Reyes v.

National Housing Authority

G.R. No. 147511 — 20 January 2003
Puno, J.:

Topic: Inherent Powrs of the State — Eminent Domain

Petitioner: Marina Z. Reyes; Alfredo A. Francisco; Angelita Z. Garcia; et. al.
Respondent: National Housing Authority (NHA)

FACTS:

I. In 1977, respondent NHA filed separate complaints for the expropriation of sugarcane
lands belonging to the petitioners; the NHA stated that the public purpose for such
expropriation was the expansion of the Dasmarinas Resettlement Project.
A. The project aimed to accommodate squatters relocated from Metro Manila.
B. The CFI of Cavite granted the expropriation of the said lots and the payment of just
compensation.
C. The Supreme Court furthermore affirmed said decision in the case of NHA v.
Zaballero.
II. In 1989, the RTC of Tagaytay City issued an order requiring the NHA to immediately pay
the petitioners the just compensation due to them springing from the expropriation.
A. Said order also directed the petitioners to pay the corresponding capital gainz tax on
the expropriated lots.
III. Alleging the failure of NHA to comply with the above order, herein petitioners filed a
complaint for the forfeiture of rights.
A. Specifically, they allege that the NHA had not relocated squatters from Metro Manila
to the expropriated lands in violation of the stated public purpose for expropriation.
B. Petitioners also allege that the NHA had not paid the just compensation fixed by the
court.
C. They thus pray that the NHA be enjoined from disposing and alienating the
expropriated properties.
IV. The NHA raises the defense of it having already paid a substantial amount to petitioners.
A. Furthermore, it states that the expropriation judgement could not be executed due to
several issues re: capital gainz tax, registration fees, and other expenses for the
transfer of title to the NHA.
V. The Regional Trial Court dismissed the complaint, finding fault with both the petitioners
—for their failure to pay the capital gainz tax—and the respondents—for their failure to
pay just compensation—but ultimately recognising the right of the respondents to
continue their use of the land.
A. The trial court performed an ocular and found 80% of one lot already occupied by
relocatees whose houses were made of light materials, with very few houses partly
made of hollow blocks.
1. The second lot was almost fully occupied by houses and structures—most of
which were not made of concrete materials—that were not being occupied by
squatters relocated to the said lot.
2. The third lot was likewise occupied by concrete houses and structures, but no
relocatees were in the said lot.
 B. Furthermore, the trial court deemed the NHA to have not abandoned the public
purpose for which the properties were expropriated; such was fulfilled when the NHA
entered into a contract involving the construction of low cost housing on the
expropriated lots to be sold to qualified low income beneficiaries.
C. The trial court found no condition in the expropriation judgement that would revert
the subject properties back to the original owners in case the purpose of said
expropriation was terminated or abandoned.
D. The court found the payment of just compensation to be independent of the obligation
of the petitioners to pay the capital gainz tax.
E. Lastly, the payment of just compensation should be based on the value of the property
at the time of its taking.
VI. Petitioners thus initiated the instant suit, questioning the Court of Appeals’ decision.

ISSUES + HOLDING:

W/N the National Housing Authority violated the stated public purpose of the expropriation
when it failed to relocate the squatters from Metro Manila — NO
I. The 1987 Constitution explicitly provides for the exercise of the power of eminent
domain over private properties upon payment of just compensation.
A. Art. III, Sec. 9 states that private property shall not be taken for public use without
just compensation.
B. Thus, two constitutional restraints are found in the power of eminent domain.
1. First, that it must be for public use; and
2. Second, there must be just compensation.
II. In justifying its expanded view of the eminent domain provision and the concept of
“public use,” the Court refers to its decision in Heirs of Juancho Ardona where it said
that “whatever may be beneficially employed for the general welfare satisfies the
requirement of public use.”
A. Such springs from the circumstances of the Philippines; “the necessities which impel
the exertion of sovereign power are all too often found in areas of scarce public land
or limited government resources.”\
III. The Court holds that the act of NHA in entering into a contract for the construction of
low cost housing to be sold to qualified low income beneficiaries cannot be taken to
mean as a deviation from the stated public purpose; jurisprudence has held the same to be
true time an time again.
A. Moreover, the Constitution itself justifies the expropriation of private property for the
express purpose of socialised housing under Art. XIII, Sec. 1–the social justice
provision.
B. Thus, the low-cost housing project of the NHA is compliant with the “public use”
requirement.
IV. The Court furthermore holds that the taking of the petitioners’ properties is absolute,
without any condition, restriction, or qualification.
A. The Court emphasises its ruling in Fery v. Municipality of Cabanatuan where it stated
that the former owner of a land validly expropriated retains no rights in the said land.
 B. Furthermore, the public use may be abandoned, or the land may be devoted to a
different use, without any impairment of the estate or title acquired, or any reversion
to the former owner.

W/N the continued failure of the NHA to pay just compensation justifies the forfeiture of its
rights and interests over the expropriated lands — NO.
I. The Court cites its recent decision of Republic of the Philippines v. Court of Appeals
where it ruled that non-payment of just compensation does not entitle the private
landowner to recover possession of its expropriated lots.
A. Here, the Court differentiates the right of the expropriating authority from that of
an unpaid seller in ordinary sales.
B. In the same case, the Court recognises the obligation of the petitioner to pay the
respondents in that case just compensation; simultaneously, the Court also adjudges
the property condemned in favour of the petitioner.
II. Similarly, the Court finds the refusal of the NHA to pay just compensation to be
unfounded and unjustified.
A. The payment of just compensation is not subject to any condition; thus, the Court
rejects the defense raised by the NHA that the petitioners allegedly failed to pay
capital gainz tax and surrender the owners’ duplicate certificates of title.
B. The Court makes a distinction between when the right to enter upon and appropriate
the land for public use is completed—prior to payment—and when the title to the
property expropriated passes from the owner to the expropriator—upon full payment
of the just compensation.
1. Such is the ruling of the Court in the case of Association of Small Landowners in
the Phils., Inc., et al. v. Secretary of Agrarian Reform where it held that
“[although the right to appropriate and use land taken for a canal is complete at
the time of entry, title to the property taken remains in the owner until payment is
actually made.”
2. Such is the ruling of the Court in the case of Visayan Refining Co. v. Camus and
Paredes as well, where it held that “no piece of land can be finally and
irrevocably taken from an unwilling owner until compensation is paid.”
III. Lastly, the Court holds that the lower court erred in not awarding interest computed from
the time the property is actually taken to the time when compensation is actually paid or
deposited in court.
A. Such was also the decision of the Court in Republic, reasoning out that the interest
rate helps eliminate the issue of the constant fluctuation and inflation of the value of
the currency over time.

RULING:
WHEREFORE, the appealed judgement is modified as follows:
1. Ordering respondent National Housing Authority to pay petitioners the amount of Php
1,218,574.35 with legal interest thereon at 12% per annum computed from the taking of
the expropriated properties in 1997 until the amount due shall be been fully paid;
2. Ordering petitioners to pay the capital gainz tax; and
3. Ordering petitioners to surrender to respondent National Housing Authority the owners’
duplicate certificates of title of the expropriated properties upon full payment of just
compensation.