Sample Case Quantum Meruit No Money Claim

DECISION NO.
2022-363
January 28, 2022
Subject: Petition for Review of Governor Eustaquio P. Bersamin et al., of the Province of Abra, of
Commission on Audit-Cordillera Administrative Region Decision No. 2018-019 dated
March 28, 2018, which affirmed various Notices of Disallowance on the procurement of
medicines, medical supplies and laboratory equipment for calendar year 2009, in the
total amount of P34,782,412.98
DECISION
FACTS OF THE CASE
1 2
Before this Commission is the Petition for Review with Motion for Exclusion of Governor Eustaquio P. Bersamin et al., of
the Province of Abra, of Commission on Audit (COA)-Cordillera Administrative
3
Region (CAR) Decision No. 2018-019 dated
March 28, 2018. The decision affirmed 58 Notices of Disallowance (NDs) on the procurement of medicines, medical supplies and
laboratory equipment for calendar year (CY) 2009, in the total amount of P34,782,412.98.
Below are the material dates to determine the timeliness of this petition:
4
Date of receipt of the NDs November 6, 2014 and
5
January 19, 2015
6
Date of filing of the appeal March 26, 2015
Days elapsed 139 and 65
7
Date of receipt of the COA-CAR decision April 10, 2018
8
Date of filing of the petition for review April 30, 2018
Days elapsed 20
Total days elapsed 159 and 85
9
As shown, the petition10was filed within11the reglementary period of six months or 180 days prescribed under Section 48 of
Presidential Decree No. 1445 and Section 3, Rule VII of the 2009 Revised Rules of Procedure of the COA.
Records show that in CY 2009, the Province of Abra procured on several occasions medicines, medical supplies and
laboratory equipment for the use of the Abra Provincial Hospital. On post-audit, the Audit Team Leader (ATL), Province of Abra,
issued several NDs anchored on the following common grounds:
12
1) The procurements were not made through public bidding as required under Section 10, Article IV of Republic
Act (RA) No. 9184; the procurements were instead made through the alternative mode of shopping.
2) The respective purchases exceeded the prescribed ceiling for shopping thereby
13
constituting splitting of contracts
to avoid the conduct of public bidding, which violates Section 54.1 14
of the Implementing Rules and
Regulations-Part A (IRR-A) of RA No. 9184 and COA Circular No. 76-41 dated July 30, 1976.
The following persons were held liable under the NDs:
Nature of
Name of Persons Liable Position/Designation
Participation
Eustaquio P. Bersamin Governor Approved the Bids
and Awards
Committee (BAC)
resolution
recommending the
award to the supplier
and the payment of
the disbursement
voucher
Godofredo L. Gasa Provincial Health Certified that the
Office Team Leader, expenses were
BAC Member necessary, lawful and
incurred under his
direct supervision;
and recommended the
award to the supplier
Wilfredo Oliveros BAC Chairman Recommended the
Anacleto B. Buenafe Provincial Budget award to the suppliers
Officer/BAC Member
Cris A. Albolote BAC Members
Paterno B. Bernal
Leonilo B. Nolasco
Megawealth Distributor Suppliers Payee
15
Corp.
16
United Diagnostic Supply
17
L-Zay Medical Enterprises
18
ABM-A Builder Marketing
19
Surgico Phils., Inc.
20
Saviour Medevices Inc.
Jelly MacMace Trading Co.
21
Ltd.
Aggrieved, Gov. Bersamin et al. filed an appeal before the Regional Director (RD), COA-CAR. They argue that the
procurements were considered emergency procurements as they were necessary and vital in the operation of the provincial
hospital in providing medical services to the people of Abra to prevent loss of lives.
22
A supplement to the appeal was likewise filed by Gov. Bersamin on September 30, 2016 to emphasize that there were no
issues on the completion, delivery and acceptance of the items procured. In support thereof, he submitted copies of Inspection and
23
Acceptance Reports.
24
In their Answer to the Appeal Memorandum, the ATL and the Supervising Auditor (SA) stated that the procurements
could not be considered as emergency procurement, nor were they intended to address fortuitous events, an outbreak or any
urgent project, since the purchases involved the regular operations of the hospital. Further, they pointed out that there were
purchase requests, purchase orders and checks bearing similar dates for procurements from the same supplier, the total amount of
25
which exceeded the prescribed ceiling for shopping, thus, constituting splitting of contracts, which were obviously made to
evade public bidding.
In the assailed decision, the RD, COA-CAR, denied the appeal and supplemental appeal and affirmed all the NDs.
Thus, this petition. Gov. Bersamin et al raise the following arguments:
1) The procurement of medicines and medical supplies was in the nature of emergency purchases; that the
circumstances then obtaining warranted the resort to alternative mode of procurement.
2) The purchases were not split to smaller contracts to avoid public bidding.
3) The petitioners cannot be held personally liable for the disallowed procurements following the principle of unjust
enrichment.
4) Gov. Bersamin should be excluded from liability since he merely relied on the recommendations of the BAC and
certifications of his subordinates.
26
In his Answer, the RD stood firm in his position and stated that the petitioners’ arguments were judiciously passed upon
in the assailed decision.
ISSUE
The issue to be resolved is whether the petition for review is meritorious.
DISCUSSION
This Commission finds the petition partly meritorious.
27
It is well-settled in RA No. 9184 and in our jurisprudence that public bidding is the primary mode of government
procurement and strict compliance with its requirements echoes the call for transparency in government transactions and
accountability of public officers. However, RA No. 9184 recognizes exceptions to the rule on public bidding but these exceptions
should only be exercised in certain instances, conditions, or under extraordinary circumstances as provided by law.
In this case, the procurement of medicines, medical supplies, and laboratory supplies was made through negotiated
procurement under the emergency mode as argued by the petitioners. However, under Section 53(b) of the IRR-A of RA No. 9184 ,
the procurement under emergency cases may be resorted to only in any of the following conditions:
1) In case of imminent danger to life or property during a state of calamity;
2) When time is of the essence arising from natural or man-made calamities or other causes where immediate action
is necessary to prevent damage to or loss of life or property; and
3) To restore vital public services, infrastructure facilities and other public utilities.
This Commission does not find any of the above conditions in these transactions that would warrant the procurement of
medicines through emergency purchase.
The underlying concern in resorting to emergency purchase of medicines, medical supplies and laboratory equipment for
the use of the provincial hospital was the supposed prevention of loss of lives. A careful review of the attendant circumstances
and available documents shows that there was no existing emergency situation or a single incident at that time that would
necessitate the purchase of these medicines, medical supplies and laboratory equipment through emergency procurement. There
was no state of calamity at any of these dates of purchase; and time was not of the essence as there was no emergency to speak of
or imminent loss of life or property. At most, as noted by the ATL and the SA, the purchases involved transactions/payments for
28
the whole year of 2009 which were intended for the day-to-day and/or regular operations of the provincial hospital.
29
Even if the procurement would fall under the alternative mode of shopping under Section 52(b) of the IRR-A of RA No.
9184, the medicines, medical and laboratory supplies falling under the definition of ordinary or regular office supplies, resort
thereto cannot be justified since the amount of the items procured exceeded the prescribed ceiling for shopping of P250,000.00.
Moreover, there was splitting of contracts as prohibited in Section 54.1 of the IRR-A of RA No. 9184, as presented by the
30
ATL and the SA under Schedule E attached in their answer. Under the IRR-A, splitting of government contract is defined as the
division or breaking up of government contracts into smaller quantities and amounts, or dividing contract implementation into
artificial phases or sub-contracts for the purpose of evading or circumventing the requirements of law and its implementing rules,
especially the necessity of public bidding and the requirements for the alternative methods of procurement. From the data
presented, it is shown that the province divided the purchase order of medicines, medical and laboratory supplies into small
amounts to qualify the procurement under shopping.
Thus, the NDs are affirmed.
With respect to Gov. Bersamin’s allegation that he relied in good faith on the acts of his subordinates, this Commission is
convinced that he should not be held liable. From the available records, there is no proof that Gov. Bersamin acted in bad faith or
malice. Thus, he is presumed to have acted in good faith in the regular performance of his official duties.
31
In the case of Joson III vs. COA, the Supreme Court (SC) excluded former Nueva Ecija Gov. Tomas Joson III from
liability as head of the procuring entity (HOPE) for failure of the COA to overcome the presumption of good faith in his favor.
The SC further ruled that the fact that Gov. Joson is the HOPE does not automatically make him the party ultimately liable for the
disallowed amount. He cannot be held liable simply because he was the final approving authority of the transaction in question
and that the employees or officers who processed the same were under his supervision. Being the HOPE, in addition to his duties
as the Governor, he is responsible for the whole province. With the amount of paperwork and the numerous documents he must
sign, it would be counterproductive to require him to examine specifically and meticulously each and every document that passes
through his office. Gov. Joson has the right to rely to a reasonable extent on the good faith of his subordinates.
Gov. Bersamin relied considerably and in good faith on the acts of his subordinates. Thus, he should be absolved and
excluded from liability under the NDs.
While the NDs are affirmed, the other petitioners are not required to refund the disallowances based on the time-honored
32
principles of unjust enrichment and quantum meruit. In the case of Royal Trust Construction vs. COA, the SC allowed payment
based on quantum meruit to the contractor for its services, even without a contract and appropriation. The ruling in Royal
33
Trust was reiterated in Melchor vs. COA where the SC held that even if the contract is void, it would be unjust to hold Mario R.
Melchor, the school administrator, personally liable for the entire amount when the government had already benefited from the
construction of a public-school building.
In recent cases, the SC continues to affirm these principles of unjust enrichment and quantum meruit, such as in Torreta vs.
34 35
COA, wherein the SC laid down the Torreta Rules on Return (akin to Madera Rules on Return for disallowed benefits)
regarding civil liability for disallowed government contracts for procurement of goods and services, to wit:
1) If a Notice of Disallowance is set aside by the Court, no return shall be required from any of the persons held
liable therein.
2) If a Notice of Disallowance is upheld, the rules on return are as follows:
a) Approving and certifying officers who acted in good faith, in the regular performance of official functions,
and with the diligence of a good father of the family are not civilly liable to return consistent with Section 38
of the Administrative Code of 1987.
b) Pursuant to Section 43 of the Administrative Code of 1987, approving and certifying officers who are clearly
shown to have acted with bad faith, malice, or gross negligence are solidarily liable together with the
recipients for the return of the disallowed amount.
c) The civil liability for the disallowed amount may be reduced by the amounts due to the recipient based on the
application of the principle of quantum meruit on a case to case basis.
d) These rules are without prejudice to the application of the more specific provisions of law, COA rules and
regulations, and accounting principles depending on the nature of the government contract involved.
Guided by the above Torreta Rules of Return, particularly under paragraph 2(a) and (c), the petitioners should not be made
to return the total disallowed amount of P34,782,412.98 that was used to purchase the medicines, medical supplies and laboratory
equipment. It should be noted that there is no issue as to the actual receipt of the province of all the items purchased. Deliveries
were made and items were duly accepted by the province, benefitting the latter and its constituents. Thus, applying the principles
of quantum meruit and unjust enrichment, the petitioners need not refund the amount disallowed.
However, in view of the violations of the provisions of RA No. 9184 and its IRR-A, the Prosecution and Litigation Office,
Legal Services Sector, this Commission, is directed to forward the case to the Office of the Ombudsman for investigation and
filing of the appropriate charges, if warranted, against the persons held liable under the NDs.
RULING
WHEREFORE, the Petition for Review of Governor Eustaquio P. Bersamin et al., of the Province of Abra, of Commission
on Audit-Cordillera Administrative Region Decision No. 2018-019 dated March 28, 2018, is hereby PARTLY GRANTED .
Accordingly, the various Notices of Disallowance (NDs) on the procurement of medicines, medical supplies and laboratory
equipment for calendar year 2009, in the total amount of P34,782,412.98, are AFFIRMED with MODIFICATION, in that, Gov.
Bersamin is excluded from the persons held liable therefor. All other persons held liable under the NDs are not required to refund
the disallowed amount on account of the principles of quantum meruit and unjust enrichment.
The Prosecution and Litigation Office, Legal Services Sector, this Commission, is directed to refer this case to the Office of
the Ombudsman for the filing of appropriate charges against the responsible persons, if warranted, in view of the violations of the
provisions of Republic Act No. 9184 and its Implementing Rules and Regulations-Part A.
(SGD.) MICHAEL G. AGUINALDO

Chairperson
(SGD.) ROLAND C. PONDOC (SGD.) MARIO G. LIPANA

Commissioner Commissioner
Attested by:
(SGD.) BRESILO R. SABALDAN

Director IV
Commission Secretary
Copy furnished:
Atty. Alberto H. Habitan

The Law Firm of Habitan Ferrer Chan Tagapan Habitan and Associates
Counsel for the Petitioners
Suite 101, Señor Ivan de Palacio Building
No. 139 Malakas St., Diliman, Quezon City
The Audit Team Leader

The Supervising Auditor
Audit Group Local Government Sector-A, Team Cordillera Administrative Region-01
Commission on Audit-Cordillera Administrative Region
The Regional Director

Commission on Audit Cordillera Administrative Region
La Trinidad, Benguet
The Directors
Information Technology Office
Administration Sector
Prosecution and Litigation Office
Legal Services Sector
The Assistant Commissioners

Local Government Audit Sector
Commission Proper Adjudication Sector
All of this Commission
ESZ-RLU/ETR-EDS-CTS/DVG/RGA-JRC/AGV
CPCN 2018-356
1 Pursuant to Rule VII, 2009 Revised Rules of Procedure of the Commission on Audit (COA).
2 He is joined by Mr. Paterno B. Bernal, Mr. Winfred Pastores, Mr. Nestor Bergonia, Mr. Aniceto Tanseco, Mr. Mariano Cantil and Ms. Ma. Eloisa
B. Marbella. Note that only Governor Eustaquio P. Bersamin, who signed the Verification part of the petition, and Mr. Bernal, Bids and Awards
Committee Member, were named as persons liable under the Notice of Disallowances (NDs).
3 Annex 1, List of NDs.
4 For ND Nos. 14-003-100-(09) to 14-030-100-(09), rollo, pp. 2616-2671. Note: the NDs were received on various dates, the last of which was on
November 6, 2014.
5 For ND Nos. 14-031-100-(09) to 14-065-100-(09), rollo, pp. 2546-2615. Note: the NDs were received on various dates, the last of which was on
January 19, 2015.
6 Stamp of receipt of COA-Cordillera Administrative Region, rollo, p. 2545.
7 As stated in the matrix in the Answer to the Petition, rollo, p. 2727.
8 Stamp of receipt of the COA Commission Secretariat, rollo, p. 155.
9 Appeal from decision of auditors. Any person aggrieved by the decision of an auditor of any government agency in the settlement of an account
or claim may within six months from receipt of a copy of the decision appeal in writing to the Commission.
10 Government Auditing Code of the Philippines.
11 Period of Appeal. – The appeal shall be taken within the time remaining of the six (6) months period under Section 4, Rule V, taking into
account the suspension of the running thereof under Section 5 of the same Rule in case of appeals from the Director’s decision x x x.
12 Competitive Bidding - All Procurement shall be done through Competitive Bidding, except as provided for in Article XVI of this Act.
13 Splitting of Government Contracts is not allowed. Splitting of Government Contracts means the division or breaking up of Government
Contracts into smaller quantities and amounts, or dividing contract implementation into artificial phases or sub-contracts for the purpose of
evading or circumventing the requirements of law and this IRR-A, especially the necessity of public bidding and the requirements for the
alternative methods of procurement.
14 Prohibition against splitting of requisitions, purchase orders, vouchers and others.
15 For NDs No. 14-003-100-(09) to 14-016-100-(09).
16 For NDs No. 14-017-100-(09) to 14-021-100-(09).
17 For NDs No. 14-022-100-(09) to 14-027-100-(09).
18 For ND No. 14-028-100-(09).
19 For ND No. 14-029-100-(09).
20 For ND No. 14-030-100-(09).
21 For ND Nos. 14-031-100-(09) to 14-065-100-(09).
22 Rollo, pp. 2404-2409.
23 Sample copies of Acceptance and Inspection Report, rollo, pp. 2389-2391.
24 Rollo, pp. 2700-2721.
25 As presented in Schedule E of the Answer to the Appeal Memorandum, rollo, pp. 2675-2678.
26 Rollo, pp. 2723-2728.
27 Manila International Airport Authority vs. Olongapo Maintenance Service, G.R. No. 146184-85, January 31, 2008.
28 Paragraph 31, Answer to the Appeal Memorandum, rollo, p. 12.
29 Shopping is a method of procurement of goods whereby the procuring entity simply requests for the submission of price quotations for readily
available off-the-shelf goods or ordinary/regular equipment to be procured directly from suppliers of known qualifications. This method of
procurement shall be employed only in any of the following cases:
xxx
b) Procurement of ordinary or regular office supplies and equipment not available in the Procurement Service involving an amount not exceeding
two hundred fifty thousand pesos (P250,000): Provided, however, That the procurement does not result in splitting of contracts, as provided
in Section 54.1 of this IRR-A: Provided, further, That at least three (3) price quotations from bona fide suppliers shall be obtained.
30 Supra, note 28.
31 G.R. No. 223762, November 7, 2017.
32 G.R. No. 84202, November 22, 1988.
33 G.R. No. 95398, August 16, 1991.
34 G.R. No. 242925, November 10, 2020.
35 The rules were laid down in the case of Madera vs. COA, G.R. No. 244128, September 8, 2020.
ANNEX 1
Notice of
Disallowance No. Date Nature Amount
Procurement of medical
1 14-003-100-(09) 8-Sep-14 supplies and medicines 1,107,620.80
Procurement of medicines
2 14-004-100-(09) 8-Sep-14 medical supplies 241,573.42
Payment of medical supplies
3 14-005-100-(09) 8-Sep-14 and medicines 284,315.22
4 14-006-100-(09) 8-Sep-14 Procurement of medicines 242,906.60
Procurement of laboratory
10 14-014-100-(09) 11-Sep-14 supplies 341,511.40
11 14-016-100-(09) 11-Sep-14 supplies 273,803.20
12 14-017-100-(09) 11-Sep-14 supplies 475,262.12
13 14-018-100-(09) 11-Sep-14 supplies 336,926.08
14 14-019-100-(09) 11-Sep-14 supplies 327,323.04
15 14-020-100-(09) 11-Sep-14 supplies 377,447.60
16 14-021-100-(09) 11-Sep-14 supplies 883,378.16
17 14-022-100-(09) 18-Sep-14 and medical supplies 402,144.00
18 14-023-100-(09) 18-Sep-14 supplies 324,192.00
19 14-024-100-(09) 18-Sep-14 supplies 288,960.00
20 14-025-100-(09) 18-Sep-14 supplies 313,296.00
Procurement of hospital
24 14-029-100-(09) 19-Sep-14 equipment 681,500.00
Procurement of hospital
25 14-030-100-(09) 19-Sep-14 equipment 653,300.00
26 14-031-100-(09) 19-Dec-14 supplies 875,422.00
27 14-032-100-(09) 19-Dec-14 and medical supplies 1,617,119.60
29 14-034-100-(09) 19-Dec-14 and medical supplies 682,064.00
37 14-042-100-(09) 19-Dec-14 supplies 972,890.60
41 14-046-100-(09) 22-Dec-14 supplies 253,804.70
42 14-047-100-(09) 22-Dec-14 Procurement of medicines 593,281.00
44 14-049-100-(09) 22-Dec-14 supplies 453,362.00
46 14-051-100-(09) 22-Dec-14 supplies 313,132.80
51 14-056-100-(09) 22-Dec-14 supplies 195,261.50
52 14-057-100-(09) 22-Dec-14 supplies 238,290.00
56 14-061-100-(09) 23-Dec-14 supplies 451,411.50
59 14-064-100-(09) 23-Dec-14 equipment 366,600.00
60 14-065-100-(09) 23-Dec-14 equipment 124,080.00
TOTAL: 34,782,412.98

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DECISION NO.

FACTS OF THE CASE

The following persons were held liable under the NDs:

Thus, this petition. Gov. Bersamin et al raise the following arguments:

The issue to be resolved is whether the petition for review is meritorious.

This Commission finds the petition partly meritorious.

Thus, the NDs are affirmed.

2) If a Notice of Disallowance is upheld, the rules on return are as follows:

(SGD.) MICHAEL G. AGUINALDO

(SGD.) ROLAND C. PONDOC (SGD.) MARIO G. LIPANA

(SGD.) BRESILO R. SABALDAN

Atty. Alberto H. Habitan

The Audit Team Leader

The Regional Director

The Assistant Commissioners

All of this Commission

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