EXHIBIT 1 

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Alco Corp. v. Mun. de Toa Alta, 183 D.P.R. 530 (2011)

© 2020 Thomson Reuters. No claim to original U.S. Government Works. 1

Certified to be a correct and true translation from the source text in Spanish to the target language English.

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2011 TSPR 180

183 D.P.R. 530, 2011 WL

6310212 (P.R.), 2011 TSPR 180

ALCO CORPORATION, petitioner, 

v.

MUNICIPIO DE TOA ALTA, respondent.

In the Supreme Court of Puerto Rico

Number: CC-2010-11

Synopsis

CERTIORARI seeking the review of a JUDGMENT of

Emmalind García, Aleida Varona Méndez and 

Gretchen I. Coll Martí, Js. of the Court of Appeals, 

which upheld the Trial Court’s decision holding that

ALCO Corporation was not entitled to demand

payment for work carried out, since the claim for

payment made against the municipality of Toa Alta 

arose from services rendered prior to the effective date 

of the contract presented in evidence. The judgment 

rendered by the Court of Appeal is upheld.

José A. Sánchez Álvarez and Christian O. Cintrón 

Pérez, de Nevares & Sánchez-Álvarez, counsel for the 

Petitioner; Ricardo Robles Caraballo, counsel for the 

Respondent.

ASSOCIATE JUSTICE MR. MARTÍNEZ TORRES 

rendered the Court's opinion.

This appeal enables us to analyze if it is feasible, in 

light of the 1991 Autonomous Municipalities Act of 

the Commonwealth of Puerto Rico (Autonomous

Municipalities Act), Act No. 81-1991 (21 L.P.R.A. 

sec. 4001 et seq.), for a contractor to perform work 

prior to the conclusion of a contract in writing and still 

demand payment for its services if the contract is later

entered into.

In view of the recognized pressing interest of 

protecting public funds, it is necessary for a *533

contract to be entered into in writing before the

contractor begins work. Thus, we reaffirm the

“rigorousness of the legal precepts that govern the 

commercial relations between private entities and the 

municipalities, which aim to promote sound and

honest public administration, which is a matter of the 

highest public interest” Fernández & Gutiérrez v. 

Mun. San Juan, 147 D.P.R. 824, 829 (1999). See also 

Cordero Vélez v. Mun. de Guánica, 170 D.P.R. 237, 

248 (2007).

I

The petitioner ALCO Corporation (ALCO) is engaged 

in the business of the supply, sale, watering and

delivery of asphalt concrete. In 2002, ALCO

participated in a bid for the execution of a resurfacing 

project in the Lajas neighborhood, Los Rivera Marrero 

sector, in the municipality of Toa Alta. On June 4 of 

the same year, the municipality’s bid board notified 

Mr. Alfonso Rodríguez García, president of ALCO, by

way of letter, that it had been awarded bid ## 02-030. 

Appendix to Certiorari petition, p. 45. As a result, 

ALCO began paving the corresponding area between 

June 25 and 28, 2002, without the contract having been 

entered into. It was not until July 16, 2002 that this 

contract was entered into. On the same date, it was 

recorded in the municipal books and a copy was sent 

to the Office of the Comptroller. Clause eighteen of the 

contract stipulated that the term for carrying out the 

work was an essential element of the contract and that 

ALCO was supposed to start the project within or 

before five days after it was awarded. Appendix to 

Certiorari petition, p. 49. Furthermore, clause fourteen 

stated that the contract would be in force for 30 days 

from July 16, 2002 to August 14, 2002. Appendix to 

Certiorari petition, p.48. In other words, the contract 

had a term of thirty days for completion of the work. 

It is worth noting that this was not the *534 first time 

that ALCO was contracting with the municipality of 

Toa Alta. From the pleadings, it results that it had also 

won a contract for another resurfacing task in 2000.

Following the completion of the work, ALCO

requested the payment of $29,500. To this end, it 

presented supporting documents showing that the

work had been carried out between June 25 and 28,

2002. After several unsuccessful attempts with the 

municipality, ALCO brought a debt collection action. 

Thereafter, it filed a summary judgment motion and

several motions for reconsideration which were

denied.

The municipality then filed a summary judgment 

motion. ALCO opposed this motion. In its motion, the 

municipality contended that “the [ALCO’s] claim was 

inadmissible since it is based on an alleged 

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Alco Corp. v. Mun. de Toa Alta, 183 D.P.R. 530 (2011)

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2011 TSPR 180

contractual obligation unrelated to the claim for the 

work done”. Appendix to Certiorari petition, p. 28. In 

turn, ALCO pointed out that “the fact that the work has 

been performed early does not in any way amount to 

fraudulent machinations, or embezzlement of funds, or 

favoritism, or any other matter being dealt with by the 

Supreme Court”. Appendix to Certiorari petition, p. 

38. It added that, as opposed to wanting to charge for 

work unrelated to the claim of the work done, “the 

information in the contract, as well as that of the

tender, is completely related to the invoices presented 

by ALCO for the work done in Barrio Lajas”.

Appendix to Certiorari petition, p. 39.

The Trial Court dismissed granting summary

judgment in the municipality’s favor. It held that the 

work carried out and the dates of the works were not 

related to the claims brought. It reasoned that, given 

the stringent requirements for contracting with

municipalities,

... no contract concluded by a municipality may 

have a validity date later than the date of completion 

of the work. *535 In other words, ALCO cannot

attempt to seek payment from the Municipality for 

work carried out prior to the date of entering into the

contract in dispute. It is clear from the evidence 

presented by Claimant itself that the works for

which Alco is attempting to collect payment from 

the Municipality were carried out on dates prior to 

the date of entry into the contract. Such action has 

no place in our legal system. Appendix to Certiorari

petition, p. 84.

At the same time, it reasoned that, given the statutory 

form requirements mandated under the law for 

contracting with municipalities, contracts cannot

cover events that occurred previously. Appendix to

Certiorari petition, p. 85.

Dissatisfied, ALCO appealed to the Court of Appeals. 

This court upheld the Trial Court’s decision. It held 

that ALCO was not entitled to seek payment for the 

work carried out, since the claim for payment asserted 

against the municipality arose from services rendered 

before the contract was in effect. Appendix to

Certiorari petition, p. 169. It held that

[t]o do otherwise would disrupt the established

system of controls on the disbursement of public 

funds, 

since it would lend itself to the validation of

agreements reached between contractors and

municipalities without complying with the process 

established by our law. ...

... In view of the interest represented by public

funds, we are not prepared to impose on the

Municipality the responsibility of complying with 

the payment of a debt allegedly incurred for services 

received on a date when no contract was in force. 

Id., p. 170.

Dissatisfied once again, ALCO appealed this decision 

before us. It asserted that the intermediate appellate 

court erred in holding that the doctrine of unjust

enrichment did not apply in this case. It explained that 

several courts in other U.S. jurisdictions have imposed

liability on municipalities that unfairly benefit from 

their own ultra vires acts. It also noted that, to hold

that payment was not chargeable because the work was 

done prior to the conclusion of the contract

discourages contracting *536 with the Government, as 

it hurts its credibility as a contracting entity. It added 

that the amendments made to Art. 8.016 of the

Autonomous Municipalities Act, 21 L.P.R.A. sec.

4366, and to Art. 1 of Act No. 18 of October 30, 1975,

by Act No. 127-2004 (2 L.P.R.A. sec. 97) relaxed the 

requirements for contracting with municipalities and

“seek to establish fair and valid rules that prevent the 

government, including its municipalities, from losing 

credibility when it comes to procurement.” Certiorari, 

p. 6.

Likewise, ALCO argues that in Cordero Vélez v. Mun. 

de Guánica, supra, we held that if a bid is awarded and 

formal notice is issued, and the contractor begins work 

without having signed a contract, payment for the

work is contingent on a contract being signed, even if 

done subsequently. Finally, ALCO is of the opinion 

that, since the contract was awarded after the

completion of the work, was recorded in the

municipality’s books and transmitted to the Office of 

the Comptroller, this situation is different from the 

case that we have resolved related to government

contracting.

In its opposition, the municipality repeated that it does 

not have to pay for work carried out prior to the

conclusion of the contract. It added that

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Alco Corp. v. Mun. de Toa Alta, 183 D.P.R. 530 (2011)

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the determination of the Trial Court in dismissing the 

suit was due to the evidence submitted by ALCO, 

which showed that the works were carried out prior to

the conclusion of the contract. We decided to issue the 

writ of certiorari. The case was formally filed on 

November 12, 2010.

II

[1] From our first pronouncements on contracting

with municipalities, we have made it clear that unlike 

contracting between private parties, *537 “the legal 

precepts governing economic relations between

private entities and municipalities are of great public 

interest and aim to promote sound and honest public 

administration.” Hatton v. Mun. de Ponce, 134

D.P.R. 1001, 1005 (1994). For this reason, in Quest

Diagnostics v. Mun. San Juan, 175 D.P.R. 994, 1000 

(2009), we noted that “the law has imposed

requirements and conditions on contracting with

municipalities by special statutes. Contracts with

government entities are examined for validity

according to special statutes, rather than general 

contract theories”. See also: Johnson & Johnson v. 

Mun. de San Juan, 172 D.P.R. 840, 854–855 (2007);

Cordero Vélez v. Mun. de Guánica, supra, p. 252.

Therefore, it is of great importance that municipalities 

have acted “in accordance with the procedures

established by law and our interpretative

jurisprudence” when disbursing public funds for the

settlement of incurred obligations. Colón Colón v. 

Mun. de Arecibo, 170 D.P.R. 718, 725 (2007).

[2] In Ocasio v. Alcalde Mun. de Maunabo, 121

D.P.R. 37, 54 (1988), we list for the first time the form 

requirements to be complied with when entering into 

agreements with municipalities. These are: (1) that the 

agreement be set out in writing; (2) that a true record 

be maintained with a view to establishing the existence 

of the contract; (3) that a copy of the contract be

transmitted to the Office of the Comptroller; and (4) 

that evidence be provided regarding the certainty of 

time, i.e., that the contract was entered into fifteen days

prior. See also: Mun. Quebradillas v. Corp. Salud 

Lares, 180 D.P.R. 1003 (2011); Colón Colón v. Mun.

de Arecibo, supra, pp. 726–727; Cordero Vélez v.

Mun. de Guánica, supra, pp. 248-249. We point out 

that each of these requirements must be rigorously 

satisfied, 

as it “reflects the legislative interest in preventing

fraudulent or illegal payments and claims by creating 

a comparison *538 mechanism to circumstantially and 

chronologically perpetuate such contracts.” Ocasio v. 

Alcalde Mun. de Maunabo, supra, pp. 53– 54.

[3] The need for municipal contracts to be in writing 

is based on a requirement of a formal or substantive 

nature. The written contract is

t... he best evidence of the

parties' reciprocal obligations. 

It frees the parties from future 

spurious disputes [sic] over the 

originally agreed upon terms, as 

these are objectively reflected 

in the written agreement.

Therefore, this requirement

protects the rights of both the 

municipality and the contractor, 

in the event of breach. Colón 

Colón v. Mun. de Arecibo, 

supra, p. 726.

[4] Therefore, “the courts look cautiously at wellfounded and contractually agreed claims in which the 

enforcement authorities have failed to comply with 

this instruction. Only thus may legislative spirit and

adjudicative judicial awareness of the disbursement of 

public funds be fully satisfied". Ocasio v. Alcalde de

Maunabo, supra, p. 54. Thus, “once the above

requirements are met, contracts are valid, enforceable 

and enjoy the public nature required by our legal

system for the sound administration of public policy,

as far as municipal procurement is concerned”.

Johnson & Johnson v. Mun. de San Juan, supra, p. 

853. Therefore, “municipalities should not demand the

execution of services without having certified to the 

private party that the agreement was reduced to a 

written contract, that it was registered and that a copy 

of it was transmitted to the Office of the Comptroller

as required by law”. (Emphasis added) Lugo v.

Municipio Guayama, 163 D.P.R. 208, 217 (2004), 

citing Las Marías v. Municipio San Juan, 159 

D.P.R. 868, 879–880 (2003). It is clear that

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Alco Corp. v. Mun. de Toa Alta, 183 D.P.R. 530 (2011)

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Certified to be a correct and true translation from the source text in Spanish to the target language English.

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... with the passage of Act No. 127 of May 31, 2004

(2 L.P.R.A. sec. 97), failure to comply with the 

requirement that *539 all contracts must be

registered and transmitted to the Office of the

Comptroller as required by Article 1 of Act No. 18, 

supra, and Article 8.016 of the Autonomous

Municipalities Law of 1991, supra, does not have

the effect of nullifying the contract in dispute,

although it does preclude benefits from being

claimed until the agreement is registered and

transmitted to the Office of the Comptroller. Mun. 

Quebradillas v. Corp. Salud Lares, supra, p. 1013.

[5–6] Art. 1.003(v) of the Autonomous Municipalities 

Act, 21 L.P.R.A. sec. 4001(v), defines obligation as 

“any legally incurred valid undertaking represented by

an outstanding purchase order, contract or similar

document, duly signed and authorized by the officials 

authorized to disburse public funds and which is or 

may become a collectable debt.” Art. 8.004 of the

same Act, 21 L.P.R.A. sec. 4354, mandates that

obligations and disbursements of funds be made only

to assume obligations or pay for services authorized by

law, ordinance or resolution passed for that purpose, 

and by the regulations adopted pursuant thereto. 21 

L.P.R.A. sec. 4354. Likewise, Article 8.004, id.,

stipulates that when loans are authorized to deal with 

the affairs of a specific fiscal year, these are to be

applied exclusively to the payment of legally 

contracted obligations that are duly recorded in the 

books of the municipality during said year. Id. This 

means that funds allocated for a fiscal year can only be 

used for obligations legally incurred during that year, 

not for obligations incurred in previous or subsequent 

years. That is, “a municipality generally cannot agree 

to future payment of amounts in excess of the

budgeted allocation for a particular contract. Johnson

& Johnson v. Mun. de San Juan, supra, p. 854.

As we can see, there will be an obligation on the part 

of the municipality only when there is a contract by

virtue of a legally valid commitment. That is why

all municipalities are required to keep “a record of all 

contracts, deeds and related documents executed, *540

as well as any amendments thereto, determination,

record or action terminating it, or rendering it void.”

See: Art. 8.016 of the Autonomous Municipalities Act, 

supra; Art. 1 of Act No. 18 of October 30, 1975, as

amended, supra. See, further, Article 4 of Regulation 

No. 33 on the Registration of Contracts, Deeds and 

Related Documents and Transmission of Copies with

the Office of the Comptroller, Regulation No. 5743, 

Department of State, January 28, 1998, p. 3.

The contents of that record should include the

following information:

(1) Governmental entity. (2)

Number of the contract, deed or 

related document. ...

(3) Date of execution.

(4) Contractor. (5) Federal

social security number or

company tax identification

number (6) Total or monthly

value or amount involved [sic]. 

Can be estimated. (7) Register 

page and volume. (8) Object of 

the contract, deed or related

document (9) Term. 

Commencement and end dates 

must be indicated. (10) Exempt. 

It shall be indicated whether or 

not the contract is exempt from 

filing [sic], as provided in

Article 9-a of these

Regulations. If it is exempt, the 

reason for not filing [sic] it shall 

be indicated, using the number 

of the exemption, as indicated 

in Article 9-a. (11) Approval or 

waiver. It shall be indicated 

whether or not it is a contract 

that requires prior approval or 

waiver from any agency prior to 

being entered into. (Emphasis

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added). Art. 5 of Regulation No. 

5743, pp. 3-4.

The obligation to register the contract in the municipal 

books and the requirement that the contract be in

writing serve different purposes. This is how we

explained it in Colón Colón v. Mun. de Arecibo, supra, 

p. 730:

There is a marked difference

between some requirements

and others. The requirement

that a signed contract be

recorded in the municipal

journal and a copy transmitted 

to the Office of the Comptroller 

of Puerto Rico is intended to 

provide publicity, with respect 

to third parties, for municipal 

procurement. In this way, third 

parties can oversee it. However, 

requiring that signed contracts 

be memorialized in writing has 

an unescapable dimension of

sound public administration,

insofar as it allows *541 for 

safeguarding the interests of the 

contracting parties in the event

of a breach, permitting the 

orderly use of municipal funds, 

avoiding uncertainty in the

preparation of the municipal

budget, and making it possible 

to properly identify the budget 

item against which public

disbursements will be made in 

compliance with the law. That 

is, the former are more related 

to procedure and smooth

processing, but the latter [that 

the contract be in writing] is

substantive due to its direct

relationship with sound public 

administration. In view of this, 

we must conclude that failure to 

comply with

the requirement to memorialize

the municipal contract in

writing perforce adversely

affects the effectiveness of the 

obligations assumed.

[7] Briefly put: “the purpose of the statutes that

regulate the execution of works and the procurement

of goods and services for the State, its agencies and 

dependencies, and the municipalities, is the protection 

of the people’s interests and financial resources. In this 

way, favoritism, waste, prevarication and the risks of 

breach are avoided.” Johnson & Johnson v. Mun. de

San Juan, supra, p. 852. See also: Mun. Quebradillas 

v. Corp. Salud Lares, supra; Colón Cólon v. Mun de

Arecibo, supra, p. 725; Lugo v. Municipio Guayama, 

supra, p. 214; Hatton v. Mun. de Ponce, supra, p. 1005.

“To this end, we have stated that [the rules outlined by

the law and the jurisprudence] must be rigorously

observed even in emergency circumstances.”

(Emphasis in the original) Ríos v. Municipio Isabela, 

159 D.P.R. 839, 846 (2003). See also: Fernández &

Gutiérrez v. Mun. de San Juan, supra, p. 833; Hatton 

v. Mun. de Ponce, supra, pp. 1005-1009.

[8] Finally, we reiterate that it is not permissible for 

“private persons to invoke equitable remedies against

the municipalities with which they contract, because 

‘it is settled doctrine that such remedies will not be 

applied when it is contrary to a clear public policy

embodied in a statute or in the Constitution’.” Mun.

Quebradillas v. *542 Corp. Salud Lares, supra, p. 

1020, citing Las Marías v. Municipio San Juan, supra, 

pp. 875-876.

III

[9] As can be seen from the above facts, the work was 

completed two weeks before the written contract was 

entered into. ALCO asserts that the municipality asked

it to start the work before the date of entry into the

written contract. However, ALCO could not prove that 

fact. Moreover, even if we were to assume that this 

was the case, this does not validate the legal

transaction carried out. Let us remember what we once 

again must reiterate: “‘private parties should play a 

more active role when contracting with

municipalities.’ ” Lugo v. Municipio

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Guayama, supra, p. 217. The prudent thing to do is for 

contractors to require municipalities to set out the

agreement in writing and to certify that it has been 

registered and transmitted to the Office of the

Comptroller. Id.

Therefore, ALCO carried out the work at the end of 

June 2002 without having a written contract

authorizing it to do so. The only thing it had was the 

letter certifying it had won the bid to carry out the 

project. That was not enough, because

... for more than three decades we have established 

that in our system “an agency has the right to revoke 

a bid award before the corresponding contract is 

formalized” ... The social objective of the power to 

reject bids or to cancel the tender once it has been 

awarded is to grant a certain degree of discretion

and flexibility that allows the administrative body to 

protect its interests adequately (Quotes omitted). 

Cordero Vélez v. Mun. de Guánica, supra, p. 248.

According to the foregoing, although ALCO won in 

the bidding process, this did not provide it with any 

assurance that the municipality would eventually

award it the contract. In that sense, endorsing ALCO’s 

performance of the work without having *543 a 

written contract would void the power that

municipalities have to revoke a bid award before the 

entry into a contract.

On the other hand, we must take into account the fact 

that “the municipality’s power to commit public funds 

for the payment of an obligation, is subject to

following the procedures established by law.” Cordero 

Vélez v. Mun. de Guánica, supra, p. 248. We have 

therefore leaned towards a restrictive rule in municipal 

procurement. Id. In this case, the work was performed 

in fiscal year 2001-2002, but the contract was entered 

into in the subsequent fiscal year. This action

committed the funds from one fiscal year for the

payment of an obligation contracted illegally in a

previous fiscal year. All this was done in clear

violation of Art. 8.004 of the Municipalities Act,

supra. However, the foregoing does not mean that 

there are no legal obligations that can be paid in a 

subsequent fiscal year. Whenever an obligation has 

been legally incurred during a fiscal year, its payment 

is justified even if it is effected during another fiscal 

year.

The justification is that these funds were set aside for 

this purpose. Similarly, the action is not validated

because both events were processed in the same fiscal 

year. A prior written contract is required.

Although the reality is richer than the imagination, if 

we validated the procurement conducted in this case, 

in the future there could be a situation where a

contractor deliberately carries out the work

beforehand, as a means of pressure to guarantee the 

future entry into a contract. Similarly, it could happen 

that a contractor who had carried out the work prior to 

entering into a contract would wait for a change in the

municipality’s administration to try to validate its act, 

by signing the agreement. Consequently, a contractor 

would be allowed to assume government powers by 

undertaking construction work at critical times without 

a formal contract, such as at the end of a fiscal year or 

*544 during a transition phase of a new municipal

administration. In other words, validating the theory 

proposed by ALCO, would reward those who conspire 

with a corrupt official of the municipality for not

following the rules of a sound public administration,

aware that once the work is completed they will have 

the right to claim compensation regardless of the fact 

that the law was not followed during the procurement

process. Ultimately, there are multiple possibilities of 

corruption that could arise if we allowed the

disbursement of the public fundsfor a work carried out 

before entry into a written contract.

On the other hand, endorsing the parties' actions

would, in this particular case, entail giving retroactive 

life to an act that did not occur as actually set out in the 

contract. We should recall that clause eighteen of the 

contract in question provides that “the time-limit for

carrying out the work is an essential element of the

contract and that [ALCO] was supposed to start the 

project within or before five days after the contract’s 

conclusion”. In other words, ALCO could begin to 

carry out the project five days after entering into the

contract or before, but in any event after it had been 

entered into. Furthermore, clause fourteen of the same 

contract states that it is in foce for thirty days from July 

16, 2002 to August 14, 2002. ALCO is claiming

payment for a project undertaken before the formal 

contract was in force.

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In its argument, ALCO refers to Article 1(d) of Act 

No. 18, supra, and Article 8.016 of the Autonomous 

Municipalities Act, supra, to state that with the

amendments made to these laws the requirements for 

referral of contracts to the Comptroller were relaxed

and it was established that failure to comply with these 

requirements is not cause for a competent court to 

declare the nullity of any legally valid contract or legal 

transaction. ALCO therefore contends that it is not 

appropriate in this case to declare the legal transaction 

carried out by the parties null and void, even if the 

contract was entered into after the work was carried 

out. *545

ALCO argues that these amendments were made to 

promote the government's credibility as a contracting 

entity by establishing fair and valid rules that prevent 

municipalities from losing their credibility when

contracting. However, from a reading of the

transcribed sections, we see that what Article 1(d) of

Act No. 18, supra refers to is the register that

municipalities must keep of all contracts they award -

including their amendments - and the transmission of 

copies of these to the Office of the Comptroller. The 

law states that a court shall not declare a contract or its 

amendments void because they are not recorded in the 

municipal registers or because they have not been 

transmitted to the Office of the Comptroller. These 

excerpts cannot serve as a basis for an interpretation 

that the legislature intended to retroactively authorize 

contracts concluded after the work has been carried 

out.

A study of the Positive Report on the measure (P. of 

C. 4243) submitted by the Governance Committee of 

the House of Representatives confirms this

conclusion. It was explained there that the amendment

arose from the need to overturn Las Marías v.

Municipio San Juan, supra. In that case, the Court 

ruled that contracts not registered in the Registry of 

Contracts of the Office of the Comptroller were void

and unenforceable. The Government Committee

explained that:

Among the unfair

consequences of the rule

established in the Las Marías

case, it should be noted that the 

entity in control of the

procedure in the Comptroller's

Register and that if the agency 

or municipality fails to comply

with this requirement, whether 

through carelessness,

negligence or intentionally, the

contract is void and the private 

entity cannot charge for the

services or goods. Positive 

Report of the P. of the C. 4243 

of 11 November 2003, 6th

Ordinary Session, 14th

Legislative Assembly, p. 2.

Finally, the House Governance Committee noted that 

the amendment, “without violating the rigorous

requirements of public procurement, protects 

contractors who rely upon legal and proper processing 

by *546 government agencies and entities in line with 

the requirements of the law.” (Emphasis added) Id., p.

3.

As can be seen, the main reason for the Legislative 

Assembly’s amendment of Article 1(d) of the Act was 

to establish that contractors are not responsible for

transmitting contracts to the Office of the Comptroller. 

That is an act that does not depend on the diligence of 

the contractor, but rather on the municipality or the 

procurement agency. Therefore, the law deemed it 

unfair to penalize the contractor for something that did 

not depend on its will. However, the Governance

Committee emphasized that the amendment had merit 

because it did not violate the strict requirements that 

prevailed in government procurement. One of these 

requirements is precisely the existence of a written 

contract.

Requiring contractors to ensure that there is a written 

contract before carrying out the work is not up to 

another party. Nor does it put them at a disadvantage

as contracting parties. On the contrary, it guarantees 

them that they will be able to receive payment for the 

work, since they have the surest guarantee of the

existence and scope of the contracted obligation: the 

written contract. We should recall that we have

previously said that “a private party that crosses its 

arms and provides services without demanding

reliable proof that the government has fulfilled its 

duty, risks assuming responsibility for its losses”.

Lugo v. Municipio Guayama, supra, p. 218. See also, 

Colón Colón v. Mun. de Arecibo, supra, p. 729.

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On the other hand, ALCO asserts that in Cordero Vélez 

v. Mun. de Guánica, supra, we held that, if a tender is 

awarded and notice formally issued, and the contractor 

begins work without having signed a contract, receipt 

of payment for the work is conditional upon the

signature of a contract even at a later date. Certiorari

petition, p. 7. It is wrong.

The dispute we dealt with there turned on whether the 

action for breach of contract and damages against *547 

the municipality was admissible by virtue of a tender 

that had not been formally awarded and did not result

in a written contract. We held that it was not.

In Cordero Vélez, the Municipality of Guánica

conducted a first bidding process in April 2001 for the 

purchase of fuel up to June 30 of the same year. Mr. 

Cordero Vélez participated in this bidding process, and 

he was later notified by letter that he had been awarded 

the bid for the supply of fuel. However, no contract 

was ever entered into. Notwithstanding the above, the

municipality was acquiring fuel from Mr. Cordero 

Vélez's garage. Another bidding process was

subsequently conducted for the period from July 2001 

to June 30, 2002. Mr. Cordero Vélez was the only 

participant. According to him, the Municipal Secretary 

told him that he would be awarded the bid since he had 

been the only bidder. However, he never received

written notification informing him of the award. After 

several procedures, Mr. Cordero Vélez found out that 

the municipality was also buying fuel from another 

retailer. He therefore asked the municipality the reason 

for the non-exclusivity in the purchase of fuel. The

municipality informed him that he had not been

awarded the bid, and it had therefore discontinued

payment for and purchase of fuel at his station.

Dissatisfied, Mr. Cordero Vélez filed an action for 

debt collection and breach of contract. He claimed that 

with the second bid, a contractual relationship had 

been established between him and the municipality of 

Guánica. The Trial Court held that the municipality of 

Guánica had awarded Mr. Cordero Vélez the second

bid (2001-2002). It found that the municipality,

through its Municipal Secretary, had informed Mr. 

Cordero Vélez that it had awarded him the bid It,

therefore, held that a contractual relationship between 

the two parties had arisen out of the bid.

The Court of Appeals partially upheld the trial court’s

decision. The intermediate court held *548 that it

lacked evidence to intervene into the trial court’s

finding. However, it recognized that the payment of a

municipal obligation with public funds is conditioned 

on following the procedures established by law. It,

therefore, ordered that a written contract be entered, 

registered in the municipal register of contracts and 

that the Office of the Comptroller be notified along 

with a copy of the judgement.

After an analysis of the dispute before us, we pointed 

out in relation to the first bid that

... [w]hile it was appropriate to enter into a written 

contract and to comply with legal formalities so that 

the municipality could disburse public funds in

accordance with applicable law, there was no

dispute regarding compliance with the terms of this 

bid.

The dispute in this case revolved around another

bid, conducted in May 2001 for the 2001-2002 

fiscal year. Applying the above provisions to the 

procedure for conducting and awarding municipal 

bids, it is indisputable that - contrary to the previous 

one - the bid in question had not been awarded. 

Cordero Vélez v. Mun. de Guánica, supra, p. 250.

From the transcript, it can be seen that in Cordero 

Vélez v. Mun. de Guánica, supra, we did not say that 

the performance of a work prior to the conclusion of 

the contract validates it. We did not go into the merits 

of the first bid. We only pointed out that, in effect, Mr. 

Cordero Vélez was awarded the bid, as the Bid Board 

sent him a letter informing him that he had won the 

award and that the parties should have contracted in 

writing. We cannot, therefore, conclude that in

Cordero Vélez this Court validated an assertion that 

works can be carried out prior to the award of 

contracts, since we did not even analyze that aspect. 

We only held that the second bid was not awarded to 

Mr. Cordero Vélez, given that the fact that the

Municipal Secretary had verbally informed him that 

the bid was going to be awarded to himwas not enough 

to obligate the municipality to *549 formally award 

that bid and perfect a written contract.

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Contrary to ALCO’s interpretation, in Cordero Vélez 

v. Mun. de Guánica, supra, we stated that the fact that 

the municipality was making purchases at Mr. Cordero 

Vélez’s station did not constitute a ratification of the 

award of the bid. We emphasize that

[i]n this case, no written

contract was ever granted. Nor 

was there a fulfilment of any of 

the formalities applicable to

municipal contracts, which are 

strictly required in order to

protect the public interest. The 

exception established by the

aforementioned Act No. 127 in 

that a valid contract that has not 

been registered or submitted to 

the Office of the Comptroller 

will not be void, does not have 

the effect of altering the public 

policy that permeates the

regulations on municipal

procurement, nor does it

exempt compliance with the

requirements described above

that render enforceable

agreements that are not legally 

valid. Moreover, that provision 

is based on the premise that a 

contract was made and that it is 

valid. Given that, in the present

case, the relationship between 

Mr. Cordero Vélez and the

municipality never became a

binding bilateral agreement, we 

hold that, since there was no

contract, it was inappropriate to 

order compliance with any

formality, contrary to decision 

of the Court of Appeals.

(Emphasis in the original) Id., 

p. 252.

Finally, we declare that “in light of the interest

represented by public funds, we are not prepared to 

impose on the municipality the responsibility of

complying with a contract that was never perfected”. 

Id., p. 253.

ALCO argues that from our language it can be

indirectly concluded that payment would have been 

required if the contract had been entered into for the

second bid. This analysis overstretches the

pronouncements in Cordero Vélez v. Mun. de

Guánica, supra, which is a case about the validity of a 

bid award, and not about whether a task can be carried 

out prior to the written conclusion of the contract.

Contrary to what ALCO alleges, in the same case we 

rejected the solution suggested by the intermediate 

appellate court, which ordered that a contract be

entered into in writing, *550 be recorded in the

municipal registry of contracts and that the Office of 

the Comptroller be notified along with a copy of the 

judgment in order to then validate the legal

transaction. Had it been held that what had been done 

could be validated, we would have affirmed the

remedy of having the contract be entered into

retroactively, but we did not do so.

We are not endorsing a municipality benefiting from a

work or a service without paying. Nor are we dealing 

with a legal claim against the municipal official who 

urged ALCO to carry out the work without a prior 

written contract. Therefore, as far as the municipality 

is concerned, we are following the applicable law and

we reiterate that the contractor should have required a 

written contract before committing its resources and 

carrying out the work. Like any commercial

enterprise, ALCO should have been aware of the legal 

requirements for contracting with a municipality and 

should have actively demanded compliance therewith. 

See Lugo v. Municipio Guayama, supra, p. 217.

Ignorance of these legal requirements does not excuse 

non-compliance. Deciding otherwise would

inadvertently lead to “favoritism, corruption, waste, 

prevarication, extravagance, carelessness and risks of 

breaches in public administration”. Lugo v. Municipio 

Guayama, supra, p. 220.

“Corruption and the improper or illegal

disbursement of public funds - in their many forms, 

sometimes crude and sometimes sophisticated - are 

acts incompatible with the system of democratic 

government enshrined in our Constitution and

underpinned by respect for human dignity and the 

funds of the people as the sole sovereign.” E.L.A. 

v. Soto Santiago, 131 D.P.R. 304, 322 (1992), citing

A.E.E. y A.A.A. v. P.N.P., 128 D.P.R. 294, 294–295

(1991),

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Associate Justice Negrón García's concurring

opinion, joined by Associate Justices Rebollo López 

and Andréu García.

Sec. 6 of Chapter IX of the Municipal Administration 

Regulations of the Office of the Commissioner of

Municipal Affairs (O.C.A.M.), applicable to all

municipal governments, currently stipulates: *551

Article 6: Construction, Works and Public

Improvements Contracts

All contracts for the construction of works and

improvements shall be entered into after a public bid 

process, when the total cost of the work exceeds one 

hundred thousand dollars ($100,000). If this amount 

is not exceeded, the work may be contracted by 

requesting at least three (3) estimates.

The contract should stipulate the maximum amount

of the cost of the work and the method of payment,

and identify how the work will be monitored or 

inspected. It must also provide for the retention of 

ten percent (10%) of each partial payment, until the 

work is completed or substantially completed, as 

required by law, and is duly inspected and accepted 

by the municipality.

Municipalities shall include in their contracts

termination clauses in cases of breach and penalty 

clauses or liquidated damages for late compliance. 

They must also stipulate clauses regulating the subcontracting of work for the project and release from 

liability, among others. They must comply with the 

permit regime required by the relevant agencies and

with the requirements set out in these Regulations.

Contracts for the construction of works and

improvements funded with “Community

Development Block Grant” (CDBG) federal funds 

must meet the requirements of applicable federal 

regulations and the Office’s guidelines. (Emphasis 

added). Municipal Administration Regulations,

Office of the Commissioner for Municipal Affairs, 

Regulation No. 7539, Department of State, July 18, 

2008, p. 159.

From a reading of this Article, it must be concluded 

that the written contract must be signed before the 

execution of the work. Otherwise, the public interest 

of regulating works inspections and restricting the 

parameters of subcontracting, among other

precautionary measures referred to in that Article, 

would be disregarded.

That rule is not new. Upon resorting to the previous 

Regulations on Basic Rules of the Office of the

Commissioner for Municipal Affairs, we find an

express prohibition on the retroactivity of contracts. 

Section 5(17) of Chapter I specified that the obligation 

is “a commitment that is represented by an outstanding 

purchase order, contract, or similar document, *552 

which must be signed by the official authorized to 

disburse municipal funds and which may in the future

be converted into an enforceable debt.” (Emphasis 

ours) Revised Regulations on Basic Rules for the

Municipalities of Puerto Rico, Regulation No. 3052 of

the Office of the Commissioner for Municipal Affairs, 

June 30, 1995, p. 4. The result at which we have

arrived today is in line with that regulation.

Given this situation, it is clear that any municipal 

works or public improvement must be preceded by a

written contract prior to its execution. We should not 

excuse compliance with regulations that require the 

municipal government to establish contractual

guarantees and public interest protections. Carrying 

out work before the signature of such clauses would 

deprive the municipal government and constituents of 

protection from illegal sub-contracting or from

performance of work without inspection and

supervision, among other shortcomings.

Nor does the doctrine of unjust enrichment apply in 

this case. The exception that allows a government

agency to invoke equitable relief to avoid a result

contrary to a public policy set out in a law or the 

Constitution does not operate here. See Mun. 

Quebradillas v. Corp. Salud Lares, supra. On the

contrary, “allowing an equity action against a

municipality to demand a benefit from a void contract 

would violate public policy established in the

Municipal Act”. Id., p. 1018.

For that reason, we reject the possibility of importing 

the approach of other jurisdictions, under which

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public obligations are validated without a written

contract, through the application of concepts in equity, 

including the doctrine of unjust enrichment. See, for a 

proposal in this regard, L. Muñiz Argüelles and J. 

Alvarado Vázquez, Obligations and Contracts, 77

(No. 2) Rev. Jur. U.P.R. 645 (2008). *553

Notwithstanding the foregoing, it is our understanding 

that it may seem fair to compensate the contractor in 

this case. In this connection, a renowned author, a 

distinguished professor in the field, has proposed an 

alternative: “Should not the official be liable for the 

financial damages suffered by the contractor who in 

good faith provides a service due to their misleading 

representation that it has been awarded a contract? 

These obligations of officials would be more effective 

tools for tackling government corruption, but they

must certainly come about through action by the

Legislature.” Muñiz Argüelles, id., pp. 650-651.

IV

On the above grounds, the judgment of the Appellate 

Court is affirmed. That court acted in accordance with 

the law by validating the summary judgment entered

in favor of the municipality of Toa Alta. The

intermediate appellate court correctly identified the 

danger of validating actions such as the one at issue 

here, no matter the good intentions of the person

proposing it. “Deciding otherwise would disrupt the 

established system of controls on the disbursement of 

public funds, since it would lend itself to the validation 

of agreements reached between contractors and

municipalities without complying with the process

established by our law.” Certiorari petition, p. 170. 

Our non-delegable task of overseeing the legality of 

the disbursement of our People's money compels us 

not to admit this type of retroactive contracting.

Deciding otherwise would undermine the strict

regulations that the Legislative Assembly has imposed 

on municipal procurement.

Judgment to be entered accordingly.

Associate Justice Ms. Rodríguez Rodríguez concurred 

with the finding without rendering a written opinion. 

Associate Justice *554 Ms. Fiol Matta dissented in a 

written opinion, which was joined by Chief Justice Mr. 

Hernández Denton.

--O--

Dissenting opinion rendered by Associate Justice Ms. 

Fiol Matta, which is joined by Chief Justice Mr.

Hernández Denton.

The Court's Opinion in this case is based on the

erroneous premise that the petitioner's entire

performance took place before the written contract 

was awarded. In doing so, it does not discuss or specify

the characteristics and constituent elements of the type 

of contract agreed to in this case. In the case of a 

contract for performance of work, in which the main 

performance takes place when the agreed work is

delivered, our task was to determine whether the

requirements for the completion of the obligation laid 

down in the regulations on municipal contracts had 

been satisfied prior to that delivery. The majority

opinion unnecessarily adds a formal constitutive

requirement to municipal contracts that is not

contemplated by the Commonwealth of Puerto Rico 

Autonomous Municipalities Act of 1991

(Autonomous Municipalities Act), Act No. 81-1991 

(21 L.P.R.A. sec. 4001 et seq.), which is to be

understood as the requirement that the contract must 

be set out in writing before the requested work is 

carried out. As I do not agree with the majority

analysis, I am forced to dissent.

I

On June 4, 2002, the municipalityof Toa Alta notified 

the petitioner ALCO Corporation (ALCO) that it had 

been awarded tender 02-030 for a resurfacing project

in the Lajas neighborhood of that municipality. The 

contract for the execution of the work was perfected 

on July 16, *555 2002, when it was put in writing, 

registered in the municipal books and a copy was

transmitted to the Office of the Comptroller. The 

project cost was $29,500. The contract was to have a 

term of approximately one month.1 There is no dispute 

that this contract satisfied the Autonomous

Municipalities Act’s four form requirements for 

municipal contracts.

According to the petitioner, the municipality of Toa 

Alta requested it to commence the resurfacing work 

before the date on which the contract would be

formally concluded.2 What is not in dispute is that at 

the end of June 2002, ALCO carried out the

resurfacing work as described in Tender 02-030 and, 

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eventually, in the July 16 work contract.

3 That is to 

say, it carried out its work before the perfection of the 

contract.4 However, the final certification of the

project, with a view to its acceptance by the

municipality of Toa Alta, occurred on July 31, 2002,

i.e. during the term of the contract.5 However, the 

municipality refused to certify the work and did not

make any payment to ALCO.

After some unsuccessful collection efforts, ALCO

filed a debt collection lawsuit against the municipality 

of Toa Alta, claiming $29,500 for the work done as an 

overdue, liquidated and enforceable debt. Both parties 

requested summary judgment. The municipality

contended *556 that the claim against it was

“unfounded because it was based on an alleged

contractual obligation that had no relationship

whatsoever to the claim for the work done”.

6 It argued, 

in particular, that it was not obliged to comply with the 

contract since the resurfacing work had been carried 

out before the contract was put in writing as required 

by the rules on municipal procurement.7

The Court of First Instance declared the summary 

judgment motion filed by the municipality to be

“admissible” and dismissed the application. In

summary, it determined that ALCO could not charge 

for work carried out before the contract for the

execution of the work had been concluded.

Dissatisfied, ALCO appealed to the Court of Appeals. 

The intermediate court, in the relevant Article, 

confirmed the decision of the court of first instance. 

The Court of Appeals held that ALCO could not claim 

any payment for the work done before the perfection 

since the contract concluded on July 16 made no

mention of the fact that the work had commenced

before the effective date of the contract and provided 

that any changes to the contract had to be made in 

writing.

Dissatisfied, ALCO appealed to this Court. In the

relevant Article, it argued that the Court of Appeal had

erred in holding that ALCO could not claim payment

for the work performed because the work on the

project had been carried out before the contract was 

concluded. In particular, ALCO questions whether “a

claim for payment for work duly tendered, budgeted 

and performed 

under a signed *557 and written contract, filed in the 

books of the Municipality and transmitted to the Office 

of the Comptroller can be dismissed [because] the 

contractor responded to the Municipality’s request to 

bring forward the works by some days”.

8 This, the 

petitioner argues, would damage the government's

credibility as a contracting entity. For its part, the 

municipality focuses on the fact that “the works in 

question were carried out prior to the conclusion [sic] 

of the [contract]”.

9 In addition, it claimed that the 

municipality’s alleged request that the work be

brought forward had not been proven. Finally, it

argues that contracts “cannot be concluded to cover 

events that occurred prior to the conclusion [of the 

contracts]”.

10

II

The power of municipalities to enter into contracts, 

and the consequent right of contractors to demand 

compliance with the provisionsis conditional upon the 

agreed contract satisfying certain formal

requirements.

11 These are: (1) that the agreement be

made in writing, (2) that a true record be kept to

establish the contract’s existence, (3) that a copy of the 

contract be sent to the Office of the Comptroller, and 

(4) that there be evidence of a specific duration, i.e., 

that the contract had been concluded no more than a 

fortnight earlier.12 These requirements must be strictly 

observed “given that their absence deprives the

agreement with the municipality of its effectiveness

and validity”. (Emphasis *558 added.)13 In other

words, “no municipality may settle any debt that does 

not arise from a written contract that has been

registered and transmitted to the Office of the

Comptroller”. (Emphasis omitted.)14 For contracts

concluded by a municipality to be valid and thus have 

binding effect between the parties, they must comply 

with these form requirements.

15 Agreements in

contravention of these rules are invalid.16

As the majority opinion states, the purpose of these 

requirements, and their rigorous observance is sound 

and honest public administration.17 We have stated 

that this objective is “in the highest public interest”.

18

The aim of this policy is not to favor the municipality,

but to protect public funds.19 We have consistently 

stated that a government’s good administration is a 

virtue of democracy,

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and part of good administration involves carrying out 

its functions as a purchaser efficiently, honestly, and 

correctly to protect the interests and money of the 

people whom that government represents. 20 Thus, 

“favoritism, corruption, waste, prevarication,

extravagance and neglect in the awarding of contracts 

are avoided, and the risks of breach *559 are 

minimized”. 21 It is therefore the duty of the courts to 

prevent the circumvention of legal provisions

protecting public funds and integrity in government

management. 22

Compliance with the above formal requirements is of 

a “constitutive nature with respect to the effectiveness 

of the obligations contracted”. (Emphasis added). 23 A 

contractor who contracts with a municipality without 

these requirements being met assumes the risk of not 

being able to require the municipal entity’s fulfilment 

of the obligation. While there has been a breach, the 

contractor has no cause of action. 24 In particular, we 

have insisted on the need for municipal contracts to be 

set out in writing, an element that we have described 

as “indispensable ... for what has been agreed upon to

have binding effect”. (Emphasis deleted.) 25

However, once the formal contracting requirements 

are met, contracts between the municipal entity and the

contractor are valid and enforceable. 26 In these cases, 

what remains is to analyze the legal transaction agreed 

and the obligations assumed, as is the case with any 

other contractual relationship. 27 In De Jesús González 

v. A.C., we declared *560 that "[w]hen the State

contracts, the interpretation of the contract must be 

made as if it were a contract between two private 

persons. This means that once the State enters into a 

contract with a private individual, both are bound by 

the general rules on contracts and their corresponding 

interpretations in light of our applicable

pronouncements”. (Citations omitted.) 28 Naturally, it 

will be beginning from the fulfilment of the form 

requirements that the municipality will be under an 

obligation to the contractor and the latter will be able 

to demand the payment of the agreed-upon price.

The Court’s opinion accepts that in this case , the four

requirements of Act No. 81 were met29 but adds a fifth 

form requirement that is not set out in the Autonomous 

Municipalities Act: that the contract be set out in

writing before the contractor's work begins.

According to the majority, this is to prevent a

contractor from carrying out work without a contract 

and then demanding payment from the municipality. 

However, the majority forgets that, since the signature 

of the contract is a sine qua non requirement, if the 

contractor carries out the work and a contract is not 

signed, it cannot demand anything from the

municipality. Moreover, in a situation of execution of 

work, like the present one, nothing obliges the

municipality to sign the contract and pay for the work.

However, if the municipality itself voluntarily decides

to assume the obligation after the work has been

carried out, observing the requirements of the

Autonomous Municipalities Act, there is nothing in 

this law that prohibits it from doing so. 30 *561

III

Even if we agree with the majority that the contract 

must be in writing before the requested work is

performed, this does not resolve the dispute in this 

case. We cannot lose sight of the fact that we are 

dealing with a work contract. Therefore, in order to 

determine when the contract should have been

perfected in this case, it is necessary to examine this 

contractual concept before determining when the form 

requirements of the Autonomous Municipalities Act 

should have been fulfilled, including the new

requirement of non-retroactivity established by the

Court. I do not propose disregarding the special

statutes and resorting exclusively to general contract 

theory. Rather, I would like to remind the court that, 

as a court, it is up to us to examine the interaction 

between the special law and the different concepts in 

our contract law, as not all contracts are the same.

By means of the work contract, also known as a work

contract, company contract or construction execution 

contract, 31 one party undertakes to execute a project 

in exchange for a previously established price. 32 In 

particular, as Puig Brutau explains to us, this “is the 

contract by which one of the parties ... undertakes with 

respect to the other ... to produce a specific result with 

its independent activity, in exchange *562 for a fixed

price”. (Emphasis added). 33 The correlation between 

the work contract and the production of a result is a 

characteristic universally accepted by the doctrine.34

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The Supreme Court of Spain has consistently reached 

the same conclusion. 35 As can be seen from the term 

itself, the emphasis on the result necessarily points to

a temporal element: it is the culmination of a

productive process. 36

A. The contractor’s main obligations in a work 

contract are to: (1) execute the project and (2) deliver 

it. 37 For its part, the client has two essential

obligations: (1) acceptance of the project 38 and (2) 

payment of the *563 price in the agreed form and 

amount and at the agreed time. 39 We now have to 

analyze these features separately and then discuss how 

they interact with each other.

While the fundamental characteristic of the work

contract is the production of a result, the process that 

leads to that product is composed, in turn, of an initial 

work and a final delivery. However, given the

importance of the result, the initial work is only a first 

step in the fulfilment of the performance incumbent 

upon the contractor. In other words, it is not a question 

of two independent services - initial work and final 

delivery - but a single obligation to produce a result 

which, although it begins with the work, ends with its 

delivery.

40 On the other hand, delivery constitutes the 

definitive moment when the contractor fulfils its

obligation. If a contractor carries out the work but 

does not deliver it, it will not have provided its service.

Therefore, undertaking the work alone is 

insufficient.41 Delivery of the completed work

constitutes the definitive provision of the service by the 

contractor. For that reason, the doctrine has placed 

considerable emphasis on the element of delivery

when discussing the concept of the work contract as a 

central element of the contractor’s *564 obligation.

42

The same occurs in the Spanish Supreme Court’s case 

law. 43

As a consequence of the importance of the result in 

this contract, some writers have emphasized that, more 

than executing the work, the contractor’s main duty is, 

precisely, to deliver the executed work. Castán

Tobeñas explains that “the provision of the thing (duly 

made), that is, its alienation, appears as the main 

performance, and the realization of the thing is just the 

means to make it possible”. (Emphasis added). 44

That is to say, work on the project is the means, but its 

delivery is the object. For Martínez Mas, the delivery 

of the work is an inherent part of its completion and, 

therefore, of the fulfilment of the obligation by the 

contractor. 45 The writer tells us that “[t]he last

obligation of the contractor in the final phase of the

fulfillment of the contract, is the delivery of the work 

to the promoter”. (Emphasis added). 46 It should be 

noted that the client's obligation to pay does not arise 

when the contractor completes the work, but rather, 

indeed, when it is delivered and accepted by the client.

*565

The work contract is “a bilateral contract. That is to 

say, that the persons who enter into it impose mutual

obligations on one another”. 47 By their very nature, 

the considerations in the work contract are of a

temporary nature. First, the contractor must execute 

and deliver the work. Only then does an obligation to 

accept and pay for it arise on the client’s part. As Lete 

del Río and Lete Achirica explain, acceptance of the 

work is “another of the client’s obligations, relating to 

that of the contractor to deliver the work”. (Emphasis 

added). 48 The Spanish Supreme Court reached the 

same conclusion:

[T]he work contract ... is a bilateral contract that 

creates reciprocal obligations, in which the

contractor's claim is not broadly limited to the

client’s payment of the price, but rather to a

consideration, i.e. to the performance of the

payment of the price in exchange for its

performance of the delivery of the executed project.

(Emphasis added). 49

A.s we have said, the main contractor’s main duty

under the work contract is the creation and delivery of 

a specific result. 50 This is precisely what differentiates 

it from the contract for services. In this connection, 

Vélez Torres demonstrates to us that in a contract for

services “what is promised by the contractor is the 

energy of labor, while what is promised in [work 

contract] is the project or the final result of the work”. 

(Emphasis added). 51 Puig Peña is of the same opinion:

“[T]he contractor promises not only its labor, but

rather the result *566 thereof.”52

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This corresponds to the consideration that the client 

must provide, given that, in addition to paying the 

agreed price, it must accept the project. In other words,

rather than paying a certain price for an effort made, in 

the work contract, the client makes a payment to the 

contractor for a result delivered and accepted.

Scientific doctrine unanimously distinguishes the 

work contract from the contract for services,

establishing clearly the difference between the result 

to be delivered and the effort made. 53 The same is true 

in Spanish case law. 54

As Puig Brutau explains, the foregoing stems from the 

fact that, in the work contract, the contractor carries 

out its work “independently”. 55 Therefore, what it 

owes the client is not an effort made but an end result. 

This is compatible with what *567 Castán Tobeñas 

states concerning the fact that the execution of the 

project is merely the means to the end of its delivery. 

56

In the same vein, Puig Brutau explains that work

contracts and sales contracts differ because in the

former the result delivered is a “new thing” or

“recently made” item. (Emphasis added). 57 In other 

words, in the work contract, the result delivered cannot 

be a generically prefabricated work, but must be the 

product of a specific commission. 58 But neither does

it necessarily have to be carried out after the contract 

has been concluded; it is sufficient for it to be a work 

of recent production. The essential thing is that the 

main performance of the delivery of the result is made 

after the contract has been perfected. The respective 

obligations will be extinguished with the delivery of 

the ordered result, the acceptance of the work and the 

payment of the agreed price, provided that what is 

delivered is in conformity with the commission

assigned in the contract. 59

This is in keeping with the independent nature of the 

contractor's work. Therefore, the Civil Code provides 

that if the work is destroyed before delivery, the loss 

will be at the expense of the contractor and not of the 

client, unless the latter has defaulted on the acceptance 

*568 of the project or the client supplied defective 

materials. 60

Prior to delivery and acceptance, the work done by the 

contractor belongs to it and it can only claim payment 

from the client in very specific cases. 61 As González 

Poveda explains: “[I]t is understood that, as long as

the delivery has not taken place, the thing is the

property of the contractor, and therefore the contractor 

shall bear the risks thereof the delivery in accordance 

with the general principle of law that owners bear the 

costs of destroyed items.” (Emphasis added). 62

According to Martínez Mas, the discussion of risk is 

tied to the very nature of the construction lease, which, 

as we have seen, is based more on the result delivered 

than on the labor employed. The writer says:

The reason why the builder assumes the risks for 

[the] destruction of the work before its delivery, is 

that, in the work contract, the builder's remuneration 

is not for the labor used and the materials

incorporated in the work, but for the conclusion of 

the work, so it seems logical that it bears the risk of 

its failure or the loss of the work almost finished or 

even completed, but not yet delivered. (Emphasis 

added). 63

If any of the parties fails to fulfil their respective 

obligations, they may exercise the powers conferred 

on them by contract law, such as requesting

termination or *569 specific performance of the 

obligation, among others. 64 As we stated in Master 

Concrete Corp. v. Fraya, S.E., “[o]nce a work contract 

has been perfected - just like in any type of contract -

the parties are bound by what has been expressly

agreed.” 65 If, for example, the work is not in

conformity with the contract, it is up to the court to 

determine the appropriate remedy, depending on the

seriousness of the breach. 66 The same applies if a 

specific condition of the contract, such as the period 

for carrying out the work, is of an essential nature.

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IV

In the instant case, the work contract was concluded 

on July 16, 2002 in accordance with the rules

applicable to municipal contracts. There is no doubt 

that it satisfied all the form requirements laid down in 

the Autonomous Municipalities Act and the case law.

The contractor had from July 16 until August 14, 2002 

to fulfil its contractual obligation. That is, the

contractor had to provide the performance of the

delivery of the work within that period of time. In fact,

the contractor tried to deliver its work on July 31 *570

The independent work carried out by the contractor 

before handing over the work to the Municipality was 

undertaken between June 25 and 28, 2002,

approximately two weeks before the contract was

perfected. As asserted in the claim, the work carried 

out on those days corresponds to the work indicated in 

tender 02-30, after notice of its award was issued on 

June 4, and in the contract perfected on July 16. 67 It 

was also argued that the work corresponds to what the

doctrine classifies as “recently made” work, given the 

temporal proximity between the work done and the 

perfection of the contract, as well as the fact that the 

work done was the one specifically commissioned in 

the tender and in the contract, and not a generic work 

as in a sale.

The performance to which the contractor committed 

itself on July 16, as part of a work contract, was the 

delivery of the completed work.

It was not necessary, as a constituent element of the 

cause of action, that the work that produced that

project be done after the perfection of the contract. It 

was enough for the work to be “recently made”. 68 In 

this case, the work was done shortly before the

contract was perfected. On July 31, during the term of 

the contract, the contractor fulfilled its obligation: it 

delivered the assigned project. It was then incumbent 

upon the *571 client to fulfill theirs: acceptance of the 

project and payment of the agreed price.

The claim in the instant case was summarily

dismissed, on the grounds that granting relief was not

justified. The Trial Court saw no evidence of the

intention of the parties or of the essential nature of the 

term laid down in the contract. The majority erred by 

going into the merits of the dispute and holding that, 

as a matter of fact, the contractor failed to perform an 

essential element of the contract, when no evidence to 

that effect was introduced.

In view of the fact that the requirement of nonretroactivity is not established in the Autonomous

Municipalities Act, that the obligation was fulfilled 

after the contract was concluded in writing and that no 

evidence was presented concerning the intention of the

parties that would allow for the finding that an

essential condition of the contract had been breached, 

I would reverse the summary judgment and remand the 

case back to the Trial Court to hold a trial on its merits.

Footnotes

1 The contract provides that it would be in force from July 16, 2002 to August 14, 2002.

2 The lower courts made no factual determination on this claim, as the Trial Court dismissed the suit granting 

summary judgment.

3 The works were carried out on June 25, 26, 27 and 28, 2002.

4 The contract signed on July 16 provided for the delivery of partial certifications that had to be approved by

a representative of the Municipality. However, since in this case there was no presentation of evidence, and

no trial on its merits, it is not known whether this contractual obligation was of an essential nature.

5 It also presented an additional certification claiming the 10% of the agreed price retained by the municipality

to cover possible imperfections and defects of the work.

6 Order of the Court of Appeals, p. 2; Appendix to Certiorari petition, p. 160.

7 Nor was there any dispute concerning the fact that the work done two weeks in advance was the same as 

agreed in the July 16 contract. Similarly, ALCO acknowledges that if the contract had not been executed on 

July 16, in compliance with the requirements of form of the municipal procurement law, it would not be able 

to demand payment for the work performed. Its argument focuses on the fact that, once the contract had 

been perfected in writing and the other form requirements had been satisfied, they could demand the 

corresponding consideration from the municipality, to pay it for the work done in advance.

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8 Certiorari petition, p. 5.

9 Opposition to the Certiorari petition p. 4.

10 Id., p. 5.

11 21 L.P.R.A. sec. 4051; Johnson & Johnson v. Mun. de San Juan, 172 D.P.R. 840, 852 (2007); Cordero 

Vélez v. Mun. de Guánica, 170 D.P.R. 237, 248 (2007); Colón Colón v. Mun. de Arecibo, 170 D.P.R. 

718, 725 (2007).

12 Mun. Quebradillas v. Corp. Salud Lares, 180 D.P.R. 1003 (2011); Fernández & Gutiérrez v. Mun. San Juan, 

147 D.P.R. 824, 830 (1999); Hatton v. Mun. de Ponce, 134 D.P.R. 1001, 1006 (1994).

13 Mun. de Quebradillas v. Corp. Salud Lares, supra, p. 1013. The requirement to transmit a copy of the 

contract to the Comptroller does not invalidate the legal transaction, but it does prevent performance from 

being demanded until it has been complied with. Id. See also, Lugo v. Municipio Guayama, 163 D.P.R. 208,

215 (2004).

14 Mun. de Quebradillas v. Corp. Salud Lares, supra, p. 1014.

15 Colón Colón v. Mun. de Arecibo, supra, pp. 725-726.

16 Fernández & Gutiérrez v. Mun. San Juan, supra, p. 833.

17 Majority opinion, p. 538; Colón Colón v. Mun de Arecibo, supra, p. 724.

18 Mun. de Quebradillas v. Corp. Salud Lares, supra, p. 1015; Johnson & Johnson v. Mun. de San Juan, supra, 

p. 852. See also Hatton v. Mun. de Ponce, supra, p. 1005. “[T]he legal precepts governing economic 

relations between private entities and municipalities are of great public interest and aim to promote sound 

and honest public administration”.

19 Mun. de Quebradillas v. Corp. Salud Lares, supra, p. 1017.

20 Cordero Vélez v. Mun. de Guánica, supra, p. 245; Mar-Mol Co., Inc. v. Adm. Servicios Gens., 126 D.P.R. 

864, 871 (1990).

21 Mar-Mol Co., Inc. v. Adm. Servicios Gens., supra, p. 871.

22 Mun. de Quebradillas v. Corp. Salud Lares, supra, p. 10; Hatton v. Mun. de Ponce, supra, p. 1006.

23 Colón Colón v. Mun de Arecibo, supra, p. 727.

24 See id., p. 731.

25 Id., p. 726, citing Cordero Vélez v. Mun. Guánica, supra, p. 248; Quest Diagnostics v. Mun. San Juan, 

175 D.P.R. 994 (2009). Disputes related to verbal contracts with municipal entities have been the main

generator of our case law in this area and we have consistently refused to give effect to these agreements. 

See, for example: Mun. de Quebradillas v. Corp. Salud Lares, supra; Colón Cólon v. Mun. de Arecibo, supra; 

Fernández & Gutiérrez v. Mun. San Juan, supra; Morales v. Municipio de Toa Baja, supra. On the other

hand, in those cases where the contract is in writing and the other requirements of form were met, we have 

upheld the agreed obligations. See, for example, Johnson & Johnson v. Mun. de San Juan, supra.

26 Johnson & Johnson v. Mun. de San Juan, supra, p. 853. See also Fernández & Gutiérrez v. Mun. San 

Juan, supra, p. 833.

27 Johnson & Johnson v. Mun. de San Juan, supra, p. 855.

28 De Jesús González v. A.C., 148 D.P.R. 255, 267 (1999).

29 Majority opinion, p. 533.

30 There is nothing to prevent the addition of formal elements to municipal procurement by way of regulation. 

However, that is not the case before us. The dispute in the case was limited to the interpretation of Act No. 

81 and the constitutive requirements set out in that statute.

The majority opinion proposes that the principle of non-retroactivity can be inferred from Article 6 of Chapter

IX of the Municipal Administration Regulations of the Office of the Commissioner for Municipal Affairs 

(O.C.A.M.). Majority opinion, pp. 550-551. However, the majority itself recognizes that it was the previous

Regulations, the O.C.A.M. Regulations on Basic Rules, which contained this express prohibition. In other

words, the current regulations removed the absolute prohibition on retroactive contracting that the repealed 

one established. I do not think that this history allows us to say that the current regulation contains a similar 

prohibition.

31 J.M. Lete del Río and J. Lete Achirica, Law of Obligations: Contracts, Navarra, Ed. Thomson/Aranzadi, 

2006, Vol. II, p. 515; F. Martínez Mas, The work contract analyzed for builders and promoters, Valencia, Ed. 

' 

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Cisspraxis, 2000, p. 15.

32 Master Concrete Corp. v. Fraya, S.E., 152 D.P.R. 616, 623 (2000). The work contract is covered in Articles 

1480 to 1492 of the Civil Code, 31 L.P.R.A. secs. 4121–4133.

33 J. Puig Brutau, Principles of Civil Law, Barcelona, Ed. Bosch, 1982, T. II, Vol. 2, p. 438. See also J.R. Vélez 

Torres, Civil Law Course: Contract Law, San Juan, Ed. Rev. Jur. U.I.P.R., 1990, T. IV, Vol. 2, p. 326.

34 See: M. Albadalejo, Civil Law, 8th ed., Barcelona, T. II, Vol. 2, p. 309 (“[A] result is promised in the [work 

contract]” (emphasis in the original)); J.M. Manresa Navarro, Commentary on the Spanish Civil Code, 5th 

ed., Madrid, Ed. Reus, 1950, T. X, p. 894; J. Santamaría Ansa, Commentary on the Civil Code, Madrid, Ed. 

Journal of Private Law, 1958, T. II, p. 637; P. González Poveda in I. Sierra Gil de la Cuesta, Commentary

on the Civil Code, Barcelona, Ed. Bosch, 2000, T. IV, p. 620; M. Medina De Lemus, Civil law: obligations

and contracts, Madrid, Ed. Dilex, 2005, T. II, Vol. 2, p. 145 (who emphasizes that such an result entails 

something “complete and finished, regardless of the work or time it took to obtain it”); Lete del Río and Lete 

Achirica, op. cit., p. 515; R. Hernández Bobadilla, Work contracts and their regulation in Guatemalan 

legislation, Guatemala, Ed. U. San Carlos, 1966, p. 17; Martínez Mas, op. cit., p. 18 (who emphasizes that 

this is a “specific result”).

35 See: Judgement of May 10, 1997; Judgement of January 30, 1997, No. 845/1997 Repertorio de

Jurisprudencia Aranzadi 1320; Judgement of November 4, 1989; Judgement of May 30, 1987; Judgement 

of November 6, 1982; Judgement of December 19, 1964, No. 5900/1964 Repertorio de Jurisprudencia 

Aranzadi 3600; Judgement of November 23, 1964, No. 5453/1964 Repertorio de Jurisprudencia Aranzadi 

3294, where the concept of result is connected with that of purpose.

36 According to the Spanish Royal Academy, the word result means “[e]ffect and consequence of an event, 

operation or deliberation”. Spanish Royal Academy, Dictionary of the Spanish Language, 22nd ed., Madrid, 

Ed. Espasa Calpe, 2001, T. II, p. 1962.

37 Master Concrete Corp. v. Fraya, S.E., supra, p. 624. See also, Albadalejo, op. cit., p. 317.

38 Puig Brutau, op. cit., p. 468; F. Puig Peña, Treatise on Spanish Civil Law, Madrid, Ed. Journal of Private 

Law, 1951, T. IV, Vol. 2, p. 302.

39 Master Concrete Corp. v. Fraya, S.E., supra, p. 624, citing Albaladejo, Civil Law, op. cit., p.

49. Article 1491 of the Civil Code provides: “In the absence of any contrary agreement or custom, the price 

of the work shall be paid on delivery.” (Emphasis added). 31 L.P.R.A. sec. 4132. As can be seen, in the 

construction lease the crucial moment of performance is the delivery and acceptance of the work, not the 

moment when the work was performed.

40 Martínez Mas, op. cit., p. 45: “The builder’s two fundamental obligations are: to carry out the work as agreed 

and to deliver it.” See also Hernández Bobadillo, op. cit., p. 17.

41 As Medina de Lemus explains: “The contractor’s first obligation is to carry out the work under the agreed 

conditions.” (Emphasis added). Medina de Lemus, op. cit., p. 146. See also: Albaladejo, op. cit., p. 317; 

Hernández Bobadillo, op. cit., p. 17 (“[The promise of the result] consists, firstly, in an act of production or

creation in the proper sense, that is to say ... in the realization of a work” (emphasis added).

42 González Poveda, op. cit., p. 666: “Once the work has been completed, the contractor is obliged to deliver

it in the agreed manner and within the agreed time”; Medina de Lemus, op. cit., p. 149: “Obviously the work 

must be delivered once it has completed”; Albaladejo, op. cit., p. 317; Manresa y Navarro, op. cit., p. 918, 

emphasizing the importance of delivery; Santamaría, op. cit., pp. 636-637.

43 Judgment of April 18, 1979, No. 1406/1979 Repertorio de Jurisprudencia Aranzadi 1156, explaining that the 

client’s obligation to pay for the work is “in exchange for [the contractor's] delivery of the work performed”. 

(Emphasis added). Judgment of October 26, 1978, No. 3286/1978 Repertorio de Jurisprudencia Aranzadi, 

in which the Spanish Supreme Court held that there is no obligation of acceptance if the contractor did not 

comply with “the obligation to deliver [the work] in the agreed time and form”. Judgment of February 5, 1975, 

No. 330/1975 Repertorio de Jurisprudencia Aranzadi 252: “[The contractor] did not comply with its obligation

to deliver the work within the agreed time.” (Emphasis added). See also: Judgment of January 30, 1997, 

No. 845/1997 Aranzadi Court Reports; Judgment of June 1, 1982, No. 3401/1982 Repertorio de

Jurisprudencia Aranzadi.

44 J. Castán Tobeñas, Spanish Civil Law, common and statute, 9th ed., Madrid, Ed. Reus, 1961, T. IV, p. 455.

45 Martínez Mas, op. cit., p. 50.

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46 Id.

47 Id.

48 Lete del Río and Lete Achirica, op. cit., p. 521.

49 Judgment of April 18, 1979, No. 1406/1979 Repertorio de Jurisprudencia Aranzadi 1156.

50 Puig Brutau, op. cit., p. 299.

51 See Vélez Torres, op. cit., p. 325.

52 Puig Peña, op. cit., p. 299.

53 Santamaria, op. cit., p. 637: “The main difference between a work contract (locatio operis) and a contract 

for services (locatio operarum) is in its economic aspect, since it is the time that is remunerated in an 

employment contract while it is the result that is remunerated in a work contract.” (Emphasis added). Lete 

del Río y Lete Achirica, op. cit., p. 515: “What characterizes this contract is that the businessperson or

contractor undertakes to provide not the labor as such, but the result thereof (the work), without regard to 

the effort required to obtain it.” (Emphasis added). The author even points out that, except in particular

cases where the personal characteristics of the contractor were the main factor in its selection, it is not 

necessary for the work to have been done by the contractor; Castán Tobeñas, op. cit., p. 454: “The real 

distinguishing mark of the business contract is, as we have already seen, that what is promised and what 

constitutes its object is not the energy of the labor or the labor as such (as is the case in the contracts for

services), but the work or result of the labor.” (Emphasis in the original.) See also: Albaladejo, op. cit., p. 

309; Manresa y Navarro, op. cit., p. 923.

54 Order of the Spanish Supreme Court of June 10, 1975, No. 3265/1975 Repertorio de Jurisprudencia 

Aranzadi 2407. According to the Spanish Supreme Court, the difference between the contract for services 

and the work contract:

“... lies in the immediate object of the contractors’ obligation, so that if it undertakes to provide services or

work or an activity in itself, not the result, which that service produces, the contract is for services and, on

the other hand, if it undertakes to provide a result, regardless of the work that creates it, the contract is for

work.” See also, Judgment of February 10 1987, Repertorio de Jurisprudencia Aranzadi 703.

55 Puig Brutau, op. cit., p. 439.

56 Castán Tobeñas, op. cit., p. 455.

57 Puig Brutau, op. cit., p. 439 Doctrine has deepened the differences, but above all the similarities, between 

the sales contract and the work contract. Many writers emphasize the fact that while more importance is

given to the material used in the work and less importance is given to the work done, the rules of the sales 

contract will apply, particularly when the material used is the contractor's own. See M. Medina de Lemus, 

op. cit., p. 145. In these cases, many speak of a mixed works and sales contract. See: Manresa y Navarro, 

op. cit., p. 914; Castán Tobeñas, op. cit., pp. 454–455; J. Santamaria, op. cit., p. 637. In particular, Castán 

Tobeñas explains that a certain sector of the doctrine is of the opinion “that the contract by which the worker

provides the material is, in general, a sale of a future thing, but it will be a contract for labor if the materials 

are only incidental”. (Emphasis added). Castán Tobeñas, op. cit., p. 455. Vélez Torres points out that the 

line between work contracts and sales contracts is “very blurred”. Vélez Torres, op. cit., p. 326.

58 Vélez Torres, op. cit., p. 327.

59 Id., p. 332.

60 Articles 1481–1482 of the Civil Code, 31 L.P.R.A. secs. 4122–4123.

61 One such scenario is when the clients terminates the project while it is in progress. In these cases, the client

will have to pay all the expenses, works and utility that could be obtained from the project. Article 1486 of 

the Civil Code, 31 L.P.R.A. sec. 4127.

62 González Poveda, op. cit., p. 625. This idea comes from the maxim res perit domino. C. Gómez Estrada, 

Principal Civil Contracts, 3rd ed., Bogotá, Ed. Temis, 1999, p. 322. It should be clarified that, for work on 

immovable property owned by the client, the contractor's title is limited to the work itself and not to the 

property on which it is carried out. On the other hand, in the case of movable property created in its entirety

by the contractor, regardless of the ownership of the materials used, the ownership of the entire property is 

vested in the contractor.

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Alco Corp. v. Mun. de Toa Alta, 183 D.P.R. 530 (2011)

© 2020 Thomson Reuters. No claim to original U.S. Government Works. 20

Certified to be a correct and true translation from the source text in Spanish to the target language English.

28/SEPTEMBER/2020 - Andreea I. Boscor ATA-certified Spanish-English #525556

By Targem Translations Inc.

.

2011 TSPR 180

63 Martínez Mas, op. cit., p. 27 See also, Santamaría, op. cit., pp. 636–637, Castán Tobeñas, op. cit., p. 459; 

Hernández Bobadilla, op. cit., p. 20.

64 Id. The defenses of exceptio non adimpleti contractus and exceptio non rite adimpleti contractus will also 

be available. See Puig Peña, op. cit., p. 308. The client’s acceptance of the work requires that it be "well 

finished". Id., p. 303. See also González Poveda, op. cit., p. 687; Judgment of the Spanish Supreme Court 

of April 18, 1979, Repertorio de Jurisprudencia Aranzadi 1406.

65 Master Concrete Corp. v. Fraya, S.E., supra, pp. 624-625.

66 In the present case, it would be for the Court of First Instance, after interpreting the contract and assessing 

the intention of the parties, to determine whether the failure to deliver partial certifications constitutes a 

substantial breach of contract and whether the work is in fact in conformity with the contract. To these ends, 

see Martínez Mas, op. cit., p. 63, and its discussion on partial certifications. See also Judgment of the 

Spanish Supreme Court of July 22, 1997, No. 5806/1997 Repertorio de Jurisprudencia Aranzadi. It would 

also be up to the court to determine whether the work is actually in line with the contract’s stipulations.

67 This does not take away any claims the municipality may have as to whether the contractor's performance 

is defective, incomplete or deviated from what was agreed. At this time we are limiting ourselves to analyzing

whether there is a cause of action. It is up to the primary forum to elucidate the merits of this case in 

particular.

68 We are aware of the problems that can arise in cases where a contractor carries out its work before its 

contract is put in writing. Municipalities undoubtedly have an important interest in being able to regularly

inspect the work while it is being carried out, to ensure that the contract specifications are being met and to 

prevent the work from being illegally subcontracted, among other things. However, the protection of this 

interest does not require the conclusion, at the outset and in an absolute manner, that there is no cause of 

action in the contractor’s favor. It is appropriate to examine the merits of the case in a plenary trial to 

determine what, how and when the work was carried out, what the intentions of the parties were, and what 

the relationship is between what was contracted and what was executed. None of the above assumes that

the contractor should prevail on the merits, but merely that it is entitled to its day in court to prove that it 

delivered what was ordered.

End of Document © 2020 Thomson Reuters. No claim to original U.S. Government Works.

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TRANSLATOR’S CERTIFICATE OF TRANSLATION

Translation from: Spanish (Puerto Rico) into English (US)

TARGEM Translations Inc.

I, Andreea I. Boscor, ATA-certified Spanish-English #525556, acting as translator at TARGEM Translations Inc., a 

NEW YORK City corporation, with its principal office at 185 Clymer Street, Brooklyn, NY, 11211, USA, certify that:

the English translated document is a true and accurate translation of the original Spanish and has been 

translated to the best of my knowledge.

Original Document Name: Alco Corp v Mun de Toa Alta 

Signed this 28th day of September 2020

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Andreea I. Boscor

E;:;JTARGEM 0 TRANSLATIONS 

D 718.384.8040 

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