Title
Ravago Equipment Rentals, Inc. vs. Court of Appeals
Case
G.R. No. 121313
Decision Date
Apr 10, 1997
Ravago sued Alcolex for unpaid generator lease charges. SC ruled lease binding due to implied ratification but dismissed overtime claims due to insufficient evidence.
unpaid overtime charges
dismissal of complaint
enforceability of rental contract
A

Case Summary (G.R. No. 121313)

Parties and Setting

Ravago’s complaint alleged that, under the lease arrangement, Alcolex was to pay P120,000.00 per month, which covered “use, non-use or standby” of the generator and/or 200 operating hours within the period whichever comes first. The contract allegedly provided that operation in excess of 200 hours would be charged at P600.00 per hour, with a month computed as eight (8) hours per day for 25 days (equivalent to 200 hours). It also provided that when the generator was used on a holiday or Sunday, a minimum of eight (8) hours per day would be charged to the lessee. Ravago claimed that from 10 October 1990 to 1 February 1991, total rentals and charges due amounted to P1,172,406.50, of which only P525,437.50 had been paid, leaving an unpaid balance of P646,969.00, plus exemplary damages, attorney’s fees, and costs. Alcolex denied the genuineness and due execution of the lease contract and asserted that the person who signed for Alcolex, Edgardo Chua, lacked authority to represent the corporation.

Factual Background: The Lease and the Claimed Overtime

The evidence presented in the record, as described by the Court, showed that Ravago relied on the rental contract (attached as Annex “A” to the complaint) and on accounting materials used to compute the claimed balance. Ravago also presented a demand letter signed by its counsel, Atty. Larry Iguidez, and a five (5)-page itemized version of the statement of account, as well as a summary of accounts prepared by its employee, Nicia Ramos. Alcolex, in turn, admitted having paid P525,437.50, but it maintained that the payment represented full, total, and final payment for the entire duration of use under the terms and agreed price. Beyond this, Alcolex challenged the claimed basis for any additional overtime charges, while Ravago maintained that overtime charges were unpaid.

Trial Court Proceedings

On 14 September 1992, the trial court rendered a decision ordering Alcolex to pay: (a) P646,969.00 for overtime use and unpaid rentals or charges for the generator; (b) P20,000.00 as exemplary damages; (c) P20,000.00 as attorney’s fees; and (d) all expenses of litigation. The trial court thus sustained Ravago’s claim that Alcolex owed the unpaid overtime-related balance and awarded additional monetary reliefs and litigation expenses.

Court of Appeals Proceedings

On appeal, the Court of Appeals reversed the trial court. In its decision dated 10 January 1995, it set aside the trial court’s judgment and dismissed the complaint. Ravago sought reconsideration, but the Court of Appeals denied the motion in its resolution dated 24 July 1995. Hence, Ravago filed the present petition for review on certiorari, assigning errors against the Court of Appeals for (1) allegedly considering an issue raised for the first time on appeal and (2) allegedly holding that Ravago failed to prove its claim against Alcolex.

The Parties’ Contentions

Ravago argued that the issue of the veracity of the overtime charges was not raised before the trial court. Ravago insisted that, in the trial court pleadings, Alcolex merely disputed whether the lease contract bound it as a corporation and denied neither the existence of overtime use nor the charges therefor. Ravago thus maintained that the Court of Appeals erred in considering any overtime-related issue that allegedly surfaced only on appeal.

Alcolex denied liability under the lease contract on the ground that Edgardo Chua was allegedly not authorized to bind the corporation because he was a dismissed messenger who had not completed his probationary employment. Alcolex also argued that there was no admission, expressed or implied, of the claimed overtime charges. It emphasized that the amount it paid, P525,437.50, was the full, total, and final payment on the basis of the agreed terms and price.

Core Issue on Appeal

The Supreme Court treated the core issue as whether Alcolex was liable to pay overtime charges for the use of the generator leased from Ravago. Because Ravago had filed the complaint for a sum of money, the Court applied the rule that the burden of proving Alcolex’s liability for overtime use and charges rested on Ravago, consistent with the maxim probandi necessitas incumbit illi qui agit.

Supreme Court’s Discussion on the Issues Raised and the Overtime Charges

The Court held that Ravago’s first assigned error did not warrant extended discussion. It ruled that Alcolex’s position in its answer effectively denied liability for overtime charges. Specifically, the Court noted that Alcolex stated in its answer that when it agreed to the “excessive rental of P120,000.00 a month,” that amount covered the maximum and full monthly charges of operation during the lease period. The Court further considered that Alcolex had also raised, in its memorandum before the trial court, the absence of proof for the claimed overtime, including the lack of evidence showing actual overtime incurred, its duration, and the dates and other relevant data. On that basis, the Court found it incorrect for Ravago to assert that the veracity of overtime charges had never been raised at the trial level.

On the substantive entitlement to Ravago’s requested reliefs, the Court concluded that Ravago’s evidence “left much to be desired.” Ravago presented the rental contract and accounting documents, but the Court emphasized evidentiary insufficiency. It observed that the person who prepared the statement of account against Alcolex was not presented in court, and that the statement of account did not, by itself, prove actual overtime use by Alcolex. The Court characterized the proof as a “dearth of evidence” showing whether the overtime charges reflected in the statement of account were actually incurred by Alcolex. With that deficiency, the complaint could not prosper and had to fail.

Evidentiary Rulings: Demand Letters and Alleged Admissions

Ravago also argued that Alcolex’s failure to reply to demand letters constituted a basis for liability. The Court rejected that contention. It cited A.B. Leach and Co. v. Peirson, 275 US 120 [1927], adopting the principle that a party cannot make evidence for itself by writing a letter containing statements it wishes to prove. The Court reiterated that the failure to answer adverse assertions, without further circumstances making an answer requisite or natural, has no effect as an admission. Accordingly, Ravago’s reliance on Alcolex’s silence was found to be “non-sequitur” and without merit.

Legal Basis and Reasoning

The Supreme Court grounded its disposition on two connected propositions. First, Ravago bore the burden of proof for overtime charges as plaintiff. Second, even assuming the underlying lease contract could be enforced against Alcolex, Ravago still failed to establish by sufficient evidence that overtime use occurred and that the overtime charges were correctly and actu

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