Case Summary (G.R. No. 131544)
Facts of the Case
In 1983, the Ministry of Human Settlement initiated a housing project in Pasig City based on a Memorandum of Agreement with the Ministry of Public Works and Highways, which included the construction of 145 housing units. Subsequently, individual contracts were entered into between the DPWH and the petitioners, covering approximately two-thirds of the project. After fulfilling the basic contract requirements, the petitioners, based on verbal assurances from the DPWH Undersecretary, undertook additional construction work without formal contracts or appropriations, leading to an unpaid balance of ₱5,918,315.63 for these additional efforts.
Administrative Actions and Legal Proceedings
The contractors’ claims for payment were recommended by the DPWH Assistant Secretary, though classified under quantum meruit, necessitating the approval of the Commission on Audit (COA). The COA indicated that payment could only proceed if funds were available. Although budgetary allocations were eventually made for the claimed amount, the DPWH Secretary denied the payment on the grounds of the absence of appropriated funds and valid contracts.
Legal Issues and Contentions
The core legal issue centers on whether the petitioners are entitled to compensation for additional work performed under circumstances deemed to create "implied contracts" absent the necessary legal compliance. The respondent argues that these implied contracts are void due to the lack of appropriations and written agreements, thus inferring that the government bears no liability for such claims due to statutory violations.
Court’s Analysis and Rulings
The Court agreed that the absence of proper appropriations made the implied contracts void as they did not comply with the stipulations of the Administrative Code of 1987 regarding public contracts. However, the Court emphasized the importance of ensuring substantial justice, invoking the principle of quantum meruit to justify compensation for the contractors based on the work they accomplished in good faith, believing that appropriate funding would ultimately materialize.
Precedent Consideration
The Court referenced previous decisions such as Eslao vs. Commission on Audit and Royal Trust Construction vs. COA, where contractors were allowed to recover costs on a quantum meruit basis even when legal stipulations were not strictly followed. It established that while the contracts were void, the work completed conferred benefits upon the public and government without formal challenges at the time of execution.
State Immunity Argument
The respondent’s invocation of State immunity from lawsuits was dismissed, noting exceptions when the avoidance of
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Case Background
- The case involves a Petition for Certiorari filed by petitioners EPG Construction Co. and others against Hon. Gregorio R. Vigilar, Secretary of the Department of Public Works and Highways (DPWH).
- The petition was filed to reverse the Decision dated November 7, 1997, of the Regional Trial Court of Quezon City, Branch 226, which dismissed the Petition for Mandamus by the petitioners.
Facts of the Case
- In 1983, the Ministry of Human Settlement initiated a housing project with the BLISS Development Corporation on government property in Pasig City.
- A Memorandum of Agreement (MOA) was signed between the Ministry of Human Settlement and the DPWH, where the latter was responsible for developing the housing site and constructing 145 housing units.
- The petitioners entered into individual contracts with the DPWH for the construction of the housing units, which covered only two-thirds of each unit's cost.
- After fulfilling the initial contracts, the petitioners undertook additional construction work based on verbal assurances from DPWH Undersecretary Aber Canlas regarding the availability of funds, despite lacking written contracts or appropriations for these additional constructions.
- The petitioners were paid for the initial construction but accrued an unpaid balance of P5,918,315.63 for the additional work.
Procedural History
- On November 14, 1988, the petitioners sent a demand letter to the DPWH Secretary regarding their unpaid claims, which had been favorably recommended by DPWH Assistant Secretary Dominador Madamba.
- The claims were referred to the Commission on Audit (COA) for review, resulting in the COA