Case Brief: PNB vs. CA

G.R. No. 97995     January 21, 1993

Philippine National Bank


Court of Appeals and B.P. Mata and Co., Inc



B.P. Mata & Co is a private corporation engaged in providing goods and services to shipping companies. It has acted as manning or crewing agent for several firms, one of which is Star Kist Foods Inc. As part of their agreement, Mata makes advances for the crew’s several expenses.

Security Pacific National Bank transmitted a cable message to PNB to pay the amount of US$14,000 to Mata by crediting PNB’s account with the Insular Bank of Asia and America, as per order of Star Kist. However, the former bank promptly sent another message to PNB with the instructions that only the amount of US$1,400 should be given to Mata. With it, Star Kist sent a check to Mata for the amount of US$1,400 through the Insular Bank of Asia and America.

However, 14 days afer, PNB effected another payment in the amount of US$14,000, purporting to be another transmittal of reimbursement from Star Kist.

More than six years later, PNB requested Mata for refund of US$14,000 after it discovered its error.

PNB filed a case for collection and refund of $14,000 against Mata, arguing that based on a constructive trust under Article 1456 of Civil Code, it has a right to recover the said amount it erroneously credited to Mata.

RTC dismissed the complaint, ruling that the case falls squarely under Article 2154 on solutio indebiti and not under Article 1456 on constructive trust.

Appellate court affirmed such decision, adding that while Mata is duty bound to return the amount paid by mistake, PNB’s demand for the return of US$14,000 cannot prosper because of prescription under Article 1145, stating that actions upon a quasi-contract must be commenced within 6 years.



Whether or not PNB was correct in arguing that based on constructive trust, it can still collect the amount from Mata even after more than 6 years have already lapsed.



PNB was correct in stating that based on constructive trust, he may claim the $14,000 it erroneously sent to Mata. In fact, he can opt to invoke solution indebiti or constructive trust to claim it. However, the action to enforce an implied trust is already barred by laches.

Article 1456 of the Civil Code provides:  If property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of the person from whom the property comes.

On the other hand, Article 2154 states:  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.

If it is to be construed as a case of payment by mistake or solutio indebiti, then the prescriptive period for quasi-contracts of six years applies, as provided by Article 1145. As pointed out by the appellate court, petitioner’s cause of action thereunder shall have prescribed, having been brought almost seven years after the cause of action accrued. However, even assuming that the instant case constitutes a constructive trust and prescription has not set in, the present action has already been barred by laches.

To recall, trusts are either express or implied. While express trusts are created by the intention of the trustor or of the parties, implied trusts come into being by operation of law. Implied trusts are those which, without being expressed, are deducible from the nature of the transaction as matters of intent or which are superinduced on the transaction by operation of law as matters of equity, independently of the particular intention of the parties.

In turn, implied trusts are subdivided into resulting and constructive trusts. A resulting trust is a trust raised by implication of law and presumed always to have been contemplated by the parties, the intention of which is found in the nature of the transaction, but not expressed in the deed or instrument of conveyance.  Examples of resulting trusts are found in Articles 1448 to 1455 of the Civil Code.  On the other hand, a constructive trust is one not created by words either expressly or impliedly, but by construction of equity in order to satisfy the demands of justice. An example of a constructive trust is Article 1456 quoted above. 

A deeper analysis of Article 1456 reveals that it is not a trust in the technical sense for in a typical trust, confidence is reposed in one person who is named a trustee for the benefit of another who is called the cestui que trust, respecting property which is held by the trustee for the benefit of the cestui que trust.  A constructive trust, unlike an express trust, does not emanate from, or generate a fiduciary relation. While in an express trust, a beneficiary and a trustee are linked by confidential or fiduciary relations, in a constructive trust, there is neither a promise nor any fiduciary relation to speak of and the so-called trustee neither accepts any trust nor intends holding the property for the beneficiary. 

Mata, in receiving the US$14,000 in its account through IBAA, had no intent of holding the same for a supposed beneficiary or cestui que trust, namely PNB. But under Article 1456, the law construes a trust, namely a constructive trust, for the benefit of the person from whom the property comes, in this case PNB, for reasons of justice and equity.

It must be borne in mind that in an express trust, the trustee has active duties of management while in a constructive trust, the duty is merely to surrender the property.

Still applying American case law, quasi-contractual obligations give rise to a personal liability ordinarily enforceable by an action at law, while constructive trusts are enforceable by a proceeding in equity to compel the defendant to surrender specific property. To be sure, the distinction is more procedural than substantive.

Further reflection on these concepts reveals that a constructive “trust” is as much a misnomer as a “quasi-contract,” so far removed are they from trusts and contracts proper, respectively. In the case of a constructive trust, as in the case of quasi-contract, a relationship is “forced” by operation of law upon the parties, not because of any intention on their part but in order to prevent unjust enrichment, thus giving rise to certain obligations not within the contemplation of the parties. 

Returning to the instant case, while petitioner may indeed opt to avail of an action to enforce a constructive trust or the quasi-contract of solutio indebiti, it has been deprived of a choice, for prescription has effectively blocked quasi-contract as an alternative, leaving only constructive trust as the feasible option.

It is wrong to conclude that in a constructive trust, only the person obtaining the property commits a mistake. This is because it is also possible that a grantor, like PNB in the case at hand, may commit the mistake.

PNB cannot claim the US$14,000 it erroneously paid private respondent under a constructive trust. Although only seven (7) years lapsed after petitioner erroneously credited private respondent with the said amount and that under Article 1144, petitioner is well within the prescriptive period for the enforcement of a constructive or implied trust, petitioner’s claim cannot prosper since it is already barred by laches. It is a well-settled rule now that an action to enforce an implied trust, whether resulting or constructive, may be barred not only by prescription but also by laches.

While prescription is concerned with the fact of delay, laches deals with the effect of unreasonable delay. It is amazing that it took petitioner almost seven years before it discovered that it had erroneously paid private respondent. Petitioner would attribute its mistake to the heavy volume of international transactions handled by the Cable and Remittance Division of the International Department of PNB. Such specious reasoning is not persuasive. It is unbelievable for a bank, and a government bank at that, which regularly publishes its balanced financial statements annually or more frequently, by the quarter, to notice its error only seven years later. As a universal bank with worldwide operations, PNB cannot afford to commit such costly mistakes. Moreover, as between parties where negligence is imputable to one and not to the other, the former must perforce bear the consequences of its neglect. Hence, petitioner should bear the cost of its own negligence.


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