Section 25. RULES ON APPROPRIATION
The Court of Appeals (CA), similar to the court a quo, sided with
respondents.
Issue: W/N the DPWH is liable to pay the claims filed against them by
the plaintiffs?
RULING: YES.
It was, however, undisputed that there was no certification from the
chief accountant of DPWH regarding the said expenditure.
DPWH vs QUIRINO???
In 1992, a number of contractors, including herein respondents, were
engaged by the DPWH pursuant to an emergency project under the
Mount Pinatubo Rehabilitation Project.
Respondents claimed that they had accomplished works on the
Sacobia-Bamban-Parua River Control Project pursuant to this
emergency project. Ronaldo E. Quiwa claimed that under two
construction agreements with the DPWH, his construction company,
the R.E.Q. Construction, had accomplished the channeling of
the
Sacobia-Bamban-Parua
River
Control
Project.
When respondent Quiwa filed his claims with the DPWH, it failed to
act on these, despite the favorable report and Certification of
Completion made . Prompted by the prolonged inaction of the DPWH
on their claims, respondents jointly filed an action for a sum of money
against the DPWH.
Petitioner DPWH primarily argues that the contracts with herein
respondents were void for not complying with Sections 85 and 86
of P.D. 1445, or the Government Auditing Code of the Philippines, as
amended by Executive Order No. 292. These sections require an
appropriation for the contracts and a certification by the chief
accountant of the agency or by the head of its accounting unit as to
the
availability
of
funds.
The RTC ruled that the claim of the respondents against DPWH was
proper since they had already made a demand on the Commission
on Audit regarding the payment of their construction services.
Notwithstanding this irregularity, it has been settled in several cases
that payment for services done on account of the government, but
based on a void contract, cannot be avoided.
The Court first resolved such question in Royal Trust Construction v.
Commission on Audit. In that case, the court issued a Resolution
granting the claim of Royal Trust Construction under a void
contract. The unpublished Resolution reads as follows:
“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 …”
The above case became the authority in granting claims of a
contractor against the government based on a void contract. In Eslao
vs. COA, The Court cited the unpublished Resolution in Royal
Construction, wherein the Court allowed the payment of the
company's services sans the legal requirements of prior appropriation.
To emphasize, the contracts in the above cases, as in this case, were
not illegal per se. There was prior appropriation of funds for the
project including appropriation; and payment to the contractors,
upon the subsequent completion of the works, was warranted.
We also depart from the CA and the RTC rulings awarding the
respondents attorney's fees and costs of suit. The Constitution
provides that "no money shall be paid out of the Treasury except in
pursuance
of
an
appropriation
made
by
law.”
Carpio, (Chairperson), Brion, Reyes, and Perlas-Bernabe,* JJ., concur.