TAN C. TEE & CO., A GENERAL MERCANTILE PARTNERSHIP, PETITIONER, VS. BEN F. WRIGHT, AS INSULAR AUDITOR, RESPONDENT.

This is an original action of mandamus brought by Tan C. Tee &
Co., a general mercantile partnership, against Ben F, Wright, as
Insular Auditor, to require the respondent to issue the certificate of
availability of funds provided by section 607 of the Administrative
Code, applied for by the

Director of Public Works, for the construction of the marginal wharf
at Iloilo, Province of Iloilo. The respondent has submitted an answer
which admits certain allegations of the petition and denies others, and
which sets up seven special defenses.

The action has been filed during the crowded sessions of the court
just prior to adjournment. Yet the parties have not seen fit to assist
the court by presenting a complete statement of the admitted facts and
a statement of the controlling law. All that the petitioner and the
respondent have done has been limited to offering a miscellaneous lot
of exhibits, consisting principally of certified copies of official
documents, which they have mutually agreed may be accepted without
objection. It has thus been necessary to prepare statements of the
facts and the law for the benefit of the members of the court, which
will explain the length of the decision.

THE FACTS

A composite statement of the facts predicated on the law authorizing
the improvements of the port of Iloilo and derived from the exhibits
will now be attempted. The funds for the lloilo marginal wharf came
from the proceeds of the sale of bonds authorized by Act No. 3417 of
the Philippine Legislature. The act authorized the Secretary of War to
issue and to sell in the name and on behalf of the Government of the
Philippine Islands, bonds in the amount of 2,175,000 dollars, the
proceeds of the sale to be used by the Philippine Government for the
construction of works and improvements in the port of lloilo, Province
of lloilo. Section 3 of the Act provided: “The proceeds of the sale of
the bonds issued by virtue of this Act are hereby appropriated for the
construction of works and improvements in the port of Iloilo, Province
of lloilo, Philippine Islands, in accordance with the plans prepared by
the Director of the Bureau of Public Works and approved by the
Secretary of Commerce and Communications.” Section 6 of the same Act
provided: “The Director of Public Works of the Philippine Islands shall
have charge and exclusive control of all work to be done and
improvements to be made under the provisions of this Act, which work
shall be begun as soon as the Insular Treasurer shall certify that the
funds therein provided for are available.”

On May 22, 1928, the Insular Treasurer certified to the Secretary of
Finance that the proceeds of bonds sold under Act No. 3417 in the
amount of Pl,592,385 “are now available for expenditure in the manner
provided for by law.” (Exhibit B.) The Secretary of Finance referred
the communication of the Insular Treasurer to the Director of Public
Works (Exhibit B-l). In turn, the Director of Public Works forwarded
the letter to the Insular Auditor “for notation and return. In this
connection, it is requested that a copy of voucher setting up these
allotments be furnished this office.” (Exhibit B-2.) By fourth
indorsement, the papers were returned by the Insular Auditor to the
Director of Public Works “inviting attention to the accompanying copy
of Journal Voucher No. 493136 recording the appropriations out of the
proceeds from the sale of bonds under Acts Nos. 3413 and 3417, in
accordance with the provisions of section 3 of the above-mentioned
acts.” (Exhibits B-2 and B-3.)

Thereafter, the construction of the Iloilo marginal wharf was advertised for bids on August 10, 1928 (Exhibits 3, 4, 4-a, 5, 6, 6-a and 6-b).
On September 15, 1928, Tan C. Tee & Co. submitted a proposal for
the construction of the Iloilo marginal wharf at Iloilo (Exhibit 1).
The lowest bid was that of Tan C. Tee & Co. in the amount of
P1,481,354. The Director of Public Works accordingly recommended to the
Secretary of Commerce and Communications that the award of the contract
to Tan C. Tee & Co. be approved (Exhibit I). This the Secretary of
Commerce and Communications did on November 19, 1928, when he approved
“the award” to Tan C. Tee & Co. “of the contract for the
construction of the first six units (A to G, inclusive) of the Iloilo
Marginal Wharf * * *, the work to be completed within 550 working days
from the date the said Company receives a copy of the properly executed
contract. They shall file a satisfactory bond in the agreed sum of
P200,000.” (Exhibit C.) On November 23, 1928, the Director of Public
Works informed Tan C. Tee & Co., that their proposal of September
15, 1928, for the construction of the first six wharf units for the
Iloilo marginal wharf, Province of Iloilo, “is hereby accepted, subject
to the approval of the Secretary of Commerce and Communications and
execution of formal contract and delivery of satisfactory surety bond
in the amount of P200,000.” (Exhibit 2.)

On December 11, 1928, and December 18, 1928, the Director of Public
Works made requests of the Insular Auditor for the certificate provided
by section 607 of the Administrative Code (Exhibits 7 and 8). These
requests were formulated on a general printed form entitled “Requests
and Certificate (section 607 of the Administrative Code of 1917.)”
Underneath the caption, the last request read: “The Insular Auditor,
Sir: I have the honor to inclose herewith copy of a proposed contract
for the construction of Iloilo Marginal Wharf, Iloilo (Contractor Tan
C. Tee & Co.) in the sum of P939,267 plus 9% Surcharge P84,534.03
(estimated only) to be charged to the appropriation of Iloilo Port
Works and Improvements Bonds, Act No. 3417, allotment for Iloilo
Marginal Wharf, Iloilo. The status of said appropriation allotment is
as follows: Total appropriated or allotted, P1,592,385 * * * Amount
available for this contract, P1,461,385. Auditor’s certificate is
requested as required by section 607 of the Administrative Code of
1917.” Then at the bottom of this form, there is printed for filling in
by the Bureau of Audits by first indorsement the following:
“Respectfully returned to………………… Pursuant to the
provisions of section 607 of the Administrative Code of 1917, I hereby
certify that the appropriation above-named is available for the purpose
contemplated by the proposed contract, and that according to the books
and records of this office there is a balance standing to the credit of
said appropriation sufficient to meet the obligation of
P…………….covered by said contract. I further certify that said
balance is not otherwise obligated or appropriated and that the money
required for the contract is in the Treasury as contemplated by section
607 of the Administrative Code of 1917. Insular Auditor, by Manager,
Department of Statistics.” Accompanying this request was a copy of the
proposed contract which, it appears, had been signed by Tan C. Tee
& Co. but not by the Director of Public Works. (Exhibits A and I.)

Instead of accomplishing the certificate requested, the Insular
Auditor on January 10, 1929, in a communication to the Director of
Public Works stated that before it would be possible for the Insular
Auditor to pass upon the contract certain information was needed
(Exhibit D). This information was furnished by the Director of Public
Works on January 18, 1929, and at the same time to correct an error a
new request for the certificate of availability of funds was submitted
(Exhibits E, F and G). On January 19, 1929, the Insular Auditor
returned the papers in connection with the contract with Tan C. Tee
& Co. “with the statement that the certificate required by section
607 of the Administrative Code, which you request, cannot be issued
under the circumstances.” (Exhibits 9 and 11.) The reasons for refusal
were particularly and extensively set forth in the Auditor’s
communication in the nature of a decision. In brief, as couched in the
concluding paragraph, these reasons were because “the purported
contract being wholly void in accordance with law and the facts as well
as illegal from the point of view of not being let to the lowest
responsible bidder, the Auditor finds no difficulty in arriving at his
decision that the certificate required by section 607 of the
Administrative Code cannot be issued in this case. The provisions of
law not having been observed, there are no funds which may be certified
as available.”

The Director of Public Works made known his stand on the question in
a lengthy indorsement to the Secretary of Commerce and Communications
dated January 30, 1929. He began by saying “Before commenting at length
on the subject matter of the basic communication, the undersigned
desires to invite especial attention to the fact that the procedure in
awarding the contract for the Iloilo Marginal Wharf construction
conforms exactly to that observed by this Bureau since its
organization,” (Exhibit I.) Then after making his argument, the
Director concluded: “The undersigned desires to reiterate his previous
statement that this Bureau can see no justification whatsoever for
rejecting the bid of Tan C. Tee & Co., and awarding the contract to
another contractor at an additional cost to the Government of P280,000,
and the undersigned believes that the apparent attempt on the part of
the Insular Auditor to discredit the judgment and decision of
Government officials empowered by law to make such decisions, is
entirely unwarranted and without legal justification.” The Secretary of
Commerce and Communications by third indorsement of February 30, 1929,
forwarded the papers to the Governor-General “Under section 24
(paragraph 6) and 25 of the Philippine Autonomy Act, otherwise known as
the Jones Law, and in connection with the conference on this subject
held last week by His Excellency, the Insular Auditor and the
undersigned.” (Exhibit H.)

Even before this, on February 16, 1929, the Governor-General in a cablegram sent to the Secretary of War stated:

“Insular Auditor holding up proposed contract for
marginal wharf of great importance business interests Ilollo. Secretary
Commerce and Communications appealed to Governor-General from decision
of Insular Auditor, and I ruled against Insular Auditor. Question now
forwarded under section 656 Administrative Code but as this is urgent
and a strictly legal question I am not forwarding papers deeming that
no papers are necessary to a proper understanding of the matter.

“Auditor
claims Director Public Works has entered this contract prior to
obtaining the Auditor’s certificate covering the availability of funds.
But the facts shown no contract has yet been entered into. The award
cannot be interpreted as entering into the contract. Sections 1917 and
1918 Administrative Code and section 6 Act 3417 give the Director
Public Works the power to receive bids and make awards for public works
contracts. In this case the bids were received and award made to Tan C.
Tee Company subject to the approval of the Department Secretary and the
furnishing of satisfactory bond-by the contractor, and then copy
proposed contract submitted to Auditor for certification under section
607 Administrative Code. This section provides that ‘when application
is made to the Insular Auditor for the certificate herein required, the
copy of the proposed contract or agreement shall be submitted to him.’
Auditor in effect claims he should certify that appropriation made and
funds available before any award is made by Director Public Works. It
seems to me impossible to comply with section 607 Administrative Code
reference submitting copy proposed contract made because there could be
no proposed contract until after* award made. Furthermore exactly the
same procedure has been followed in this case as has been the practice
heretofore.

“The Insular Auditor also claims award was not
made to lowest responsible bidder. Auditor claims his general authority
as provided by law gives him the power to decide who is ‘lowest
responsible bidder.’ My opinion is that no valid basis for this claim
exists, and that the duty to decide who is lowest responsible bidder is
an administrative function vested expressly in the administrative
officer designated by law to make the contract. I hold that Auditor is
in effect seeking to usurp administrative functions with which he is
not vested by law. Section 1917 Administrative Code providing the means
of letting government contracts states such contracts shall be awarded
by Director Public Works to lowest responsible bidder after publication
lasting at least ten days. Section 1918 Administrative Code vests in
Director Public Works power to reject any or all bids. Section 1921
Administrative Code provides that the officer charged with duty of
awarding a contract for any public work may, under regulations Bureau
Public Works, require contractor give adequate bond. In none of these
sections is any mention made of Insular Auditor. The general powers of
Insular Auditor cannot be held sufficiently broad to give him
jurisdiction to determine lowest responsible bidder in a complex
engineering contract, and thus permit him to virtually assume the
administrative duties which have been expressly vested in Director
Public Works.

“Attention is called to Supreme Court United
States Wright against Ynchausti. Seventy-one lawyers Edition at 272,
‘but where the Insular Auditor is not vested with administrative
discretion to pass upon the merits of the claim for which the warrant
is drawn his only function is to determine whether the warrant is drawn
by the proper officer upon the decision of the proper tribunal, and is
applicable to an existing appropriation, and having been satisfied as
to these preliminaries, his duty is merely ministerial”

“In
my opinion, it is the duty of the Insular Auditor to issue a
certificate of appropriation and availability of funds for this
contract. An early decision is requested.

“Copy furnished to Insular Auditor.” (Exhibit 11.)

The Insular Auditor also submitted his views to the Secretary of War by a cablegram of February 18, 1929, reading as follows:

“Referring to recent cables sent by Governor-General
regarding contract for Iloilo Wharf, Insular Auditor respectfully
protests against such action. First, because under Organic Act there is
no appeal from Auditor’s decision except in cases involving accounts
and claims and no account or claim is involved in this case. Second,
granting, without admitting, that appeal lies Auditor respectfully
claims right of presenting his own side of the case in his own way
rather than having it presented by the person who has disagreed with
his decision. Auditor feels obliged to say he does not consider cables
constitute a fair proper or reasonable presentation of his side of the
case. His decision involves complicated questions of law, facts and
procedure in view of which Auditor respectfully requests right
conferred upon him by Organic Act of having all papers necessary to
proper understanding of cases forwarded to reviewing authority before a
decision is rendered. Such papers are now in preparation for forwarding
thru Governor-General.

“Auditor desires to state that he has
been given no opportunity of seeing written appeal in this case nor was
he given opportunity of presenting his side of case to Governor-General
before said official arrived at his decision disagreeing with Auditor’s
decision.

“Governor-General states Auditor is holding up
project of great importance. Permit me to say that if the project is
built by Tan C. Tee Company it will require at least 875 days whereas
if contract is given to next bidder which has constructed every port
works of importance in Islands for last 27 years project be completed
in 525 days.

“Permit me to say that many insular projects
involving millions of pesos have recently been forfeited because let to
lowest and irresponsible bidders and that Auditor’s recent
investigation of provincial records shows 120 cases of existing
contracts involving over P2,800,000 which were entered into in direct
violation of law as to provincial treasurer’s certificate of funds and
as to approval of provincial boards. In the instant case not only has
contract been made but work is actually under way without obtaining
Auditor’s certificate under 607 Administrative Code.

“If
cable was sent relating to release of irrigation funds first paragraph
of this cable applies to that case. Further, Auditor has not been asked
to release funds for any new projects.” (Exhibit 11.)

The Governor-General supplemented his first cable by a cable of
February 19, 1929, addressed to the Secretary of War and reading:

“My first radiogram concerning the controversy over
the proposed Iloilo marginal wharf was the subject of a two-hour
conference between the Insular Auditor and myself. In that conference
the following additional points were raised:

“The Insular
Auditor admitted that he did not question the financial responsibility1
of Tan C. Tee & Co. but did doubt whether it possessed sufficient
equipment and whether it had the requisite technical ability to fulfill
properly the proposed contract. The Secretary of Commerce and
Communications upheld the award to Tan C. Tee Co. upon the advise of
his technical advisers. I hold that it is no business of the Insular
Auditor’s to determine such technical matters which are within the
jurisdiction of the Secretary of Commerce and Communications.

“The
Insular Auditor contends that this controversy is not an account or
claim subject to appeal within section 25 of the Organic Act. His
contention is that neither the Governor-General nor the Secretary of
War can decide this matter as no provision is made for appeal, the
matter lying exclusively within the jurisdiction of the Insular
Auditor. It might well be asked how the Insular Auditor obtains
jurisdiction over the subject-matter if this is not an account or
claim. If the Insular Auditor contends that this is not an account or
claim, I fail to see any justification for his action under the Organic
Act. His only power would be that granted under section 607 of the
Administrative Code. But I hold that his duty under this section is
purely ministerial when funds have been properly appropriated and are
available for distribution. He has no jurisdiction to determine such
technical questions as the one involved in this controversy. I hold the
contention of the Insular Auditor to the effect that the
Governor-General and the Secretary of War have no jurisdiction to pass
upon such appeals to be untenable.

“The Insular Auditor
protests the submission of this question by radiogram. But it is my
opinion that under section 656 of the Administrative Code the Secretary
of War need not require the submission of papers if he does not deem
them necessary for his proper understanding of the matter. To allow the
submission of papers in this case are not essential as the legal issues
involved are clear cut. I strongly urge immediate action to settle this
controversy.

“Attention is drawn to the inevitable result of
admitting the almost unlimited jurisdiction claimed by the Insular
Auditor in this case. It means that an accounting officer of the
Government can overrule other technical officials in their own fields
and have his decision final. Such an interference with the work of the
Secretary of Commerce and Communications and the Bureau of Public Works
seems unauthorized and entirely contrary to existing administrative
procedure.” (Exhibit 11.)

In response to these cables, the Chief of the Bureau of Insular Affairs made answer on February 21, 1929, as follows:

“The Secretary of War has considered carefully the
question relative to the Iloilo Wharf contract presented in your
radiograms No. 512 February 16th and No. 519 February 19th and in
unnumbered radio from the Insular Auditor dated February 19th. The
Secretary of War decides:

“First. That the Insular Auditor
has no legal authority to control the exercise by the Director of
Public Works of the administrative discretion involved in determining
who is (quote) ‘the lowest responsible bidder’ (end of quotation)
mentioned in the first paragraph of section 1917 Administrative Code.

“Second.
That the Insular Auditor has no authority to refuse to issue the
certificate required by section 607 Administrative Code if such refusal
be based upon any supposed authority of the Insular Auditor to review
the administrative decision of the Director of Public Works as to who
is the lowest responsible bidder under section 1917 Administrative
Code. Please furnish a copy of this message to the Insular Auditor for
his information and guidance.” (Exhibit 10.)

In this state,
the controversy has remained except that on March 24, 1929, a new
request for the Auditor’s certificate appears to have been made by the
Director of Public Works (Exhibit 12). In addition, Mr. Wright, as
Insular Auditor, and Mr. Williams, as Director of Public Works, have
submitted their personal affidavits. (Exhibits 11 and 1-1.) In the
affidavit made by Mr. Williams, he deposes and says “that neither a
contract in the form of Exhibit A of the petition nor any other
contract for the work in question has ever been signed or executed by
affiant or by the Secretary of Commerce and Communications on behalf of
the Government or otherwise.”

THE LAW

The jurisdiction and powers of the Insular Auditor are prescribed in
familiar provisions of the Organic Act, the Act of Congress of August
29, 1916, and of the Accounting Law enacted by the Philippine
Legislature. Section 24 of the Organic Act provides that the Auditor
“shall examine, audit, and settle all accounts pertaining to the
revenues and receipts from whatever source of the Philippine Government
and of the provincial and municipal governments of the Philippines,
including trust funds and funds derived from bond issues; and audit, in
accordance with law and administrative regulations, all expenditures of
funds or property pertaining to or held in trust by the government of
the provinces or municipalities thereof. * * *

* * * * * * *

“It
shall be the duty of the auditor to bring to the attention of the
proper administrative officer expenditures of funds or property which,
in his opinion, are irregular, unnecessary, excessive, or extravagant.

“The
administrative jurisdiction of the auditor over accounts, whether of
funds or property, and all vouchers and records pertaining thereto,
shall be exclusive. * * *

“The decisions of the auditor shall
be final and conclusive upon the executive branches of the government,
except that appeal therefrom may be taken by the party aggrieved or the
head of the department concerned within one year, in the manner
hereinafter prescribed. The auditor shall, except as hereinafter
provided, have like authority as that conferred by law upon the several
auditors of the United States and the Comptroller of the United States
Treasury. * * *

* * * * * * *

“The
office of the Auditor shall be under the general supervision of the
Governor-General and shall consist of the auditor and deputy auditor
and such necessary assistants as may be prescribed by law.”

Section 25 of the Organic Act outlines the method for appeals from decisions of the Auditor as follows:

“That any person aggrieved by the action or decision
of the auditor in the settlement of his account or claim may, within
one year, take an appeal in writing to the Governor-General, which
appeal shall specifically set forth the particular action of the
auditor to which exception is taken, with the reason and authorities
relied on for reversing such decision.

“If the
Governor-General shall confirm the action of the auditor, he shall so
indorse the appeal and transmit it to the auditor, and the action
shall’ thereupon be final and conclusive. Should the Governor-General
fail to sustain the action of the auditor, he shall forthwith transmit
his grounds of disapproval to the Secretary of War, together with the
appeal and the papers necessary to a proper understanding of the
matter. The decision of the Secretary of War in such case shall be
final and conclusive.”

The Accounting Law, included as Chapter 26 of the Administrative
Code, gives in greater detail the various powers of the Insular
Auditor. Section 584 thereof, as amended by Act No. 3066, provides that
“The authority and powers of the Bureau of Audits extend to and
comprehend all matters relating to accounting procedure, * * *, and to
the audit and settlement of the accounts of all persons respecting
funds or property received or held by them in an accountable capacity,
* * *

Passing now to the powers of the Director of Public Works, we find
them given in Chapter 51 of the Administrative Code. According to codal
section 1901, the general functions of the Bureau of Public Works
shall, among other things, comprise “The making of needful preliminary
investigations, plans, and specifications for the construction or
repair of public works and improvements; the obtaining of bids for
contract work, the acceptance or rejection of the same, and the
awarding of contracts therefor.” Article III of Chapter 51 relating to
the subject “Contracts for public works/* in section 1917, provides
that “When any Insular public work of construction or repair involves
an estimated cost of three thousand pesos or more, the contract
therefore, shall, except as herein below provided, be awarded by the
Director of Public Works to the lowest responsible bidder after
publication extending over a period of at least ten days. * * *.*’ The
next succeeding section authorizes the Director of Public Works to
reject bids. Following this, section 1920, similar in scope to the
general provisions found in section 568, of the Administrative Code,
provides that “Contracts awarded by the Director of Public Works for
the construction or repair of public works and improvements of any kind
shall be executed on behalf of the Government by said Director, with
the approval of the Department Head. * * *.”

Returning again to the powers of the Insular Auditor, Article IV of
Chapter 26 is found to deal with the subject “Restrictions upon making
of public contracts.” Section 606 thereof makes an appropriation the
antecedent to making of contract by providing that “No contract
involving the expenditure of public funds shall be made until there is
an appropriation therefor, the unexpended balance of which, free of
other obligations, is sufficient to cover the proposed expenditures. *
* *.” Next following is the much debated section 607 headed
“Certificate showing appropriation to meet contract,” the first
paragraph of which reads as follows:

“Except in the case of a contract for personal
service or for supplies to be carried in stock, no contract involving
an expenditure by the Insular Government of three thousand pesos or
more shall be entered into or authorized until the Insular Auditor
shall have certified to the officer entering into such obligation that
funds have been duly appropriated for such purpose and that the amount
necessary to cover the proposed contract is available for expenditure
on account thereof. When application is made to the Insular Auditor for
the certificate herein required, a copy of the proposed contract or
agreement shall be submitted to him accompanied by a statement in
writing from the officer making the application showing all obligations
not yet presented for audit which have been incurred against the
appropriation to which the contract in question would be chargeable;
and such certificate, when signed by the Auditor, shall be attached to
and become a part of the proposed contract, and the sum so certified
shall not thereafter be available for expenditure for any other purpose
until the Government is discharged from the contract in question.”
Section 608, in the nature of a penal provision, provides:

“A
purported contract entered into contrary to the requirements of the
next preceding section hereof shall be wholly void, and the officer
assuming to make such contract shall be liable to the Government or
other contracting party for any consequent damage to the same extent as
if the transaction had been wholly between private parties”

OPINION

At the outset, the respondent questions the power of the
Governor-General by virtue of the latter’s “general supervision” over
the office of the Insular Auditor as provided by the Organic Act,
impugns the procedure followed in taking the appeal from the decision
of the Auditor, and challenges the jurisdiction of this court for the
reason that the decision of the Auditor is final and conclusive in
accordance with the provisions of the Organic Act. In other words, the
Insular Auditor declares his independence both from the authority of
the Governor-General and the Supreme Court of the Philippines.
Regarding the portion of the Organic Act which provides that the office
of the Auditor shall be under the general supervision of the
Governor-General, we are shown no necessity for passing upon the
meaning of this provision. Conceding for present purposes that such
general supervision of the Governor-General does not extend to
administrative jurisdiction over the Auditor in this class of cases and
that the particular legal provisions pertaining to appeals from
decisions of the Auditor are exclusive, should it be found that the
Insular Auditor has been reversed in his decision/ alike by the
Governor General and the Secretary of War, the respondent would
naturally have little or no standing in court. Checking the portions of
the Organic Act which concern the procedure to be followed in taking
appeals with the facts, we have a decision of the Auditor; an appeal
therefrom apparently both verbal and in writing by the Secretary of
Commerce and Communications, the head of the department concerned, to
the Governor-General; the Governor-General failing to sustain the
action of the Auditor; the Governor-General transmitting his grounds
for disapproval to the Secretary of War; the Insular Auditor submitting
his views to the Secretary of War; and the decision of the Secretary of
War which certainly did not reverse the Governor-General and which as
certainly decided two questions adversely to the Insular Auditor and
requested that the ruling be furnished the Insular Auditor for his
information and guidnce. All that was lacking for a compliance with the
law in its letter was the failure of the Governor-General to transmit
along with the grounds of his disapproval to the Secretary of War, the
appeal and the papers necessary to a proper understanding of the
matter, but this deficiency was explained because of the urgency of
obtaining a prompt decision from the Secretary of War and was partially
or totally remedied when the Insular Auditor sent on his contrary views
to the Secretary of War for consideration. Conceding again for present
purposes that, as contended by the respondent, there was some
irregularity in the procedure and that the Secretary of War did not set
aside the decision of the respondent, all this would have nothing at
all to do with ousting the court of jurisdiction. The law makes the
decisions of the Auditor when not reversed by the Secretary of War
final and conclusive “upon the executive branches of the government.”
The law does not make the decisions of the Auditor final and conclusive
upon, either the legislative or judicial branches of the government.
Appeal or no appeal, a private party such as the petitioner has the
right of redress in the courts. It would be an intolerable state of
affairs and repugnant to every conception of democratic government if a
citizen could not be allowed to come into the courts and there find an
authority ready and willing to grant an order against an executive
officer to make him do an act which the law especially enjoins. That is
the very essence of mandamus. The jurisdiction of the Supreme Court
over the Insular Auditor in proper cases has so often been enforced as
to be hardly debatable. (Ynchausti & Co. vs. Wright [1925], 47 Phil., 866; [1926], 272 U. S., 640; City of Manila vs. Posadas [1925], 48 Phil, 309; [1927], 274 U. S., 410; Compaiiia General de Tabacos vs. French and Unson [1918], 39 Phil., 34; Riel vs. Wright [1926], 49 Phil., 194. Also see Smith vs. Jackson [1917], 246 U. S., 388.)

Ruling against the respondent in his objection to the jurisdiction
of this court, we think that we could best come to an understanding of
respondent’s position by considering the grounds of his decision on
which he refused to issue the requisite certificate. These grounds were
two: First, that the contract was not let to the lowest responsible
bidder, although in the answer this is made a supplemental
consideration and now consists in the respondent only claiming the
right in cases of clear and gross abuse of discretion conferred upon
other officials to refuse to take any action which results in funds
being obligated; and second, that the awarding of the contract by the
Director of Public Works to Tan C. Tee & Co. and the approval of
such award by the Secretary of Commerce and Communications was made
before the certificate of funds was secured, and so amounted to
entering into the contract without the Insular Auditor’s certificate,
thereby rendering such purported contract void as provided by section
608 of the Administrative Code.

The first question presents no difficulty. It is the Director of
Public Works and not the Insular Auditor to whom the law grants the
power to award a contract to the lowest responsible bidder. In the
leading case cited by the respondent in his decision, People vs.
Kent ([1896], 160 111., 655), it was the holding of the Supreme Court
of Illinois that the courts cannot interfere, in the absence of fraud,
with the exercise of the official discretion of a public officer
entrusted with the duty of awarding a contract, in determining whether
a certain person was the lowest responsible bidder, after investigation
of such person’s record in doing similar business before. More
pertinent still is the ruling of this court in Wright vs. Ynchausti & Co., supra,
later confirmed by the United States Supreme Court, to the effect that
the Insular Auditor has no power to reexamine the merits of a decision
by the Insular Collector of Customs. What the Insular Auditor can
properly and legally do when, in his desire to protect the public
treasury, he sees money being dissipated by irresponsible or careless
officials, is clearly indicated in the Organic Act when it provides
that “It shall be the duty of the Auditor to bring to the attention of
the proper administrative officer expenditures of funds or property
which, in his opinion, are irregular, unnecessary, excessive, or
extravagant.” But the Insular Auditor does not possess veto power over
Government contracts (Zobel vs. City of Manila [1925], 47 Phil., 169).

As to the second ground of disapproval, it was and is the contention
of the Insular Auditor that the certificate of availability of funds
under section 607 of the Administrative Code is necessary before the
award of the contract by the Director of Public Works and the Secretary
of Commerce and Communications, and that the failure to secure the
certificate makes the contract void. It is conceded that the contract
has been “awarded” by the Director of Public Works pursuant to section
1917 of the Administrative Code, but from this it does not necessarily
follow that the contract has been “entered into” by the Director of
Public Works, within the meaning of sections 607 and 608 of the
Administrative Code. To award the contract to the lowest responsible
bidder is not the equivalent of entering into the contract. Codal
section 607 requires that a copy of the proposed contract shall be
submitted along with the request for the certificate, but there could
be no proposed contract to be submitted until after the award was made.
For there to be a proposed contract, there must be an award of the bid
for otherwise there would be no basis for the drafting of the
comtemplated agreement to accompany the application for the certificate
of the Auditor. This is from one point of view. From another point of
view, if, as argued by the respondent, the acceptance of petitioner’s
bid and the award of the contract to them by the Director of Public
Works with the approval of the Secretary of Commerce and Communications
constituted the actual consummation of a binding contract, there would
be no need for the Auditor’s certificate. By the Auditor’s own
admissions, his would then be merely the performance of a ministerial
act. Reasoning in a circle, the respondent’s argument is “I cannot be
required to give the certificate because the contracts is void, and it
is void because I have not made the certificate.” We experience no
difficulty in reaching the conclusion that the Director of Public
Works, following the long practice of his Bureau, did everything to
consummate the contract except to secure the certificate of
availability of funds and to execute the contract for the Government,
and that in this process no illegal act was committed.

For the guidance of all whom it may concern, it has occurred to the
court to point out the procedure which should be followed in the
letting of contracts for Insular works. First, there is an award of the
contract by the Director of Public Works to the lowest responsible
bidder. Second, there is a certificate of availability of funds to be
obtained from the Insular Auditor (and in this case from the Insular
Treasurer) to cover the proposed contract. And third, there is a
contract to be executed on behalf of the Government by the Director of
Public Works with the approval of the Department Head. In the case
before us, the letting of the contract may only be said to have gone
through the first stage and is held up by the lack of the second
prerequisite before the formal execution of the contract. Contractors
with the Government should accordingly, to protect their own interests,
await the fulfillment of all three requirements before beginning public
works.

On still broader grounds, we would like to test the controlling
legal provisions with the facts. And first there is Act No. 3417
enacted by the Philippine Legislature to provide for the construction
of works and improvements in Iloilo. In compliance with that law, plans
were prepared by the Director of Public Works, and although it does not
affirmatively appear, it can safely be assumed that these plans were
approved by the Secretary of Commerce and Communications for the
Secretary has sustained the Director of Public Works in all his
actions. The Director of Public Works is then given “charge and
exclusive control of all work,” which is to begin as soon as the
Insular Treasurer shall certify that the funds provided for are
available. This the Insular Treasurer has done. We have then the two
principal officials concerned in putting vitality into the law, the
Director of Public Works and the Insular Treasurer, doing all that the
law asked of them to make it effective. It might well be asserted with
this the situation and with the law making absolutely no mention of the
Insular Auditor, that the law was intended to be all inclusive and to
go into effect without the intrusion of the Insular Auditor’s
authority. Conceding without having to decide that it was not the
legislative intention to supersede and render unnecessary the power
previously conferred on the Insular Auditor, the special Act fits into
the general scheme of things without difficulty.

Accordingly, reasserting the jurisdiction of the court, and as a
court relieving the mind of the Insular Auditor of all uncertainty as
to the meaning of the law, we come to what is the real legal question
to be decided. The crux of the case is whether the duty conferred on
the Insular Auditor by section 607 of the Administrative Code is
ministerial or discretionary—for in the first instance mandamus will
lie, and in the second instance it will not lie.

The purpose behind the debated provision of the law is readily
understandable. The Organic Act in its section 3 prescribes that no
money shall be paid out of the treasury except in pursuance of an
appropriation by law. Sections 606, 607 and 608 of the Administrative
Code are provided to make this constitutional provision effective and
to protect the Insular Treasury against the incurring of excessive
liabilities for which no provision is made. Should there be an
available appropriation, a contract can be entered into with a third
party without detriment to the Government. Should there be no
appropriation available and should the contract be entered into, it is
the officer assuming to make the contract and not the Government who is
liable. So it is that the Insular Auditor is to certify to the officer
desiring to enter into the obligation “that funds have been duly
appropriated for such purpose and that the amount necessary to cover
the proposed contract is available for expenditure on account thereof.”
In this case, that funds have been appropriated and are available is
proved by the terminology of Act No. 3417, by the certificate of the
Insular Treasurer, by the recording of the appropriation by the Insular
Auditor, and by the admission of the Insular Auditor in his decision of
January 19, 1929, that “ample funds were available for the completion
of the entire project.” This being conceded, no judgment and discretion
would be needed to certify to a fact which is admitted.

The respondent relies on the case of Lamb vs. Phipps
([1912], 22 Phil, 456), but the facts in that case are essentially
different from those before us, while the doctrines announced therein
have been considerably modified and restricted by subsequent decisions
of this court and of the “United States Supreme Court. The decision in
Wright vs. Ynchausti & Co., supra, virtually
decides the case at bar. There it was held by this court and the United
States Supreme Court that the Insular Auditor’s duty to counter-sign
the Insular Collector of Customs’ warrant for a refund, when in due
form and drawn upon an applicable appropriation, is ministerial, and
enforceable by mandamus. The Chief Justice of the United States Supreme
Court observed; “To take money out of the treasury on appropriation, a
warrant has to be drawn by the head of the bureau having the payment of
the claim in charge and the warrant must be countersigned by the
Insular Auditor before it is paid; but where the Insular Auditor is not
vested with the administrative discretion to pass upon the merits of
the claim for which the warrant is drawn, his only function is to
determine whether the warrant is drawn by the proper officer upon the
decision of the proper tribunal, and is applicable to an existing
appropriation, and having been satisfied as to these preliminaries, his
duty is merely ministerial.”. Again in the case of Posadas vs. City of Manila, supra,
it was held by this court and the United States Supreme Court that the
duty of the Collector of Internal Revenue of the Philippines to issue,
and of the Insular Auditor to countersign, a warrant to the City of
Manila for the share of internal revenue receipts assigned to it by the
Administrative Code, is mandatory and (in the absence of any
uncertainty as to the amount of the collections), ministerial, and
enforceable by mandamus. The Chief Justice said: “His (the Auditor’s)
duty is clearly set forth and he has nothing to do but to comply with
it, having ascertained exactly what the share of the city is under the
foregoing provisions.”

In its last analysis, this is the situation. Except for the lack of
the certificate of availability, all legal provisions both of the
special Act, No. 3417, and of the general law have been complied with.
Except for the failure of the Insular Auditor to take action, all other
public officials whose duties bring them into contact with the contract
have accomplished their respective parts. The Legislature has provided
and appropriated the necessary funds. The Director of Public Works,
with the full acquiescence of his superior officers, the Secretary of
Commerce and Communications and the Governor-General, has awarded the
contract. The Insular Treasurer has certified that the funds are
available. And while the certificate of the Insular Auditor has not
been provided, it is not denied that the funds have been duly
appropriated, and that the amount necessary to cover the contract is
available for expenditure on account thereof. In the meantime, while
officials in different branches of the Government jangle, the people of
Iloilo are without their wharf.

The court has jurisdiction. The petition states a good cause of
action. None of the defenses are tenable. No law will be infringed if
the requested certificate be given by the Insular Auditor. The
Auditor’s duty in the premises is strictly ministerial. There is no
vacillation, in our minds as to the correctness of these rulings. Were
it not for the earnestness of the parties and the magnitude of the
public interests involved, the case would merit but brief consideration
and formal disposition. Let the good faith and high motives of the
respondent be granted. The position of the Insular Auditor is legally
indefensible.

It is our firm conviction that the issuance of the certificate of
availability of funds in this case by the Insular Auditor would not be
in contravention of law, and that the Auditor has a ministerial duty
imposed upon him by law which he should perform.

The judgment of the court is that a peremptory order against the
respondent Insular Auditor be granted, commanding him within the
customary fifteen-day period to issue the certificate applied for by
the Director of Public Works as required by section 607 of the
Administrative

Code. Without special pronouncement as to costs, it is so ordered.

Street, Villamor, Johns, Romualdez, and Villa-Real, JJ., concur.
Ostrand, J., did not sign.