Philippine Supreme Court Resolutions

G.R. No. 201560 (Dr. Jose Cesar Cabrera v. AMECO Contractors Rental, Inc.). - This is a petition for review on certiorari  under Rule 45 of the Rules of Court filed by Dr. Jose Cesar Cabrera (Cabrera) assailing the Decision^[1]  dated January 26, 2012 and Resolution^[2] dated April 17, 2012 issued by the Court of Appeals (CA) in CA-G.R. CV No. 93920.

On September 6, 1996, 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 Samsung MX 132 W Wheel Type Backhoe at the stipulated rate of P1,050.00 per hour. PMI subsequently delivered the Backhoe to Marble Plant's site on September 7, 1996.

On September 16, 1996, another rental contract was entered into by Cabrera and PMI for the lease of one CAT 200 Excavator at the stipulated rate of P1,050.00 per hour. PMI delivered the Excavator to Marble Plant's site on September 19, 1996.

On December 19, 1996, AMECO Contractors Rental, Inc. (AMECO) informed Cabrera that PMI had already ceased doing business as of September 30, 1996 and that, as a result of a joint venture agreement, AMECO had acquired all the assets of PMI including the Backhoe and Excavator leased to him and the corresponding credits and receivables due to PMI. Accordingly, AMECO billed Cabrera for the use of the said heavy equipment.

On January 2, 1997, Cabrera and AMECO executed two new contracts for the rent of the Backhoe and Excavator each at the rate of P1,050.00 per hour.

On March 31, 1997, AMECO sent Cabrera a Statement of Account informing him of his past due account. In order to settle Cabrera's unpaid obligations, AMECO and Cabrera, on several occasions, agreed to meet but the latter failed to appear. Despite repeated demands, Cabrera failed to settle his unpaid account to AMECO.

This prompted AMECO to file a Complaint for collection of sum of money against Cabrera and Marble Plant with the Regional Trial Court (RTC) of Quezon City on March 8, 1998. AMECO claimed that the unpaid rent owed by Cabrera and Marble Plant, as of January 20, 1998, 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 for the Backhoe and the Excavator 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.

On September 25, 2008, the RTC rendered a decision directing Cabrera to pay AMECO the following: (1) P1,81,350.00 for the rent due on the Backhoe and the Excavator; (2) 2% surcharge per month on the amount due from the date of default until full payment; (3) interest at the legal rate on the amount due; and (4) costs of suit.

Cabrera sought reconsideration of the Decision dated September 25, 2008 but it was denied by the RTC in its Order dated April 27, 2009.

Undeterred, Cabrera appealed the RTC�s disposition to the CA. Cabrera claimed that Marble Plant did not use the Backhoe and the Excavator after December 25, 1996 and that the said heavy equipment were leased out by AMECO to other quarrying plants. Further, he insisted that he is not liable to pay rent for the heavy equipment during the period that Marble Plant ceased its quarrying operation.

On January 26, 2012, the CA rendered the herein assailed decision which affirmed the RTC�s disposition. The CA pointed out that the rental contracts executed by Cabrera and AMECO on January 2, 1997 did not contain any provision stating that the renewal of the lease on the said heavy equipment is subject to the condition of the resumption of Marble Plant's quarrying operations. Thus, the CA, invoking the parol evidence rule, held that Cabrera is liable to pay the rent for the period that Marble Plant supposedly ceased its quarrying operations.

Farther, the CA stressed that there is nothing in the said rental contracts which support Cabrera's claim that he is not liable to pay rent in case of Marble Plant's cessation of operations. On the contrary, the CA opined that the rental contracts showed that Cabrera, even in case of non-usage of the heavy equipment, is still liable to pay rent.

Cabrera's motion for reconsideration was denied by the CA in its Resolution dated April 17, 2012.

Undaunted, Cabrera instituted the instant petition for review on certiorari before this Court essentially asserting the following arguments: first, the cessation of Marble Plant's quarrying operations is a fortuitous event which effectively forestalled his obligation to AMECO for the payment of rent of the leased heavy equipment; and second, notwithstanding the provisions of the rental contracts on payment of rent despite non-usage, he should not be made to pay the rent of the leased heavy equipment for the period that Marble Plant ceased its quarrying operation because it would be inequitable and result to unjust enrichment on the part of AMECO.

After a careful consideration, the Court finds no reversible error in the Decision of the CA.

First, we agree with the CA that the 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,^[3] 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." This provision is akin to the "plain meaning rule" applied by Pennsylvania courts, which assumes that the intent of the parties to an instrument is "embodied in the writing itself, and when the words are clear and unambiguous the intent is to be discovered only from the express language of the agreement." It also resembles the "four corners" rule, a principle which allows courts in some cases to search beneath the semantic surface for clues to meaning. A court's purpose in examining a contract is to interpret the intent of the contracting parties, as objectively manifested by them. The process of interpreting a contract requires the court to make a preliminary inquiry as to whether the contract before it is ambiguous. A contract provision is ambiguous if it is susceptible of two reasonable alternative interpretations. Where the written terms of the contract are not ambiguous and can only be read one way, the court will interpret the contract as a matter of law. If the contract is determined to be ambiguous, then the interpretation of the contract is left to the court, to resolve the ambiguity in the light of the intrinsic evidence."^[4] (Emphasis supplied)

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.

Indeed, Cabrera cannot be allowed to evade an otherwise valid and binding obligation to the detriment of AMECO by the mere expedient of alleging that they had agreed that no rent is due in the event of a cessation of Marble Plant's quarrying operations. On this score, the CA's disquisition is apropos, thus: 

Corollarily, the parol evidence rule constrains the Court to reject defendant-appellant's claim regarding the condition between him and plaintiff-appellee. The parol evidence rule states that when the terms of an agreement were reduced into writing, it is deemed to contain all the terms agreed upon and no evidence of such terms can be admitted other than the contents thereof. The parol evidence rule forbids any addition to, or contradiction of, the terms of a written agreement by testimony or other evidence purporting to show that different terms were agreed upon by the parties, varying the purport of the written contract.^[5] (Citations omitted)

Second, 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 but a foray in the dark. In Southeastern College, Inc. v. CA,^[6] this Court exhaustively explained the concept of caso fortuito, thus: 

This conclusion finds support in Article 1174 of the Civil Code, which provides:

"Art 1174. Except in cases expressly specified by the law, or when it is otherwise, declared by stipulation, or when the nature of the obligation requires the assumption of risk, no person shall be responsible for those events which could not be foreseen, or which, though foreseen, were inevitable."

The antecedent of fortuitous event or caso fortuito is found in the Partidas which defines it as "an event which takes place by accident and could not have been foreseen." Escriche elaborates it as "an unexpected event or act of God which could neither be foreseen nor resisted." Civilist Arturo M. Tolentino adds that "[f]ortuitous events may be produced by two general causes: (1)  by nature, such as earthquakes, storms, floods, epidemics, fires, etc. and (2) by the act of man, such as an armed invasion, attack by bandits, governmental prohibitions, robbery, etc."^[7] (Citations omitted and emphasis supplied)

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.^[8] 

Here, this Court could not fathom how the cessation of Marble Plant's querying operations could be considered as a fortuitous event which would exempt Cabrera from paying the rent for the leased heavy equipment during the period of the said cessation. Indubitably, the cessation of Marble Plant�s quarrying operations is an event that is definitely not impossible to foresee and, though foreseeable, is not impossible to avoid.

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. Also, the stoppage of Marble Plant�s quarrying operation is not impossible to avoid notwithstanding that one of its clients did not pay for the products that the latter had received. There is no reason why Marble Plant had to resort to a stoppage of its quarrying operations just because one of its clients failed to pay the processed marbles delivered by the former.

Third, 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.

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.^[9]

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.

Likewise, We find Cabrera�s invocation of equity untenable. Indeed, by no amount of equity considerations, if at all deserved, would suffice to behove this Court to turn a blind eye to the clear import of the contract executed by Cabrera and AMECO.cralaw

WHEREFORE,  in consideration of the foregoing disquisitions, the petition is DENIED.

SO ORDERED. 

Very truly yours, 

(Sgd.) TERESITA AQUINO TUAZON
Deputy Division Clerk of Court

Endnotes:

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^[1] Penned by Associate Justice Ramon A. Cruz, with Associate Justices Rosalinda Asuncion-Vicente and Antonio L. Villamor, concurring; rollo, pp. 13-25.

^[2] Id. at 32-33. 

^[3] G.R. No. 151402, August 22, 2008, 563 SCRA 25. 

^[4] Id. at 37, citing Abad v. Goldloop Properties, Inc., G.R. No. 168108, April 13, 2007, 521 SCRA 131, 143-144. 

^[5] Rollo, p. 19. 

^[6] 354 Phil. 434 (1998). 

^[7] Id. at 441-442. 

^[8] Cruz v. Sun Holidays, Inc., G.R. No. 186312, June 29, 2010, 622 SCRA 389-398, citing Lea Mer Industries, Inc. v. Malayan Insurance Co., Inc., 508 Phil. 656, 665 (2005). 

^[9] Flores v. Lindo, Jr., G.R. No. 183984, April 13, 2011, 648 SCRA 772, 782, 783, citing Republic v. Court of Appeals, G.R. No. 160379, August 14, 2009, 596 SCRA 57.