GR 142277; (December, 2002) (Digest)
G.R. No. 142277 December 11, 2002
ARWOOD INDUSTRIES, INC., petitioner, vs. D.M. CONSUNJI, INC., respondent.
FACTS
Petitioner Arwood Industries, Inc. (owner) and respondent D.M. Consunji, Inc. (contractor) entered into a Civil, Structural and Architectural Works Agreement dated February 6, 1989, for the construction of petitioner’s Westwood Condominium at a contract price of P20,800,000.00. Despite the project’s completion, a balance of P962,434.78 remained unpaid by petitioner despite respondent’s demands. Consequently, respondent filed a complaint for recovery of the balance, praying for payment of P962,434.78 with interest of 2% per month from November 1990, attorney’s fees, exemplary damages, and costs. The Regional Trial Court ruled in favor of respondent, ordering petitioner to pay the balance with 2% monthly interest from November 1990, attorney’s fees, and costs. On appeal, the Court of Appeals affirmed the trial court’s decision but deleted the award of attorney’s fees for lack of justification in the decision’s body. The Court of Appeals based the imposition of interest on Article 6.03 of the Agreement, which provided that in case of delay in payment of monthly progress billings, the owner shall pay interest at 2% per month. Petitioner moved for reconsideration, which was denied, leading to this petition.
ISSUE
The sole issue is the correctness of imposing a 2% per month interest on the awarded amount of P962,434.78.
RULING
The Supreme Court DENIED the petition, upholding the imposition of 2% monthly interest. The Court ruled that the Agreement, as the law between the parties, contained a clear provision (Article 6.03) allowing the contractor, in case of delayed monthly payments, the option to continue work and require the owner to pay 2% monthly interest on the amount due. Respondent chose this option upon completing the project. The Court rejected petitioner’s argument that the unpaid balance was not a “monthly progress billing,” holding that the phrase refers to portions of the contract price payable based on work accomplished, which includes the claimed amount. The Court further stated that even without a stipulation, Article 2209 of the Civil Code entitles the creditor to interest in case of delay in the payment of a sum of money. Thus, the Court of Appeals correctly affirmed the trial court’s decision.