G.R. No.

210641, March 27, 2019

DOMESTIC PETROLEUM RETAILER CORPORATION, PETITIONER, v.

Facts:
On December 23, 2008, [petitioner DPRC] filed a Complaint for "Collection of Sums of Money" against
respondent MIAA before the RTC. averring that: on June 4, 1998, DPRC and respondent MIAA entered
into a Contract of Lease whereby the former leased from the latter a 1,631.12-square meter parcel of
land and a 630.88-square meter building both located at Domestic Road, Pasay City.

DPRC was obliged to pay monthly rentals of P75,357.74 for the land and P33,310.46 for the building;
petitioner DPRC faithfully complied with its obligation to pay the monthly rentals since the start of the
lease contract.

MIAA issued Administrative Order No. 1 Series of 1998 reflecting the new schedule of fees, charges,
and rates. DPRC initially refused to pay the increased rentals which was decreed without prior notice
and hearing. On November 19, 1998, MIAA demanded its payment of P655,031.13 as rental in
arrears.

DPRC protested in writing to [respondent MIAA] the increased rentals and the computation. It also
signified its intention to comply in good faith with the terms and conditions of the lease contract. On
December 11, 1998, DPRC paid P628,895.43 which was based on the new rates.

The Court nullified Resolution Nos. 98-30 and 99-11 issued by respondent MIAA for non-observance
of notice and hearing requirements for the fixing rates required by the Administrative Code.
Petitioner DPRC paid [respondent] MIAA a total amount of P9,593,179.87, which is in excess of the
stipulated monthly rentals from December 11, 1998 up to December 5, 2005.

MIAA has been ordered to pay P645,216.21 allegedly representing the balance of the rentals from
January up to June 2006. Petitioner DPRC was constrained to file Complaint for Collection of Sums of
Money after MIAA ignored its final written demand in November 2008.

RTC rendered [its Decision, ruling in favor of petitioner DPRC.

CA affirmed the RTC's Decision holding respondent MIAA liable to petitioner DPR, it 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 And because petitioner DPRC's claim against respondent MIAA is
purportedly in the nature of solutio indebiti, the CA held that "the claim of refund must be
commenced within six (6) years from date of payment pursuant to Article 1145(2) of the Civil Code.

Issue:
whether the CA was correct in amending the RTC's Decision, modifying the amount of respondent
MIAA's liability from the full amount of P9,593,179.87 to just P3,839,643.05 plus legal interest at 12%
per annum computed from the time of extra-judicial demand on July 27, 2006, on the basis of the
application of the six-year prescriptive period governing the quasi-contract of solutio indebiti.

Ruling:
In the instant case, the Court finds that the essential requisites of solutio indebiti are not present.

it is undisputed by all parties that respondent MIAA and petitioner DPRC are mutually bound to each
other under a Contract of Lease

Hence, with respondent MIAA and petitioner DPRC having the juridical relationship of a lessor-lessee,
it cannot be said that in the instant case, the overpayment of monthly rentals was made when there
existed no binding juridical tie or relation between the pay or, i.e., petitioner DPRC, and the person
who received the payment, i.e., respondent MIAA.

the Court finds that the cause of action of petitioner DPRC is based on the violation of a contractual
stipulation in the parties' Contract of Lease, and not due to the existence of a quasi-contract.

Hence, by filing its Complaint, petitioner DPRC invoked the Contract of Lease and alleged that
respondent MIAA violated the aforementioned contractual stipulation, considering that the latter
imposed a price escalation of monthly rentals despite reneging on its contractual obligation to first
issue a valid Administrative Order and give petitioner DPRC prior notice.

Just because the Contract of Lease in itself may be silent as to petitioner DPRC's entitlement to a
refund does not mean that such claim for refund is not provided for in the contract and cannot be
asserted by petitioner DPRC.

It must be stressed that applicable laws form part of, and are read into, contracts without need for
any express reference thereto.

Furthermore, it cannot be said that petitioner DPRC's payments in monthly rentals from December
11, 1998 up to December 5, 2005 in observance with the subsequently nullified Resolution No. 98-30
were made due to mistake on the part of petitioner DPRC.

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

petitioner DPRC also signified its intention to comply in good faith with the terms and conditions of
the lease contract by paying the amount charged in accordance with Resolution No. 98-30 despite
registering its objection to its validity.

Solutio indebiti applies when payment was made on the erroneous belief of facts or law that such
payment is due.[34] In the case at hand, petitioner DPRC's overpayment of rentals from 1998 to 2005
was not made by sheer inadvertence of the facts or the misconstruction and misapplication of the
law. Petitioner DPRC did not make payment because it mistakenly and inadvertently believed that the
increase in rentals instituted by the subsequently voided Resolution No. 98-30 was indeed due and
demandable. From the very beginning, petitioner DPRC was consistent in its belief that the increased
rentals were not due as Resolution No. 98-30 was, in its view, void.

Therefore, with the absence of the two essential requisites of solutio indebiti in the instant case,
petitioner DPRC's cause of action is not based on the quasi-contract of solutio indebiti.

The Court of Appeals reduced the total amount of liability of respondent Manila International Airport
Authority to P3,839,643.05, plus legal interest at 12% per annum computed from the time of the
extrajudicial demand on July 27, 2006. The Decision dated August 15, 2011 of the Regional Trial Court
in Civil Case No. R-PSY-08-08963, as clarified in its Order dated November 17, 2011, is REINSTATED.