G.R. No. 148830.

April 13, 2005

NATIONAL HOUSING AUTHORITY, petitioner,
versus
COURT OF APPEALS, BULACAN GARDEN CORPORATION and MANILA SEEDLING 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 120hectare 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 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. Both the NHA and MSBF conducted survey on the
subject parcel of land.

ISSUE:
Whether or not the MSBF has the right to determine the subject 7-hectare portion of 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 MSBFs 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 owners 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 facilities of MSBF within the 7-hectare portion
without sacrificing contiguity.
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 MSBFs 7-hectare area since under Proc. No. 1670, MSBFs 7-hectare area was
already excluded from the operation of Proc. No. 481, which established the NGC Site.