Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION

G.R. No. 98355 March 2, 1994
HON. TOMAS R, OSMEA, petitioner,
vs.
COMMISSION ON AUDIT AND HONORA!E EU"EMIO C. DOMINGO, respondents.
Office of the City Attorney for petitioner.
The Solicitor General for respondents.

NOCON, J.:
Soetie in !"#$ the Cit% of Cebu decided to construct a odern abattoir. &or this pro'ect, the Cit%
(reasurer, Ricardo Pestano, issued a certificate of availabilit% of funds dated )pril *+, !"#$, in the
aount of &IVE MI,,ION &O-R .-NDRED NINE(EEN (.O-S)ND )ND ONE .-NDRED
EI/.(0 1P$,2!",!#+.++3 PESOS, specificall% 4for the construction of Cebu Cit% )bbatoir
1sic3.4
1
)fter a public biddin5, .. &ranco Construction Copan%, Inc. 1.&CCI3 6as a6arded to do the
construction of the abattoir. (hus, the Cit% of Cebu, throu5h its Ma%or, Ronald R. Duterte, entered
into a contract 6ith .&CCI, the ters of 6hich are as follo6s7
8.ERE)S, the contract cost for this pro'ect is EI/.( MI,,ION (.REE .-NDRED
SI9(0:EI/.( (.O-S)ND NINE .-NDRED (8EN(01P#,*;#,"<+.++3 PESOS=
>>> >>> >>>
8.ERE)S, the Cit% treasurer of Cebu Cit% certified the availabilit% of funds for the
first installent due to the CON(R)C(OR in the aount of (8O MI,,ION NINE(0
(8O (.O-S)ND (8O .-NDRED (.IR(0 1P<,+"<,<*+.++3 PESOS, 6hich is to be
due and pa%able upon certification of the Cit% En5ineer, concurred in b% the Pro'ect
Mana5eent Staff that the pro'ect substantiall% copleted=
8.ERE)S, the CI(0 O& CE?- shall include the ?ud5et for calendar %ear !"#;, the
aount of SI9 MI,,ION (8O .-NDRED SEVEN(0 SI9 (.O-S)ND SI9 .-NDRED
NINE(0 1P;,<@;,;"+.++3 PESOS 6hich represents the second, third and final installent
pa%ents due to the CON(R)C(OR.
2
On March !*, !"#;, Sen. Aohn .. OseBa, then Officer:In:Char5e of the Cit% of Cebu, ordered the
suspension of the pro'ect and revie6 of the contract b% the CO). .e also 6rote .&CCI asCin5 the
to account for the value of their pro5ress. On )pril <2, !"#;, .&CCI claied the aount of (8O
MI,,ION ONE .-NDRED &OR(0 (8O (.O-S)ND NINE .-NDRED SI9(0 &O-R )ND <"D!++
1P<,!2<,";2.<"3 PESOS as the value of the 6orC accoplished.
-nable to collect the said aount after so an% deands, .&CCI instituted a civil action,
3
dated
Ma% <!, !"#@ a5ainst the Cit% of Cebu, for recover% of investent and daa5es.
In its ans6er dated Aune $, !"#@, the Cit% of Cebu, 6hile adittin5 havin5 entered into a contract
6ith .&CCI, alle5ed that the contract it entered into 6as null and void as declared b% the
Coission on )udit in its <nd Indorseent dated Septeber 2, !"#;. (herefore 6hatever aount
is due to .&CCI is to the sole liabilit% of the officer or officers 6ho entered into the said contract.
4
Nevertheless, on Deceber !$, !"##, the Cit% of Cebu, throu5h its Ma%or, (oas R. OseBa,
entered into a coproise a5reeent, approved b% the court, to the effect that as a full and final
settleent to the clai of .&CCI, the Cit% of Cebu shall pa% the aount of ONE MI,,ION &IVE
.-NDRED (.O-S)ND 1P!,$++,+++.++3 PESOS.
On the stren5th of the CourtEs Order dated March *, !"#" the Provincial Deput% Sheriff, R(C,
?ranch $, Cebu Cit% 6as ordered on March #, !"#", to serve a 6rit of e>ecution a5ainst the Cit% of
Cebu throu5h its Ma%or, (oas R. OseBa. (hus, the aount of P!,$++,+++.++ and P!$,+$<.++, as
la6ful fees, 6ere 5arnished fro the Cit%Es funds deposited in the Philippine National
?anC.
5
(he trial courtEs 'ud5ent based on the coproise a5reeent 6as referred to the CO)Es Re5ional
Director, 6ho in turn indorsed the sae to the Chairan of the CO). In its *rd Indorseent dated
Ma% <, !"#", the CO) ruled that7
It a% not be disputed that the contract for the construction of the Cebu Cit% )battoir
6as declared void in a <nd Indorseent dated Septeber 2, !"#;, of this
Coission. )nd since no appeal appears to have been taCen thereon, said
decision becae final.
ConseFuentl%, 4if a coproise is based upon an antecedent clai 6hich is
undisputedl% and undoubtedl% ille5al, the coproise a% be considered invalid on
the 5round of ille5alit% as 6ell as lacC of consideration.4 1Sec. <", !$ ). Aur <d3
?esides the coproise a5reeent entered into b% the Cit% of Cebu 6ith .. &ranco
Construction Co., Inc., after the contract b% and bet6een the had been declared
void b% this Coission, is a circuvention of the constitutional provision that the
part% a55rieved b% an% decision, order or rulin5 of the Coission a% 6ithin thirt%
1*+3 da%s fro receipt of a cop% thereof appeal on certiorari to the Supree Court
1Sec. <:<, )rt. 9II:D,!"@* Constitution= Sec. @, )rt, I9:), !"#@ Constitution3.
-nder the circustances, this Coission concurs in the vie6 e>pressed b% that Office
that the e>penditure involved 6ould be the personal liabilit% of the officer directl%
responsible for its incurrence 1Sec. !+*, P.D. No. !22$3.
#
PetitionerEs reFuest for reconsideration of the above rulin5 6as denied in CO)Es $th Indorseent
dated Aanuar% <*, !""!,
$
hence this petition, 6ith the follo6in5 ar5uents7
!3 the decision of the Public Respondent as contained in the <nd Indorseent dated
Septeber 2, !"#; is null and void for havin5 been ade 6ithout, in e>cess of
'urisdiction or 6ith 5rave abuse of discretion=
<3 that Public RespondentEs decision has never becoe final because it 6as ade
6ithout, in e>cess of 'urisdiction, or 6ith 5rave abuse of discretion.
8
Petitioner ar5ues that the decision of CO) invalidatin5 the contract bet6een the Cit% of Cebu and
.&CCI 6as void since it 6as alread% e>ecuted and fulfilled. Petitioner further stresses that CO) has
no authorit% to declare a contract alread% e>ecuted void. )nd since the <nd Indorseent is a nullit%,
it never attained finalit%.
(he petition is devoid of erit.
(he Coission on )udit has the po6er, authorit% and dut% to e>aine, audit and settle all accounts
pertainin5 to revenue and receipts of and e>penditures or uses of funds and propert%, o6ned of held
in trust b%, or pertainin5 to, the 5overnent, or an% of its subdivisions, a5encies or instruentalities.
9
(he )uditin5 Code of the Philippines 1P.D. !22$3 further provides that no contract involvin5 the
e>penditure of public funds shall be entered into unless there is an appropriation therefor
1%
and the
proper accountin5 official of the a5enc% concerned shall have certified to the officer enterin5 into the
obli5ation that funds have been dul% appropriated for the purpose and the aount necessar% to
cover the proposed contract for the current %ear is available for e>penditure on account
thereof.
11
1Ephasis supplied3 )n% contract entered into contrar% to the fore5oin5 reFuireents shall
be VOID.
12
Clearl% then, the contract entered into b% the forer Ma%or Duterte 6as void fro the ver% be5innin5
since the a5reed cost for the pro'ect 1P#,*;#,"<+.++3 6as 6a% be%ond the appropriated aount
1P$,2!",!#+.++3 as certified b% the Cit% (reasurer. .ence, the contract 6as properl% declared void
and unenforceable in CO)Es <nd Indorseent, dated Septeber 2, !"#;. (he CO) declared and 6e
a5ree, that7
(he prohibition contained in Sec. #$ of PD !22$ 1/overnent )uditin5 Code3 is e>plicit
and andator%. &und availabilit% is, as it has al6a%s been, an indispensable prereFuisite
to the e>ecution of an% 5overnent contract involvin5 the e>penditure of public funds b%
all 5overnent a5encies at all levels. Such contracts are not to be considered as final or
bindin5 unless such certification as to funds availabilit% is issued 1,etter of Instruction No.
@;@, s. !"@#3. )ntecedent of advance appropriation is thus essential to 5overnent
liabilit% on contracts 1Gobel v. Cit% of Manila, 2@ Phil. !;"3. (his contract bein5 violative of
the le5al reFuireents aforeFuoted, the sae contravenes Sec. #$ of PD !22$ and is
null and void b% virtue of Sec. #@.
13
)s a atter of fact, the Cit% of Cebu relied on the above pronounceent and interposed the sae as
its affirative defense,
14
so uch so that petitioner cannot no6 assert that it 6as void havin5 been
issued in e>cess of CO)Es 'urisdiction. ) part% cannot invoCe the 'urisdiction of a court or an
adinistrative bod% to secure affirative relief a5ainst his opponent and after obtainin5 or failin5 to
obtain such relief, repudiate or Fuestion that sae 'urisdiction. It is not ri5ht for a part% 6ho has
affired and invoCed the 'urisdiction of a court in a particular atter to secure an affirative relief, to
after6ards den% the sae 'urisdiction to escape a penalt%.
15
?esides, neither the petitioner nor .&CCI Fuestioned the rulin5 of CO) declarin5 the invalidit% of the
abattoir contract, thereb% resultin5 in its finalit% even before the civil case 6as instituted. Petitioner
could have brou5ht the case to the Supree Court on a petition for certiorari 6ithin thirt% da%s fro
receipt of a cop% of the CO) decision in the anner provided b% la6 and the Rules of Court.
1#
)
decision of the Coission or of an% of its )uditor not appealed 6ithin the period provided b% la6,
shall be final and e>ecutor%.
1$
Petitioner cannot hide behind the ar5uent that the pa%ent 6as ade in copliance 6ith the trial
courtEs 'ud5ent. )s correctl% stated b% the Solicitor /eneral7
Since petitioner and .&CCI Cne6 of the absolute invalidit% of said )battoir Contract, the
Coproise )5reeent relative to the petitionerEs obli5ation resultin5 fro said )battoir
contract is also void and in e>istent and the decision based on said Coproise
)5reeent is unenforceable a5ainst the Cit% of Cebu. 1)rt. !2<<, Civil Code of the
Philippines3.
18
(he trial courtEs decision based on the coproise a5reeent could not have ratified a contract
6hich is void ab initio. ConseFuentl% the settleent of the supposed obli5ation of the Cit% of Cebu
arisin5 out of a void contract becoes a personal liabilit% of petitioner 6ho is directl% responsible
therefor.
19
Neither can petitioner rel% on the principle of Quantum Meruit. Quantum Meruit is based on 'ustice
and eFuit%, to copensate a propert% or benefit received if restitution is eFuitable and if such action
involves no violation, frustration or opposition to public polic%. In the present case, ho6ever, the
pa%ent due to .&CCI 6as due to the coproise a5reeent 6hich in turn 6as ade in pursuance
to a supposed abattoir contract, 6hich is a void contract. &urtherore, there 6as no evidence
presented as to the e>tent of 6orC accoplished b% .&CCI as to substantiate the aount stipulated
in the coproise a5reeent. &inall%, as observed b% the Solicitor /eneral7
In an% event, it is respectfull% subitted that since petitionerEs act in enterin5 into said
Coproise )5reeent . . . cae after public respondent had voided petitionerEs abattoir
contract 1he3 a% not be allo6ed to evade the le5al sanctions resultin5 fro his failure to
copl% 6ith the la6Es safe5uards a5ainst undue e>penditures of public funds.
2%
Preises considered, the Coproise )5reeent entered into bet6een the Cit% of Cebu, throu5h
its Ma%or, (oas OseBa is void bein5 erel% a derivative of a previousl% void )battoir Contract,
and thus becoes a personal liabilit% of the officer 6ho entered into it pursuant to Sec. #@ H !+* of
P.D. !22$.
8.ERE&ORE, petition is hereb% DISMISSED for lacC of erit.
SO ORDERED.
Narvasa, C.., !adilla, "e#alado and !uno, ., concur.

&"oo'(o')*
! )nne> 4)4 of the Coplaint, Ori5inal Record, p. ;.
< )nne> 4?4 of the Coplaint, Ori5inal Record, p. !#:!".
* .. &ranco Construction Copan%, Inc. v. Cit% of Cebu, Civil Case No. CE?:$";;,
Celso M. /ieneI, presidin5 Aud5e, ?ranch V, R(C of Cebu.
2 )nne> 4E4 of the Petition, "ollo, pp. <@:<".
$ Ori5inal Record, pp. !@@, !#!:!#$.
; )nne> 4?4 of the Petition, "ollo, p. !":<+.
@ )nne> 4C4 of the Petition, "ollo, p. <!.
# Petition, p. ;= "ollo, p. #.
" Sec. <, )rt. I9, !"#@ Constitution.
!+ Sec. #$, Chap. *, (itle II of P.D. !22$.
!! Sec. #;, Chap. *, (itle II, P.D. !22$.
!< Sec. #@, Chap *, (itle II, P.D. !22$.
!* )nne> 4)4 of the Petition, "ollo, p. 2+.
!2 )nne> 4E4 of the Petition, "ollo, p. <#.
!$ MarFueI v. Secretar% of ,abor, /.R. No. #+;#$, !@! SCR) **@, Fuotin5 fro
Dean v. Dean, !*; Or. ;"2, #; ).,.R. @" and ,ittleton v. ?ur5es, !; 8%o. $#.
!; Sec. $+, Chap. *, (itle I, P.D. !22$= Sec. *$, Chap. $, )dinistrative Code of
!"#@.
!@ Sec. $!, Chap. *, P.D. !22$= Sec. *;, Chap. $, )dinistrative Code of !"#@.
!# RespondentEs Meorandu, p. $.
!" Sec. #@ and Sec. !+* of P.D. !22$.
<+ RespondentEs Meorandu, p. ".
(he ,a6phil Pro'ect : )rellano ,a6 &oundation