The NHA owned a vast tract of land in Quezon City located at EDSA from Quezon Avenue all the way down North Avenue. On October 24, 1968, by virtue of Proclamation 481, a 120 hectare portion of said land was set aside as reserved property sight of the National Government Center (NGC). Subsequently, or on September 19, 1977, another Proclamation (1670) was issued removing a seven hectare portion from the coverage of the NGC and giving usufructuary rights over it in favor of Manila Seedling Bank Foundation (MSBF). Pursuant to 1670, the 7 hectares shall be determined by a future survey to be undertaken by MSBF but the term of the usufruct was not specified.
Without first conducting a survey, MSBF already occupied a portion of the NGC but exceeding the seven-hectare area. MSBF only conducted a survey in 1984 covering a total area of 16 hectares which it had been occupying over the years. In 1986 it conducted a second survey still covering a 16 hectare area although the 7 hectare portion was already indicated with a yellow shade.
On November 11, 1987, a Memorandum Order (MO 127) was issued by the Office of the President which revoked the reserved status of the 50 hectares more or less remaining out of the 120 hectares of the NHA property reserved as cite of the NGC. MO 127 also authorized the NHA to commercialize the area and to sell it to the public. Acting on the power granted by MO 127, and using its own survey, NHA notified an occupant of a portion of land which had existing lease contracts with MSBF. NHA claimed that based on its survey, the land leased by MSBF to the occupant was beyond the area granted to MSBF as a usufructuary under Proclamation 1670. Could the NHA eject the lessee of MSBF?
The Supreme Court ruled that the seven-hectare portion subject of the usufruct must be determined first. But its determination cannot be made to rely on a choice between the NHA’s and the MSBF’s survey. There is 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 the facilities of MSBF within the seven hectare portion without sacrificing contiguity.
But it must be pointed out also that "a usufruct cannot be constituted in favor of a town, corporation or association for more than 50 years. If it has been constituted, and before its expiration, the town is abandoned, or the corporation or association is dissolved, the usufruct shall be extinguished by reason thereof (Article 605, Civil Code). The law clearly limits any usufruct 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 association’s lifetime may be extended indefinitely. The usufruct would then be perpetual. This is especially detrimental and unfair in cases where the usufruct given to a corporation or association covers public land. Proclamation 1670 was issued on September 19, 1977 or 28 years ago. Hence under Article 605, the usufruct in favor of MSBF has 22 years left.
MO 127 releasing 50 hectares of NHA land as reserved for the NGC site does not affect MSBF’s seven-hectare area since under Proclamation 1670, MSBF’s seven-hectare area was already excluded from the operation of Proclamation 481 dated October 24, 1968 which established the NGC site (National Housing Authority vs. Court of Appeals, G.R. 148830. April 13, 2005. 456, SCRA 17).