G.R. No. 208788 (and G.R. No. 228284), July 23, 2024
Quezon City Government, et al., Petitioners, vs. Manila Seedling Bank Foundation, Inc., Respondent. [ G.R. No. 208788 ] / Manila Seedling Bank Foundation, Inc., Petitioner, vs. Quezon City Government, et al., Respondents. [G.R. No. 228284]

FACTS

1. On September 19, 1977, Presidential Proclamation No. 1670 reserved a seven-hectare land owned by the National Housing Authority (NHA) in Diliman, Quezon City, for the use of respondent Manila Seedling Bank Foundation, Inc. (Manila Seedling) in its operations and projects.
2. In 2000 and 2003, the Quezon City Council enacted and amended its Zoning Ordinance (Ordinance No. SP-918 and SP-1369), which classified Manila Seedling’s property as institutional and commercial zones and required a locational clearance or certificate of non-conformance for business permit issuance.
3. Manila Seedling had been issued a Certificate of Non-Conformance for its business permit until December 2011. However, on January 5, 2012, the Quezon City Government refused to renew Manila Seedling’s locational clearance, leading to its failure to renew its business permit in 2012.
4. On February 23, 2012, Manila Seedling filed a Petition for Prohibition with the RTC (Branch 96, Quezon City) against the Quezon City Government regarding the zoning ordinance. The RTC ruled in favor of Manila Seedling on June 18, 2013, directing the city to desist from enforcing the ordinance on the property and to issue the necessary clearance and permit.
5. The Quezon City Government filed G.R. No. 208788 , challenging Manila Seedling’s legal capacity to sue, citing the revocation of its SEC Certificate of Registration in 2002.
6. Separately, on July 3, 2012, Manila Seedling received a notice from the City Treasurer that the subject property had been sold at public auction for delinquent real property taxes. Manila Seedling replied, asserting its exemption as a usufructuary.
7. On July 10, 2012, the Quezon City Government, through then Mayor Herbert Bautista, informed Manila Seedling of the property’s transfer due to non-redemption and forcibly took possession of the premises.
8. Manila Seedling filed another Petition for Prohibition and Injunction with the RTC (Branch 216, Quezon City) on July 12, 2012. The RTC dismissed it based on lack of personality to sue due to the SEC revocation. The Court of Appeals affirmed this dismissal, prompting Manila Seedling to file G.R. No. 228284.
9. In G.R. No. 228284, Manila Seedling argued it had corporate personality at the time of filing because the SEC order of revocation was not final and was later set aside in 2015, which should retroact to the date of revocation.

ISSUE

1. Whether Manila Seedling has the legal capacity to sue (corporate personality) despite the earlier revocation of its SEC registration.
2. Whether the Quezon City Government’s zoning ordinance and its enforcement, as well as the taking of the subject property for tax delinquency, infringed upon Manila Seedling’s usufructuary rights under Presidential Proclamation No. 1670.

RULING

(Based on the Concurring and Dissenting Opinion of Justice Caguioa):
1. On Legal Capacity to Sue: Justice Caguioa concurs that the Quezon City Government is estopped from challenging Manila Seedling’s corporate personality. The doctrine of corporation by estoppel applies because the Quezon City Government had consistently recognized, transacted with, and issued official documents (e.g., business permits, tax notices) to Manila Seedling as a corporate entity, even after the alleged revocation. Furthermore, Justice Caguioa agrees with Manila Seedling’s position that the SEC’s 2015 order setting aside the revocation retroacts to the date of revocation, effectively curing any defect in its legal personality at the time the petitions were filed.
2. On Infringement of Usufructuary Rights:
Regarding the Zoning Ordinance ( G.R. No. 208788 ): Justice Caguioa concurs with the ponencia* that the relevant portions of the Quezon City Zoning Ordinance are null and void insofar as they infringe upon Manila Seedling’s usufructuary rights granted under Presidential Proclamation No. 1670. The local government’s power to zone is subject to the usufructuary rights established by the presidential proclamation.
* Regarding the Tax Sale and Taking of Property (G.R. No. 228284): Justice Caguioa dissents from the ponencia’s dismissal of this petition on the ground of mootness. He argues that, in view of the usufruct granted to Manila Seedling, it has the right to be restored to the possession and use of the subject property or to be indemnified for damages resulting from the illegal dispossession by the Quezon City Government. The forcible taking based on a tax delinquency sale was improper as it violated Manila Seedling’s vested usufructuary rights.