G.R. Nos. 151373-74 – 511 Phil. 654 – 475 SCRA 218 – Political Law – Constitutional Law – State Immunity from Suit – Waiver of Immunity – Consent by Law
In 1996, the Department of Health accepted the bid of C.V. Canchela & Associates, Architects (CVCAA) for it to provide consultancy and supervisory works for the construction projects of three hospitals. The DOH however withheld payment as it alleged that CVCAA failed to do its job resulting in substandard projects. CVCAA sued the DOH before the CIAC (Construction Industry Arbitration Commission). CVCAA won and the DOH was directed to pay Php3.4M. The Court of Appeals affirmed the CIAC. The DOH is arguing that it is immune from suit.
ISSUE: Whether or not the decision is proper.
HELD: No. But not upon the argument that the State is immune from suit. To sustain the argument would not only perpetuate a grave injustice on CVCAA which performed their services in good faith and were given the run-around for over eight years, but would sanction as well unjust enrichment on the part of the State. The laws creating the CIAC (PD 1746 and EO 1008) stipulate that the private sector may sue the State for disputes arising from the construction of public works.
Nevertheless, it appears that the projects were subjected to public bidding even without the availability of funds for them to be carried out. The Chief Accountants of the DOH hospitals were negligent. Nevertheless, the accountants should not be made liable to personally pay CVCAA considering that the State did benefit from the services made by CVCAA.
The SC then directed the Commission on Audit to conduct an audit to determine the State’s liability to CVCAA based on quantum meruit.
