SBTC vs.

CA, 249 SCRA 206

PROVISION: Art. 1182. When the fulfillment of the condition depends upon the sole will of the
debtor, the conditional obligation shall be void. If it depends upon chance or upon the will of a
third person, the obligation shall take effect in conformity with the provisions of this Code.

FACTS:
● Ysmael C. Ferrer was contracted by Security Bank and Trust Company (SBTC) and
Rosito C. Manhit to construct the building of SBTC in Davao City for 1.7M.
● Ferrer completed the construction within the contracted period but he incurred additional
300k expenses because of a drastic increase in the cost of the materials for
construction.
● Ferrer made timely demands for payment of the increased cost, supported by receipts,
invoices, payrolls and other documents proving the additional expenses.
● To support Ferrer’s claim for additional cost, the AVP of SBTC and a representative from
an architectural firm verified the additional cost, but decreased it to 200k.
● SBTC DID NOT PAY. Said there was no mutual agreement, SBTC alleges that the
obligation to pay the additional cost never materialized.
○ Under the contract, “subject to the condition that the "appropriate adjustment" will
be made "upon mutual agreement of both parties." According to SBTC, that was
not present.
● Ferrer filed a complaint for breach of contract with damages.
● RTC rules in favor of Ferrer, and CA affirmed the RTC decision.

ISSUE: W/N SBTC is liable to pay for the increased construction cost. (Yes)

RULING: Under Article 1182 of the Civil Code, a conditional obligation shall be void if its
fulfillment depends upon the sole will of the debtor. 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.
● The additional expenses, after all, were proven through receipts, invoices and other
supporting documents, and SBTC benefitted from the construction notwithstanding the
additional costs incurred.
● To allow SBTC to acquire the building at a price far below the actual construction cost
would constitute unjust enrichment, prejudicial to Ferrer.
● Therefore, SBTC must pay for the additional costs.