G.R. No. 217656, November 16, 2020
DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS, PETITIONER, VS. EDDIE MANALO, ET AL., RESPONDENTS.

FACTS

Respondents are owners of residential structures on a parcel of land owned by the Metropolitan Waterworks and Sewerage System along Luzon Avenue, Quezon City, which is affected by the DPWH’s C-5 extension project. They filed a Complaint before the Regional Trial Court seeking the determination and payment of just compensation. They alleged that despite its expropriation power, the DPWH neglected to initiate formal expropriation proceedings and instead made a voluntary offer of financial assistance which they found to be “notoriously small.” They claimed entitlement to replacement costs for their houses, citing a Memorandum of Agreement between the DPWH and the Quezon City government which referred to the need to relocate “affected squatters.”
The DPWH filed a Motion to Dismiss, arguing that respondents were squatters on government land without the owner’s consent, making their structures subject to demolition under Republic Act No. 7279 (the Urban Development and Housing Act). It asserted that expropriation was not the proper remedy, that respondents were only entitled to financial assistance under the law, and that they were builders in bad faith with no right to compensation. The Regional Trial Court denied the motion to dismiss, a decision affirmed by the Court of Appeals, prompting the DPWH to elevate the matter to the Supreme Court via a Petition for Review on Certiorari.

ISSUE

Whether the Regional Trial Court correctly denied the DPWH’s Motion to Dismiss the Complaint for determination of just compensation.

RULING

Yes, the Supreme Court affirmed the denial of the motion to dismiss. The Court held that a motion to dismiss hypothetically admits the truth of the material allegations of the complaint. At this preliminary stage, the allegations in the respondents’ Complaint—that the DPWH was taking their properties for a public purpose (the road project) without initiating expropriation—sufficiently stated a cause of action for the determination of just compensation. The core issue of whether respondents are entitled to compensation, and the nature and amount thereof, involves questions of fact and law that require a full-blown trial for proper adjudication.
The Court clarified that the respondents’ admission of not owning the land does not automatically negate a cause of action or classify them as builders in bad faith as a matter of law. Their status and the corresponding rights, if any, to compensation for the improvements are evidentiary matters to be proven during trial. The DPWH’s defenses, including its claim that respondents are only entitled to financial assistance under R.A. No. 7279 and not to just compensation, are matters best addressed after both parties have presented their evidence. Therefore, the trial court did not commit grave abuse of discretion in denying the motion to dismiss and ordering the case to proceed to trial on the merits.