Case Summary (G.R. No. 97995)
Demand for Refund and Initial Proceedings
Upon discovering the second payment error in 1981, PNB requested return of US$14,000. When Mata did not refund, PNB filed suit on February 4, 1982, invoking a constructive trust under Article 1456, or alternatively solutio indebiti under Article 2154, to recover the mistaken payment.
Ruling Below: Solutio Indebiti and Prescription
The Regional Trial Court dismissed PNB’s complaint, holding the case fell under solutio indebiti (quasi-contract) rather than constructive trust. It reasoned that Mata, unaware of the mistake, was obliged to return the undue payment. The Court of Appeals affirmed, finding PNB’s cause of action under Article 2154 had prescribed after six years (Article 1145, par. 2), as suit was filed nearly seven years post-payment.
Legal Distinctions: Constructive Trust vs. Solutio Indebiti
• Constructive Trust (Art. 1456): Imposed by law when property is acquired by mistake or fraud; no fiduciary relation exists, and the duty is to surrender unjustly held property.
• Solutio Indebiti (Art. 2154): Obligation to return what was unduly delivered through mistake when there was no right to demand it, rooted in preventing unjust enrichment.
Historical and Comparative Perspectives
Under the Spanish Civil Code, only negotiorum gestio and solutio indebiti were quasi-contracts; implied trusts were later introduced by the Code Commission (1949). Philippine law recognizes both quasi-contracts and implied trusts to advance equity. Anglo-American equity treats constructive trusts as a remedy enforcing surrender rather than a conventional fiduciary arrangement, and views quasi-contractual obligations as personal liabilities enforceable at law.
Prescription and Laches Analysis
• Quasi-contract claims prescribe in six years (Art. 1145[2]).
• Implied trust claims prescribe in ten years (Art. 1144[2]).
PNB’s suit was timely under a constructive trust theory but exceeded the prescriptive period for solutio
Case Syllabus (G.R. No. 97995)
Facts of the Case
- B.P. Mata & Co., Inc. (“Mata”) is a private corporation acting since 1966 as manning agent for Star Kist Foods, Inc., USA, advancing crew expenses and seeking monthly reimbursement.
- On February 21, 1975, Security Pacific National Bank (SEPAC) of Los Angeles cabled Philippine National Bank (PNB) to credit US$14,000 to Mata’s account at the Insular Bank of Asia and America (IBAA) for Star Kist.
- PNB’s International Department detected an error on receipt (February 24, 1975) and sought instructions from SEPAC, which corrected the remittance to US$1,400.
- On February 25, 1975, Cashier’s Check No. 269522 for US$1,400 (P9,772.96) was issued to Mata.
- On March 11, 1975, PNB mistakenly issued Cashier’s Check No. 270271 for US$14,000 (P97,878.60) to Mata, again purporting to be Star Kist reimbursement.
- On May 13, 1981, PNB demanded return of the US$14,000; on February 4, 1982, it filed suit for collection and refund, invoking constructive trust under Article 1456, Civil Code.
Proceedings Below
- The Regional Trial Court (Manila) dismissed PNB’s complaint, ruling the case governed by Article 2154 (solutio indebiti), not Article 1456 (constructive trust).
- The RTC held that a “trust” requires a fiduciary relation—absent here between Mata and PNB.
- The Court of Appeals affirmed: under Article 2154, mistaken payments must be returned, but PNB’s action was barred by the six-year prescription for quasi-contracts (Article 1145, par. 2), having been filed almost seven years after the error.
Issues Presented
- Whether PNB’s right to recover US$14,000 rests on an implied constructive trust (Art. 1456) or on the quasi-contract of solutio indebiti (Art. 2154).
- Whether PNB’s action under constructive trust is timely or barred by prescription and/or laches.
- Whether the lower courts erred in distinguishing mistake by grantor ver