GR 250296; (Febuary, 2024) (Digest)

G.R. No. 250296, February 12, 2024
REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS (DPWH), PETITIONER, VS. A.D. GONZALES, JR. CONSTRUCTION AND TRADING COMPANY, INC., RESPONDENT.

FACTS

The respondent, A.D. Gonzales, Jr. Construction and Trading Company, Inc., entered into two contracts with the petitioner DPWH: (1) the Gumain Project (PHP 2,695,980.00) and (2) the Abacan Project (PHP 8,174,294.32). The respondent alleged it completed the projects, which were inspected and verified. Only a partial payment of PHP 1,178,252.42 for the Abacan Project was made, leaving an unpaid balance of PHP 9,692,021.92. After a final demand on March 26, 1999, the respondent filed a Complaint for sum of money. The DPWH raised defenses including non-suability of the state, void contracts due to lack of a certification on fund availability as required by Presidential Decree No. 1445, absence of signatures by the Regional Director or DPWH Secretary, and failure to exhaust administrative remedies. The DPWH did not present any evidence. The Regional Trial Court (RTC) ruled in favor of the respondent, awarding PHP 5,364,086.35 for the accomplished work on the Abacan Project based on quantum meruit, plus attorney’s fees and costs, but denied the claim for the Gumain Project for lack of substantial evidence. The Court of Appeals (CA) affirmed with modification, deleting the award of attorney’s fees and costs, and adding an interest rate of 6% per annum from the finality of the decision until full payment.

ISSUE

Whether the CA correctly affirmed the RTC’s award of PHP 5,364,086.35 in favor of Gonzales Construction based on quantum meruit.

RULING

Yes. The Supreme Court denied the petition and affirmed the CA Decision. The Court held that the principle of quantum meruit is applicable. While a certification of fund availability is a condition sine qua non for the validity of government contracts, its absence does not automatically preclude a contractor from receiving payment for services rendered, especially when the government has accepted and benefited from the work. The government cannot unjustly enrich itself. The respondent presented sufficient evidence, including the testimony of a DPWH project engineer and certified documents, proving it accomplished 90.61% of the Abacan Project, valued at PHP 7,332,292.45. After deducting the partial payment, the balance of PHP 5,364,086.35 was correctly awarded. The Court also ruled that the RTC had jurisdiction over the case, as the doctrine of primary jurisdiction of the Commission on Audit (COA) over money claims is not absolute; judicial recourse is allowed when, as here, there is unreasonable delay or the claim involves a pure question of law. The defense of failure to exhaust administrative remedies was likewise unavailing under the circumstances.