G.R. No. 139885; January 13, 2003
Bangko Sentral ng Pilipinas, petitioner, vs. Jesus G. Santamaria, doing business under the name and style of J. Santamaria & Associates, respondent.

FACTS

Petitioner Bangko Sentral ng Pilipinas (BSP) and respondent Jesus G. Santamaria (JGS), doing business as J. Santamaria & Associates (JSA), entered into a Contract for Project Construction Management (PCM) Services for BSP’s Regional Unit Building in Lucena City. The contract stipulated a lump sum fee of P676,044.35 for services over a ten-month period, covering pre-construction, construction, and post-construction phases. A key provision stated that supervision beyond the original contract completion time would not entitle the PCM to additional compensation unless officially authorized by BSP, and that supervision during duly authorized extensions would be compensated based on actual man-months rendered at approved rates multiplied by 1.5.
The construction, undertaken by C.T. Gumaru Construction (CTGC), commenced on September 29, 1994, with a target completion date of May 26, 1995. The project incurred significant delays due to BSP’s issuance of several Variation Orders, which led to work suspensions and a 90-day extension granted to CTGC, resetting the completion date to April 9, 1996. Despite this extension, CTGC had completed only about 33% of the work by April 9, 1996, and eventually pulled out on July 31, 1996. JSA ceased its services the following day.
JSA submitted claims to BSP for payment for extended services rendered beyond the original completion period: the first claim for P450,604.96 (covering May 27, 1995 to January 31, 1996) on February 23, 1996, and a second claim for P62,451.05 (covering February 1, 1996 to April 9, 1996) on September 10, 1996. BSP did not act on these claims. When BSP later requested JSA to remobilize after CTGC resumed work under a new supplemental contract, JSA refused pending resolution of its unpaid claims.
JSA filed a Request for Adjudication with the Construction Industry Arbitration Commission (CIAC). The CIAC ruled in favor of JSA, ordering BSP to pay the two billings plus interest and an additional P108,610.52 for services from April 10, 1996 to July 31, 1996. The Court of Appeals affirmed the CIAC decision. BSP elevated the case to the Supreme Court via certiorari.

ISSUE

Whether the Court of Appeals erred in affirming the CIAC’s decision ordering BSP to pay JSA for extended construction management services, despite the contract provision stating that supervision beyond the original completion time, unless officially authorized, shall not entitle the PCM to additional compensation.

RULING

The Supreme Court DENIED the petition and AFFIRMED the Court of Appeals’ decision with MODIFICATION regarding the interest rates.
The Court held that the CIAC’s factual findings, affirmed by the Court of Appeals, are conclusive and not subject to review. It found that the project delays were solely attributable to BSP due to design revisions (Variation Orders) and its delay in resolving issues raised by the contractor. Although BSP did not formally authorize an extension of JSA’s service period, its actionsissuing Variation Orders, granting the contractor a time extension, and requesting JSA to continue its supervisionconstituted an implied approval of the necessary extension of JSA’s services. The contract provision for additional compensation during “duly authorized extensions” was thus applicable.
The Court modified the interest imposed. It ruled that since the obligation did not arise from a loan or forbearance of money, the proper interest on the amounts due is 6% per annum from the date of demand or accrual. After the finality of the decision, any unpaid amount shall earn interest at 12% per annum until fully paid. Specifically:
1. On P450,604.96 6% per annum from February 23, 1996.
2. On P62,451.05 6% per annum from September 10, 1996.
3. On P108,610.52 6% per annum from February 20, 1998 (CIAC amended award date).
All amounts unpaid after the finality of the decision shall earn 12% per annum until fully paid.