Title
Metropolitan Manila Development Authority vs. D.M. Consunji, Inc.
Case
G.R. No. 222423
Decision Date
Feb 20, 2019
MMDA awarded a landfill contract to DMCI and R-II Builders, but TROs halted operations. Claiming expenses, respondents sued MMDA; SC ruled COA has jurisdiction over money claims.
government revenue
government receipts
money claims

Case Summary (G.R. No. 222423)

Factual Background

The MMDA sought a private proponent to develop and operate a new sanitary landfill for Metro Manila under a Build-Operate-Own scheme to replace the San Mateo landfill. Legal actions obstructed the original project, so the MMDA and Metro Manila mayors agreed on an interim two-year waste disposal arrangement. Then MMDA Chairman Jejomar C. Binay secured approval in principle from the Office of the President subject to presidential approval of the negotiated contract. Public bidding resulted in respondents as winning joint bidders to construct an integrated waste facility in Semirara Island, Antique, and the parties executed a contract on 4 January 2001 signed by MMDA officers and by Roberto N. Aventajado. MMDA allegedly instructed respondents to proceed with preparatory works before presidential signature. Respondents performed limited operations from 2 to 5 January 2001 under MMDA supervision but ceased when temporary restraining orders were issued by the Regional Trial Court, Antique.

Claim and Demand

After operations stopped, respondents formally demanded reimbursement from MMDA of expenses incurred. Respondents initially sought P20,123,190.00 and later filed a complaint for P19,920,936.17 representing expenses for partial execution of the project, together with attorney's fees and litigation costs. MMDA, through the Office of the Solicitor General, denied contractual liability on grounds that presidential approval required by law had not been obtained, that conditions precedent in the Notice of Award were unmet, and that a contractual clause absolved liability for interruption by mass or court actions; MMDA further contended that monetary claims against government agencies fall under the primary jurisdiction of the Commission on Audit and must comply with appropriation and administrative remedies.

Trial Court Proceedings and Judgment

Respondents filed a Motion for Judgment on the Pleadings, which the Regional Trial Court, Makati City, Branch 133, granted. On 9 June 2010 the trial court rendered judgment in favor of respondents, ordering MMDA to pay P19,920,936.17 with six percent legal interest from date of extrajudicial demand until fully paid. The trial court denied claims for litigation expenses. MMDA and respondents filed appeals to the Court of Appeals; MMDA appealed while respondents filed a partial appeal on denial of litigation expenses.

Court of Appeals Ruling

The Court of Appeals affirmed the trial court. It held that judgment on the pleadings was proper because admissions in the pleadings and attached documents allowed disposition without further hearing, citing Pacific Rehouse Corporation v. EIB Securities, Inc. The Court of Appeals applied the principle of quantum meruit and held that respondents were entitled to reimbursement for services rendered because the government received and accepted benefit from the waste disposal operations of January 2 to 5, 2001. The appellate court rejected MMDA's invocation of governmental immunity, relying on precedent that immunity cannot be used to perpetrate injustice, and it denied litigation expenses, finding insufficient showing of bad faith by MMDA.

Issues Presented to the Supreme Court

MMDA raised three principal issues: (1) whether judgment on the pleadings was proper; (2) whether DMCI and R-II Builders were entitled to recover their expenses on the basis of quantum meruit; and (3) whether the Commission on Audit has primary jurisdiction over the present case.

Supreme Court Ruling on Jurisdiction

The Supreme Court resolved jurisdiction first and held that the COA has primary jurisdiction over specific money claims against government agencies. The Court set aside the assailed Decision and Resolution of the Court of Appeals and concluded that respondents’ money claim based on quantum meruit should be filed with the Commission on Audit. The Court thereby rendered unnecessary the adjudication of the other issues raised by MMDA in the petition.

Legal Basis and Reasoning

The Court grounded its ruling on Section 26 of Presidential Decree No. 1445, incorporating the jurisdictional scope of Commonwealth Act No. 327, which vests the COA with authority to audit and settle debts and claims due from or owing to the Government and its subdivisions, agencies, and instrumentalities. The Court observed that the COA exercised rule-making authority under the 1987 Constitution and enacted the 2009 Revised Rules of Procedure of the Commission on Audit, which expressly include money claims against the Government within the COA’s original jurisdiction. The Court relied on an unbroken line of precedents — including Euro-Med Laboratories Phil., Inc. v. Province of Batangas, Daraga Press, Inc. v. Commission on Audit, Province of Aklan v. Jody King Construction and Dev't. Corp., Star Special Watchman and Detective Agency, Inc. v. Puerto Princesa City, and RG Cabrera Corporation, Inc. v. DPWH — to hold that claims for fixed money amounts readily determinable from accounting documents, as well as money claims against government entities based on quantum meruit, fall squarely within the COA’s primary jurisdiction. The Court further noted prior decisions directing the COA to determine on a quantum meruit basis the compensation due contractors i

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