December 2018 - Philippine Supreme Court Decisions/Resolutions
G.R. No. 224163, December 04, 2018 - MARIO M. GERONIMO, DOING BUSINESS UNDER THE NAME AND STYLE OF KABUKIRAN GARDEN, Petitioner, v. COMMISSION ON AUDIT, AND THE DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS, REPRESENTED BY SECRETARY ROGELIO L. SINGSON, Respondents.
G.R. No. 224163, December 04, 2018
MARIO M. GERONIMO, DOING BUSINESS UNDER THE NAME AND STYLE OF KABUKIRAN GARDEN, Petitioner, v. COMMISSION ON AUDIT, AND THE DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS, REPRESENTED BY SECRETARY ROGELIO L. SINGSON, Respondents.
D E C I S I O N
J. REYES, JR., J.:
This is a petition for certiorari under Section 1, Rule 64 of the Rules of Court which seeks to set aside the Decision No. 2014-3111 dated November 10, 2014 and the Resolution2 dated December 23, 2015 of the respondent Commission on Audit (COA), in COA CP Case No. 2010-186 which denied the petition for money claim filed by herein petitioner Mario M. Geronimo (Geronimo), doing business under the name and style of Kabukiran Garden.
On June 28, 2010, Geronimo filed with the respondent COA a petition for collection of sum of money against the Republic of the Philippines and the Department of Public Works and Highways (DPWH).3 Geronimo alleged that sometime in February 2005, he was invited to attend a meeting with the officials of the DPWH, including its then secretary, Florante Soriquez. The DPWH sought Geronimo's services for several landscaping projects which the DPWH seeks to be implemented in the areas of Ayala Boulevard, Padre Burgos Street, Roxas Boulevard, Osmeña Highway, and other median strips or center islands of main thoroughfares within Metro Manila, in connection with the 112th Inter-Parliamentary Union (IPU) Summit in Manila.
Due to the limited time left as the IPU Summit was about to commence, Geronimo was commissioned to implement the projects without the parties executing any written contract. On the said meeting, Geronimo was verbally requested to initiate and complete the projects at the earliest possible time. Geronimo was further assured that he will be paid in full upon completion of the projects.
Relying on the assurance and representations by the DPWH officials, Geronimo proceeded with the implementation and completion of the projects in accordance with the plans and specifications by the DPWH. The projects were completed sometime in July 2005. Geronimo alleged that he incurred a total amount of P14,245,994.20 for the projects. Although no written contract had been executed between the parties, Geronimo asserted that he is entitled to receive payment for his services on the basis of quantum meruit.
Despite the completion of the project, and in spite of several demands, the DPWH failed to pay Geronimo compensation for his services. Thus, he was prompted to file his claim before the COA. Attached to Geronimo's petition are several memoranda and endorsements for payment signed by officials of the DPWH, as well as photographs of the completed projects to support his allegations.4
In its Answer,5 the DPWH, through its then secretary Rogelio L. Singson, denied any liability for the projects. It also prayed for the dismissal of Geronimo's petition. The DPWH denied Geronimo's allegation that he verbally commissioned to undertake the completion of several landscaping and beautification projects along major thoroughfares in Metro Manila for lack of knowledge or information sufficient to form a belief as to the truth thereof. Thus, it contended that Geronimo was not obliged to perform the landscaping projects as there was no valid perfected contract between him and the DPWH. It further argued that Geronimo was not entitled to receive payment on the basis of quantum meruit as there was no proof that the landscaping projects have been completed in accordance with the approved plans and specifications by the DPWH and that the public had benefited therefrom.
Ruling of the COA
In its assailed Decision No. 2014-311 dated November 10, 2014, the COA denied Geronimo's petition. The COA found, based on the records, that the DPWH acknowledged the existence of its obligation to Geronimo for the completed landscaping/beautification projects. This was amply supported by the several memoranda/endorsement letters submitted by Geronimo. Thus, the COA opined that the principle of quantum meruit was applicable.
However, despite its recognition that DPWH's liability in favor of Geronimo exists, and even after concluding for the applicability of the principle of quantum meruit, the COA still denied Geronimo's claim for want of supporting documents that would substantiate the projects accomplishment and the reasonableness of the cost thereof. It ruled that under Section 4(6) of Presidential Decree (P.O.) No. 1445, otherwise known as the "Government Auditing Code of the Philippines," claims against the government funds shall be supported with complete documentation. The dispositive portion of the assailed decision provides:
WHEREFORE, premises considered, the instant petition for money claim is hereby DENIED.6
Geronimo moved for reconsideration, but the same was denied by the COA in its Resolution dated December 23, 2015.
Hence, this petition.
WHETHER THE COMMISSION ON AUDIT ERRED WHEN IT DENIED GERONIMO'S MONEY CLAIM DESPITE ITS FINDING THAT DPWH'S LIABILITY IN FAVOR OF GERONIMO EXISTS.
Geronimo argues that the "complete documentation" requirement under Section 4(6) of P.D. No. 1445 should not be restricted to the actual documents submitted and/or required in the regular course of business, but should pertain to any document which may support the claim against the government. As such, the photographs showing that the projects have been completed and the letters wherein the DPWH acknowledged the existence of its obligation would suffice to entitle him to receive payment for his services. He points out that his claim is based on the principles of quantum meruit and unjust enrichment which are founded on equity. Thus, they should not be limited by the rigid application of the provisions of laws such as Section 4(6) of P.D. No. 1445.
In its Comment7 dated September 1, 2016, the DPWH, through the Office of the Solicitor General, maintains that the money claim was properly denied. It asserts that Geronimo failed to present any evidence which could form the basis for the determination of the existence of the projects or, in case they indeed exist, the compensation therefor based on quantum meruit. It notes that no proof was presented to show that the projects were completed in accordance with its plans and specifications, or that it duly accepted the same. As such, the principle of quantum meruit is not applicable.
The DPWH also insists that Geronimo is not entitled to any compensation because they did not execute any written contract. It submits that a review of this Court's decisions involving the application of the principle of quantum meruit on claims against the government would show that even if a government project failed to abide by the prescribed audit rules, there has to be, at the very least, a contract or an implied authorization or express acknowledgment from the government agency involved to show that the contractor had actually been tasked to complete the project in question. Finally, it argues that the findings of the COA are accorded not only respect but also finality as its decision was not tainted with unfairness and arbitrariness.
The Court's Ruling
The petition is meritorious.
Principle of quantum meruit applicable in this case.
At the onset, it must be emphasized that the Court concurs with the COA's findings with regard to the applicability of the principle of quantum meruit and the existence of DPWH's liability to Geronimo.
Ordinarily, a written contract along with a written certification showing availability of funds for the project are among the conditions necessary for the execution of government contracts. It has been held, however, that the absence of these documents would not necessarily preclude the contractor from receiving payment for the services he or she has rendered for the government.8 This issue is actually not novel as it has been settled by the Court in numerous occasions.
In Dr. Eslao v. The Commission on Audit,9 the Court ruled that the contractor should be duly compensated notwithstanding the questions which hounded the construction project involved due to the failure to undertake a public bidding. The Court explained that the denial of the contractor's claim would result in the government unjustly enriching itself. The Court further reasoned that justice and equity demand compensation on the basis of quantum meruit.
Recovery on the basis of quantum meruit was also allowed despite the invalidity or absence of a written contract between the contractor and the government agency. This has been settled in the same case of Dr. Eslao, citing the unpublished case of Royal Trust Construction v. Commission on Audit,10 thus:
In Royal Trust Construction vs. COA, a case involving the widening and deepening of the Betis River in Pampanga at the urgent request of the local officials and with the knowledge and consent of the Ministry of Public Works, even without a written contract and the covering appropriation, the project was undertaken to prevent the overflowing of the neighboring areas and to irrigate the adjacent farmlands. The contractor sought compensation for the completed portion in the sum of over P1 million. While the payment was favorably recommended by the Ministry of Public Works, it was denied by the respondent COA on the ground of violation of mandatory legal provisions as the existence of corresponding appropriations covering the contract cost. Under COA Res. No. 36-58 dated November 15, 1986 its existing policy is to allow recovery from covering contracts on the basis of quantum meruit if there is delay in the accomplishment of the required certificate of availability of funds to support a contract.
In said case, the Solicitor General agreed with the respondent COA but in the present case he agrees with petitioner.
Thus, this Court held therein —
The work done by it was impliedly authorized and later expressly acknowledged by the Ministry of Public Works, which has twice recommended favorable action on the petitioner's request for payment. Despite the admitted absence of a specific covering appropriation as required under COA Resolution No. 36-58, the petitioner may nevertheless be compensated for the services rendered by it, concededly for the public benefit, from the general fund alloted by law to the Betis River project. Substantial compliance with the said resolution, in view of the circumstances of this case, should suffice. The Court also feels that the remedy suggested by the respondent, to wit, the filing of a complaint in court for recovery of the compensation claimed, would entail additional expense, inconvenience and delay which in fairness should not be imposed on the petitioner.
Accordingly, in the interest of substantial justice and equity, the respondent Commission on Audit is DIRECTED to determine on a quantum meruit basis the total compensation due to the petitioner for the services rendered by it in the channel improvement of the Betis River in Pampanga and to allow the payment thereof immediately upon completion of the said determination.11 (Emphasis supplied)
The above disquisitions in Dr. Eslao and Royal Trust have been reiterated in the cases of Melchor v. Commission on Audit,12EPG Construction Co. v. Hon. Vigilar,13Department of Health v. C.V Canchela & Associates, Architects,14RG Cabrera Corporation, Inc. v. Department of Public Works and Highways,15 and other similar cases.
Liability of DPWH sufficiently established.
The DPWH however insists that the principle of quantum meruit as enunciated in Dr. Eslao and Royal Trust does not apply in this case as no document was presented to prove the existence of the alleged projects and that it did not acknowledge, whether express or implied, that the alleged projects have been implemented and completed by Geronimo.
This argument is specious at best.
The Court concurs with the DPWH's submission that the findings by the COA must be treated with utmost respect. Indeed, by reason of their special knowledge and expertise over matters falling under their jurisdiction, administrative agencies are in a better position to pass judgment on the same, and their findings of fact are generally accorded great respect, if not finality, by the courts. Such findings must be respected as long as they are supported by substantial evidence, even if such evidence is not overwhelming or even preponderant.16
Unfortunately for the DPWH, the COA's factual findings do not lean in its favor. To recall, although the COA denied Geronimo's claim for compensation, it nevertheless found that the DPWH acknowledged the existence of its obligation for the landscaping and beautification projects. The COA observed that the letters from the DPWH officials, as well as its allegation in its Answer, tend to establish that Geronimo is entitled to his claim. The Court observes that the DPWH neither appealed nor sought the reconsideration of the said factual findings, which state:
Based on records, it is established that the DPWH acknowledged the existence of its obligation to herein petitioner for the completed landscaping/beautification project. The following letters/memoranda of Director Luis A. Mamitag, Jr., Bureau of Maintenance, dated July 15, 2005, October 6, 2005, May 22, 2009, June 9,  and July 20, 2009; the[n] Acting Secretary Florante Soriquez dated November 3, 2005; and of Maria Catalina E. Cabral, Assistant Secretary for Planning, dated July 2, 2009 would support this fact. In the Answer of the DPWH to herein petition, it was stated that the claim was being evaluated and was referred to the Extraordinary Claims and Review Committee, DPWH, pursuant to Special Order No. 37, series of 2007, and it was suggested that the financial obligation of the DPWH to the petitioner be charged against the Engineering and Administrative Overhead or from any available funds of the DPWH. These circumstances further bolster the claim of the petitioner.17
Furthermore, a review of the aforementioned letters/memoranda would certainly reveal that the DPWH indeed acknowledged the completion of the projects, or some of it at the very least, and that it is liable to compensate Geronimo therefor. For instance, in the Memorandum dated November 3, 2005, to the Regional Director of the National Capital Region, DPWH, then Undersecretary Florante Soriquez reiterated the suggestion to prioritize the completed landscaping projects in the allocation of the South Manila Engineering District.
Referred for appropriate action is the herein letter dated 26 October of Mr. MARIO M. GERONIMO, General Manager, Kabukiran Garden regarding their claims for payment of completed beautification projects within the area of South Manila Engineering District in connection with the IPU Summit.
Attention is invited to the last paragraph of the letter dated 15 July 2005 of OIC-Director Luis A. Mamitag, Bureau of Maintenance, suggesting among others that the pending requirements of said completed projects be prioritized in the MVUC allocation for the District concerned.18 (Emphasis supplied)
A similar recognition of liability could be discerned four years later in the Memorandum dated May 22, 2009, by then Director IV Luis A. Mamitag, Jr. to the Director of the Planning Service of the DPWH.
This has reference to the Memorandum dated 22 April 2009 of Assistant Secretary Maria Catalina E. Cabral, this Department, relative to the letter dated 29 January 2009 of Mr. Mario M. Geronimo, General Manager, Kabukiran Garden x x x requesting payment of landscaping/beautification projects done in selected areas of Metro Manila.
In this regard, please be informed that this Office has no appropriate funds available for the purpose. It is suggested that the funding requirement for the settlement of the said financial obligations be charged against the Engineering and Administrative Overhead (EAO) or from any available funds of the Department.19 (Emphasis supplied)
From the foregoing, it is clear that the COA is correct in ruling that the principle of quantum meruit is applicable in this case. The letters and memoranda presented by Geronimo unmistakably established DPWH's recognition of the completion of the projects and its liability therefor. These projects obviously redounded to the benefit of the public in the form of uplifting the image of the country — albeit superficially — to the foreign dignitaries who passed through these thoroughfares during the IPU Summit. It would be unjust and inequitable if there is no compensation for the actual work performed and services rendered by Geronimo.
The COA erred when it denied the petition for money claim.
Quantum meruit literally means "as much as he deserves."20 Under this principle, a person may recover a reasonable value of the thing he delivered or the service he rendered.21 The principle also acts as a device to prevent undue enrichment based on the equitable postulate that it is unjust for a person to retain benefit without paying for it.22 The principle of quantum meruit is predicated on equity.23
At the risk of being repetitious, it must be stressed that Geronimo sufficiently established his right to be compensated on the basis of quantum meruit. Thus, to deny him of this compensation for the services he rendered despite the clear benefit which resulted to the government would be the height of injustice. It is in this context that the Court finds itself in awe with the conclusion reached by the COA in its assailed decision. By denying Geronimo's petition for money claim — which it, itself, found to have been clearly established — the Commission allowed itself to be the vehicle of the very injustice which it sought to prevent.
To be sure, there is basis for the COA to state that the documents submitted by Geronimo may have been insufficient for the purpose of determining the actual amount due him. Indeed, the letters and memoranda issued by the DPWH officials, and the photographs showing the completed projects, would be of little help to the Commission in ascertaining the reasonable sum which may be awarded to Geronimo. Similarly, the separate summaries of the alleged costs of the projects could not be considered in determining the just compensation for the services rendered by Geronimo. Without any reasonable computation and supporting document, such as receipts of the materials procured for the projects, to justify the figures contained therein, these summaries could only be considered as self-serving statements which the COA properly disregarded.
Nevertheless, the COA erred in denying Geronimo's petition for money claim. As a principle predicated on equity, the application of quantum meruit should not have been restricted by the provisions of Section 4(6) of P.D. No. 1445. Although the documents submitted by Geronimo were insufficient to ascertain what was reasonably due him, the most judicious action which the COA could have taken was to require him to submit additional supporting evidence and/or employ whatever auditing technique is necessary to determine the reasonable value of the services he rendered, and the market value of the materials used in the subject landscaping projects. Denial of the claim would certainly not be appropriate and just under the circumstances. Clearly, the COA gravely abused its discretion when it denied Geronimo's claim despite his obvious and recognized entitlement thereto.
WHEREFORE, the petition is GRANTED. The assailed Decision No. 2014-311 dated November 10, 2014 and the Resolution dated December 23, 2015 of the Commission on Audit are REVERSED and SET ASIDE.
The Commission on Audit is hereby directed to determine and ascertain with dispatch, on a quantum meruit basis, the total compensation due to petitioner Mario M. Geronimo, for the landscaping/beautification projects in connection with the 112th Inter-Parliamentary Union Summit in Manila in 2005, and to allow payment thereof upon the completion of the said determination.
Bersamin, C.J., Carpio, Peralta, Del Castillo, Perlas-Bernabe, Leonen, Jardeleza, Caguioa, Tijam, A. Reyes, Jr., Gesmundo, and Hernando, JJ., concur.
Carandang, J., on leave.
NOTICE OF JUDGMENT
Sirs / Mesdames:
Please take notice that on December 4, 2018 a Decision, copy attached herewith, was rendered by the Supreme Court in the above-entitled case, the original of which was received by this Office on February 4, 2019 at 10:41 a.m.
Very truly yours,
(SGD.) EDGAR O. ARICHETA
1 Concurred in by COA Commissioners Heidi L. Mendoza and Jose A. Fabia; rollo, pp. 18-23.
2 Notice of Resolution; id. at 25.
3 Id. at 26-35.
4 Id. at 37-57; 68-76.
5 Id. at 80-83.
6 Id. at 23.
7 Id. at 106-125.
8RG Cabrera Corp., Inc. v. Department of Public Works and Highways, 797 Phil. 563, 569-570 (2016).
9 273 Phil. 97, 107 (1991).
10 G.R. No. 84202, November 23, 1988.
11Dr. Eslao v. Commission on Audit, supra note 9, at 106-107.
12 277 Phil. 801 (1991).
13 407 Phil. 53 (2001).
14 511 Phil. 654 (2005).
15 Supra note 8.
16Delos Reyes v. Municipality of Kalibo, Aklan, G.R. No. 214587, February 26, 2018.
17Rollo, p. 21.
18 Id. at 70.
19 Id. at 71.
20Aquino v. Casabar, 752 Phil. 1, 12 (2015).
21Melchor v. Commission on Audit, supra note 12, at 815.
22Catly v. Navarro, 634 Phil. 229, 279 (2010).
23International Hotel Corporation v. Joaquin, Jr., 708 Phil. 361, 385 (2013).