Provincial Government of Sorsogon v. Stamatelaky
REITERATIONFacts
The Antecedents: The Provincial Government of Sorsogon published a notice for bids to construct its provincial hospital. Constantino Stamatelaky submitted a proposal to build the hospital for P66,000 within 200 working days, which was accepted. A contract was executed, with Juan Alcazar and Jose Fajardo as bondsmen for P26,400. Stamatelaky commenced work in January 1929. Due to delays, an extension of 50 days was granted, expiring on September 15, 1929. Stamatelaky continued working until October 15, 1929, and then abandoned the work on November 15, 1929. The Provincial Government took over the construction, completing it on March 6, 1930. Procedural History: The Provincial Government of Sorsogon sued Stamatelaky and his bondsmen to recover the excess expenses incurred in completing the hospital, amounting to P5,538.52. Mayon Sawmill and Lumber Co., Inc. intervened, claiming P3,140.61 for materials furnished to Stamatelaky. The Court of First Instance of Sorsogon rendered judgment sentencing the defendants to pay jointly and severally to the plaintiff P5,538.52 and to the intervenor P3,140.61, with the provincial government to be paid first. The defendants appealed. The Petition: The defendants appealed the judgment, assigning eight errors. The Supreme Court reviewed the case, focusing on whether the expenses incurred by the provincial government were excessive and whether the defendants should be credited with the value of unused materials. The Court also addressed the intervention of Mayon Sawmill & Lumber Co., Inc.
Issue(s)
Whether the expenses incurred by the Provincial Government to complete the hospital were excessive and unreasonable. Whether the defendants are entitled to credit for the value of unused materials left at the site and used by the government. Whether the intervention of Mayon Sawmill & Lumber Co., Inc. was proper and if the default order against defendants regarding said intervention was valid. Whether the bondsmen are liable for materials supplied to the contractor after the expiration of the authorized extension period.
Ruling
The Supreme Court modified the judgment of the lower court. It held that the defendants should be credited with the value of the unused materials, amounting to P2,708.03. The Court also modified the judgment regarding the intervenor's claim, stating that the bondsmen are liable only for materials supplied until September 15, 1929, and the contractor alone is liable for materials supplied thereafter. The judgment was affirmed as to the claim of the intervenor, but with a reservation for the intervenor to prove the value of materials furnished up to September 15, 1929.
Ratio Decidendi
On Issue 1: The Court ruled that the completion expenses of P18,078.52 were not excessive. The Province submitted specific receipts and vouchers (Exhibits R to A-67) detailing materials and labor, which the defendants failed to prove were fraudulent or false. Bare conjectures that the costs were too high for the remaining work are insufficient to overcome documented expenditures verified by the district engineer. Applying the principle of evidentiary weight, the Court noted that the specific nature of the government's evidence must prevail over the appellants' unsupported allegations of exorbitant pricing. On Issue 2: The Court found that the defendants should be credited for the sum of P2,708.03, representing the value of materials left at the site which the government utilized in other projects. It is 'not just or righteous' that the government should charge the defendants for these materials while simultaneously keeping and using them. The Court clarified that paragraph 51 of the general conditions of the contract, regarding the government's right to completion costs, does not justify failing to credit the contractor for usable materials actually appropriated by the state. This prevented the government from gaining an inequitable advantage beyond the stipulated contract price. On Issue 3: The intervention of Mayon Sawmill was held proper as it was filed during the rebuttal stage, which is within the 'period of trial' under Section 121 of Act No. 190. Regarding the default, the Court ruled that the defendants' filing of objections to the motion for intervention and their exception to the subsequent order constituted a 'voluntary appearance' under Section 397 of the Code of Civil Procedure. This voluntary appearance is equivalent to the service of summons and subjected the defendants to the court's jurisdiction over the intervention. Consequently, the failure to file a timely answer to the complaint in intervention justified the order of default. On Issue 4: In its Resolution on the Motion for Reconsideration, the Court held that the bondsmen's liability is governed by Article 1826 of the Civil Code, which dictates that a surety's obligation cannot be more onerous than the principal's. Since the bondsmen only guaranteed performance within the 200-day contract period and the 50-day extension they consented to, their liability for materials supplied to the contractor ended on September 15, 1929. The contractor, Stamatelaky, remains personally liable for all materials, but the bondsmen Fajardo and Alcazar cannot be held joint and severally liable for deliveries made between September 16 and November 15, 1929, as those occurred after the bonded period expired.
Main Doctrine
The Supreme Court modified the judgment, holding that the defendants (contractor and bondsmen) should be credited with the value of unused materials remaining after the government took over the construction. The liability of the bondsmen was limited to materials supplied within the original or extended contract period.