TL;DR

The Supreme Court ruled that the National Housing Authority (NHA) did not forfeit its rights to expropriated land even though it constructed low-cost housing instead of directly relocating squatters. The Court determined that low-cost housing qualifies as a “public use” because it serves the broader public interest and fulfills the State’s social justice mandate. While the landowners are not entitled to the return of the land, the NHA must pay the outstanding balance of just compensation with interest from the time of the taking in 1977 until full payment. This case clarifies the evolving definition of “public use” under eminent domain and affirms the government’s power to address housing needs through expropriation.

From Squatters to Socialized Housing: Evolving Definitions of Public Use

This case arises from a dispute over land expropriated by the National Housing Authority (NHA) for the expansion of the Dasmariñas Resettlement Project. The original goal was to relocate squatters from Metro Manila, but the NHA later entered into a contract to build low-cost housing on the land. The landowners, the Reyes and Zaballero families, sued to reclaim their property, arguing that the NHA had abandoned the original public purpose. At the heart of the legal question is whether the construction of low-cost housing constitutes a valid “public use” under the Constitution, justifying the continued expropriation of private land.

The petitioners argued that the NHA’s failure to relocate squatters, as originally intended, meant the expropriation’s purpose had been abandoned, warranting the return of the land. They also questioned the “public nature” of constructing low-cost housing. The NHA countered that it had substantially complied with the expropriation judgment, that the project served a public purpose, and that the landowners’ non-payment of capital gains tax was hindering full compensation. The trial court and the Court of Appeals sided with the NHA, prompting this appeal to the Supreme Court.

The Supreme Court emphasized that the concept of public use has evolved beyond traditional notions of direct use by the public. It now encompasses public interest, public benefit, public welfare, and public convenience. This broader interpretation reflects the Philippines’ socio-economic realities and the State’s role in promoting social justice. The Court cited the case of Heirs of Juancho Ardona, et al. vs. Reyes, et al., which stated that “whatever may be beneficially employed for the general welfare satisfies the requirement of public use.”

Building on this principle, the Court affirmed that socialized housing projects fall squarely within the ambit of public use. The Constitution itself mandates the State to undertake a continuing program of urban land reform and housing in cooperation with the private sector. This program aims to provide affordable, decent housing to underprivileged citizens and those in resettlement areas. Therefore, the NHA’s contract for low-cost housing on the expropriated land aligned with the State’s constitutional obligations and did not constitute an abandonment of the public purpose.

Moreover, the Court underscored that an unconditional expropriation grants the government full ownership of the land, without any reversionary rights for the former owner. Quoting Fery vs. Municipality of Cabanatuan, the Court clarified that “when land has been acquired for public use in fee simple unconditionally… the former owner retains no rights in the land, and the public use may be abandoned, or the land may be devoted to a different use, without any… reversion to the former owner.” Thus, the absence of a reversion clause in the original expropriation judgment further weakened the petitioners’ claim.

However, the Court also addressed the issue of just compensation. While the landowners were not entitled to reclaim the property, they were entitled to full and timely payment. The Court found the NHA’s reasons for delaying payment—the landowners’ failure to pay capital gains tax and surrender the titles—to be unjustified. Citing Republic of the Philippines vs. Court of Appeals, et al., the Court reiterated that non-payment of just compensation does not entitle landowners to recover possession of expropriated land. The Court also stated that title to the property only transfers to the government upon full payment of just compensation.

Finally, the Court addressed the issue of interest on the unpaid compensation. Citing Republic, et al. vs. Court of Appeals, et al., the Court ruled that the landowners were entitled to legal interest at 12% per annum on the outstanding balance, computed from the time of taking in 1977 until full payment. This interest was intended to mitigate the effects of inflation and ensure that the landowners received fair compensation for the long delay. The Court ordered the NHA to pay the remaining balance of P1,218,574.35, plus the accrued interest, while also directing the landowners to pay the capital gains tax and surrender the titles upon full payment.

FAQs

This case underscores the evolving interpretation of “public use” in eminent domain, recognizing the government’s power to address social needs like housing through expropriation. While landowners are not automatically entitled to reclaim property if initial plans change, they retain the right to just compensation, including interest for delays. It is a reminder that the government must act responsibly in exercising its eminent domain powers, ensuring fairness and equity for all parties involved.

For inquiries regarding the application of this ruling to specific circumstances, please contact Atty. Gabriel Ablola through gaboogle.com or via email at connect@gaboogle.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Reyes vs. NHA, G.R. No. 147511, January 20, 2003