The Supreme Court has affirmed that contractors who complete government projects are entitled to compensation even without a formal written contract, based on the principle of quantum meruit—meaning “as much as he deserves.” This ruling ensures that the government cannot unjustly benefit from completed projects without compensating the contractor for their services. This decision emphasizes fairness and equity in government dealings, protecting contractors who rely on assurances from government officials.

Unwritten Promises: Can a Landscaper Claim Payment for Beautifying Manila?

Mario Geronimo, doing business as Kabukiran Garden, sought compensation from the Department of Public Works and Highways (DPWH) for landscaping projects completed for the 112th Inter-Parliamentary Union (IPU) Summit in Manila. Geronimo claimed he was verbally commissioned by DPWH officials to undertake these projects with the assurance of full payment upon completion. Despite completing the projects, the DPWH failed to pay Geronimo, leading him to file a claim with the Commission on Audit (COA). The central legal question was whether Geronimo could recover payment for his services based on quantum meruit, even in the absence of a written contract.

The COA initially denied Geronimo’s claim, acknowledging the DPWH’s liability but citing a lack of supporting documentation to substantiate the project’s completion and the reasonableness of the costs. The COA relied on Section 4(6) of Presidential Decree (P.D.) No. 1445, which requires complete documentation for claims against government funds. Geronimo argued that the “complete documentation” requirement should not be strictly limited to formal business documents but should include any evidence supporting his claim. He asserted that the photographs of the completed projects and the DPWH’s acknowledgment of the work should suffice, especially considering the principles of quantum meruit and unjust enrichment.

The DPWH countered that Geronimo was not entitled to compensation because no written contract existed, and there was no proof that the landscaping projects were completed according to approved plans or that the public benefited from them. They argued that even in cases where quantum meruit was applied, there was typically at least an implied authorization or express acknowledgment from the government agency involved. The Supreme Court, however, disagreed with the COA’s strict interpretation and sided with Geronimo, emphasizing the applicability of quantum meruit in this case.

The Court highlighted that the absence of a written contract does not necessarily preclude a contractor from receiving payment for services rendered to the government. This principle has been affirmed in several previous cases, including Dr. Eslao v. The Commission on Audit, where the Court ruled that a contractor should be compensated despite the lack of public bidding, as denying the claim would result in the government unjustly enriching itself. The Court reasoned that justice and equity demand compensation based on quantum meruit, especially when the government has benefited from the services.

In Royal Trust Construction v. Commission on Audit, the Court allowed recovery on the basis of quantum meruit despite the absence of a written contract for the widening and deepening of the Betis River in Pampanga. The project was undertaken at the urgent request of local officials and with the knowledge of the Ministry of Public Works. The Court held that the contractor could be compensated for the services rendered, even without a specific covering appropriation, as the work was done for public benefit.

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.

The Supreme Court found that the DPWH had sufficiently established its liability to Geronimo. The COA’s factual findings, which the DPWH did not appeal, indicated that the DPWH acknowledged its obligation for the completed landscaping projects. Several memoranda and letters from DPWH officials supported this acknowledgment. For example, a memorandum from Undersecretary Florante Soriquez suggested prioritizing 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.

Furthermore, a memorandum from Director Luis A. Mamitag, Jr., suggested charging the funding requirement for the settlement of the financial obligations against the Engineering and Administrative Overhead or from any available funds of the Department. These acknowledgments clearly indicated the DPWH’s recognition of the completed projects and its liability for compensating Geronimo.

The Court emphasized that the landscaping projects benefited the public by enhancing the image of the country during the IPU Summit. It would be unjust and inequitable to deny compensation for the actual work performed and services rendered. While the COA correctly noted that the documents submitted by Geronimo were insufficient to determine the actual amount due, the Court found that the COA erred in denying the petition for money claim. Instead, the COA should have required Geronimo to submit additional supporting evidence or employed auditing techniques to determine the reasonable value of the services rendered and the market value of the materials used.

The principle of quantum meruit aims to prevent unjust enrichment, ensuring that a person does not retain a benefit without paying for it. In this case, denying Geronimo’s claim would have allowed the government to unjustly benefit from his services. Thus, the Supreme Court directed the COA to determine and ascertain the total compensation due to Geronimo on a quantum meruit basis, ensuring that he receives fair payment for the landscaping projects completed for the IPU Summit.

FAQs

What is quantum meruit?	Quantum meruit means “as much as he deserves.” It allows a person to recover the reasonable value of services or goods provided, especially when there is no formal contract.
Why was there no written contract in this case?	The DPWH verbally commissioned Geronimo due to the limited time before the IPU Summit, with assurances of full payment upon completion.
What evidence did Geronimo present to support his claim?	Geronimo presented memoranda and endorsements for payment signed by DPWH officials, as well as photographs of the completed projects.
What was the DPWH’s defense?	The DPWH denied any liability, arguing that there was no valid contract and no proof that the projects were completed according to approved plans.
What did the COA initially decide?	The COA acknowledged the DPWH’s liability but denied Geronimo’s claim due to insufficient supporting documentation.
What did the Supreme Court rule?	The Supreme Court reversed the COA’s decision, holding that Geronimo was entitled to compensation based on quantum meruit, despite the lack of a written contract.
What was the basis for the Supreme Court’s decision?	The Court found that the DPWH acknowledged the completion of the projects and that the principle of quantum meruit should apply to prevent unjust enrichment.
What is the practical implication of this ruling?	Government contractors can receive fair compensation for completed projects, even without a written contract, provided they can demonstrate the value of their services.
What is the next step for Geronimo?	The COA must now determine and ascertain the total compensation due to Geronimo on a quantum meruit basis.

This case underscores the importance of fairness and equity in government contracts. Even in the absence of formal agreements, contractors who provide valuable services are entitled to just compensation. This ruling protects contractors from unjust enrichment and ensures that government agencies fulfill their obligations for completed projects.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: GERONIMO v. COA, G.R. No. 224163, December 04, 2018