Shinryo (Philippines) Company, Inc. v. RRN Inc.

, 20 October 2010
FACTS:

Petitioner Shinryo (Philippines) Company, Inc. (petitioner) and private respondent RRN
Incorporated (respondent) are both domestic corporations organized under Philippine
laws. Respondent filed a claim for arbitration against petitioner before the Construction
Industry Arbitration Commission (CIAC) for recovery of unpaid account while petitioner
filed a counterclaim for overpayment.

Petitioner and respondent executed an Agreement and Conditions of Sub-contract.

Respondent signified its willingness to accept and perform for petitioner in any of its
projects described in Conditions of Sub-Contract and other Sub-contract documents.
The parties also agreed that respondent will perform variation orders for the Phillip
Morris Greenfield Project (Project). In connection with it, petitioner supplied manpower
chargeable against respondent.

Unfortunately, respondent was not able to finish the entire works with petitioner due to
financial difficulties. Petitioner paid respondent a total amount of P26,547,624.76. On
June 25, 2005 [should read 2003], respondent, through its former counsel sent a letter
to petitioner demanding for the payment of its unpaid balance amounting to
P5,275,184.17. Petitioner claimed material back charges in the amount of
P4,063,633.43. On September 26, 2003, respondent only acknowledged P2,371,895.33
as material back charges. Thereafter, on October 16, 2003, respondent sent another
letter to petitioner for them to meet and settle their dispute.

ISSUE:

Whether or not the respondent should be made to pay based on the principle of unjust
enrichment?

RULING:

No. Petitioner contends that it is entitled to payment for respondent's use of its manlift
equipment, and even absent proof of the supposed agreement on the charges,
respondent should be made to pay based on the principle of unjust enrichment. Court
ruled that the petitioner's reliance on the principle of unjust enrichment is likewise
misplaced.

Unjust enrichment is explained in University of the Philippines v. Philab Industries, Inc.:

“Unjust enrichment claims do not lie simply because one party benefits from the efforts
or obligations of others, but instead it must be shown that a party was unjustly enriched
in the sense that the term unjustly could mean illegally or unlawfully.

Moreover, to substantiate a claim for unjust enrichment, the claimant must

unequivocally prove that another party knowingly received something of value to which
he was not entitled and that the state of affairs are such that it would be unjust for the
person to keep the benefit. Unjust enrichment is a term used to depict result or effect of
failure to make remuneration of or for property or benefits received under circumstances
that give rise to legal or equitable obligation to account for them; to be entitled to
remuneration, one must confer benefit by mistake, fraud, coercion, or request. Unjust
enrichment is not itself a theory of reconvey. Rather, it is a prerequisite for the
enforcement of the doctrine of restitution.

Article 22 of the New Civil Code reads: 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.

In order that accion in rem verso may prosper, the essential elements must be present:
(1) that the defendant has been enriched, (2) that the plaintiff has suffered a loss, (3)
that the enrichment of the defendant is without just or legal ground, and (4) that the
plaintiff has no other action based on contract, quasi-contract, crime or quasi-delict.

An accion in rem verso is considered merely an auxiliary action, available only when
there is no other remedy on contract, quasi-contract, crime, and quasi-delict. If there is
an obtainable action under any other institution of positive law, that action must be
resorted to, and the principle of accion in rem verso will not lie.

As found by both the CIAC and affirmed by the CA, petitioner failed to prove that
respondent's free use of the manlift was without legal ground based on the provisions of
their contract. Thus, the third requisite, i.e., that the enrichment of respondent is without
just or legal ground, is missing. In addition, petitioner's claim is based on contract,
hence, the fourth requisite − that the plaintiff has no other action based on contract,
quasi-contract, crime or quasi-delict − is also absent. Clearly, the principle of unjust
enrichment is not applicable in this case.”