4 Mateo vs. Lagua

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864 SUPREME COURT

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ANNOTATED
Mateo vs. Lagua.
No. L-26270. October 30, 1969.
BONIFACIA MATEO, ET AL., petitioners, vs.GERVASIO LAGUA, ET AL.,

respondents.
Civil law: Donations; Donation propter nuptias may be reduced for being inofficious.—
Donations propter nuptias (by reason of marriage) are without onerous consideration, the
marriage being merely the occasion or motive for the donation, not its causa. Being liberalities,
.they remain subject to reduction for inofficiousness upon the donor's death, if they should
infringe the legitime of a forced heir.
Same; Succession; Legitime; Steps in determination of legal share due to a compulsory heir.
—Before any conclusion about the legal share due .to a compulsory heir may be reached, it is
necessary that certain steps be taken first. The net estate of the decedent must be ascertained,
by deducting all payable obligations and charges from the value of the property owned by the
deceased at the time of his death; then, all donations subject to collation would be added to it.
With the partible estate thus determined, the legitimes of the compulsory heir
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Mateo vs, Lagua
or heirs can be established; and only thereafter can it be ascertained whether or not a
donation had prejudiced the legitimes.
PETITION for review of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.

Pedro P. Tuason for petitioners.
Isaiah Asuncion for respondents.
REYES, J.B.L., J.:
http://central.com.ph/sfsreader/session/00000167107c1ffccabf9460003600fb002c009e/t/?o=False 1/17
This is a petition for review of the decision of the Court of Appeals (In CA-G.R. Nos.
30064-R and 30065-R), raising as only issue the correctness of the appellate court's
reduction of a donation propter nuptias, for being inofficious.
The established facts of this case are as follows: Cipriano Lagua was the original
registered owner of 3 parcels of land situated in Asingan, Pangasinan, referred to as
Lot No. 998, with an area of 11,080 sq.m., more or less and covered by O.C.T. No. 362;
Lot No. 6541, with an area of 808 sq.m., more or less, covered by O.C.T. No. 6618; and
Lot No. 5106, with an area of 3,303 sq.m., covered by O.C.T. No. 8137. Sometime in
1917, Lagua and his wife Alejandra Dumlao, in a public instrument, donated Lots 998
and 6541 to their son Alejandro Lagua, in consideration of the latter's marriage to
Bonifacia Mateo. The marriage was celebrated on 15 May 1917, and thereafter, the
couple took possession of the properties, but the Certificates of Title remained in the
donor's name.
In 1923, the son, Alejandro, died. His widow, Bonifacia Mateo, and her inf fant
daughter lived with her father-in-law, Cipriano Lagua, who then undertook the
farming of the donated lots. It seems that at the start, Cipriano Lagua was giving to
Bonifacia the owner's share of the harvest from the land. In 1926, however, Cipriano
refused to deliver the said share, thus prompting Bonifacia
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Mateo vs. Lagua
to resort to the Justice of the Peace Court of Asingan, Pangasinan, from where she
obtained a judgment awarding to her possession of the two lots, plus damages.
On 31 July 1941, Cipriano Lagua executed a deed of sale of the same two parcels of
land in favor of his younger son, Gervasio. This sale notwithstanding, Bonifacia Mateo
was continuously given the owner's share of the harvest. until 1956, when it was
altogether stopped. 11 was only then that Bonifacia Mateo learned of the sale ofthe
lots to her brother-in-law, who had the sale in his favor resgistered only on 22
September 1955. As a consequence, TCT Nos. 19152 and 19153 of the Register of
Deeds of Pangasinan were issued to Gervasio,
Bonifacia Mateo and her daughter, Anatalia, assisted by her husband, Luis
Alcantara, went to the Court of First Instance of Pangasinan (Civil Case No. T-339),
seeking annulment of the deed of sale in favor of Gervasio Lagua and for recovery of
possession of the properties. On 3 January 1967, judgment was rendered in the case—
"x x x declaring the sale executed by Cipriano Lagua in favor of the other defendants, Gervasio
Lagua and Sotera Casimero, as null and void and non-existent; ordering the Register of Deeds
for the province of Pangasinan, to cancel Transfer Certificates of Title Nos. 19152 and 19153;
condemning the defendants to pay jointly and severally to the plaintiffs the sum of P200.00;
ordering the defendants Gervasio Lagua and Sotera Lagua to vacate and deliver the possession
over the two parcels of land to the plaintiffs, and to pay the costs of this suit"
The decision became final, and Bonifacia Mateo Mid her daughter, Anatalia Lagua,
were installed in possession of the land.
On 18 August 1957, the spouses Gervasio Lagua and Sotera Casimero commenced
in the Justice of the Peace Court of Asingan, Pangasinan, an action against Bonifacia
Mateo and her daughter for reimbursement of the improvements allegedly made by
them on Lots 998 and 6541, plus damages. Dismissed by the Justice of the
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Mateo vs. Lagua
Peace Court for being barred by the judgment in Civil Case No. T-339, therein
plaintiffs appealed to the Court of First Instance of Pangasinan where the case was
docketed as Civil Case No. T-433. At about the same time, another case was filed, this
time by Gervasio Lagua and Cipriano Lagua, for annulment of the donation of the two
lots, insofar as one-half portion thereof was concerned (Civil Case No. T-442). It was
their claim that in donating the two lots, which allegedly were all that plaintiff
Cipriano Lagua owned, said plaintiff not only neglected leaving something for his own
support but also prejudiced the legitime of his forced heir, plaintiff Gervasio Lagua.
Being intimately related, the two cases were heard jointly. On November 12, 1958,
while the cases were pending final resolution, plaintiff Cipriano Lagua died. On 23
December 1960, the court rendered a single decision dismissing Civil Case No. T-
433 for lack of cause of action, plaintiffs spouses Gervasio Lagua and Sotera Casimero
having been declared possessors in bad faith in Civil Case No. T-339 and, therefore,
not entitled to any reimbursement of the expenses and improvements put up by them
on the land. The other suit, Civil Case No. T-442, was, likewise, dismissed on the
ground of prescription, the action to annul the donation having been brought only in
1958, or after the lapse of 41 years. Defendants' counterclaims were similarly
dismissed although they were awarded attorneys' fees in the sum of P150.00.
Plaintiffs appealed the decision to the Court of Appeals (CA-G.R. Nos. 30064 and
30065-R). Said tribunal, on 18 March 1966, affirmed the ruling of the trial court
in Civil Case No. T-433 denying plaintiffs' claim for reimbursement of the
improvements said to have been made on the land. In regard to the annulment case
(C.F.I. No. T-442), however, the Court of Appeals held that the donation to Alejandro
Lagua of the 2 lots with a combined area of 11,888 square meters exceeded by 494.75
square meters his (Alejandro's) legitime and the disposable portion that Cipriano
Lagua could have freely given by will, and, to the same extent prejudiced the legitime
of Cipriano's other
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Mateo vs, Lagua
heir, Gervasio Lagua. The donation was thus declared inofficious, and defendants-
appellees were ordered to reconvey to plaintiff Gervasio Lagua a portion of 494.75
square meters to be taken from any convenient part of the lots. The award of
attorneys' fees to the defendants was also eliminated for lack of proper basis.
Bonifacia, Mateo, et al., then resorted to this Court, assailing the decision of the
Court of Appeals insofar as it ordered them to reconvey a portion of the lots to herein
respondent Gervasio Lagua, It is petitioners' contention that (1) the validity of the
donation propter nuptiashaving been finally determined in Civil Case No. T-339, any
question in derogation of said validity is already barred; (2) that the action. to annul
the donation, filed in 1958, or 41 years after its execution, is abated by prescription;
(3) that a donation propter nuptias is revocable only for any of the grounds
enumerated in Article 132 of the new Civil Code, and inofficiousness is not one of
them; and (4) that in determining the legitime of the Lagua brothers in the hereditary
estate of Cipriano Lagua, the Court of Appeals should have applied the provisions of
the Civil Code of 1889, and not Article 888 of the new Civil Code.
Petitioners' first two assigned errors, it may be stated, are non-contentious issues
that have no bearing in the actual controversy in this case. All of them refer to
the validity of the donation—a matter which was definitively settled in Civil Case No.
T-339 and which, precisely, was declared by the Court of Appeals to be "beyond the
realm of judicial inquiry," In reality, the only question this case presents is whether or
not the Court of Appeals acted correctly in ordering the reduction of the donation for
being inofficious, and in ordering herein petitioners to reconvey to respondent
Gervasio Lagua an unidentified 494.75square-meter portion of the donated lots.
We are in accord with the Court of Appeals that Civil Case No. 442 is not one
exclusively for annulment or revocation of the entire donation, but of merely that
portion thereof allegedly trenching on the legitime of respon-
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Mateo vs. Lagua
1
dent Gervasio Lagua; that the cause of action to enforce Gervasio's legitime, having
accrued only upon the death of his father on 12 November 1958, the dispute has to be
governed by the pertinent provisions of the new Civil Code; and that a
donation propter nuptias property may be reduced for being inofficious. Contrary to
the views of appellants (petitioners), donations propter nuptias (by reason of
marriage) are without onerous consideration, the marriage being merely

the occasion or motive for the donation, not its causa.Being liberalities, they remain
subject to reduction for inofficiousness
2
upon the donor's death, if they should infringe
the legitime of a forced heir.
It is to be noted, however, that in rendering the judgment under review, the Court
of Appeals acted on several unsupported assumptions: that the three (3) lots
mentioned in the-decision (Nos. 998, 5106 and 6541) were the onlyproperties
composing the net hereditary estate of the deceased Cipriano Lagua; that Alejandro
Lagua and Gervasio Lagua were his only legal heirs; that the deceased left no 3
unpaid
debts, charges, taxes, etc., for which the estate would be answerable. In the
computation of the heirs' legitime, the Court of Appeals also considered only the area,
not the value, of the properties.
The infirmity in the above course of action lies in the fact that in its Article 908 the
new Civil Code specifically provides as follows:
"ART. 908. To determine the legitime, the value of the property left at the death of the testator
shall be considered,
________________
1 SeeComplaint, Civil Case No. 442, page 50, Record on Appeal: That plaintiff Gervasio Lagua is entitled
for a protection of his rights over the one-half of each of said two parcels of land which (are) supposed to be
reserved for the legitimes of forced heirs, and which plaintiff' (Cipriano) "could not donate x x x."
2 21 Scaevola, Cod. Civ., 2d Ed., pages 328-329; 348-349; Vol. I, Reyes and Puno, An Outline of Philippine
Civil Law, 1965 ed., page 166.

3 There is no evidence on these facts.
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Mateo vs. Lagua
deducting all debts, and charges, which shall not include those Imposed in the will.
"To "To the net value of the 'hereditary estate, shall be added the value of all donations by
the testator that are subject to collation, at' the time he made them."
In other words, before any conclusion about the legal share due to a compulsory heir
may be reached, it is necessary that certain steps be taken first. The net estate of the
decedent must be ascertained, by deducting all payable obligations and charges from
the value of of the property owned by the deceased at the time of his death; then, all
donations subject to collation would be added to it. With the partible estate thus
determined, the legitimes of the compulsory heir or heirs can be established; and only
thereafter can it- be ascertained whether or not a donation had prejudiced the
legitimes. Certainly, in order that a .donation may be reduced for being inofficious,
there must be proof that the value of the donated property exceeds that of the
disposable
4
free portion plus the donee's share as legitime in the properties of the
donor. In the present case, it can .hardly be said that, with the evidence then before
the court, it was in any position to rule on the inofficiousness of the donation involved
here, and to order its reduction and reconveyance of the deducted portion to the
respondents.
FOR THE FOREGOING CONSIDERATIONS, the decision of the Court of Appeals,
insofar as Civil Case No. 442 of the court a quo is concerned, is hereby set aside and
the trial court's order of dismissal sustained, without prejudice- to the parties'
litigating the issue of inofficiousness in a proper proceeding, giving due notice to all
persons interested in the estate of the late Cipriano Lagua, Without costs.
Concepcion,
C.J., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Fernando, Teehankee and .Barredo,
JJ.,concur,
Decision set aside.
________________
4 Ramos vs. Cariño, L-17429 (October 31, 1962), 6 SCRA 482, 486.
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Mateo vs. Lagua
A N N O T A T I O N
MEANING AND DETERMINATION OF JUST COMPENSATION IN EMINENT
DOMAIN OR EXPROPRIATION PROCEEDINGS
Meaning of just compensation.—In two provisions, the Constitution makes it a

condition for the taking or expropriation of private property that "just compensation"
be paid. The first, which refers to the exercise of the general power of eminent
domain, declares that: "Private property shall not be taken for public use without just
compensation." [Art. III, Sec. (2)]. The second, which allows the taking of private
property even if it is not for the use of the general public but for the benefit of only
certain individuals, empowers Congress to "authorize, upon payment of just
compensation, the expropriation of lands to be subdivided into small lots and
conveyed at cost to individuals." [Art. XIII, Sec. 4].
What constitutes just compensation under these provisions? The general rule is
that the just compensation to which the owner of condemned property is entitled to its
market value [Manila, Railroad Co. vs. Fabie, 17 Phil. 206; Tenorio vs. Manila
Railroad Company, 22 Phil. 41; City of Manila v, Estrada, 25 Phil. 208; City of Manila
v, Corrales, 32 Phil. 85; Manila Railroad Company v. Velasquez, 32 Phil. 287,
314; Manila Railroad Company v. Caligsihan, 40 Phil. 327; Manila Railroad
Company v. Mitchel, 49 Phil. 801; Municipality of Tarlac v. Besa, 55 Phil.
423; Metropolitan Water District v. Director of Lands, 57 Phil. 293]. By market value
is meant. according to one definition, "the price fixed by buyer and seller in the open
market in the usual and ordinary course of legal trade and competition; the price and
value of the article established or shown by sale, public or private, in the ordinary way
of business; the fair value of the property as between one who desires to purchase and
one who desires to sell; the current price;
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Mateo vs. Lagua
the general or ordinary price for which property may be bought and sold in that
locality." (Manila, Railroad Co. v. Fabie, supra). More aptly stated, it is "that sum of
money which a person, desirous but not compelled to buy, and an owner, willing but
not compelled to sell, would agree on as a price to be given and received therefor"; or
the price which the property "'will bring when it is offered for sale 'by one who desires,
but is not obliged to sell it, and is bought by one who is under 110 necessity of having
it."(City of Manila v. Estrada, supra; Manila Railroad Company v. Caligsihan, 40
Phil. 326). Or, as another decision puts it: "When we speak of the market value of
.property taken under the power of eminent domain, we mean. the value which
purchaser generally would pay for it. We do not mean what a purchaser would pay
who had. no particular object in view in purchasing and no definite plan as to the use
to which to put, The owner has a right to Its value for the use to which it would bring-
the most in the market." (City of Manila v. Corrales, supra).
The general rule, however, is modified where only a part of a certain property is
condemned or expropriated. In such a case the owner is not restricted to compensation
for the portion actually taken. In addition to the market value of the portion taken, he
is also entitled to recover for the consequential damage, if any, to the remaining part
of the property; but from the total compensation must be deducted the value of the
consequential benefits, (Manila Railroad Co. v, Fabie, supra; City of Manila v.
Corrales supra; Manila Railroad Company v. Velasquez, supra;Municipality of Tarlac
v. Besa, supra; Republic v. Lara, el al., 50 O.G. 5778),
Time as of which market value should 'be fixed.—ln the determination of the
compensation to be awarded to the owner- of condemned property, the first -thing that
must be considered is the time with reference to which the market value of the
property must be reckoned. As of what time must the market value of the property be
fixed? The case
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Mateo vs. Lagua,
of Republic v. Phil. National Bank, et al., 1 SCRA 957, clarifies this question. The
necessity for clarification arose because of apparent conflict between two cases and
the Rules of Court on the one hand, and several other cases, on the other. In Manila,
Railroad Company v. Caligsihan, supra, decided in 1919, the Supreme Court held
that "the value of property taken by eminent domain should be fixed as of the date of
the-proceedings." This ruling became embodied in the old as well as in the new Rules
of Court, according to Section 4, Rule 67 of which the just compensation to be paid is
"to be determined as of the date of the filing of the complaint." However, in the 1933
case of Provincial Government of Rizal v. Caro, supra, the Court fixed the value of the
property therein involved as of the date when the property was taken in 1927,
although the condemnation proceedings were actually began by the f iling of the
complaint in 1928. The reason is that the value of the property was greatly enhanced
by the purpose for which it was taken. The Caro ruling was reiterated in Republic v.
Lara, 50 O.G. 5778 (1954) where it was held that the value of the lands expropriated
must be reckoned as of the time of the actual possession by the Government in 1916
and not as of the time of the filing of the complaint in 1949. In overruling the lower
court, the Court expressly stated that Section 5 of Rule 69 (now Section 4 of Rule 67)
of the Rules of Court, providing that the payment of just compensation must be
determined as of the filing of the complaint, did not supersede the Caro holding.
Explaining the rationale of the ruling the Court said: "Ordinarily, inquiry is limited to
actual market values at the time of the institution of the condemnation proceedings
because, under normal circumstances, the filing of the complaint coincides with or
even precedes the taking of the property by the plaintiff; and Rule 69 simply fixes this
convenient date for the valuation of property sought to be expropriated. Where,
however, the actual taking or occupation by the plaintiff,' with the consent of the
landowner, long precedes the filing of the complaint for expropriation, the rule to be
followed must still be that enunciated by us in Provincial Government
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Mateo vs, Lagua
of Rizal vs. Caro, supra, that 'the value of the property should be fixed as of the date
when it was taken and not the date of the filing of the proceedings.' For where
property is taken ahead of the filing of the condemnation proceedings, the value
thereof may be enhanced by the public purpose for which it is taken; the entry by the
plaintiff upon the property may have depreciated its value thereby; or, there may
have been a natural increase in the value of the property from the time it is taken to
the time the complaint is filed, due to general economic conditions, The 'owner of
private property should be compensated only for what 'he actually loses; it is not
intended that his compensation shall extend beyond 'his loss or injury, And what he
loses is only the actual value of his property at the time it is taken. This is the only
way the compensation to be paid can be truly just; i.e., 'just' not only to the individual
whose property is taken, 'but to the public, which is to pay.for if (18 Am. Jur., 873,
874)." Four subse-quent cases without making any distinction, enunciate the rule that
compensation for property expropriated must be determined as of the time the
expropriating authority takes possession thereof and not as of the institution of the
proceedings. (Republic v. Deleste, et al., G.R. L-7208. May 23, 1956; Republic v.
Garcellano, et al., G.R. L-9556 & L12630, March 29. 1958; Municipal Government of
Sagay v. Jison, et al., L-10484, December 29, 1958; Alfonso -.v. Pasay City, G.R. L-
12754, January 30, 1960). . In between the first and the second of these cases, the
Court, in Republic v. Narciso, L-6594, May 18, 1956, held that the prices to be
considered in determining' the just compensation to be paid are those at the beginning
of the expropriation proceedings, i.e., at the time of the filing of the complaint.
Making a reconciliation of these apparently conflicting decisions, the Court, in
the Philippine National Bank case, states the rule to be that when the plaintiff takes
possession before the institution of the condemnation proceed-ings, the value should
be fixed as of the time of the taking of said. possession, not of the filing of the
complaint; but when the taking of the property coincides with, or is sub-sequent to, the
commencement of the proceedings, then
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Mateo vs. Lagua
the basis is f or the determination of the value, is the f iling of the complaint and not
the taking of possession. Otherwise, the Court explains, the provision of Rule 69,
Section 5 (now Rule 67, Section 4), directing that compensation "be determined as of
the f iling of the complaint" would never be operative.
Factors or evidence on which estimate may be based.—The circumstances to be
taken into account in determining the value of property condemned for public
purposes are many and varied, so many and varied that it is practically impossible to
formulate a rule to govern its appraisement in all cases. Exceptional circumstances
will modify the most carefully guarded rule. It may, however, be stated as a guiding
principle that the compensation of the owner is to be estimated by reference to the use
for which the property is suitable, having regard to the existing business or wants of
the community, or such as may reasonably be expected in the immediate future. (City
of Manila v, Corrales, supra). Otherwise stated, all the capabilities of the property,
and all the uses to which it may be applied or for which it is adapted are to be
considered, and not merely the condition it is in at the time and the use to which it is
then applied by the owner. All the facts as to the condition of the property and its
surroundings, its improvements and capabilities, may be shown and considered in
estimating its value. (Manila Railroad Company v. Velasquez, supra). In every case,
the inquiry must be; What is the property worth in the market, viewed not merely
with reference to the uses for which the property is suitable, but with reference to the
uses to which it is plainly adapted; that is to say, what is it worth from its availability
for valuable uses? (City of Manila v. Estrada, supra; City of Manila v. Corrales,
supra; Manila Railroad Company v. Velasquez, supra).
(1) Classification or use for which suited.—Following the above stated principle, it
would be a relevant inquiry whether the property taken is suitable or useful for
agricultural, residential, commercial or industrial purposes. This would involve,
among other things, consideration of the location, topography, kind of soil, fertility or
pro-
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ductivity, accessibility. and surroundings of the property.

Accordingly, in Manila Railroad Company v. Caligsihan, supra, the Court raised
the price awarded by the commissioner upon finding that the condemned land was
within the municipality of San Pablo, was not far distant from the market and the
church, and was so located as to be suitable for commercial purposes. The Court also
took into account the fact that the availability and necessity of the land for the use of
the railroad was so imminent that adds something to the value in the minds of
possible buyers.
The issue that has engaged the Court's attention most' in this respect is whether a
certain expropriated land was residential or agricultural. In Republic v. Garcia, L-
3526, March 27, 1952, the trial court refused to regard any portion of the expropriated
land as residential solely because there was not a single private house on it. On
appeal, it was held that the absence of private houses is not a decisive factor in the
classification of land as agricultural or residential. Under the circumstances of the
case, the important consideration should have been the use to which the land was
dedicated before the war and the use to which It could have been dedicated thereafter
if it had not been taken for military purposes. It appeared that the land used to be a
part of a residential community prior to the destruction of the houses thereon and
those of the adjacent lands during the war. It was, further shown that the lot was
close to the living quarters in the military post for the establishment of which it was
expropriated. As a business proposition, the Court concluded, the lot was better
adapted to the construction of houses and stores than agricultural.
A similar holding was reached in Republic v. Lara, supra, where the Government
claimed that none of the parcels condemned should be classified as residential
because, having been converted into an airfield at the time they were taken, they were
no longer fit for residential purposes. Rejecting this argument, the Court noted that
along two roads there were houses several years old before the area's conversion into
an airfield and that it appeared that after
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Mateo vs. Lagua
the war, the owners would have again built their homes on these lands had not the
Army authorities restrained them from doing so. The residential nature of the land
was further shown by the topography of the land and other advantages mentioned in
the commissioners' report as well as by the tax declaration based on a general revision
throughout the country in accordance with a schedule of values approved by the
Secretary of Finance and not upon declaration of the taxpayers.
But what if, because of the gravel and earth filling caused by the Japanese during
the war on the lands under expropriation, such lands could no longer be returned to
their former status of rice and coconut lands and, had the Government not taken
them, could have been utilized by the owners for residential purposes? It was held,
in Republic v. Garcellano, et al., L-9553 and L-12630, March 29, 1958, that if, as in
fact, the lands were agricultural when they were taken by the Japanese forces during
the war and from that time the owners never recovered or regained their use and
possession. the lands should be considered agricultural in the expropriation
proceedings, in conformance with the theory that the owner of private property should
recover only for what he actually loses at the time his property is taken.
(2) Sales prices of other lands.—Purchases and sales of lands or property within the
same locality are competent and material evidence to determine the true market
value of expropriated land. This, however, is subject to certain conditions. First, the
transactions must be shown to have been made in good faith or under normal
circumstances or in the ordinary course of legal business and competition and the
prices stated therein must have been real and not affected by unusual conditions.
Second, the character of the parcels subject of the purchases and sales as sites for
business purposes, dwellings, or for whatever other use which enhances the pecuniary
value of the condemned land must be so sufficiently similar to that of the latter that it
may be assumed that the price of the condemned land would be approximately near
the price brought by the par-
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Mateo vs. Lagua
cels sold. Third, the properties sold must be adjoining, or at least within the vicinity or
immediate neighborhood, that is, in the zone of of commercial activity with which the
condemned property is identified. And, fourth, the sales must be coeval or sufficiently
near in point of time with the date of the condemnation proceedings or the taking, as
the case may be (in accordance with. the rule laid down in the case under
annotation), as to exclude general increases or decreases in property values due to
changed commercial conditions in the vicinity. ( Manila, Railroad Co. v. Fabie,
supra; City of Manila v. Estrada, supra; Manila Railroad Company v, Velasquez,
supra; Manila, Railroad Company v. Mitchel, supra,; Metropolitan Water District v.
Director of Lands, supra; Republic v. Gonzales, 50 O.G. 2461; Republic v. Lara,
supra; Republic v. Narciso, supra; Republic v. Deleste, supra; Republic v.
Yaptinchay, July 26, 1960).
A sale was held effected under normal circumstance where the purchaser himself
declared that he was not obliged to buy the land and that he bought it because he
wanted to put up a store near the market which was intended to be there. The fact
that there was no proof as to whether or not the vendor was in need of money was
deemed cured by the purchaser's declaration that the sale was effected in a free and
voluntary manner. (Manila Railroad Company v. Atty. General, 41 Phil. 163). But
sales and purchases made in the nature 01 a compromise to avoid the risk of legal
proceedings were held in Republic v. Lara, supra, and in Republic v. Narciso, supra, to
be incompetent as not being made in the ordinary course of trade since the prices of
such sales are not prices of property which is sold by one "who desires but is not
obliged to sell it." However, in Republic v. Gonzales, et al., supra, the Court based Its
estimate, among others on two sales made through a local agent by a Spaniard
residing in Madrid despite the fact that, as the Court itself noted, he "was obviously
anxious to liquidate his affairs in the Philippines, as shown by the circumstance that
in two months he disposed of two sizeable parcels of real estate" and such "disposition
and such abesence must have given him a na-
879

30, 1969
Mateo vs. Lagua
tural disadvantage in the bargaining, so that a discount of 10 or 20 per cent was not
improbable." Much earlier, the Court also considered as competent a sale of adjacent
property made about the time the proceedings were begun, even if the vendor testif
fied that the sale was made because of the imperative necessity of obtaining money at
the time. This testimony was merely the basis for fixing a higher price for the
condemned property than that of the property sold. (Manila Railroad Company v,
Caligsihan, supra).
The requirement that the character of the property sold as site for valuable uses
must be sufficiently similar to that of the condemned property does not require that
the former and the latter must be similar in all respects. No. two estates are ever
exactly alike and, although it has been stated that the evidentiary value of sales of
lands in the vicinity decreases as the differences between the property sold and the
condemned one increases (City of Manila v. Estrada, supra; Manila Railroad
Company v. Velasquez, supra), the differences have been taken more as a basis for
fixing a lower or higher for the condemned property that as grounds for rejecting such
evidence. Thus, in City of Manila v. Estrada, .supra,the fact that the condemned land,
which was 011 the same street, Calle Herran and on the same estero as a vacant land
sold on the opposite side of said street and estero, differed from the latter in that the
condemned land, aside from having improvements, also had a frontage on Calle
Looban and was on the same side of the estero and immediately in front of the market
site, did not bar the admission of testimony on the sale of the vacant property.
In Metropolitan Water District v. Director of Lands, supra,purchases and sales of
properties adjoining that which was expropriated were made the basis of fixing a
higher valuation for the expropriated land because of its topography and the fact that
it was more valuable for the purposes of the water district than the contiguous
properties. Of course. where the differences between the parcels sold and the land
condemned are so great that the sales in question can form no reliable standard for
com-
880
880 SUPREME COURT

REPORTS
ANNOTATED
Mateo vs. Lagua
parison, such evidence should not be admitted. (City of Manila v, Estrada,

supra; Manila Railrod Company v. Velasquez, supra). It is for this reason, among
others, that evidence showing prices of lands in Bacoor and Naic, which are near
Manila and the lowlands, were rejected as incompetent to indicate the market value of
properties being expropriated in Carmona, which is a mountainous region and farther
from Manila. (Republic v. Yaptinchay, et al., L-13684, July 26, 1960). For the same
reason, a sale of land purchased from a subdivision, prices in realty subdivisions being
necessarily higher because of improvement therein. (Republic vs. Gonzales, supra).
A land subject of a sale was held to be within the vicinity of, although not
adjoining, the land under expropriation because it was situated in the same barrio, at
the same distance from the public market, and was under the same conditions as the
latter. (Manila Railroad Company v. Atty. General, 41 Phil 163). The fact that the
lands sold are in the same locality, town or city as the condemned lands does not,
however, of itself make them capable of being considered within the neighborhood of
the latter. Thus, in Manila Railroad Company v. Mitchel, sales of real estates situated
on several of the business streets of Manila were rejected, since none of said
estates were on the same street or in the vicinity of the expropriated land, It should
be emphasized, nevertheless, that the controlling consideration is the zone of
commercial activity to which the condemned property belongs and the distance
required between such property and others sold will be relative to and will vary
according to the area of that zone. (See City of Manila v. Estrada, supra; Republic v.
Yaptinchay, supra),
On the question of what sales are sufficiently near in point of time to the date of
the condemnation proceedings or the taking, there is no hard and fast rule as to the
number of days, months or years that should intervene. The important consideration
indicated in the cases is whether there has been a general increase or decrease in
property
881

30, 1989
Mateo vs. Lagua,
values .due to changed commercial conditions in the vicinity. In Republic v, Lara,
supra, .sales of nearby lands executed during the years 1936 to 1941 were held
incompetent as basis for determining the reasonable value of lands 'taken by
expropriation in 1946. The Court noted that, aside from the passage of at least 5 years
before the taking; prewar prices of real estate had risen considerably in 1946 and
subsequent years because of post-war inflation, But, in the same decision, .sales made
in 1945, 1947, and 1948 to 1950, or within 4 years from the date of taking, were taken.
into consideration because there was no appreciable increase in the price of lands in
the vicinity during those years. In Republic v. Gonzalez, supra,wherein the land was
expropriated for the purpose of distributing; it to individuals, it was held
"unimportant that the sales were consummated several months after these
proceedings had begun, because unlike other eminent domain proceedings for public
use—roads, bridges, canals, markets, etc.—these do not tend to inflate prices of
adjoining. properties." However, in the early case of Manila Railroad Co. v.
Caligsihan, supra, it was considered error for the trial court to base Its -estimate on a
sale which transpired in 1913, after the proceedings were begun in 1911. And
in Republic v. Deleste, et al., supra, sales which occurred in 1951 were rejected
because the Government took possession of the- Lands in 1947.
(3) Price paid for neighborhood lands under expropriation proceedings.—An
important question raised in the case of City of Manila v. Estrada, was: Is evidence
showing prices paid for neighboring lands under expropriation proceedings
admissible? The decision in that case gave a negative answer, stating that such sales
are a fair criterion of value because they are forced or compulsory or in the nature of a
compromise and, hence, the prices thereof are not obtained by "one who desires but
it is not obliged to sell, and is bought by one who is under no necessity of having it."
This ruling was reiterated in Republic v. Narciso, supra,wherein it was stated that, in
expropriation proceedings, the result of an award, a verdict or a
882
882 SUPREME COURT

REPORTS
ANNOTATED
Mateo vs. Lagua
settlement is inadmissible as it is not a sale in the open market and does not show
market value.
These rulings, however, did not prevent the Court from applying what amounted to
an opposite holding in two later cases. Thus, in Republic v. Deleste, et al., it ruled that
"if the Government willingly pays (in the same expropriation proceedings) P1.00 per
square meter to the owners of the above-mentioned lot, there is no reason why it
should pay less for the adjoining lots in the same locality, bearing in mind they are all
of the same kind, practically. And in the case under annotation, it awarded to the
appellant the compensation of P6.00 per square meter for his lot because the adjoining
one "was expropriated at the rate of P6.00 per square meter, in pursuance of a
compromise agreement." (Italics supplied).
(4) Value declared or demanded by the owner.—Under Commonwealth Act 530, the
statement of the value of his property by the owner in the tax declaration shall
constitute prima facieevidence of the real value of the property in expropriation
proceedings by the Government and its instrumentalities. This provision was held
in Province of Ilocos Norte v. Cia, General de Tabacos de Filipinas, 53 O.G. 7687, not
to make the statement of value in the tax declaration conclusive and as not precluding
the consideration of other evidence, such as the price per square meter on prior sales
of portions of the property (See also Municipality of Tarlac v. Besa,
supra and Republic v, Lara. et al., supra).
But prices or amounts demanded by the owners in their pleadings, even if such
pleadings, were subsequently amended to state a higher price, have been held to be
conclusive. This ruling was first formulated in the case of Republic v. Narciso,
supra,as follows:
"This is evidence of the highest order: Admission by the owners. x x x. Their valuation may not
in law be binding on the Government or the court; but it should at least set a ceiling price for
the compensation to be awarded. The price for the condemned property should not be higher
than what the owner demanded."
883

30, 1969
Mateo vs. Lagua
This ruling was restated in Republic v. Yaptinchay, el al., supra, but with respect to a
memorandum wherein the owners offered to sell the properties expropriated at
P700.00 per hectare; and again, in the case under annotation. It must be noted,
however, that in these last two cases the actual holdings of the Court were quite
different from what was declared to be the rule. Thus, in the Yaptinchaycase, the
Court, taking into account the other evidence, awarded "P1,000.00 per hectare for
irrigated lands with sugar quota; P800.00 per hectare for irrigated lands without
sugar quota," etc. despite the P700.00 per hectare offer made by the owners in their
memorandum. In the case under annotation, the Court awarded P6.00 per square
meter even if the appellant demanded only P5.00 per square meter in his original
answer. And even, in the Narciso case, the Court took into consideration other
evidence, despite the so-called admission which set the "ceiling price" of the
defendant's lands.
(5) Assessed value.—The assessed value of land is regarded as of little value in a
judicial investigation to determine the market value of the property since, as a rule,
such assessed value is considerably below the true market valuation. Evidence as to
such assessed value is competent and admissible and, when based in large part upon
the sworn statement of the owner, may be taken into consideration for what it is
worth in determining whether the value claimed by' the owner in a condemnation
proceeding is grossly excessive and exorbitant and wholly beyond the bounds of
reason; and in some cases as an element, though by no means a controlling one, in
determining the real market value of the land taken. (Tenorio v. Manila Rail-road
Co., supra; City of Manila v. Estrada, supra; Manila Railroad Company v. Velasquez,
supra; Manila Railroad Company v, Alano,36 Phil. 500; Mun. of Tarlac v. Besa,
supra).
(6) Improvements, crops, and trees.—The plaintiff in a condemnation proceeding
must pay the value of improvements found on the property, This is the rule even if the
owner built the improvements after he became aware that
884
884 SUPREME COURT

REPORTS
ANNOTATED
Mateo vs. Lagua
condemnation is intended but before action is begun. (Manila Railroad Company v.

Velasquez, supra). If such improvements are permanent in character, consisting of
good paved roads, playgrounds, water system, sewerage and general levelling of the
land suitable for residential lots together with electric installations and buildings, the
same are important factors to consider in determining the value of the land. (Republic
v. Gonzales, supra). The original cost of such improvements may be considered, with
due regard to the corresponding depreciation. (Davao v. Dacudao, L-3741, May 8,
1952).
With. respect to crops and trees, the rule is that when the land is preferably
intended for the raising of a given crop or for the planting of trees of a certain kind,
although these be deemed improvements of the land, they should not be appraised
apart from the land as they are an integral part thereof and their value is inherent or
forms part of that of the land. But when the land is not particularly adapted to any
class of plants, and it appears on the contrary that it is planted with several classes of
trees and plants, said improvements may be valued separately from the land,
inasmuch as the owners of expropriated lands are entitled to be indemnified for the
improvements thereon. (Manila Railroad Company v. Aguilar, 25 Phil. 118; Manila
Railroad Company v. Attorney General, supra; Philippine Executive Commission v.
Estacio, 52 O.G. 773).
Interest.—The owners of expropriated land are entitled to recover interest from the
date the plaintiff in condemnation takes possession of the land, and the amounts
granted by the court as compensation f or the taking shall cease to earn interest only f
rom the moment they are paid to the owners or deposited in court. (Philippine
Railway Co. v. Campbell, 13 Phil. 34; Philippine Railway Co. v. Duran, 33 Phil.
156; Manila Railroad Company v. Attorney General, supra; Republic v. Lara,
supra; Philippine Executive Commission v. Estacio,supra.)—ATTY. ESTEBAN
BAUTISTA
———o———

4 Mateo vs. Lagua

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864 SUPREME COURT

No. L-26270. October 30, 1969.

BONIFACIA MATEO, ET AL., petitioners, vs.GERVASIO LAGUA, ET AL.,

VOL. 29, 865

Mateo vs, Lagua

PETITION for review of a decision of the Court of Appeals.

The facts are stated in the opinion of the Court.

866 SUPREME COURT

VOL. 29, OCTOBER 867

868 SUPREME COURT

VOL. 29, OCTOBER 869

marriage) are without onerous consideration, the marriage being merely

Civil Law, 1965 ed., page 166.

870 SUPREME COURT

Decision set aside.

VOL. 29, OCTOBER 871

Meaning of just compensation.—In two provisions, the Constitution makes it a

872 SUPREME COURT

VOL. 29, OCTOBER 873

874 SUPREME COURT

VOL. 29, OCTOBER 875

876 SUPREME COURT

ductivity, accessibility. and surroundings of the property.

VOL. 29. OCTOBER 877

878 SUPREME COURT

VOL. 29, OCTOBER 879

Mateo vs. Lagua

880 SUPREME COURT

parison, such evidence should not be admitted. (City of Manila v, Estrada,

VOL. 29, OCTOBER 881

882 SUPREME COURT

VOL. 29, OCTOBER 883

884 SUPREME COURT

condemnation is intended but before action is begun. (Manila Railroad Company v.

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