Bank of the Philippine Islands vs. Sarmiento

Solutio indebiti does not apply to recover salary paid to an employee who did not render work during an internal investigation, where the employer-employee relationship still subsisted, the employee was not suspended, and the payment was made with the knowledge and approval of superiors.

Elizabeth Sarmiento, assistant manager of BPI's España Branch, was implicated in an anomalous time deposit transaction investigated in 1987. From October 10, 1987, to June 30, 1988, Sarmiento rarely reported for work but received her full salary. BPI terminated her on August 26, 1988, and subsequently demanded the return of the salary paid during her absence, asserting that she was not entitled to it under the "no work, no pay" principle.

• Employment and Investigation: Respondent was the assistant manager of BPI's España Branch. In 1987, the branch underwent an internal audit for anomalous time deposit transactions, and respondent was identified as a suspect.
• Absence and Payment: From October 10, 1987, to June 30, 1988, respondent went to the office sparingly but received her full salary totaling P116,003.52.
• Dispute over Absence: Petitioner claimed respondent simply ceased reporting for work. Respondent countered that Assistant Vice-President (AVP) Arturo Kimseng of the Audit Department verbally directed her not to report to work during the investigation to prevent tampering with records or influencing subordinates. AVP Kimseng denied giving such instruction and testified he lacked the authority to do so.
• Termination and Demand: Respondent's employment was terminated on August 26, 1988. Petitioner subsequently demanded the return of the salary paid during the period of her absences, characterizing the payment as a mistake.

• Misapprehension of Facts: Petitioner argued that the CA erred in limiting the issue to whether the verbal instruction was given, implying an acknowledgment that respondent did not work.
• Lack of Authority: Petitioner maintained that no evidence showed AVP Kimseng had the authority to order respondent not to report; AVP Kimseng explicitly denied possessing such authority.
• Solutio Indebiti: Petitioner insisted that because respondent did not work, she was not entitled to her salary under the "no work, no pay" principle. The payment was made by mistake, thus obligating respondent to return it under the principle of solutio indebiti.

• Verbal Instruction: Respondent countered that she did not report for work regularly because she was verbally instructed by AVP Kimseng not to do so during the investigation.
• Unrebutted Claim: Respondent argued that petitioner failed to present countervailing evidence or explain why the Branch Manager did not call her attention for her absences, suspend her, or withhold her salary if her absence was unauthorized.

• Factual Findings: Whether the CA committed reversible error in affirming the factual finding that respondent was verbally instructed not to report for work.
• Solutio Indebiti: Whether the principle of solutio indebiti applies to recover salary paid to an employee who did not work during an internal investigation.

• Factual Findings: The factual findings of the CA and RTC are conclusive and binding; none of the recognized exceptions apply. The question of whether a verbal instruction was given is a question of fact beyond the scope of Rule 45 of the Rules of Court. The trial court's assessment of witness credibility—crediting respondent's testimony over AVP Kimseng's—is entitled to the highest respect. The failure of the Branch Manager to call out respondent's absences or suspend her, coupled with the uninterrupted payment of her salary, supports the finding that a verbal instruction was given and complied with.
• Solutio Indebiti: Solutio indebiti does not apply. Both requisite elements are absent: (1) a binding relation existed because respondent was not suspended and remained an employee until her termination; and (2) the payment was not made through mistake, having been made with the knowledge and approval of her immediate superior officers.

• Solutio Indebiti — Requires: (1) payment 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) payment made through mistake, and not through liberality or some other cause. Applied to hold that salary payments to an active, unsuspended employee cannot be recovered under this principle, as the employer-employee relation constitutes a binding relation and the payment is not a mistake.
• Conclusiveness of CA Findings of Fact — The factual findings of the Court of Appeals are conclusive and binding on the Supreme Court, subject only to recognized exceptions (e.g., findings grounded entirely on speculation, misapprehension of facts, grave abuse of discretion). Applied to decline review of the factual issue regarding the verbal instruction, finding no exception applicable.

• "There is solutio indebiti where: (1) 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."

• Spouses Almendrala v. Spouses Ngo, G.R. No. 142408 — Followed for the rule that CA findings of fact are conclusive and binding, and for the enumeration of exceptions to this rule.
• Aclon v. Court of Appeals, 436 Phil. 219 — Followed for the rule that the trial court's evaluation of witness credibility is entitled to the highest respect.
• Power Commercial and Industrial Corporation v. Court of Appeals, G.R. No. 119745 — Followed for the definition and elements of solutio indebiti.

• Article 2154, Civil Code — "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." Held inapplicable because the employee had a right to demand the salary (subsisting employment) and the delivery was not unduly made through mistake.
• Rule 45, Rules of Court — Mandates that only questions of law may be raised in a petition for review on certiorari. Applied to preclude review of the factual issue of whether a verbal instruction was given.

Artemio V. Panganiban, Consuelo Ynares-Santiago, Romeo J. Callejo, Sr., Minita V. Chico-Nazario