G.R. No. 183543 - National Housing Authority vs. Manila Seedling Bank Foundation, Inc.

Petitioner, National Housing Authority (NHA), owns a 120-hectare government property in Diliman, Quezon City, reserved for the National Government Center.
By Proclamation No. 1670 (September 19, 1977), President Ferdinand Marcos reserved a seven-hectare portion of this property and granted respondent, Manila Seedling Bank Foundation, Inc., usufructuary rights over it.
Respondent occupied a total of 16 hectares, thus exceeding its allotted seven-hectare area.
The respondent leased the excess area (9 hectares) to private tenants.

On November 11, 1987, President Corazon Aquino issued Memorandum Order No. 127, revoking the reserved status of the remaining 50 hectares and authorizing NHA to commercialize and sell the area via bidding.
President Fidel Ramos issued Executive Order No. 58 on February 15, 1993, creating an inter-agency Executive Committee including NHA to oversee development of the 50-hectare North Triangle Property portion.
Since respondent occupied a prime portion of the North Triangle Property, the Executive Committee proposed transferring respondent to more suitable areas.

On August 12, 1994, respondent filed a complaint for injunction before the RTC seeking protection of its possession over the seven-hectare area under Proclamation No. 1670 and a writ of preliminary injunction against petitioner’s relocation efforts.
Petitioner answered with a compulsory counterclaim, praying that respondent be ordered to vacate both the seven-hectare area and the excess, pay rent, and be liable for exemplary damages, attorney’s fees, and litigation expenses.
A writ of preliminary injunction was issued by RTC on November 11, 1994, enjoining petitioner from relocating respondent.
On February 12, 1998, RTC granted final injunction in favor of respondent over the seven-hectare area, but reserved ruling on petitioner’s counterclaim regarding the excess.
Petitioner’s and respondent’s motions for reconsideration were denied on June 5, 1998.
The Court of Appeals (CA) affirmed RTC’s decision, remanding the counterclaim for further proceedings.
Petitioner recovered possession of the excess on March 1, 1999.

On January 21, 2005, RTC validated petitioner’s recovery of possession over the excess but denied petitioner’s claim for rent, exemplary damages, attorney’s fees, and litigation expenses.
RTC found respondent had authority from then Minister of Natural Resources Ernesto Maceda to lease the excess to generate income as it no longer received government donations after 1986.
RTC also acknowledged respondent’s efforts in developing and protecting the excess land from squatters, concluding such expenses compensated petitioner’s rent claims.
Petitioner appealed to the CA.

On April 8, 2008, CA affirmed RTC’s ruling, holding respondent was possessor by tolerance of petitioner, not an officious manager (negotiorum gestio).
CA clarified that no legal demand to vacate was made; thus respondent’s removal of possession and the absence of demand negated rent and damage claims in absence of bad faith.
CA denied petitioner’s motion for reconsideration on June 30, 2008.

Rent from respondent for the excess land occupied beyond the seven-hectare usufructuary grant.
Exemplary damages.
Attorney’s fees and litigation expenses.