GR 203834; (July, 2014) (Digest)
G.R. No. 203834 , July 9, 2014
HEIRS OF DIOSDADO M. MENDOZA, namely: LICINIA V. MENDOZA, PETER VAL V. MENDOZA, CONSTANCIA V. MENDOZA YOUNG, CRISTINA V. MENDOZA FIGUEROA, DIOSDADO V. MENDOZA, JR., JOSEPHINE V. MENDOZA JASA, and RIZALINA V. MENDOZA PUSO, Petitioners, vs. DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS and the DPWH SECRETARY, Respondents.
FACTS
Diosdado M. Mendoza, doing business as D’ Superior Builders, was the winning bidder for two government infrastructure projects under the Highland Agriculture Development Project (HADP): Package VI (road and building construction) and Package IX (barangay roads). The Department of Public Works and Highways (DPWH) hired United Technologies, Inc. (UTI) as consultant. After receiving the Notice to Proceed for Package VI, Mendoza alleged he discovered a right-of-way problem along the entire project stretch, which was only resolved months later when landowners allowed passage at his risk. The DPWH and UTI, however, alleged that Mendoza failed to commence work on time, mobilized insufficient equipment, and incurred excessive negative slippage (delay), reaching 31.852% by November 1989, far exceeding the 15% “terminal stage” limit under DPWH Circular No. 102. Due to this performance, the Sangguniang Panlalawigan of Benguet recommended termination of Package VI, leading the DPWH to forfeit the contract, cancel Package IX, and blacklist Superior Builders. Mendoza filed an action for specific performance and damages. The Regional Trial Court ruled in his favor, finding the termination arbitrary due to the DPWH’s failure to secure right-of-way. The Court of Appeals reversed, dismissing Mendoza’s complaint.
ISSUE
Whether the Court of Appeals correctly dismissed the complaint, ruling that the DPWH’s termination of the contract and non-award of the project were justified due to the contractor’s excessive negative slippage and that the DPWH is immune from suit.
RULING
The Supreme Court DENIED the petition and AFFIRMED the Court of Appeals’ decision. The termination of Package VI and non-award of Package IX were justified. The evidence, including a series of warnings and monthly progress reports, conclusively showed that Superior Builders incurred a negative slippage of 31.852%, which was more than double the allowable limit, due to its own delays in mobilization and implementation, not primarily due to the right-of-way issue. The right-of-way problem affected only the first 3.2 kilometers of the 15.5-kilometer project, and thus did not excuse the overall delay. Furthermore, the DPWH enjoys state immunity from suit. The construction of the HADP packages was undertaken in the exercise of the government’s sovereign and governmental functions. By entering into such a contract, the DPWH did not impliedly waive its immunity from suit. Therefore, the action for specific performance and damages against it cannot prosper.