443 Phil. 108
QUISUMBING, J.:
On September 9, 1994, BSP and C.T. Gumaru Construction (CTGC) entered into a “Contract for the Complete Supply of Labor and Materials for the Proposed Construction of the Bangko Sentral Regional Unit Building in Lucena City.” By virtue of said agreement, CTGC bound itself to, among other things, undertake the proposed construction of BSP’s building in Lucena City to be completed within two hundred forty (240) calendar days, to be reckoned from ten (10) calendar days after CTGC’s receipt of the Notice to Proceed.ARTICLE I – SCOPE OF WORK
The PCM[6] shall undertake the project management, design management and construction management, with the end-view of ensuring for the BANK a high degree of quality control and inspection, and that all phases of the construction, such as architectural, structural, electrical, mechanical, sanitary/plumbing, airconditioning, civil works and other phases of work that are necessary to complete the project, are properly accomplished. Its services shall supplement and/or complement administrative supervision by the BANK and the PCM shall provide an on-site Construction Management Staff to monitor and closely coordinate the different phases of the construction work.
x x x
ARTICLE II- COMPENSATION AND MANNER OF PAYMENT
For services to be rendered by the PCM for ten (10) months, inclusive of the pre-construction, construction and post-construction periods, the BANK shall pay the amount of SIX HUNDRED SEVENTY SIX THOUSAND FORTY FOUR PESOS & 35/100 (P676,044.35) Philippine Currency, broken down as follows:
Pre-Construction Phase - P59,278.86 to be paid in two (2) equal payments: 1st payment to be released after the opening of bids while the 2nd payment will be released after the issuance of the Notice of Award (NOA) Construction, Post-Construction & Project Close-out Phase - P616,765.49 to be paid as progress billings on the value of work accomplished including cost of owner-furnished materials.
Supervision of construction work beyond the original contract completion time, unless officially authorized by the BANK, shall not entitle the PCM to additional compensation and shall be undertaken by the PCM for his own account.
Contract completion time may, however, be extended only for the following reasons:Supervision by the PCM during duly authorized extensions of contract time shall be compensated on the basis of actual man-months rendered and approved rates multiplied by a factor of 1.5.
- Delay in delivery of owner-furnished materials
- Change in scope of work due to revisions
- Hold orders on areas requiring the decision of the BANK
- Unreasonably delayed payments
- Force majeure
x x x
On the basis of the above findings, it is the conclusion of this Arbitrator that the claim of JGS is valid. Accordingly, BSP is ordered to pay JGS its first billing in the amount of P450,604.96, with interest at the rate of 6% per annum from February 23, 1996 until it is fully paid; and its second billing for the amount of P62,451.05 with interest also at the rate of 6% per annum from September 10, 1996 until it is fully paid.The CIAC noted that the contract itself had allowed additional compensations on authorized extensions and that any delays in this case are solely attributable to BSP first, due to design revision and second, due to its delay in resolving the issues raised by CTGC, so that the project completion date had gone far beyond what the parties had contemplated. Hence, BSP should bear any resulting losses.
In view of the long delay in the construction of the Project, the prices quoted by JGS are no longer realistic. It would be unjust and inequitable for JGS to be required to complete the balance of the work which is estimated to be 66% in accordance with the unit rates made by JGS in his proposal. This Arbitrator would have no basis for determining the appropriate adjustment taking into consideration cost escalation. The parties are, therefore, directed to negotiate and determine the amount of cost escalation to be allowed JGS for work already performed and for performing the balance of 66% of the work….
x x x
In view of the finding that neither party acted in bad faith, no award for attorney’s fees is made. Both parties are ordered to pay in equal share the cost of arbitration including the arbitrator’s fees.[10]
On the basis of the above findings, it is the conclusion of this Arbitrator that the claim of JGS is valid. Accordingly, BSP is ordered to pay JGS its first billing in the amount of P450,604.96, with interest at the rate of 6% per annum from February 23, 1996 until it is fully paid; and its second billing for the amount of P62,451.05 with interest also at the rate of 6% per annum from September 10, 1996 until it is fully paid; and the amount of P108,610.52 for services rendered from April 10, 1996 to July 31, 1996.[11] (Italics supplied)On March 11, 1998, BSP filed a Motion for Correction/ Reconsideration, which the CIAC denied in its Order[12] of March 16, 1998.
FOR ALL THE FOREGOING, the instant petition is hereby DISMISSED and the challenged decision dated February 9, 1998 and Amended Award dated February 20, 1998, both of the Construction Industry Arbitration Commission in CIAC Case No. 37-97 AFFIRMED (sic) in toto.The Court of Appeals found that while the PCM contract provided for a lump-sum payment for services rendered, it also provided for additional compensation for services rendered beyond the original completion date, if officially authorized by BSP. Thus, it is purely lump sum only when the project is accomplished on the original completion date. The appellate court likewise observed that the absence of formal authorization to extend the completion date cannot be a source of comfort for BSP, as the contract was ambiguous on this point. It was not comprehensive enough to include mechanisms for respondent to compel BSP to issue an official authorization to extend the project period, should circumstances call for such an issuance. It noted that the delays were clearly not attributable to respondent. Hence, it would be utterly oppressive to respondent if the “progress billing” provisions be strictly applied as such presupposes that the project will be completed within the targeted completion date. The appellate court ruled that respondent should not be made to pay for the consequence of CTGC’s incompetence, negligence or abandonment of the project since respondent rendered full service within the project period.
SO ORDERED.[13]
Given these averments, the only issue for our resolution is whether or not the Court of Appeals erred in holding that respondent is entitled to the payment claimed for extended services under the PCM Contract.
- …THE PCM CONTRACT IS A LUMP SUM CONTRACT IN AND FOR THE SUM OF P676,044.35.
- …THE COMPENSATION FOR THE PROJECT CONSTRUCTION MANAGEMENT SERVICES IN THE CONSTRUCTION, POST-CONSTRUCTION, AND PROJECT CLOSE-OUT PHASES IS TO BE PAID ON PROGRESS BILLINGS BASED ON THE VALUE OF WORK ACCOMPLISHED BY THE GENERAL CONTRACTOR, INCLUDING THE COST OF OWNER-FURNISHED MATERIAL.
- …ADDITIONAL COMPENSATION FOR ALLEGED EXTENDED SERVICES RENDERED BY JSA MAY BE GIVEN ONLY IF THE SUPERVISION IS OFFICIALLY AUTHORIZED BY BSP.
- …THE CONSTRUCTION INDUSTRY ARBITRATION COMMISSION’S COMPUTATION OF THE AWARD IN FAVOR OF JSA’S IS NOT SUPPORTED BY EVIDENCE.[14]
Petitioner BSP itself alleges that in finding that the personnel of JGS were at the project site during the subject periods, CIAC merely relied on the affidavit of Jesus Santamaria (Exhibit “A-29”), and the Certification dated January 27, 1998 (Exh. “A-30”), of one Percival Pagador, Project Manager of CTGC. In short, BSP impliedly admits that this particular finding of the CIAC is somehow supported by evidence, albeit not of the quantum desired by it. We are constrained to uphold such finding because We do not see in the instant petition any countervailing proof that the same and the computation made on the basis thereof are actually inaccurate.Moreover, as pointed out by CIAC, BSP had raised this issue belatedly, thus:
As it appears, BSP is itself not in a position to competently ascertain the truth of JGS’s allegation relative to the number and actual presence of its personnel at the site. For sure, on page 19 of its petition, BSP in fact admits that it “had no other way of checking the actual presence of JGS’s personnel at the project site”. If this were so, then how can We fault the CIAC for relying on the figures furnished by JGS when no evidence whatsoever was put forward by the petitioner to refute what JGS had presented as bases for its monetary claim?[19]
Moreover, the [BSP], in its answer and in its special defenses, had not raised as issues the matter of the number of Claimant’s technical personnel at the project site, nor of the basis of the computation of the Claimant’s billings. It should have done so since the Claimant’s exhibits were attached to his original claim.Finally, we find that the award of interest needs modification. Except on the amount of P108,610.52 for services rendered form April 10, 1996 to July 31, 1996, for which no interest was awarded, the CIAC awarded interest at the rate of 6% per annum from the dates of demand, i.e. February 23, 1996 and September 10, 1996, respectively, until fully paid. These referred to the first and second billings amounting to P450,604.96 and P62,451.05, respectively.
It is, therefore, too late in the day for the [BSP] to raise Ground No. IV as basis for seeking a reconsideration of the Decision and of the Amended Award.[20]
Since this case does not involve any obligation arising from loan or forbearance of money, then the interest should be imposed as follows:x x x
- When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated claims or damages except when or until the demand can be established with reasonable certainty. Accordingly, where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained). The actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged.
- When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be 12% per annum from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit. [21]
On the first billing for P450,604.96 – 6% per annum computed from the date of demand on February 23, 1996 while an interest of 12% per annum shall be imposed on such amount from the finality of this decision until the payment thereof.WHEREFORE, the petition is DENIED, and the decision of the Court of Appeals in CA G.R. SP. No. 47274 is AFFIRMED with the MODIFICATION that petitioner Bangko Sentral ng Pilipinas is ordered to pay respondent Jesus G. Santamaria the amount of P450,604.96 plus interest thereon at the rate of 6% per annum computed from February 23, 1996; the amount of P62,451.05 plus interest thereon at the rate of 6% per annum computed from September 10, 1996; and the amount of P108,610.52 plus interest thereon at the rate of 6% per annum computed from February 20, 1998. However, for any amount not yet paid after the date of the finality of this decision, the rate of interest on the payable amount shall be increased to 12% per annum from the date of this decision until fully paid. Costs against petitioner.
On the second billing for P62,451.05 - 6% per annum computed from the date of demand on September 10, 1996 while an interest of 12% per annum shall be imposed on such amount from the finality of this decision until the payment thereof.
On the P108,610.52 for services rendered from April 10, 1996 to July 31, 1996 - 6% per annum computed from the date of decision of CIAC on February 20, 1998 while an interest of 12% per annum shall be imposed on such amount from the finality of this decision until the payment thereof.