04 Mateo V Lagua PDF

SUPREME COURT REPORTS ANNOTATED VOLUME 029 05/10/2017, 1)06 PM
864 SUPREME COURT REPORTS 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
865
VOL. 29, OCTOBER 30, 1969 865
Mateo vs, Lagua
or heirs can be established; and only thereafter can it be

ascertained whether or not a donation had prejudiced the legitimes.
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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.:
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
866

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 of the 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
868

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 nuptias having
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 donationa 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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VOL. 29, OCTOBER 30, 1969 869

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 upon the donor's 2
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 only properties 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 unpaid debts, charges, 3
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 See Complaint, 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 free portion plus the 4
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. Cario, L-17429 (October 31, 1962), 6 SCRA 482, 486.
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Mateo vs. Lagua
ANNOTATION
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;
872

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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VOL. 29, OCTOBER 30, 1969 873

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
874

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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VOL. 29, OCTOBER 30, 1969 875

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-
876

Mateo vs. Lagua
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
877
VOL. 29. OCTOBER 30, 1960 877

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-
878

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
VOL. 29, OCTOBER 30, 1969 879

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

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
VOL. 29, OCTOBER 30, 1989 881

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 useroads, 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

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 facie evidence 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
VOL. 29, OCTOBER 30, 1969 883

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 Yaptinchay case, 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

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
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SUPREME COURT REPORTS ANNOTATED VOLUME 029 05/10/2017, 1)06 PM

864 SUPREME COURT REPORTS ANNOTATED

No. L-26270. October 30, 1969.

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

Civil law: Donations; Donation propter nuptias may be reduced

VOL. 29, OCTOBER 30, 1969 865

Mateo vs, Lagua

or heirs can be established; and only thereafter can it be

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

The facts are stated in the opinion of the Court.

REYES, J.B.L., J.:

This is a petition for review of the decision of the Court of

866 SUPREME COURT REPORTS ANNOTATED

to resort to the Justice of the Peace Court of Asingan,

On 31 July 1941, Cipriano Lagua executed a deed of sale

"x x x declaring the sale executed by Cipriano Lagua in favor of the

The decision became final, and Bonifacia Mateo Mid her

VOL. 29, OCTOBER 30, 1969 867

Peace Court for being barred by the judgment in Civil Case

868 SUPREME COURT REPORTS ANNOTATED

heir, Gervasio Lagua. The donation was thus declared

VOL. 29, OCTOBER 30, 1969 869

2 21 Scaevola, Cod. Civ., 2d Ed., pages 328-329; 348-349; Vol. I, Reyes

870 SUPREME COURT REPORTS ANNOTATED

In other words, before any conclusion about the legal share

Lagua, Without costs.

Concepcion, C.J., Dizon, Makalintal, Zaldivar,

Decision set aside.

VOL. 29, OCTOBER 30, 1969 871

Meaning of just compensation.In two provisions, the

32 Phil. 85; Manila Railroad Company v. Velasquez, 32

872 SUPREME COURT REPORTS ANNOTATED

the general or ordinary price for which property may be

the portion taken, he is also entitled to recover for the

VOL. 29, OCTOBER 30, 1969 873

of Republic v. Phil. National Bank, et al., 1 SCRA 957,

in 1916 and not as of the time of the filing of the complaint

874 SUPREME COURT REPORTS ANNOTATED

of Rizal vs. Caro, supra, that 'the value of the property

quent cases without making any distinction, enunciate the

VOL. 29, OCTOBER 30, 1969 875

the basis is f or the determination of the value, is the f iling

guiding principle that the compensation of the owner is to

876 SUPREME COURT REPORTS ANNOTATED

ductivity, accessibility. and surroundings of the property.

adds something to the value in the minds of possible

VOL. 29. OCTOBER 30, 1960 877

advantages mentioned in the commissioners' report as well

878 SUPREME COURT REPORTS ANNOTATED

cels sold. Third, the properties sold must be adjoining, or at

least within the vicinity or immediate neighborhood, that

VOL. 29, OCTOBER 30, 1969 879

tural disadvantage in the bargaining, so that a discount of

standard for com-

880 SUPREME COURT REPORTS ANNOTATED

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

The important consideration indicated in the cases is

VOL. 29, OCTOBER 30, 1989 881

values .due to changed commercial conditions in the

compulsory or in the nature of a compromise and, hence,

882 SUPREME COURT REPORTS ANNOTATED

settlement is inadmissible as it is not a sale in the open

pleadings, even if such pleadings, were subsequently