G.R. No. L-50877 April 28, 1983
THE NATIONAL HOUSING AUTHORITY, petitioner, vs. THE HONORABLE COURT OF APPEALS and GAVINO MENDIOLA, respondents.

FACTS

The People’s Homesite and Housing Corporation (PHHC, now NHA) filed a complaint for recovery of possession against Gavino Mendiola, alleging he unlawfully occupied Lot 20-A, Block E-74 in Quezon City since 1959. Mendiola admitted PHHC’s ownership but claimed lawful occupation, asserting that PHHC had transferred his house to the lot and initially awarded it to him. The evidence established that Mendiola was a member of a squatters’ association whose petitions for relocation reached Malacañang. Pursuant to a Quezon City Council resolution, PHHC subdivided Block E-74 to relocate these squatters. Mendiola and his wife were transferred to Lot 20, which was later subdivided into Lots 20-A and 20-B, awarded to Mendiola and his wife respectively.
However, PHHC subsequently conducted a raffle in October 1960 and awarded Lot 20-A to Antonio Ilustre, who made a down payment. This created conflicting claims. After an investigation, PHHC recommended sustaining Ilustre’s award and ejecting Mendiola. When Mendiola refused to vacate, PHHC filed the suit. The trial court ruled in favor of Mendiola, ordering PHHC to award him the lot and cancel Ilustre’s award. The Court of Appeals affirmed this decision.

ISSUE

Whether the Court of Appeals erred in affirming the trial court’s decision ordering the NHA (PHHC) to award Lot 20-A to respondent Gavino Mendiola.

RULING

The Supreme Court affirmed the lower courts’ decisions. Procedurally, the Court found no merit in PHHC’s objection to the trial court’s delegation of evidence reception to a commissioner (the Clerk of Court), as the parties had agreed to this procedure, sanctioned by the Rules of Court, and the issue was raised belatedly.
On the substantive merits, the Court upheld the award to Mendiola based on equity and the specific purpose of the subdivision. The evidence showed Mendiola was an original squatter-relocatee for whom Block E-74 was intended, as per PHHC Board Resolution No. 531. He had occupied the lot continuously since 1959 with PHHC’s initial involvement. In contrast, Antonio Ilustre was an “outsider” not belonging to the original beneficiary group. The Court noted that Ilustre had later transferred his rights and subsequently died, indicating no real need for the property. An internal PHHC memorandum had also questioned the justification for the raffle award to Ilustre. Given these circumstances—Mendiola’s prior award, continuous possession, and status as an intended beneficiary versus Ilustre’s status as a non-qualified outsider—the Court found that justice and equity demanded the property be awarded to Mendiola. The administrative agency’s action was thus overturned to prevent a manifest injustice.