REPUBLIC ACT NO.
9397 March 18, 2007
AN ACT AMENDING SECTION 12 OF REPUBLIC ACT NO. 7279,
OTHERWISE KNOWN AS THE URBAN DEVELOPMENT AND HOUSING ACT
OF 1992, AND FOR OTHER PURPOSES
Be it enacted by the Senate and House of Representatives of the Philippines in
Congress assembled:
SECTION 1. Section 12 of Republic Act No. 7279, otherwise known as the
"Urban Development and Housing Act of 1992," is hereby amended to read
as follows:
"SEC. 12. Disposition of Lands for Socialized Housing. - The National
Housing Authority, with respect to lands belonging to the National
Government, and the local government units with respect to the other
lands within their respective localities, shall coordinate with each other
to formulate and make available various alternative schemes for the
disposition of lands to the beneficiaries of the Program. These
schemes shall not be limited to those involving transfer of ownership in
fee simple but shall include lease, with option to purchase, usufruct or
such other variations as the local government units or National
Housing Authority may deem most expedient in carrying out the
purposes of this Act."
"Consistent with this provision, a scheme for public rental housing may
be adopted.
"Disposition of lands, including any improvements thereon, owned by
the National Government or any of its agencies or instrumentalities
and/or the local government units through direct negotiated sale to
the occupants thereof without need of public bidding shall be allowed
subject to the following conditions:
"a) The lands are within a residential zone as classified by
the local government unit concerned;
"b) The lands are certified to be for socialized housing
purpose by the Housing and Urban Development
Coordinating Council;
"c) The occupants are qualified beneficiaries in accordance
with Section 16 and are registered as such in accordance
with Section 17 of this Act;
"d) The cost of said lands shall be made affordable to the
beneficiaries, taking into consideration their income and land
valuation required in Section 13 of this Act;
"e) Any subsequent disposition of the said land shall be
subject to the limitations provided in Section 14 of this Act;
and
"f) The occupants have resided on the said lands subject to
the prohibitions provided in Section 30 of this Act."
SEC. 2. Separability Clause. - If any part or provision of this Act shall be held
unconstitutional or invalid, other provision hereof that are not affected
thereby shall continue to be in full force and effect.
SEC. 3. Repealing Clause. - All laws, presidential decrees, executive orders,
rules, regulations, or parts thereof which are not consistent with this Act, are
hereby repealed, amended or modified accordingly.
SEC. 4. Effectivity. - This Act shall take effect fifteen (15) days after its
publication in at least two newspapers of general circulation.
REPUBLIC ACT NO. 7279
AN ACT TO PROVIDE FOR A COMPREHENSIVE AND CONTINUING
URBAN DEVELOPMENT AND HOUSING PROGRAM, ESTABLISH THE
MECHANISM FOR ITS IMPLEMENTATION, AND FOR OTHER PURPOSES.
ARTICLE I
TITLE, POLICY, PROGRAM AND DEFINITION OF TERMS
Section 1. Title. — This Act shall be known as the "Urban Development and
Housing Act of 1992."
Sec. 2. Declaration of State Policy and Program Objectives. — It shall be the
policy of the State to undertake, in cooperation with the private sector, a
comprehensive and continuing Urban Development and Housing Program,
hereinafter referred to as the Program, which shall:
(a) Uplift the conditions of the underprivileged and homeless citizens in urban
areas and in resettlement areas by making available to them decent housing
at affordable cost, basic services, and employment opportunities;
(b) Provide for the rational use and development of urban land in order to
bring about the following:
(1) Equitable utilization of residential lands in urban and urbanizable areas
with particular attention to the needs and requirements of the underprivileged
and homeless citizens and not merely on the basis of market forces;
(2) Optimization of the use and productivity of land and urban resources;
(3) Development of urban areas conducive to commercial and industrial
activities which can generate more economic opportunities for the people;
(4) Reduction in urban dysfunctions, particularly those that adversely affect
public health, safety and ecology; and
(5) Access to land and housing by the underprivileged and homeless citizens;
(c) Adopt workable policies to regulate and direct urban growth and
expansion towards a dispersed urban net and more balanced urban-rural
interdependence;
(d) Provide for an equitable land tenure system that shall guarantee security
of tenure to Program beneficiaries but shall respect the rights of small
property owners and ensure the payment of just compensation;
(e) Encourage more effective people's participation in the urban
development process; and
(f) Improve the capability of local government units in undertaking urban
development and housing programs and projects.
Sec. 3. Definition of Terms. — For purposes of this Act:
(a) "Affordable cost" refers to the most reasonable price of land and shelter
based on the needs and financial capability of Program beneficiaries and
appropriate financing schemes;
(b) "Areas for priority development" refers to those areas declared as such
under existing statutes and pertinent executive issuances.
(c) "Blighted lands" refers to the areas where the structures are dilapidated,
obsolete and unsanitary, tending to depreciate the value of the land and
prevent normal development and use of the area.
(d) "Consultation" refers to the constitutionally mandated process whereby the
public, on their own or through people's organizations, is provided an
opportunity to be heard and to participate in the decision-making process on
matters involving the protection and promotion of its legitimate collective
interest, which shall include appropriate documentation and feedback
mechanisms;
(e) "Idle lands" refers to non-agricultural lands urban and urbanized areas on
which no improvements, as herein defined, have been made by the owner, as
certified by the city, municipal or provincial assessor;
(f) "Improvements" refers to all types of buildings and residential units, walls,
fences, structures or constructions of all kinds of a fixed character or which are
adhered to the soil but shall not include trees, plants and growing fruits, and
other fixtures that are mere superimpositions on the land, and the value of
improvements shall not be less than fifty percent (50%) of the assessed value
of the property;
(g) "Joint venture" refers to the commitment or agreement by two (2) or more
persons to carry out a specific or single business enterprise for their mutual
benefit, for which purpose they combine their funds, land resources, facilities
and services;
(h) "Land assembly or consolidation" refers to the acquisition of lots of varying
ownership through purchase or expropriation of the purpose of planned and
rational development and socialized housing programs without individual
property boundary restrictions;
(i) "Land banking" refers to the acquisition of land at values based on existing
use in advance of actual need to promote planned development and
socialized housing programs;
(j) "Land swapping" refers to the process of land acquisition by exchanging
land for another piece of land of equal value, or for shares of stock in a
government or quasi-government corporation whose book value is of equal
value to the land being exchanged, for the purpose of planned and rational
development and provision for socialized housing where land values are
determined based on land classification, market value and assessed value
taken from existing tax declarations: Provided, That more valuable lands
owned by private persons may be exchanged with less valuable lands to
carry out the objectives of this Act;
(k) "Land use plan" refers to the rational approach of allocating available
resources as equitably as possible among competing user groups and for
different functions consistent with the development plan of the area and the
Program under this Act;
(l) "On-site development" refers to the process of upgrading and
rehabilitation of blighted slum urban areas with a view of minimizing
displacement of dwellers in said areas, and with provisions for basic services
as provided for in Section 21 hereof;
(m) "Professional squatters" refers to individuals or groups who occupy lands
without the express consent of the landowner and who have sufficient income
for legitimate housing. The term shall also apply to persons who have
previously been awarded homelots or housing units by the Government but
who sold, leased or transferred the same to settle illegally in the same place
or in another urban area, and non-bona fide occupants and intruders of lands
reserved for socialized housing. The term shall not apply to individuals or
groups who simply rent land and housing from professional squatters or
squatting syndicates;
(n) "Resettlement areas" refers to areas identified by the appropriate
national agency or by the local government unit with respect to areas within
its jurisdiction, which shall be used for the relocation of the underprivileged
and homeless citizens;
(o) "Security of tenure" refers to the degree of protection afforded to
qualified Program beneficiaries against infringement or unjust, reasonable
and arbitrary eviction or disposition, by virtue of the right of ownership, lease
agreement, usufruct and other contractual arrangements;
(p) "Slum Improvement and Resettlement Program or SIR" refers to the
program of the National Housing Authority of upgrading and improving
blighted squatter areas outside of Metro Manila pursuant to existing statutes
and pertinent executive issuances;
(q) "Small property owners" refers to those whose only real property consists
of residential lands not exceeding three hundred square meters (300 sq.m.) in
highly urbanized cities and eight hundred square meters (800 sq.m.) in other
urban areas;
(r) "Socialized housing" refers to housing programs and projects covering
houses and lots or homelots only undertaken by the Government or the
private sector for the underprivileged and homeless citizens which shall
include sites and services development, long-term financing, liberalized terms
on interest payments, and such other benefits in accordance with the
provisions of this Act;
(s) "Squatting syndicates" refers to groups of persons engaged in the business
of squatter housing for profit or gain;
(t) "Underprivileged and homeless citizens" refers to the beneficiaries of this
Act and to individuals or families residing in urban and urbanizable areas
whose income or combined household income falls within the poverty threshold
as defined by the National Economic and Development Authority and who do
not own housing facilities. This shall include those who live in makeshift
dwelling units and do not enjoy security of tenure;
(u) "Unregistered or abandoned lands" refers to lands in urban and
urbanizable areas which are not registered with the Register of Deeds, or
with the city or municipal assessor's office concerned, or which are uninhabited
by the owner and have not been developed or devoted for any useful
purpose, or appears unutilized for a period of three (3) consecutive years
immediately prior to the issuance and receipt of publication of notice of
acquisition by the Government as provided under this Act. It does not include
land which has been abandoned by reason of force majeure or any other
fortuitous event: Provided, That prior to such event, such land was previously
used for some useful or economic purpose;
(v) "Urban areas" refers to all cities regardless of their population density
and to municipalities with a population density of at least five hundred (500)
persons per square kilometers;
(w) "Urbanizable areas" refers to sites and lands which, considering present
characteristics and prevailing conditions, display marked and great potential
of becoming urban areas within the period of five (5) years; and
(x) "Zonal Improvement Program or ZIP" refers to the program of the
National Housing Authority of upgrading and improving blighted squatters
areas within the cities and municipalities of Metro Manila pursuant to existing
statutes and pertinent executive issuances.
ARTICLE II
COVERAGE AND EXEMPTIONS
Sec. 4. Coverage. — The Program shall cover all lands in urban and
urbanizable areas, including existing areas for priority development sites,
and in other areas that may be identified by the local government units as
suitable for socialized housing.
Sec. 5. Exemptions. — The following lands shall be exempt from the
coverage of this Act:
(a) Those included in the coverage of Republic Act No. 6657, otherwise known
as the Comprehensive Agrarian Reform Law;
(b) Those actually used for national defense and security of the State;
(c) Those used, reserved or otherwise set aside for government offices,
facilities and other installations, whether owned by the National Government,
its agencies and instrumentalities, including government-owned or-controlled
corporations, or by the local government units: Provided, however, That the
lands herein mentioned, or portions thereof, which have not been used for the
purpose for which they have been reserved or set aside for the past ten (10)
years from the effectivity of this Act, shall be covered by this Act;
(d) Those used or set aside for parks, reserves for flora and fauna, forests
and watersheds, and other areas necessary to maintain ecological balance or
environmental protection, as determined and certified to by the proper
government agency; and
(e) Those actually and primarily used for religious, charitable, or educational
purposes, cultural and historical sites, hospitals and health centers, and
cemeteries or memorial parks.
The exemptions herein provided shall not apply when the use or purpose of
the abovementioned lands has ceased to exist.
ARTICLE III
NATIONAL URBAN DEVELOPMENT AND HOUSING FRAMEWORK
Sec. 6. Framework for Rational Development. — There shall be a National
Urban Development and Housing Framework to be formulated by the Housing
and Land Use Regulatory Board under the direction of the Housing and Urban
Development Coordinating Council in coordination with all local government
units and other concerned public and private sectors within one (1) year from
the effectivity of this Act.
The framework shall refer to the comprehensive plan for urban and
urbanizable areas aimed at achieving the objectives of the Program. In the
formulation of the Framework, a review and rationalization of testing town
and land use plans, housing programs, and all other objectives and activities
of government agencies and the private sectors which may substantially
affect urban land use patterns, transportation and public utilities,
infrastructure, environment and population movement shall be undertaken with
the concurrence of the local government units concerned.
ARTICLE IV
LAND USE, INVENTORY, ACQUISITION AND DISPOSITION
Sec. 7. Inventory of Lands. — Within one (1) year from the effectivity of this
Act, all city and municipal governments shall conduct an inventory of all kinds
and improvements thereon within their respective localities. The inventory shall
include the following:
(a) Residential lands;
(b) Government-owned lands, whether owned by the National Government or
any of its subdivisions, instrumentalities, or agencies, including government-
owned or-controlled corporations and their subsidiaries;
(c) Unregistered or abandoned and idle lands;
(d)Other lands.
In conducting the inventory, the local government units concerned, in
coordination with the Housing and Land Use Regulatory Board and with the
assistance of the appropriate government agencies, shall indicate the type of
land use and the degree of land utilization, and other data or information
necessary to carry out the purposes of this Act.
For planning purposes, the Housing and Urban Development Coordinating
Council shall be furnished by each local government unit a copy of its
inventory which shall be updated every three (3) years.
Sec. 8. Identification of Sites for Socialized Housing. — After the inventory
the local government units, in coordination with the National Housing Authority,
the Housing and Land Use Regulatory Board, the National Mapping Resource
Information Authority, and the Land Management Bureau, shall identify lands
for socialized housing and resettlement areas for the immediate and future
needs of the underprivileged and homeless in the urban areas, taking into
consideration and degree of availability of basic services and facilities, their
accessibility and proximity of jobs sites and other economic opportunities, and
the actual number of registered beneficiaries.
Government-owned lands under paragraph (b) of the preceding section which
have not been used for the purpose for which they have been reserved or set
aside for the past ten (10) years from the effectivity of this Act and identified
as suitable for socialized housing, shall immediately be transferred to the
National Housing Authority subject to the approval of the President of the
Philippines or by the local government unit concerned, as the case may be, for
proper disposition in accordance with this Act.cralaw
Sec. 9. Priorities in the Acquisition of Land. — Lands for socialized
housing shall be acquired in the following order:
(a) Those owned by the Government or any of its subdivisions,
instrumentalities, or agencies, including government-owned or -controlled
corporations and their subsidiaries;
(b) Alienable lands of the public domain;
(c) Unregistered or abandoned and idle lands;
(d) Those within the declared Areas for Priority Development, Zonal
Improvement Program sites, and Slum Improvement and Resettlement Program
sites which have not yet been acquired;
(e) Bagong Lipunan Improvement of Sites and Services or BLISS sites which
have not yet been acquired; and
(f) Privately-owned lands.
Where open-site development is found more practicable and advantageous
to the beneficiaries, the priorities mentioned in this section shall not apply. The
local government units shall give budgetary priority to on-site development of
government lands.
Sec. 10. Modes of Land Acquisition. — The modes of acquiring lands for
purposes of this Act shall include, among others, community mortgage, land
swapping, land assembly or consolidation, land banking, donation to the
Government, joint-venture agreement, negotiated purchase, and
expropriation: Provided, however, That expropriation shall be resorted to
only when other models of acquisition have been exhausted: Provided,
further, That where expropriation is resorted to, parcels of land owned by
small property owners shall be exempted for purposes of this Act: Provided,
finally, That abandoned property, as herein defined, shall be reverted and
escheated to the State in a proceeding analogous to the procedure laid down
in Rule 91 of the Rules of Court.
For the purpose of socialized housing, government-owned and foreclosed
properties shall be acquired by the local government units, or by the National
Housing Authority primary through negotiated purchase: Provided, That
qualified beneficiaries who are actual occupants of the land shall be given
the right of first refusal.cralaw
Sec. 11. Expropriation of Idle Lands. — All idle lands in urban and
urbanizable areas, as defined and identified in accordance with this Act, shall
be expropriated and shall form part of the public domain. These lands shall
be disposed of or utilized by the Government for such purposes that conform
with their land use plans. Expropriation proceedings shall be instituted if,
after the lapse of one (1) year following receipt of notice of acquisition, the
owner fails to introduce improvements as defined in Section 3(f) hereof,
except in the case of force majeure and other fortuitous events. Exempted
from this provision, however, are residential lands owned by small property
owners or those the ownership of which is subject of a pending
litigation.cralaw
Sec. 12. Disposition of Lands for Socialized Housing. — The National Housing
Authority, with respect to lands belonging to the National Government, and
the local government units with respect to other lands within their respective
localities, shall coordinate with each other to formulate and make available
various alternative schemes for the disposition of lands to the beneficiaries of
the Program. These schemes shall not be limited to those involving transfer of
ownership in fee simple but shall include lease, with option to purchase,
usufruct or such other variations as the local government units or the National
Housing Authority may deem most expedient in carrying out the purposes of
this Act.
Consistent with this provision, a scheme for public rental housing may be
adopted..
Sec. 13. Valuation of Lands for Socialized Housing. — Equitable land
valuation guidelines for socialized housing shall be set by the Department of
Finance on the basis of the market value reflected in the Zonal valuation, or in
its absence, on the latest real property tax declaration.
For site already occupied by qualified Program beneficiaries, the Department
of Finance shall factor into the valuation the blighted status of the lands as
certified by the local government unit or the National Housing Authority.
Sec. 14. Limitations on the Disposition of Lands for Socialized Housing. — No
land for socialized housing, including improvements or rights thereon, shall be
sold, alienated, conveyed, encumbered or leased by any beneficiaries as
determined by the government agency concerned.
Should the beneficiary unlawfully sell, transfer, or otherwise dispose of his lot
or any right thereon, the transaction shall be null and void. He shall also lose
his right to the land, forfeit the total amortization paid thereon, and shall be
barred from the benefits under this Act for a period of ten (10) years from
the date of violation.
In the event the beneficiary dies before full ownership of the land is vested on
him, transfer to his heirs shall take place only upon their assumption of his
outstanding obligations. In case of failure by the heirs to assume such
obligations, the land shall revert to the Government for disposition in
accordance with this Act.
ARTICLE V
SOCIALIZED HOUSING
Sec. 15. Policy. — Socialized housing, as defined in Section 3 hereof, shall
be the primary strategy in providing shelter for the underprivileged and
homeless. However, if the tenurial arrangement in a particular socialized
housing program is in the nature of leasehold or usufruct, the same shall be
transitory and the beneficiaries must be encouraged to become independent
from the Program within a given period of time, to be determined by the
implementing agency concerned.
Sec. 16. Eligibility Criteria for Socialized Housing Program Beneficiaries.
— To qualify for the socialized housing program, a beneficiary:
(a) Must be a Filipino citizen;
(b) Must be an underprivileged and homeless citizen, as defined in Section 3
of this Act;
(c) Must not own any real property whether in the urban or rural areas; and
(d) Must not be a professional squatter or a member of squatting syndicates.
Sec. 17. Registration of Socializing Housing Beneficiaries. — The Housing and
Urban Development Coordinating Council, in coordination with the local
government units, shall designed a system for the registration of qualified
Program beneficiaries in accordance with the Framework. The local
government units, within one (1) year from the effectivity of this Act, shall
identify and register all beneficiaries within their respective localities.
Sec. 18. Balanced Housing Development. — The Program shall include a
system to be specified in the Framework plan whereby developers of
proposed subdivision projects shall be required to develop an area for
socialized housing equivalent to at least twenty percent (20%) of the total
subdivision area or total subdivision project cost, at the option of the
developer, within the same city or municipality, whenever feasible, and in
accordance with the standards set by the Housing and Land Use Regulatory
Board and other existing laws. The balanced housing development as herein
required may also be complied with by the developers concerned in any of
the following manner:
(a) Development of new settlement;
(b) Slum upgrading or renewal of areas for priority development either
through zonal improvement programs or slum improvement and resettlement
programs;
 (c) Joint-venture projects with either the local government units or any of the
housing agencies; or
(d) Participation in the community mortgage program.
Sec. 19. Incentives for the National Housing Authority. — The National
Housing Authority, being the primary government agency in charge of
providing housing for the underprivileged and homeless, shall be exempted
from the payment of all fees and charges of any kinds, whether local or
national, such as income and real taxes. All documents or contracts executed
by and in favor of the National Housing Authority shall also be exempt from
the payment of documentary stamp tax and registration fees, including fees
required for the issuance of transfer certificates of titles.
Sec. 20. Incentives for Private Sector Participating in Socialized Housing. —
To encourage greater private sector participation in socialized housing and
further reduce the cost of housing units for the benefit of the underprivileged
and homeless, the following incentives shall be extended to the private
sectors:
(a) Reduction and simplification of qualification and accreditation
requirements for participating private developers;
(b) Creation of one-stop offices in the different regions of the country for the
processing, approval and issuance of clearances, permits and licenses:
Provided, That clearances, permits and licenses shall be issued within ninety
(90) days from the date of submission of all requirements by the participating
private developers;
(c) Simplification of financing procedures; and
(d) Exemption from the payment of the following:
(1) Project-related income taxes;
(2) Capital gains tax on raw lands used for the project;
(3) Value-added tax for the project contractor concerned;
(4) Transfer tax for both raw completed projects; and
(5) Donor's tax for lands certified by the local government units to have been
donated to socialized housing purposes.
Provided, That upon application for exemption, a lien on the title of the land
shall be annotated by the Register of Deeds: Provided, further, That the
socialized housing development plan has already been approved by the
appropriate government agencies concerned: Provided, finally, That all the
savings acquired by virtue of this provision shall accrue in favor of the
beneficiaries subject to the implementing guidelines to be issued by the
Housing and Urban Development Coordinating Council.
Appropriate implementing guidelines shall be prepared by the Department
of Finance, in consultation with the Housing and Urban Development
Coordinating Council, for the proper implementation of the tax exemption
mentioned in this section within one (1) year after the approval of this Act.
Property owners who voluntarily provide resettlement sites to illegal
occupants of their lands shall entitled to a tax credit equivalent to the actual
non-recoverable expenses incurred in the resettlement, subject to the
implementing guidelines jointly issued by the Housing and Urban Development
Coordinating Council and the Department of Finance.
Sec. 21. Basic Services. — Socialized housing or resettlement areas shall be
provided by the local government unit or the National Housing Authority in
cooperation with the private developers and concerned agencies with the
following basic services and facilities:
(a) Potable water;
(b) Power and electricity and an adequate power distribution system;
(c) Sewerage facilities and an efficient and adequate solid waste disposal
system; and
(d)Access to primary roads and transportation facilities.
The provisions of other basic services and facilities such as health, education,
communications, security, recreation, relief and welfare shall be planned and
shall be given priority for implementation by the local government unit and
concerned agencies in cooperation with the private sector and the
beneficiaries themselves.
The local government unit, in coordination with the concerned national
agencies, shall ensure that these basic services are provided at the most cost-
efficient rates, and shall set as mechanism to coordinate operationally the
thrusts, objectives and activities of other government agencies concerned with
providing basic services to housing projects.
Sec. 22. Livelihood Component. — To extent feasible, socialized housing and
resettlement projects shall be located near areas where employment
opportunities are accessible. The government agencies dealing with the
development of livelihood programs and grant of livelihood loans shall give
priority to the beneficiaries of the Program.
Sec. 23. Participation of Beneficiaries. — The local government units, in
coordination with the Presidential Commission for the Urban Poor and
concerned government agencies, shall afford Program beneficiaries or their
duly designated representatives an opportunity to be heard and to
participate in the decision-making process over matters involving the
protection and promotion of their legitimate collective interest which shall
include appropriate documentation and feedback mechanisms. They shall also
be encouraged to organize themselves and undertake self-help cooperative
housing and other livelihood activities. They shall assist the Government in
preventing the incursions of professional squatters and members of squatting
syndicates into their communities.cralaw
In instances when the affected beneficiaries have failed to organized
themselves or form an alliance within a reasonable period prior to the
implementation of the program of projects affecting them, consultation
between the implementing agency and the affected beneficiaries shall be
conducted with the assistance of the Presidential Commission for the Urban
Poor and the concerned nongovernment organization..
Sec. 24. Consultation with Private Sector. — Opportunities for adequate
consultation shall be accorded to the private sector involved in socialized
housing project pursuant to this Act.
ARTICLE VI
AREAS FOR PRIORITY DEVELOPMENT, ZONAL IMPROVEMENT
PROGRAM SITES AND SLUM IMPROVEMENT AND RESETTLEMENT
PROGRAMS SITES
Sec. 25. Benefits. — In addition to the benefits provided under existing laws
and other related issuance to occupants of areas for priority development,
zonal improvement program sites and slum improvement and resettlement
program sites, such occupants shall be entitled to priority in all government
projects initiated pursuant to this Act. They shall also be entitled to the
following support services:
(a) Land surveys and titling at minimal cost;
(b) Liberalized terms on credit facilities and housing loans and one hundred
percent (100%) deduction from every homebuyer's gross income tax of all
interest payments made on documents loans incurred for the construction or
purchase of the homebuyer's house;
(c) Exemption from the payment of documentary stamp tax, registration fees,
and other fees for the issuance of transfer certificate of titles;
(d) Basic services as provided for in Section 21 of this Act; and
(e) Such other benefits that may arise from the implementation of this Act.
ARTICLE VII
URBAN RENEWAL AND RESETTLEMENT
Sec. 26. Urban Renewal and Resettlement. — This shall include the
rehabilitation and development of blighted and slum areas and the
resettlement of Program beneficiaries in accordance with the provisions of this
Act. On-site development shall be implemented whenever possible in order to
ensure minimum resettlement of the beneficiaries of the Program from their
existing places of occupancy shall be undertaken only when on-site
development is not feasible and after compliance with the procedures laid
down in Section 28 of this Act.
Sec. 27. Action Against Professional Squatters and Squatting Syndicates. —
The local government units, in cooperation with the Philippine National Police,
the Presidential Commission for the Urban Poor (PCUP), and the PCUP-
accredited urban poor organization in the area, shall adopt measures to
identify and effectively curtail the nefarious and illegal activities of
professional squatters and squatting syndicates, as herein defined.
Any person or group identified as such shall be summarily evicted and their
dwellings or structures demolished, and shall be disqualified to avail of the
benefits of the Program. A public official who tolerates or abets the
commission of the abovementioned acts shall be dealt with in accordance with
existing laws.
For purposes of this Act, professional squatters or members of squatting
syndicates shall be imposed the penalty of six (6) years imprisonment of a
fine of not less than Sixty thousand pesos (P60,000.00) but not more than
One hundred thousand pesos (P100,000), or both, at the discretion of the
court.
Sec. 28. Eviction and Demolition. — Eviction or demolition as a practice shall
be discouraged. Eviction or demolition, however, may be allowed under the
following situations:
(a) When persons or entities occupy danger areas such as esteros, railroad
tracks, garbage dumps, riverbanks, shorelines, waterways, and other public
places such as sidewalks, roads, parks, and playgrounds;
(b) When government infrastructure projects with available funding are
about to be implemented; or
(c) When there is a court order for eviction and demolition.
In the execution of eviction or demolition orders involving underprivileged
and homeless citizens, the following shall be mandatory:
(1) Notice upon the effected persons or entities at least thirty (30) days prior
to the date of eviction or demolition;
(2) Adequate consultations on the matter of settlement with the duly
designated representatives of the families to be resettled and the affected
communities in the areas where they are to be relocated;
(3) Presence of local government officials or their representatives during
eviction or demolition;
(4) Proper identification of all persons taking part in the demolition;
(5) Execution of eviction or demolition only during regular office hours from
Mondays to Fridays and during good weather, unless the affected families
consent otherwise;
(6) No use of heavy equipment for demolition except for structures that are
permanent and of concrete materials;
(7) Proper uniforms for members of the Philippine National Police who shall
occupy the first line of law enforcement and observe proper disturbance
control procedures; and
(8) Adequate relocation, whether temporary or permanent: Provided,
however, That in cases of eviction and demolition pursuant to a court order
involving underprivileged and homeless citizens, relocation shall be
undertaken by the local government unit concerned and the National Housing
Authority with the assistance of other government agencies within forty-five
(45) days from service of notice of final judgment by the court, after which
period the said order shall be executed: Provided, further, That should
relocation not be possible within the said period, financial assistance in the
amount equivalent to the prevailing minimum daily wage multiplied by sixty
(60) days shall be extended to the affected families by the local government
unit concerned.
This Department of the Interior and Local Government and the Housing and
Urban Development Coordinating Council shall jointly promulgate the
necessary rules and regulations to carry out the above provision.
Sec. 29. Resettlement. — Within two (2) years from the effectivity of this Act,
the local government units, in coordination with the National Housing Authority,
shall implement the relocation and resettlement of persons living in danger
areas such as esteros, railroad tracks, garbage dumps, riverbanks, shorelines,
waterways, and in other public places as sidewalks, roads, parks, and
playgrounds. The local government unit, in coordination with the National
Housing Authority, shall provide relocation or resettlement sites with basic
services and facilities and access to employment and livelihood opportunities
sufficient to meet the basic needs of the affected families.
Sec. 30. Prohibition Against New Illegal Structures. — It shall be unlawful for
any person to construct any structure in areas mentioned in the preceding
section.
 After the effectivity of this Act, the barangay, municipal or city government
units shall prevent the construction of any kind of illegal dwelling units of
structures within their respective localities. The head of any local government
unit concerned who allows, abets or otherwise tolerates the construction of any
structure in violation of this section shall be liable to administrative sanctions
under existing laws and to penal sanctions provided for in this Act.
ARTICLE VIII
COMMUNITY MORTGAGE PROGRAM
Sec. 31. Definition. — The Community Mortgage Program (CMP) is a
mortgage financing program of the National Home Mortgage Finance
Corporation which assists legally organized associations of underprivileged
and homeless citizens to purchase and develop a tract of land under the
concept of community ownership. The primary objective of the program is to
assist residents of blighted or depressed areas to own the lots they occupy, or
where they choose to relocate to, and eventually improve their neighborhood
and homes to the extent of their affordability.
Sec. 32. Incentives. — To encourage its wider implementation, participants in
the CMP shall be granted with the following privileges or incentives:
(a) Government-owned or -controlled corporations and local government
units, may dispose of their idle lands suitable for socialized housing under the
CMP through negotiable sale at prices based on acquisition cost plus financial
carrying costs;
(b) Properties sold under the CMP shall be exempted from the capital gains
tax; and
(c) Beneficiaries under the CMP shall not be evicted nor dispossessed of their
lands or improvements unless they have incurred arrangements in payments of
amortizations for three (3) months.
Sec. 33. Organization of Beneficiaries. — Beneficiaries of the Program shall
be responsible for their organization into associations to manage their
subdivisions or places of residence, to secure housing loans under existing
Community Mortgage Program and such other projects beneficiaries to them.
Subject to such rules and regulations to be promulgated by the National
Home Mortgage Finance Corporation, associations organized pursuant to this
Act may collectively acquire and own lands covered by this Program. Where
the beneficiaries fail to form an association by and among themselves, the
National Home Mortgage Finance Corporation shall initiate the organization
of the same in coordination with the Presidential Commission for the Urban
Poor and the local government units concerned. No person who is not a bona
fide resident of the area shall be a member or officer of such association..
ARTICLE IX
RELATED STRATEGIES
Sec. 34. Promotion of Indigenous Housing Materials and Technologies.
— The local government units, in cooperation with the National Housing
Authority, Technology and Livelihood Resource Center, and other concerned
agencies, shall promote the production and use of indigenous, alternative, and
low-cost construction materials and technologies for socialized housing.
Sec. 35. Transport System. — The local government units, in coordination
with the Departments of Transportation and Communications, Budget and
Management, Trade and Industry, Finance, and Public Works and Highways,
the Home Insurance Guaranty Corporation, and other concerned government
agencies, shall device a set of mechanisms including incentives to the private
sector so that a viable transport system shall evolve and develop in the urban
areas. It shall also formulate standards designed to attain these objectives:
(a) Smooth flow of traffic;
b) Safety and convenience of travel;
(c) Minimum use of land space;
(d) Minimum damage to the physical environment; and
(e) Adequate and efficient transport service to the people and goods at
minimum cost.
Sec. 36. Ecological Balance. — The local government units shall coordinate
with the Department of Environment and Natural Resources in taking measures
that will plan and regulate urban activities for the conservation and protection
of vital, unique and sensitive ecosystems, scenic landscapes, cultural sites and
other similar resource areas.
To make the implementation of this function more effective, the active
participation of the citizenry in environmental rehabilitation and in decision-
making process shall be promoted and encouraged. The local government
units shall recommend to the Environmental and Management Bureau the
immediate closure of factories, mines and transport companies which are
found to be causing massive pollution.
Sec. 37. Population Movements. — The local government units shall set up an
effective mechanism, together with the appropriate agencies like the
Population Commission, the National Economic and Development Authority
and the National Statistics Office, to monitor trends in the movements of
population from rural to urban, urban to urban, and urban to rural areas.
They shall identify measures by which such movements can be influenced to
achieve balance between urban capabilities and population, to direct
appropriate segments of the population into areas where they can have
access to opportunities to improve their lives and to contribute to national
growth and recommend proposed legislation to Congress, if necessary.
The Population Commission, the National Economic and Development
Authority, and the National Statistics Office shall likewise provided advanced
planning information to national and local government planners on population
projections and the consequent level of services needed in particular urban
and urbanizable areas. This service will include early-warning systems on
expected dysfunctions in a particular urban area due to population increases,
decreases, or age structure changes.cralaw
Sec. 38. Urban-rural Interdependence. — To minimize rural to urban
migration and pursue urban decentralization, the local government units shall
coordinate with the National Economic and Development Authority and other
government agencies in the formulation of national development programs
that will stimulate economic growth and promote socioeconomic development
in the countryside.
They shall prepare a comprehensive land use plan for their respective
localities in accordance with the provisions of this Act.
Sec. 40. Role of Government Housing Agencies. — In addition to their
respective existing powers and functions, and those provided for in this Act,
the hereunder mentioned housing agencies shall perform the following:
(a) The Housing and Urban Development Coordinating Council shall, through
the key housing agencies, provide local government units with necessary
support such as:
(1) Formulation of standards and guidelines as well as providing technical
support in the preparation of town and land use plans;
(2) In coordination with the National Economic and Development Authority and
the National Statistics Office, provide data and information for forward-
planning by the local government units in their areas, particularly on
projections as to the population and development trends in their localities and
the corresponding investment programs needed to provide appropriate types
and levels of infrastructure, utilities, services and land use patterns; and
(3) Assistance in obtaining funds and other resources needed in the urban
development and housing programs in their areas of responsibility.
(b) The National Housing Authority, upon request of local government units,
shall provide technical and other forms of assistance in the implementation of
their respective urban development and housing programs with the objective
of augmenting and enhancing local government capabilities in the provision of
housing benefits to their constituents;

ARTICLE X
PROGRAM IMPLEMENTATION
(c) The National Home Mortgage Finance Corporation shall administer the
Sec. 39. Role of Local Government Units. — The local government units shall
Community Mortgage Program under this Act and promulgate rules and
be charged with the implementation of this Act in their respective localities, in
regulations necessary to carry out the provisions of this Act; and
coordination with the Housing and Urban Development Coordinating Council,
the national housing agencies, the Presidential Commission for the Urban Poor,
the private sector and other nongovernment organizations.
(d) The Home Insurance Guaranty Corporation shall design an appropriate
guarantee scheme to encourage financial institutions to go into direct lending
for housing.
Sec. 41. Annual Report. — The Housing and Urban Development
Coordinating Council and the local government units shall submit a detailed
annual report with respect to the implementation of this Act to the President
and the Congress of the Republic of the Philippines.
ARTICLE XI
FUNDING
Sec. 42. Funding. — Funds for the urban development and housing program
shall come from the following sources:
(a) A minimum of fifty percent (50%) from the annual net income of the Public
Estate Authority, to be used by the National Housing Authority to carry out its
programs of land acquisition for resettlement purposes under this Act;
(b) Proceeds from the disposition of ill-gotten wealth, not otherwise previously
set aside for any other purpose, shall be applied to the implementation of this
Act shall be administered by the National Home Mortgage Finance
Corporation;
(c) Loans, grants, bequests and donations, whether from local or foreign
sources;
(d) Flotation of bonds, subject to the guidelines to be set by the Monetary
Board;
(e) Proceeds from the social housing tax and, subject to the concurrence of the
local government units concerned, idle lands tax as provided in Section 236
of the Local Government Code of 1991 and other existing laws;
(f) Proceeds from the date or disposition of alienable public lands in urban
areas; and
(g) Domestic and foreign investment or financing through appropriate
arrangements like the build-operate-and-transfer scheme.
Sec. 43. Socialized Housing Tax. — Consistent with the constitutional principle
that the ownership and enjoyment of property bear a social function and to
raise funds for the Program, all local government units are hereby authorized
to impose an additional one-half percent (0.5%) tax on the assessed value of
all lands in urban areas in excess of Fifty thousand pesos (P50,000).
ARTICLE XII
TRANSITORY PROVISIONS
Sec. 44. Moratorium on Eviction and Demolition. — There shall be a
moratorium on the eviction of all program beneficiaries and on the demolition
of their houses or dwelling units for a period of three (3) years from the
effectivity of this Act: Provided, That the moratorium shall not apply to those
persons who have constructed their structures after the effectivity of this Act
and for cases enumerated in Section 28 hereof.
ARTICLE XIII
COMMON PROVISIONS
Sec. 45. Penalty Clause. — Any person who violates any provision of this Act
shall be imposed the penalty of not more than six (6) years of imprisonment
or a fine of not less than Five thousand pesos (P5,000) but not more than One
hundred thousand pesos (P100,000), or both, at the discretion of the court:
Provided, That, if the offender is a corporation, partnership, association or
other juridical entity, the penalty shall be imposed on the officer or officers of
said corporation, partnership, association or juridical entity who caused the
violation.
Sec. 46. Appropriations. — The amount necessary to carry out the purposes
of this Act shall be included in the annual budget of implementing agencies in
the General Appropriations Act of the year following its enactment into law
and every year thereafter.
Sec. 47. Separability Clause. — If for any reason, any provision of this Act
shall be included in the annual budget of implementing agencies in the
General Appropriations Act of the year following its enactment into law and
every year thereafter.
Sec. 48. Repealing Clause. — All laws, decrees, executive orders,
proclamations, rules and regulations, and other issuances, or parts thereof
which are inconsistent with the provisions of this Act, are hereby repealed or
modified accordingly.
Sec. 49. Effectivity Clause. — This Act shall take effect upon its publication in
at least two (2) national newspapers of general circulation.
Approved: March 24, 1992
 meters, and includes the 475-square-meter lot owned by respondent Melba
THIRD DIVISION Tan Te.[6]

CITY OF MANILA, G.R. No. 169263 The records bear that respondent had acquired the property from the heirs of
Petitioner, Present: Emerlinda Dimayuga Reyes in 1996, and back then it was being occupied by
a number of families whose leasehold rights had long expired even prior to
VELASCO, JR., J., Chairperson, said sale. In 1998, respondent had sought before the Metropolitan Trial Court
PERALTA, of Manila, Branch 15 the ejectment of these occupants from the premises. The
ABAD, favorable ruling in that case evaded execution; hence, the court, despite
- versus- MENDOZA, and opposition of the City of Manila, issued a Writ of Demolition at respondents
PERLAS-BERNABE, JJ. instance.[7] It appears that in the interim between the issuance of the writ of
Promulgated: execution and the order of demolition, the City of Manila had instituted an
expropriation case[8] affecting the same property. Respondent had moved for
September 21, 2011 the dismissal of that first expropriation case for lack of cause of action, lack
MELBA TAN TE, of showing of an ordinance authorizing the expropriation, and non-
Respondent. compliance with the provisions of Republic Act (R.A.) No. 7279, otherwise
known as the Urban Development and Housing Act of 1992.[9] The trial court
found merit in the motion and dismissed the complaint without prejudice.[10]
x---------------------------------------------------------------------------------------x
On November 16, 2000, petitioner[11] filed this second Complaint[12] for
expropriation before the Regional Trial Court of Manila, Branch 24.[13] This
time, it attached a copy of Ordinance No. 7951 and alleged that pursuant
DECISION
thereto, it had previously offered to purchase the subject property from
respondent for P824,330.00.[14] The offer was contained in a letter sent to
respondent by the City Legal Officer on May 21, 1999,[15] but respondent
PERALTA, J.:
allegedly failed to retrieve it despite repeated notices,[16] thereby compelling
petitioner to institute the present expropriation proceedings after depositing
In this Petition for Review,[1] the City of Manila assails the April 29,
in trust with the Land Bank of the Philippines P1,000,000.00 cash,
2005 Decision[2] of the Court of Appeals in CA-G.R. CV No. 71894, as well
representing the just compensation required by law to be paid to
as the August 12, 2005 Resolution,[3] in the said case denying reconsideration.
respondent.[17]
The assailed decision affirmed the June 13, 2001 Order[4] of the Regional
Trial Court of Manila, Branch 24 issued in Civil Case No. 00-99264 one for
Respondent did not file an answer and in lieu of that, she submitted a
expropriation filed by petitioner, the City of Manila. The said Order, in turn,
Motion to Dismiss[18] and raised the following grounds: that Ordinance No.
granted the motion to dismiss the complaint that was filed by respondent
7951 was an invalid expropriation measure because it violated the rule
Melba Tan Te, in lieu of an answer.
against taking private property without just compensation; that petitioner did
not comply with the requirements of Sections 9[19] and 10[20] of R.A. No. 7279;
The facts follow.
and that she qualified as a small property owner and, hence, exempt from
On March 15, 1998, then Manila City Mayor Joselito L. Atienza approved
the operation of R.A. No. 7279, the subject lot being the only piece of realty
Ordinance No. 7951 an expropriation measure enacted on February 3, 1998
that she owned.
by the city council authorizing him to acquire by negotiation or expropriation
certain pieces of real property along Maria Clara and Governor Forbes
Petitioner moved that it be allowed to enter the property, but before
Streets where low-cost housing units could be built and then awarded to bona
it could be resolved, the trial court issued its June 13, 2001
fide residents therein. For this purpose, the mayor was also empowered to
Order[21] dismissing the complaint. First, the trial court held that while
access the citys funds or utilize funding facilities of other government
petitioner had deposited with the bank the alleged P1M cash in trust for
agencies.[5] In the aggregate, the covered property measures 1,425 square
respondent, petitioner nevertheless did not submit any certification from the
City Treasurers Office of the amount needed to justly compensate respondent
for her property. Second, it emphasized that the provisions of Sections 9 and
10 of R.A. No. 7279 are mandatory in character, yet petitioner had failed to
show that it exacted compliance with them prior to the commencement of this
suit. Lastly, it conceded that respondent had no other real property except the
subject lot which, considering its total area, should well be considered a small
property exempted by law from expropriation. In view of the dismissal of the
complaint, petitioners motion to enter was rendered moot and academic.[22]
Petitioner interposed an appeal to the Court of Appeals which,
finding no merit therein, dismissed the same.[23] Petitioner sought
reconsideration,[24] but it was denied.[25]
In this Petition,[26] petitioner posits that the trial courts dismissal of its
complaint was premature, and it faults the Court of Appeals for having failed
to note that by such dismissal it has been denied an opportunity to show
previous compliance with the requirements of Sections 9 and 10 of R.A. No.
7279 as well as to establish that respondent actually owns other realty apart
from the subject property. Besides, continues petitioner, whether or not it had
truly complied with the requirements of the law is a matter which can be
determined only after a trial of the case on the merits and not, as what
happened in this case, at the hearing of the motion to dismiss.[27]
Respondent, for her part, points out that Ordinance No. 7951 is an
invalid expropriation measure as it does not even contain an appropriation of
funds in its implementation. In this respect, respondent believes that the P1M
cash deposit certified by the bank seems to be incredible, since petitioner has
not shown any certification from the City Treasurers Office on the amount
necessary to implement the expropriation measure. More importantly, she
believes that the dismissal of the complaint must be sustained as it does not
allege previous compliance with Sections 9 and 10 of R.A. No. 7279 and,
hence, it does not present a valid cause of action.[28] She theorizes that the
expropriation for socialized housing must abide by the priorities in land
acquisition and the available modes of land acquisition laid out in the law,
and that expropriation of privately-owned lands avails only as the last
resort.[29] She also invokes the exemptions provided in the law. She professes
herself to be a small property owner under Section 3 (q),[30] and claims that
the subject property is the only piece of land she owns where she, as of yet,
has not been able to build her own home because it is still detained by illegal
occupants whom she had already successfully battled with in the ejectment
court.[31]
In its Reply, petitioner adopts a different and bolder theory. It claims
that by virtue of the vesture of eminent domain powers in it by its charter, it is
thereby not bound by the requirements of Sections 9 and 10 of R.A. No.
7279. It also asserts its right to immediately enter the subject property
because not only is its complaint supposedly sufficient in form and substance
but also because it has already deposited P1M cash with the bank in trust for
respondent. It reiterates that the dismissal of its complaint constitutes a denial
of due process because all the issues propounded by respondent, initially in
her motion to dismiss and all the way in the present appeal, must be resolved
in a full-blown trial.
Prefatorily, the concept of socialized housing, whereby housing units are
distributed and/or sold to qualified beneficiaries on much easier terms, has
already been included in the expanded definition of public use or purpose in
the context of the States exercise of the power of eminent domain. Said the
Court in Sumulong v. Guerrero,[32] citing the earlier case of Heirs of Juancho
Ardona v. Reyes:[33]
The public use requirement for a valid exercise of the
power of eminent domain is a flexible and evolving concept
influenced by changing conditions.
The taking to be valid must be for public use. There was a
time where it was felt that a literal meaning should be
attached to such a requirement. Whatever project is
undertaken must be for the public to enjoy, as in the case of
streets or parks. Otherwise, expropriation is not allowable. It
is not anymore. As long as the purpose of the taking is public,
then the power of eminent domain comes into play. x x x The
constitution in at least two cases, to remove any doubt,
determines what is public use. One is the expropriation of
lands to be divided into small lots for resale at cost to
individuals. The other is in the transfer, through the exercise
of this power, of utilities and other enterprise to the
government. It is accurate to state then that at present
whatever may be beneficially employed for the general
welfare satisfies the requirement of public use.
The term public use has acquired a more comprehensive
coverage. To the literal import of the term signifying strict use
or employment by the public has been added the broader
notion of indirect public benefit or advantage. x x x
The restrictive view of public use may be appropriate for a
nation which circumscribes the scope of government activities
and public concerns and which possesses big and correctly
located public lands that obviate the need to take private
property for public purposes. Neither circumstance applies to
the Philippines. We have never been a laissez-faire state.
And the necessities which impel the exertion of sovereign
power are all too often found in areas of scarce public land
or limited government resources.
Specifically, urban renewal or development and the
construction of low-cost housing are recognized as a
public purpose, not only because of the expanded concept
of public use but also because of specific provisions in the
Constitution. x x x The 1987 Constitution [provides]:
The State shall promote a just and dynamic
social order that will ensure the prosperity
and independence of the nation and free the
people from poverty through policies that
provide adequate social services, promote
full employment, a rising standard of living
and an improved quality of life for all.
(Article II, Section 9)
The State shall, by law and for the common
good, undertake, in cooperation with the
private sector, a continuing program for
urban land reform and housing which will
make available at affordable cost decent
housing and basic services to
underprivileged and homeless citizens in
urban centers and resettlement areas. x xx In
the implementation of such program the
State shall respect the rights of small
property owners. (Article XIII, Section 9)
Housing is a basic human need. Shortage in housing is
a matter of state concern since it directly and significantly
affects public health, safety, the environment and in sum, the
general welfare. The public character of housing measures
does not change because units in housing projects cannot be
occupied by all but only by those who satisfy prescribed
qualifications. A beginning has to be made, for it is not
possible to provide housing for all who need it, all at once.
Population growth, the migration to urban areas and
the mushrooming of crowded makeshift dwellings is a
worldwide development particularly in developing countries.
So basic and urgent are housing problems that the United
Nations General Assembly proclaimed 1987 as the
"International Year of Shelter for the Homeless" "to focus the
attention of the international community on those problems."
The General Assembly is seriously concerned that, despite the
efforts of Governments at the national and local levels and
of international organizations, the driving conditions of the
majority of the people in slums and squatter areas and rural
settlements, especially in developing countries, continue to
deteriorate in both relative and absolute terms." [G.A. Res.
37/221, Yearbook of the United Nations 1982, Vol. 36, p.
1043-4]
In light of the foregoing, the Court is satisfied that
socialized housing falls within the confines of public
use.[34]
Congress passed R.A. No. 7279,[35] to provide a comprehensive and
continuing urban development and housing program as well as access to land
and housing by the underprivileged and homeless citizens; uplift the conditions
of the underprivileged and homeless citizens in urban areas by making
available decent housing at affordable cost; optimize the use and
productivity of land and urban resources; reduce urban dysfunctions which
affect public health, safety and ecology; and improve the capability of local
governments in undertaking urban development and housing programs and
projects, among others.[36] Accordingly, all city and municipal governments are
mandated to inventory all lands and improvements within their respective
locality and identify lands which may be utilized for socialized housing and as
resettlement sites for acquisition and disposition to qualified
beneficiaries.[37] Section 10 thereof authorizes local government units to
exercise the power of eminent domain to carry out the objectives of the law,
but subject to the conditions stated therein and in Section 9.[38]
It is precisely this aspect of the law which constitutes the core of the present
controversy, yet this case presents a serious procedural facet overlooked by
both the trial court and the Court of Appeals which needs foremost attention
ahead of the issues propounded by the parties.
Expropriation is a two-pronged proceeding: first, the determination
of the authority of the plaintiff to exercise the power and the propriety of its
exercise in the context of the facts which terminates in an order of dismissal or
an order of condemnation affirming the plaintiff's lawful right to take the
property for the public use or purpose described in the complaint
and second, the determination by the court of the just compensation for the
property sought to be expropriated.[39]
Expropriation proceedings are governed by Rule 67 of the Rules of
Court. Under the Rules of Court of 1940 and 1964, where the defendant in
an expropriation case conceded to the plaintiffs right to expropriate (or
where the trial court affirms the existence of such right), the court-appointed
commissioners would then proceed to determine the just compensation to be
paid.[40] Otherwise, where the defendant had objections to and defenses
against the expropriation of his property, he was required to file a single
motion to dismiss containing all such objections and defenses.[41]
This motion to dismiss was not covered by Rule 15 which governed
ordinary motions, and was then the required responsive pleading, taking the
place of an answer, where the plaintiffs right to expropriate the defendants
property could be put in issue.[42] Any relevant and material fact could be
raised as a defense, such as that which would tend to show that the exercise
of the power to condemn was unauthorized, or that there was cause for not
taking defendants property for the purpose alleged in the petition, or that
the purpose for the taking was not public in character. With that, the hearing
of the motion and the presentation of evidence would follow. The rule is
based on fundamental constitutional provisions affecting the exercise of the
power of eminent domain, such as those that seek to protect the individual
property owner from the aggressions of the government.[43] However, the rule,
which was derived from the practice of most American states, proved indeed
to be a source of confusion because it likewise permitted the filing of another
motion to dismiss, such as that referred to in Rule 16, where the defendant
could raise, in addition, the preliminary objections authorized under it.[44]
The Supreme Court, in its en banc Resolution in Bar Matter No. 803
dated April 8, 1997, has provided that the revisions made in the Rules of
Court were to take effect on July 1, 1997. Thus, with said amendments, the
present state of Rule 67 dispenses with the filing of an extraordinary motion
to dismiss such as that required before in response to a complaint for
expropriation. The present rule requires the filing of an answer as responsive
pleading to the complaint. Section 3 thereof provides:
Sec. 3. Defenses and objections. If a defendant has no
objection or defense to the action or the taking of his
property, he may and serve a notice or appearance and a
manifestation to that effect, specifically designating or
identifying the property in which he claims to be interested,
within the time stated in the summons. Thereafter, he shall be
entitled to notice of all proceedings affecting the same.
If a defendant has any objection to the filing of or the
allegations in the complaint, or any objection or defense to
the taking of his property, he shall serve his answer within
the time stated in the summons. The answer shall
specifically designate or identify the property in which he
claims to have an interest, state the nature and extent of
the interest claimed, and adduce all his objections and
defenses to the taking of his property. No counterclaim,
cross-claim or third-party complaint shall be alleged or
allowed in the answer or any subsequent pleading.
A defendant waives all defenses and objections not so
alleged but the court, in the interest of justice, may permit
amendments to the answer to be made not later than ten (10)
days from the filing thereof. However, at the trial of the issue
of just compensation, whether or not a defendant has
previously appeared or answered, he may present evidence
as to the amount of the compensation to be paid for his
property, and he may share in the distribution of the
award.[45]
The defendant in an expropriation case who has objections to the
taking of his property is now required to file an answer and in it raise all his
available defenses against the allegations in the complaint for eminent
domain. While the answer is bound by the omnibus motion rule under Section
8,[46] Rule 15, much leeway is nevertheless afforded to the defendant because
amendments may be made in the answer within 10 days from its filing. Also,
failure to file the answer does not produce all the disastrous consequences of
default in ordinary civil actions, because the defendant may still present
evidence on just compensation.[47]
At the inception of the case at bar with the filing of the complaint on
November 16, 2000, the amended provisions of Rule 67 have already been
long in force. Borre v. Court of Appeals[48] teaches that statutes which regulate
procedure in the courts apply to actions pending and undetermined at the
time those statutes were passed. And in Laguio v. Gamet,[49] it is said that new
court rules apply to proceedings which take place after the date of their
effectivity.
In the case of Robern Development Corporation v. Quitain,[50] a similar
motion to dismiss was filed by the private property owner, petitioner therein,
in an expropriation case filed by the National Power Corporation (NPC),
alleging certain jurisdictional defects as well as issues on the impropriety of
the expropriation measure being imposed on the property. The trial court in
that case denied the motion inasmuch as the issues raised therein should be
dealt with during the trial proper. On petition for certiorari, the Court of
Appeals affirmed the trial courts denial of the motion to dismiss. On appeal,
the Supreme Court affirmed the Court of Appeals, but declared that under
the amended provisions of Section 3, Rule 67, which were already in force at
about the time the motion to dismiss had been submitted for resolution, all
objections and defenses that could be availed of to defeat the expropriators
exercise of the power of eminent domain must be contained in an answer and
not in a motion to dismiss because these matters require the presentation of
evidence. Accordingly, while the Court in that case sustained the setting aside
of the motion to dismiss, it nevertheless characterized the order of dismissal as
a nullity. Hence, it referred the case back to the trial court and required the
NPC to submit its answer to the complaint within 10 days from the finality of
the decision.
be fully ventilated in a full-blown trial and hearing. It would
be precipitate to dismiss the Complaint on such grounds as
claimed by the petitioner. Dismissal of an action upon a
motion to dismiss constitutes a denial of due process if, from a
consideration of the pleadings, it appears that there are
issues that cannot be decided without a trial of the case on
the merits.
Inasmuch as the 1997 Rules had just taken effect when this
case arose, we believe that in the interest of substantial
justice, the petitioner should be given an opportunity to file its
answer to the Complaint for expropriation in accordance with
Section 3, Rule 67 of the 1997 Rules of Civil Procedure.x x
x[53]

Thus, the trial court in this case should have denied respondents
motion to dismiss and required her to submit in its stead an answer within the
reglementary period. This, because whether petitioner has observed the
provisions of Sections 9 and 10 of R.A. No. 7279 before resorting to
expropriation, and whether respondent owns other properties than the one
sought to be expropriated, and whether she is actually a small property
owner beyond the reach of petitioners eminent domain powers, are indeed
issues in the nature of affirmative defenses which require the presentation of
evidence aliunde.[51] Besides, Section 1, Rule 16 of the Rules of Court does not
consider these matters grounds for a motion to dismiss, and an action can be
dismissed only on the grounds authorized by this provision.[52]
WHEREFORE, the Petition is hereby GRANTED. The Order of the
Regional Trial Court of Manila, Branch 24 in Civil Case No. 00-99264 dated
June 13, 2001, as well as the April 29, 2005 Decision of the Court of
Appeals in CA-G.R. CV No. 71894 affirming said order, and the August 12,
2005 Resolution therein which denied reconsideration, are hereby SET
ASIDE. The case is hereby REMANDED to the trial court for further
proceedings. Respondent is DIRECTED to file her Answer to the complaint
within ten (10) days from the finality of this Decision.
SO ORDERED.

The Court declared in Robern Development Corporation, thus:

Accordingly, Rule 16, Section 1 of the Rules of Court,

does not consider as grounds for a motion to dismiss the
allotment of the disputed land for another public purpose or
the petition for a mere easement of right-of-way in the
complaint for expropriation. The grounds for dismissal are
exclusive to those specifically mentioned in Section 1, Rule 16
of the Rules of Court, and an action can be dismissed only on
a ground authorized by this provision.

To be exact, the issues raised by the petitioner are

affirmative defenses that should be alleged in an answer,
since they require presentation of evidence aliunde. Section 3
of Rule 67 provides that if a defendant has any objection to
the filing of or the allegations in the complaint, or any
objection or defense to the taking of his property, he should
include them in his answer. Naturally, these issues will have to
G.R. No. 120132 December 4, 1995
CRISANTA GALAY, ET AL., petitioners,
vs.
COURT OF APPEALS and VIRGINIA WONG, represented by her
Administrator, ATTY. REYNALDO B. HERNANDEZ, respondents.
FRANCISCO, J.:
In an effort to uplift the living conditions in the poorer sections of the
communities in urban areas, the legislature enacted Republic Act No. 7279
otherwise known as the "Urban Development and Housing Act of 1992",
envisioned to be the antidote to the pernicious problem of squatting in the
metropolis. Nevertheless, the courts continue to be swamped with cases arising
from disputes in the proper implementation of the aforementioned legislation,
particularly on matters involving the eviction, demolition and resettlement of
squatters. The present suit is among such cases.
The instant petition for review on certiorari seeks to annul the decision of
respondent Court of Appeals dated September 20, 1994 in CA-G.R. SP No.
33761 entitled "Crisanta Galay, et al. vs. Judge Mariano I. Bacalla and
Virginia Wong, represented by her Administrator, Atty. Reynaldo B.
Hernandez". Petitioners claim that the assailed decision was based on an
unauthorized compromise agreement to which they never consented nor had
any knowledge thereof.
Material hereto are the following antecedents:
Private respondent Virginia Wong, as represented by her Administrator and
Attorney-in fact, Reynaldo B. Hernandez filed an ejectment suit (Civil Case
No. 38-5830) against herein petitioners, who were alleged to have been
illegally occupying private respondents' 405 square meter lot located in
Quezon City which is covered by Transfer Certificate of Title No. 51589 of
the Registry of Deeds of Quezon City.
Although petitioners do not claim ownership over the subject premises, they
however disputed private respondents' claim of ownership and alleged that
they have been in possession of the property in question since 1972 by virtue
of the tolerance and permission of the alleged real owner, Dr. Alejo Lopez.
On August 3, 1992, judgment was rendered by the Metropolitan Trial Court
of Quezon City, Branch 38, ordering the ejectment of the petitioners from the
disputed premises.1
Upon appeal to the Regional Trial Court of Quezon City, Branch 83, the
decision of the Metropolitan Trial Court was affirmed in toto.2
Still not satisfied, petitioners proceeded to the Court of Appeals and filed a
petition for review, but the petition was dismissed outright for failure to state
the material dates to show that the petition was filed on time and for not
being accompanied by certified true copies of the disputed decision.3
No further appeal was interposed by petitioner, hence, the judgment became
final. This prompted private respondent to file a Motion for Issuance of an
Alias Writ of Execution which was granted by the Metropolitan Trial Court in
its order dated March 25, 1994,4 taking into account that the judgment has
already become final and executory.
In an attempt to prevent the execution of the judgment and their consequent
eviction, petitioners filed a complaint for Injunction with Preliminary Injunction
and Temporary Restraining Order before the Regional Trial Court at Quezon
City, Branch 216,5 alleging that herein private respondent must first comply
with the mandatory requirements of Section 28(c) of R.A. 7279 regarding
eviction and demolition by court order.
In its order dated April 5, 1994,6 the lower court denied the prayer for the
issuance of a restraining order as the act sought to be enjoined was pursuant
to a lawful order of the court.
Thereafter, petitioners again sought recourse from the Court of Appeals via
Petition for Certiorari with Preliminary Injunction and Temporary Restraining
Order, claiming that the latter order was tainted with grave abuse of
discretion for being arbitrary, unjust and oppressive, and reiterating that they
cannot be evicted unless there is compliance with Section 28(c) of R.A. 7279.7
On April 28, 1994, respondent Court of Appeals gave due course to the
petition and granted petitioners' prayer for preliminary injunction, enjoining
the ejection of petitioners until further orders from the court.8
On July 18, 1994, counsel for private respondent filed a Motion To Lift
And/Or Dissolve Preliminary Injunction, contending among others that the
Urban Poor Affairs Office [People's Bureau] has already been notified, as
mandated by RA 7279, and that more than 45 days had already lapsed
since the notice was made in April, 1994. Thus, private respondent has
substantially complied with the requirements of RA 7279 and therefore the
enforcement of the final judgment and ejectment of petitioners is in
order.9 Objecting to private respondent's motion, petitioners argued that RA
7279 requires not only the 45-day notice, but also the relocation of
petitioners and the grant of financial assistance to them prior to their
relocation. Furthermore, petitioners maintain that there is no extreme urgency
for petitioners' eviction on account of private respondent's affluence. 10
The case was subsequently set for hearing and oral argument, after which,
respondent court rendered the assailed decision on September 20, 1994
ordering as follows:
WHEREFORE, pursuant to RA 7279, the People's Bureau is
hereby ordered to relocate the herein petitioners from
subject lot of private respondent not later than October 30,
1994. Should the relocation of petitioners be not finished on
or before October 30, 1994, the People's Bureau shall pay
petitioners a daily allowance of P145.00 for every day of
delay of relocation but in no case shall such allowance last
for more than sixty (60) days.
Petitioners are hereby ordered to vacate the premises in
question not later than October 30, 1994, on which date the
private respondent shall have the right to take over
possession thereof and, if necessary, to ask for a writ of
execution for the implementation of this disposition. No
pronouncement as to costs.
SO ORDERED. 11
On October 25, 1994, a new counsel entered his appearance for petitioners
and filed a motion to set aside the aforequoted decision. 12 As initially
mentioned, petitioners assert that the assailed decision was rendered based
on a compromise agreement to which they never gave their consent nor
authorized their former counsel to enter into, and for which reason said former
counsel has withdrawn his appearance as counsel of record.
Petitioners contend that the judgment of respondent Court of Appeals was
indeed based on a compromise agreement which is evident from the following
portions of the decision:
xxx xxx xxx
When the case was called for hearing on September 14,
1994, as scheduled, both parties were represented. Atty.
Rogelio Directo stood up for the People's Bureau (Urban Poor
Affairs Office). And the parties, including the said
representative of the People's Bureau, agreed that petitioners
herein are all qualified to avail of the protection and benefits
under RA 7279 and through counsel, manifested their
willingness and readiness to be relocated in accordance with
said law. It was likewise agreed by all concerned that should
petitioners be not relocated within the period of 45 days,
from September 15 to October 30, 1994, the People's
Bureau shall pay them an allowance of P145.00, equivalent
to the minimum wage, per day of delay of relocation, until
their actual transfer to the relocation site to be designated
for them. It is understood, however, that the daily allowance
for petitioners shall be for a period not exceeding sixty (60)
days, starting October 31, 1994. In other words, should the
delay of relocation of petitioners be for more than sixty (60)
days, they shall only be entitled to the daily allowance of
P145.00 per day of delay of relocation for not more than
sixty (60) days.
It was likewise agreed that on October 31, 1994, whether
petitioners shall have been relocated or not, the private
respondent shall then be entitled to the execution and
implementation of this judgment, and to cause the ejectment
of petitioners from subject property litigated upon. (Emphasis
supplied).13
In its Resolution dated May 4, 1995, respondent Court of Appeals denied
petitioners' Motion to Set Aside Decision 14and reiterated that the assailed
decision dated September 20, 1994 was a decision based on the merits and
not upon a compromise agreement.
Hence, the instant petition.
Petitioners adamantly argue that the decision of respondent court dated
September 20, 1994 was based on an unauthorized compromise agreement,
sans their knowledge, consent and authority. Additionally, petitioners
interpose the following issues: 1) whether there can be eviction and demolition
without actual relocation; 2) can the petitioners be considered as homeless
and underprivileged?; and 3) whose duty is it to relocate them?
A compromise is a bilateral act or transaction that is expressly acknowledged
as a juridical agreement by the Civil Code. It is defined in Article 2208 of the
Code as "a contract whereby the parties by making reciprocal concessions,
avoid a litigation or put an end to one already commenced". 15 Thus, a
judgment upon a compromise is a judgment embodying a compromise
agreement entered into by the parties in which they make reciprocal
concessions in order to terminate a litigation already instituted.16
In the present suit, the assailed decision, far from being a judgment based on
a compromise agreement, is undoubtedly a decision rendered entirely on the
merits. Contrary to petitioners' assertion, the dispositive portion of the decision
is very explicit in exclusively adverting to RA 7279 as the basis for the
judgment. Nowhere did it appear nor can it be inferred therefrom that
respondent court's disposition took into account any agreement or concessions
made by the parties that is indicative of a judgment on a compromise. A
scrutiny of the assailed portions of the decision allegedly embodying the
compromise agreement revealed that the same are nothing but admissions
made by the parties intended to clarify the applicable provisions of RA
7279. In fact the said admissions are expressly laid out in Section 28(c) (8) of
RA 7279 and thus could not have been the subject of any compromise
agreement as the same are already provided in the law.
Further negating petitioners' contention are the following ratiocinations made
by respondent court in denying the Motion to Set Aside Decision, with which
we are in complete accord:
After a careful study, We find movant's stance barren of
merit. Our Decision promulgated on September 20, 1994 in
this case was not rendered as a Judgment by Compromise. It
resolved the petition on the merits, after the lawyers of the
parties and the representative of the Urban Poor Affairs
Office agreed on the applicability of Rep. Act No. 7279 to
petitioner's situation. As a result of such development of the
case, Our judgment granted petitioners more than what they
have came here for. All they prayed for was to hold in
abeyance execution of subject final and executory Decision
of the Quezon Metropolitan Trial Court, ordering their
ejectment; until after the expiration of forty-five (45) days
from date of notice of their ejectment to the Urban Poor
Affairs Office. But the judgment in question has recognized
not only petitioner's right not to be ejected sans the 45-day
notice to the Urban Poor Affairs Office, but also the right to
a daily allowance of P145.00 for each day of delay or
relocation, for a period of not more than sixty (60) days,
should there be a delay in their relocation, as mandated by
law.17
Finally, in a desperate move to prolong the execution of the decision ordering
their eviction, petitioners invoke the principle of social justice and plead that
as underprivileged and homeless citizen, their eviction and demolition of their
homes cannot be effected unless there is adequate relocation. Moreover,
petitioners maintain that private respondent is also duty bound to share in the
task of relocating them.
The contentions are without merit. It is beyond dispute that the ejectment suit
against petitioners has already been resolved with finality way back on
February 16, 1994 when the petitioners' appeal was dismissed outright by
the Court of Appeals and they did not interpose any further appeal
therefrom. The subsequent proceedings merely sought to enforce the decision
ordering their ejectment from the disputed premises, which petitioners
however, repeatedly tried to thwart by invoking non-compliance with Section
28(c) of RA 7279. Thus, upon compliance by private respondent with the
requirements of the aforesaid law, particularly on the notice to the People's
Bureau (Urban Poor Affairs Office) and the expiration of 45 days from said
notice, petitioners' right to remain in the subject lot ceased. Resultingly,
petitioners' eviction must now proceed in accordance with Section 28(c) (8), to
wit:
. . . Provided, however, That in cases of eviction and
demolition pursuant to a court order involving
underprivileged and homeless citizens, relocation shall be
undertaken by the local government unit concerned and the
National Housing Authority with the assistance of other
government agencies within forty-five (45) days from service
of notice of final judgment by the court, after which period
the said order shall be executed: Provided, further, That
should relocation not be possible within the said period,
financial assistance in the amount equivalent to the prevailing
minimum daily wage multiplied by sixty (60) days shall be
extended to the affected families by the local government
unit concerned.
Anent petitioners' claim that private respondent must also share the
responsibility of relocating petitioners, the same is also without any basis. The
aforecited provision is very explicit that the task of relocating the homeless
and the underprivileged shall be the responsibility of the local government
unit concerned and the National Housing Authority with the assistance of the
other government agencies. Although private individuals are not prohibited
from taking part in the relocation, there is nothing in the law either that
compels them to undertake such task on a mandatory basis, otherwise, such
obligation should have been included in the provision, either expressly or
impliedly. Thus, petitioners attempt to further burden private respondent with
their relocation is unwarranted.

Equally unpersuasive is petitioners' plea for social justice. In previous cases,

this Court has emphasized that "never is it justified to prefer the poor simply
because they are poor, or to reject the rich simply because they are rich, for
justice must always be served, for poor and rich alike, according to the
mandate of the law." 18 In the same vein, it has been held that "the policy of
social justice is not intended to countenance wrongdoing simply because it is
committed by the underprivileged. At best it may mitigate the penalty but it
certainly will not condone the offense. Compassion for the poor is an
imperative of every humane society but only when the recipient is not a rascal
claiming an undeserved privilege." 19

Further militating against petitioners' appeal for compassion is the fact that
only recently, President Ramos himself, in the exercise of his veto power,
vetoed a congress-approved measure 20 intended to extend the moratorium
on the demolition of squatter colonies throughout the country. The President's
action was intended to curtail the negative influences to general growth and
development in urban areas brought about by the problem of squatting and
to prevent the legitimate landowners from being unduly deprived of the
immediate use of their properties.

In closing, we find it fitting to advert to the following pronouncements made in

the case of Martires vs. Court of Appeals 21 :

While we sympathize with the millions of our people who are

unable to afford the basic necessity of shelter, let alone the
comforts of a decent home, this sympathy cannot extend to
squatting, which is a criminal offense. Social justice cannot
condone the violation of law nor does it consider that very
wrong to be a justification for priority in the enjoyment of a
right. This is what the petitioner wants us to grant him. But we
cannot heed his unjust plea because the rule of law rings
louder in our ears.

WHEREFORE, in view of the foregoing considerations, the instant petition is

hereby DENIED for lack of merit.

SO ORDERED.