DEVELOPMENT BANK OF THE PHILIPPINES, petitioner,

vs.
ROMEO TESTON, represented by his Attorney-in- Fact, CONRADO O. COLLARINA, respondent.
Facts
Romeo Teston (respondent) By a Deed of Conditional Sale dated June 15, 1987, he purchased two (2)
parcels of land situated in Mandaon, Masbate, on installment basis from petitioner, Development Bank of
the Philippines (DBP). Respondent defaulted in the payment of his amortizations which had amounted
to P3,727,435.57 as of September 1990. The DBP thus rescinded their contract by letter dated
September 24, 1990 addressed to respondent. It turned out that on December 1, 1988, respondent had
voluntarily offered the two parcels of land for inclusion in the Comprehensive Agrarian Reform Program
(CARP).
On September 18, 1995, respondent filed before the Department of Agrarian Reform Adjudication
Board (DARAB) Regional Office in Legazpi City a Petition against DBP and the Land Bank of the
Philippines (Land Bank), alleging that under Republic Act No. 6657, his obligation to DBP was assumed
by the government through the Land Bank after the two parcels of land became covered by the CARP,
and that the operation of said law extinguished DBP's right to rescind the sale. DBP alleged that, among
other things, since respondent had not acquired title to the two parcels of land, he had no right to
voluntarily offer them to the CARP.
By Order of March 30, 1998, the DARAB Regional Adjudicator dismissed respondent's petition in
view that the Petitioner has never been the owner of the land, hence could not have validly offered the
property under the [Voluntary Offer to Sell] scheme. As against Land Bank, petitioner has no right of
action whatsoever, as there is nothing Land Bank could act on to favor their petition.
On appeal, the DARAB affirmed the Regional Adjudicator's decision, it states: Thus, petitioner-appellant
has lost whatever right he may have over the property pursuant to the contract. It is clear on the records
that the Deed of Conditional Sale dated July 15, 1987 was rescinded on September 24, 1990 or long
before the property was turned over to the DAR on November 29, 1990. Evidently, petitioner-appellant
had long lost his interest over the property in question when the same was turned over to the national
government. Hence, petitioner-appellant could not have validly offered the property under the Voluntary
Offer to Sell (VOS) scheme.
Respondent assailed the DARAB decision via Petition for Review before the Court of Appeals. By
Decision of January 11, 2006, the appellate court modified the trial court's decision by ordering DBP to
return to respondent "the P1,000,000 which [respondent] paid as downpayment," following the law on
rescission.
Under Article 1385 of the Civil Code, "rescission creates the obligation to return the things which
were the object of the contract, together with their fruits, and the price with its interests x x x."
Hence, equity demands that the amount paid by the petitioner be returned to him.
The assailed Decision dated February 23, 2004 is MODIFIED. With DBP's rescission of the contract it
executed with petitioner, DBP is consequently directed to return petitioner the P1,000,000.00 which the
latter paid as down payment for the intended purchase of the subject parcels of land, plus 12% annual
interest thereon. The decision stands in all other respects.
By a Partial Motion for Reconsideration, DBP questioned the order to return the P1,000,000 which
respondent had allegedly given as down payment. Respondent, upon the other hand, filed a "Motion to
Fix Date When [theP1,000,000 Would] Earn Interest."

The Court of Appeals denied DBP's Motion for Partial Reconsideration. It granted respondent's motion
and accordingly held that interest on the P1,000,000 would accrue upon the finality of the judgment until
full payment.
ISSUE:
Whether or not the decision of the CA constitutes constitutional violation
HELD:
Due process considerations justify this requirement. It is improper to enter an order which exceeds the
scope of relief sought by the pleadings, absent notice which affords the opposing party an opportunity to
be heard with respect to the proposed relief. The fundamental purpose of the requirement that allegations
of a complaint must provide the measure of recovery is to prevent surprise to the defendant.
Respondent invokes this Court's pronouncement in Heirs of Ramon Durano, Sr. v. Uy that "[t]he Court of
Appeals is imbued with sufficient discretion to review matters, not otherwise assigned as errors on
appeal, if it finds that their consideration is necessary in arriving at a complete and just resolution of the
case." He argues that the return of "the P1,000,000 downpayment" is a necessary consequence of the
rescission of the sale.
That rescission of a sale creates the obligation to return the things which were the object of the contract,
together with their fruits, and the price with its interests is undisputed. However, to require DBP to return
the allegedP1,000,000 without first giving it an opportunity to present evidence would violate the
Constitutional provision that "[n]o person shall be deprived of life, liberty, or property without due process
of law x x x." The essence of due process is to be found in the reasonable opportunity to be heard and
submit any evidence one may have in support of one's defense.