Case Summary (G.R. No. 230399)
Nature of the Petition and Procedural Posture
DepEd filed a Petition for Review on Certiorari under Rule 45, challenging the Court of Appeals (CA) decision that reversed the Regional Trial Court (RTC) and declared the respondent heirs as lawful possessors of the contested titled lot. The RTC had earlier recognized title in the name of Regino Banguilan but dismissed respondents’ complaint on grounds of laches/prescription; the CA reversed, holding that possession by the school was by mere tolerance and that laches did not bar recovery. The Supreme Court reviewed whether the CA erred in ruling that respondents’ cause of action was not barred by laches.
Relevant Facts — Occupation and Ownership Allegations
Respondents asserted ownership as heirs through an extra-judicial settlement and partition of property registered under OCT No. 10728. They alleged that, prior to World War II, the original owner permitted the establishment and gradual improvement of temporary school structures on the land for Caritan Norte Elementary School (CNES); no purchase or rental payments were made despite promises. After the original owner’s death in 1961, respondents’ predecessors demanded rent or purchase; when payments or purchase did not occur, respondents sought recovery of possession in 2001.
DepEd’s Position and Trial Court Findings
DepEd admitted establishment and long occupation of CNES on the lot but denied respondents’ ownership claims and asserted that CNES possessed the property in the concept of an owner for more than fifty years, invoking laches/prescription. The RTC acknowledged title under OCT No. 10728 in favor of Regino but concluded that laches and prescription barred respondents from recovering possession and dismissed the complaint without prejudice to an action for just compensation.
Court of Appeals Decision and Reliefs Ordered
The CA reversed the RTC, holding that possession by CNES was by mere tolerance and that laches/prescription could not operate against a registered owner under Torrens. The CA declared respondents lawful possessors and directed them to exercise the Article 448 option: (a) appropriate the structures by paying DepEd the expenses for the structures, or (b) oblige DepEd to pay the price of the land (market value including improvements). The CA ordered DepEd to pay reasonable compensation of P500/month from filing until delivery, awarded attorney’s fees, and set procedures for valuation, forced lease if purchase refused, and court-fixed lease terms if parties fail to agree.
Issue Presented to the Supreme Court
Whether the CA erred in holding that respondents’ cause of action was not barred by laches — specifically, whether the elements of laches were present so as to bar recovery of possession against DepEd despite prolonged occupation by CNES.
Law on Laches and Its Elements
The Court reiterated the doctrine of laches: unreasonable and unexplained delay in asserting a right, governed by equitable considerations. Citing prior jurisprudence, the Court set out the elements necessary to establish laches: (1) conduct by the defendant giving rise to the complained-of situation; (2) delay by complainant in asserting rights despite knowledge; (3) defendant’s lack of notice that the complainant would assert the right; and (4) injury or prejudice to defendant if relief is granted. Laches is not fixed by strict time periods but by circumstances and equitable discretion.
Application of Laches to the Facts — Tolerance vs. Adverse Possession
The Supreme Court found DepEd failed to establish the concurrence of laches elements. The foundational factual point was that the lot was registered under OCT No. 10728 in the name of Regino (registration evidence dating back decades), and the school’s occupation was known to be on land owned by another. Under the Torrens system and controlling precedents, possession by a person other than the registered owner, absent proof of transfer or adverse intent, gives rise to a presumption of mere tolerance. Because CNES’s occupancy was by permission/tolerance, respondents were not required to take protective acts to preserve their right; they repeatedly demanded rent or sale and, when demands failed, filed for recovery. Thus there was no unreasonable or unexplained delay by respondents that would satisfy laches.
Torrens System Indefeasibility and Imprescriptibility of Right to Recover
The Court emphasized the settled principle that a Torrens title is indefeasible and that title to registered land cannot be acquired by prescription or adverse possession in derogation of the registered owner. Where possession rests on tolerance or permission, the registered owner retains the imprescriptible right to recover the property at any time. The Court applied prior decisions rejecting laches against a registered owner when the possessor cannot prove possession was adverse (i.e., accompanied by intent to possess as owner).
Intent to Possess and the Tuliao Standard
The Court applied the Tuliao standard: mere material possession does not become adverse unless coupled with intent to possess as owner. Laches can only apply where possession was open, continuous, exclusive, notorious, and in the concept of an owner for a prolonged period, and where such possession was not merely tolerated. Here,
...continue readingCase Syllabus (G.R. No. 230399)
Citation and Procedural Posture
- Supreme Court decision reported at 833 Phil. 943, Second Division, G.R. No. 230399, dated June 20, 2018.
- Petition for Review on Certiorari under Rule 45 filed by the Department of Education, Culture and Sports (now Department of Education, DepEd), through Regional Director Teresita Domalanta, assailing the Court of Appeals (CA) Decision in CA-G.R. CV No. 100288 dated February 24, 2017.
- The CA had reversed the Regional Trial Court (RTC) of Tuguegarao City, Branch 2, Civil Case No. 5897, Decision dated September 11, 2012.
- The Supreme Court resolved the sole issue whether the CA erred in ruling that the respondents’ cause of action was not barred by laches.
Nature of the Petition
- Petition challenges CA’s reversal and setting aside of the RTC decision and the CA’s declaration that the heirs of Regino Banguilan are the lawful possessors of the property covered by Original Certificate of Title (OCT) No. 10728.
- DepEd contends respondents’ rights, if any, are barred by laches due to inaction for more than fifty years.
- Relief sought by respondents at trial originally included declaration of illegal possession by DepEd, recovery of possession, payment of reasonable rent since 1950 (P500.00 per month), litigation expenses (P30,000), and attorney’s fees (P50,000). The CA awarded attorney’s fees of P20,000 and costs in a revised award.
Antecedent Facts
- On October 24, 2001, respondents (heirs of Regino Banguilan: Benigna Gumabay, Filomena Banguilan, Ester Kummer, Aida Banguilan, Elisa Mallillin) filed a Complaint for recovery of possession against DepEd before the RTC of Tuguegarao City, Cagayan.
- The disputed parcel is located in Caritan Norte, Tuguegarao City and is covered by OCT No. 10728 registered in the name of Regino Banguilan (title existing as early as 1929).
- Prior to the Second World War, officials of Caritan Norte Elementary School (CNES) sought and allegedly obtained Regino’s permission to build temporary structures on the property to be used as classrooms; Regino reportedly had no immediate use for the land and consented.
- Over time, temporary structures were improved to concrete and permanent school buildings were established on the lot.
- After Regino’s death in 1961, successors-in-interest allegedly demanded rent or purchase of the land from CNES school officials; respondents allege assurances were made to pay rent and to purchase the property, but no payments or purchase were ever made.
- Respondents claim deprivation of use and enjoyment of the property since 1950 and sought recovery and compensation.
Parties’ Allegations and Positions at Trial
- Respondents:
- As heirs of the registered owner (Regino), asserted absolute ownership via extra-judicial settlement and partition after his death.
- Claimed possession by DepEd/CNES was based on mere tolerance and specific permission, not adverse possession.
- Demanded recovery of possession, payment of reasonable rent (P500/month since 1950), litigation expenses and attorney’s fees.
- Petitioner (DepEd):
- Admitted CNES was established on the subject land before the war and that school buildings were constructed.
- Denied respondents’ ownership claims and rent demands, asserting CNES’ possession was in the concept of an owner for more than fifty years until 2001.
- Argued respondents’ cause of action lacked proof that the lot formed part of the school site; alternatively, asserted prescription and laches because of long, continuous, and adverse possession.
Trial Court (RTC) Decision, September 11, 2012
- RTC recognized Regino as the undisputed owner of the contested property as evidenced by OCT No. 10728.
- Despite recognizing ownership, the RTC found laches and prescription had set in and dismissed the complaint for lack of merit.
- RTC’s dismissal was without prejudice to respondents filing an action for payment of just compensation against the Republic of the Philippines.
Court of Appeals Decision, February 24, 2017
- CA reversed and set aside the RTC decision.
- CA held prescription and laches could not operate in favor of DepEd because:
- The lot is registered under the Torrens System; registered title’s indefeasibility prevents acquisition of title by prescription or adverse possession.
- CNES’ possession was by mere tolerance and not in the concept of an owner; mere material possession without intent to possess as owner is insufficient to establish adverse possession (citing Department of Education v. Tuliao).
- CA applied Article 448 (with Article 546) of the New Civil Code, giving respondents options under the law:
- Appropriate the structures by paying DepEd the expenses spent for the structures, or
- Oblige DepEd to pay the price of the land as determined by the City Assessor’s Office; if DepEd refuses purchase because land value greatly exceeds the structures’ value, parties should agree on terms of a forced lease or the court will fix terms.
- CA ordered:
- Plaintiffs-appellants declared lawful possessors of OCT No. R.O. 62 (10728).
- Plaintiffs-appellants to exercise Article 448 option within 30 days; if appropriating structures, DepEd to submit amount of expenses within 15 days; if compelling purchase, current market value including improvements to be basis.
- DepEd to pay P500.00 per month as reasonable compensation from filing of complaint until delivery of property, subject to reimbursement for expenses or upon payment of purchase price in