FACTS:

On March 15, 1998, Mayor Joselito L. Atienza approved Ordinance No.

7951 an expropriation measure enacted 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. He was also empowered to access the citys funds
or utilize funding facilities of other government agencies .
This involves 1,425 square meters, and includes the 475-square-meter lot
owned by respondent Melba Tan Te.
As per the records, Tan Te had acquired the property from the heirs of
Reyes , and then it was being occupied by a number of families whose
leasehold rights had long expired even prior to said sale.
In 1998, Tan Te had sought before the MetC of Manila the ejectment of
these occupants from the premises.
TC 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.
Tan Te 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, petitioner[11] filed this second Complaint[12] for
expropriation before the RTC of Manila, Branch 24.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 9[19] and 10[20] 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 Order [21] 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.[22]
Petitioner interposed an appeal to the Court of Appeals which, finding no merit
therein, dismissed the same. [23] Petitioner 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 privatelyowned lands avails only as the last resort.[29] She 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 laissezfaire 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. 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 inLaguio 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 x[53]

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 CAG.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.