G.R. No. 148830 . April 13, 2005
NATIONAL HOUSING AUTHORITY, Petitioner, vs. COURT OF APPEALS, BULACAN GARDEN CORPORATION and MANILA SEEDLING BANK FOUNDATION, INC., Respondents.

FACTS

Proclamation No. 481 (1968) reserved 120 hectares of NHA land in Quezon City as the National Government Center (NGC) site. Proclamation No. 1670 (1977) excluded a seven-hectare portion from the NGC and granted Manila Seedling Bank Foundation, Inc. (MSBF) usufructuary rights over it, with the specific area to be determined by a future survey. MSBF occupied an area that eventually expanded to about 16 hectares. In 1987, MSBF leased a portion of this occupied land, specifically a 4,590-square-meter area facing EDSA, to Bulacan Garden Corporation (BGC). Subsequently, Memorandum Order No. 127 (1987) revoked the reserved status of the remaining NGC land and authorized NHA to commercialize it. NHA then ordered BGC to vacate, prompting BGC and MSBF to file an injunction suit.
The Regional Trial Court dismissed the complaint, finding that while Proclamation No. 1670 gave MSBF the right to conduct the survey to establish the seven-hectare area, MSBF failed to act seasonably on this right. The Court of Appeals reversed, ruling that MSBF had asserted its right through prior surveys and construction, and enjoined NHA from demolishing BGC’s structures. NHA demolished the structures after the trial court’s decision and appealed to the Supreme Court.

ISSUE

The core issue is whether the premises leased by BGC from MSBF is within the seven-hectare area granted to MSBF under Proclamation No. 1670.

RULING

The Supreme Court ruled that the petition was not moot despite the demolition, as the determination of MSBF’s rightful usufruct area remained a live justiciable issue with practical legal consequences. The Court found that the factual determination of whether BGC’s leased lot fell within the usufructuary grant was inadequately resolved by both lower courts. The trial court dismissed the case based on MSBF’s failure to conduct a proper survey, while the appellate court presumed inclusion without conclusive evidence.
The Court held that the specific metes and bounds of the seven-hectare usufruct had never been definitively established. Proclamation No. 1670 explicitly required a future survey for this purpose, which was never finalized and approved. Consequently, the Supreme Court could not resolve the core issue as a question of law because it was dependent on a critical unresolved question of fact: the exact location and boundaries of the granted area. Therefore, the Court remanded the case to the trial court with the directive to conduct a joint survey by NHA and MSBF to finally determine the contiguous seven-hectare portion, which should include, as much as possible, MSBF’s existing major improvements. The approved survey would then definitively resolve whether BGC’s former leased premises were within MSBF’s lawful usufruct.