### Facts:
The case began when Angelito M. Twaño, serving as Officer-in-Charge-District Engineer of the DPWH in Pampanga, invited Arnulfo D. Aquino, the proprietor of A.D. Aquino Construction and Supplies, to bid for a dike construction project along Porac River in Pampanga. After winning the bid, Aquino entered into a contract agreement with the DPWH for the project amounting to PhP1,873,790.69 and completed the project by July 9, 1992. Despite completion and issuance of a Certificate of Project Completion, Aquino claimed unpaid dues of PhP1,262,696.20. The DPWH, citing the non-suitability of the state among other defenses including the failure to comply with Presidential Decree No. 1445, refused payment leading Aquino to file a Complaint before the Regional Trial Court of Guagua, Pampanga.
The RTC ruled in favor of Aquino, ordering the DPWH to pay the full contract amount plus damages, a decision reversed by the Court of Appeals (CA) declaring the contract void but directing the Commission on Audit (COA) to assess compensation for Aquino on a quantum meruit basis. The DPWH then escalated the case to the Supreme Court through a Petition for Review.
### Issues:
1. Whether the doctrine of non-suability of the state applies in this case.
2. Whether the Court of Appeals erred by not dismissing the complaint due to failure to exhaust administrative remedies.
3. Whether the Court of Appeals erred in ordering COA to allow payment on a quantum meruit basis despite non-compliance with Presidential Decree No. 1445.
### Court’s Decision:
The Supreme Court denied the petition, affirming the CA’s decision. It outlined that the doctrines of exhausting administrative remedies and primary jurisdiction have exceptions, which were applicable in this case due to the prolonged duration since project completion and the purely legal question regarding the contract’s validity. It further asserted that the contracts, although void due to legal non-compliance, did not negate the respondent’s entitlement to compensation for the completed project benefiting the public based on quantum meruit. The Supreme Court held that invoking state immunity in this scenario would promote injustice, hence Aquino should be compensated for his services.
### Doctrine:
The principle established dictates that a contractor should be compensated on a quantum meruit basis for services rendered in completing a project beneficial to the public, even if the contract is void for failing to comply with statutory requirements. This serves both public interest and equity, preventing the government from being unjustly enriched at the expense of the contractor. This exception to the non-suability of the state doctrine is particularly highlighted in instances where justice and fairness would be compromised by the strict application of legal provisions.
### Class Notes:
– **Quantum Meruit**: A principle allowing compensation for services rendered when a contract is found void due to non-compliance with prescribed legal requirements.
– **Non-Suability of the State**: The doctrine that the state cannot be sued without its consent, with certain exceptions such as when there is a clear injustice perpetrated against a citizen.
– **Presidential Decree No. 1445**: Governs the auditing of government expenditure and requires compliance for legal contracts involving public funds.
– **Exhaustion of Administrative Remedies**: The principle requiring all administrative avenues to be pursued before approaching the judiciary, subject to recognized exceptions.
**Application**: In this case, the Court highlighted the importance of ensuring equitable outcomes and preventing the unjust enrichment of the state at the expense of private citizens, thereby allowing a quantum meruit claim regardless of the initial contract’s legal validity.
### Historical Background:
This case illustrates the evolving interpretation of traditional doctrines like state immunity and administrative remedies in Philippine jurisprudence, especially in the context of government contracts and public works projects. It underscores the judiciary’s role in balancing legal technicalities with equity and justice, particularly in scenarios where state actions could otherwise result in unfairness to individuals.
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