G.R. No. 11434 , December 20, 1916
ARTHUR F. ALLEN, plaintiff-appellant, vs. THE PROVINCE OF BULACAN, defendant-appellee.

FACTS:
On January 15, 1913, the Bureau of Public Works, on behalf of the Province of Bulacan, advertised for proposals to construct eight reinforced concrete bridges. Arthur F. Allen submitted a proposal. On March 8, 1913, the provincial board authorized the Director of Public Works to enter into a contract with Allen for five bridges at a price of P39,400, with the province to furnish all reinforcing steel at a specified rate. The formal contract was executed on April 16, 1913, and it stipulated that the bridges were to be completed on or before August 1, 1913.

On July 25, 1913, Allen’s representative requested a 110-day extension to complete the work, citing delays in cement delivery. The provincial board granted the extension on August 21, 1913, moving the completion deadline to November 18, 1913. Only one bridge was completed by this new deadline. The remaining four were completed and accepted on November 29, 1913, December 29, 1913, January 3, 1914, and February 9, 1914.

The Province of Bulacan paid Allen the full contract price but withheld P3,300 as liquidated damages for the delay, pursuant to the contract terms. Allen filed suit to recover this amount, along with other claims. The Court of First Instance ruled in favor of the province. Allen appealed, arguing that the delay was not his fault but was caused by the province’s delay in executing the contract and delivering materials, and that the time stipulation was thereby waived, obliging him only to complete the work within a reasonable time.

ISSUE:
Was the Province of Bulacan entitled to deduct P3,300 as liquidated damages for Allen’s failure to complete the bridges within the contract period, as extended?

RULING:
Yes, the Province of Bulacan was entitled to deduct the liquidated damages. The Supreme Court affirmed the judgment of the lower court.

The Court found that the evidence did not support Allen’s claim that the delay was caused by the province. The steel required for the bridges was delivered by the province in a timely manner after the contract was signed, with most shipments arriving by mid-June 1913. The Court noted that Allen’s own letter of July 25, 1913, requesting an extension, attributed the delay solely to cement procurement and made no mention of late steel deliveries. Furthermore, the province had no obligation to order or deliver steel before the contract was formally executed on April 16, 1913.

The Court also rejected the argument that the delay in signing the contract from March 8 to April 16 waived the original completion date. The contract explicitly set August 1, 1913, as the deadline. The province’s grant of a 110-day extension was an unqualified modification that simply substituted “November 18, 1913” for “August 1, 1913” in the contract, leaving all other terms, including the liquidated damages clause, in full force. Paragraph 42 of the Instructions to Bidders, incorporated into the contract, clearly established time as an essential feature and fixed liquidated damages at P25 per bridge per day of delay.

The Court held that it could not make a different contract for the parties. Since Allen failed to complete the work by the extended deadline, the province was contractually entitled to withhold the sum as liquidated damages.