GR L 12283; (July, 1918) (Digest)
G.R. No. L-12283; July 25, 1918
ARTHUR F. ALLEN, plaintiff-appellee, vs. THE PROVINCE OF TAYABAS, defendant-appellant.
FACTS:
On April 18, 1914, the Province of Tayabas, represented by the Director of Public Works, entered into a contract with Arthur F. Allen for the construction of five reinforced concrete bridges for P39,200. The contract incorporated standard terms, including provisions for payment of extras and a requirement for a certificate of acceptance from the Director of Public Works or his representative prior to payment. Four bridges were accepted and paid for. A dispute arose concerning the fifth bridge (No. 53.3) and certain extras. The province paid P4,360 for this bridge but refused the balance of P2,840, alleging deviations from specifications and defective work, and also refused payment for the extras. Allen filed an action to recover the balance and other amounts. The province demurred, arguing the complaint failed to state a cause of action because: (a) the contract lacked the Governor-General’s approval as allegedly required by law, and (b) the complaint did not allege the required certificate for payment from the Director of Public Works or district engineer. The demurrer was overruled. After trial, the court rendered judgment in favor of Allen. The province appealed.
ISSUE:
1. Whether the contract was invalid for lack of approval by the Governor-General.
2. Whether the certificate of acceptance by the Director of Public Works or his authorized representative is a condition precedent for payment and for maintaining an action on the contract, and if so, whether the findings in such a certificate are conclusive.
RULING:
1. On the Governor-General’s Approval: The Court held that the law in force (Section 2 of Act No. 83 , as amended) required the Governor-General’s approval only for the purchase or conveyance of real estate by a province. The contract for the construction of bridges did not involve such a transaction; therefore, the Governor-General’s approval was not a prerequisite for its validity.
2. On the Certificate as a Condition Precedent: The Court ruled that both the law (Act No. 1401, as amended) and the specific terms of the contract made the certificate of acceptance by the Director of Public Works or his authorized representative a mandatory condition precedent to any payment. This certificate, issued by the government’s technical expert, is conclusive in the absence of a showing of fraud or bad faith on his part. A contractor cannot maintain an action for the contract price when the responsible engineer has, in good faith, withheld the certificate. To overturn the engineer’s decision, fraud or bad faith must be alleged and proven. The Court found no sufficient proof of fraud or bad faith in this case.
3. On the Pleading Defect: The Court noted that the complaint was technically defective for failing to allege the fulfillment of the condition precedent (the certificate) or an excuse for its non-fulfillment. However, this defect was cured by the issues raised in the answer and the evidence presented during trial. Furthermore, the complaint contained a general averment of full compliance with the contract, and the province had subsequently accepted the bridge in question.
DISPOSITIVE:
The judgment of the trial court was modified. Plaintiff Arthur F. Allen was entitled to recover from the Province of Tayabas the sum of P3,354.90, with legal interest from July 14, 1914, until paid. No costs were awarded.