GR 110634; (October, 1995) (Digest)
G.R. No. 110634 October 6, 1995
RUFINO O. ESLAO, petitioner, vs. COMMISSION ON AUDIT, respondent.
FACTS
Petitioner Rufino O. Eslao, as President of Pangasinan State University (PSU), entered into a contract with C.T. Serna Consultants for the preparation of architectural plans and specifications for the extension of the university’s Engineering Building. The contract stipulated a professional fee of 3% of the project’s released amount, a counteroffer by Eslao accepted by the firm. The completed plans were approved, and PSU paid the firm P30,000 and later P60,000 for these services.
Subsequently, the Commission on Audit (COA) disallowed these payments, asserting they violated COA Circular No. 82-191, which required public bidding for such contracts. COA held petitioner and other university officials jointly and severally liable for the total amount of P90,000. Petitioner sought a lifting of the disallowance, arguing the contract was entered in good faith, was not disadvantageous to the government, and was necessary due to time constraints. He also noted that a resident auditor had initially concurred with the transaction.
ISSUE
Whether the Commission on Audit correctly disallowed the payments for architectural services made to C.T. Serna Consultants.
RULING
The Supreme Court granted the petition and reversed the COA decision. The legal logic centered on the principle of quantum meruit and the absence of bad faith. The Court found that the services were actually rendered, were necessary, and were beneficial to the government, as the completed plans were duly approved and used for the construction. The contract price of 3% was even lower than the firm’s initial 6% offer and the standard rate, negating any claim of excessive or unconscionable expenditure.
Crucially, the Court ruled that the disallowance based on a technical violation of the circular requiring public bidding was too rigid under the circumstances. Petitioner acted in good faith to expedite a necessary project, and the resident auditor’s initial concurrence supported this finding. To disallow payment would unjustly enrich the government at the expense of a contractor who had fully performed. The Court also noted the intimate relation of this case to a prior ruling ( G.R. No. 89745 ) where it allowed, on quantum meruit, the construction costs for the same building, further justifying the allowance of the design fees. The COA was directed to pass the vouchers in audit.