Domestic Petroleum Retailer Corp. v. Manila International Airport Authority;

G.R. No. 210641, March 27, 2019

FACTS:

The parties entered into a Contract of Lease whereby DPRC (petitioner) was obliged to pay monthly rentals of P75,357.74 for the land and P33,310.46 for the building. In 1998, MIAA passed Resolution No. 98-30 which increased the rentals. DPRC protested in writing to [respondent MIAA] the increased rentals and the computation on the ground that it was decreed without prior notice. However, it also signified its intention to comply in good faith with the terms and conditions of the lease contract by paying the amount charged.

DPRC stopped paying the increased rental rate but continued paying the original rental rate prescribed in the lease contract. The decision to stop paying the increased rental rate was based on the [Court’s] Decision in the case of Manila International Airport Authority vs. Air span Corporation. DPRC demanded for a refund of its overpayment in the amount of P9,593,179.87. In 2008, DPRC filed a Complaint for “Collection of Sums of Money”.

RTC decided in favor of petitioner DPRC ordering for the payment of the principal amount plus 12% per annum legal interest computed from the time of the extrajudicial demand.

The CA affirmed the RTC’s Decision but with a modification as to the amount. The CA found that the liability of respondent MIAA to petitioner DPRC for overpaid monthly rentals was in the nature of a quasi-contract of solutio indebiti. The CA held that by reason of the six (6) years prescriptive period, DPRC lost its right to recover the amount of P5,753,536.82 paid during the period from December 11, 1998 to December 5, 2002.

ISSUE:

Whether the modification of MIAA’s liability from the full amount of P9,593,179.87 to just P3,839,643.05 plus legal interest on the ground of application of the six-year prescriptive period governing the quasi-contract of solutio indebiti is correct.

HELD:

NO. 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. The Court finds that the essential requisites of solutio indebiti are not present – there exists a binding relation between petitioner DPRC and respondent MIAA. The parties are mutually bound to each other under a Contract of Lease, hence, having the juridical relationship of a lessor-lessee, it cannot be said that the overpayment of monthly rentals was made when there existed no binding juridical tie or relation.

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. DPRC deliberately made the payments in accordance with respondent MIAA’s Resolution No. 98-30, albeit under protest.

Considering that petitioner DPRC’s cause of action is not based on a quasi-contract and is instead founded on the enforcement of a contract, the CA erred in applying Article 1145(2) of the Civil Code in the instant case. Instead of the prescriptive period of six years for quasi-contracts, it is Article 1144 of the Civil Code that finds application in the instant case. This Article provides that an action based on a written contract must be brought within 10 years from the time the right of action accrues.

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