Security Bank and Trust Company v. CA, GR No.

117009 (Oct 11, 1995) 

UP v. De Los Angeles, GR No. L-28602 (Sep 29, 1970)

Ronquillo v. CA, GR No. L-55138 (Sep 28, 1984) 

SECURITY BANK & TRUST COMPANY and ROSITO C. MANHIT,

petitioners,
vs.
COURT OF APPEALS and YSMAEL C. FERRER, respondents.
G.R. No. 117009 October 11, 1995

PADILLA, J.:

FACTS
Security Bank and Trust Company (SBTC) and Rosito C. Manhit contracted
Ysmael Ferrer to construct in 200 days a building in consideration of
1,760,000.00. Ferrer was able to finish the construction of the building
within the prescribed time, but incurred additional expenses of about
300,000.00 on top of the original cost due to drastic increases in
construction materials. Ferrer made timely demands for payment of the
increased cost which were supported by receipts, invoices, payrolls and
other documents proving the additional expenses. SBTC and a
representative of an architectural firm verified Ferrer’s claims for
additional cost. A recommendation was then made to settle the claim for
200,000.00 but SBTC did not pay the amount, and instead denied any
liability for the additional cost. Ferrer then filed a claim for breach of
contract with damages in the RTC, which ruled in favor of Ferrer, Court of
Appeals affirmed the decision.
ISSUE
Whether Security Bank and Trust Company (SBTC) is liable to pay for the
increased construction cost

RULING
Yes, Under Article 1182 of the Civil Code, a conditional obligation shall be
void if its fulfillment depends upon the sole will of the debtor. In the
present case, the mutual agreement, the absence of which petitioner bank
relies upon to support its non-liability for the increased construction cost, is
in effect a condition dependent on petitioner bank's sole will, since private
respondent would naturally and logically give consent to such an
agreement which would allow him recovery of the increased cost.

Further, it cannot be denied that petitioner bank derived benefits when

private respondent completed the construction even at an increased cost.

Hence, to allow petitioner bank to acquire the constructed building at a

price far below its actual construction cost would undoubtedly constitute
unjust enrichment for the bank to the prejudice of private respondent. Such
unjust enrichment is not allowed by law.
UNIVERSITY OF THE PHILIPPINES, petitioner,
vs.
WALFRIDO DE LOS ANGELES, in his capacity as JUDGE of the
COURT OF FIRST INSTANCE IN QUEZON CITY, et al., respondents.
G.R. No. L-28602 September 29, 1970

REYES, J.B.L., J.:

FACTS
University of the Philippines (UP), pursuant to Act 3608, entered into a
logging agreement with ALUMCO granting the latter logging rights over a
particular land owned by UP. However, ALUMCO incurred debts which
were remained unpaid.

Upon receipt of notice from UP that it would rescind the contract,

ALUMCO executed an “Acknowledgment of Debt and Proposed Manner
of Payments” which obligated itself to pay for its incurred debts and upon
further failure to pay the same, UP may treat the logging agreement
rescinded without need for judicial action.

Despite the execution of the document, ALUMCO incurred again debts.

Thus, UP informed ALUMCO of its intention to rescind the contract.
However, ALUMCO continued its operations which opted UP to filed an
action for preliminary injunction and an action for preliminary attachment
for the payment of ALUMCOs debts.

During the pendency of the suit, UP was able to enter into another logging
agreement with Sta. Clara Lumber Company, Inc. ALUMCO however,
obtained a writ of preliminary injunction against UP and the Sta. Clara
Lumber to continue the logging operations. ALUMCO alleged that UP
cannot unilaterally rescind the contract without judicial action. Hence, this
petition.

ISSUE
Whether UP can treat its contact with ALUMCO rescinded and may
disregard the same before any judicial pronouncement to that effect

RULING
Yes, UP and ALUMCO had expressly stipulated in the "Acknowledgment
of Debt and Proposed Manner of Payments" that, upon default by the
debtor ALUMCO, the creditor (UP) has "the right and the power to
consider, the Logging Agreement as rescinded without the necessity of any
judicial suit." In connection with Article 1191 of the Civil Code, the Court
stated in Froilan vs. Pan Oriental Shipping Co., that “there is nothing in the
law that prohibits the parties from entering into agreement that violation of
the terms of the contract would cause cancellation thereof, even without
court intervention. In other words, it is not always necessary for the injured
party to resort to court for rescission of the contract.”

The party who deems the contract violated may consider it resolved or
rescinded, and act accordingly, without previous court action, but it
proceeds at its own risk. For it is only the final judgment of the
corresponding court that will conclusively and finally settle whether the
action taken was or was not correct in law.
ERNESTO V. RONQUILLO, petitioner,
vs.
HONORABLE COURT OF APPEALS AND ANTONIO P. SO,
respondents.
G.R. No. L-55138 September 28, 1984

CUEVAS, J.:

FACTS