corporation or association to 50 years. A usufruct is meant only as a lifetime grant. Unlike a natural person, a corporation or association's lifetime may be extended indefinitely. The usufruct would then be perpetual. This is especially invidious in cases where the usufruct given to a corporation or association covers public land."
• "To prefer the NHA's survey to MSBF's survey will strip MSBF of most of its main facilities."
• "MSBF's encroachment of its benefactor's property gave birth to the confusion that attended this case."
• "The direct corollary of enforcing MSBF's rights within the seven-hectare area is the negation of any of MSBF's acts beyond it."

• BPI Credit Corporation v. Court of Appeals — Cited for the ten recognized exceptions to the general rule that the SC, in a petition for review under Rule 45, does not review findings of fact; the SC invoked the exception regarding conflicting findings between the RTC and CA.
• Baluran v. Navarro — Cited for the rule that a usufruct may be constituted for a specified term and under such conditions as the parties may deem convenient, subject to legal provisions on usufruct.

• Article 562, Civil Code — Defines usufruct as the right to enjoy the property of another with the obligation of preserving its form and substance.
• Article 565, Civil Code — Provides that the rights and obligations of the usufructuary are governed by the title constituting the usufruct; applied to determine that MSBF had the right to locate the 7-hectare area under Proclamation No. 1670.
• Article 572, Civil Code — Allows the usufructuary to lease the object held in usufruct; applied to validate the lease between MSBF and BGC within the usufruct area.
• Article 601, Civil Code — Imposes on the usufructuary the duty to notify the owner of prejudicial acts by third parties; cited to emphasize MSBF's duty to respect NHA's ownership rights.
• Article 605, Civil Code — Limits usufructs in favor of corporations or associations to 50 years; applied to calculate the remaining term of MSBF's usufruct (22 years from 2005).
• Rule 45, Section 1, 1997 Rules of Civil Procedure — Limits petitions for review on certiorari to questions of law; the SC noted the exceptions applied in this case due to conflicting factual findings.
• Proclamation No. 481 — Reserved the 120-hectare National Government Center site.
• Proclamation No. 1670 — Granted MSBF usufruct over 7 hectares within the NGC; constituted the title defining the usufructuary's rights.
• Memorandum Order No. 127 — Revoked the NGC reservation and authorized NHA to commercialize the property; held not to affect the 7-hectare area already excluded by Proclamation No. 1670.

N/A (Davide, Jr., C.J., Quisumbing, Ynares-Santiago, and Azcuna, JJ., concurred without separate opinions)