by respondent, that fact does not change the latter's status as a possessor
7.7 NHA v. Manila Seedling Foundation (GR No. 183543)
in bad faith.
June 20, 2016 | C.J. Sereno | Usufructuary | Anna ッ
Under Article 549 in relation to Articles 546 and 443 of the Civil Code, a
Petitioner: N ational Housing Authority possessor in bad faith has a specific obligation to reimburse the legitimate
Respondent: Manila Seedling Foundation possessor for everything that the former received, and that the latter could
have received had its possession not been interrupted
Recit-Ready: NHA is the owner of a 120 hectare land of the government.
FACTS:
President Marcos, through a proclamation, reserved 7 hectares of such for
Manila Seedling Foundation, granting it usufructuary rights. MSF occupied
1. Petitioner NHA is the owner of a 120-hectare government property
16 hectares, thereby exceeding the limit granted to it. President Aquino
in Diliman, QC which is reserved for the establishment of the
subsequently revoked the reserved status of the remaining 50 hectares of
National Government Center.
the original land and directed the NHA to commercialize such are which was
2. President Marcos issued Proclamation No. 1670 on September 19,
now referred to as the North Triangle Property, which included the 7 hectare
1977, where he reserved seven hectares of such land and granted
land. MSF filed a complaint for injunction with the RTC to prevent NHA from
usufructuary rights over it to Manila Seedling.
making them vacate the land. A final injunction was granted in MSF’s favor.
3. Manila Seedling Foundation (MSF) occupied a total of 16 hectares,
NHA’s petition for certiorari was denied by the CA so the case was
thereby exceeding the seven-hectare area it was allowed to occupy.
remanded to the RTC to resolve the issue regarding the excess in the land.
It leased the excess to private tenants.
RTC and the CA validated the turnover of the excess in the land to NHA.
4. On November 11, 1987, President Corazon Aquino issued
Memorandum Order No. 127 which revoked the reserved status of
The issue in this case is whether MSF is a possessor in good faith. (NO).
the remaining 50 hectares of the 120-hectare property. NHA was
expressly authorized to commercialize the area and sell it to the
The court held that by occupying the land which exceeded the seven
public through bidding.
hectare limit granted to MSF, it became a possessor in bad faith as stated in
5. President Fidel Ramos subsequently issued Executive Order No. 58
the case of NHA v. CA. Even if MSF was in bad faith, the court held that he is
on February 15, 1993, creating an inter-agency executive
still entitled to be reimbursed for the necessary expenses he incurred in
committee (Executive Committee) composed of NHA and other
protecting the land from squatters.
government agencies to oversee the comprehensive development
of the remaining 50 hectares, therein referred to as the North
Doctrine: Under Article 549 in relation to Articles 546 and 443 of the Civil
Triangle Property.
Code, a possessor in bad faith has a specific obligation to reimburse the
6. As Manila Seedling occupied a prime portion of the North Triangle
legitimate possessor for everything that the former received, and that the
Property, the Executive Committee proposed its transfer to areas
latter could have received had its possession not been interrupted.
more suitable for its operations.
7. On August 12, 1994, MSF filed before the RTC a Complaint for
While respondent may have been allowed by the Minister of Natural
injunction with prayer for the issuance of a writ of preliminary
Resources Ernesto Maceda to lease the excess, such authority did not come
injunction against petitioner. Respondent sought the protection of
from NHA, who is the owner. Even if petitioner tolerated the encroachment
its occupancy and possession of the property reserved for it under
Proclamation No. 1670.
8. In its answer, NHA prayed that MSF be ordered to vacate the recovery of rent and damages. In that case, the CA found that the
seven-hectare area and the excess, and to pay rent therefor on top Executive Committee's proposal for the transfer of respondent was
of exemplary damages, attorney's fees, and litigation expenses. not a demand in contemplation of the law. Considering that the
9. On November 11, 1994, the RTC issued a writ of preliminary excess was eventually surrendered by MSF to NHA without any
injunction enjoining NHA from causing the relocation of demand, there was no basis for the award of rent and damages in
respondent. The trial court eventually issued a summary judgment the absence of bad faith.
on granting a final injunction over the seven-hectare area in MSF’s 17. Petitioner's motion for reconsideration was denied.
favor.
10. The court, however, reserved the determination of the counterclaim
of NHA as to the excess. Petitioner's motion for reconsideration ISSUE:
and respondent's motion for partial reconsideration were both
denied by the RTC. Whether MSF is possessor in good faith (NO).
11. NHA’s petition for certiorari was denied by the CA, which remanded
the case to the RTC for further proceedings on the matter of RATIO:
petitioner's counterclaim. Petitioner no longer questioned the CA In National Housing Authority v. CA, this Court upheld the usufructuary right
ruling. In the meantime, it recovered possession of the excess on of respondent over the seven-hectare area granted under Proclamation No.
March 1, 1999. 1670. However, the Court also emphasized that the rights of respondent
12. RTC: validated the turnover of the excess to NHA, but disallowed were circumscribed within the limits of the seven-hectare area allotted to it.
the recovery of rent, exemplary damages, attorney's fees and The important doctrines in such case are as follows:
litigation expenses. ● A usufruct gives a right to enjoy the property of another with the
13. The trial court found that MSF had leased the excess to various obligation of preserving its form and substance, unless the title
establishments upon authority given by Minister of Natural constituting it or the law otherwise provides. Respondent, for its
Resources Ernesto Maceda. As he had administrative control over part, must vacate the area that is not part of its usufruct.
respondent at the time, he gave it that authority to enable it to earn Respondent's rights begin and end within the seven-hectare portion
income to finance its operations, considering that it no longer of its usufruct. This Court agrees with the trial court that
received any donation from the national government since 1986. respondent has abused the privilege given it under Proclamation
14. Respondent had protected the excess by developing it and keeping No. 1670.
squatter syndicates from taking possession. For that reason, the ● Since respondent had no right to act beyond the confines of the
expenses it incurred for the development of the excess were more seven-hectare area granted to it, and since it was fully aware of this
than sufficient to compensate NHA in terms of rent. fact, its encroachment of nine additional hectares of petitioner's
15. Petitioner filed an appeal before the CA. The CA affirmed the ruling property rendered it a possessor in bad faith as to the excess.
of the RTC and held that MSF cannot be considered an officious
manager under the principle of negotiorum gestio, as the latter had While respondent may have been allowed by Minister of Natural Resources
not established that the excess was either abandoned or neglected Ernesto Maceda to lease the excess, such authority did not come from
by petitioner. NHA, who is the owner. Even if petitioner tolerated the encroachment by
16. As respondent possessed the excess by tolerance of NHA, a respondent, that fact does not change the latter's status as a possessor in
demand to vacate was necessary to establish the reckoning point bad faith.
for the filing of an unlawful detainer action, as well as for the
Under Article 549 in relation to Articles 546 and 443 of the Civil Code, a
possessor in bad faith has a specific obligation to reimburse the legitimate
possessor for everything that the former received, and that the latter could
have received had its possession not been interrupted.
Respondent, however, shall be entitled to a refund of the necessary
expenses it incurred. Necessary expenses are those made for the
preservation of the land occupied, or those without which the land would
deteriorate or be lost. These may also include expenditures that augment
the income of the land or those that are incurred for its cultivation,
production, and upkeep.
The courts found that respondent had exerted efforts and expended money
to develop the excess and protect it from squatter syndicates. These
expenses would naturally fall under those defined as necessary expenses
for which respondent, even as a possessor in bad faith, is entitled to be
reimbursed.
There is a need to remand the case to the RTC for the conduct of trial for
the purpose of determining the amounts the parties are entitled to as laid
out in this Decision.
The SC denied NHA’s prayer for the award of exemplary damages. While
respondent was a possessor in bad faith, there is no evidence that it acted
in a wanton, fraudulent, reckless, oppressive or malevolent manner. The
award of attorney's fees and litigation expenses to petitioner is also
improper.
