Republic Act No.

7279
"Urban Development and Housing Act of 1992"
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; and
(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.
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.
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
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.
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. Onsite 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
demolition;
(2) Adequate consultations on the matter of settlement with the duly designated representatives of
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
(4) Proper identification of all persons taking part in the demolition;

demolition;

or

the

(5) Execution of eviction or demolition only during regular office hours from Mondays to
good weather, unless the affected families consent otherwise;

Fridays and during

(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
enforcement and observe proper disturbance control procedures; and

line of law

(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.
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.
ARTICLE X
PROGRAM IMPLEMENTATION
Sec. 39. Role of Local Government Units. The local government units shall be charged with the
implementation of this Act in their respective localities, in 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.
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
town and land use plans;

preparation

of

(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
programs in their areas of responsibility.

housing

(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;

(c) The National Home Mortgage Finance Corporation shall administer the Community Mortgage Program under
this Act and promulgate rules and regulations necessary to carry out the provisions of this Act; and
(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-andtransfer 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

Republic of the Philippines

Congress of the Philippines
Metro Manila
Thirteenth Congress
Third Regular Session

Begun and held in Metro Manila, on Monday, the twenty-fourth day of July, two thousand six.
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.
Approved,

JOSE DE VENECIA, JR.

Speaker of the House of
Representatives

MANNY VILLAR
President of the Senate

This Act which is a consolidation of Senate Bill No. 2518 and House Bill No. 3834 was finally passed
by the Senate and the House of Representatives on January 30, 2007 and January 29, 2007, respectively.
Approved: MAR 18, 2007

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 169263

September 21, 2011

CITY OF MANILA, Petitioner,

vs.
MELBA TAN TE, Respondent.
DECISION
PERALTA, J.:
In this Petition for Review,1 the City of Manila assails the April 29, 2005 Decision 2 of the Court of
Appeals in CA-G.R. CV No. 71894, as well as the August 12, 2005 Resolution, 3 in the said case denying
reconsideration.
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 expropriation filed by petitioner, the City of Manila. The
said Order, in turn, granted the motion to dismiss the complaint that was filed by respondent Melba Tan

Te, in lieu of an answer.

The facts follow.
On March 15, 1998, then Manila City Mayor Joselito L. Atienza approved Ordinance No. 7951 an
expropriation measure enacted on February 3, 1998 by the city council authorizing him to acquire by
negotiation or expropriation certain pieces of real property along Maria Clara and Governor Forbes
Streets where low-cost housing units could be built and then awarded to bona fide residents therein. For
this purpose, the mayor was also empowered to access the citys funds or utilize funding facilities of
other government agencies.5 In the aggregate, the covered property measures 1,425 square meters, and
includes the 475-square-meter lot owned by respondent Melba Tan Te.6
The records bear that respondent had acquired the property from the heirs of 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 said sale. In 1998, respondent had sought before the Metropolitan Trial Court
of Manila, Branch 15 the ejectment of these occupants from the premises. The favorable ruling in that
case evaded execution; hence, the court, despite opposition of the City of Manila, issued a Writ of
Demolition at respondents instance.7 It appears that in the interim between the issuance of the writ of
execution and the order of demolition, the City of Manila had instituted an expropriation case 8 affecting
the same property. Respondent had moved for the dismissal of that first expropriation case for lack of
cause of action, lack of showing of an ordinance authorizing the expropriation, and non-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
On November 16, 2000, petitioner11 filed this second Complaint12 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 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 allegedly failed to retrieve it despite repeated notices,16 thereby compelling
petitioner to institute the present expropriation proceedings after depositing in trust with the Land Bank
of the Philippines P1,000,000.00 cash, representing the just compensation required by law to be paid to
respondent.17
Respondent did not file an answer and in lieu of that, she submitted a Motion to Dismiss 18 and raised the
following grounds: that Ordinance No. 7951 was an invalid expropriation measure because it violated
the rule against taking private property without just compensation; that petitioner did not comply with
the requirements of Sections 919 and 1020 of R.A. No. 7279; and that she qualified as a small property
owner and, hence, exempt from the operation of R.A. No. 7279, the subject lot being the only piece of
realty that she owned.
Petitioner moved that it be allowed to enter the property, but before it could be resolved, the trial court
issued its June 13, 2001 Order21 dismissing the complaint. First, the trial court held that while petitioner
had deposited with the bank the alleged P1M cash in trust for 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.23Petitioner 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. 29She 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.1wphi1 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.
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
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 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 x53
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.
DIOSDADO M. PERALTA
Associate Justice

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
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 Decision14 and 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.
Narvasa, C.J., Regalado, Puno and Mendoza, JJ., concur.