G.R. No. L-45674 - Francisco vs. Court of Appeals

A.D. Gonzales, Jr. Construction and Trading Company, Inc. (Gonzales Construction) entered into two contracts with the Department of Public Works and Highways (DPWH):

Rehabilitation of Gumain-Porac Division Channel, Sta. 5+800 to Sta. 6+100 (Gumain Project) - PHP 2,695,980.00.
Abacan River Control Cut-Off Channel along Manggahan Sto. Rosario, Mexico, Pampanga, Sta. 17+500 to Sta. 18+033 (Abacan Project) - PHP 8,174,294.32.

The contracts were signed by Aurelio Gonzales, Jr. for Gonzales Construction and submitted to DPWH Regional Director for signature.

Gonzales Construction alleged full performance and submission of documents proving project completion.
Both projects were inspected, found conforming to plans and specifications.
Partial payment of PHP 1,178,252.42 was made for the Abacan Project.
Unpaid balance of PHP 9,692,021.92 remained for both projects.

Gonzales Construction filed a complaint for collection of sum of money with damages before the Regional Trial Court (RTC).
Testimonies presented: Remedios P. Soto (State Auditor IV, Commission on Audit), Aurelio Gonzales, Jr. (company president), Engr. Jesus O. Obordo (assistant chief, DPWH Construction Division).
DPWH raised defenses: lack of consent to sue, invalid contracts due to no certification of fund appropriations under PD No. 1445, absence of signatures by Regional Director and Secretary, and failure to exhaust administrative remedies.
DPWH presented no evidence.

Found a perfected contract between Gonzales Construction and DPWH based on their conduct and acceptance.
Held that State consent to be sued can be implied in government contracts.
Estopped DPWH from raising lack of PD No. 1445 compliance due to emergency circumstances (Mt. Pinatubo eruption) and prior partial payments.
Awarded PHP 5,364,086.35 for 90.61% completed work on Abacan Project based on quantum meruit, denied payment for Gumain Project due to insufficient proof.
Dismissed DPWH’s argument on failure to exhaust administrative remedies citing unreasonable delay and purely legal issue.
Awarded attorney’s fees of PHP 50,000 and costs of suit.

Affirmed RTC decision with modification: deleted attorney’s fees and costs of suit.
Added 6% interest per annum from finality of decision until full payment.
Upheld principle that absence of certification of funds under PD No. 1445 does not bar payment for services rendered.
Affirmed 90.61% completion of Abacan Project based on substantial evidence.

Noted primary jurisdiction for money claims against government is with COA under PD No. 1445.
Exercised judicial economy to rule on merits notwithstanding jurisdictional issue.

Whether the CA correctly affirmed the RTC’s award of PHP 5,364,086.35 to Gonzales Construction based on quantum meruit despite DPWH’s objections.
Whether the RTC had jurisdiction to hear monetary claims against the government under PD No. 1445.
Whether Gonzales Construction sufficiently proved that 90.61% of the Abacan Project was accomplished to entitle payment.
Whether the interest awarded should run from demand or from the judgment date.