G.R. NO. 168794 - DEVELOPMENT BANK OF THE PHILIPPINES, VS. GLORIA C. BALLESTEROS, REPRESENTED BY HER ATTORNEY-IN-FACT, VALENTINO RIVERA.D E C I S I O N - Supreme Court E-Library

Ruling

WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff and against the defendant Development Bank of the Philippines, ordering the same to pay the plaintiff the amount of P26,725.00, representing the total penalty charges/liquidated damages less overpayment of the contract price, plus legal interest at the rate of 6% per annum on the said amount from the time of filing of the complaint up to the time payment is made before finality of judgment. Thereafter, if the amount adjudged remains unpaid, the interest rate shall be 12% per annum computed from the time the judgment becomes final and executory until fully satisfied. [3] and its Resolution [4] dated 28 June 2005 denying the motion for reconsideration of petitioner Development Bank of the Philippines (DBP). The following are the antecedents as narrated by the Court of Appeals: The plaintiff-appellee contractor won the bidding for the refurbishing of the Development Bank of the Philippines, Cabanatuan Branch Building. Thus, pursuant thereto the defendant-appellant Development Bank of the Philippines (DBP for brevity), and the plaintiff-appellee (hereinafter referred to as contractor) entered into a contract of service for the refurbishing of the DBP Cabanatuan Branch building, on 04 April 1988. Under the said contract, the contractor, agreed to refurbish/renovate the DBP, Cabanatuan Branch building, within a period of thirty-five (35) days, commencing on 11 April 1988, for and in consideration of the contract price of P 850,000.00. The parties further agreed that in case the contractor fails to complete the work within the stipulated period, a penalty of P 2,000.00 per day of delay, inclusive of Sundays and holidays, shall be deducted from any amount/s due the said contractor. To supervise the refurbishing work, the DBP hired the services of project architect, Jose Vicente Salazar III. The project architect was named as representative of DBP and was expressly authorized by DBP, to condemn or reject defective works or poor workmanship of the contractor at anytime before the completion, approval and acceptance of such work. In accordance with the aforesaid contract of service, the contractor commenced the refurbishing work on 11 April 1988 following the specifications prepared by the project architect and approved by the DBP. However, in the course of the work, the contractor, at the behest of the project architect, performed additional works, not included in the said specifications. Among the additional works done by the contractor were the replacement of ten (10) narra flush doors and the repainting of the canteen. Foreseeing that the refurbishing work would not be completed on 15 May 1988, for the following reasons: (1) problems encountered in the freight delivery service of some materials purchased in Metro Manila due to the negligence of the supplier; (2) unavailability of materials due to the hoarding of the same by suppliers anticipating price increases; and (