JANE L. GARCIA, MAYORICO P. SANDICO, BELEN R. GARCIA AND DANILO DIOKNO, PETITIONERS, VS. COURT, OF APPEALS (SPECIAL TENTH DIVISION) AND NATIONAL POWER CORPORATION, RESPONDENTS.

Garcia versus National Power Corporation

The Case

This is a petition for certiorari brought by Jane L. Garcia, Mayorico P. Sandico, Belen R. Garcia, and Danilo Diokno against the Court of Appeals, Special Tenth Division, and the National Power Corporation. The petitioners are the owners of two adjoining parcels of land in Mexico, Pampanga, and they challenge the valuation fixed by the Court of Appeals for a twenty thousand four hundred thirty nine square meter portion of their property known as Block 19, which the National Power Corporation had occupied since 1957 without paying anything. The case matters because it fixes the date at which just compensation is measured when the expropriator never took the land under the power of eminent domain, and it teaches that a tax declaration is only prima facie evidence of market value.

Procedural History

On August 8, 1969, the National Power Corporation filed a complaint for eminent domain before the Court of First Instance of Pampanga, Branch Five, seeking a right of way easement over portions of the petitioners' lots for its 69 KV Mexico-Balibago transmission line. The petitioners answered, asking for dismissal and setting up counterclaims for rentals and, alternatively, for compensation for Block 19. The plaintiff was placed in possession on March 30, 1970, after a provisional deposit. The Clerk of Court, Andres B. Paras, sat as lone Commissioner and recommended compensation of fifteen pesos per square meter for both Block 19 and Block 10, with six percent interest from March 16, 1970. The trial court, through Judge Honorio Romero, rendered judgment on November 16, 1971, expropriating both blocks and ordering payment of fifteen pesos per square meter, with interest at the legal rate from June 30, 1954 for Block 10 and from March 30, 1970 for Block 19, plus five percent attorney's fees and costs.

The National Power Corporation appealed to the Court of Appeals. On October 28, 1977, the Court of Appeals modified the judgment. It affirmed fifteen pesos per square meter for Block 10, but for Block 19 it fixed the market value at seven centavos per square meter, or fourteen thousand five hundred eleven pesos and sixty nine centavos, with legal interest from July 1, 1957, relying on the 1957 tax declaration. It eliminated the attorney's fees and costs. The petitioners moved for reconsideration, which was denied on December 13, 1977. They then came to the Supreme Court by petition for certiorari, assigning as sole error the reduction of just compensation for Block 19 to seven centavos per square meter.

Facts

The petitioners own Lot 633, with an area of eighty five thousand two hundred twelve square meters, and Lot 634, with an area of seventy four thousand six hundred thirteen square meters, both in Mexico, Pampanga. As early as 1957, the National Power Corporation occupied a portion of these lots, twenty thousand four hundred thirty nine square meters in all, designated as Block 19, for the construction of steel towers and high power lines for the Ambuklao-Manila and Mexico-Tarlac lines. Up to the time of the case, the corporation had paid nothing for that portion, neither rental nor purchase price.

As early as March 10, 1960, the two lots were surveyed for conversion into the Conching Subdivision for residential purposes. They were subdivided into nineteen blocks, and all except Block 19 were cut into residential lots, three hundred fifty in all. Block 19 was left undivided because the steel towers and power lines made it dangerous for residential use. The subdivision plan was approved by the court in August 1962, by the Land Registration Commission in July 1962, and by the Municipal Council of Mexico, Pampanga in January 1962. Roads and gutters were constructed, about twenty five houses of strong materials were built, and there were about one hundred to one hundred fifty willing buyers.

On May 8, 1969, the corporation filed its action for expropriation of a right of way easement over two thousand eight hundred thirty five square meters within Block 10, adjacent to Block 19. The corporation's entry into Block 19 in 1957 was made under a document titled Permission to Occupy Land, signed by the petitioners' father, Eutiquiano Garcia, pending negotiation of compensation, which negotiation was never completed. The corporation later constructed the Mexico-Tarlac line without permission and without court authority. Block 19 was never the subject of the expropriation action; it was ordered expropriated only when the trial court declared that the corporation could not acquire an easement over it nor own it by prescription, and that its only way to justify continued occupation was to expropriate it.

Issues

• Whether or not the Court of Appeals erred in fixing just compensation for Block 19 at seven centavos per square meter based on the 1957 tax declaration.
• Whether or not the date of taking in 1957 may serve as the time for fixing the market value of Block 19, when the corporation entered under permission and never intended to expropriate it.
• Whether or not the fair market value of Block 19 should be fixed at fifteen pesos per square meter, as found by the trial court.

Applicable Provisions

The decision applies the constitutional guarantee of just compensation, which the Court states as follows:

Just compensation is the market value of the property.

This is the measure the Court uses to test both the trial court's finding and the appellate court's reduction.

The decision also states the rule on the time of valuation:

It should be determined at the time of the taking.

The whole dispute turns on whether there was a taking of Block 19 in 1957 for purposes of eminent domain.

And on the evidentiary weight of a tax declaration, the Court adopts the ruling in the case of the Province of Ilocos Norte versus Compania General de Tabacos:

A tax declaration is only prima facie evidence of market value which may be overcome by satisfactory evidence presented by the owners of the property to be expropriated.

This is why the petitioners' evidence of subdivision sales could overcome the seven centavo valuation.

Ruling

On the first issue, the Court held that the Court of Appeals erred. The reduction to seven centavos per square meter rested on the doctrine in Republic versus Philippine National Bank that where the taking precedes the condemnation proceedings, the value is fixed as of the time of the taking. But the Court found that the facts assumed by the appellate court were not borne by the evidence. The expropriation action of August 8, 1969 sought only a right of way easement over Block 10 for the Mexico-Balibago line. Block 19, traversed by the Ambuklao-Manila and Mexico-Tarlac lines, was not its subject matter.

On the second issue, the Court held that there was no taking of Block 19 for purposes of eminent domain. The corporation's entry was gained through permission, under the document titled Permission to Occupy Land, so it had no intention to acquire ownership either by voluntary purchase or by eminent domain, and it never completed the negotiation on compensation. It even built the Mexico-Tarlac line without permission and without court authorization. Since Block 19 was never entered or possessed for purposes of eminent domain, and never became the subject of an expropriation action, neither the date of entry nor the filing of the action could be the basis for just compensation. The Court ruled that, under these special and peculiar circumstances, the time as of which the market value should be fixed is the time when the trial court made its order of expropriation.

On the third issue, the Court held that the fair market value of Block 19 should be fixed at fifteen pesos per square meter. It agreed with the trial court that the property had been converted into a subdivision as early as 1962, that it lies along the national highway near the town proper of Mexico, Pampanga and near the school and church sites, and that the testimonies established a selling price of fifteen to twenty pesos per square meter with many willing buyers. The provincial appraisal of six to eight pesos per square meter was not determinative. The Court also noted that the expropriation of Block 19 had become final, as the petitioners could not raise for the first time on appeal the trial court's directive to expropriate it.

Doctrine

Just compensation is the market value of the property, determined as of the time of the taking. Where the expropriator enters the land under a mere permission and without intent to expropriate, and no condemnation proceedings are instituted over that land, there is no taking for purposes of eminent domain, and the date of entry cannot be used to fix the market value. In such a case, the market value is fixed as of the time the trial court makes its order of expropriation. A tax declaration is only prima facie evidence of market value and may be overcome by satisfactory evidence of the owners, such as contracts to sell and requests for reservation showing the actual selling price. In estimating market value, all the capabilities of the property and all the uses to which it may be applied are considered, not merely its condition at the time and the use then made by the owner.

Disposition

The Court modified the decision of the Court of Appeals as to Block 19 and ordered the National Power Corporation to pay the petitioners three hundred six thousand five hundred eighty five pesos as market value at fifteen pesos per square meter, with legal interest from March 30, 1970, without pronouncement as to costs.

Remember This

The single line to memorize: no taking for purposes of eminent domain, no valuation as of entry, so the market value is fixed as of the trial court's order of expropriation. Examiners use this case to test the date of valuation of just compensation and the weight of a tax declaration against evidence of actual subdivision sales.