Allen vs Albay

ARTHUR F. ALLEN, ALLEN, plaintiff-appellant vs THE PROVINCE OF ALBAY AND THE PROVINCE OF AMBOS CAMARINES, CAMARINES , defendantsappellees Topic: Obligation with a penal clause Facts: On February 25, 1913, the Director of Public Works, acting for the Provinces of Albay and Ambos Camarines, advertised for the sealed proposals, to be opened March 15, 1913, for the construction of a reinforced concrete bridge over the Agus River on the Albay-Ambos Camarines boundary. At the request of the plaintiff, plaintiff , the opening of the bids was postponed until March 20, on which date plaintiff submitted his bid to construct the proposed bridge for the sum of P30,690. On April 25, 1913, the Director of Public Works asked the provincial boards of Albay and Ambos Camarines for authority to contract with the plaintiff for the construction of the bridge. The boards passed the necessary resolutions of May 6 and the plaintiff was notified of their action on June 13. The formal construct was duly executed on June 26, 1913. The bridge was completed and accepted by the defendant provinces on April 1, 1914. The plaintiff was paid the construct price less P1,301.45, P925 being retained as liquidated damages at the rate of P25 per day from February 15, 1914, to March 31, 1914; P175.03 for expenses of inspection from November 1, 1913, to February 15, 1914; and P201.42 for the operation and maintenance of a ferry across the Agus River during the last mentioned period. This action by the Plaintiff was instituted for the purpose of recovering the amount of P1,301.45, P200 overcharges on steel not delivered, P2,000 for damages caused by the defendants' delay, and P878 for extra work and material furnished on the bridge at defendants' request. The trial court dismissed the complaints in favor of the defendants. Plaintiff went to the Supreme Court for appeal. A. Plaintiff’s Argument/s Plaintiff contends that he prayed for an extension of time to construct the bridge because during the course of construction there were events that impede the construction; the cement used for work were not delivered on time because of the shortage of the Manila Market, the Province unable to deliver the steel on time, the hauling also of the said cement and steel to the work site was delayed because of the road being inaccessible and the alternative method for hauling with the use of carabaos were stop because of the quarantine imposed by the Province because of a rinderpest. Much of the delays were caused by the Province. B. Defendant’s Argument/s There was delay on the work of the contractor, because the agreed date of completion was not met. For this the plaintiff is paid the construct price less P1,301.45, P925 being retained as liquidated damages at the rate of P25 per day from February 15, 1914, to March 31, 1914; P175.03 for expenses of inspection from November 1, 1913, to February

15, 1914; and P201.42 for the operation and maintenance of a ferry across the Agus River during the last mentioned period. Issue: Whether or not the plaintiff is entitled to recover the P1,301.45, being the delay caused by the defendants? Ruling:  YES. In the contract of the construction of the bridge, it fixes a certain amount as liquidated damages for each delay in accomplishing the work. It appears that the delay was caused by the defendants. Rule: Where strict performance on the part of the contractor is prevented or waived by the other party, a claim by such party of fines and penalties for delay or failure cannot be sustained. The same rule applies in cases containing liquidated damage clauses. Application: By delaying the delivery of the steel and by imposing a quarantine that impeded the delivery of the materials. Through this, the province waived their contract time and that the waiver operated to eliminate the definite date from which to assess liquidated damages; and through the plaintiff, in continuing the work, was obligated to complete the same within a reasonable time, the liquidated damage clause was not thereby restored and made applicable to an unreasonable time.

Conclusion: Reitareted from the rule, Where strict performance on the part of the contractor is prevented or waived by the other party, a claim by such party of fines and penalties for delay or failure cannot be sustained. The same rule applies in cases containing liquidated damage clauses.