Case Digest (G.R. No. 101444)
Facts:
The case involves A.C. Enterprises, Inc. as the petitioner and the Construction Industry Arbitration Commission (CIAC) and Dee Construction Corporation as the respondents. The events leading to this case began with a monetary award issued by the CIAC in favor of Dee Construction Corporation. The CIAC's decision was based on a dispute regarding a construction contract, which was arbitrated under the provisions of Executive Order No. 1008 and the Rules of Procedure Governing Construction Arbitration. Dee Construction Corporation filed a Second Motion for Partial Reconsideration, asserting its entitlement to interest at the rate of 12% per annum on the monetary award. The private respondent argued that according to the ruling in Eastern Shipping Lines, Inc. v. Court of Appeals, all final and executory monetary awards should bear legal interest of 12% per annum, regardless of the nature of the obligation. The case was brought before the Supreme Court after the CIAC's awar...
Case Digest (G.R. No. 101444)
Facts:
Parties Involved:
- Petitioner: A.C. Enterprises, Inc.
- Respondents: Construction Industry Arbitration Commission (CIAC) and Dee Construction Corporation.
Nature of the Case:
- The case involves a dispute over the imposition of interest on a monetary award granted by the CIAC.
Key Events:
- The CIAC issued an arbitral award in favor of Dee Construction Corporation.
- Dee Construction Corporation filed a Second Motion for Partial Reconsideration, insisting on its entitlement to 12% per annum interest on the monetary award.
- Dee Construction Corporation argued that under Executive Order No. 1008 and the Rules of Procedure Governing Construction Arbitration, arbitral awards are final and "inappealable." It also cited the ruling in Eastern Shipping Lines, Inc. v. Court of Appeals, which held that monetary awards in final and executory judgments shall bear legal interest of 12% per annum.
Legal Context:
- The obligation in question did not involve a loan or forbearance of money, and thus was not covered by Central Bank Circular No. 416.
- The Supreme Court had previously clarified in Reformina v. Tomol, Jr. and Pilipinas Bank v. Court of Appeals that the 12% interest rate applies only to loans or forbearance of money.
- However, in Eastern Shipping Lines, Inc., the Court ruled that once a judgment awarding a sum of money becomes final and executory, the monetary award shall earn 12% interest per annum from the date of finality until satisfaction, regardless of whether the case involves a loan or forbearance of money.
Procedural History:
- The CIAC award was not immediately final and executory. It became so only after the Supreme Court denied the motion for reconsideration on April 8, 1992.
- The award was fully paid to Dee Construction Corporation on May 6, 1992.
Issue:
- Whether Dee Construction Corporation is entitled to 12% per annum interest on the monetary award granted by the CIAC.
- Whether the term "final and inappealable" under Executive Order No. 1008 and the Rules of Procedure Governing Construction Arbitration is equivalent to "final and executory" as used in Eastern Shipping Lines, Inc.
Ruling:
- The Supreme Court denied Dee Construction Corporation's Second Motion for Partial Reconsideration.
- The Court held that the CIAC award did not become "final and executory" until April 8, 1992, when the Court denied the motion for reconsideration.
- The interest that accrued from April 8 to May 6, 1992 (less than a month) was deemed de minimis and not chargeable against the award.
Ratio:
Final and Inappealable vs. Final and Executory:
- A "final and inappealable" judgment is not the same as a "final and executory" one.
- Under Executive Order No. 1008 and the Rules of Procedure Governing Construction Arbitration, an arbitral award becomes executory only after 30 days from receipt of notice if no petition for review is filed with the Supreme Court.
Interest on Monetary Awards:
- The 12% per annum interest rate under Eastern Shipping Lines, Inc. applies only when a judgment awarding a sum of money becomes final and executory.
- In this case, the CIAC award became final and executory on April 8, 1992, and the interest accrued during the interim period (April 8 to May 6, 1992) was considered negligible (de minimis).
Legal Interest on Non-Loan Obligations:
- For obligations not involving loans or forbearance of money, the court may impose interest at 6% per annum at its discretion.
- However, once a judgment becomes final and executory, the 12% interest rate applies, as the interim period is deemed equivalent to a forbearance of credit.