UNIVERSITY OF THE PHILIPPINES, Petitioner, v. PHILAB INDUSTRIES, INC., Respondent;

G.R. No. 152411 September 29, 2004

FACTS:

The University of the Philippines (UP) decided to construct an integrated system of research organization known as the Research Complex. As part of the project, laboratory equipment and furniture were purchased for the National Institute of Biotechnology and Applied Microbiology (BIOTECH). Ferdinand E. Marcos Foundation (FEMF) came forward and agreed to fund the acquisition of the laboratory furniture, including the fabrication thereof.  

PHILAB was chosen to fabricate the laboratory furniture and deliver the same to BIOTECH.  It made partial deliveries of office and laboratory furniture to BIOTECH after having been duly inspected by their representatives and FEMF Executive Assistant Lirio. However, PHILAB failed to submit the contract for the installation of laboratory furniture to BIOTECH. In 1984, PHILAB submitted to BIOTECH Invoice No. 01643 in the amount of P702,939.40 for the final payment of laboratory furniture. There was, however, no response from the FEMF.

When President Marcos was ousted from office during the February 1986 EDSA Revolution, PHILAB wrote to President Aquino asking her help to secure the payment of the amount due from the FEMF. The PCGG requested for the MOA, but, PHILAB and FEMF did not execute any contract regarding the fabrication and delivery of laboratory furniture to BIOTECH.

Exasperated, PHILAB filed a complaint for a sum of money and damages against UP.  UP denied liability and alleged that PHILAB had no cause of action against it because it was merely the donee/beneficiary of the laboratory furniture in the BIOTECH; and that the FEMF, which funded the project, was liable to the PHILAB. 

The trial court rendered judgment dismissing the complaint. 

The CA reversed and set aside the decision of the RTC and held that although UP did not bind itself to pay for the laboratory furniture; nevertheless, it is liable to PHILAB under the maxim: “No one should unjustly enrich himself at the expense of another.”

ISSUES: 

1. Whether UP is liable for the final payment of laboratory furniture to PHILAB.

2. Whether CA is correct in holding the petitioner liable for the claim of the respondent based on the maxim that no one should enrich itself at the expense of another

HELD:

1. NO. The respondent is not entitled to its claim against the petitioner.

While the respondent is not privy to the MOA executed by the petitioner and FEMF, but, based on the records, an implied-in-fact contract of sale was entered into between the respondent and FEMF. A contract implied in fact is one implied from facts and circumstances showing a mutual intention to contract. It arises where the intention of the parties is not expressed, but an agreement in fact creating an obligation. It is a contract, the existence and terms of which are manifested by conduct and not by direct or explicit words between parties but is to be deduced from conduct of the parties, language used, or things done by them, or other pertinent circumstances attending the transaction. To create contracts implied in fact, circumstances must warrant inference that one expected compensation and the other to pay. An implied-in-fact contract requires the parties’ intent to enter into a contract; it is a true contract. The conduct of the parties is to be viewed as a reasonable man would view it, to determine the existence or not of an implied-in-fact contract. The totality of the acts/conducts of the parties must be considered to determine their intention. 

The respondent was aware, from the time Padolina contacted it for the fabrication and supply of the laboratory furniture until the go-signal was given to it to fabricate and deliver the furniture to BIOTECH as beneficiary, that the FEMF was to pay for the same. The respondent knew that the petitioner was merely the donee-beneficiary of the laboratory furniture and not the buyer; nor was it liable for the payment of the purchase price thereof.

2. NO.  Unjust enrichment claims do not lie simply because one party benefits from the efforts or obligations of others, but instead it must be shown that a party was unjustly enriched in the sense that the term unjustly could mean illegally or unlawfully. To substantiate a claim for unjust enrichment, the claimant must unequivocally prove that another party knowingly received something of value to which he was not entitled and that the state of affairs are such that it would be unjust for the person to keep the benefit.

Article 22 of the New Civil Code reads:

Every person who, through an act of performance by another, or any other means, acquires or comes into possession of something at the expense of the latter without just or legal ground, shall return the same to him.

In order that accion in rem verso may prosper, the essential elements must be present: (1) that the defendant has been enriched, (2) that the plaintiff has suffered a loss, (3) that the enrichment of the defendant is without just or legal ground, and (4) that the plaintiff has no other action based on contract, quasi-contract, crime or quasi-delict. An accion in rem verso is considered merely an auxiliary action, available only when there is no other remedy on contract, quasi-contract, crime, and quasi-delict. If there is an obtainable action under any other institution of positive law, that action must be resorted to, and the principle of accion in rem verso will not lie

The essential requisites for the application of Article 22 of the New Civil Code do not obtain in this case. The respondent had a remedy against the FEMF via an action based on an implied-in-fact contract with the FEMF for the payment of its claim. The petitioner legally acquired the laboratory furniture under the MOA with FEMF; hence, it is entitled to keep the laboratory furniture.