Solutio Indebiti

What is meant by solutio indebiti?

Solutio indebiti refers to the juridical relation which arises whenever a person unduly delivers a thing through mistake to another who has no right to demand it.

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. (Art. 2154, CC)

What are the requisites solutio indebiti?

1. There must be a payment or delivery made by one person to another;

2. The person who made the payment or delivery was under no obligation to do so;

3. The payment or delivery was made by reason of a mistake.

Examples of solutio indebiti

1. Erroneous payment of interest not due

2. Erroneous payment of rental not called for in view of the expiration of the lease contract

3. Taxes erroneously given.

Can solutio indebiti be applied because of doubtful or difficult questions of law?

Payment by reason of a mistake in the construction or application of a doubtful or difficult question of law may come within the scope solutio indebiti (Art. 2155, CC)

Payment not yet due

If the payer was in doubt whether the debt was due, he may recover if he proves that it was not due. (Art. 2156, CC)

Solidary responsibility of two or more payees

The responsibility of two or more payees, when there has been payment of what is not due, is solidary. (Art. 2157, CC)

When the property or money belongs to a third person

When the property delivered or money paid belongs to a third person, the payee shall comply with the provisions of article 1984. (Art. 2158, CC)

The depositary cannot demand that the depositor prove his ownership of the thing deposited. Nevertheless, should he discover that the thing has been stolen and who its true owner is, he must advise the latter of the deposit.

If the owner, in spite of such information, does not claim it within the period of one month, the depositary shall be relieved of all responsibility by returning the thing deposited to the depositor.

If the depositary has reasonable grounds to believe that the thing has not been lawfully acquired by the depositor, the former may return the same. (Art. 1984, CC)

Rule if payee is in bad faith

Whoever in bad faith accepts an undue payment, shall pay legal interest if a sum of money is involved, or shall be liable for fruits received or which should have been received if the thing produces fruits.

He shall furthermore be answerable for any loss or impairment of the thing from any cause, and for damages to the person who delivered the thing, until it is recovered. (Art. 2159, CC)

What is the liability of payee in good faith

He who in good faith accepts an undue payment of a thing certain and determinate shall only be responsible for the impairment or loss of the same or its accessories and accessions insofar as he has thereby been benefited. If he has alienated it, he shall return the price or assign the action to collect the sum. (Art. 2160, CC)

Reimbursement for improvements

As regards the reimbursement for improvements and expenses incurred by him who unduly received the thing, the provisions of Title V of Book II shall govern. (Art. 2161, CC)

Right of the payee who destroys the evidence or proofs of his right

He shall be exempt from the obligation to restore who, believing in good faith that the payment was being made of a legitimate and subsisting claim, destroyed the document, or allowed the action to prescribe, or gave up the pledges, or cancelled the guaranties for his right. He who paid unduly may proceed only against the true debtor or the guarantors with regard to whom the action is still effective. (Art. 2162, CC)

When mistake is presumed

It is presumed that there was a mistake in the payment if something which had never been due or had already been paid was delivered; but he from whom the return is claimed may prove that the delivery was made out of liberality or for any other just cause. (Art. 2163, CC)

GMC Corp. used to compute and pay monthly cost of living allowance (COLA) on the basis of 30 days a month ever since the law mandated the payment of COLA. Wage Order 6 was implemented, increasing the COLA by P3 a day. GMC, however, multiplied the P3 additional COLA by 22 days. The Union objected arguing that the management's unilateral act was tantamount to withdrawal of benefits. Is there a mistake in the application of law?

GMC cannot be faulted for the erroneous application of law. Payment may be said to have been made by reason of a mistake in the construction or application of "doubtful or difficult question of law. Since it is a past error that it being corrected, no vested right may be said to have arisin nor any diminution of benefit under Art. 100 of the Labor Code, may be said to have resulted by virtue of the correction. (Globe Mackay Cable and Radio Corp. vs. NLRC, G.R. No. 74156, June 29, 1988)

BAR QUESTIONS

C, a Filipino resident of the US sent to his father D in Manila $500 through X Bank. Due to mistake of the employees of the Bank, D was paid $5,000 instead. Upon discovery of the mistake, the Bank demanded from D the return of $4,500. D refused and the Bank sued him. Is the Bank entitled to recover from D? (1980)

Yes, the Bank is entitled to recover the $4,500 from D. We have in this case an example of a quasi-contract of solutio indebiti which arises whenever a person unduly delivers a thing through mistake to another who has no right to demand it. Its requisite are:

1. There must be a payment or delivery made by one person to another;

2. The person who made the payment or delivery was under no obligation to do so;

3. The payment or delivery was made by reason of a mistake.

It is obvious that the above requisites are present in the instant case.

DPO went to a store to buy a pack of cigarettes worth P225.00 only. He gave the vendor, RRA, a P500-peso bill. The vendor gave him the pack plus P375.00 change. Was there a discount, an oversight, or an error in the amount given? What would be DPO’s duty, if any, in case of an excess in the amount of change given by the vendor? How is this situational relationship between DPO and RRA denominated? Explain. (5%)