Philippine Commercial v. William Golangco Construction Corporation

Summary

This consolidated case arose from a construction contract dispute between PCIB (now BDO) and WGCC over defective granite wash-out finish on PCIB Tower II extension. After the finish began peeling in 1993, PCIB hired another contractor to redo the work at P11.6 million cost. CIAC initially awarded both parties' claims resulting in net liability for WGCC, but the Supreme Court in G.R. No. 142830 reversed WGCC's liability for construction defects, leaving only PCIB's obligation to pay P5.7 million for material cost adjustments. The main issue was when legal interest should begin running on this award. The Supreme Court held that compensatory interest at 6% per annum should run from the original CIAC decision date (June 21, 1996) until payment, applying Civil Code provisions on interest for breach of contracts not involving loans or forbearance of money, following Eastern Shipping guidelines.