G.R. No. 183444; October 12, 2011
DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS, Petitioner, vs. RONALDO E. QUIWA, doing business under the name “R.E.Q. Construction,” EFREN N. RIGOR, doing business under the name “Chiara Construction,” ROMEO R. DIMATULAC, doing business under the name “Ardy Construction” and FELICITAS C. SUMERA, doing business under the name “F.C.S. Construction,” represented by her ATTORNEY-IN-FACT ROMEO M. DE LEON, Respondents.

FACTS

Following the 1991 eruption of Mt. Pinatubo, the Department of Public Works and Highways (DPWH) engaged several contractors, including the respondents, for emergency rehabilitation works on the Sacobia-Bamban-Parua River Control Project under the Mount Pinatubo Rehabilitation Project. The contractors completed the works as certified by DPWH engineers. Despite the allocation of government funds (initially ₱400 million, later increased to ₱700 million) for the project and the completion of the works, the DPWH failed to pay the respondents. The respondents filed money claims with the DPWH, which were referred to the Commission on Audit (COA). The COA returned the claims to the DPWH, stating that the latter already had the funds and authority to disburse them. Due to the DPWH’s prolonged inaction, the respondents jointly filed an action for a sum of money. The Regional Trial Court (RTC) ruled in favor of the respondents, ordering the DPWH and its officials to pay the principal sums plus interest, attorney’s fees, and costs. The Court of Appeals affirmed the RTC decision. The DPWH, through the Office of the Solicitor General, filed a Petition for Review on Certiorari.

ISSUE

Whether the Court of Appeals erred in affirming the trial court’s judgment ordering the DPWH to pay the money claims of the respondent contractors.

RULING

The Supreme Court DENIED the petition and AFFIRMED the assailed Court of Appeals Decision. The Court held that the respondents were entitled to payment for the completed works. The contracts, even those not formally signed by the DPWH Regional Director, were ratified when the Director signed the Inspection and Certification of Completion. For contracts lacking a written document, a perfected contract existed as all essential requisites (consent, subject matter, cause) were present, and the DPWH was estopped from denying the agreement after inducing the contractors to undertake the work. The Court found that an Advice of Allotment from the Department of Budget and Management covering the projects constituted a certification of availability of funds. The respondents properly exhausted administrative remedies by first filing their claims with the COA. The government is liable for contracts entered into by its officers in the performance of their governmental functions. The DPWH’s failure to pay, despite the availability of funds and completion of work, constituted an unjust enrichment at the expense of the contractors.