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223334, June 07, 2017 ]

810 Phil. 978

THIRD DIVISION
[ G.R. No. 223334, June 07, 2017 ]
DANILO BARTOLATA, REPRESENTED BY HIS ATTORNEY-IN-FACT
REBECCA R. PILOT AND/OR DIONISIO P. PILOT, PETITIONER, VS.
REPUBLIC OF THE PHILIPPINES, DEPARTMENT OF PUBLIC
WORKS AND HIGHWAYS, DEPARTMENT OF TRANSPORTATION
AND COMMUNICATIONS, AND TOLL REGULATORY BOARD,
RESPONDENTS.
DECISION

VELASCO JR., J.:

Nature of the Case

Before the Court is a Petition for Review on Certiorari assailing the Decision[1] and Resolution
of the Court of Appeals (CA) in CA-G.R. CV No. 100523, dated July 10, 2015 and March 7,
2016, respectively. The challenged rulings denied petitioner's claim for just compensation on
the ground that the portion of his property that was used by the government was subject to an
easement of right of way. Additionally, the CA ordered petitioner to return any payment made to
him by the government in relation to the enforcement of the easement.

The Facts of the Case

Petitioner Danilo Bartolata acquired ownership over a 400 square meter parcel of land identified
as Lot 5, Blk. 1, Phase 1, AFP Officer's Village, Taguig, Metro Manila by virtue of an Order of
Award from the Bureau of Lands dated December 14, 1987.[2] It appears from the Order of
Award that petitioner was the sole bidder for the property during a public auction conducted on
August 14, 1987,[3] with the offer of P15 per square meter or P6,000 total for the 400 square
meter lot.[4]

Sometime in 1997, respondents acquired 223 square meters of petitioner's property for the
development of the Metro Manila Skyway Project. The parties agreed that in exchange for the
acquisition, petitioner would be paid just compensation for the appraised value of the property,
fixed at P55,000 per square meter or an aggregate of P12,265,000 for the entire affected area by
the Municipal Appraisal Committee of Taguig, Metro Manila.[5] Subsequently, on August 14,
1997, respondents appropriated P1,480,000 in favor of petitioner as partial payment.

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Since the date of initial payment, petitioner had, on numerous occasions, demanded from
respondents the balance of Php10,785,000.00, but the latter refused to settle their outstanding
obligation. This prompted petitioner to file, on September 20, 2006, a Complaint[6] for a sum of
money with the Regional Trial Court (RTC), Branch 166 in Pasig City, docketed as Civil Case
No. 70969.[7]

In their Supplemental Answer, dated July 9, 2009, respondents raised that the Order of Award
from the Bureau of Lands granting title to petitioner over the subject property contained the
following encumbrance:

This award shall further be subject to the provisions of the Public Land Law
(Commonwealth Act No. 141, as amended), and particularly the following
conditions:

xxxx

2. The land shall be subject to the easement and servitudes provided for in
Section 109-114 of Commonwealth Act No. 141, as amended.[8](emphasis added)

Respondents then argued that pursuant to Section 112 of Commonwealth Act No. 141 (CA
141),[9] the government is entitled to an easement of right of way not exceeding 60 meters in
width, without need of payment for just compensation, save for the value of improvements
existing. The pertinent provision reads:

SECTION 112. Said land shall further be subject to a right-of-way not

exceeding sixty (60) meters in width for public highways, railroads, irrigation
ditches, aqueducts, telegraph and telephone lines and similar works as the
Government or any public or quasi-public service or enterprise, including mining or
forest concessionaires, may reasonably require for carrying on their business, with
damages for the improvements only. (emphasis added)

Under the above-cited provision, any payment for the government's use of the easement, unless
made to compensate the landowner for the value of the improvements affected, is unwarranted.
Consequently, respondents prayed, by way of counterclaim, that the P1,480,000 partial payment
made to petitioner for the acquisition of the latter's property, which was well within the 60-
meter threshold width, be returned to the government.

In rebuttal, petitioner contended that Presidential Decree No. 2004 (PD 2004),[10] which
amended Republic Act No. 730 (RA 730),[11] allegedly removed the statutory lien attached to
the subject property. Sec. 2 of RA 730, as amended, now reads:

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SEC. 2. Lands acquired under the provisions of this Act shall not be subject to any
restrictions against encumbrance or alienation before and after the issuance of the
patents thereon.

Respondents, however, countered that petitioner could not have benefited from PD 2004 since
the removal of restrictions and encumbrances contained in PD 2004 only applies to public land
sold by the government for residential purposes without public auction, whereas petitioner was
awarded the subject property through a public auction sale.

Ruling of the RTC

On November 28, 2012, the RTC promulgated its Decision in Civil Case No. 70969 disposing
the case in the following wise:

WHEREFORE, premises considered, judgment is hereby rendered dismissing

plaintiffs complaint for lack of merit and insufficiency of evidence.

Defendant's counterclaims are likewise denied and dismissed for insufficiency of

evidence.

No pronouncement as to costs.

SO ORDERED.[12]

Giving credence to respondents' postulation, the RTC ruled that PD 2004 could not have
removed the encumbrances attached to petitioner's property since the law does not cover public
lands sold through auction. The RTC, therefore, ruled that the government is entitled to a 60-
meter width right of way on the property, for which it is not entitled to pay just compensation
under Sec. 112 of CA 141.[13]

Nevertheless, the RTC found no reason to grant respondents' counterclaim. In ruling that
petitioner is not under obligation to return the initial payment made, the RTC considered the fact
that respondents effectively entered into a contract of sale with petitioner for the acquisition of
the piece of land to be used for the Metro Manila Skyway Project, which contract of sale was
consummated by respondents' partial payment.[14] By virtue of this consummated contract of
sale, so the RTC further ratiocinated, petitioner never opposed the taking of his property. He
was made to believe, as he did in fact believe, that he will be paid just compensation as agreed
upon by the parties. It cannot then be said that petitioner was illegally paid when he transacted
with the government in good faith and when he relied on respondents' representations that he is
entitled to just compensation.

Ruling of the CA
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On appeal, the CA modified the RTC ruling thusly:

WHEREFORE, premises considered, plaintiff-appellant's appeal is DENIED. On

the other hand, defendants' appeal is GRANTED. Accordingly, the Decision dated
November 28, 2012 of Branch 166, Regional Trial Court of Pasig City in Civil Case
No. 70969 is hereby AFFIRMED with the MODIFICATION that plaintiff-
appellant is ordered to return the amount of Php1,480,000.00 to the Republic of the
Philippines.

SO ORDERED.[15]

The appellate court affirmed the RTC's finding that the subject property is still subject to the
easement of right of way, which is free of any compensation, except only for the value of the
existing improvements that may have been affected. Echoing the RTC's line of reasoning, the
CA ruled that PD 2004 could not be extended to benefit petitioner who acquired the subject
property through an auction sale. The lot in issue is, therefore, subject to the statutory lien
embodied in Sec. 112 of CA 141.

Further upholding the government's right to enforce against petitioner's property the easement
for public highways without cost, the CA granted respondents' counterclaim on appeal. The CA
noted that the portion of petitioner's property that was used by respondents corresponds to the
widths of 13.92 meters and 13.99 meters, well within the 60-meter limit under CA 141.[16]
Given that respondents never exceeded the threshold width, and that petitioner never established
that there were improvements in his property that were affected, the CA held that petitioner is
not entitled to any form of compensation. Consequently, the CA ordered him to return the
P1,480,000 partial payment made, lest he be unjustly enriched by respondents' use of the legal
easement that under the law should have been free of charge.

Aggrieved, petitioner moved for reconsideration of the appellate court's Decision, which motion
was denied by the CA through its March 7, 2016 Resolution. Hence, petitioner elevated the case
to this Court.

The Issues

In the instant recourse, petitioner raises the following issues:

1. THE HONORABLE COURT OF APPEALS SERIOUSLY/GRAVELY

COMMITTED AN ERROR IN LAW AND WITH THE
ESTABLISHED/ACCEPTED JURISPRUDENCE IN UPHOLDING AND
SUSTAINING THE DECISION DATED 28 NOVEMBER 2012 OF THE
HONORABLE REGIONAL TRIAL COURT BRANCH 166 OF PASIG CITY
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IN RULING THAT THE PROVISIONS OF PRESIDENTUIAL DECREE

NO. 2004 IS INAPPLICABLE OVER THE SUBJECT PARCEL OF LAND
OF PETITIONER.

2. THE HONORABLE COURT OF APPEALS SERIOUSLY/GRAVELY

COMMITTED AN ERROR IN LAW AND WITH THE
ESTABLISHED/ACCEPTED JURISPRUDENCE IN UPHOLDING AND
SUSTAINING THE DECISION DATED 28 NOVEMBER 2012 OF THE
HONORABLE REGIONAL TRIAL COURT BRANCH 166 OF PASIG CITY
IN RULING THAT THE PROVISIONS OF COMMONWEALTH ACT NO.
141 APPLIES AS ENCUMBRANCE OVER THE SUBJECT PARCEL OF
LAND OF PETITIONER.

xxxx

3. THE HONORABLE COURT OF APPEALS SERIOUSLY/GRAVELY

COMMITED AN ERROR IN LAW AND WITH THE
ESTABLISHED/ACCEPTED JURISPRUDENCE IN UPHOLDING AND
SUSTAINING THE DECISION DATED 28 NOVEMBER 2012 OF THE
HONORABLE REGIONAL TRIAL COURT BRANCH 166 OF PASIG CITY
IN RULING THAT PETITIONER IS NOT ENTITLED TO BE PAID THE
BALANCE OF JUST COMPENSATION IN THE AMOUNT OF TEN
MILLION SEVEN HUNDRED EIGHTY-FIVE THOUSAND PESOS,
(Php10,785,000.00) WITH LEGAL INTEREST COMMENCING FROM
ACTUAL TAKING OF PROPERTY ON 14 AUGUST 1997 UNTIL FULLY
PAID.

4. THE HONORABLE COURT OF APPEALS SERIOUSLY/GRAVELY

COMMITTED AN ERROR IN LAW AND WITH THE
ESTABLISHED/ACCEPTED JURISPRUDENCE IN UPHOLDING AND
SUSTAINING THE DECISION DATED 28 NOVEMBER 2012 OF THE
HONORABLE REGIONAL TRIAL COURT BRANCH 166 OF PASIG CITY
IN RULING THAT THE PARTIAL PAYMENT MADE BY RESPONDENT
IN THE AMOUNT OF ONE MILLION FOUR HUNDRED EIGHTY
THOUSAND PESOS (Php1,480,000.00), BE RETURNED BY PETITIONER
TO RESPONDENT.

5. ASSUMING WITHOUT ADMITTING AND FOR THE SAKE OF

ARGUMENT THAT THE SUBJECT PARCEL OF LAND LAWFULLY
OWNED BY PETITIONER IS SUBJECT TO THE PROVISIONS OF
COMMONWEALTH ACT NO. 141 WITH THE SIXTY (6) METERS
ENCUMBRANCE OF RIGHT OF WAY, PETITIONER SHOULD STILL BE
ENTITLED TO THE DIFFERENCE OF ONE HUNDRED SIXTY-THREE
SQUARE METERS, (163 sq.m.), OUT OF THE TWO HUNDRED
TWENTY-THREE SQUARE METERS (223 sq.m.) TAKEN BY
RESPONDENT FOR THE USE OF THE METRO MANILA SKYWAY
PROJECT, TO WHICH JUST COMPENSATION THERETO MUST AND
SHOULD BE PAID BY RESPONDENT TO PETITIONER [17]
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To simplify, the Court is faced with the same issues that confronted the CA, to wit:

1. Whether or not the subject property owned by petitioner is subject easement of

right of way in favor of the government;

2. Whether or not respondents are liable to pay just compensation to petitioner;

and

3. Whether or not petitioner should return the initial payment made by

respondents in the amount of P1,480,000.

Petitioner maintains that RA 730 relaxed the mode of acquiring public land, from the strict
method of public auction to the more lenient non-auction sale. Thus, petitioner postulates that
the CA's interpretation of PD 2004—that only public lands sold without auction sale are
covered by the decree's removal of encumbrance—would lead to a scenario wherein properties
acquired through the more stringent process would be subjected to more restrictions than those
acquired through the more relaxed means.[18] Petitioner, therefore, submits that PD 2004 should
be interpreted to cover all government sales of public land, with or without auction.

Furthermore, petitioner cites his constitutional right to just compensation in exchange for public
property taken for public use.[19] He laments that as early as August 14, 1997, respondents have
deprived him of his ownership rights over more than half of his property for the development of
the Metro Manila Skyway Project. For 19 years and counting, the government has been
enjoying full use of 223 square meters of his parcel of land, all the while denying petitioner
payment for just compensation, resulting in the violation of his constitutionally enshrined right.
[20] Petitioner, therefore, prays that respondents be directed to pay the balance of P10,785,000
pursuant to the parties' covenant, plus legal interest.

In connection with the foregoing, petitioner asserts that he could not be held liable to return the
initial payment made by respondents in the amount of P1,480,000. This amount, to petitioner,
constitutes part and parcel of the just compensation he is legally entitled to for the government's
use of his private property. Respondents' payment was then not tainted with illegality for which
petitioner may be held liable for its return.

Assuming for the sake of argument that petitioner illegally obtained payment, petitioner claims
that respondents are barred from recovering the same as they themselves are in pari delicto.[21]
Being the same parties who cajoled petitioner into parting with his property in the promise of
being paid the appraised value and who did, in fact, make such payment, albeit partial,
respondents could no longer recover what they have already paid. To sustain the CA's finding
that petitioner ought to return the downpayment would be tantamount not only to allowing
respondents to abscond liability for paying the balance, but also to virtually allowing the

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government to rob petitioner of his property through machinations.[22]

Lastly, petitioner claims that in the alternative, even if the property awarded to him by the
Bureau of Lands is subject to the easement under Sec. 112 of CA 141, he is still entitled to just
compensation in the amount of P8,959,000, representing 163 sq.m. (223 sq.m. taken property
less the 60 sq.m. easement) multiplied by the appraised value of the property of P55,000 per
square meter. Deducting the initial payment made from the aggregate amount would leave
respondents' total unpaid balance in the amount of P7,485,000, plus legal interest, as per
petitioner's computation.[23]

The Court's Ruling

The petition is partly meritorious.

The easement of right of way in

favor of the government subsists
despite the enactment of PD 2004

Resolving the first issue, the Court rejects petitioner's claim that the subject property is no
longer subject to the 60-meter width easement of right of way in favor of the government.

First, no less than the Order of Award granting petitioner title over the subject property reads
that the parcel of land conferred to him is subject to the restrictions contained under Sec. 109-
114 of CA 141, which necessarily includes the easement provided in Sec. 112. Notably,
petitioner was awarded the subject property in 1987, while PD 2004, which allegedly removed
all encumbrances and restrictions from awarded properties, was signed into law much earlier in
1985. This alone raises suspicion on the applicability of PD 2004 to the subject property.

Second, the Court finds no reversible error in the RTC and CA's interpretation of the coverage
of PD 2004 and RA 730. The title of RA 730 itself supports the rulings of the courts a quo that
the laws petitioner relied upon only cover the sale of public lands for residential purposes and to
qualified applicants without public auction. To quote:

REPUBLIC ACT NO. 730 – AN ACT TO PERMIT THE SALE WITHOUT

PUBLIC AUCTION OF PUBLIC LANDS OF THE REPUBLIC OF THE
PHILIPPINES FOR RESIDENTIAL PURPOSES TO QUALIFIED APPLICANTS
UNDER CERTAIN CONDITIONS (emphasis added)

It can readily be inferred from the title of RA 730 that the definite ambit of the law could not be
extended to sales of public lands via public auction, through which mode of disposition
petitioner acquired the subject property. Consequently, when RA 730 was amended by PD 2004
to the effect of removing encumbrances and restrictions on purchased properties without public
auction, petitioner could not have benefitted from the same.

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Lastly, even the contents of RA 730 belie petitioners claim. The foremost section of the law
reads:

Section 1. Notwithstanding the provisions of sections sixty-one and sixty-seven

of Commonwealth Act Numbered One hundred forty-one, as amended by
Republic Act Numbered Two hundred ninety-three, any Filipino citizen of legal age
who is not the owner of a home lot in the municipality or city in which he resides
and who has in good faith established his residence on a parcel of the public land of
the Republic of the Philippines which is not needed for the public service, shall be
given preference to purchase at a private sale of which reasonable notice shall be
given to him not more than one thousand square meters at a price to be fixed by the
Director of Lands with the approval of the Secretary of Agriculture and Natural
Resources. It shall be an essential condition of this sale that the occupants has
constructed his house on the land and actually resided therein. Ten per cent of the
purchase price shall be paid upon the approval of the sale and the balance may be
paid in full, or in ten equal annual installments. (emphasis added)

As can be gleaned, RA 730 was crafted as an exception to Sees. 61[24] and 67[25] of CA 141.
These provisions govern the mode of disposition of the alienable public lands enumerated under
Sec. 59 of the same law.[26] Synthesizing the provisions, CA 141 provides that public lands
under Sec. 59 can only be disposed for residential, commercial, industrial, and other similar
purposes through lease or sale, in both cases, "to the highest bidder." The conduct of an auction
is then required under Secs. 61 and 67.

By way of exception, however, RA 730 now allows the sale of public lands without public
auction to qualified applicants.[27] It is through this exceptional case of purchase of public land
without public auction wherein PD 2004 would apply.

Petitioner's assertion that both sales of public land with and without public auction are
subsumed under the coverage of PD 2004 is contrary to the very tenor of the law. Sec. 2 of RA
730, as amended by PD 2004, is clear and unambiguous:

SEC. 2. Lands acquired under the provisions of this Act shall not be subject to
any restrictions against encumbrance or alienation before and after the issuance of
the patents thereon. (emphasis added)

Under its plain meaning, only public lands acquired by qualified applicants without public
auction and for residential purposes are free from any restrictions against encumbrance or
alienation. The provision is inapplicable to petitioner's property which was awarded to
petitioner not in accordance with RA 730, but through public auction.

What is more, the easement of right of way under Sec. 112 of CA 141 is not subsumed in the
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phrase "restrictions against encumbrance or alienation" appearing in the amendment introduced

by PD 2004. This becomes obvious upon examining the original text of Sec. 2 of RA 730,
before PD 2004 took effect:

Sec. 2. Except in favor of the Government or any of its branches, units, or

institutions, lands acquired under the provisions of this act shall not be subject to
encumbrance or alienation before the patent is issued and for a term of ten years
from the date of the issuance of such patent, nor shall they become liable to the
satisfaction of any debt contracted prior to the expiration of the said period. No
transfer or alienation made after the said period of ten years and within fifteen years
from the issuance of such patent except those made by virtue of the right of
succession shall be valid unless when duly authorized by the Secretary of
Agriculture and Natural Resources and the transferee of vendee is a Filipino citizen.
Every convenyance made shall be subject to repurchase by the original purchaser or
his legal heirs within a period of five years from the date of conveyance.

Any contract or agreement made or executed in violation of this section shall be void
ab initio.

Consequently, it was erroneous for petitioner to harp on Sec. 2 of RA 730, as amended by PD

2004, in his bid to unshackle his property from its servient state, to release it from the statutory
lien prescribed under Sec. 112 of CA 141.

Petitioner is not entitled to just compensation

The Court now determines how the subsisting easement of right of way in favor of the
government bears on petitioner's entitlement to just compensation. In resolving petitioner's
principal claim, we apply the doctrine in Republic v. Andaya (Andaya).[28]

The seminal case of Andaya likewise involved property subject to the statutory lien under Sec.
112 of CA 141. As held in the case:

It is undisputed that there is a legal easement of right-of-way in favor of the

Republic. Andaya's transfer certificates of title contained the reservation that the
lands covered thereby are subject to the provisions of the Land Registration Act and
the Public Land Act. Section 112 of the Public Land Act provides that lands granted
by patent shall be subject to a right-of-way not exceeding 60 meters in width for
public highways, irrigation ditches, aqueducts, and other similar works of the
government or any public enterprise, free of charge, except only for the value of
the improvements existing thereon that may be affected. In view of this, the Court
of Appeals declared that all the Republic needs to do is to enforce such right
without having to initiate expropriation proceedings and without having to pay
any just compensation. Hence, the Republic may appropriate the 701 square

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meters necessary for the construction of the floodwalls without paying for it.[29]
(emphasis added)

The Court affirmed the CA's interpretation of Sec. 112 of CA 141 and ruled that the Republic
was under no obligation to pay therein respondent Andaya just compensation in enforcing its
right of way. Be that as it may the Court did not foreclose the possibility of the property owner
being entitled to just compensation if the enforcement of the right of way resulted in the
"taking" of the portions not subject to the legal easement.

Jurisprudence teaches us that "taking, " in the exercise of the power of eminent domain, "occurs
not only when the government actually deprives or dispossesses the property owner of his
property or of its ordinary use, but also when there is a practical destruction or material
impairment of the value of his property."[30] As in Andaya, even though the Republic was not
legally bound to pay just compensation for enforcing its right of way, the Court nevertheless
found that its project to be undertaken—the construction of floodwalls for Phase 1, Stage 1 of
the Lower Agusan Development Project—would prevent ingress and egress in Andayas private
property and turn it into a catch basin for the floodwaters coming from the Agusan River,
effectively depriving him of the normal use of the remainder of his property. To the mind of the
Court, this resulted in a "taking" of what was left of Andaya's property, entitling him to
consequential damages, awarded by the Court in the form of just compensation.

To demonstrate in concrete terms, the property involved in Andaya contained a total area of
10,380 square meters, which can be divided in the following manner:

i. The 4,443 square meter portion subject to the easement of right of way, which can further
be subdivided into two:

a. The 701 square meter portion corresponding to total area of the 10-meter easement
actually utilized by the Republic; and

b. The 3,742 square meter portion corresponding to the unutilized area of the portion
subject to the 60-meter width easement; and

ii. The remainder 5,937 square meter portion not subject to the government's easement of
right of way.

The 701 square meter easement in Andaya was the site for the floodwall project. This was the
extent of the right of way enforced by the government. The Court affirmed the CA ruling that
the Republic may acquire the 701 square meter property free of charge, save only for the value
of the improvements that may be affected.

As previously discussed, the floodwall project on the 701 square meter property would have
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deprived Andaya of the normal use of the remainder, i.e., both the 3,742 and the 5,937 square
meter residual portions. But of the two, the Court held that Andaya is entitled to just
compensation only for the 5,937 square meter span. The Court ratiocinated that though
unutilized, the 3,742 square meter portion is still covered by Sec. 112 of CA 141 that limits the
property owner's compensation to the value of the improvements, not of the value of the
property per se.

To recapitulate, two elements must concur before the property owner will be entitled to just
compensation for the remaining property under Sec. 112 of CA 141: (1) that the remainder is
not subject to the statutory lien of right of way; and (2) that the enforcement of the right of way
results in the practical destruction or material impairment of the value of the remaining property,
or in the property owner being dispossessed or otherwise deprived of the normal use of the said
remainder.

This doctrine in Andaya was reiterated in the recent Republic v. Regulto.[31] We now apply the
same parameters for determining petitioner's entitlement to just compensation in the case at bar.

Recall that the subject property in this case is a 400 square meter parcel of land. The 223 square
meter portion of the subject property was traversed by respondents' Metro Manila Skyway
Project. And as noted by the CA, the subdivision plan shows that the covered area corresponds
to the widths of 13.92 meters and 13.99 meters, well within the 60-meter width threshold
provided by law. Respondents are then not under any legal obligation to pay just compensation
for utilizing the 223 square meter portion pursuant to the Republic's right of way under Sec. 112
of CA 141, and in accordance with our ruling in Andaya.

Anent the remaining 177 square meters of the 400 square meter lot, suffice it to state that it was
never proved that the said area was not subject to the statutory lien. Neither was it established
that despite not having been utilized for the Metro Manila Skyway Project, the enforcement of
the easement resulted in the "taking" of the remaining property all the same. There is then no
evidentiary basis for awarding petitioner just compensation, as correctly ruled by the RTC and
the CA. However, petitioner remains the owner of the said 177 square meters and can fully
exercise all the rights of ownership over the same.

Respondents are barred by estoppel

from recovering the initial payment
of P1,480,000 from petitioner

Guilty of reiteration, Sec. 112 of CA 141 precludes petitioner from claiming just compensation
for the government's enforcement of its right of way. The contract allegedly entered by the
parties for the government's acquisition of the affected portion of the property in exchange for
just compensation is then void ab initio for being contrary to law.[32] Consequently, petitioner
has no right to collect just compensation for the government's use of the 223 square meter lot.
Anent the P1,480,000 partial payment already made by respondents, such amount paid shall be
governed by the provisions on solutio indebiti or unjust enrichment.

"Solutio indebiti" arises when something is delivered through mistake to a person who has no
right to demand it. It obligates the latter to return what has been received through mistake. As
defined in Article 2154 of the Civil Code,[33] the concept has two indispensable requisites: first,
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that something has been unduly delivered through mistake; and second, that something was
received when there was no right to demand it.[34]

As discussed above, petitioner was never entitled to collect and receive just compensation for
the government's enforcement of its right of way, including the P1,480,000 payment made by
respondents. For its part, the government erroneously made payment to petitioner because of its
failure to discover earlier on that the portion of the property acquired was subject to a statutory
lien in its favor, which it could have easily learned of upon perusal of petitioner's Order of
Award. These circumstances satisfy the requirements for solutio indebiti to apply.

Regardless, respondents' action to compel petitioner to return what was mistakenly delivered is
now barred by the doctrine of estoppel. The doctrine is based upon the grounds of public policy,
fair dealing, good faith and justice, and its purpose is to forbid one to speak against his own act,
representations, or commitments to the injury of one to whom they were directed and who
reasonably relied thereon. The doctrine of estoppel springs from equitable principles and the
equities in the case.[35]

As a general rule, the State cannot be barred by estoppel by the mistakes or errors of its officials
or agents. But as jurisprudence elucidates, the doctrine is subject to exceptions, viz:

Estoppels against the public are little favored. They should not be invoked except [in
rare] and unusual circumstances, and may not be invoked where they would operate
to defeat the effective operation of a policy adopted to protect the public. They must
be applied with circumspection and should be applied only in those special cases
where the interests of justice clearly require it. Nevertheless, the government must
not be allowed to deal dishonorably or capriciously with its citizens, and must
not play an ignoble part or do a shabby thing; and subject to limitations ..., the
doctrine of equitable estoppel may be invoked against public authorities as well as
against private individuals.[36]

In this case, petitioner was erroneously paid P1,480,000 on August 14, 1997 when respondents
appropriated the amount in his favor. However, because of respondents' representation that the
amount was a mere downpayment for just compensation, petitioner never objected to the taking
of his land and peacefully parted with his property, expecting to be paid in full for the value of
the taken property thereafter. As the events unfolded, respondents did not make good their
guarantee. Instead, they would claim for the recovery of the wrongful payment after almost
twelve (12) years, on July 9, 2009, as a counterclaim in their Supplemental Answer. Indubitably,
respondents are barred by estoppel from recovering from petitioner the amount initially paid. A
modification of the assailed CA ruling is, therefore, in order.

WHEREFORE, premises considered, the Court resolves to PARTIALLY GRANT the

petition. The award to respondents for the recovery of the P1,480,000 initial payment is hereby
DELETED as their right to a refund has already prescribed. Petitioner Danilo Bartolata remains
the owner of the 177 square meter portion and can exercise all rights of ownership over the said
lot.
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SO ORDERED.

Bersamin, Reyes, Perlas-Bernabe,* and Tijam, JJ., concur.

July 18, 2017

NOTICE OF JUDGMENT

Sirs /Mesdames:

Please take notice that on June 7, 2017 a Decision, copy attached hereto, was rendered by the
Supreme Court in the above-entitled case, the original of which was received by this Office on
July 18, 2017 at 2:20 p.m.

Very truly yours,

(SGD.) WILFREDO V. LAPITAN

Division Clerk of Court

* Additional member per raffle dated February 15, 2017.

[1]Penned by Associate Justice Maria Elisa Sempio Diy and concurred in by Associate Justices
Stephen C. Cruz and Manuel M. Barrios.

[2] Rollo, p. 118.

[3] Id. at 125.

[4] Id. at 140-141.

[5] Id. at 134.

[6] Id. at 77.

[7]Entitled "Danilo Bartolata, rep. by Atty. In Fact Rebecca P. Pilot & Dionisio P. Pilot vs.
Republic of the Philippines, Department of Public Works and Highways, Department of
Transportation and Communications, and Toll Regulatory Board."

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[8] Rollo, p. 141.

[9]
AN ACT TO AMEND AND COMPILE THE LAWS RELATIVE TO LANDS OF THE
PUBLIC DOMAIN, approved on November 7, 1936.

[10]
AMENDING SECTION TWO OR REPUBLIC ACT NUMBERED SEVEN HUNDRED
AND THIRTY RELATIVE TO THE SALE WITHOUT PUBLIC AUCTION OF PUBLIC
LANDS OF THE REPUBLIC OF THE PHILIPPINES FOR RESIDENTIAL PURPOSES TO
QUALIFIED APPLICANTS UNDER CERTAIN CONDITIONS, dated December 30, 1985.

[11]
AN ACT TO PERMIT THE SALE WITHOUT PUBLIC AUCTION OF PUBLIC LANDS
OF THE REPUBLIC OF THE PHILIPPINES FOR RESIDENTIAL PURPOSES TO
QUALIFIED APPLICANTS UNDER CERTAIN CONDITIONS, approved on June 18, 1952.

[12] Rollo, p. 126.

[13] Id. at 123.

[14] Id. at 125.

[15] Id. at 146.

[16] Id. at 143-144.

[17] Id. at 47-48.

[18] Id. at 55.

[19] CONSTITUTION, Art. III, Sec. 9. Private property shall not be taken for public use without
just compensation.

[20]Rollo, pp. 57-60; citing the expropriation cases of Republic v. Lim, G.R. No. 161656, June
29, 2005, 462 SCRA 265, Republic v. Salem Investments Corporation, G.R No. 137569, June
23, 2000, 334 SCRA 320, Heirs of Saguitan v. City of Mandaluyong, G.R No. 135087, March
14, 2000, 328 SCRA 137, Landowners in the Philippines, Inc. v. Secretary of Agrarian Reform,
G.R No. 78742, July 14, 1989, 175 SCRA 343, Coscuella v. Court of Appeals, No. L-77765,
August 15, 1988, 164 SCRA 393, Visayan Refining Co. v. Camus and Paredes, 40 Phil. 550
(1919), Manila Railroad v. Velasquez, 32 Phil. 286 (1915).

[21] Id. at 66-67.

[22] Id. at 66-68.

[23] Id. at 69.

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[24] SECTION 61. The lands comprised in classes (a), (b), and (c) of section fifty-nine shall be
disposed of to private parties by lease only and not otherwise, as soon as the President, upon
recommendation by the Secretary of Agriculture and Commerce, shall declare that the same are
not necessary for the public service and are open to disposition under this chapter. The lands
included in class (d) may be disposed of by sale or lease under the provisions of this Act.
(emphasis added)

[25] SECTION 67. The lease or sale shall be made through oral bidding; and adjudication
shall be made to the highest bidder. However, where an applicant has made improvements on
the land by virtue of a permit issued to him by competent authority, the sale or lease shall be
made by sealed bidding as prescribed in section twenty-six of this Act, the provisions of which
shall be applied wherever applicable. If all or part of the lots remain unleased or unsold, the
Director of Lands shall from time to time announce in the Official Gazette or in any other
newspapers of general circulation, the lease or sale of those lots, if necessary. (emphasis added)

[26] SECTION 59. The lands disposable under this title shall be classified as follows:

(a) Lands reclaimed by the Government by dredging, filing, or other means;

(b) Foreshore;

(c) Marshy lands or lands covered with water bordering upon the shores or banks of
navigable lakes or rivers;

(d) Lands not included in any of the foregoing classes.

[27] RA 730, Sec. 1.

[28] G.R. No. 160656, June 15, 2007, 524 SCRA 671.

[29] Id. at 675-676.

[30] Id. at 676; citing Republic v. Court of Appeals, G.R. No. 147245, March 31, 2005, 454
SCRA 516, 536 and Ansaldo v. Tantuico, Jr., G.R. No. 50147, August 3, 1990, 188 SCRA 300,
304.

[31] G.R. No. 202051, April 18, 2016, 790 SCRA 1.

[32] Article 1409. The following contracts are inexistent and void from the beginning:

(1) Those whose cause, object or purpose is contrary to law, morals, good customs,
public order or public policy.
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[33]Article 2154. If something is received when there is no right to demand it, and it was
unduly delivered through mistake, the obligation to return it arises.

[34]Metropolitan Bank & Trust Company v. Absolute Management Corporation, G.R. No.
170498, January 9, 2013, 688 SCRA 225, 238.

[35]
Megan Sugar Corporation v. Regional Trial Court of Iloilo, Branch 68, Dumangas, Iloilo,
G.R. No. 170352, June 1, 2011, 650 SCRA 100, 110.

[36] Republic v. Court of Appeals, G.R. No. 116111, January 21, 1999, 301 SCRA 366, 377;
citing 31 CJS 675-676.

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