Sto. Niño Construction v. Commission on Audit
REITERATIONFacts
The Antecedents: Petitioner Sto. Niño Construction (STC) was the lowest responsive bidder for the improvement and rehabilitation of Payao Road. Despite completing the project on November 18, 2009, with costs amounting to P11,425,875.67, no contract was awarded, and no payment was released due to pending fund allocation. STC claims it commenced work upon verbal instruction from former Zamboanga Sibugay Representative Belma Cabilao and assurances of funding from her and Undersecretary Renato Ebarle, to minimize insurgency in the area. Procedural History: STC filed a Petition for Money Claim with the Commission on Audit (COA). The DPWH Ipil Engineering District affirmed that high-ranking officials assured funding and that the project was completed and turned over. The DPWH recommended payment of P8,238,271.35 based on work accomplished. COA denied the claim, citing the absence of appropriation and a valid contract as per P.D. 1445, and refused to apply quantum meruit as the construction was not authorized by the agency. STC's motion for reconsideration was denied for being filed out of time, and COA reiterated that quantum meruit could not apply to services rendered in violation of law. The Petition: STC filed a Petition for Certiorari under Rule 64 of the Rules of Court, assailing the COA's Decision and Resolution. STC argued for the application of the principle of quantum meruit, citing similar cases where it was applied despite the absence of appropriation and contract. The COA, through the OSG, countered that STC voluntarily undertook the project without available funds and prior DPWH consent, and that the COA decision had attained finality.
Issue(s)
Whether the Commission on Audit committed grave abuse of discretion in denying Sto. Niño Construction's claim for payment for services rendered in the rehabilitation of Payao Road. Whether the principle of quantum meruit is applicable in this case despite the absence of a formal contract and appropriation.
Ruling
The petition is GRANTED. The Decision dated December 29, 2016, and Resolution dated November 28, 2018, of the Commission on Audit are REVERSED and SET ASIDE. The Department of Public Works and Highways is ORDERED to pay Sto. Niño Construction the amount of P8,238,271.35 for actual services rendered.
Ratio Decidendi
On Issue 1: The Supreme Court found that the COA committed grave abuse of discretion by overlooking relevant facts. While COA correctly cited the requirements of appropriation and a written contract under P.D. 1445, it failed to consider the implied authorization and subsequent actions by DPWH officials. These actions, including the public bidding, the certification of completion by the District Engineer, the DPWH's admission of project commencement without funding to address insurgency, and the Audit Team Leader's recommendation for payment, served to cure the cited defects. The Court noted that if there were no authorization, DPWH could have disclaimed liability, but it did not. The government and the people of Zamboanga Sibugay benefited from the construction, making denial of compensation unjustified and leading to unjust enrichment. On Issue 2: The Supreme Court held that the principle of quantum meruit is applicable in this case. Although COA denied its application due to the absence of a written contract and appropriation, the Court found that the actions of the DPWH officials, particularly the District Engineer and the Audit Team Leader, in acknowledging the work and recommending payment, coupled with the completion and turnover of the project, provided a basis for applying quantum meruit. The Court reasoned that the government and the people benefited from the project, and to deny compensation would result in unjust enrichment. The Court distinguished this case from others where quantum meruit was denied because, in this instance, there were subsequent curative actions and acknowledgments by DPWH officials, and the project was completed and utilized, preventing the application of quantum meruit from rendering auditing laws useless.
Main Doctrine
While government contracts require appropriation and available funds, and contracts entered into without them are void, the Supreme Court may still order payment based on quantum meruit if the government has benefited from the completed project and subsequent actions by DPWH officials, such as acknowledging the work and recommending payment, indicate an implied authorization or curative intent, thereby preventing unjust enrichment. The doctrine of immutability of judgments can be set aside if the COA committed grave abuse of discretion.