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SECOND DIVISION

DEPARTMENT OF EDUCATION, G.R. No. 230399

CULTURE AND SPORTS, (now
DEPARTMENT of EDUCATION),
represented by its REGIONAL
DIRECTOR, TERESITA Present:
DOMALANTA,
Petitioner, CARPIO,J.
Chairperson,
PERALTA,
PERLAS-BERNABE,
CAGUIOA, and
REYES, JR., JJ.

- versus -

HEIRS OF REGINO BANGUILAN,

namely: BENIGNA GUMABAY,
FILOMENA BANGUILAN, ESTER Promulgated:
KUMMER, AIDA BANGUILAN,
and ELISA MALLILLIN, "'{ 0 JUN 2018
x-----------------------------~~~~~-~~-~~~~~------------~--~~-----x
DECISION

REYES JR., J.:

Nature of the Petition

Before the Court is a Petition for Review on Certiorari 1 filed by the

Department of Education, Culture and Sports, now Department of Education
(DepEd) through its Regional Director Teresita Domalanta, assailing the

Rollo, pp. 16-39.

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Decision 2 G.R. No. 230399

Decision 2 dated February 24, 2017 of the Court of Appeals (CA) in CA-G.R.
CV No. 100288. The assailed Decision granted the appeal of the heirs of
Regino Banguilan (Regino), namely, Benigna Gumabay, Filomena
Banguilan, Ester Kummer, Aida Banguilan, and Elisa Mallillin and declared
them as the lawful possessors of the contested property.

The Antecedent Facts

On October 24, 2001, the heirs of Regino Banguilan (respondents)

instituted a Complaint 3 for recovery of possession against the Department of
Education (petitioner) with the Regional Trial Court (RTC) of Tuguegarao
City, Cagayan. Respondents claim that as the heirs of Regino, the original
registered owner, and by virtue of the Extra-Judicial Settlement and Partition
executed by and among themselves upon the latter's death, they are the
absolute owners of the subject parcel of land situated in Caritan Norte,
Tuguegarao City covered by Original Certificate of Title (OCT) No. 10728. 4
They alleged that sometime before the Second World War, the petitioner,
through the officials of Caritan Norte Elementary School (CNES), sought
permission from Regino to build temporary structures in the contested land
to be used as classrooms for students. Since Regino did not have any
immediate need of the land, he consented to the construction of said
temporary structures and allowed the conduct of classes in the premises. 5

Over time, the temporary structures were gradually improved to

concrete ones until the permanent building of CNES was established. After
Regino' s death in 1961, respondents alleged that their predecessors-in-
interest demanded from the school officials that they be paid reasonable rent
for the use of their property and for the petitioner to purchase the same if it
so desired. Respondents claim that the officials of CNES assured them that
they would pay reasonable rent for occupying the subject lot and that they
would eventually purchase it. However, no purchase or payments were ever
made. Respondents now claim that the petitioner's non-adherence to the
agreement prejudiced them because they were deprived of the use and
enjoyment of the subject property since 1950. 6

Accordingly, the respondents prayed for the following: (I) to declare

the school's possession of the property illegal or unlawful; (2) to order
DepEd, its assigns and those acting in its behalf, to vacate the property
presently occupied by CNES and to surrender peaceful possession thereof to

Pe1med by Associate Justice Myra V. Garcia-Fernandez and concurred in by Associate Justices

Rosmari D. Carandang and Mario V. Lopez: id. at 42-54.
3
Id. at 65-69.
Id. at 70-73.
Id. at 66.
6

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Id.
Decision 3 G.R. No. 230399

the respondents; (3) to demand from DepEd for payment of reasonable rent
for the use of the property at a rate of P500.00 per month since 1950,
litigation expense of P30,000.00 and PS0,000.00 as attorney's fees. 7

In its Answer, 8 the petitioner admitted that sometime before the war, it
had established CNES on land located in Caritan Norte, Tuguegarao City
and constn1cted school buildings on the said school site. However, it denied
respondents' claim of ownership and demands for payment of reasonable
rent since the school's occupation and possession over the property was in
the concept of an owner for more than fifty (50) years until 2001. 9

Furthermore, the petitioner contended that respondents' complaint did

not state a cause of action since there was no proof that the lot being claimed
by the latter formed part of the school site of CNES. Even assuming but
without admitting that there was a cause of action, the petitioner argues that
the same had already been barred by prescription and/or laches because they
had been occupying and using the subject lot adversely, peacefully,
continuously, and in the concept of an owner for more than fifty (50) years
without question. 10

In a Decision 11 dated September 11, 2012, the trial court declared

Regino as the undisputed owner of the contested property where CNES was
built as evidenced by OCT No. 10728. However, despite recognition of
ownership, the trial court was convinced that laches and prescription had
already set in, barring respondents from assailing the petitioner's right over
subject property. The fallo of the decision reads:

WHEREFORE, premises considered, the Court ORDERS the

dismissal of the complaint for lack of merit without prejudice to their
filing of an action for payment of just compensation against the Republic
of the Philippines.

SO ORDERED. 12

On appeal to the CA, respondents argued that the court a quo erred
when it found that they were barred by lac11es from recovering possession of
the subject property. They further contended that the petitioner's possession
of the property was by mere tolerance; hence lac11es could not prevent them
from asserting their right of possession over the subject property. 13

Id. at 67.
8
Id. at 74-80.
9
Id. at 74-76.
10
Id. at 77.
11
Id. at 96-103.
12
Id. at 103.
13
Id. at 45.

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Decision 4 G.R. No. 230399

In its Decision 14 dated February 24, 2017, the CA reversed and set
aside the decision of the court a quo ruling that prescription and lacl1es could
not work in favor of petitioner since the subject lot was registered under the
Torren's System and because their possession was merely by tolerance. In
resolving the issue, the CA applied the principles laid down in the case of
Department of Education vs. Tuliao, 15 that mere material possession of land
cannot be considered as adverse unless such possession is accompanied with
intent to possess as an owner.

In keeping with the ruling in Tuhao, 16 the CA further ruled that

respondents may either appropriate the stn1ctures or oblige the defendant to
pay for the price of the land or enter into a forced lease. Additionally, the
CA awarded attorney's fees and ordered payment of an amount of P500.00
per month as reasonable compensation for the occupancy of the property
from the time of the filing of the complaint until full delivery of the property
with reimbursement of the incurred expenses as enumerated in Article 448
of the New Civil Code or upon payment of the purchase price in case of
compulsory sale. 17 In view of the foregoing, it was held that:

WHEREFORE, the appeal is GRANTED. The decision issued

by the Regional Trial Court of Tuguegarao City, Cagayan Br. 2 dated
September 11, 2012 in Civil Case No. 5897 is REVERSED and SET
ASIDE. A new decision is entered declaring as follows:

1. Plaintiffs-Appellants Benigna Gumabay, Filomena Banguilan,

Ester Kummer, Aida Banguilan and Elisa Mallillin are the lawful
possessors of the property registered under the Original Certificate Title
No. R.O. 62 (10728);

2. Plaintiffs-Appellants are directed to exercise their option under

Article 448 of the New Civil Code of the Philippines whether to
appropriate the structures !:milt on the subject property as their own by
paying to the defendant-appellee Department of Education, Culture and
Sports (now the Department of Education) the amount of the expenses
spent for the structures or to oblige the defendant-appellee to pay the price
of the land, and said option must be exercised and relayed to this court
formally within thirty (30) days from receipt of this decision and a copy of
such notice must be furnished to the defendant.

a. If in case the plaintiffs-appellants exercise the

option to appropriate the structures built on the lot in suit,
the defendant-appellee is hereby directed to submit to this
court the amount of the expenses spent for the structures
within 15 days from receipt of the notice of the plaintiff of
his desired option.

14
Id. at 42-54.
15
735 Phil. 703, 712 (2014).
16
Id. at 707.
17
Rollo. pp. 50-51.

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Decision 5 G.R. No. 230399

b. If the plaintiffs-appellants decide to oblige the

defendant-appellee to pay the price of the land, the current
market value of the land including its improvements as
determined by the City Assessor's Office shall be the basis
for the price thereof.

c. In case the plaintiffs-appellants exercise the

option to oblige the defendant-appellee to pay the price of
the land but the latter rejects such purchase because the
value of the land is considerably more than that of the
structures, the parties shall agree upon the terms of a forced
lease, and give the court a formal written notice of such
agreement and its provisos.

d. If no formal agreement shall be entered into

within a reasonable period, the court shall fix the terms of
the forced lease.

3. Defendant-appellee is directed to pay the plaintiffs-appellants

the amount of five hundred pesos (P500.00) per month as reasonable
compensation for the occupancy of the subject property from the time the
complaint was filed until such time the possession of the property is
delivered to the plaintiffs-appellants subject to the reimbursement of the
aforesaid expenses in favor of the defendant-appellee or until such time
the payment of the purchase price of the lot be made by the defendant
appellee in favor of the plaintiffs-appellants in case the latter opts for the
compulsory sale of the same;

4. Defendant-appellee is directed to pay the plaintiffs-appellants

the amount of'P20, 000.00 as attorney's fees and to pay the costs of the
suit.

SO ORDERED. 18

Aggrieved, DepEd filed the instant Petition for Review on Certiorari

under Rule 45 of the Rules of Court arguing that respondent's right over the
subject property, if any, is barred by laches due to their inaction for more
than fifty (50) years.

The Issue

The issue before this Court is whether or not the CA erred in ruling
that respondent's cause of action against petitioner was not yet barred by
laches. 19

Ruling of the Court

18
Id. at 52-54.
19
Id. at 25.

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Decision 6 G.R. No. 230399

The petition is bereft of merit.

The principle of laches or "stale demands" is the failure or neglect, for

an unreasonable and unexplained length of time, to do that which by
exercising due diligence could or should have been done earlier. 20 It is based
on the grounds of public policy in order to maintain peace in the society and
equity in order to avoid recognizing a right when to do so would result in a
clearly unfair situation. 21

Nevertheless, the Court has held that there is no fast and hard rule as
to what constitutes laches or staleness of demand; the detennination of
which is addressed to the sound discretion of the court. To conclude a sound
judgment, courts are guided that laches, being an equitable doctrine, is
controlled by equitable considerations in accordance with the particular
circumstances of each case. It cannot be used to defeat justice or perpetrate
fraud. Ultimately, pursuant to the principle of equity, courts are not bound
strictly by the statute of limitations or the doctrine of laches when to be so, a
manifest wrong or injustice would result. 22

As prescribed in the ruling of Phil-Air Conditioning Center vs. RCJ

23
Lines, the following elements must all be present in order to constitute
laches:

(1) Conduct on the part of the defendant, or of one under whom he claims,
giving rise to the situation of which complaint is made for which the
complaint seeks a remedy;

(2) Delay in asserting the complainant's rights, the complainant having had
knowledge or notice, of the defendant's conduct and having been afforded
an opportunity to institute a suit;

(3) Lack of knowledge or notice on the part of the defendant that the
complainant would assert the right on which he bases his suit; and

(4) Injury or prejudice to the defendant in the event relief is accorded to

the complainant, or the suit is not held to be barred. 24

In the instant case, a close scrutiny of the records reveals that

petitioner failed to establish the concurrence of the above-mentioned
elements for the reason that CNES' possession over the subject property was
merely being tolerated by respondents and their predecessor-in-interest.

:o See Spouses Benatiro, et al. v. Heirs of Evaristo Cuyos, 582 Phil. 470, 491 (2008).
21
See Aznar Brothers Realty Company v. Spouses Jose and A1agda!ena Ybaf"lez, 733 Phil. l, 29
(2014); Insurance of the Philippine Island Corp. v. Spouses Gregorio, 658 Phil. 36, 42 (2011).
22
Id. at 42
23
Phil-Air Conditioning Center v. RCJ Lines, 773 Phil. 352, 369 (2015).

ryu
24
Id. at 369.
Decision 7 G.R. No. 230399

Petitioner contends that the government, through CNES, was in

possession of the subject property in the concept of an owner since the
1940's.25 However, as found by the court a quo and the CA, the subject
property was registered in the name of Regino Banguilan under OCT. No.
10728 as early as 1929 .26 The court a quo explicitly stated, "In the case at
bar, it was undisputed that the property registered under OCT. No. 10728
was owned by Regino Banguilan, which later redounded to his heirs. " 27.
Therefore, CNES knew from the very beginning that the property was titled
in someone else's name and that their possession was not in the concept of
an owner.

In the case of Heirs ofJose Maligaso vs. Spouses Encinas, 28 the Court
explained that possession over the property by anyone other than the
registered owner gives rise to the presumption that said possession is only by
mere tolerance. Likewise, when faced with unsubstantiated self-serving
claims as opposed to a duly registered Torrens title, the latter must prevail.
The Court elucidated on this point, to wit:

The respondents' title over such area is evidence of their

ownership thereof. That a certificate of title serves as evidence of an
indefeasible and incontrovertible title to the property in favor of the person
whose name appears therein and that a person who has a Torrens title over
a land is entitled to the possession thereof are fundamental principles
observed in this jurisdiction. Alternatively put, the respondents' title
and that of their predecessors-in-interest give rise to the reasonable
presumption that the petitioners have no right over the subject area
and that their stay therein was merely tolerated. 29 (Citations omitted
and emphasis supplied)

Notably, petitioner failed to adduce any evidence to substantiate its

claim that it acquired the subject property and possessed it in the concept of
an owner. Moreover, petitioner was unable to support its claim that the
subject land was sold to the municipality of Tuguegarao by Elena Banguilan,
°
Regino's sister. 3 Clearly, petitioner was unable to overturn the presumption
that its occupation over the lot was by mere tolerance of the respondents.

On the other hand, the respondents have proffered the following to

prove their claim of ownership over the subject lot: (1) OCT No. 10728
registered under the name of Regino Banguilan; 31 (2) tax declarations

25
Rollo, p. 102.
26
Id. at 70-71.
27
Id. at 101.
28
688 Phil. 516, 523 (2012).
29
Id.
30
Rollo, p. 100.
31
Id. at 70.

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Decision 8 G.R. No. 230399

covering the subject land in the name of Regino; 32 and (3) a sketch plan of
Lot 3950 surveyed in the name of Aida Banguilan, one of the herein
respondents. 33 Thus, as between the petitioner's unsubstantiated self-serving
claims and respondent's evidence, the latter must prevail. As such, the Court
finds no reason to disturb the CA' s factual finding that CNES' possession of
the subject property was, and continues to be, by mere tolerance of the
respondents.

Considering that CNES' possession was merely being tolerated,

respondents cannot be said to have delayed in asserting their rights over the
subject property. As explained in the recent case of Department of
Education vs. Casibang, et al., 34 a registered owner who is merely tolerating
another's possession of his land is not required to perform any act in order to
recover it. This is because the occupation of the latter is only through the
continuing permission of the former. Consequently, once said pennission
ceases, the party whose possession is merely being tolerated is bound to
vacate the subject property. Hence, until the registered owner communicates
the cessation of said permission, there is no need to do anything to recover
the subject prope1iy. Similarly, as aptly pointed out by the court a quo,
Regino and his successor-in-interests repeatedly asserted their rights over the
subject property by demanding from CNES the payment of rentals or for the
latter to purchase the same. 35 However, once it became clear that petitioner
was not going to pay rent, purchase the lot, or vacate the premises,
respondents instituted an action for recovery of possession. 36 There was no
prolonged inaction on the part of the respondents which could bar them from
prosecuting their claims.

Likewise, since CNES' occupation of Lot No. 3950 was merely being
tolerated by Regino and his successors-in-interest, petitioner cannot now
claim that they lacked any knowledge or notice that the former would assert
their rights over said property. Even assuming arguendo that there was no
agreement between CNES and Regino, the school is necessarily bound by an
implied promise to vacate the subject property upon the registered owner's
demand. 37

Notwithstanding the petitioner's failure to prove the concun-ence of

all the elements of laches, jurisprudence is also replete with cases which
hold that the doctrine of prescription or laches is inapplicable to registered

32
Id. at 97.
33
Id at 98.
3~
779 Phil. 472, 486 (2016).
35
Rollo, p. 109.
36
Id.
37
Supra note 34, at 486.

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Decision 9 G.R. No. 230399

lands covered by the Torrens System. 38 The Court has consistently held that
laches cannot apply to registered land covered by a Torrens Title because
under the Property Registration Decree, no title to registered land in
derogation to that of the registered owner shall be acquired by prescription
or adverse possession. 39

In Casibang, 40 the Court ruled in favor of a registered owner and

upheld the indefeasibility and incontrovertibility of a registered title as
against the school's possession by mere tolerance. In said case, the
registered owner therein allowed the construction and operation of a school
on a portion of his property because he had no use of it at the time.
However, when his successors-in-interest sought to recover possession of
the lot, the DepEd refused alleging that its possession was in the concept of
an owner because it had purchased it from the original registered owner. The
Court ruled against the DepEd because it failed to produce any competent
proof of transfer of ownership. Hence, their possession of the subject
property was only by mere tolerance and not in the concept of an owner. The
Court held:

It is undisputed that the subject property is covered by OCT No. 0-

627, registered in the name of the Juan Cepeda. A fundamental principle
in land registration under the Torrens system is that a certificate of title
serves as evidence of an indefeasible and incontrovertible title to the
property in favor of the person whose name appears therein. Thus, the
certificate of title becomes the best proof of ownership of a parcel ofland.

As registered owners of the lots in question, the respondents

have a right to eject any person illegally occupying their property.
This right is imprescriptible. Even if it be supposed that they were aware
of the petitioner's occupation of the property, and regardless of the length
of that possession, the lawful owners have a right to demand the return of
their property at any time as long as the possession was unauthorized or
merely tolerated, if at all. This right is never barred by !aches.

Case law teaches that those who occupy the land of another at
the latter's tolerance or permission, without any contract between
them, are necessarily bound by an implied promise that the occupants
will vacate the property upon demand. 41 (Citations omitted and
emphasis supplied)

On the same note, the Court concurs with the CA in its application of
the case of Tuliao 42 to the herein controversy with regard to the issue of

38
See de Leon v. de Leon-Reyes, 791 SCRA 407, G.R. No. 205711 May 30, 2016; Supapo et al. v.
Sps. De Jesus, et al., 758 Phil. 444, 461 (2015); Jakosalem, et al. v. Barangan, 682 Phil. 130, 142 (2012).
39
See Jakosalem, et al. v. Barangan, 682 Phil. 130, 142 (2012).
40
Supra note 34.
41
Id. at 484-485.
42
Department ofEducation v. Tuliao, supra note 15.

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Decision 10 G.R. No. 230399

]aches. In said case, the Court unequivocally stated that lacl1es can only
apply to one whose possession of the property was open, continuous,
exclusive, adverse, notorious, and in the concept of an owner for a prolonged
period of time. Additionally, physical possession must be coupled with
intent to possess as an owner in order for it to be considered as adverse. The
Court explained this, to wit:

As regards the DepEd's defense of laches, it has no merit either. It

avers that its possession of the subject land was open, continuous,
exclusive, adverse, notorious and in the concept of an owner for at least
thirty-two (32) years already at the time Tuliao filed the complaint. It must
be noted, however, that Tuliao's claim that the DepEd's possession of a
portion of his land to be used as a passageway for the students was mere
tolerance was not refuted. Thus, the same is deemed admitted. This means
that the DepEd's possession was not truly adverse.

The Court once ruled that mere material possession of the land
was not adverse as against the owner and was insufficient to vest title,
unless such possession was accompanied by the intent to possess as an
owner.'0 (Citation omitted and emphasis supplied)

As earlier discussed, petitioner, through CNES, was only occupying

the subject lot through the permission and mere tolerance of Regino and
eventually his successors-in-interest, herein respondents. Therefore, the
petitioner's claim that their possession of the subject lot was adverse and in
the concept of an owner, must fail.

Being the owners of the subject property, respondents have the right
to recover possession from the petitioner because such right is
imprescriptible. Even if the Department of Education has been occupying
the subject property for a considerable length of time, respondents, as lawful
owners, have the right to demand the return of their property at any time as
long as the possession was only through mere tolerance. 44 The same precept
holds true even if the tolerance resulted from a promise that the possessor
will pay for the reasonable value of the land. 45

As correctly ruled by the Court of Appeals, respondents may exercise

their rights under Article 448, 46 in relation to Article 546 47 of the New Civil

43
Id. at
44
.'>pauses Ocampo v. Heirs of Bernardino U. Dionisio. 744 Phil. 716, 729-730(2014).
45
Ma/onesio v. Jizmundo. G.R. No. 199239, August 24, 2016. 801 SCRA 339.
46
Art. 448. The owner of the land on which anything has been built, sown or planted in good faith.
shall have the right to appropriate as his own the works, sowing or planting, after payment of the indenmity
provided for in articles 546 and 548. or to oblige the one who built or planted to pay the price of the land,
and the one who sowed. the proper rent. However, the builder or planter cannot be obliged to buy the land
if its value is considerably more than that of the building or trees. In such case. he shall pay reasonable rent.
if the owner of the land does not choose to appropriate the building or trees after proper inclenmity. The

11~
Decision 11 G.R. No. 230399

Code. Said provision provides them with the option of either: (1)
appropriating the improvements, after payment of indemnity representing
the value of the improvements introduced and the necessary and useful
expenses defrayed on the subject lots; or (2) obliging the petitioner to pay
the price of the land. However, petitioner cannot be obliged to buy the land
if its value is considerably more than that of the improvements and buildings
it built. In such a scenario, the petitioner may instead enter into a lease
agreement with respondent heirs and pay them reasonable rent. In case of
disagreement, the Court shall fix the terms thereof.

Nonetheless, considering that the subject lot is now being used as

school premises by the Caritan Norte Elementary School and permanent
stn1ctures have already been erected thereon, respondent's exercise of their
rights under Article 448 and payment of indemnity pursuant to Article 546·.
would undoubtedly hinder the Department of Education's prerogative of
providing basic education to said locality. In consonance with previous
rulings by the Court, 48 the petitioner's remedy to address such inconvenience
is to file an action for expropriation over said land.

WHEREFORE, given the foregoing disquisition, the Petition for

Review on Certiorari, dated April 26, 2017 of the Department of Education,
represented by its Regional Director, is hereby DENIED. Accordingly, the
Decision dated February 24, 2017 of the Court of Appeals in CA-G.R. CV
No. 100288, reversing and setting aside the Decision dated September 11,
2012 of the Regional Trial Court of Tuguegarao City, Cagayan, Branch 2 is
hereby AFFIRMED in toto.

SO ORDERED.

ANDRE
Asso
fl />
REYES, JR.
e Justice

parties shall agree upon the tem1s of the lease and in case of disagreement, the court shall fix the terms
thereof.
47
Art. 546. Necessary expenses shall be refunded to every possessor; but only the possessor in good
faith may retain the thing w1til he has been reimbursed therefor.
Useful expenses shall be refunded only to the possessor in good faith with the same right of
retention, the person who has defeated him in the possession having the option of refunding the amount of
the expenses or of paying the increase in value which the thing may have acquired by reason thereof.
48
Department of Education v. Tuliao, supra note 15, at 712.
Decision 12 G.R. No. 230399

WE CONCUR:

~~~
ANTONIO T. CARPIO
Senior Justice
Chairperson

I~ llAQ~ 'UfJJ
ESTELA Ml.PERLAS-BERNABE
Associate Justice

S. CAGUIOA

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, I certify that

the conclusions in the above Decision had been reached in consultation
before the case was assigned to the writer of the opinion of the Court's
Division.

az:~
ANTONIO T. CARPIO
Senior Associate Justice
(Per Section 12, R.A. No. 296 The
Judiciary Act of 1948, as amended)