DOMINADOR BORDA, PETITIONER AND APPELLANT, VS. ENRIQUE TABALON, RESPONDENT AND APPELLEE.

This is an appeal taken by petitioner Dominador Borda from a decision
of the Court of First Instance of Capiz dismissing his petition,
without costs.

The facts are correctly set forth in the brief for respondent Enrique Tabalon, from which we quote:

“Petitioner
Dominador Borda, a, civil engineer, was awarded the contract for the
construction of the Tumalalud-Burias Road in Capis for the project
price of P13,851.00. The contract (Exh. D, p. 22, rec.) was signed by
him and the respondent Enrique A. Tabalon, highway district engineer of
Capiz, in representation of the Commissioner of Public Highways. The
first partial payment of P3,739.77 was made to the petitioner on March
9, 1951 (Exh. A, p. 17, rec.). The amount due the latter was P4,155.50
but 10% of this, or P415.51 was retained pursuant to Clauses 38 and 56
of the ‘General Conditions’ forming part of the Contract. Upon
completion of the Work, the final payment of P7,510.61 was made to the
petitioner tinder General Voucher, Exh. B, (p. 18, rec.) dated July 29,
1957. The balance Still due the petitioner; as shown in Exhibit B was
P9,425.70 but 10% of this amount, or P942.67, was retained; other
deductions representing rentals for equipment, liquidated damages on
account of delay, etc. Were made, so that petitioner received only
P7,510.61.

“On October 11, 1957, petitioner-appellant
Dominador Borda, caused to be prepared a voucher Exhibit E (p. 19,
rec.), for the collection of the sum of P1,358.10, representing the 10%
retention of the contract price by the District Engineer’s Office
Contract (p. 6, t.s.n.). The respondent District Highway Engineer,
Enrique Tabalon, refused to approve payment of the said voucher on the
ground that Moises Fajardo had filed with his office a claim sworn to
before him on August 20, 1957, for the sum of P2,117.39, allegedly
representing the remaining unpaid amount which Fajardo had advanced to
the petitioner-appellant for materials and labor used on the
construction of the Tumalalud-Burias road project (Exhibit 1, p. 20,
rec.; pp. 25-27, t.s.n.). As basis for his refusal, respondent-appellee
invokes the fourth paragraph of Article 9.8 of the Standard
Specifications for Highways and Bridges, marked Exhibit 2 (a booklet
forming part of the contract), which reads as follows:

‘In case, before any partial or final payment, the contractor cannot,
or for any reason fails, to file such affidavit, or even if he files
it, his affidavit is contradicted by sworn statements of claimants
against him for unpaid accounts for wages, salaries, rents, materials,
and taxes incurred in connection with his contract project, the
Director may withhold an amount equivalent to the total of all such
claims, from any and all payments due the said contractor from the
Government, until such accounts are settled satisfactorily or their
lack of merit established in a proper court action’.

“In
view of respondent’s refusal to approve payment of Exhibit A,
petitioner filed the present action for mandamus in the Court of First
Instance of Capiz in order to compel the said respondent to approve
payment of the 10% retention from Exhibits A and B in the total sum of
P1,385.10.”

Appellant maintains that said
Article 9.8 of the Standard Specifications for Highways and Bridges
does not form part of his contract with the Government (Exhibit D).
This contention is riot only groundless, but, also, contrary to the
express provisions of his aforementioned contract, Exhibit D, Article I
of which explicitly provides:

“That the
advertisement, instructions to bidders, general conditions,
Commonwealth Act No. 138, Republic Act No. 76 and Republic Act No. 602,
Specifications, Proposed and Letter of Acceptance hereto attached,
together with the plans relating thereto, the original thereof are on
file in the Office of the Highway District Engineer at Roxas City are
hereby made, and acknowledged by the parties hereto to be a part of
this agreement.”

It is next urged that the
power of the Director of Public Works to withhold payment, under said
Article 9.8 of the Standard Specifications for Highways and Bridges,
exists only before the final payment, but not subsequently thereto;
that final payment in the case at bar was made on July 29, 1957, when
appellant received the sum of P7,510.61; and that, accordingly, when
appellant Borda filed his claim for P2,117.39, on August 20, 1957, the
Government had no longer the right to retain the sum of P1,385.10,
withheld from him.

It should be noted that the aggregate
cost of the construction work undertaken by appellant was P13,851,
itemized as follows:

			ITEM	Unit Price		Aggregate Price
105 Roadway & Drainage Excavation
	Km. 43+800 to 44+070			P1.10		P2,750.00
	Km. 44+135 to 44+600			1.10		1,870.00
107 Borrow Km. 44+890 to Km. 44+135
108 Selected Borrow				3.30		1,650.00
	Km. 42 + 890 to Km. 44+000
118 Prep. of Previously Constructed Road
	From Km. 42+890 to Km. 43+800			1.10		341.00
411 (a) Const. of Tp. Tb. Br. No. 42+700
	3-spans at 6.00 M. (1st Gr. Lumber)			700.00		2,100.00
411(b) Const. of Tb.Tp.Br. No. 43+050
	2-spans at 6.50 M. (1st. Gr. Lumber)			750.00		1,500.00
505 Reinforced Conc. Pipes
	Km. 42+560 to Km. 44+120
		(a) 0.60 M. Ø pipe per piece -64-pcs.		P40.00		P2,560.00
		(b) 1.00 M. Ø pipe per piece -18-pcs.		60.00		1,080.00
			TOTAL			P13,851.00″

Thus
the cost price of each item would appear to be due upon the completion
of the work corresponding to such item. However, only 90 per cent of
said price was immediately collectible, for the balance of 10 per cent
was to be withheld by the Government for a period, according to
appellant’s own belief, of sixty (60) days after the completion of the
work covered by the contract. Thus, on March 9, 1951, appellant
collected P3,739.77 for items aggregating P4,155.30, 10 per cent of
which, or P415.53, was withheld as aforementioned. Likewise, on July
29, 1951, he received P7,510.61, for the remaining items specified
above, amounting to the total sum of P9,425.70, after deducting
P942.57, representing 10 per cent thereof, which was similarly
withheld, plus P522.72 for rental of equipment, and P325.00 as
liquidated damages on account of delay. This payment of P7,510.61 has
been described in the records as a “final payment” in the sense only
that it is the compensation for the remaining items of the work
undertaken by appellant, resulting in its completion. Actually,
it is not a “final payment”, in the common and ordinary meaning of the
phrase, for there is still another payment he would be entitled to, in
the absence of adverse claims for materials and/or labor furnished in
the construction work which is the subject matter of his contract with
the Government—namely, the payment of the aggregate amount thus
withheld by the Government, or the sum of P1,358.10, which is covered
by the voucher that respondent herein has refused to approve owing to
the claim filed by Moises Fajardo on August 20, 1957—or within the
60-day period indicated above—for amounts allegedly advanced to
appellant herein for materials used and labor furnished in connection
with said construction work. The payment of said sum of P1,385.10, if
made, would be the “final payment” contemplated in the aforesaid
Article 9.8 of the Standard Specifications, forming part of appellant’s
contract. Hence, the Government is still entitled to withhold said
payment.

The provisions of said Article clearly indicate
that its purpose, is two-fold, namely: (1) to assure that all accounts
for “wages, salaries, rents, materials and taxes incurred in connection
with” the contract in question are settled before the cost of the
construction is fully paid to the contractor; and (2) to protect the
Government from any claim arising from such accounts of the contractor
as may still be unpaid. This purpose would be defeated if the theory of
appellant herein were adopted. The truth of this conclusion becomes
more apparent when we bear in mind that, in the ordinary course of
events, such claims for unpaid “wages, salaries, rents, materials and
taxes” are more likely to be filed or made after the completion of the
work, than prior thereto, for accounts are normally liquidated upon the
conclusion of an undertaking, not while the same is in the process of
execution.

Being in accordance with the facts and the law,
the decision appealed from is hereby affirmed, therefore, with costs
against petitioner-appellant Dominador Borda. It is so ordered.

Paras, C. J., Bengzon, Montemayor, Bautista Angelo, Labrador, Barrera, and Gutierrez David, JJ., concur.

Reyes, J.B.L., and Endencia, JJ., took no part.