Republic v. Gonzales
REITERATIONFacts
The Antecedents: A.D. Gonzales, Jr. Construction and Trading Company, Inc. (Gonzales Construction) filed a Complaint for collection of sum of money with damages against the Department of Public Works and Highways (DPWH). Gonzales Construction claimed it entered into two contracts with DPWH: the Gumain Project (PHP 2,695,980.00) and the Abacan Project (PHP 8,174,294.32). Gonzales Construction alleged it performed its undertakings, the projects were inspected and verified as completed according to plans and specifications, but only a partial payment of PHP 1,178,252.42 was made, leaving an unpaid amount of PHP 9,692,021.92. Procedural History: The Regional Trial Court (RTC) ruled in favor of Gonzales Construction, ordering DPWH to pay PHP 5,364,086.35 for the Abacan Project based on quantum meruit, plus attorney's fees and costs of suit. The RTC found that DPWH was estopped from asserting non-compliance with Presidential Decree No. 1445 due to the emergency nature of the projects and that a partial payment was made. The RTC also found no substantial evidence for the Gumain Project claim. The Court of Appeals (CA) affirmed with modification, deleting attorney's fees and costs, but adding a 6% interest per annum from finality of its decision until full payment. The CA applied the principle of quantum meruit, citing previous cases, and affirmed the factual finding of 90.61% accomplishment for the Abacan Project. The Petition: DPWH assailed the CA decision, arguing that the RTC lacked jurisdiction over money claims against the government, which should be under the Commission on Audit (COA), and that quantum meruit was inapplicable due to insufficient evidence of accomplishment.
Issue(s)
Whether the RTC has jurisdiction over the money claim against the DPWH. Whether the principle of quantum meruit is applicable for the payment of accomplished work on the Abacan Project. Whether Gonzales Construction presented convincing evidence of 90.61% accomplishment for the Abacan Project. Whether the award of interest is proper and from what date it should commence.
Ruling
The petition is denied. The Decision of the Court of Appeals is affirmed with modification regarding the interest rate and its accrual.
Ratio Decidendi
On the jurisdiction of the RTC over money claims against the government: The Court acknowledged that under Commonwealth Act No. 327, as amended by Section 26 of Presidential Decree No. 1445, the Commission on Audit (COA) has primary jurisdiction over money claims against government agencies. However, in the interest of judicial economy and to prevent undue delay, the Court deemed it prudent to rule on the merits of the case, citing precedents like R.G. Cabrera Corporation, Inc. v. DPWH. This approach is justified to avoid further protracted litigation and ensure justice is served. On the applicability of quantum meruit and the absence of certification of availability of funds: The Court reiterated the principle that while a certification of availability of funds is a condition sine qua non for government contracts, its absence does not necessarily preclude a contractor from receiving payment for services rendered. Citing DPWH v. Quiwa and R.G. Cabrera Construction v. DPWH and COA, the Court emphasized that the government cannot unjustly deny payment to contractors after the public has benefited from their work, as this would amount to unjust enrichment. The Court found that the Abacan Project, undertaken as an emergency measure, benefited the public, and denying payment due to procedural flaws would be unjust. On the evidence of accomplishment for the Abacan Project: The Court held that a review under Rule 45 of the Rules of Court is limited to questions of law, and it generally does not disturb the uniform factual findings of the RTC and the CA. In this case, both lower courts found that Gonzales Construction accomplished 90.61% of the Abacan Project, a finding supported by documentary evidence and testimony, and DPWH failed to present controverting evidence. Therefore, the Court did not disturb this factual finding. On the award of interest: The Court applied the guidelines set in Lara's Gifts & Decors, Inc. v. Midtown Industrial Sales, Inc. for obligations not consisting of loans or forbearances of money. It ruled that the monetary award of PHP 5,364,086.35 shall earn legal interest of 6% per annum from July 17, 2014, the date the RTC rendered its decision, as this is when the entitlement was determined with reasonable certainty. This interest shall run until full payment.
Main Doctrine
While the Commission on Audit (COA) has primary jurisdiction over money claims against government agencies, the Supreme Court may rule on the merits in the interest of judicial economy and to prevent undue delay. The absence of a certification of availability of funds does not necessarily preclude a contractor from receiving payment for services rendered, especially when the government has benefited from the project, to avoid unjust enrichment. Factual findings of the RTC and CA, when affirmed, are given utmost respect.