ARTHUR F.

ALLEN, plaintiff-appellant vs
THE PROVINCE OF ALBAY AND THE PROVINCE OF AMBOS CAMARINES, defendants-
appellees

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, 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. Plaintiffs 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. Defendants 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.