G.R. No. 183444 - Department of Public Works and Highways vs. Quiwa

Following the catastrophic Mt. Pinatubo tragedy in 1991, an urgent rehabilitation effort was deemed necessary to repair defaced river systems.
The Department of Public Works and Highways (DPWH) initiated the rehabilitation project, engaging several contractors to address the damage.

DPWH entered into contracts with a number of contractors, including the respondents: Ronaldo E. Quiwa (doing business as R.E.Q. Construction), Efren N. Rigor (doing business as Chiara Construction), Romeo R. Dimatulac (doing business as Ardy Construction), and Felicitas C. Sumera (doing business as F.C.S. Construction).
While most contractors signed written agreements with Engineer Philip MeAez, Project Manager II of DPWH, two of the respondents (Chiara Construction and Ardy Construction) operated without written agreements.

Despite the differences in contractual formalities, it is undisputed that the respondents completed their assigned rehabilitation works under the emergency project.
The performance of the works was timely and addressed the pressing needs arising from the natural disaster.

After the completion of the rehabilitation works, DPWH refused to compensate the contractors, asserting that the contracts were invalid due to non-compliance with legal requirements in government contracting.
In consequence, the respondents filed an action for a sum of money against DPWH, seeking compensation for the work already performed.

The Regional Trial Court (RTC) of Manila, in Civil Case No. 96-77180, ruled that the contracts were valid and directed DPWH to pay the contractors.
The Court of Appeals (CA) affirmed the RTC's judgment, upholding the respondents’ entitlement to payment based on the completed works.

DPWH petitioned the Supreme Court through a certiorari and later filed a Motion for Partial Reconsideration on November 8, 2011.
The motion primarily challenged the earlier decision, contending that the respondents had not come to court with clean hands by failing to comply with legal requirements, thus arguing that the contracts were void ab initio.
Specific arguments included:

The alleged failure of respondents to verify the legal validity of the contracts and the authority of Engineer MeAez, which in DPWH's view should preclude the enforcement of the contracts.
The assertion that verbal assurances, such as those given by DPWH Undersecretary Teodoro T. Encarnacion to expedite the project, did not substitute for the legal formalities required.

Evidence showed that respondents acted based on the positive assurance from DPWH, which facilitated the initiation and completion of the emergency rehabilitation project.
The substantial public benefit derived from the respondents’ services further complicated the issue of withholding payment.

Whether the respondents’ conduct, particularly their alleged omissions in verifying the full legal validity of the contracts and the authority of the public official involved, amounted to a lack of clean hands sufficient to bar their claim for compensation.
Whether the contracts, even if tainted by procedural irregularities, could be rendered unenforceable or void ab initio, thereby justifying DPWH’s refusal to pay.
Whether the equitable doctrines, specifically the principle of quantum meruit, would mandate the award of compensation to the respondents despite the alleged contractual deficiencies.