Vigilar v. Aquino
REITERATIONFacts
The Antecedents: On June 19, 1992, the Department of Public Works and Highways (DPWH) 2nd Engineering District of Pampanga sent an Invitation to Bid to Arnulfo D. Aquino (Aquino), owner of A.D. Aquino Construction and Supplies, for the construction of a dike by bulldozing a part of the Porac River. The project was awarded to Aquino on July 7, 1992, and a Contract of Agreement was executed for PhP1,873,790.69. The project was completed by July 9, 1992, and a Certificate of Project Completion was issued on July 16, 1992. Aquino claimed PhP1,262,696.20 was still due, but petitioners refused to pay. Procedural History: Aquino filed a Complaint for collection of sum of money with damages before the Regional Trial Court (RTC) of Guagua, Pampanga. The RTC ruled in favor of Aquino, ordering the DPWH to pay the full contract amount of PhP1,873,790.69, plus attorney's fees and costs. On appeal, the Court of Appeals (CA) reversed the RTC decision, declaring the Contract Agreement null and void ab initio and ordering the Commission on Audit (COA) to determine the obligation due to Aquino on a quantum meruit basis. Petitioners are now before the Supreme Court. The Petition: Petitioners assail the CA Decision, arguing that the CA erred in holding that the doctrine of non-suability of the State has no application, in not dismissing the complaint for failure to exhaust administrative remedies, and in ordering payment on a quantum meruit basis despite non-compliance with Presidential Decree No. 1445.
Issue(s)
Whether the Court of Appeals erred in holding that the doctrine of non-suability of the State has no application in this case. Whether the Court of Appeals erred in not dismissing the Complaint for failure of respondent to exhaust all administrative remedies. Whether the Court of Appeals erred in ordering the COA to allow payment to respondent on a quantum meruit basis despite the latter’s failure to comply with the requirements of Presidential Decree No. 1445.
Ruling
The Petition is DENIED for lack of merit. The assailed Decision of the Court of Appeals in CA-G.R. No. 82268 dated September 25, 2006, is AFFIRMED.
Ratio Decidendi
On the issue of state immunity from suit: The Court reiterated its established jurisprudence that the doctrine of governmental immunity from suit cannot be used to perpetrate injustice. Citing Ministerio v. CFI of Cebu and Heirs of Pidacan v. ATO, the Court stated that this immunity yields to exceptions, especially when upholding it would subvert the ends of justice. The Court emphasized that it cannot sanction a patent injustice and allow itself to be an instrument in its perpetration. Therefore, justice and equity require that the State's cloak of invincibility be shed in this instance, and the contractor be duly compensated on a quantum meruit basis for the construction done on the public works project, as the government and the public had benefited from the project for years. On the issue of exhaustion of administrative remedies: The Court held that the doctrine of exhaustion of administrative remedies and the doctrine of primary jurisdiction are not absolute rules and are subject to exceptions. In this case, exceptions (c) unreasonable delay or official inaction that will irretrievably prejudice the complainant, and (e) where the question involved is purely legal and will ultimately have to be decided by the courts of justice, were present. The project was completed almost two decades prior, and further delay would prejudice the respondent. Moreover, the issues concerning the validity and enforceability of the contract were purely legal questions beyond the expertise of administrative bodies like the COA or DPWH, necessitating judicial intervention. The Court cited Republic of the Philippines v. Lacap to support the exceptions to the rule. On the issue of payment on a quantum meruit basis despite non-compliance with PD 1445: The Court affirmed the CA's reliance on previous rulings such as Royal Trust Corporation v. COA, Eslao v. COA, Melchor v. COA, EPG Construction Company v. Vigilar, and Department of Health v. C.V. Canchela & Associates, Architects. These cases involved government projects undertaken in violation of laws on public bidding, appropriations, and funds, where contracts were declared void. However, the Court consistently held that public interest and equity demand compensation for services rendered and work done. The Court noted that the contract was not illegal per se but void due to non-compliance with statutory requirements. Since the government and the public had benefited from the completed dike for almost two decades, denying payment would result in unjust enrichment. The Court reiterated the principle that justice and equity demand compensation on the basis of quantum meruit.
Main Doctrine
The doctrine of exhaustion of administrative remedies and the doctrine of primary jurisdiction are not absolute and admit of exceptions, particularly when the issue involves purely legal questions beyond the expertise of administrative bodies, or when unreasonable delay would prejudice the complainant. Furthermore, while contracts with the government may be declared void for non-compliance with statutory requirements, equity and public interest may dictate compensation on a quantum meruit basis for services rendered and benefits received by the State.