The antecedents are as follows:

Anacleto Nieto was the registered owner of a parcel of land, consisting of 3,882 square meters, situated at Poblacion, Meycauayan, Bulacan and covered by TCT No. T-24.055 (M). The property is being used by respondent, Municipality of Meycauayan, Bulacan, which constructed an extension of the public market therein.

Upon Anacleto's death on July 26, 1993, his wife, Sixta P. Nieto, and their three children, namely, Eulalio P. Nieto, Gaudencio Nieto and Corazon Nieto-Ignacio, herein petitioners, collated all the documents pertaining to his estate. When petitioners failed to locate the owner's duplicate copy of TCT No. T-24.055 (M), they filed a petition for the issuance of a second owner's copy with the RTC, Malolos, Bulacan. In that case, petitioners discovered that the missing copy of the title was in the possession of the respondent. Consequently, petitioners withdrew the petition and demanded from respondent the return of property and the certificate of title.

On February 23, 1994, petitioners formally demanded from respondent the return of the possession and full control of the property, and payment of a monthly rent with interest from January 1964. Respondent did not comply with petitioners' demand.^[2]

On December 28, 1994, petitioners filed a complaint^[3] for recovery of possession and damages against respondent alleging that the latter was in possession of the owner's copy of TCT No. T-24.055 (M). They averred that, in 1966, respondent occupied the subject property by making it appear that it would expropriate the same. Respondent then used the land as a public market site and leased the stalls therein to several persons without paying Anacleto Nieto the value of the land or rent therefor. Petitioners prayed that respondent be ordered to surrender to them the owner's copy of TCT No. T-24.055 (M), vacate the property, and pay them the rents thereon from 1966 until the date of the filing of the complaint for the total of P1,716,000.00, and P10,000.00 a month thereafter, as well as P300,000.00 as moral damages, and P100,000.00 as attorney's fees.

In its Answer,^[4] respondent alleged that the property was donated to it and that the action was already time-barred because 32 years had elapsed since it possessed the property.

Respondent and counsel failed to appear during the scheduled pre-trial conference.^[5] Upon petitioners' motion, respondent was declared as in default and petitioners were allowed to present evidence ex parte. Respondent filed a motion for reconsideration which the RTC granted. Respondent was then allowed to cross-examine petitioners' lone witness and present its own evidence. However, despite notice, respondent failed again to appear during the scheduled hearing. Hence, the RTC considered respondent to have waived its right to cross-examine petitioners' witness and present its own evidence. The case was then submitted for decision.

On August 1, 1995, the RTC rendered a Decision dismissing the complaint as well as respondent's counterclaims for damages. For lack of proof, the RTC disregarded respondent's claim that Anacleto Nieto donated the property to it in light of the fact that the title remained in the name of Anacleto. Nonetheless, the RTC did not rule in favor of petitioners because of its finding that the case was already barred by prescription. It held that the imprescriptibility of actions to recover land covered by the Torrens System could only be invoked by the registered owner, Anacleto Nieto, and that the action was also barred by laches.

Petitioners appealed the case to the Court of Appeals (CA). On October 30, 2001, the CA rendered a Decision dismissing the case for lack of jurisdiction. According to the CA, the petition involved a pure question of law; hence, petitioners should have filed a petition directly with this Court.^[6]

Accordingly, petitioners elevated the case to this Court through a petition for review on certiorari, raising the following issues:

1. Are lands covered by the Torrens System subject to prescription?
   
   
2. May the defense of [l]aches be invoked in this specific case?
   
   
3. May the defense of imprescriptibility only be invoked by the registered owner to the exclusion of his legitimate heirs?^[7]

The petition is meritorious.

Respondent argues that the action of petitioner to recover possession of the property is already barred by prescription.

We do not agree.

An action to recover possession of a registered land never prescribes in view of the provision of Section 44 of Act No. 496 to the effect that no title to registered land in derogation of that of a registered owner shall be acquired by prescription or adverse possession.^[8] It follows that an action by the registered owner to recover a real property registered under the Torrens System does not prescribe.

Despite knowledge of this avowed doctrine, the trial court ruled that petitioners' cause of action had already prescribed on the ground that the imprescriptibility to recover lands registered under the Torrens System can only be invoked by the person under whose name the land is registered.

Again, we do not agree. It is well settled that the rule on imprescriptibility of registered lands not only applies to the registered owner but extends to the heirs of the registered owner as well.^[9] Recently in Mateo v. Diaz,^[10] the Court held that prescription is unavailing not only against the registered owner, but also against his hereditary successors because the latter step into the shoes of the decedent by operation of law and are the continuation of the personality of their predecessor-in-interest. Hence, petitioners, as heirs of Anacleto Nieto, the registered owner, cannot be barred by prescription from claiming the property.

Aside from finding that petitioners' cause of action was barred by prescription, the trial court reinforced its dismissal of the case by holding that the action was likewise barred by laches.

Laches has been defined as 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 negligence or omission to assert a right within a reasonable time, warranting the presumption that the party entitled to assert his right has either abandoned or declined to assert it.^[11]

In a number of cases, the Court has held that an action to recover registered land covered by the Torrens System may not be barred by laches.^[12] Laches cannot be set up to resist the enforcement of an imprescriptible legal right.^[13] Laches, which is a principle based on equity, may not prevail against a specific provision of law, because equity, which has been defined as "justice outside legality," is applied in the absence of and not against statutory law or rules of procedure.^[14]

In recent cases, ^[15] however, the Court held that while it is true that a Torrens title is indefeasible and imprescriptible, the registered landowner may lose his right to recover possession of his registered property by reason of laches.

Yet, even if we apply the doctrine of laches to registered lands, it would still not bar petitioners' claim. It should be stressed that laches is not concerned only with the mere lapse of time.^[16] The following elements must be present in order to constitute laches:

                                       

(1)	conduct on the part of the defendant, or of one under whom he claims, giving rise to the situation of which complaint is made for which the complaint seeks a remedy;
(2)	delay in asserting the complainant's rights, the complainant having had knowledge or notice, of the defendant's conduct and having been afforded an opportunity to institute a suit;
(3)	lack of knowledge or notice on the part of the defendant that the complainant would assert the right on which he bases his suit; and
(4)	injury or prejudice to the defendant in the event relief is accorded to the complainant, or the suit is not held to be barred.[17]

We note that the certificate of title in the name of Anacleto Nieto was found in respondent's possession but there was no evidence that ownership of the property was transferred to the municipality either through a donation or by expropriation, or that any compensation was paid by respondent for the use of the property. Anacleto allegedly surrendered the certificate of title to respondent upon the belief that the property would be expropriated. Absent any showing that this certificate of title was fraudulently obtained by respondent, it can be presumed that Anacleto voluntarily delivered the same to respondent. Anacleto's delivery of the certificate of title to respondent could, therefore, be taken to mean acquiescence to respondent's plan to expropriate the property, or a tacit consent to the use of the property pending its expropriation.

This Court has consistently held 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.^[18] The status of the possessor is analogous to that of a lessee or tenant whose term of lease has expired but whose occupancy continues by tolerance of the owner. In such case, the unlawful deprivation or withholding of possession is to be counted from the date of the demand to vacate.^[19] Upon the refusal to vacate the property, the owner's cause of action accrues.

In this case, the first element of laches occurred the moment respondent refused to vacate the property, upon petitioners demand, on February 23, 1994. The filing of the complaint on December 28, 1994, after the lapse of a period of only ten months, cannot be considered as unreasonable delay amounting to laches.

Moreover, case law teaches that if the claimant's possession of the land is merely tolerated by its lawful owner, the latter's right to recover possession is never barred by laches. Even if it be supposed that petitioners were aware of respondent's occupation of the property, and regardless of the length of that possession, the lawful owners have a right to demand the return of their property at any time as long as the possession was unauthorized or merely tolerated, if at all.^[20]

Furthermore, the doctrine of laches cannot be invoked to defeat justice or to perpetrate fraud and injustice. It is the better rule that courts, under the principle of equity, will not be guided or bound strictly by the statute of limitations or the doctrine of laches when by doing so, manifest wrong or injustice would result.^[21]

Finally, we find that the rentals being prayed for by petitioners are reasonable considering the size and location of the subject property. Accordingly, the award of rentals is warranted.

WHEREFORE, premises considered, the petition is GRANTED. The Decision of the Regional Trial Court of Malolos, Bulacan, dated August 1, 1995, is REVERSED and SET ASIDE. Respondent is ORDERED (a) to vacate and surrender peaceful possession of the property to petitioners, or pay the reasonable value of the property; (b) to pay P1,716,000.00 as reasonable compensation for the use of the property from 1966 until the filing of the complaint and P10,000.00 monthly rental thereafter until it vacates the property, with 12% interest from the filing of the complaint until fully paid; and (c) to return to petitioners the duplicate copy of TCT No. T-24.055 (M).

SO ORDERED.

Ynares-Santiago, (Chairperson), Austria-Martinez, Chico-Nazario, and Reyes, JJ., concur.

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^[1] Penned by Associate Justice Marina L. Buzon, with Associate Justices Buenaventura J. Guerrero and Alicia L. Santos, concurring; rollo, pp. 30-39.

^[2] Records, pp. 70-71.

^[3] Id. at 1-4.

^[4] Records, pp. 32-33.

^[5] Rollo, p. 24.

^[6] Id. at 37-38.

^[7] Id. at 11.

^[8] Mateo v. Diaz, 424 Phil. 772, 781 (2002).

^[9] Mateo v. Diaz, supra, at 782; Bailon-Casilao v. Court of Appeals, No. L-78178, April 15, 1988, 160 SCRA 738, 747.

^[10] Supra.

^[11] Isabela Colleges, Inc. v. Heirs of Nieves Tolentino-Rivera, 397 Phil. 955, 969 (2000).

^[12] Mateo v. Diaz, supra note 8, at 781; Quevada v. Glorioso, 356 Phil. 105, 119 (1998); Dablo v. Court of Appeals, G.R. No. 93365, September 21, 1993, 226 SCRA 618, 628; Bishop v. Court of Appeals, G.R. No. 86787, May 8, 1992, 208 SCRA 636, 641; Jimenez v. Fernandez, G.R. No. 46364, April 6, 1990, 184 SCRA 190, 198; Umbay v. Alecha, 220 Phil. 103, 106 (1985); J.M. Tuason & Co., Inc. v. Macalindong, No. L-15398, December 29, 1962, 6 SCRA 938.

^[13] Heirs of Romana Ingjug-Tiro v. Casals, 415 Phil. 665, 674 (2001).

^[14] Mateo v. Diaz, supra note 8, at 781.

^[15] De Vera-Cruz v. Miguel, G.R. No. 144103, August 31, 2005, 468 SCRA 506, 518; Heirs of Juan and Ines Panganiban v. Dayrit, G.R. No. 151235, July 28, 2005, 464 SCRA 370, 379-380; Vda. de Cabrera v. Court of Appeals, 335 Phil. 19, 34 (1997).

^[16] Pineda v. Heirs of Eliseo Guevara, G.R. No. 143188, February 14, 2007, 515 SCRA 627, 635

^[17] Heirs of Juan and Ines Panganiban v. Dayrit, supra note 15, at 382.

^[18] Macasaet v. Macasaet, G.R. Nos. 154391-92, September 30, 2004, 439 SCRA 625, 635.

^[19] Arcal v. Court of Appeals, 348 Phil. 813, 825 (1998).

^[20] Feliciano v. Zaldivar, G.R. No. 162593, September 26, 2006, 503 SCRA 182, 201.

^[21] Heirs of Dumaliang v. Serban, G.R. No. 155133, February 21, 2007, 516 SCRA 343, 356.