Case Digest (G.R. No. 89745)
Facts:
Dr. Rufino O. Eslao, in his capacity as President of Pangasinan State University, petitioner, vs. The Commission on Audit, respondent, G.R. No. 89745, April 08, 1991, the Supreme Court En Banc, Gancayco, J., writing for the Court.On December 22, 1986, Pangasinan State University (PSU), through petitioner Dr. Rufino O. Eslao, engaged C.T. Serna Consultants by conditional contract to prepare plans, specifications, bills of materials and estimates, programs of work and structural designs for an extension of the PSU Engineering Building at Urdaneta; Serna had earlier designed the existing engineering building. The agency estimate for that work was P1,000,000.00; Serna delivered the plans on December 26, 1986. Separately, PSU engineering prepared agency estimates of P599,763.65 for completion/renovation of the Ceramics Building at Lingayen; these plans were likewise submitted to the DPWH Regional Office I and both sets of plans were approved by DPWH Region I on March 11, 1987.
An Advice of Allotment (No. TC2-1132-86-4-02) appropriating P1.6 million for the two projects was released by the DBM on December 29, 1986. Fearing reversion of funds and pressed by urgent classroom needs, petitioner on December 29, 1986 entered into two negotiated contracts with SJC Construction: P960,000.00 for the Engineering Building extension and P582,000.00 for the Ceramics Building completion — each below the agency estimates and the respective appropriations. The PSU Board of Regents approved the contracts on February 16, 1987; the Secretary of Education, Culture and Sports approved them on December 2, 1987. Copies were forwarded to the Office of the Executive Secretary for the President’s approval and, according to contractor follow-up, as of January 19, 1987 the contracts appeared to have been approved through an Atty. Danilo T. Gardaya of the Presidential Legal Staff.
Upon verification, PSU’s resident auditor discovered no such person and on July 27, 1987 issued CSB No. 0727 disallowing payments of P552,900.00 (Ceramics) and P912,000.00 (Engineering), totaling P1,464,900.00, on grounds that: (1) the contracts violated IB2.5.2 (now IB2.4.2) of the Implementing Rules of P.D. No. 1594; (2) the purported approval by the Office of the Executive Secretary bore a spurious signature; and (3) the contracts lacked required engineering aspects under Section 2 of P.D. No. 1594. The Director of COA Region I concurred (2nd Indorsement, Sept. 3, 1987), the COA central office recommended denial of petitioner’s appeal (10th Indorsement, Mar. 30, 1988), and COA Decision No. 736 (11th Indorsement, Feb. 9, 1989) denied the appeal and affirmed the disallowances; a motion for reconsideration was denied Aug. 2, 1989.
Petitioner then filed the present petition before the Supreme Court challenging the COA decision and asserting (a) that the circumstances qualified as an “exceptional case” under Section 4 of P.D. No. 1594 (time of the essence) thus justifying negotiated contracts; (b) that the contracts had the necessary approvals for projects under P1,000,000.00 (citing COA Circular No. 83-101-J) and Board of Regents authority under P.D. No. 1437, Sec. 3(i); (c) that detailed engineering investigations were unnecessary because the works were mere extensions; and alternatively (d) that even if the contracts were invalid the contractor should be paid on a quantum meruit basis because the buildings were nearly complete and in use. COA countered...(Subscriber-Only)
Issues:
- Did the Commission on Audit properly disallow payment under the two contracts as violative of P.D. No. 1594 and its Implementing Rules and Regulations?
- If the contracts were invalid or irregular, is the contractor nevertheless entitled to payment on the basi...(Subscriber-Only)
Ruling:
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Ratio:
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Doctrine:
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