G.R. No. 121313 April 10, 1997
Ravago Equipment Rentals, Inc., plaintiff-appellee, vs. Court of Appeals and Alcolex Corporation, respondents.

FACTS

Ravago Equipment Rentals, Inc. (Ravago) filed a complaint for a sum of money against Alcolex Corporation (Alcolex). Ravago alleged that the parties entered into a Lease Contract dated October 10, 1990, for a diesel generator. The contract stipulated a monthly rental of P120,000 for 200 operating hours or one month, whichever came first, with overtime charges of P600 per hour for use exceeding 200 hours. Ravago claimed that from October 10, 1990, to February 1, 1991, Alcolex incurred total charges of P1,172,406.50, but only paid P525,437.50, leaving a balance of P646,969.00 for alleged overtime use.
In its Answer, Alcolex denied the genuineness of the contract, asserting that its signatory, Edgardo Chua, was an unauthorized messenger. Alcolex admitted the P525,437.50 payment but contended it represented full payment for the generator’s use, denying liability for any overtime charges. The trial court ruled in favor of Ravago, ordering Alcolex to pay the balance, exemplary damages, and attorney’s fees. On appeal, the Court of Appeals reversed the trial court and dismissed the complaint.

ISSUE

Whether Alcolex is liable to pay Ravago for the alleged overtime charges for the use of the leased generator.

RULING

The Supreme Court affirmed the decision of the Court of Appeals, holding that Alcolex is not liable for the overtime charges. The Court first addressed the enforceability of the lease contract. Applying Article 1317 of the Civil Code, the Court held that even assuming Edgardo Chua lacked authority, Alcolex’s act of using the generator constituted implied ratification, making the contract binding.
However, the Court ruled that Ravago failed to discharge its burden of proof to establish Alcolex’s liability for the overtime charges. Ravago, as the plaintiff, bore the burden of proving its claim by preponderance of evidence. The evidence presented—primarily the lease contract and a summary of accounts prepared by its employee, Nicia Ramos—was insufficient. The person who prepared the statement of account was not presented as a witness to testify on how the overtime charges were computed or to substantiate the actual occurrence and duration of the overtime use. The document alone did not prove that Alcolex actually incurred the charges.
The Court also rejected Ravago’s argument that Alcolex’s failure to reply to demand letters constituted an admission of liability. Citing established jurisprudence, silence to a letter containing a claim does not amount to an admission, absent circumstances making a reply requisite or natural. Consequently, without competent evidence proving the overtime use, Ravago’s claim must fail.