Proc. No. 1670 granted usufructuary rights over a 7-hectare portion of land owned by NHA to Manila Seedling Bank Foundation (MSBF) for its operations. Over the years, MSBF occupied 16 hectares instead of the granted 7 hectares. NHA sought to commercialize the land but MSBF claimed rights over the area. The Supreme Court ruled that MSBF has the right to determine the location of the 7-hectare area based on Proc. No. 1670. However, MSBF exceeded its grant and a new survey must be conducted jointly by NHA and MSBF to identify the 7 hectares while considering existing structures and maintaining contiguity. The usufruct

1. G.R. No. 148830. April 13, 2005
NATIONAL HOUSING AUTHORITY, petitioner,
versus
COURT OF APPEALS, BULACANGARDEN CORPORATION and MANILASEEDLING BANK FOUNDATION,INC., respondents.
FACTS:
Pres. Marcos issued Proc. No. 481 (1968) setting aside a 120-hectare portion of land in Quezon City owned by the NHA as
reserved property for the site of National Government Center (NGC). Subsequently, he issued Proc. No. 1670 (1977),
which removed a 7-hectare portion from the 120-hectare land, giving the usufructuary rights to the “xxx 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.” Over the years,
MSBF occupied the area but it exceeded the 7-hectare subject of the usufruct and occupied 16 hectares instead. 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 1987, MSBF leased a portion of its area to BGC and other
stallholders. BGC leased the portion facing EDSA, which occupies 4,590 square meters of the 16-hectare area. On
November 1987, Pres. Corazon Aquino issued 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 NGC. It also authorized the NHA to
commercialize the area and to sell it to the public. On August 1988, acting pursuant to MO 127, the NHA gave BGC 10 days
to vacate its occupied area. Any structure left behind after the expiration of the 10-day period will be demolishedby NHA.
BGC then filed a complaint for injunction on 21 April 1988 before the trial court. On 26 May 1988, BGC amended its
complainttoinclude MSBFas itsco-plaintiff. Boththe NHA andMSBF conductedsurveyonthe subjectparcel of land.
ISSUE:
Whetheror notthe MSBF has the rightto determine the subject7-hectare portionof land
HELD:
Yes. Art. 565 states that, 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, Proc. No. 1670 is the title constituting the usufruct. It categorically states that the 7-hectare
area shall be determined by future survey under the administration of the Foundation subject to private rights if there be
any. It authorized MSBF to determine the location of the 7-hectare area. This authority, coupled with the fact that Proc.
No. 1670 did not state the location of the 7-hectare area, leaves no room for doubt that Proc. No. 1670 left it to MSBF to
choose the location of the seven-hectare area under its usufruct. However, the Court cannot countenance MSBF’s act of
exceeding the 7-hectare portion granted to it by the proclamation. A usufruct is not simply about rights and privileges. A
usufructuary has the duty to protect the owner’s interests. Article 601 of the Civil Code states: 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. The controversy would not have arisen had MSBF respected the limit of the beneficial use given to it. Hence, there is
a need for a new survey, conducted jointly by the NHA and MSBF, consider existing structures of MSBF and as much as
possible include all of the facilitiesof MSBFwithinthe 7-hectare portionwithoutsacrificingcontiguity.
Another point in the case: Article 605 of the Civil Code states: 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.Proc. No. 1670 was issued in 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 NGC. However, it does
not affect MSBF’s 7-hectare area since under Proc. No. 1670, MSBF’s 7-hectare area was already excluded from the
operationof Proc. No.481, whichestablishedthe NGCSite.