DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS v. RONALDO E. QUIWA, et al.
G.R. No. 183444, 12 October 2011, SECOND DIVISION (Sereno, J.)
Facts:
After the eruption of Mt. Pinatubo in 1991, several contractors, including the respondents, were
hired by the Department of Public Works and Highways (DPWH) for the rehabilitation of the areas
affected by the lahar and floodwater. Respondents finished the works on their respective projects.
When Ronaldo Quiwa sought to claim payment for the works done by its company, DPWH
failed to act upon Quiwa’s request despite the report and Certification of Completion provided by the
Assistant Project Manager for Operations. The other respondent contractors joined Quiwa to file an
action against DPWH for sum of money. The Regional Trial Court (RTC) rendered a decision in favor
of respondents stating that the respondents have completed the works assigned to them, as certified by
DPWH itself; that despite the appropriation provided in the Mt. Pinatubo Rehabilitation Program in the
amount of P700 million, DPWH still denied their claims; and finally, that the contract between DPWH
and respondents were valid.
Upon appeal, DPWH argued that there was no valid contract between it and respondents; there
was no certification issued by the DPWH Chief Accountant or by the head of its accounting unit that
funds were indeed available for the project. Also, the requirements provided in Presidential Decree (PD)
1294 and 1445 were not complied with and that the project manager of DPWH was not authorized to
enter into the subject contracts. The Court of Appeals (CA) affirmed the decision of the RTC. Regarding
the liability of DPWH former Secretaries Gregorio T. Vigilar and Jose P. de Jesus, both the RTC and the
CA held them jointly and solidarily liable with DPWH.
DPWH, however, maintains its position that there was no valid contract.
ISSUES:
1. Are the contractors entitled to payment for the accomplishment of their assigned projects,
notwithstanding the absence of the legal requirements under PD 1445?
2. Whether the Secretary and the Undersecretary of DWPH should be held jointly and
solidarily liable to the contractors
3. Should attorney’s fees and cost of suit be awarded to the contractors?
RULING:
1. YES. DPWH primarily argues that the contracts with herein contractors 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. It should be noted that there was an appropriation amounting to P400 million,
which was increased to P700 million. The funding was for the rehabilitation of the areas devastated and
affected by Mt. Pinatubo, which included the Sacobia-Bamban-Parua River for which some of the
channeling, desilting and diking works were rendered by herein respondents construction companies.
It was, however, undisputed that there was no certification from the chief accountant of DPWH
regarding the said expenditure. In addition, the project manager has a limited authority to approve
contracts in an amount not exceeding P1 million. Notwithstanding these irregularities, it should be
pointed out that there is no novelty regarding the question of satisfying a claim for construction
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contracts entered into by the government, where there was no appropriation and where the contracts
were considered void due to technical reasons. 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.
2. NO. They were sued in their official capacity, and it would be unfair to them to pay the
contractors out of their own pockets. It has been previously declared that Court declared that it was
unjust to hold the public official liable for the payment of a construction that benefited the government.
3. NO. The Constitution provides that no money shall be paid out of the Treasury except in
pursuance of an appropriation made by law. Attorney’s fees and costs of suit were not included in the
appropriation of expenditures for the Sacobia-Bamban-Parua project.
