Facts:

The case involves the Bank of the Philippine Islands (BPI) as the petitioner and Elizabeth G. Sarmiento as the respondent. The events leading to the case began in 1987 when Sarmiento, who was the assistant manager of BPI's España Branch, became a suspect in an investigation concerning alleged anomalous transactions involving time deposits. During the period from October 10, 1987, to June 30, 1988, Sarmiento did not regularly report for work, attending the office only sporadically, yet she received her full salary amounting to P116,003.52 for that period. Following this, BPI demanded the return of the salary, claiming it was mistakenly paid since Sarmiento had not worked during that time. Sarmiento, however, contended that she was verbally instructed by Vice President Arturo Kimseng of the Audit Department to refrain from reporting to work while the investigation was ongoing, a directive aimed at preventing her from tampering with records or influencing her subordinates.

Facts:

1. Employment and Investigation: Elizabeth Sarmiento (respondent) was the Assistant Manager of Bank of the Philippine Islands' (BPI) España Branch. In 1987, the branch was investigated for alleged anomalous transactions involving time deposits, and Sarmiento was among the suspects.
2. Absence from Work: From October 10, 1987, to June 30, 1988, Sarmiento did not regularly report for work but received her full salary totaling P116,003.52 during this period.
3. Demand for Reimbursement: BPI demanded the return of the salary paid, claiming it was mistakenly paid since Sarmiento did not work during the period. Sarmiento refused, leading BPI to file a complaint for collection.
4. Sarmiento's Defense: Sarmiento claimed she was verbally instructed by BPI's Vice President of the Audit Department, Arturo Kimseng, not to report for work during the investigation to prevent tampering with records or influencing subordinates.
5. Trial Court Decision: The Regional Trial Court dismissed BPI's complaint, ruling that Sarmiento was a managerial employee not required to follow a strict work schedule and that her salary was lawfully paid.
6. Court of Appeals Decision: The CA affirmed the trial court's decision, finding that Sarmiento was instructed not to report for work during the investigation and was entitled to her salary.

Issue:

1. Whether Sarmiento was verbally instructed by Vice President Arturo Kimseng not to report for work during the investigation.
2. Whether Sarmiento was entitled to her salary for the period she did not report for work.
3. Whether the principle of "no work, no pay" applies, and whether Sarmiento is obligated to return the salary paid to her.

Ruling:

The Supreme Court denied BPI's petition and affirmed the decisions of the trial court and the Court of Appeals. The Court held that:

1. Sarmiento was entitled to her salary during the period in question because she was still an employee of BPI and was not suspended.
2. The payment of her salary was not a mistake, as it was made with the knowledge and approval of her superiors.
3. The principle of solutio indebiti (payment by mistake) does not apply because there was no mistake in the payment, and Sarmiento was lawfully entitled to her salary.

Ratio:

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