G.R. No. 231015 , 240618, and 249212, January 26, 2021.
RG CABRERA CORPORATION, INC., PETITIONER, VS. DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS AND COMMISSION ON AUDIT, RESPONDENTS.

FACTS

Following the 1991 Mount Pinatubo eruption and subsequent lahar flows, the DPWH Task Force Mount Pinatubo Rehabilitation Projects, through its Chairman, authorized the DPWH Pampanga 2nd Engineering District to hire equipment for rehabilitation works. DPWH Pampanga entered into three contracts with RG Cabrera Corporation, Inc. (RGCCI) for: (1) lease of a payloader; (2) construction of a dike on the Porac River; and (3) excavation and diking of the Gumain River. RGCCI performed the services but was not fully paid. After the Regional Trial Court dismissed its collection suits for lack of jurisdiction, RGCCI filed separate money claims before the Commission on Audit (COA), docketed as CP Case Nos. 2013-050, 2012-116, and 2013-049. The DPWH contended the contracts were void for being unauthorized and lacking complete documentation, specifically a Certificate of Availability of Funds as required by Section 87 of Presidential Decree No. 1445 (Government Auditing Code). The COA denied all claims. In CP Case No. 2013-050, the COA held the contract void for lack of the required certification. In CP Case No. 2012-116, the COA additionally found RGCCI lacked juridical personality per SEC records and that necessary supporting documents were absent. In CP Case No. 2013-049, the COA similarly ruled the contract void and noted a lack of complete documentation. RGCCI filed petitions for certiorari, which were consolidated, arguing the contracts were merely voidable, that the certification requirement was technical, and that denial would unjustly enrich the government. RGCCI also contended it was entitled to payment on a quantum meruit basis.

ISSUE

1. Whether RGCCI has locus standi to file the petitions.
2. Whether the COA erred in denying RGCCI’s money claim on the basis that the contract was void for being entered into without the necessary appropriation and incomplete documentation.
3. Whether RGCCI is entitled to payment on the basis of quantum meruit.

RULING

1. On Locus Standi: The Supreme Court held that RGCCI has locus standi. The COA’s finding in one case that RGCCI was a non-existent corporation per SEC records was not conclusive. The Court noted that the contracts were entered into under the name “RG Cabrera Construction,” and RGCCI submitted a Secretary’s Certificate and documents showing it was the successor-in-interest. The issue of corporate existence involves a factual determination not typically undertaken in a Rule 64 petition. The Court found RGCCI sufficiently established its standing as the real party-in-interest seeking to enforce the contracts.
2. On Validity of Contracts and Documentation: The Supreme Court upheld the COA’s ruling that the contracts were void. Section 87 of P.D. No. 1445 mandates that a contract involving the expenditure of government funds is void unless supported by a certification of availability of funds by the proper accounting official and auditor. This requirement is a condition precedent to ensure contracts are not entered into without appropriated funds, safeguarding against unauthorized expenditures. The contracts in question lacked this certification. Furthermore, RGCCI failed to submit complete supporting documentation required by auditing rules, such as Statements of Work Accomplished, Inspection Reports, and pictures of the work. The absence of these documents prevented a proper audit and verification that the services were fully rendered and acceptable.
3. On Quantum Meruit: The Supreme Court denied RGCCI’s claim for payment under quantum meruit. The principle of quantum meruit, which allows recovery for the reasonable value of services rendered, does not apply to void contracts. A void contract produces no legal effect. The government cannot be held liable on a quasi-contract theory for services rendered under a void contract, as this would circumvent the mandatory requirements of the law designed to protect public funds. The Court cited precedent stating that a contractor who enters into a void contract with the government assumes the risk of non-payment. Allowing recovery would unjustly enrich the contractor at the expense of the law’s safeguards, not unjustly enrich the government.
The petitions were DENIED. The assailed COA Decisions and Resolutions were AFFIRMED.