GR 221773; (October, 2016) (Digest)
G.R. No. 221773. October 18, 2016
RG CABRERA CORPORATION, INC., PETITIONER, VS. DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS, AND COMMISSION ON AUDIT, RESPONDENTS.
FACTS
In the aftermath of the 1991 Mt. Pinatubo eruption, the DPWH Pampanga 2nd Engineering District entered into several equipment lease contracts with RG Cabrera Corporation for the maintenance of the Porac-Gumain Diversion Channel System from February to September 1992. RG Cabrera performed its obligations by providing bulldozers, payloaders, and dump trucks, but the DPWH failed to pay the agreed rentals. The corporation initially filed collection cases in the Regional Trial Court, which ruled in its favor, but the Court of Appeals reversed the decisions, citing state immunity and directing that the money claims be filed with the Commission on Audit.
RG Cabrera subsequently filed its claims with the COA, which consolidated them as COA CP Case Nos. 2011-200 and 2011-228. The COA denied the claims, ruling that the lease contracts were void for non-compliance with Presidential Decree No. 1445, specifically the lack of a prior certification of fund availability. The COA also rejected the application of quantum meruit, noting the DPWH’s consistent denial of liability and acceptance of benefits from the contracts. RG Cabrera’s motion for reconsideration was denied, prompting this petition for certiorari.
ISSUE
Whether RG Cabrera is entitled to recover payment for the equipment leased to the DPWH despite the technical infirmities of the contracts.
RULING
Yes, RG Cabrera is entitled to recover payment on the basis of quantum meruit. The Supreme Court reversed the COA decision, emphasizing that while the contracts were technically void for non-compliance with P.D. No. 1445, they were not illegal per se. The legal infirmity stemmed from a procedural defect—the absence of a certification of fund availability—and not from any intrinsic illegality. The Court found that the government had clearly accepted and benefited from the use of the leased equipment for a vital public purpose: the rehabilitation of lahar-affected areas. The DPWH never denied the actual use of the equipment, and the people of Pampanga derived substantial benefits from the projects.
The Court, citing precedents such as PNR v. Kanlaon Construction and Spouses del Rosario v. COA, held that it would be grossly inequitable and unjust to allow the government to evade payment after it has accepted and profited from the rendered services. The principle of quantum meruit applies precisely to prevent such unjust enrichment at the expense of a contractor who acted in good faith. Therefore, RG Cabrera must be compensated for the reasonable value of the services and use of equipment provided. The DPWH was ordered to pay the agreed rentals totaling ₱4,944,480.00 plus legal interest, without prejudice to any administrative or criminal actions against responsible DPWH officials.