Case Digest (G.R. No. 117009) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
In Security Bank & Trust Company and Rosito C. Manhit vs. Court of Appeals and Ysmael C. Ferrer (G.R. No. 117009, October 11, 1995), petitioners SBTC and its Vice-President Rosito C. Manhit engaged contractor Ysmael C. Ferrer by written agreement dated February 4, 1980 to erect SBTC’s Davao City building for ₱1,760,000 within 200 working days. Ferrer timely completed the work on August 15, 1980 but incurred an additional cost of approximately ₱300,000 due to an unforeseen surge in material and labor prices. He promptly informed SBTC through Vice-President Fely Sebastian and Supervising Architect Rudy de la Rama as early as March 1980 and supported his additional cost claim with receipts, invoices, payrolls, and other documents. In March 1981 SBTC’s Assistant Vice-President Susan Guanio and an outside architectural consultant verified the extra expenses and recommended settling for ₱200,000, but SBTC denied any obligation citing Article IX of the contract, which conditioned adjus Case Digest (G.R. No. 117009) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Contracting Parties and Agreement
- Security Bank & Trust Company (SBTC) and Rosito C. Manhit (hereafter “petitioners”) engaged Ysmael C. Ferrer (hereafter “private respondent”) by written contract dated February 4, 1980, to construct SBTC’s building in Davao City.
- The agreed contract price was ₱1,760,000.00, with completion to be achieved within 200 working days.
- Performance and Additional Costs
- Private respondent completed the building on August 15, 1980, within the stipulated period.
- Due to an unforeseen, drastic increase in the cost of labor and materials, private respondent incurred additional expenses amounting to approximately ₱300,000.00, duly reported to SBTC officers (Vice-President Fely Sebastian and Supervising Architect Rudy de la Rama) beginning March 1980, supported by receipts, invoices, payrolls, and other documentary evidence.
- SBTC’s Verification and Denial of Liability
- In March 1981, SBTC, through Assistant Vice-President Susan Guanio and its architectural consultant, audited and verified private respondent’s claim, recommending settlement of ₱200,000.00.
- SBTC nonetheless refused payment, invoking Article IX of the contract, which conditioned any price adjustment “upon mutual agreement of both parties,” and denied authorization or liability for amounts beyond the original contract price.
- Trial Court and Court of Appeals Proceedings
- Private respondent filed a complaint for breach of contract with damages in Civil Case No. 42712, RTC Makati, Branch 63.
- The trial court granted relief, awarding:
- ₱259,417.23 for increased costs plus 12% interest from August 15, 1980;
- ₱24,000.00 as actual damages;
- ₱20,000.00 as moral damages;
- ₱20,000.00 as exemplary damages;
- Attorney’s fees at 25% of principal; and
- Costs of suit.
- The Court of Appeals in CA-G.R. CV No. 40450 affirmed the trial court’s decision on August 31, 1994.
- Petition to the Supreme Court
- Petitioners sought review under Rule 45, assigning errors:
- That private respondent failed to prove his claim by a preponderance of evidence;
- That the lower courts misinterpreted the clear and unambiguous Article IX;
- That enforcing the award impaired petitioners’ obligation of contract without mutual agreement.
- The Supreme Court, noting inadequate merit briefing by private respondent’s counsel, undertook an independent review of the records.
Issues:
- Whether private respondent sufficiently proved his claim for additional construction costs by preponderance of evidence.
- Whether Article IX’s requirement of “mutual agreement” barred recovery of the increased costs.
- Whether the award of attorney’s fees at 25% of the principal amount was reasonable.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)