DPWH vs. Manalo

Informal settlers whose structures are taken for public use by the government state a cause of action for just compensation or damages if the government fails to follow due process and statutory eviction procedures.

The DPWH implemented the C-5 extension project to link SLEX and NLEX. The project required clearing a parcel of land owned by MWSS, which was occupied by informal settlers. Rather than initiating formal expropriation proceedings, DPWH attempted to remove the settlers by offering financial assistance and issuing demolition notices, prompting the settlers to seek judicial intervention to enforce their right to just compensation and due process.

• Original Filing: RTC of Quezon City, Branch 76, Civil Case No. Q-10-67907 (Complaint for determination and payment of just compensation)
• Lower Court Decision: May 5, 2011 Order denying DPWH's motion to dismiss; June 30, 2011 Order denying reconsideration
• Appeal: DPWH filed Petition for Certiorari before the CA (CA-G.R. SP No. 121303)
• CA Decision: March 19, 2015 Decision affirming the RTC
• SC Action: DPWH filed Petition for Review on Certiorari under Rule 45

• The C-5 Project and the Settlers: Respondents (Manalo, et al.) own residential structures on MWSS-owned land on Luzon Avenue, Quezon City, directly in the path of DPWH's C-5 extension project.
• The Complaint: On September 13, 2010, respondents filed a Complaint for just compensation, alleging DPWH was "cutting corners" by not initiating expropriation proceedings and offering "notoriously small" financial assistance. They cited a 2008 MOA between DPWH and the QC government acknowledging them as informal settlers requiring relocation.
• The Demolition Notice: On November 15, 2010, the QC Task Force issued a Notice of Demolition giving respondents 7 days to vacate and offering P21,000 financial assistance per family. Respondents refused to vacate and accept the aid.
• DPWH's Defense: DPWH filed an Answer seeking dismissal, arguing respondents were squatters on government land without consent, subject to summary demolition under Sec. 27 RA 7279, and builders in bad faith under Art. 449 of the Civil Code with no right to reimbursement.

• The complaint fails to state a cause of action because respondents are squatters on government land.
• The RTC should not have considered the 2008 MOA because it was not formally offered in evidence during the motion to dismiss hearing; regardless, the MOA shows relocation is the QC government's duty, not DPWH's.
• Respondents are professional squatters under Sec. 27 RA 7279, entitled only to financial assistance and summary eviction, not just compensation or replacement costs.
• Respondents are builders in bad faith under Art. 449 of the Civil Code, barring any reimbursement for their structures.

• A cause of action exists because they own the residential structures that DPWH demolished for a public project.
• The RTC has jurisdiction over the issue of just compensation.
• They are entitled to either just compensation for their structures or suitable relocation.

• Procedural Issues:
  • Whether the CA erred in finding that the RTC did not gravely abuse its discretion in denying DPWH's motion to dismiss based on failure to state a cause of action.
• Substantive Issues:
  • Whether DPWH can extrajudicially and summarily evict respondents and demolish their structures.
  • Whether respondents are entitled to just compensation for their structures.

• Procedural: The SC ruled the complaint sufficiently states a cause of action. All three elements are present: (1) respondents owned the structures and had rights under the MOA; (2) DPWH had the obligation to respect these rights and comply with due process; (3) DPWH's actions violated these rights. The test for failure to state a cause of action is whether, assuming the allegations are true, the plaintiff is entitled to the relief demanded. Defenses raised by DPWH (like respondents being professional squatters) do not warrant dismissal if the complaint furnishes a sufficient basis for the suit. The RTC also properly considered the MOA, as courts can look at annexes and pleadings on record without ruling on their truth.
• Substantive: The SC ruled DPWH cannot summarily evict respondents. While respondents' rights do not spring from Art. III, Sec. 9 (private property) of the Constitution, they arise from Art. XIII, Sec. 10 (urban or rural poor dwellers). Under RA 8974, if expropriated land is occupied by squatters, the implementing agency must observe Secs. 28 and 29 of RA 7279. DPWH failed to procure a court writ of demolition and did not observe mandatory eviction procedures. By offering financial assistance under Sec. 28(8) of RA 7279, DPWH effectively acknowledged respondents as underprivileged citizens entitled to due process. DPWH also failed to substantiate its claim that respondents were professional squatters. The SC could not rule on the builder in bad faith issue under the Civil Code because MWSS, the landowner, was not impleaded. The case was remanded to determine if respondents are entitled to damages.

• Failure to State a Cause of Action vs. Lack of Cause of Action — Failure to state a cause of action refers to the insufficiency of allegations in the pleading, resolved by hypothetically admitting the truth of the allegations and looking only at the complaint's four corners (and annexes). Lack of cause of action refers to the insufficiency of the factual basis/evidence, resolved after the plaintiff rests its case.
• Inverse Expropriation — Expropriation may be claimed not just by the government filing a complaint, but also by the deprived landowner filing a complaint or counterclaim for compensation.
• Rights of Informal Settlers in Eminent Domain — Urban or rural poor dwellers cannot be evicted or demolished except in accordance with law and in a just and humane manner (Art. XIII, Sec. 10, Constitution). When government infrastructure projects affect squatters, the implementing agency must strictly observe the mandatory eviction and demolition procedures under Secs. 28 and 29 of RA 7279.

• Art. XIII, Sec. 10, 1987 Constitution — Mandates that urban or rural poor dwellers shall not be evicted nor their dwellings demolished, except in accordance with law and in a just and humane manner. Applied as the specific source of respondents' rights, distinguishing them from private property owners under Art. III, Sec. 9.
• Sec. 9, RA 8974 — Requires implementing agencies to observe Secs. 28 and 29 of RA 7279 when expropriated land is occupied by squatters. Applied to mandate DPWH's compliance with due process before demolition.
• Secs. 27, 28, and 29, RA 7279 (UDHA) — Sec. 27 defines professional squatters subject to summary eviction; Sec. 28 provides mandatory procedures for eviction/demolition (notice, consultation, presence of LGU officials, relocation/financial assistance); Sec. 29 provides resettlement rules. Applied to show DPWH failed to follow mandatory procedures and failed to prove respondents were professional squatters.
• Rule 2, Sec. 2, Rules of Court — Defines cause of action as the act or omission by which a party violates a right of another. Applied to test the sufficiency of the respondents' complaint.
• Art. 449, Civil Code — Governs rights of builders in bad faith. Not applied because the landowner (MWSS) was not impleaded.