G.R. No. 11433 , December 20, 1916
ARTHUR F. ALLEN, plaintiff-appellant, vs. THE PROVINCE OF ALBAY AND THE PROVINCE OF AMBOS CAMARINES, defendants-appellees.

FACTS:
On February 25, 1913, the Director of Public Works advertised for bids to construct a reinforced concrete bridge over the Agus River, on the boundary between the Provinces of Albay and Ambos Camarines. Arthur F. Allen submitted a bid, and a formal contract was executed on June 26, 1913. The contract, incorporating the advertisement and related documents, initially stipulated completion by September 1, 1913. However, there were conflicting references to the completion date: Allen’s proposal stated completion within four months after he furnished sand and gravel, and the provincial board of Ambos Camarines referenced November 1, 1913, in its resolution.

The bridge was completed and accepted on April 1, 1914. The defendant provinces paid the contract price but deducted P1,301.45, comprising: (a) P925 as liquidated damages at P25 per day for the period from February 15 to March 31, 1914; (b) P175.03 for inspection expenses from November 1, 1913, to February 15, 1914; and (c) P201.42 for operating and maintaining a ferry during the same period. Allen filed an action to recover these deducted amounts, plus additional sums for alleged overcharges, damages from the defendants’ delay, and extra work. The Court of First Instance ruled in favor of the defendants, dismissing the complaint. Allen appealed.

ISSUE:
Whether the defendants were legally justified in deducting from the contract price the amounts for liquidated damages, inspection expenses, and ferry maintenance, considering the circumstances surrounding the delay in the bridge’s completion.

RULING:
The Supreme Court reversed the decision of the lower court. The Court held that the defendants were not entitled to make the deductions.

2. On Inspection and Ferry Expenses (P175.03 & P201.42): The Court ruled these deductions were unjustified. The plaintiff never agreed to bear these costs, and more critically, the defendants offered no proof at trial that these expenses had actually been incurred.

DISPOSITIVE:
The Supreme Court reversed the judgment of the Court of First Instance. The defendants, the Provinces of Albay and Ambos Camarines, were ordered to pay the plaintiff, Arthur F. Allen, the sum of P1,301.45 wrongfully deducted from the contract price, with legal interest from the date of the filing of the complaint. Costs were also awarded against the defendants.