G.R. No. 108718 July 14, 1994
GENARO R. REYES CONSTRUCTION, INC. and UNIVERSAL DOCKYARD., petitioners, vs. THE HONORABLE COURT OF APPEALS, THE DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS, JOSE P. DE JESUS, ROMULO M. DEL ROSARIO, ET AL.

FACTS

On March 1, 1992, the Department of Public Works and Highways (DPWH) entered into a contract with a joint venture composed of Genaro G. Reyes Construction, Inc. (GGRCI), Universal Dockyard, Ltd. (UDL), Home Construction, and JPL Construction for the Lower Agusan Development Project. Petitioners submitted the lowest bid at P445,858,196.02, which was 9.45% below the Approved Government Estimate. A Notice to Proceed was issued on May 8, 1992, received by petitioners on May 9, 1992. However, on April 23 and 27, 1992, DPWH Project Engineers reported a negative slippage of 9.50% and 9.8%, respectively. Based on this, DPWH Project Director Antonio A. Alpasan recommended either negotiating the balance with the second lowest bidder or rebidding the work. On May 14, 1992, DPWH Acting Secretary Gregorio Alvarez and Secretary Jose P. de Jesus notified petitioners of the termination of their contract. Petitioners requested reconsideration, arguing that the delay was partly due to government faults, such as right-of-way problems where only 40 out of 100 hectares for the spoilbank were acquired, and that awarding the balance to the third lowest bidder, Hanil Development Corporation, whose bid was 41.4% above the government estimate, would cause significant government loss. Despite a subsequent memorandum from Undersecretary Romulo del Rosario to the Japan Overseas Economic Cooperation Fund acknowledging government faults contributing to the delay, Secretary De Jesus terminated the contract on June 2, 1992. Petitioners filed a case in the Regional Trial Court seeking a temporary restraining order and preliminary injunction, which was denied. The Court of Appeals affirmed this denial. Petitioners then elevated the case to the Supreme Court.

ISSUE

Whether the Court of Appeals erred in affirming the Regional Trial Court’s denial of petitioners’ application for a temporary restraining order and a writ of preliminary injunction to enjoin the DPWH from enforcing the notice of pre-termination of their contract.

RULING

The Supreme Court dismissed the petition and denied the preliminary injunction or temporary restraining order. The Court noted that the DPWH, in a resolution dated June 30, 1993, and approved on July 14, 1993, explicitly stated that the request to negotiate the balance of the work with the next complying bidder had been denied by the Office of the President. Instead, a directive was issued to repackage and rebid the project. This action alleviated petitioners’ apprehension that the balance would be awarded to Hanil Development Corporation at a significantly higher cost, thereby removing the factual basis for the injunctive relief sought. The Court found no reason to grant the extraordinary writs prayed for.