Municipality Ordered to Recover Overpayment to Construction Inspector

Puerto Rico Law Controversies

Municipality Ordered to Recover Overpayment to Construction Inspector Where Contract Amendments and Change Orders Created Conflicting Compensation Obligations

Prepared March 15, 2026

Court: Tribunal de Apelaciones de Puerto Rico

Date: February 26, 2026

Citation: Birriel Ramos v. Gobierno Municipal de Hatillo, 2026 WL 710302 (TCA)

Summary of Relevant Facts

Engineer Manuel L. Birriel Ramos entered into multiple contracts with the Municipality of Hatillo for resident inspection services on the Proyecto de Construcción del Sistema Sanitario del Barrio Palma Gorda (P-174-2015), a sanitary sewer construction project. Contract 2019 (effective January 22, 2019 to July 14, 2020) provided $87,354.00 in compensation. Contract 2021 (effective July 15, 2020 to May 14, 2021) originally provided $48,530.00, later reduced to $43,677.00 through Amendment A, and then extended through March 14, 2022, with additional compensation of $53,383.00 under Amendment B. During the project, Change Order No. 5 delayed the project 312 days and increased costs by $131,585.50. Birriel Ramos performed inspection work until October 29, 2021.

Procedural Background

On November 22, 2022, Birriel Ramos filed a demand for breach of contract and payment for work performed against the Municipality. The Municipality filed an Amended Answer denying the debt and asserting a counterclaim for the return of $9,706.00 in alleged overpayments. The trial court issued a Summary Partial Judgment on November 26, 2024, finding no debt owed by the Municipality and awarding Birriel Ramos $31,561.00 for work performed during Amendment B. The Municipality appealed.

Main Controversies

The central controversy was whether the engineer was entitled to $31,561.00 in additional compensation for work performed during Amendment B of Contract 2021, or whether he had already been paid in excess of the contractual maximum. A secondary controversy involved whether Change Order No. 5, which substantially delayed the project and increased costs, justified additional compensation to the inspector beyond the amounts specified in the contract amendments.

Position of the Parties

Birriel Ramos argued he was entitled to additional compensation for inspection work performed during the Amendment B period. The Municipality argued the engineer was already overpaid by $9,706.00 when total payments across all contracts were compared to the contractual maximums, and that no additional compensation was warranted.

Holding or Decision

The Tribunal de Apelaciones revoked the Summary Partial Judgment and remanded. The court ordered Birriel Ramos to reimburse the Municipality $9,706.00 paid in excess and remanded the Municipality's counterclaim for additional damages.

Reasons for the Decision

The court applied Puerto Rico's principles of contractual autonomy (autonomía de la voluntad) and pacta sunt servanda. It held that parties can establish whatever clauses they agree upon, and what is agreed has the force of law between them. The court emphasized that the State is constitutionally obligated to manage public funds with fiduciary and ethical principles, and that contracts with the government that fail to comply with statutory requirements are null and void. On the merits, the court found that total payments to Birriel Ramos ($97,060.00) exceeded the maximum amount owed under Contract 2019 ($87,354.00) by $9,706.00. The contract provisions limited the inspector's right to additional compensation to situations where Change Orders increasing project costs were approved by the Junta de Subastas (Bidding Board). Since Change Order No. 5 was the only such order, and its approval was tied to the specific extension period, the engineer could only claim payment within the contract scope.