IMUS ELECTRIC COMPANY, INC., PLAINTIFF AND APPELLANT, VS. THE MUNICIPALITY OF IMUS, PROVINCE OF CAVITE, ET AL., DEFENDANTS AND APPELLANTS.

The question at issue in this case relates
to the validity of a contract executed by the parties thereto, which
reads as follows:

“CONTRACT FOR STREET LIGHTING SERVICE FOR THE MUNICIPALITY OF IMUS, PROVINCE OF CAVITE, PHILIPPINE ISLANDS

“The contract made and entered into at the Municipality of Imus,
Province of Cavite, Philippine Islands, this eleventh day of June in
the year nineteen hundred thirty-one (1931), A. D., by and between the
Imus ELECTRIC Company, Incorporated, a corporation duly organized under
the laws of the Philippine Islands, and in its name and behalf, Mr.
Esteban C. Espiritu, in his capacity as President of the said company
duly empowered to execute this contract, party of the first part,
hereinafter called the company, and the Municipality of Imus, a
municipal corporation duly organized and existing under and by virtue
of the laws of the Philippine Islands, and in its name and
representation, Mr. Epifanio E. Gabriel, Municipal President hereunto
also duly authorized party of the second part, hereinafter called the
municipality.

“WlTNESSETH:

“1. That the company, for the consideration hereinafter mentioned
and in strict accordance with the terms of this contract, does hereby
agree to furnish the MUNICIPALITY with a public street lighting service
which shall consist of furnishing and operating forty-five (45)
multiple alternating current metallic filament incandescent lamps, at
the rate and prices specified in the Electric Service Rate Schedule III
hereof, which forms part of this contract, and shall be distributed as
follows:

Location	No Lights	Wattage
Bayanluma (to corner going Tulay ng Julian)……..	8	50-watt
Duihalo and Sinukuan …………………………………………….	1	Do.
Dumalo and Dimasalang ………………………………………..	1	Do.
Dumalo and Karaniwan ……………………………………….	1	Do.
Dumalo and Carsadang Bago…………………………………	1	Do.
Tansanluma (to Talon only) ………………………………….	3	Do.
Sinukuan ………………………………………………………………….	2	Do.
Sinukuan and Magtangol …………………………………………	1	Do.
Sinukuan and Tansanluma ……………………………………..	1	Do.
Sinukuan and Pagasa ……………………………………………	1	Do.
Sinukuan and Maestro G. Tirona ………………………….	1	Do.
Sinukuan and Magwagi …………………………………………	1	Do.
Dimasalang and Magkaisa …………………………………	1	Do.
Dimasalang and Maestro Tirona………………………………	1	Do.
Dimasalang between Sapinoso and Pagasa…………….	1	Do.
Dimasalang and Magwagi……………………………………….	1	Do.
Sapinoso …………………………………………………………………..	1	Do.
Karaniwan and Magkaisa ……………………………………..	1	Do.
Karaniwan and Tahimik ………………………………………..	1	Do.
Karaniwan and Maestro Tirona …………………………..	1	Do.
Karaniwan and Kaliwanagan ………………………………..	1	Do.
Karaniwan and Pagasa …………………………………………	1	Do.
Karaniwan and Magwagi ……………………………………….	1	Do.
Karaniwan and Magtangol …………………………………….	1	Do.
Magtangol and Tagumpay ……………………………………..	1	Do.
Tagumpay and Magwagi …………………………………………	1	Do.
Masikap and Kaliwanagan ……………………………………..	1	Do.
Masikap and Pagasa ………………………………………………	1	Do.
Masikap and Magwagi ……………………………………………	1	Do.
Masikap and Magtangol ………………………………………….	1	Do.
Magtangol, in front of slaughterhouse ………………..	1	Do.
Magtangol and Papaya…………………………………………….	1	Do.
On Imus Bridge, Provincial Road …………………………..	1	Do.
Palico, 2d polo from Provincial Road……………………..	1	Do.
On boundary line, Provincial Road………………………….	1	Do.

Any additional street lights hereafter ordered by
the Municipality and installed by the Company in places where secondary
lines are maintained shall be subject to the same conditions and rates
stipulated in this contract.

“2. This contract shall run for a period of ten (10) years, beginning
from the first day of July, 1931. It being understood and agreed that
the Electric Service Rate Schedule III set forth hereof shall become
effective upon the date of the execution of this contract.

“3. The municipality in consideration of the faithful and complete
performance by the company of its part of this contract, hereby agrees
to pay monthly the said company for the service herein described upon
the basis shown on the Electric Service Rate Schedule III hereof, as
follows:

“ELECTRIC SERVICE RATE

“SCHEDULE III

“FLAT RATE SCHEDULE FOR STREET LIGHTING SERVICE

“FOR METALLIC FILAMENT LAMPS

(Approved by the Public Service Commission)

including Installation and Maintenance:

For each 50-watt metallic filament lamp………….. per month….	P4.50
For each 75-watt metallic filament lamp……………………do……..	6.00
For each 100-watt metallic filament lamp………………..do……..	8.00
For each 150-watt metallic filament lamp………………….do……..	12.00
For each 200-watt metallic filament lamp……………………do……..	16.00
For higher wattage lamps, a charge of P4 will be made for every 50 watts in excess of 200 watts.

“The installation of street lights, including the brackets, shades and lamps will be furnished by the Company, free of charge.

“The electric service herein referred to will be maintained between the
hours of 5:45 P. M. and 5.45 A. M. It can be made between six (6:00) P.
M. and six (6:00) A. M.

“The Company has the option to furnish either multiple or series street lighting service.

‘4. That the Company shall not be responsible for interruptions to the service due to cases beyond the company’s control.

“In witness whereof, the parties hereto have caused these presents to
be signed and executed by their respective officers duly authorized to
do so and cause their respective seals to be affixed hereto, the day
and the year above written.

	“FOR THE IMUS ELECTRIC CO., INC.
“BY (Sgd.)	ESTEBAN C. ESPIRITU
	“President
	“FOR THE MUNICIPALITY OF IMUS
“By (Sgd.)	EPIFANIO E. GABRIEL
	“Municipal President

“Attest:
	“(Sgd.)	AURELIO ELISES
		“Municipal Secretary
“Signed in the presence of:
	“(Sgd.)	CECILIO DEL ROSARIO
	“(Sgd.)	DIONISIO ANONUEVO

‘UNITED STATES OF AMERICA	}SS.
PHILIPPINE ISLANDS
PROVINCE OF CAVITE

“I hereby certify that before me, a Notary Public in
and for the Province of Cavite, personally appeared Esteban Espiritu in
his capacity as President of the Imus Electric Company, Inc., with
cedula No. F-8476, issued at Manila, on January 14, 1931, and Epifanio
Gabriel, in his capacity as Municipal President of Imus, Cavite, with
cedula No. F-2375125, issued at Imus, Cavite, to me known and known to
me to be the persons who signed the foregoing instrument and they
acknowledged to me that they executed the same as their free act and
deed and the free act and deed of the corporation and municipality
which they represent for the purposes therein set forth.

“I
further certify that the said instrument relates to a contract for
street lighting service for the Municipality of Imus, Province of
Cavite, and that the same consists of three pages including the page on
which this certificate is written.

“In witness whereof, I
have hereunto set my hand and affixed my official seal this 11th day of
June, 1931, at the Municipality of Imus, Province of Cavite, P. I.

	(Sgd.) “FRANCISCO T. SAYOC
	“Notary Public
“My commission espires December 31, 1937

“Doc. No. 143

“Page 39

“Book III

“Series of 1930.”

The municipality of Imus, represented by the defendant councilors,
appropriated funds for the payment for electric light service
corresponding to the months of January and February, 1932, and said
monthly charges were actually paid to the plaintiff company. However,
the defendants later refused to appropriate funds for the month of
March of the said year and for subsequent months, and their refusal
prompted the plaintiff to bring this action for the purpose of
compelling them to comply with their obligation by appropriating the
necessary funds. Notwithstanding the defendants’ attitude, the
plaintiff continued and still continues to render the electric lighting
service on the streets specified in the contract and, it is needless to
state that the inhabitants of the municipality of Imus have been
benefited by and still continue to enjoy the said public service.

The plaintiff appealed from the judgment rendered by the Court of First Instance of Cavite, which reads as follows:

“Wherefore, judgment is hereby rendered declaring:

“(A) That the contract for electric lighting executed by the plaintiff
and the defendants on June 11, 1931, and quoted in paragraph III of the
complaint, is null and void on the ground that it had been executed in
open violation of the legal provisions contained in sections 606 and
607 of the Revised Administrative Code and in accordance with those of
section 608 of the same Code; and

“(B) Sentencing the
defendants to pay to the plaintiff the sum of P202.50 monthly, from
March 1, 1932, until said public lighting service is suspended or
stopped, without special pronouncement as to the damages and attorney’s
fees claimed by the plaintiff, nor as to costs. So ordered.”

The defendants, in turn, appealed from that part of the judgment
compelling them to pay to the plaintiff the sum of 202.50 monthly, from
March 1, 1932, until the service is withdrawn by the aforesaid
plaintiff.

A stipulation of facts was entered into and other oral and
documentary evidence was presented. The following facts are practically
admitted by both parties, to wit:

In March, 1930, the plaintiff applied to the then municipal council
of Imus for a franchise to install an electric lighting system on
different streets of the said municipality and to furnish electric
current to the municipality and its inhabitants. The franchise was
granted by the municipality on June 30th of the same year and
subsequently approved by the Public Service Commission, together with
the rates proposed therein. On June 10, 1931, the municipal council of
Imus, by means of a resolution, authorized the municipal president to
enter into a contract with the plaintiff whereby the latter should
furnish the different streets of the said municipality with electric
light. On the 11th of the same month, the municipal president and the
president of the plaintiff corporation signed the above quoted
contract. The contract, according to the terms thereof, was of ten (10)
years’ duration and the plaintiff was thereby bound to furnish
forty-five 50-watt lamps at the rate of P4.50 each per month, or a
total of P202.50 monthly. The contract thus executed was approved by
the municipal council of Imus by means of resolution No. 40, series of
1931. On account of such approval, the said municipality, on the same
date of June 11, 1931, approved a special appropriation for the sum of
P1,200 for the purpose of covering the value of the electric current to
be furnished by the plaintiff for a period of six (6) months. The
special or additional appropriation was at first opposed by the
provincial treasurer of Cavite, but later it was approved by the same
official, and by the provincial board in its resolution No. 568.

Immediately after their election, the defendant councilors, tried
to annul the contract for furnishing electric current, entered into
with the plaintiff, as well as the former municipal council’s
resolution approving the same. For that purpose, they submitted the
case to the Chief of the Executive Bureau, who expressed the opinion
that the contract in question was null and void and that the resolution
approving it should be revoked. In consequence thereof he also held
that the resolution appropriating funds for six (6) months was contrary
to law on the ground that the municipality lacked available funds for
the entire period of ten (10) years covered by the contract in
question. The Insular Auditor likewise expressed the same opinion.
However, the Chief of the Executive Bureau was asked to reconsider his
decision, which he did after further study of the case, and he finally
declared valid the contract as well as the appropriation of funds for
six (6) months and immediately ordered the defendants to include in the
corresponding appropriation the amount necessary to pay for the service
for one year or for three months, if no sufficient funds were available.

The defendants contend that the contract in question is null and
void on the ground that the former municipal council of Imus approved
it without having the necessary funds to pay for the value of the
service to be rendered by the plaintiff for a period of ten (10) years,
which amounted to P24,300, and without the provincial treasurer’s
previous certificate to the effect that said funds have been
appropriated and were available, in violation of the provisions of
sections 606, 607 and 608 of the Revised Administrative Code of 1917.
The above cited legal provisions read as follows:

“SEC. 606. Appropriation antecedent to making of contract.—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
expenditure. This provision shall not, however, be construed to prevent
the purchasing and carrying of supplies in stock, under the regulations
of the Bureau of Audits, provided that when issued such supplies shall
be charged to the proper appropriation account.

“SEC. 607. Certificate showing appropriation to meet contract.—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.

“Except in the
case of a contract for supplies to be carried in stock, no contract
involving the expenditure by any province, municipality, township, or
settlement of two thousand pesos or more shall be entered into or
authorized until the treasurer of the political division concerned
shall have certified to the officer entering into such contract 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. Such certificate, when signed by the said
treasurer, 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 contract in question is
lawfully abrogated or discharged.

“For the purpose of making
the certificate hereinabove required ninety per centum of the estimated
revenues and receipts which should accrue during the current fiscal
year, but which are yet uncollected, shall be deemed to be in the
treasury of the particular branch of the Government against which the
obligation in question would create a charge.

“SEC. 608. Void contract; Liability of officer.—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.”

The defendants contend that the additional appropriation made by
the then municipal council was inadequate on the ground that it was the
duty of the latter to appropriate funds for the whole term of the
contract and that the contract in question falls within the prohibition
of section 608 because in reality there was no appropriation for the
sum of P24,300, nor did the provincial treasurer certify that such
appropriation was made and that the funds for the same were available.

The inconsistency of the defendants’ claim becomes obvious merely
by taking into consideration that the contract entered into by the
parties was for the sale of electric current at the rate of P4.50
monthly for every lamp or light of 50 watts, or the sum of P202.50
every month. Under this agreement, the municipality of Imus was not
bound, nor it is bound, to pay the price of the electric current until
the same has been furnished, and inasmuch as the period of one month
was made the basis thereof, there is no doubt but that neither is the
said municipality obliged to pay for the current except at the end of
every month. It is true that the duration of the contract was fixed at
ten (10) years, a period which was accepted by the municipality on the
ground that only under that condition could the plaintiff furnish
electric current at a very much reduced rate, but it is also true that
under the terms of the contract and the law, the municipality was not
bound to make advanced payments and, consequently, there was no reason
for it to appropriate funds for the said public service except for a
period of one month or one year, at most, if it had sufficient funds,
in order to comply with the provisions of section 2296 of the Revised
Administrative Code, which requires that municipalities should, at the
beginning of every year, make a general appropriation containing the
probable expenses which they would have to incur.

From the foregoing, it is obvious that the contract in question is
not in conflict with the provisions of sections 607 and 608 above
quoted because in reality the same does not necessarily involve an
appropriation of funds in excess of P2,000. As the Chief of the
Executive Bureau has finally decided, the municipality of Imus may
appropriate funds for three (3) months or for six (6) months in the
same manner the former councilors of the said municipality have done.

There is no evidence to establish the damages claimed by the plaintiff and, therefore, it is not entitled thereto.

Wherefore, the appealed judgment is hereby reversed and the
contract for furnishing electric current, executed by the parties and
quoted in the complaint and in the stipulation of facts, is hereby
declared valid and binding, with the costs of this instance against the
defendants-appellants. So ordered.

Malcolm, Villa-Real, Hull, and Goddard, JJ., concur.