Geronimo v. Commission on Audit

A contractor who rendered services to the government without a written contract may recover compensation on a quantum meruit basis where the government agency acknowledged the completion of the projects and its liability therefor, and the COA should not deny such a claim outright for insufficiency of documents but should instead require the submission of additional evidence or employ auditing techniques to ascertain the reasonable value of services rendered.

Petitioner Mario M. Geronimo, doing business under the name and style of Kabukiran Garden, is a landscaping contractor who rendered services for the Department of Public Works and Highways (DPWH). The DPWH, through its officials including then Secretary Florante Soriquez, sought Geronimo's services for landscaping and beautification projects along major Metro Manila thoroughfares in connection with the 112th Inter-Parliamentary Union (IPU) Summit in Manila. Government contracts ordinarily require a written contract and a written certification showing availability of funds, but the urgent timeline of the summit led to a verbal commission without formal documentation. The Commission on Audit (COA) has jurisdiction over money claims against the government under P.D. No. 1445, the Government Auditing Code of the Philippines.

Sometime in February 2005, Geronimo was invited to attend a meeting with officials of the DPWH, including its then Secretary Florante Soriquez, regarding landscaping projects the DPWH sought to implement along 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. Because the summit was about to commence and time was limited, Geronimo was verbally commissioned to initiate and complete the projects at the earliest possible time, without the parties executing any written contract. He was assured that he would be paid in full upon completion.

Relying on those assurances, Geronimo proceeded with the implementation and completion of the projects in accordance with the plans and specifications provided 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, he asserted entitlement to payment on the basis of quantum meruit. Despite the completion of the projects and despite several demands, the DPWH failed to pay Geronimo compensation for his services.

On June 28, 2010, Geronimo filed a petition for collection of sum of money against the Republic of the Philippines and the DPWH before the COA. Attached to the petition were several memoranda and endorsements for payment signed by DPWH officials, as well as photographs of the completed projects. The DPWH, through then Secretary Rogelio L. Singson, denied any liability, contending that no valid perfected contract existed between it and Geronimo and that there was no proof the projects were completed in accordance with approved plans and specifications or that the public benefited therefrom.

The COA, in its Decision No. 2014-311 dated November 10, 2014, found based on the records that the DPWH acknowledged the existence of its obligation to Geronimo for the completed landscaping and beautification projects, as supported by several memoranda and endorsement letters. The COA opined that the principle of quantum meruit was applicable. Nevertheless, the COA denied the claim for want of supporting documents substantiating project accomplishment and the reasonableness of costs, ruling that under Section 4(6) of P.D. No. 1445, claims against government funds must be supported with complete documentation. Geronimo's motion for reconsideration was denied by the COA in its Resolution dated December 23, 2015.

• Broad Interpretation of "Complete Documentation": Geronimo argued that the "complete documentation" requirement under Section 4(6) of P.D. No. 1445 should not be restricted to actual documents submitted or required in the regular course of business, but should pertain to any document which may support the claim against the government, such as the photographs showing project completion and the letters wherein the DPWH acknowledged its obligation.
• Equity Over Rigid Statutory Application: Petitioner maintained that his claim is based on the principles of quantum meruit and unjust enrichment, which are founded on equity and therefore should not be limited by the rigid application of statutory provisions such as Section 4(6) of P.D. No. 1445.

• Insufficient Evidence: The DPWH, through the Office of the Solicitor General, maintained that the money claim was properly denied because Geronimo failed to present evidence forming the basis for determining the existence of the projects or the compensation therefor based on quantum meruit, noting that no proof was presented to show that the projects were completed in accordance with plans and specifications or duly accepted.
• No Written Contract: Respondent argued that Geronimo is not entitled to any compensation because the parties did not execute any written contract, and that a review of the Court's decisions on quantum meruit claims against the government shows that at the very least there must be a contract, an implied authorization, or express acknowledgment from the government agency that the contractor was actually tasked to complete the project.
• Respect for COA Findings: The DPWH insisted that the findings of the COA are accorded not only respect but also finality, as its decision was not tainted with unfairness and arbitrariness.

• COA's Denial of Money Claim: Whether the COA erred when it denied Geronimo's money claim despite its own finding that DPWH's liability in favor of Geronimo exists.

• COA's Denial of Money Claim: Yes. The COA gravely abused its discretion in denying the claim despite recognizing DPWH's liability and the applicability of quantum meruit. As a principle predicated on equity, quantum meruit should not have been restricted by the documentary requirements of Section 4(6) of P.D. No. 1445; the proper course was to require additional evidence or employ auditing techniques to ascertain reasonable value.

• COA's Denial of Money Claim: The Court concurred with the COA's findings that the principle of quantum meruit was applicable and that the DPWH's liability to Geronimo existed. While a written contract and a certification of availability of funds are ordinarily required for government contracts, their absence does not necessarily preclude a contractor from receiving payment for services rendered. This principle was settled in Dr. Eslao vs. Commission on Audit, where the Court ruled that a contractor should be compensated despite questions hounding a construction project due to failure of public bidding, because denial would result in unjust enrichment. Recovery on quantum meruit was also allowed in Royal Trust Construction vs. Commission on Audit, where work was undertaken without a written contract or covering appropriation but was impliedly authorized and later expressly acknowledged by the Ministry of Public Works. In the present case, the COA itself found that the DPWH acknowledged its obligation through multiple memoranda and endorsements from DPWH officials, including Director Luis A. Mamitag, Jr., Undersecretary Florante Soriquez, and Assistant Secretary Maria Catalina E. Cabral. The DPWH never appealed or sought reconsideration of these factual findings. The letters and memoranda unmistakably established DPWH's recognition of project completion and its liability therefor; the projects redounded to public benefit by uplifting the country's image to foreign dignitaries during the IPU Summit. The Court acknowledged that the documents submitted may have been insufficient to ascertain the exact amount due, as the letters, memoranda, photographs, and self-serving cost summaries lacked reasonable computations and supporting receipts. However, as a principle predicated on equity, the application of quantum meruit should not have been restricted by Section 4(6) of P.D. No. 1445. The most judicious action the COA could have taken was to require Geronimo to submit additional supporting evidence or employ auditing techniques to determine the reasonable value of services rendered and the market value of materials used. Denial of the claim was not appropriate or just under the circumstances, and the COA gravely abused its discretion in denying a claim it itself found to be clearly established.

• Quantum Meruit — Literally means "as much as he deserves." Under this principle, a person may recover the reasonable value of the thing delivered or the service rendered. It acts as a device to prevent undue enrichment based on the equitable postulate that it is unjust for a person to retain a benefit without paying for it. The principle is predicated on equity. In this case, the Court applied quantum meruit to allow Geronimo's recovery for landscaping projects completed for the DPWH without a written contract, where the DPWH acknowledged its obligation through multiple official memoranda and endorsements, and where the projects redounded to public benefit. The Court directed the COA to ascertain the reasonable compensation due rather than deny the claim outright.
• Absence of Written Contract Does Not Preclude Recovery Against the Government — Ordinarily, a written contract and a written certification showing availability of funds are conditions necessary for the execution of government contracts. However, the absence of these documents does not necessarily preclude a contractor from receiving payment for services rendered to the government, provided there is implied authorization or express acknowledgment from the government agency involved. In this case, the DPWH's multiple memoranda and endorsements constituted express acknowledgment of the projects and of its liability, satisfying the minimum threshold for quantum meruit recovery established in Dr. Eslao vs. Commission on Audit and Royal Trust Construction vs. Commission on Audit.
• Respect for Administrative Findings of Fact — Findings of fact by administrative agencies are accorded great respect, if not finality, by the courts, by reason of their special knowledge and expertise over matters falling under their jurisdiction, as long as such findings are supported by substantial evidence. In this case, the doctrine worked against the DPWH because the COA's factual finding that the DPWH acknowledged its obligation was never appealed or sought to be reconsidered by the DPWH.

• "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." — This passage articulates the core ratio decidendi: the COA's denial of a claim it recognized as valid constituted grave abuse of discretion.
• "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." — This defines the relationship between the equitable doctrine of quantum meruit and the documentary requirements of the Government Auditing Code, establishing that equity should prevail over rigid statutory compliance in appropriate circumstances.
• "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." — This sets the proper procedure for administrative bodies when confronted with valid but insufficiently documented claims: require supplementation rather than outright denial.

• Dr. Eslao vs. Commission on Audit, 273 Phil. 97 (1991) — Controlling precedent, followed. Established that a contractor should be compensated despite questions hounding a construction project due to failure of public bidding, because denial would result in unjust enrichment; justice and equity demand compensation on a quantum meruit basis.
• Royal Trust Construction vs. Commission on Audit, G.R. No. 84202, November 23, 1988 — Followed. Allowed recovery on quantum meruit despite absence of a written contract and covering appropriation, where work was impliedly authorized and later expressly acknowledged by the Ministry of Public Works, which recommended favorable action on payment.
• Melchor vs. Commission on Audit, 277 Phil. 801 (1991) — Followed. Reiterated the quantum meruit principle in government claims.
• EPG Construction Co. vs. Hon. Vigilar, 407 Phil. 53 (2001) — Followed. Reiterated quantum meruit in government contract claims.
• Department of Health vs. C.V. Canchela & Associates, Architects, 511 Phil. 654 (2005) — Followed. Reiterated quantum meruit in government contract claims.
• RG Cabrera Corp., Inc. vs. Department of Public Works and Highways, 797 Phil. 563 (2016) — Followed. Cited for the proposition that the absence of a written contract and certification of availability of funds does not necessarily preclude a contractor from receiving payment for services rendered to the government.
• Delos Reyes vs. Municipality of Kalibo, Aklan, G.R. No. 214587, February 26, 2018 — Cited for the doctrine that findings of fact by administrative agencies are accorded great respect, if not finality, when supported by substantial evidence.

• Section 4(6), Presidential Decree No. 1445 (Government Auditing Code of the Philippines) — Requires that claims against government funds be supported with complete documentation. The Court held that this provision should not restrict the application of quantum meruit, which is predicated on equity; insufficiency of documents should prompt the COA to require additional evidence, not deny a valid claim outright.
• Section 1, Rule 64, Rules of Court — Provides the remedy of certiorari to set aside judgments, final orders, or resolutions of the Commission on Audit. Geronimo invoked this provision to seek review of the COA's Decision and Resolution denying his money claim.

Bersamin, C.J., Carpio, Peralta, Del Castillo, Perlas-Bernabe, Leonen, Jardeleza, Caguioa, Tijam, A. Reyes, Jr., Gesmundo, and Hernando, JJ., concurred. Carandang, J., was on leave.