NATIONAL HOUSING AUTHORITY, petitioner, vs.

COURT OF
APPEALS, BULACAN GARDEN CORPORATION and
MANILA
SEEDLING
BANK
FOUNDATION,
INC., respondents.

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.

DECISION
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

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 plaintiffappellant 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-plaintif, 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 sevenhectare 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 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-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 sevenhectare 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.

MERCEDES MORALIDAD, Petitioner, vs. SPS. DIOSDADO

PERNES and ARLENE PERNES, Respondents.
DECISION
GARCIA, J.:
Under consideration is this petition for review on certiorari under
Rule 45 of the Rules of Court to nullify and set aside the following
issuances of the Court of Appeals (CA) in CA-G.R. SP No. 61610, to
wit:
1. Decision dated September 27, 2001, 1 affirming an earlier
decision of the Regional Trial Court (RTC) of Davao City which
reversed that of the Municipal Trial Court in Cities (MTCC), Davao
City, Branch 1, in an action for unlawful detainer thereat
commenced by the petitioner against the herein respondents; and
2. Resolution dated February 28, 2002,
motion for reconsideration.

denying petitioners

At the heart of this controversy is a parcel of land located in Davao

City and registered in the name of petitioner Mercedes Moralidad
under Transfer Certificate of Title (TCT) No. T-123125 of the Registry
of Deeds of Davao City.
In her younger days, petitioner taught in Davao City, Quezon City
and Manila. While teaching in Manila, she had the good fortune of
furthering her studies at the University of Pennsylvania, U.S.A.
While schooling, she was offered to teach at the Philadelphia
Catholic Archdiocese, which she did for seven (7) years. Thereafter,
she worked at the Mental Health Department of said University for
the next seventeen (17) years.
During those years, she would come home to the Philippines to
spend her two-month summer vacation in her hometown in Davao
City. Being single, she would usually stay in Mandug, Davao City, in
the house of her niece, respondent Arlene Pernes, a daughter of her
younger sister, Rosario.

Back in the U.S.A. sometime in 1986, she received news from

Arlene that Mandug at the outskirts of Davao City was infested by
NPA rebels and many women and children were victims of crossfire
between government troops and the insurgents. Shocked and
saddened about this development, she immediately sent money to
Araceli, Arlenes older sister, with instructions to look for a lot in
Davao City where Arlene and her family could transfer and settle
down. This was why she bought the parcel of land covered by TCT
No. T-123125.
Petitioner acquired the lot property initially for the purpose of
letting Arlene move from Mandug to Davao City proper but later
she wanted the property to be also available to any of her kins
wishing to live and settle in Davao City. Petitioner made known this
intention in a document she executed on July 21, 1986. 3 The
document reads:
I, MERCEDES VIA MORALIDAD, of legal age, single, having been
born on the 29th day of January, 1923, now actually residing at
8021 Lindbergh Boulevard, Philadelphia, Pennsylvania, U.S.A.,
wishes to convey my honest intention regarding my properties
situated at Palm Village Subdivision, Bajada, Davao City, 9501,
and hereby declare:
1. That it is my desire that Mr. and Mrs. Diosdado M. Pernes may
build their house therein and stay as long as they like;
2. That anybody of my kins who wishes to stay on the
aforementioned real property should maintain an atmosphere of
cooperation, live in harmony and must avoid bickering with one
another;
3. That anyone of my kins may enjoy the privilege to stay therein
and may avail the use thereof. Provided, however, that the same is
not inimical to the purpose thereof;
4. That anyone of my kins who cannot conform with the wishes of
the undersigned may exercise the freedom to look for his own;

5. That any proceeds or income derived from the aforementioned

properties shall be allotted to my nearest kins who have less in life
in greater percentage and lesser percentage to those who are
better of in standing.

Petitioner alleged that she is the registered owner of the land on

which the respondents built their house; that through her counsel,
she sent the respondent spouses a letter demanding them to
vacate the premises and to pay rentals therefor, which the
respondents refused to heed.

xxx xxx xxx

Following her retirement in 1993, petitioner came back to the
Philippines to stay with the respondents on the house they build on
the subject property. In the course of time, their relations turned
sour because members of the Pernes family were impervious to her
suggestions and attempts to change certain practices concerning
matters of health and sanitation within their compound. For
instance, Arlenes eldest son, Myco Pernes, then a fourth year
veterinary medicine student, would answer petitioner back with
clenched fist and at one time hurled profanities when she corrected
him. Later, Arlene herself followed suit. Petitioner brought the
matter to the local barangay lupon where she lodged a complaint
for slander, harassment, threat and defamation against the Pernes
Family. Deciding for petitioner, the lupon apparently ordered the
Pernes family to vacate petitioners property but not after they are
reimbursed for the value of the house they built thereon.
Unfortunately, the parties could not agree on the amount, thus
prolonging the impasse between them.
Other ugly incidents interspersed with violent confrontations
meanwhile transpired, with the petitioner narrating that, at one
occasion in July 1998, she sustained cuts and wounds when Arlene
pulled her hair, hit her on the face, neck and back, while her
husband Diosdado held her, twisting her arms in the process.
Relations having deteriorated from worse to worst, petitioner, on
July 29, 1998, lodged a formal complaint before the Regional Office
of the Ombudsman for Mindanao, charging the respondent spouses,
who were both government employees, with conduct unbecoming
of public servants. This administrative case, however, did not
prosper.
Then, on August 3, 1998, petitioner filed with the MTCC of Davao
City an unlawful detainer suit against the respondent spouses.

In their defense, the respondents alleged having entered the

property in question, building their house thereon and maintaining
the same as their residence with petitioners full knowledge and
express consent. To prove their point, they invited attention to her
written declaration of July 21, 1986, supra, wherein she expressly
signified her desire for the spouses to build their house on her
property and stay thereat for as long as they like.
The MTCC, resolving the ejectment suit in petitioners favor,
declared that the respondent spouses, although builders in good
faith vis--vis the house they built on her property, cannot invoke
their bona fides as a valid excuse for not complying with the
demand to vacate. To the MTCC, respondents continued possession
of the premises turned unlawful upon their receipt of the demand
to vacate, such possession being merely at petitioners tolerance,
and sans any rental. Accordingly, in its decision dated November
17, 1999, 4 the MTCC rendered judgment for the petitioner, as
plaintiff therein, to wit:
WHEREFORE, judgment is hereby rendered in favor of herein
plaintiff and against the defendants, as follows:
a) Directing the defendants, their agents and other persons acting
on their behalf to vacate the premises and to yield peaceful
possession thereof to plaintiff;
b) Ordering defendants to pay P2,000.00 a month from the filing of
this complaint until they vacate premises;
c) Sentencing defendants to pay the sum of P120,000.00
attorneys fees and to pay the cost of suit.

as

Defendants counterclaim are hereby dismissed except with respect

to the claim for reimbursement of necessary and useful expenses
which should be litigated in an ordinary civil actions. (sic)

WHEREFORE, in view of the foregoing, the Decision appealed from

is REVERSED and declared invalid. Consequently, the motion for
execution pending appeal is likewise denied.

Dissatisfied, the respondent spouses appealed to the RTC of Davao

City.

Counter-claims of moral and exemplary damages claimed by

defendants are likewise dismissed. However, attorneys fees in the
amount of fifteen thousand pesos is hereby awarded in favor of
defendants-appellants, and against plaintiffs.

In the meantime, petitioner filed a Motion for Execution Pending

Appeal. The motion was initially granted by the RTC in its Order of
February 29, 2000, but the Order was later withdrawn and vacated
by its subsequent Order dated May 9, 2000 6 on the ground that
immediate execution of the appealed decision was not the prudent
course of action to take, considering that the house the
respondents constructed on the subject property might even be
more valuable than the land site.
Eventually, in a decision 7 dated September 30, 2000, the RTC
reversed that of the MTCC, holding that respondents possession of
the property in question was not, as ruled by the latter court, by
mere tolerance of the petitioner but rather by her express consent.
It further ruled that Article 1678 of the Civil Code on
reimbursement of improvements introduced is inapplicable since
said provision contemplates of a lessor-lessee arrangement, which
was not the factual milieu obtaining in the case. Instead, the RTC
ruled that what governed the parties relationship are Articles 448
and 546 of the Civil Code, explaining thus:
Since the defendants-appellees [respondents] are admittedly
possessors of the property by permission from plaintiff [petitioner],
and builders in good faith, they have the right to retain possession
of the property subject of this case until they have been reimbursed
the cost of the improvements they have introduced on the property.
Indeed, this is a substantive right given to the defendants by law,
and this right is superior to the procedural right to [sic] plaintiff to
immediately ask for their removal by a writ of execution by virtue
of a decision which as we have shown is erroneous, and therefore
invalid. (Words in brackets supplied),
and accordingly dismissed petitioners appeal, as follows:

SO ORDERED.

Therefrom, petitioner went to the CA in CA-G.R. SP No. 61610.

On September 27, 2001, the CA, while conceding the applicability
of Articles 448 and 546 of the Civil Code to the case, ruled that it is
still premature to apply the same considering that the issue of
whether respondents right to possess a portion of petitioners land
had already expired or was already terminated was not yet
resolved. To the CA, the unlawful detainer suit presupposes the
cessation of respondents right to possess. The CA further ruled
that what governs the rights of the parties is the law on usufruct
but petitioner failed to establish that respondents right to possess
had already ceased. On this premise, the CA concluded that the
ejectment suit instituted by the petitioner was premature. The
appellate court thus affirmed the appealed RTC decision, disposing:
WHEREFORE, premises considered, the instant petition for review is
hereby denied for lack of merit. Accordingly, the petitioners
complaint for Unlawful Detainer is DISMISSED.
SO ORDERED.
With the CAs denial of her motion for reconsideration in its
Resolution of February 28, 2002, petitioner is now before this Court
raising the following issues:
I. WHETHER OR NOT THE COURT OF APPEALS ERRED IN DISMISSING
THE UNLAWFUL DETAINER CASE FOR BEING PREMATURE WHICH
DECISION IS NOT IN ACCORDANCE WITH LAW AND JURISPRUDENCE.

II. WHETHER OR NOT THE COURT OF APPEALS ERRED IN APPLYING

ARTICLES 448 AND 546 AND THE PROVISIONS OF THE CODE ON
USUFRUCT INSTEAD OF ARTICLE 1678 OF THE CIVIL CODE.

thereof. We have no quarrel, therefore, with the CAs ruling that

usufruct was constituted between petitioner and respondents. It is
thus pointless to discuss why there was no lease contract between
the parties.

The Court rules for the petitioner.

The Court is inclined to agree with the CA that what was
constituted between the parties herein is one of usufruct over a
piece of land, with the petitioner being the owner of the property
upon whom the naked title thereto remained and the respondents
being two (2) among other unnamed usufructuaries who were
simply referred to as petitioners kin. The Court, however, cannot
go along with the CAs holding that the action for unlawful detainer
must be dismissed on ground of prematurity.

However, determinative of the outcome of the ejectment case is

the resolution of the next issue, i.e., whether the existing usufruct
may be deemed to have been extinguished or terminated. If the
question is resolved in the affirmative, then the respondents right
to possession, proceeding as it did from their right of usufruct,
likewise ceased. In that case, petitioners action for ejectment in
the unlawful detainer case could proceed and should prosper.
The CA disposed of this issue in this wise:

Usufruct is defined under Article 562 of the Civil Code in the

following wise:

xxx Section 1, Rule 70 of the 1997 Rules of Civil Procedure, as

amended, provides xxx

ART. 562. 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.

xxx xxx xxx

Usufruct, in essence, is nothing else but simply allowing one to

enjoy anothers property. 9 It is also defined as the right to enjoy
the property of another temporarily, including both the jus utendi
and the jus fruendi, 10 with the owner retaining the jus disponendi
or the power to alienate the same. 11

From the foregoing provision, it becomes apparent that for an

action for unlawful detainer to prosper, the plaintiff [petitioner]
needs to prove that defendants [respondents] right to possess
already expired and terminated. Now, has respondents right to
possess the subject portion of petitioners property expired or
terminated? Let us therefore examine respondents basis for
occupying the same.

It is undisputed that petitioner, in a document dated July 21, 1986,

supra, made known her intention to give respondents and her other
kins the right to use and to enjoy the fruits of her property. There
can also be no quibbling about the respondents being given the
right "to build their own house" on the property and to stay thereat
"as long as they like." Paragraph #5 of the same document
earmarks "proceeds or income derived from the aforementioned
properties" for the petitioners "nearest kins who have less in life in
greater percentage and lesser percentage to those who are better
of (sic) in standing." The established facts undoubtedly gave
respondents not only the right to use the property but also granted
them, among the petitioners other kins, the right to enjoy the fruits

It is undisputed that petitioner expressly authorized respondents o

occupy portion of her property on which their house may be built.
Thus "it is my desire that Mr. and Mrs. Diosdado M. Pernes may
build their house therein and stay as long as they like." From this
statement, it seems that petitioner had given the respondents the
usufructuary rights over the portion that may be occupied by the
house that the latter would build, the duration of which being
dependent on how long respondents would like to occupy the
property. While petitioner had already demanded from the
respondents the surrender of the premises, this Court is of the
opinion that the usufructuary rights of respondents had not been
terminated by the said demand considering the clear statement of

petitioner that she is allowing respondents to occupy portion of her

land as long as the latter want to. Considering that respondents still
want to occupy the premises, petitioner clearly cannot eject
respondents. 12
We disagree with the CAs conclusion of law on the matter. The
term or period of the usufruct originally specified provides only one
of the bases for the right of a usufructuary to hold and retain
possession of the thing given in usufruct. There are other modes or
instances whereby the usufruct shall be considered terminated or
extinguished. For sure, the Civil Code enumerates such other
modes of extinguishment:
ART. 603. Usufruct is extinguished:
(1) By the death of the usufructuary, unless a contrary intention
clearly appears;
(2) By expiration of the period for which it was constituted, or by
the fulfillment of any resolutory condition provided in the title
creating the usufruct;
(3) By merger of the usufruct and ownership in the same person;
(4) By renunciation of the usufructuary;
(5) By the total loss of the thing in usufruct;
(6) By the termination of the right of the person constituting the
usufruct;
(7) By prescription. (Emphasis supplied.)
The document executed by the petitioner dated July 21, 1986
constitutes the title creating, and sets forth the conditions of, the
usufruct. Paragraph #3 thereof states "[T]hat anyone of my kins
may enjoy the privilege to stay therein and may avail the use
thereof. Provided, however, that the same is not inimical to the
purpose thereof" (Emphasis supplied). What may be inimical to the
purpose constituting the usufruct may be gleaned from the

preceding paragraph wherein petitioner made it abundantly clear

"that anybody of my kins who wishes to stay on the
aforementioned property should maintain an atmosphere of
cooperation, live in harmony and must avoid bickering with one
another." That the maintenance of a peaceful and harmonious
relations between and among kin constitutes an indispensable
condition for the continuance of the usufruct is clearly deduced
from the succeeding Paragraph #4 where petitioner stated "[T]hat
anyone of my kins who cannot conform with the wishes of the
undersigned may exercise the freedom to look for his own." In fine,
the occurrence of any of the following: the loss of the atmosphere
of cooperation, the bickering or the cessation of harmonious
relationship between/among kin constitutes a resolutory condition
which, by express wish of the petitioner, extinguishes the usufruct.
From the pleadings submitted by the parties, it is indubitable that
there were indeed facts and circumstances whereby the subject
usufruct may be deemed terminated or extinguished by the
occurrence of the resolutory conditions provided for in the title
creating the usufruct, namely, the document adverted to which the
petitioner executed on July 21, 1986.
As aptly pointed out by the petitioner in her Memorandum,
respondents own evidence before the MTCC indicated that the
relations between the parties "have deteriorated to almost an
irretrievable level." 13 There is no doubt then that what impelled
petitioner to file complaints before the local barangay lupon, the
Office of the Ombudsman for Mindanao, and this instant complaint
for unlawful detainer before the MTCC is that she could not live
peacefully and harmoniously with the Pernes family and vice versa.
Thus, the Court rules that the continuing animosity between the
petitioner and the Pernes family and the violence and humiliation
she was made to endure, despite her advanced age and frail
condition, are enough factual bases to consider the usufruct as
having been terminated.
To reiterate, the relationship between the petitioner and
respondents respecting the property in question is one of owner
and
usufructuary.
Accordingly,
respondents
claim
for

reimbursement of the improvements they introduced on the

property during the effectivity of the usufruct should be governed
by applicable statutory provisions and principles on usufruct. In this
regard, we cite with approval what Justice Edgardo Paras wrote on
the matter:
If the builder is a usufructuary, his rights will be governed by Arts.
579 and 580. In case like this, the terms of the contract and the
pertinent provisions of law should govern (3 Manresa 215-216; se
also Montinola vs. Bantug, 71 Phil. 449). 14 (Emphasis ours.)
By express provision of law, respondents, as usufructuary, do not
have the right to reimbursement for the improvements they may
have introduced on the property. We quote Articles 579 and 580 of
the Civil Code:
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, remove such improvements, should it be possible to
do so without damage to the property. (Emphasis supplied.)

Given the foregoing perspective, respondents will have to be

ordered to vacate the premises without any right of
reimbursement. If the rule on reimbursement or indemnity were
otherwise, then the usufructuary might, as an author pointed out,
improve the owner out of his property. 15 The respondents may,
however, remove or destroy the improvements they may have
introduced thereon without damaging the petitioners property.
Out of the generosity of her heart, the petitioner has allowed the
respondent spouses to use and enjoy the fruits of her property for
quite a long period of time. They opted, however, to repay a noble
gesture with unkindness. At the end of the day, therefore, they
really cannot begrudge their aunt for putting an end to their right of
usufruct. The disposition herein arrived is not only legal and called
for by the law and facts of the case. It is also right.
WHEREFORE, the petition is GRANTED. The assailed Decision and
Resolution of the CA are REVERSED and SET ASIDE. Accordingly,
the decision of the MTCC is REINSTATED with MODIFICATION that all
of respondents counterclaims are dismissed, including their claims
for reimbursement of useful and necessary expenses.
No pronouncement as to costs.

Art. 580. The usufructuary may set off the improvements he may
have made on the property against any damage to the same.

SO ORDERED.