Republic v. Sps. Llamas PDF

7/31/2020 SUPREME COURT REPORTS ANNOTATED VOLUME 805

G.R. No. 203610. October 10, 2016.*

REPUBLIC OF THE PHILIPPINES and HOUSING AND URBAN
DEVELOPMENT COORDINATING COUNCIL (HUDCC),
petitioners, vs. GONZALO ROQUE, JR., MANUELA ALMEDA
ROQUE, EDUVIGIS A. PAREDES, MICHAEL A. PAREDES,
PURIFICACION ALMEDA, JOSE A. ALMEDA, MICHELLE A.
ALMEDA, MICHAEL A. ALMEDA, ALBERTO DELURA, and
THERESA ALMEDA, respondents.
State Immunity from Suit; The Constitution provides that “the State
may not be sued without its consent.” One instance when a suit is against
the State is when the Republic is sued by name.—The Constitution provides
that “the State may not be sued without its consent.” One instance when a
suit is against the State is when the Republic is sued by name, as in this
case. A suit against the State is allowed when the State gives its consent,
either expressly or impliedly. Express consent is given through a
statute while implied consent is given when the State enters into a contract
or commences litigation. Although not all contracts entered into by the
government operates as a waiver of its non-suability, the Court held in the
two cases below that the State effectively gave its consent when it entered
into contracts and committed breach.
Same; The State’s consent to be sued is presumed when the State fails
to comply with the alleged terms of a deed of donation.—In Santiago v. The
Government of the Republic of the Philippines, 87 SCRA 294
(1978), Ildefonso Santiago and his wife donated a parcel of land to the
Republic on the alleged condition that the latter would install lighting
facilities and a water system and would build an office building and parking
lot on the property on or before December 7, 1974. Santiago filed a
complaint for the revocation of the donation due to the government’s breach
of the condition. The trial court dismissed the case based on the State’s non-
suability. The Court set aside the dismissal on certiorari, reasoning that the
State’s consent
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central.com.ph/sfsreader/session/00000173a3c0708e1c47caba003600fb002c009e/t/?o=False 1/23
* SECOND DIVISION.

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Republic vs. Roque, Jr.
to be sued is presumed when the State fails to comply with the alleged
terms of a deed of donation. It essentially held that the Republic impliedly
waived its immunity.
Same; When the State enters into a contract which creates mutual or
reciprocal rights and obligations, the State may be sued even without
express consent.—In Republic v. Sandiganbayan (Second Division), 484
SCRA 119 (2006), the Court ruled that when the Republic entered into a
compromise agreement with a private person, it stripped itself of its
immunity from suit and placed itself on the same level as its adversary.
When the State enters into a contract which creates mutual or reciprocal
rights and obligations, the State may be sued even without express
consent. Its consent to be sued is implied from its entry into the contract and
the Republic’s breach grants the other party the right to enforce or repudiate
the contract.
Same; Following Santiago and Republic, the State’s failure to abide by
these conditions constitutes the State’s implied waiver of its immunity.—In
the present case, the Republic entered into deeds of sale with the
respondents to construct the NGC Project on the lots sold. To facilitate the
sale, the Republic created a negotiating team to discuss the terms of the sale
with the respondents. The latter agreed to the negotiated sale on these
alleged conditions: (a) that they will have the right to repurchase the
properties if the NGC Project does not push through; and (b) that the NGC
Project will increase the market value of their remaining properties.
Following Santiago v. The Government of the Republic of the Philippines,
87 SCRA 294 (1978), and Republic v. Sandiganbayan (Second Division),
484 SCRA 119 (2006), the State’s failure to abide by these conditions
constitutes the State’s implied waiver of its immunity. We reiterate that the
doctrine of state immunity from suit cannot serve to perpetrate an injustice
on a citizen. If we rule otherwise, we will be tolerating unfair dealing in
contract negotiation.
Civil Law; Prescription; Laches; Resolving the issues of prescription
and laches in the present case requires a factual review, specifically whether
the presidential proclamations that reduced the land allotted for the
National Government Center (NGC) Project covered the subject properties
and when the prescription period should start to run under the
circumstances.—Resolving the issues of

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prescription and laches in the present case requires a factual review,

specifically whether the presidential proclamations that reduced the land
allotted for the NGC Project covered the subject properties and when the
prescription period should start to run under the circumstances. These are
questions of fact that this Court need not delve into. Nevertheless, the RTC
found and concluded, with the CA affirming, that the respondents’ action to
annul the sale is not barred either by prescription or laches. Both court ruled
that the enactment of RA 9207 was the earliest time that the respondents
could have known about the government’s plans to officially use the land for
socialized housing. Thus, the respondents were not barred by prescription
when they filed their complaint in 2005, within four (4) years from the
enactment of RA 9207.
Remedial Law; Evidence; Parol Evidence Rule; Section 9, Rule 130 of
the Rules of Court provides that a written contract is deemed to contain all
the terms agreed upon by the parties and no evidence of these terms is
admissible other than the contents of the contract.—Section 9, Rule 130 of
the Rules of Court provides that a written contract is deemed to contain all
the terms agreed upon by the parties and no evidence of these terms is
admissible other than the contents of the contract. The parol evidence rule
forbids any addition to the terms of a written agreement by testimony
showing that the parties orally agreed on other terms before the signing of
the document. However, a party may present evidence to modify, explain, or
add to the terms of a written agreement if he puts in issue in his
pleadings either: (a) an intrinsic ambiguity, mistake, or imperfection in the
written agreement; (b) the failure of the written agreement to express the
parties’ true intent and agreement; (c) the validity of the written
agreement; or (d) the existence of other terms agreed to by the parties or
their successors in interest after the execution of the written agreement. The
issue must be squarely presented.
Same; Same; The Supreme Court (SC) notes the basic rule that he who
alleges must prove his case.—We note the basic rule that he who alleges
must prove his case. In this case, the respondents have the burden to prove
that the sale was subject to two conditions: (a) their remaining properties
will benefit from the increase in land value after the construction of the
NGC Project and (b) the government will return the sold properties to them
should the NGC Project

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not materialize. However, they failed to discharge this burden. Notably,

they failed to present copies of the deeds of sale to show that the sale was
attended by the alleged conditions. Pursuant to the parol evidence rule, no
evidence of contractual terms is admissible other than the contract itself. On
this level alone, the respondents failed to discharge their burden.
Same; Same; Parol Evidence Rule; Although parol evidence is
admissible to explain the contract’s meaning, it cannot serve to incorporate
into the contract additional conditions which are not mentioned at all in the
contract unless there is fraud or mistake.—The second exception to the
parol evidence rule applies only when the written contract is so ambiguous
or obscure in terms that the parties’ contractual intention cannot be
understood from a mere reading of the agreement. Hence, the court may
receive extrinsic evidence to enable the court to address the ambiguity.
Although parol evidence is admissible to explain the contract’s meaning, it
cannot serve to incorporate into the contract additional conditions which are
not mentioned at all in the contract unless there is fraud or mistake.
Evidence of a prior or contemporaneous verbal agreement is generally not
admissible to vary, contradict, or defeat the operation of a valid
contract. Hence, parol evidence is inadmissible to modify the terms of the
agreement if the complaint fails to allege any mistake or imperfection in the
written agreement.
Expropriation Proceedings; In expropriation, the Republic’s
acquisition of the expropriated property is subject to the condition that the
Republic will return the property should the public purpose for which the
expropriation was done did not materialize.—In expropriation, the
Republic’s acquisition of the expropriated property is subject to the
condition that the Republic will return the property should the public
purpose for which the expropriation was done did not materialize. On the
other hand, a sale contract between the Republic and private persons is not
subject to this same condition unless the parties stipulate it. The respondents
in this case failed to prove that the sale was attended by a similar condition.
Hence, the parties are bound by their sale contract transferring the property
without the condition applicable in expropriation cases.
PETITION for review on certiorari of the decision and resolution of

the Court of Appeals.

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The facts are stated in the opinion of the Court.

Office of the Solicitor General for petitioners.
Agrava, Martinez & Reyes for respondents.

BRION, J.:

We resolve the petition for review on certiorari1 filed by the
Republic of the Philippines (Republic) assailing the July 4, 2012
decision2 and the September 26, 2012 resolution3 of the Court of
Appeals (CA) in C.A.-G.R. CV No. 93018. The CA affirmed the
Regional Trial Court’s (RTC) decision annulling the sale of the
respondents’ properties to the Republic, and ordering the
respondents to return the purchase price they received from the
government.

Antecedent Facts

Gonzalo Roque, Jr. (Gonzalo), Manuela Almeda-Roque, Edu-
vigis A. Paredes, Michael A. Paredes, Purification Almeda, Jose A.
Almeda, Michelle A. Almeda, Michael A. Almeda, Alberto Delura,
and Theresa Almeda (respondents), owned several parcels of land
with a total area of about 9,811 square meters,4 located in
Constitution Hills, Quezon City.5 Gonzalo represented the
respondents in the court proceedings.
In 1978, the Republic, through the Department of Public Works
and Highways (DPWH), approached the respondents and asked
them to sell a portion of the land at government-
_______________
1 Rollo, pp. 7-32.
2 Id., at pp. 38-61; penned by Court of Appeals Associate Justice Socorro B.
Inting and concurred in by Associate Justices Fernanda Lampas Peralta and Mario V.
Lopez.
3 Id., at p. 63.
4 RTC Rollo, p. 3.
5 Rollo, p. 40.

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dictated prices lower than the market value.6 The Republic was
supposed to use the land for President Marcos’ National
Government Center (NGC) Project — his plan to bring together the
various national government offices in one venue for greater
efficiency and to create additional areas for the expanding needs of
the central government and the people.7
The respondents allege that several public hearings regarding the
sale took place between the Republic and the respondents;8 and that
during these meetings, the Republic made the following
representations:
First, the Republic guaranteed that although the respondents
would get paid a price much lower than the market value of the land,
the construction of the NGC Project would eventually enhance the
value of the surrounding portions of the land that they still own.9
Second, the Republic assured the respondents that, in the remote
possibility that it abandons the project, they will have the right to
buy back the land.10
The respondents further allege that they were reluctant to sell the
land, but felt compelled to do so because martial law was in force,
and they dared not resist a project of President Marcos.11 Thus,
relying on the Republic’s representations, the respondents signed the
deeds of absolute sale.
The Register of Deeds cancelled the three certificates of title
(TCT) and issued six new titles.12 Three of these new titles were
issued in the Republic’s name: (a) TCT No. RT-115781
_______________
6 Id., at pp. 39-40.

7 RTC Rollo, p.4.
8 Rollo, p. 57.
9 Id., at p. 40.
10 Id., at p. 42.
11 Id., at p. 68.
12 Id., at pp. 61-62. The three titled issued in the Republic’s name covers the
properties sold while the remaining three titles issued in the respondents’ names
covers their remaining properties.

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(283214); (b) TCT No. RT-34249 (283216); and (c) TCT No. RT-
115907 (283212).13
The Republic did not immediately take possession of all of the
land it had bought from the respondents;14 thus, the respondents
continued to occupy portions of the sold properties.15
After several years, informal settlers began to occupy parts of the
land, and the respondents felt that the Republic was reneging on its
undertaking to develop the land into the NGC Project.16 Hence,
Gonzalo sent letters dated March 25, 1987, and September 23, 1988,
to then DPWH Secretary Vicente R. Jayme (Jayme) offering to buy
back the properties.17 Gonzalo received no response.
The respondents’ suspicion was confirmed in December 2003.
Armando A. De Castro (De Castro), then undersecretary of the
Housing and Urban Development Coordinating Council (HUDCC),
wrote a letter to the respondents, requesting them to vacate all
portions of the sold land that they were still occupying, because the
government would use the properties for socialized housing pursuant
to Republic Act (R.A.) No. 9207.18
On August 23, 2004, Gonzalo wrote another letter to then
HUDCC Secretary Michael Defensor, offering to buy back the
properties.19 He argued that the respondents have the right to
_______________
13 Id., at pp. 39-41 and 61-62.

14 Id., at pp. 41 and 70.
15 Id., at p. 70.
16 Id., at p. 41.
17 Id.
18 AN ACT DECLARING CERTAIN PORTIONS OF THE NATIONAL GOVERNMENT CENTER
SITE OPEN FOR DISPOSITION TO BONA FIDE RESIDENTS AND LOCAL GOVERNMENT OR
COMMUNITY FACILITIES, CHARITABLE, EDUCATIONAL AND RELIGIOUS INSTITUTIONS

ACTUALLY OCCUPYING THE SAME FOR SOCIOECONOMIC, CIVIC AND RELIGIOUS PURPOSES,
AMENDING FOR THIS PURPOSE PROCLAMATION NO. 1826, SERIES OF 1979 AND FOR OTHER
PURPOSES (approved on May 17, 2003).
19 Rollo, p. 71.

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repurchase the properties after the Republic abandoned the NGC

Project and diverted the use of the properties to socialized housing.20
Secretary Defensor allegedly found the respondents’ position

reasonable and requested a feedback on the possibility of a
repurchase.21 However, the secretary was transferred to another
department and was unable to further address the situation.22 Despite
persistent follow-ups, the respondents failed to receive any action
from the Republic on this matter.23
Realizing that the Republic had completely abandoned its initial
plan to use the land for the NGC Project, in 2005, the respondents
filed a complaint for the annulment of the sale of the properties on
the grounds of fraud, force, intimidation, or undue influence.24 They
also asserted their right to buy back the properties at the same price
at which they sold them since the Republic failed to develop the land
according to the original purpose for which it was
“expropriated.”25 Alternatively, they asked for the payment of
additional compensation in the amount of not less than Five Million
Pesos.26
In their answer,27 the Republic and the HUDCC (defendants)
argue that: (1) they are immune from suit as government
instrumentalities; (2) they agreed to neither the respon-
_______________
20 Id., at pp. 41-42.

21 Id., at pp. 71-72: Marginal note on Gonzalo’s letter:
“ August 23, 2004
Sonny Godonez,
This request is reasonable. Look into the possibility of a purchase. Give me a
feedback asap.
(Sgd.) Michael Defensor”
22 Id., at p. 72.
23 Id.
24 RTC Rollo, pp. 2-12.
25 Rollo, p. 42.
26 Id.

532

dents’ right to repurchase the properties in case the government

abandons the NGC Project nor a right to additional compensation in
case the respondents’ remaining properties suffer a decrease in
market value; (3) the respondents were not forced, intimidated, or
unduly influenced to sell their properties to the government; and (4)
even assuming that any vice of consent attended the sale, the
respondents’ action for the annulment of sale is barred by
prescription28 and laches.
During trial, Dante Viloria (Viloria) testified on the negotiations
that took place. Viloria was the Assistant City Assessor of Quezon
City and was part of the government’s negotiating team for the NGC
Project. He testified that: (a) the negotiated price was lower than the
base amounts in Presidential Decree No. 1517;29 (b) the government
did not file any court action to expropriate the properties; (c) it did
not take possession of the properties; and (d) it undertook to resell
the properties to the respondents at the same price if the project
would not push through.30 Gonzalo’s testimony corroborated
Viloria’s testimony.
_______________
27 Id., at pp. 77-87.

28 Id., at pp. 82-83: The defendants argued that an action for annulment of sale
must be filed within four years from the time the defect of the consent ceased. (Civil
Code of the Philippines, Art. 1391) Thus, the action prescribed on February 24, 1990
or four years from the time martial rule ceased.
Assuming that fraud attended the sale, the action for the annulment of sale on that
ground prescribes after four years from the discovery of the fraud. The defendants
argue that from 1987 to 1998, several presidential proclamations were issued
subjecting the properties to socialized housing programs. The implementation of
socialized housing on the properties since 1987 was known to the general public.
Thus, the respondents should have filed the action for annulment of sale not later than
2002.
29 Presidential Decree No. 1517, PROCLAIMING URBAN LAND REFORM IN THE
PHILIPPINES AND PROVIDING FOR THE IMPLEMENTING MACHINERY THEREOF, “URBAN LAND
REFORM ACT,” June 11, 1978.
30 Rollo, pp. 103-104.

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Several presidential proclamations were issued pertaining to the

NGC Project from 1979-1998.31 In 2003, Congress
_______________
“Q: What was the practice at that time with respect to the payment of just
compensation for land expropriation by the government, if you know?
A: We started expropriation proceedings under P.D. 1517, the declared value of the
owner and the declare (sic) value of the assessor, whichever is lower.
Q: Was that observed in the case of the expropriation of the National Government
Center?
A: It was not, sir, because the clamor there is very low not in accordance with the
price acquisition of lands.
x x x x
Q: Did you arrive at some negotiated price, purchase price for the properties?
A: Yes, Sir.
x x x x
Q: How about the issue of the possibility of abandonment of the project of the
government, was that taken up?
A: That is one that we discussed in the meeting the need of privating (sic) their
property. If the government will not push through with the project, they
can repurchase or reconvey the property.
Q: At what price?
A: The same price.”
31 Rollo, pp. 78-79. Several presidential proclamations were issued in relation to

the NGC Project, to wit:
a) In 1979, President Marcos issued Proclamation No. 1926, reserving the a
444-hectare property as a site for the NGC Project;
b) In 1987, President Aquino issued Proclamation No. 137, excluding some
portions of the NGC reservation and declared these portions open for
disposition;

534

passed RA 9207, amending the proclamations. Under Section 3 of

RA 9207, 184 hectares on the west side and 238 hectares on the east
side were excluded from the original 444-hectare NGC
reservation.32

The RTC’s Ruling

The RTC decided in the respondents’ favor. It held that: (1) the
Republic is not immune from suit; (2) the respondents’ action is not
barred by either prescription or laches; and (3) the sale should be
annulled.
First, the RTC held that the Republic is not immune from suit.
Citing Section 9, Article III of the Constitution,33 the Republic
cannot invoke government immunity since the nature of the case is
either to obtain just compensation or to retrieve the properties.
Second, the respondents’ action is not barred by either

prescription or laches.
It noted Roque’s letters to DPWH Secretary Jayme dated March
25, 1987 and September 23, 1988. In the March letter, Gonzalo
brought up the agreement he had with the Republic that he has
preemptive right to buy back his property from the government
should the project not push through. In the September letter,
Gonzalo told the DPWH Secretary that he prevented the informal
settlers from building structures within his former property and
reiterated his preemptive right to buy back the property. The RTC
took these letters as
_______________
c) In 1993, President Ramos issued Proclamation No. 248, declaring the

excluded properties reserved for the bona fide residents; and
d) In 1998, President Ramos issued Proclamation No. 1169, excluding
additional areas from the NGC site.
32 Id., at p. 79.
33 “Section 9. Private property shall not be taken for public use without just
compensation.”

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clear indications of the respondents’ vigilance in invoking their

right; thus, their action is not barred by laches.
The RTC added that the respondents found out about the
Republic’s plan to divert the use of the properties to low-cost
housing only on May 14, 2003, when RA 9207 was enacted. Thus,
the filing of the complaint in 2005 was within the four-year
prescriptive period reckoned from the enactment of RA 9207.
Third, the RTC annulled the deeds of absolute sale on the ground
of fraud. It gave credence to Viloria and Gonzalo’s testimonies about
the matters discussed during negotiations. Based on these
testimonies, the RTC emphasized that the respondents signed the
deeds of absolute sale relying on the government’s assurances that
they could retrieve the properties should the NGC Project not
materialize.
Fourth, the RTC declared that the respondents are not entitled to
damages and attorney’s fees because the Republic was not in bad
faith in resisting the complaint. The RTC added that the Republic is
not entitled to its counterclaims because RA 9207 recognizes the

validity of vested rights and precedence of proclamations.
Aggrieved, the Republic filed an appeal with the CA.

The CA’s Ruling

The CA affirmed the RTC’s decision.34 It held that: (1) the
Republic is not immune from suit; (2) the sale was conditioned upon
the materialization of the NGC Project; and (3) the respondents’
action is not barred by prescription or laches.
First, the CA ruled that the doctrine of sovereign immunity must
be read with Section 9, Article III of the Constitution, which
provides that “private property shall not be taken for public use
_______________
34 Rollo, p. 60.

536

without just compensation.” This provision imposes two

requirements: public purpose and payment of just compensation.
In the present case, the Republic “extrajudicially expropriated”
the respondents’ properties for a public purpose, i.e., the
construction of the NGC Project. However, the Republic failed to
pay just compensation to the respondents. To recall, it expropriated
the land at an amount far below the actual market value. Despite the
low price, the respondents sold their properties relying on the
Republic’s promise that they would be amply compensated by the
appreciation of their remaining properties’ values.
Not only did the NGC Project not materialize but the values of
their remaining properties depreciated due to the illegal settlers in
their vicinity. Thus, the respondents were deprived of just
compensation to which they are entitled.
Consequently, the Republic may not validly invoke the non-
suability of the State and conveniently hide under the State’s cloak
of invincibility against suit. The ends of justice would be subverted
if the court were to uphold the State’s immunity from suit in this
case.
Second, the CA held that the parties entered into a conditional
sale with a right to repurchase the properties from the Republic. The
sale was subject to these conditions: (a) the landowners may
repurchase the properties at selling price should the NGC Project not
materialize; and (b) the construction of the NGC Project will
increase the land value of the landowners’ remaining properties.
The Republic invoked the parol evidence rule in arguing that the
sale had no conditions. In response, the CA noted that the parol
evidence rule admits of exceptions, such as the failure of the written
agreement to express the parties’ true intent.35 This exception
applies in the present case.
_______________
35 RULES OF COURT, Rule 130, Sec. 9(b).

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The testimony of Viloria established that the sale contracts failed

to express the parties’ true intent and agreement. He explained that
the Republic assured the respondents that it would reconvey the
properties to them should the NGC Project not push through.
The CA added that the enactment of R.A. No. 9207 had no effect
on the respondents’ right to repurchase their land, because the law
recognizes the precedence and validity of vested rights. Given that
the Republic no longer pushed through with the NGC Project, it
should have allowed the respondents to exercise their right to buy
back the land.
Third, the CA ruled that the respondents’ action is not barred by
prescription and/or laches. As the RTC held, the respondents filed
their complaint within the prescribed period and were prompt and
vigilant in protecting their rights.
Hence, the Republic filed this petition.

The Parties’ Arguments

In its petition, the Republic argues that: (a) the lower courts erred
in annulling the sale on the ground of fraud; (b) the respondents
have no right to reacquire the properties sold to the Republic; (c) the
respondents’ action is barred by laches and/or prescription; and (d)
the State has not given its consent to be sued.
The Republic submits that the government did not use insidious
words or machinations constitutive of fraud in transacting with the
respondents. The government did not lie when it told the
respondents that it intended to establish the NGC Project in the area,
and its failure to realize the project cannot be considered a

fraudulent act.36
Furthermore, the respondents’ failure to realize their expected
gain from the “economic boom” is not a ground to an-
_______________
36 Rollo, p. 22.

538

nul the sale. They voluntarily agreed to the sale, albeit reluctantly.
They should not be allowed to obtain judicial relief just because they
believe they got the short end of the bargain. Moreover, any
deficiency in the purchase price has been more than adequately
compensated by the respondents’ uninterrupted use of a portion of
the government’s property for over thirty (30) years.37
The Republic points out that the respondents failed to present any
document to prove that there were conditions imposed on the
sale.38 Furthermore, the enactment of R.A. No. 9207 has determined
the public use of the land.39
Even assuming that vices of consent attended the sale in 1978
and persisted during the Marcos regime, the Republic argues that the
respondents should have filed the action to annul within four (4)
years from February 24, 1986.40 The respondents, however, only
filed their complaint in January 2005, or clearly beyond the
prescriptive period.
Finally, the Republic reiterates that, under the doctrine of state
immunity from suit, it cannot be sued without its consent.41
In their comment, the respondents argue that: (a) the defense of
immunity from suit is not proper in an eminent domain case; (b) the
action is not barred by prescription and/or laches; (c) the Republic
compelled them to sell their properties through extrajudicial
expropriation at a government-dictated price; and (d) the CA
correctly annulled the extrajudicial expropriation of the land and
allowed the respondents to repurchase the land given the
government’s abandonment of the NGC Project.
_______________
37 Id., at p. 23.
38 Id., at p. 24.
39 Id.
40 Id., at p. 28.
41 Id., at p. 30.

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The respondents submit that the Republic cannot hide behind the
state immunity doctrine to defeat the constitutionally guaranteed
right against the taking of private property for a purpose other than
the specified public use and only after payment of just
compensation.
The respondents argue that their action has not prescribed
because they filed the complaint within four (4) years from the
enactment of RA 9207.42 Their action is also not barred by laches
because their act of sending the letters to the DPWH shows their
vigilance in protecting their rights.43 Further, the Republic failed to
prove that the respondents had any constructive or actual knowledge
of the presidential decrees reducing or modifying the land meant for
the NGC Project.44
The respondents contend that they had no choice but to accept
the price that the government offered during the Marcos
regime.45 Even the State recognized the dark period of fear that
enveloped the country under President Marcos, as shown by the
passage of R.A. No. 10368.46 This law made it a policy to
acknowledge the State’s moral and legal obligation to recognize and
provide reparation to victims of rights violations committed at the
time.47
Finally, the respondents note that the Republic did not dispute
Viloria’s testimony that during the negotiations for the expropriation
of the land, the government undertook to resell the land to its former
owners should the government abandon the NGC Project.48
_______________
42 Id., at p. 133.
43 Id.
44 Id., at p. 134.
45 Id., at p. 135.
46 HUMAN RIGHTS VICTIMS REPARATION AND RECOGNITION ACT, July 23, 2012.
47 Rollo, p. 137.
48 Id., at p. 139.

540

The Republic reiterates its arguments in the reply. It stresses that

the RTC annulled the sale on the ground of fraud despite the absence
of deceit or use of insidious words or machinations to induce the
respondents to enter into the sale contracts. It also insists that the
properties will still be devoted to public use, which is socialized
housing. It stresses that the respondents failed to present evidence
that P60.00 per square meter in 1987 did not constitute just
compensation. Moreover, the respondents used the properties
without paying rent.

Our Ruling

We grant the Republic’s petition.
The issues for the Court’s resolution are: (a) whether the
Republic is immune from suit; (b) whether the action is barred by
prescription or laches; and (c) whether an exception to the parol
evidence rule applies.

A. Immunity from Suit

We rule that the Republic is not immune from suit in the present
case.
The Constitution provides that “the State may not be sued
without its consent.”49 One instance when a suit is against the State
is when the Republic is sued by name,50 as in this case.
A suit against the State is allowed when the State gives its
consent, either expressly or impliedly. Express consent is given
through a statute51 while implied consent is given when
_______________
49 1987 CONSTITUTION, Art. XVI, Sec. 6.

50 Republic v. Sandoval, G.R. No. 84607, March 19, 1993, 220 SCRA 124, 139.
51 United States of America v. Guinto, G.R. No. 76607, February 26, 1990, 182
SCRA 644, 654.

541
VOL. 805, OCTOBER 10, 2016 541

the State enters into a contract or commences litigation.52 Although

not all contracts entered into by the government operates as a waiver
of its non-suability, the Court held in the two cases below that the
State effectively gave its consent when it entered into contracts and
committed breach.
In Santiago v. The Government of the Republic of the
Philippines,53 Ildefonso Santiago and his wife donated a parcel of
land to the Republic on the alleged condition that the latter would
install lighting facilities and a water system and would build an
office building and parking lot on the property on or before
December 7, 1974. Santiago filed a complaint for the revocation of
the donation due to the government’s breach of the condition. The
trial court dismissed the case based on the State’s non-suability. The
Court set aside the dismissal on certiorari, reasoning that the State’s
consent to be sued is presumed when the State fails to comply with
the alleged terms of a deed of donation. It essentially held that the
Republic impliedly waived its immunity.
In Republic v. Sandiganbayan (Second Division),54 the Court
ruled that when the Republic entered into a compromise agreement
with a private person, it stripped itself of its immunity from suit and
placed itself on the same level as its adversary. When the State
enters into a contract which creates mutual or reciprocal rights and
obligations, the State may be sued even without express
consent.55 Its consent to be sued is implied from its entry into the
contract and the Republic’s breach grants the other party the right to
enforce or repudiate the contract.
In the present case, the Republic entered into deeds of sale with
the respondents to construct the NGC Project on the lots sold. To
facilitate the sale, the Republic created a negotiating
_______________
52 Id.
53 No. L-48214, December 19, 1978, 87 SCRA 294.
54 G.R. No. 129406, March 6, 2006, 484 SCRA 119, 129.
55 Id.

542

team to discuss the terms of the sale with the respondents. The latter
agreed to the negotiated sale on these alleged conditions: (a) that
they will have the right to repurchase the properties if the NGC
Project does not push through; and (b) that the NGC Project will
increase the market value of their remaining properties.
Following Santiago and Republic, the State’s failure to abide by
these conditions constitutes the State’s implied waiver of its
immunity. We reiterate that the doctrine of state immunity from suit
cannot serve to perpetrate an injustice on a citizen.56 If we rule
otherwise, we will be tolerating unfair dealing in contract
negotiation.

B. Prescription and Laches

We turn to the issue of whether the respondents’ action for
annulment of sale is barred by prescription and/or laches.
Prescription can either be a question of law or fact.57 It is
question of fact where there is a need to determine the veracity of
factual matters.58 Laches is also evidentiary in nature.59
This Court is not a trier of facts. It is not our function to review,
examine, and evaluate the probative value of the evidence presented.
We give great weight to the RTC’s conclusion and findings; we are
even bound by the RTC’s findings when the CA adopts them.60
_______________
56 Amigable v. Cuenca, No. L-26400, February 29, 1972, 43 SCRA 360;

Ministerio v. Court of First Instance of Cebu, No. L-31635, August 31, 1971, 40
SCRA 464.
57 Macababbad, Jr. v. Masirag, G.R. No. 161237, January 14, 2009, 576 SCRA
70, 82, citing Crisostomo v. Garcia, Jr., G.R. No. 164787, January 31, 2006, 481
SCRA 402, 409.
58 Id.
59 Id.
60 See W-Red Construction and Development Corporation v. Court of Appeals,
392 Phil. 888, 894; 338 SCRA 341, 345 (2000).

543
VOL. 805, OCTOBER 10, 2016 543

Resolving the issues of prescription and laches in the present case

requires a factual review, specifically whether the presidential
proclamations that reduced the land allotted for the NGC Project
covered the subject properties and when the prescription period

should start to run under the circumstances. These are questions of
fact that this Court need not delve into.
Nevertheless, the RTC found and concluded, with the CA
affirming, that the respondents’ action to annul the sale is not barred
either by prescription or laches. Both court ruled that the enactment
of RA 9207 was the earliest time that the respondents could have
known about the government’s plans to officially use the land for
socialized housing. Thus, the respondents were not barred by
prescription when they filed their complaint in 2005, within four (4)
years from the enactment of RA 9207.
As to laches, both the RTC and the CA found that the
respondents’ letters to the DPWH showed that they were vigilant in
asserting their alleged right to repurchase the properties from the
Republic. This vigilance negates the Republic’s claim of laches.
We are bound and accordingly adopt these findings and
conclusions by the lower courts.

C. Parol Evidence

The core issue in this case is whether an exception to the parol
evidence rule applies. In resolving this issue, we examine whether
the parol evidence presented, particularly Gonzalo and Viloria’s
testimonies, are admissible to establish the alleged oral conditions in
the sale contract.
We rule in the negative.
Section 9, Rule 130 of the Rules of Court provides that a written
contract is deemed to contain all the terms agreed upon by the
parties and no evidence of these terms is admis-

544

sible other than the contents of the contract. The parol evidence rule
forbids any addition to the terms of a written agreement by
testimony showing that the parties orally agreed on other terms
before the signing of the document.61 However, a party may present
evidence to modify, explain, or add to the terms of a written
agreement if he puts in issue in his pleadings either: (a) an intrinsic
ambiguity, mistake, or imperfection in the written agreement; (b)
the failure of the written agreement to express the parties’ true
intent and agreement; (c) the validity of the written agreement; or
(d) the existence of other terms agreed to by the parties or their
successors in interest after the execution of the written agreement.

The issue must be squarely presented.62
We note the basic rule that he who alleges must prove his case. In
this case, the respondents have the burden to prove that the sale was
subject to two conditions: (a) their remaining properties will benefit
from the increase in land value after the construction of the NGC
Project and (b) the government will return the sold properties to
them should the NGC Project not materialize. However, they failed
to discharge this burden.
Notably, they failed to present copies of the deeds of sale to show
that the sale was attended by the alleged conditions. Pursuant to the
parol evidence rule, no evidence of contractual terms is admissible
other than the contract itself. On this level alone, the respondents
failed to discharge their burden.
Furthermore, the respondents failed to put in issue in their
pleadings the sale contract’s failure to express the parties’
agreement. In Ortañez v. Court of Appeals,63 the respondents alleged
the existence of oral conditions which were not re-
_______________
61 Ortañez v. Court of Appeals, G.R. No. 107372, January 23, 1997, 266 SCRA
561, 566.
62 Id.
63 Id.

545
VOL. 805, OCTOBER 10, 2016 545

flected in the deeds of sale. A witness testified in court that the sale
was subject to the oral conditions. The Court held that the parol
evidence was inadmissible because, among others, the respondents
failed to expressly plead that the deeds of sale did not reflect the
parties’ intentions. Instead, they merely alleged that the sale was
subject to four conditions which they tried to prove during trial. The
Court emphasized that this cannot be done because they failed to put
in issue in their pleadings any exception to the parol evidence rule.
Similar to Ortañez, a review of the complaint reveals that the
respondents failed to put in issue in their complaint that the deeds of
sale do not express the parties’ true intent. Hence, the failure of the
deeds of sale to reflect the parties’ agreement was not squarely
presented as an issue for the court to hear evidence on it. Therefore,
the exceptions to the parol evidence rule cannot apply.
Even assuming that the respondents put in issue in the complaint

the deed of sales’ failure to express the parties’ true agreement, the
parol evidence will still not apply because they failed to justify the
applicability of the second exception to the parol evidence in this
case.
The second exception to the parol evidence rule applies only
when the written contract is so ambiguous or obscure in terms
that the parties’ contractual intention cannot be understood
from a mere reading of the agreement.64 Hence, the court may
receive extrinsic evidence to enable the court to address the
ambiguity.65
Although parol evidence is admissible to explain the contract’s
meaning, it cannot serve to incorporate into the contract additional
conditions which are not mentioned at all in
_______________
64 Seaoil Petroleum Corporation v. Autocorp Group, G.R. No. 164326, October

17, 2008, 569 SCRA 387.
65 Id.

546

the contract unless there is fraud or mistake.66 Evidence of a prior or

contemporaneous verbal agreement is generally not admissible to
vary, contradict, or defeat the operation of a valid contract.67 Hence,
parol evidence is inadmissible to modify the terms of the agreement
if the complaint fails to allege any mistake or imperfection in the
written agreement.
In the present case, the respondents failed to allege that the terms
of the deeds of sale are ambiguous or obscure to require the
presentation of parol evidence to ascertain the parties’ intent. Both
parties agree that the transaction was clearly a sale to transfer
ownership over the properties to the Republic. Absent any allegation
that the contractual terms are ambiguous, the testimonies of Gonzalo
and Viloria are unnecessary to establish the two alleged oral
conditions.
To reiterate, the respondents failed to comply with the parol
evidence rule because: first, they failed to produce copies of the
deeds of sale; second, they failed to prove that the second exception
to the parol evidence rule applies. Hence, the testimonies of Gonzalo
and Viloria are inadmissible under the parol evidence rule.

Conclusion

In sum, We rule that (a) the State is not immune from suit; (b) the
respondents’ action is not barred by either prescription or laches;
and (c) the second exception to the parol evidence rule does not
apply. Consequently, we grant the Republic’s petition and reverse
the CA’s ruling annulling the sale contract between the parties.
On a final note, we point out that the parties entered into a
negotiated sale transaction; thus, the Republic did not acquire the
property through expropriation.
_______________
66 Id.
67 Id.

547
VOL. 805, OCTOBER 10, 2016 547

In expropriation, the Republic’s acquisition of the expropriated

property is subject to the condition that the Republic will return the
property should the public purpose for which the expropriation was
done did not materialize.68 On the other hand, a sale contract
between the Republic and private persons is not subject to this same
condition unless the parties stipulate it.
The respondents in this case failed to prove that the sale was
attended by a similar condition. Hence, the parties are bound by
their sale contract transferring the property without the condition
applicable in expropriation cases.
WHEREFORE, we GRANT the Republic’s petition and
accordingly REVERSE and SET ASIDE the Court of Appeal’s
July 4, 2012 decision and September 26, 2012 resolution in C.A.-
G.R. CV No. 93018.
SO ORDERED.
Carpio** (Acting CJ., Chairperson), Del Castillo, Mendoza and

Leonen, JJ., concur.
Petition granted, judgment and resolution reversed and set aside.
Notes.—The immunity of the state from suit, known also as the

doctrine of sovereign immunity or non-suability of the State, is
expressly provided in Article XVI of the 1987 Constitution; The
immunity from suit is based on the political truism that the State, as
a sovereign, can do no wrong. (Air Transportation Office vs. Ramos,
644 SCRA 36 [2011])
_______________
68 Vda. de Ouano v. Republic, G.R. Nos. 168770 and 168812, February 9, 2011,

642 SCRA 384.
** Per Special Order No. 2386 dated September 29, 2016.

548

An unincorporated government agency without any separate

juridical personality of its own enjoys immunity from suit because it
is invested with an inherent power of sovereignty. (Id.)

——o0o——

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7/31/2020 SUPREME COURT REPORTS ANNOTATED VOLUME 805

G.R. No. 203610. October 10, 2016.*

VOL. 805, OCTOBER 10, 2016 525

526 SUPREME COURT REPORTS ANNOTATED

prescription and laches in the present case requires a factual review,

VOL. 805, OCTOBER 10, 2016 527

not materialize. However, they failed to discharge this burden. Notably,

PETITION for review on certiorari of the decision and resolution of

VOL. 805, OCTOBER 10, 2016 529

The facts are stated in the opinion of the Court.

VOL. 805, OCTOBER 10, 2016 529

Republic vs. Roque, Jr.

6 Id., at pp. 39-40.

530 SUPREME COURT REPORTS ANNOTATED

13 Id., at pp. 39-41 and 61-62.

COMMUNITY FACILITIES, CHARITABLE, EDUCATIONAL AND RELIGIOUS INSTITUTIONS

VOL. 805, OCTOBER 10, 2016 531

repurchase the properties after the Republic abandoned the NGC

Secretary Defensor allegedly found the respondents’ position

20 Id., at pp. 41-42.

532 SUPREME COURT REPORTS ANNOTATED

dents’ right to repurchase the properties in case the government

27 Id., at pp. 77-87.

VOL. 805, OCTOBER 10, 2016 533

Several presidential proclamations were issued pertaining to the

31 Rollo, pp. 78-79. Several presidential proclamations were issued in relation to

534 SUPREME COURT REPORTS ANNOTATED

passed RA 9207, amending the proclamations. Under Section 3 of

Second, the respondents’ action is not barred by either

c) In 1993, President Ramos issued Proclamation No. 248, declaring the

VOL. 805, OCTOBER 10, 2016 535

clear indications of the respondents’ vigilance in invoking their

not entitled to its counterclaims because RA 9207 recognizes the

536 SUPREME COURT REPORTS ANNOTATED

without just compensation.” This provision imposes two

35 RULES OF COURT, Rule 130, Sec. 9(b).

VOL. 805, OCTOBER 10, 2016 537

The testimony of Viloria established that the sale contracts failed

and its failure to realize the project cannot be considered a

538 SUPREME COURT REPORTS ANNOTATED

VOL. 805, OCTOBER 10, 2016 539

540 SUPREME COURT REPORTS ANNOTATED

The Republic reiterates its arguments in the reply. It stresses that

49 1987 CONSTITUTION, Art. XVI, Sec. 6.

VOL. 805, OCTOBER 10, 2016 541

the State enters into a contract or commences litigation.52 Although

542 SUPREME COURT REPORTS ANNOTATED

56 Amigable v. Cuenca, No. L-26400, February 29, 1972, 43 SCRA 360;

VOL. 805, OCTOBER 10, 2016 543

Resolving the issues of prescription and laches in the present case

covered the subject properties and when the prescription period

544 SUPREME COURT REPORTS ANNOTATED

successors in interest after the execution of the written agreement.

VOL. 805, OCTOBER 10, 2016 545

Even assuming that the respondents put in issue in the complaint

64 Seaoil Petroleum Corporation v. Autocorp Group, G.R. No. 164326, October

546 SUPREME COURT REPORTS ANNOTATED

the contract unless there is fraud or mistake.66 Evidence of a prior or

VOL. 805, OCTOBER 10, 2016 547

In expropriation, the Republic’s acquisition of the expropriated

Carpio** (Acting CJ., Chairperson), Del Castillo, Mendoza and

Petition granted, judgment and resolution reversed and set aside.

Notes.—The immunity of the state from suit, known also as the