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Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
AT A GLANCE:
Article 2154 of the Civil Code explains the concept of the quasi-contract of solutio indebiti:
“Art. 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.”
Article 2154 of the Civil Code explains the concept of the quasi-contract of solutio indebiti:
“Art. 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.”
According to the case of DOMESTIC PETROLEUM RETAILER CORPORATION vs. MANILA INTERNATIONAL AIRPORT AUTHORITY, G.R. No. 210641, March 27, 2019, in order to establish the application of solutio indebiti in a given situation, two conditions must concur:
(1) a payment is made when there exists no binding relation between the payor who has no duty to pay, and the person who received the payment, and
(2) the payment is made through mistake, and not through liberality or some other cause.
It is important to note that for the concept of solutio indebiti to apply, the undue payment must have been made by reason of either an essential mistake of fact or a mistake in the construction or application of a doubtful or difficult question of law. Mistake entails an error, misconception, or misunderstanding.
In the instant case, the two aforesaid conditions are absent. Therefore, solutio indebiti does not apply.
The first condition is lacking because there exists a binding relation between DPRC and MIAA. First and foremost, it is undisputed by all parties that respondent MIAA and petitioner DPRC are mutually bound to each other under a Contract of Lease. Hence, with respondent MIAA and petitioner DPRC having the juridical relationship of a lessor-lessee, it cannot be said that in the instant case, the overpayment of monthly rentals was made when there existed no binding juridical tie or relation between the pay or, i.e., petitioner DPRC, and the person who received the payment, i.e., respondent MIAA.
The second condition is also lacking. Petitioner DPRC made the overpayments in monthly rentals from December 11, 1998 to December 5, 2005 not due to any mistake, error, or omission as to any factual matter surrounding the payment of rentals. Nor did petitioner DPRC make the overpayments due to any mistaken construction or application of a doubtful question of law.
Instead, petitioner DPRC deliberately made the payments in accordance with respondent MIAA’s Resolution No. 98-30, albeit under protest. It must be recalled that after the issuance of Resolution No. 98-30, on December 8, 1998, petitioner DPRC protested in writing to respondent MIAA, alleging that Resolution No. 98-30 was invalidly issued. However, petitioner DPRC also signified its intention to comply in good faith with the terms and conditions of the lease contract by paying the amount charged in accordance with Resolution No. 98-30 despite registering its objection to its validity.
Solutio indebiti applies when payment was made on the erroneous belief of facts or law that such payment is due. In the case at hand, petitioner DPRC’s overpayment of rentals from 1998 to 2005 was not made by sheer inadvertence of the facts or the misconstruction and misapplication of the law. Petitioner DPRC did not make payment because it mistakenly and inadvertently believed that the increase in rentals instituted by the subsequently voided Resolution No. 98-30 was indeed due and demandable. From the very beginning, petitioner DPRC was consistent in its belief that the increased rentals were not due as Resolution No. 98-30 was, in its view, void.
However, petitioner DPRC still made payment despite its objection, not due to any mistaken belief, but for the sole reason that prior to the Court’s Decision in Manila International Airport Authority v. Airspan Corporation, et al., Resolution No. 98-30 was still presumed to be legal, having the force of law in the absence of any judicial declaration to the contrary. Hence, without any judicial declaration on the nullity of Resolution No. 98-30 at that time, petitioner DPRC had no alternative but to make the subject payments, though under protest. Therefore, it is not correct to say that the subject payments made by petitioner DPRC were made by mistake or inadvertence.
Therefore, with the absence of the two essential requisites of solutio indebiti in the instant case, petitioner DPRC’s cause of action is not based on the quasi-contract of solutio indebiti.
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Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding legal services, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/ 0917-5772207/ 09778050020.
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