Dr. Jose Cesar Cabrera v. AMECO Contractors Rental, Inc.

G.R. No. 201560

SUMMARY:

Cabrera, sole proprietor of Marble Plant entered into a rental contract with PMI for lease of backhoe and excavator. AMECO
acquired assets of PMI. AMECO and Marble Plant entered into new contracts for the equipment. Marble Plant failed to pay rent.
AMECO filed a complaint with the RTC for collection of money. Cabrera in his defense pointed out that the renewal of the said
rental contracts was subject to the condition of the resumption Marble Plant’s quarrying operations. Thus, Cabrera posited that
he was under no obligation to pay rent for the said heavy equipment for the period that Marble Plant ceased its quarrying
operations. RTC granted petition in favor of AMECO. CA affirmed. SC held that the terms of the rental contracts are clear and
leave no doubt upon the intention of the parties therein. Nowhere in the said rental contracts was it ever stated that Cabrera’s
obligation to pay the rent for the lease of the said heavy equipment would be forestalled in the event of the cessation of Marble
Plant’s quarrying operations. Also, principle of unjust enrichment finds no application in this case. The benefit which would be
derived by AMECO should Cabrera pay for the rent of the heavy equipment for the period that Marble Plant ceased its quarrying
operations definitely has a valid basis. Petition Denied.

DOCTRINE:

The principle of unjust enrichment is provided under Article 22 of the Civil Code which provides:

Article 22. 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

There is unjust enrichment “when a person unjustly retains a benefit to the loss of another, or when a person retains money or
property of another against the fundamental principles of justice, equity and good conscience.” The principle of unjust
enrichment requires two conditions: (1) that a person is benefited without a valid basis or justification, and (2) that such benefit
is derived at the expense of another.

FACTS:

Cabrera, the sole proprietor of Sto. Rosario Marble Plant (Marble Plant) entered into a rental contract with Prime Machine, Inc.
(PMI) for the lease of one Backhoe and another contract for an Excacvator, both at a rate of P1,050.00 per hour each.

On December 19, 1996, AMECO Contractors Rental, Inc. (AMECO) informed Cabrera that AMECO had acquired all the assets of
PMI including the Backhoe and Excavator leased to him. Accordingly, AMECO billed Cabrera for the use of the said heavy
equipment. Cabrera and AMECO executed two new contracts for the rent of the Backhoe and Excavator at the same rate.

On March 31, 1997, AMECO sent Cabrera a Statement of Account informing him of his past due account. Despite repeated
demands, Cabrera failed to settle his unpaid account to AMECO.

AMECO filed a Complaint for collection of sum of money against Cabrera and Marble Plant with the (RTC) of Quezon City on
March 8, 1998. AMECO claimed that the unpaid rent already amounted to P1,960,939.00, inclusive of stipulated penalties. Thus,
AMECO prayed that Cabrera be ordered to pay the amount due, penalties, interests and attorney’s fees.

In his Answer, Cabrera admitted the execution of the rental contracts but asserted that the amount claimed by AMECO was
bloated and exaggerated. He averred that Marble Plant had stopped its quarrying operations after December 1996 and was only
able to resume its operations sometime in August 1997. He then pointed out that the renewal of the said rental contracts on
January 2, 1997 was subject to the condition of the resumption Marble Plant’s quarrying operations. Thus, Cabrera posited that
he was under no obligation to pay rent for the said heavy equipment for the period that Marble Plant ceased its quarrying
operations.

RTC ruled in favor of AMECO. CA affirmed. MR denied

ISSUE:

1. WON Cabrera should pay rent for the period Marble plant ceased operations? (Y)
2. WON there is unjust enrichment if Cabrera as made to pay such rent? (N)

HELD:
 1. Terms of the rental contracts entered into by Cabrera and AMECO on January 2, 1997 with regard to the lease of the
Backhoe and the Excavator are clear and leave no doubt upon the intention of the parties therein. In Benguet Corporation
v. Cabildo, we stressed that:
“The cardinal rule in the interpretation of contracts is embodied in the first paragraph of Article 1370 of the
Civil Code: "[i]f the terms of a contract are clear and leave no doubt upon the intention of the contracting parties,
the literal meaning of its stipulations shall control." (Benguet Corporation v. Cabildo )

Here, nowhere in the said rental contracts was it ever stated that Cabrera’s obligation to pay the rent for the lease of the
said heavy equipment would be forestalled in the event of the cessation of Marble Plant’s quarrying operations. Thus, the
RTC and the CA aptly ruled that Cabrera is liable to pay the rent for the lease of the said heavy equipment for the period that
Marble Plant’s quarrying operations purportedly ceased

2. Cabrera’s claim that, should he be directed to pay the rent for the period that Marble Plant stopped its quarrying
operations, AMECO would be unjustly enriched is likewise untenable. The principle of unjust enrichment is provided
under Article 22 of the Civil Code which provides:

Article 22. 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.

(also, see doctrine)

Contrary to Cabrera’s asseverations, the principle of unjust enrichment finds no application in this case. The benefit
which would be derived by AMECO should Cabrera pay for the rent of the heavy equipment for the period that Marble
Plant ceased its quarrying operations definitely has a valid basis. Cabrera’s payment of the rent for the said period is
but proper as it was agreed upon by him and AMECO in the rental contracts which they executed.

DISPOSITIVE:PETITION DENIED.

Minor issue

Cabrera’s assertion that the cessation of Marble Plant’s quarrying operations is a fortuitous event which effectively forestalled
his obligation to pay the rent for the leased heavy equipment is untenable

The elements of a "fortuitous event" are:

(a) the cause of the unforeseen and unexpected occurrence, or the failure of the debtors to comply with their obligations, must
have been independent of human will;
(b) the event that constituted the caso fortuito must have been impossible to foresee or, if foreseeable, impossible to avoid; (c)
the occurrence must have been such as to render it impossible for the debtors to fulfill their obligation in a normal manner; and
(d) the obligor must have been free from any participation in the aggravation of the resulting injury to the creditor.

Cabrera explains that the reason for the stoppage of Marble Plant’s quarrying operations is that its client, Tokyu Construction
Co., Ltd., did not pay for the processed marbles it received from Marble Plant. Certainly, it is not impossible to foresee the
contingency that a client would not be able to pay Marble Plant for the processed marbles that the latter has delivered.