This study examines how the state categorises and governs the urban poor in the Philippines, implementing different housing policies for citizens who can pay regular prices and the urban poor who cannot. Slum dwellers who cannot afford land are categorised as “underprivileged and homeless citizens” and receive state protection. Meanwhile, those considered able to afford land are classified as “professional squatters” and are subject to imprisonment and/or fines. Since the 2000s, the state protection has been via market-driven policies, which have proven insufficient as local governments and private developers relocate slum dwellers for high-end housing projects that force these dwellers to purchase relatively expensive socialised housing in suburbs with inadequate infrastructure or livelihood opportunities. This article reviews the inadequacy of state protection by examining the role of courts that might protect slum dwellers from the state’s market-driven policies. This analysis indicates that, based on the building materials of houses, the courts are likely to define slum dwellers as professional squatters. This is not necessarily an accurate reflection of their living standard, compared to income. Underprivileged and homeless citizens are easily relocated under market-driven policies, and if they resist in court, they are likely to be treated as professional squatters.