Municpality of Corella, represented by Mayor Jose Nicanor D. Tocmo vs. Philkonstrak Development Corporation and Vito Rapal,
G.R. No. 218663, February 28, 2022
Facts:
1. Sometime in 2009, Corella conducted a public bidding for the rehabilitation and improvement of its municipal waterworks system project. Philkonstrak emerged as the winning bidder.
2. Subsequently, Corella, through then mayor Rapal, entered into a contract agreement with Philkonstrak for the rehabilitation and improvement of the municipal waterworks system.
3. Pursuant to the contract, Philkonstrak procured the materials, equipment, and the labor force for the mobilization of the construction works.
4. As of December 2009, Philkonstrak accomplished more than 50% of the work essential for the project. When Corella, through Tocmo (New Mayor), refused to pay and denied liability, Philkonstrak was forced to suspend its construction works.
5. Tocmo, in his reply, denied liability and questioned the validity of the contract. He averred that Rapal had no authority to enter into such contract during his term as mayor of Corella.
6. Philkonstrak filed before the CIAC a complaint for collection of sum of money against Corella and Rapal, as Rapal was the mayor at the time the contract was signed and whose signature appeared thereon.
7. Rapal filed his answer admitting the material allegations of the complaint and averring that he was authorized to enter into the contract for the rehabilitation/improvement of the waterworks system of Corella in accordance with Municipal Ordinance No. 2010-0228 or "An Ordinance Appropriating the Amount of Twenty-Seven Million Pesos (Php 27,000,000.00) for the Purchase of the Following Heavy Equipment: One Unit Brand New Road Grader, One Unit Reconditioned Road Roller, and Rehabilitation/Improvement on the Existing Waterworks System of the [Local Government Unit].
8. Corella filed its answer, denying the material allegations of the complaint. It asserted that the contract is not binding because Municipal Ordinance No. 2010-02 was in violation of Article 107(g) of the IRR of RA 7160.
9. The CIAC issued a Decision33 finding the contract between Philkonstrak and Corella to be valid. Thus, Corella, through its present mayor, Tocmo, breached the contract when he refused to honor the obligation.
10. The CIAC ordered Corella to pay Philkonstrak the total amount of P12,844,650.00, which includes claims for unpaid billings, delivered but uninstalled materials, and accrued interest.
11. Aggrieved, Corella filed a motion for correction of final award claiming that the award of P4,000,000.00 for the uninstalled materials should be deleted because it is inconsistent and contradictory to the quantum meruit principle applied by the CIAC.
12. The CIAC issued an Order which ruled that Corella's motion for correction of final award actually partook of a motion for reconsideration because it sought to change the CIAC ruling.
13. The CIAC issued another Order,38 granting Philkonstrak's motion for execution of judgment and issuance of writ of execution
Issues:
· Whether or not a mayor enters into a contract with a corporation without prior authorization from the sangguniang bayan as required by RA 7160 and RA 9184
· Whether or not an appropriation ordinance requires the affirmative vote of a majority of all the sanggunian members.
· Whether or not the principle of quantum meruit is applicable in this case
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Ruling:
The Supreme Court held that the contract between Philkonstrak and Corella is not valid and binding.
FIRST ISSUE
No separate sangguniang bayan authorization is necessary when the appropriation ordinance is sufficient in detail.
In the landmark case of Quisumbing v. Garcia the Court delineated when a sangguniang bayan authorization is still necessary to accompany the appropriation ordinance and when it is not. Depending on the circumstances of the case, if the project is provided for in sufficient detail in the appropriation ordinance, meaning the transactions, bonds, contracts, documents, and other obligations the mayor would enter into in behalf of the municipality, among others, are enumerated, then no separate authorization is necessary. On the other hand, if the project is merely couched in general and generic terms, then a separate approval by the sangguniang bayan in accordance with the law is required.
In the case at bar, the Court finds that there is no need for a separate authorization from the sangguniang bayan as the appropriation ordinance, Municipal Ordinance No. 2010-02, identified the project or program in sufficient detail, and not just in general or generic terms. The one-paged appropriation ordinance specifically and expressly set aside an amount of money, P27,000,000.00, for certain projects, including the purchase of specific heavy equipment and rehabilitation/improvement of the existing waterworks system of the municipality. Municipal Ordinance No. 2010-02, having sufficiently covered the project and the cost in detail, need not be accompanied by a prior sangguniang bayan authorization any longer
SECOND ISSUE
The Supreme Court held that an appropriation ordinance requires the affirmative vote of a majority of all the sanggunian members.
Article 107(g) of the IRR of the Local Government Code provides the general rule that no ordinance or resolution shall be passed by the sanggunian without prior approval of a majority of all the members present. The exception to the general rule is that for ordinances or resolutions authorizing or directing the payment of money or creating a liability, what is needed is the affirmative vote of a majority of all the sanggunian members, whether present or not. Simply, the quorum in the general rule depends on the number of the sanggunian members present while the quorum in the exception depends on the total number of sanggunian members voted into office.
Municipal Ordinance No. 2010-02, the appropriation ordinance in question, directs and authorizes the payment of money; thus, requires a majority vote of all the members of the sangguniang bayan, not only of the members present. Thus, since the sangguniang bayan of Corella is composed of a total of 11 members, the majority vote of six is required in order for municipal ordinance no. 2010-02 to be valid and binding. However, the municipal ordinance only obtained five affirmative votes, based on the quorum on the sanggunian members present at that time, which was eight members
THIRD ISSUE
The principle of quantum meruit is applicable in this case.
Quantum meruit literally means "as much as he deserves.” This legal principle, a principle predicated on equity, states that a person may recover a reasonable value of the thing he delivered or the service he rendered.
The Court has held in the past that recovery on the basis of quantum meruit is allowed despite the invalidity or absence of a written contract between a contractor and a government agency. The absence or invalidity of required documents would not necessarily preclude the contractor from receiving payment for the services he or she has rendered for the government.78 Thus, in the case at bar, despite the invalidity of Municipal Ordinance No. 2010-02, which in turn rendered the contract between Corella and Philkonstrak, invalid, the latter is still entitled to receive payment for the services it rendered for the local government of Corella. Corella cannot be unjustly enriched and allowed to retain the benefits of the services rendered by Philkonstrak without properly paying for it.
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