Decs

11/11/2019 SUPREME COURT REPORTS ANNOTATED VOLUME 867

G.R. No. 230399. June 20, 2018.*

DEPARTMENT OF EDUCATION, CULTURE AND
SPORTS (now DEPARTMENT OF EDUCATION),
represented by its REGIONAL DIRECTOR, TERESITA
DOMALANTA, petitioner, vs. HEIRS OF REGINO
BANGUILAN, namely: BENIGNA GUMABAY
FILOMENA BANGUILAN, ESTER KUMMER, AIDA
BANGUILAN, and ELISA MALLILLIN, respondents.
Civil Law; Laches; The Supreme Court (SC) has held that
there is no fast and hard rule as to what constitutes laches or
staleness of demand; the determination of which is addressed to
the sound discretion of the court.—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. 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. Nevertheless, the Court
has held that there is no fast and hard rule as to what constitutes
laches or staleness of demand; the determination 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 statute of
limitations or the doctrine of laches when to be so, a manifest
wrong or injustice would result.
Same; Property; Possession by Mere Tolerance; In the case
of Heirs of Jose Maligaso v. Spouses Encinas, 674 SCRA 215
(2012), the Supreme Court (SC) 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.—In
the case of Heirs of Jose Maligaso v. Spouses Encinas, 674 SCRA
215 (2012), the Court
_______________
www.central.com.ph/sfsreader/session/0000016e5ac1cb1a6a94b443003600fb002c009e/t/?o=False 1/19
* SECOND DIVISION.

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VOL. 867, JUNE 20, 2018 421

Department of Education, Culture and Sports (now
Department of Education) vs. Heirs of Regino Banguilan
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.
Same; Laches; Prescription; The doctrine of prescription or

laches is inapplicable to registered lands covered by the Torrens
System.—Notwithstanding the petitioner’s failure to prove the
concurrence 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 lands covered by the Torrens
System. 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.
Same; Property; Builders in Good Faith; 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 Supreme Court (SC) shall fix the terms thereof.
—As correctly ruled by the Court of Appeals, respondents may
exercise their rights under Article 448, in relation to Article 546 of
the New Civil 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

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422 SUPREME COURT REPORTS ANNOTATED

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.
PETITION for review on certiorari of a decision of the

Court of Appeals.
The facts are stated in the opinion of the Court.
Office of the Solicitor General for petitioner.
Mac Paul B. Soriano for respondents.

REYES, JR., J.:

Nature of the Petition

Before the Court is a Petition for Review on Certiorari1
filed by the Department of Education, Culture and Sports,
now Department of Education (DepEd) through its
Regional Director Teresita Domalanta, assailing the
Decision2 dated February 24, 2017 of the Court of Appeals
(CA) in C.A.-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 lawful possessors of the contested
property.
_______________
1 Rollo, pp. 16-39.

2 Penned by Associate Justice Myra V. Garcia-Fernandez, and
concurred in by Associate Justices Rosmari D. Carandang and Mario V.
Lopez; id., at pp. 42-54.

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VOL. 867, JUNE 20, 2018 423

The Antecedent Facts

On October 24, 2001, the heirs of Regino Banguilan
(respondents) instituted a Complaint3 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 is made. Respondents now claim the
petitioner’s nonadherence to the aggrement prejudiced
them
_______________
3 Id., at pp. 65-69.

4 Id., at pp. 70-73.
5 Id., at p. 66.

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because they were deprived of the use and enjoyment of the

subject property since 1950.6
Accordingly, the respondents prayed for the following:
(1) 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 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 P50,000.00 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
Cartan Norte, Tuguegarao City and constructed 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
of 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 a 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
_______________
6 Id.
7 Id., at p. 67.
8 Id., at pp. 74-80.
9 Id., at pp. 74-76.
10 Id., at p. 77.

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VOL. 867, JUNE 20, 2018 425

In a Decision11 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 the 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
laches from recovering possession of the subject property.
They further contended that the petitioner’s possession of
the property was by mere tolerance; hence laches could not
prevent them from asserting the right of possession over
the subject property.13
In its Decision14 dated February 24, 2017, the CA
reversed and set aside the decision of the court a quo’s
ruling that the prescription and laches 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 v. 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.
_______________
11 Id., at pp. 96-103.

12 Id., at p. 103.
13 Id., at p. 45.
14 Id., at pp. 42-54.
15 735 Phil. 703, 712; 725 SCRA 560, 569 (2014).

426

In keeping with the ruling in Tuliao,16 the CA further

ruled that respondents may either appropriate the
structures 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 the 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 Kummar, 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 built 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.
_______________
16 Id., at p. 707; p. 563.

17 Rollo, pp. 50-51.

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VOL. 867, JUNE 20, 2018 427

a. If in case the plaintiffs-appellants exercise the

option to appropriate the structures built on the lot in
the 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.
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;


428

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

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 determination of which is addressed to the
sound
_______________
18 Id., at pp. 52-54.

19 Id., at p. 25.
20 See Benatiro v. Heirs of Evaristo Cuyos, 582 Phil. 470, 491; 560
SCRA 478, 502 (2008).
21 See Aznar Brothers Realty Company v. Ybañez, 733 Phil. 1, 29; 722
SCRA 1, 30 (2014); Insurance of the Philippine Island Corporation v.
Gregorio, 658 Phil. 36, 42; 642 SCRA 685, 691 (2011).

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VOL. 867, JUNE 20, 2018 429

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
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 v. RCJ Lines,23 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 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
_______________
22 Insurance of the Philippine Island Corporation v. Gregorio, id., at p.

42; pp. 691-692.
23 Phil-Air Conditioning Center v. RCJ Lines, 773 Phil. 352, 369; 775
SCRA 265, 279 (2015).
24 Id.

430

over the subject property was merely being tolerated by

respondents and their predecessor-in-interest.
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 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 to someone else’s name and that their
possession was not in the concept of an owner.
In the case of Heirs of Jose Maligaso v. 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
_______________
25 Rollo, p. 102.
26 Id., at pp. 70-71.
27 Id., at p. 101.
28 688 Phil. 516, 523; 674 SCRA 215, 221 (2012).

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VOL. 867, JUNE 20, 2018 431

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 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.30 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 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 the 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 v. 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
_______________
29 Id.
30 Rollo, p. 100.
31 Id., at p. 70.
32 Id., at p. 97.
33 Id., at p. 98.
34 779 Phil. 472, 486; 782 SCRA 326, 338 (2016).

432

the continuing permission of the former. Consequently, once said

permission 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 property.
Similarly, as aptly pointed out by the court a quo, Regino and his
successors-in-interest 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
concurrence 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 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
_______________
35 Rollo, p. 109.
36 Id.
37 Department of Education v. Casibang, supra note 34 at p. 486; p.
337.
38 See de Leon v. de Leon-Reyes, G.R. No. 205711, May 30, 2016, 791
SCRA 407.

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VOL. 867, JUNE 20, 2018 433

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. O-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 of land.
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 unauthor-
_______________
39 See Jakosalem v. Barangan, 682 Phil. 130, 142; 666 SCRA 138, 150
(2012).
40 Department of Education v. Casibang, supra note 34.

434

ized or merely tolerated, if at all. This right is never barred by

laches.
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 (Ctiations omitted
and emphasis supplied)
On the same note, the Court concurs with the CA in its

application of the case of Tuliao42 to the herein controversy
with regard to the issue of laches. In said case, the Court
unequivocally stated that laches 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 and 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.43 (Citation omitted and emphasis supplied)
_______________
41 Id., at pp. 484-485; pp. 336-337.

42 Department of Education v. Tuliao, supra note 15.
43 Id.

435
VOL. 867, JUNE 20, 2018 435

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
_______________
44 Ocampo v. Heirs of Bernardino U. Dionisio, 744 Phil. 716, 729-730;

737 SCRA 381, 394 (2014).
45 Malonesio 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 indemnity
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 the proper indemnity. The

parties shall agree upon the terms of the lease and in case of
disagreement, the court shall fix the terms thereof.

436

Article 54647 of the New Civil 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 structures have already been erected thereon,
respondent’s exercise of their rights under Article 448 and
payment of indemnity pursuant to Article 546 would undoubtable
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
_______________
47 Art. 546. Necessary expenses shall be refunded to every

possessor; but only the possessor in good faith may retain the thing until
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 p. 712; p. 569.

437
VOL. 867, JUNE 20, 2018 437

24, 2017 of the Court of Appeals in C.A.-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.
Carpio** (Chairperson), Peralta, Perlas-Bernabe and Caguioa,

JJ., concur.
Petition denied, judgment dated February 24, 2017

affirmed in toto.
Notes.—The principle of laches or “stale demands”

ordains that 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 —
negligence or omission to assert a right within a reasonable
time — warrants a presumption that the party entitled to
assert it has abandoned it or declined to assert it. (Manila
vs. Gallardo-Manzo, 657 SCRA 20 [2011])
Evidence is of utmost importance in establishing the
existence of laches because, as stated in Department of
Education, Division of Albay v. Oñate, 524 SCRA 200
(2007), there is “no absolute rule as to what constitutes
laches or staleness of demand; each case is to be
determined according to its particular circumstances.”
(Arroyo vs. Bocago Inland Dev’t. Corp. [BIDECO], 685
SCRA 430 [2012])

——o0o——
_______________
** Designated Senior Associate Justice per Section 12, R.A. No. 296,
The Judiciary Act of 1948, as amended.
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11/11/2019 SUPREME COURT REPORTS ANNOTATED VOLUME 867

G.R. No. 230399. June 20, 2018.*

VOL. 867, JUNE 20, 2018 421

explained that possession over the property by anyone other than

Same; Laches; Prescription; The doctrine of prescription or

and the necessary and useful expenses defrayed on the subject

422 SUPREME COURT REPORTS ANNOTATED

PETITION for review on certiorari of a decision of the

1 Rollo, pp. 16-39.

VOL. 867, JUNE 20, 2018 423

The Antecedent Facts

3 Id., at pp. 65-69.

424 SUPREME COURT REPORTS ANNOTATED

because they were deprived of the use and enjoyment of the

VOL. 867, JUNE 20, 2018 425

In a Decision11 dated September 11, 2012, the trial court

WHEREFORE, premises considered, the Court ORDERS

11 Id., at pp. 96-103.

426 SUPREME COURT REPORTS ANNOTATED

In keeping with the ruling in Tuliao,16 the CA further

WHEREFORE, the appeal is GRANTED. The decision

16 Id., at p. 707; p. 563.

VOL. 867, JUNE 20, 2018 427

a. If in case the plaintiffs-appellants exercise the

428 SUPREME COURT REPORTS ANNOTATED

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

Aggrieved, DepEd filed the instant Petition for Review

18 Id., at pp. 52-54.

VOL. 867, JUNE 20, 2018 429

discretion of the court. To conclude a sound judgment,

(1) Conduct on the part of the defendant, or of one under

In the instant case, a close scrutiny of the records

22 Insurance of the Philippine Island Corporation v. Gregorio, id., at p.

430 SUPREME COURT REPORTS ANNOTATED

over the subject property was merely being tolerated by

The respondents’ title over such area is evidence of their

28 688 Phil. 516, 523; 674 SCRA 215, 221 (2012).

VOL. 867, JUNE 20, 2018 431

subject area and that their stay therein was merely

Notably, petitioner failed to adduce any evidence to

34 779 Phil. 472, 486; 782 SCRA 326, 338 (2016).

432 SUPREME COURT REPORTS ANNOTATED

the continuing permission of the former. Consequently, once said

VOL. 867, JUNE 20, 2018 433

registered land in derogation to that of the registered

It is undisputed that the subject property is covered by OCT

434 SUPREME COURT REPORTS ANNOTATED

ized or merely tolerated, if at all. This right is never barred by

On the same note, the Court concurs with the CA in its

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

41 Id., at pp. 484-485; pp. 336-337.

VOL. 867, JUNE 20, 2018 435

As earlier discussed, petitioner, through CNES, was

44 Ocampo v. Heirs of Bernardino U. Dionisio, 744 Phil. 716, 729-730;

to appropriate the building or trees after the proper indemnity. The

436 SUPREME COURT REPORTS ANNOTATED

Article 54647 of the New Civil Code. Said provision provides

47 Art. 546. Necessary expenses shall be refunded to every

VOL. 867, JUNE 20, 2018 437