Case Summary (G.R. No. 142277)

Background of the Case

• Petitioner Arwood Industries, Inc. and respondent D.M. Consunji, Inc. entered into a construction agreement for the Westwood Condominium.
• The total contract price was P20,800,000.00, but petitioner failed to pay P962,434.78 after project completion.
• Respondent filed a complaint for recovery of the unpaid balance and damages on August 13, 1993.

Trial Court's Decision

• The trial court ruled in favor of respondent, ordering petitioner to pay:
  • P962,434.78 with 2% interest per month from November 1990 until payment.
  • P150,000 as attorney's fees.
  • Costs of suit.
• Petitioner appealed, contesting the imposition of the 2% interest.

Court of Appeals' Ruling

• The Court of Appeals upheld the trial court's decision regarding the 2% interest, citing Article 6.03 of the Agreement.
• The appellate court modified the trial court's decision by removing the award for attorney's fees, stating it lacked justification in the body of the decision.

Petitioner's Arguments

• Petitioner contended that the trial court's decision lacked a basis for imposing the 2% interest, arguing that the provision in the Agreement referred only to "monthly progress billings."
• Petitioner also claimed that the issue of interest was not included in the pre-trial order.

Legal Basis for Interest

• The court emphasized that the Agreement is the formal expression of the parties' rights and obligations.
• Upon completion of the project, petitioner had a duty to pay the balance, and its refusal constituted a delay, justifying the imposition of interest as damages.

Interpretation of "Monthly Progress Billings"

• The court clarified that "monthly progress billings" are part of the contract price and refer to payments due based on work completed.
• Petitioner failed to provide a convincing alternative definition for "monthly progress billings."

Implications of Delay

• The court noted that delay in fulfilling contractual obligations is disfavored, as it causes damages to the other party.
• Respondent's choice to continue work despite delayed payments entitled it to t...continue reading

Case Syllabus (G.R. No. 142277)

Case Overview

• This case involves a petition for review regarding the decision of the Court of Appeals dated November 12, 1999, which modified the decision of the Regional Trial Court in favor of D.M. Consunji, Inc. against Arwood Industries, Inc.
• The primary issue at hand is the propriety of imposing a 2% monthly interest on the outstanding amount adjudged by the trial court, which was affirmed by the Court of Appeals.

Background Facts

• Arwood Industries, Inc. (petitioner) and D.M. Consunji, Inc. (respondent) entered into a construction agreement on February 6, 1989, for the Westwood Condominium project, with a total contract price of P20,800,000.00.
• Upon completion of the project, petitioner failed to pay P962,434.78, prompting respondent to file a complaint on August 13, 1993, seeking recovery of the unpaid balance along with additional claims for damages and attorney’s fees.

Court Proceedings

• The trial court ruled in favor of the respondent, granting the claims for the unpaid balance with 2% interest per month from November 1990, attorney’s fees of P150,000, and costs of the suit.
• Petitioner appealed, specifically contesting the inclusion of the 2% interest, arguing that this provision in the Agreement did not apply to the claim for the unpaid balance.

Court of Appeals Decision

• The Court of Appeals upheld the trial...continue reading