The Supreme Court in this case reaffirms that the power of eminent domain allows the government to expropriate private property for public use upon payment of just compensation. This ruling clarifies that “public use” is not limited to traditional uses like roads or parks but extends to any purpose that benefits the public welfare, including urban land reform and socialized housing. Even if expropriated land is later transferred to private entities for low-cost housing projects, the taking remains valid as long as it serves a public purpose.

Can Land Expropriated for Squatter Relocation Be Used for Low-Cost Housing?

This case revolves around a dispute between Marina Z. Reyes, et al. (petitioners) and the National Housing Authority (NHA) concerning land expropriated by the NHA in 1977. The NHA initially stated the public purpose of the expropriation as the expansion of the Dasmariñas Resettlement Project, intended to relocate squatters from Metro Manila. After the expropriation, however, the NHA entered into a contract for the construction of low-cost housing units on the land. The petitioners argued that this new plan was a deviation from the original public purpose, leading to a forfeiture of the NHA’s rights and interests in the expropriated properties. The core legal question is whether the NHA’s subsequent use of the expropriated land for low-cost housing constituted a valid public use, or whether it represented an abandonment of the original purpose, thus warranting the return of the land to its former owners.

The petitioners claimed that the NHA violated the stated public purpose by failing to relocate squatters and instead engaging in low-cost housing construction. The petitioners argued that this change warranted the forfeiture of the NHA’s rights and the return of the properties to them. However, the Supreme Court disagreed, emphasizing that the concept of **public use** has evolved to encompass a broader range of public benefits. It cited previous rulings stating that “public use” is now synonymous with “public interest,” “public benefit,” “public welfare,” and “public convenience.” The Court underscored that even if the developed area is later sold to private homeowners or commercial firms, the expropriation remains valid if it serves a public purpose like slum clearance or urban development.

Building on this principle, the Supreme Court highlighted that the 1987 Constitution explicitly allows the State, in cooperation with the private sector, to undertake a continuing program of **urban land reform and housing**. The Court pointed out that the expropriation of private property for socialized housing aligns with the social justice provision in the Constitution, which aims to reduce social, economic, and political inequalities. Given this context, the NHA’s low-cost housing project on the expropriated land was deemed compliant with the “public use” requirement, serving the common good and promoting equitable access to housing.

Moreover, the Supreme Court rejected the petitioners’ claim that the stated public purpose was abandoned when the NHA failed to occupy the expropriated lots by relocating squatters from Metro Manila. The Court referred to the doctrine established in *Fery vs. Municipality of Cabanatuan*, stating that when land is acquired for public use in fee simple unconditionally, the former owner retains no rights, and the public use may be abandoned or changed without any reversion to the former owner. Here, the expropriation judgment granted the NHA absolute rights to the properties without any condition, restriction, or qualification.

The petitioners also contended that the NHA’s continued failure to pay just compensation justified the forfeiture of its rights and the return of the properties. While acknowledging that the NHA’s delay in payment was unjustified, the Supreme Court cited *Republic of the Philippines vs. Court of Appeals, et al.*, which ruled that **non-payment of just compensation** does not entitle private landowners to recover possession of their expropriated lots. The Court emphasized that the right of the expropriating authority differs from that of an unpaid seller, and condemnation acts upon the property, creating a new and independent title in the public.

However, the Court also found the NHA’s refusal to pay just compensation based on the petitioners’ failure to pay capital gains tax and surrender the owners’ duplicate certificates of title to be unfounded and unjustified. The Court clarified that the payment of just compensation was not subject to any condition under the expropriation judgment. Additionally, the Court referred to *Association of Small Landowners in the Phils., Inc., et al. vs. Secretary of Agrarian Reform*, affirming that title to expropriated property passes from the owner to the expropriator only upon full payment of just compensation.

Thus, the Court clarified that the lower courts erred in not awarding interest computed from the time the property was actually taken to the time when compensation is actually paid or deposited in court. This allowance of interest compensates the owner for the delay and the fluctuation of currency value over time. The Court cited *Republic, et al. vs. Court of Appeals, et al.*, imposing interest at 12% per annum to address this issue.

FAQs

What was the key issue in this case?	The central issue was whether the National Housing Authority (NHA) forfeited its rights to expropriated land by using it for low-cost housing instead of the initially stated purpose of squatter relocation. The petitioners argued that the change in purpose warranted the return of the land to them.
What is eminent domain?	Eminent domain is the power of the government to take private property for public use, even if the owner does not want to sell it. The Constitution requires that the owner receive just compensation for the property.
What constitutes “public use” in eminent domain cases?	The concept of “public use” has expanded to include any purpose that benefits the public welfare, such as urban land reform, socialized housing, or economic development. It is no longer limited to traditional uses like roads or parks.
Can expropriated land be used for purposes other than the initially stated public purpose?	Yes, the Supreme Court has ruled that once land has been acquired for public use in fee simple unconditionally, the public use may be abandoned or changed without any reversion to the former owner. The former owner loses rights on the property.
Does non-payment of just compensation entitle the former landowner to recover possession of the property?	No, the Supreme Court has ruled that non-payment of just compensation does not entitle the former landowner to recover possession of the expropriated property. However, the landowner is entitled to receive just compensation with interest.
When does title to expropriated property transfer to the government?	Title to expropriated property transfers to the government upon full payment of just compensation. Until then, the original owner technically retains the title, though the government has the right to possess and use the property.
What is just compensation?	Just compensation is the fair market value of the property at the time of the taking, plus interest from the time of taking until the compensation is actually paid. This aims to place the owner in as good a position as they were before the taking occurred.
Is the payment of just compensation conditional on the landowner paying capital gains tax?	No, the payment of just compensation is not conditional on the landowner paying capital gains tax. The government is obligated to pay just compensation regardless of the landowner’s tax obligations.

In conclusion, this case reinforces the government’s broad power of eminent domain, emphasizing that the definition of “public use” is flexible and encompasses initiatives like socialized housing. While landowners are protected by the requirement of just compensation, they are not automatically entitled to recover expropriated land simply because the initial purpose evolves. However, the government is obligated to ensure full and timely payment of just compensation, including interest, to adequately compensate landowners for the taking of their property.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.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: MARINA Z. REYES v. NATIONAL HOUSING AUTHORITY, G.R. No. 147511, January 20, 2003