Guillermo v. Philippine Information Agency
REITERATIONFacts
The Antecedents: Petitioners Miguel "Lucky" Guillermo and AV Manila Creative Production, Co. (AV Manila) filed a Complaint for a sum of money and damages against respondents Philippine Information Agency (PIA) and Department of Public Works and Highways (DPWH). Petitioners alleged that in the last months of the Arroyo Administration, they were consulted by then Acting Secretary of DPWH Victor Domingo regarding an advocacy campaign to counter negative public perception of the administration. They submitted a letter-proposal for a documentary film titled "Joyride" showcasing the administration's milestones. Acting Secretary Domingo approved the proposal with a marginal note, "OK, proceed!" Petitioners claimed to have undertaken preliminary work and submitted the finished product on April 4, 2010, which was aired on April 5, 2010. They further alleged communications and meetings with various government agencies and officials regarding the campaign and "Joyride," including instructions, emphasis on proprietary nature, and discussions on terms of reference, deliverables, and submissions. Petitioners claimed to have committed to several deliverables, including reproduction and distribution of the documentary, a coffee table book, comics, and infomercials, with a total consideration of ₱25,000,000.00. They alleged that Acting Secretary Domingo found the total consideration acceptable and approved. A Memorandum dated May 6, 2010, from Acting Secretary Domingo to then President Gloria Macapagal-Arroyo stated that petitioners were asked to produce the "Joyride" materials. A Memorandum of Agreement dated April 30, 2010, between the Road Board and PIA provided for ₱15,000,000.00 to be released to PIA for the "Joyride" materials, with AV Manila as the preferred production agency. Petitioners claimed that PIA's representative advised that a separate written contract was unnecessary and instructed them to send billings directly to PIA. Petitioners alleged delivery of "Joyride" documentary copies and comics, billing PIA ₱10,000,000.00 and ₱15,000,000.00 respectively, but no funds were released. They further alleged delivery of coffee table books and comics after securing financial assistance. Despite demands, no payment was made. Procedural History: The Office of the Solicitor General moved to dismiss the Complaint for failure to state a cause of action and failure to exhaust administrative remedies. The Regional Trial Court (RTC) of Marikina City, Branch 263, granted the motion, finding that while a contract existed between petitioners and Acting Secretary Domingo, it was not binding on the government due to the absence of legal requirements for entering into a contract with the government. The RTC denied petitioners' motion for reconsideration. The Court of Appeals affirmed the RTC's dismissal, finding that petitioners failed to prove the existence of a contract due to the absence of its elements and that the doctrine of quantum meruit was inapplicable. The Court of Appeals deemed it unnecessary to address the issue of non-exhaustion of administrative remedies. The Court of Appeals denied petitioners' motion for reconsideration. The Petition: Petitioners filed a Petition for Review on Certiorari with the Supreme Court, arguing that the Court of Appeals erred in finding that they failed to prove the existence of a contract and in dismissing their appeal. They also insisted that the Court of Appeals should have found respondents liable under the principle of quantum meruit.
Issue(s)
Whether the Complaint was properly dismissed for failure to state a cause of action. Whether the petitioners sufficiently alleged the existence of a valid contract with the government for the expenditure of public funds. Whether the principle of quantum meruit is applicable in this case.
Ruling
The Petition is DENIED. The Court of Appeals did not err in affirming the dismissal of the Complaint for failure to state a cause of action.
Ratio Decidendi
On the issue of failure to state a cause of action: The Court reiterated the test for a motion to dismiss based on failure to state a cause of action, which requires the court to hypothetically admit the factual allegations in the complaint and determine if they justify the relief demanded. The Court emphasized that only ultimate facts, not legal conclusions or evidentiary facts, are considered. In this case, the Complaint prayed for payment of ₱25,000,000.00 for services and deliverables related to the "Joyride" project, which involved the expenditure of public funds. However, the Complaint failed to allege facts showing compliance with the essential requisites for the validity of contracts involving public funds as mandated by Sections 46, 47, and 48 of Book V, Title I, Subtitle B, Chapter 8 of the Administrative Code of 1987. These requisites include the existence of an appropriation law and a certification of fund availability. Without these, any contract entered into is void. Therefore, assuming the allegations in the Complaint were true, they were insufficient to establish that the trial court could grant the prayer for payment, as the alleged contract was void ab initio. On the existence of a valid contract: The Court found that the Complaint, while alleging communications, meetings, and memoranda, did not sufficiently establish the existence of a valid contract involving public funds. The essential requisites for such contracts, namely, an appropriation and a certification of fund availability, were not alleged. The Court cited Philippine National Railways v. Kanlaon Construction Enterprises Co., Inc., which held that contracts involving the expenditure of public funds are void if they do not comply with these requirements. The Court noted that the Administrative Code of 1987 expressly prohibits entering into such contracts without these prior conditions, and failure to comply renders the contract void. Thus, the alleged contract, even if proven to exist in terms of offer and acceptance, was legally infirm from the start due to non-compliance with statutory requirements for government contracts. On the applicability of quantum meruit: The Court held that the invocation of the principle of quantum meruit could not save the Complaint from dismissal. It pointed out that the Complaint did not mention the principle of quantum meruit nor did it lay down any factual basis for its application, such as showing that the public had derived any benefit from the "Joyride" project. The Court reiterated that the belated invocation of quantum meruit does not retroactively make a deficient Complaint sufficient. Therefore, even if the petitioners were entitled to be reimbursed under quantum meruit, the Complaint failed to provide the necessary factual allegations to support such a claim, making it insufficient to state a cause of action.
Main Doctrine
A complaint for recovery of payment for services rendered to the government is properly dismissed for failure to state a cause of action if it does not allege facts showing compliance with the essential requisites for the validity of contracts involving the expenditure of public funds, namely, an appropriation law and a certification of fund availability. The absence of these requisites renders the contract void, and the invocation of quantum meruit cannot save the complaint if no factual basis for its application is laid down.