J.A.B. Bulao & Associates

CASE NO. 2011-0039: MODESTO AGYAO, JR. VS. CIVIL SERVICE COMMISSION (G.R. NO. 182591, 18 JANUARY 2011, MENDOZA, J.) SUBJECT: CAREER EXECUTIVE SERVICE COVERS PRESIDENTIAL APPOINTMENTS ONLY. (BRIEF TITLE: AGYAO VS. CSC).

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D E C I S I O N

MENDOZA, J.:

Assailed in this petition for review on certiorari is the September 26, 2007 Decision^[1][1] of the Court of Appeals (CA), in CA-G.R. SP No. 92569, which affirmed Resolution No. 05-0821 dated June 16, 2005, issued by the Civil Service Commission (CSC).  The CSC Resolution, in turn, affirmed the invalidation by the Civil Service Commission Field Office-Bangko Sentral Ng Pilipinas (CSCFO-BSP) of the appointment of petitioner Modesto Agyao, Jr. (Agyao) as Department Manager II of the Philippine Economic Zone Authority (PEZA). 

Records show that on June 16, 2004, Agyao was re-appointed as Department Manager II of PEZA. As a matter of course, the renewal of Agyao’s appointment was submitted by PEZA to the CSC.

On July 16, 2004, however, Agyao’s re-appointment was invalidated by the CSCFO-BSP, through a letter of Director Mercedes P. Tabao (Director Tabao). The letter stated that Agyao lacked the prescribed Career Executive Service Office (CESO)/ Career Service Executive Examination (CSEE) eligibility, and there were qualified eligibles actually available for appointment.  Section 2 (b), Rule III of CSC Memorandum Circular No. 40, Series of 1998, provides as follows:

b. Temporary – issued to a person who meets the education, experience and training requirements for the position to which he is being appointed except for the appropriate eligibility but only in the absence of a qualified eligible actually available, as certified to by the Civil Service Regional Director or Field Officer. xxx

          On August 31, 2004, PEZA Director-General Lilia B. De Lima (Director-General De Lima) sent a letter-appeal to the CSC seeking a reconsideration of its action on the appointment of Agyao.

On June 16, 2005, the CSC issued Resolution No. 05-0821^[2][2] denying Director-General De Lima’s appeal and affirming the invalidation by the CSCFO–BSP of Agyao’s appointment as Department Manager II of PEZA. The CSC referred to CSC Memorandum Circular (MC) No. 9, Series of 2005 (Limitations on Renewal of Temporary Appointments), which clearly provides that only one renewal of a temporary third-level appointment is allowed provided that there are no qualified applicants actually available and willing to assume the position. Moreover, although Agyao’s temporary appointment was renewed four (4) times, he failed to acquire the appropriate third level eligibility.  In addition, CSCFO-BSP Director Tabao certified that there were qualified eligibles available for appointment to the position of Department Manager II.

          On July 18, 2005, Agyao was informed by PEZA Deputy Director for Finance and Administration, Justo Porfirio LL. Yusingco, about his appointment as Division Chief III, Permanent, effective July 16, 2005.

          On August 21, 2005, Agyao filed with the CSC a Letter-Motion for Reconsideration of its July 16, 2005 Resolution. The motion, however, was denied in the cited CSC Resolution No. 05-1486 dated October 17, 2005.

          On appeal, the CA rendered a decision dated September 26, 2007 affirming the resolution of the CSC. It ruled, among others, that Agyao could not qualify for the position of Department Manager II because he was not a Career Civil Service Eligible (CESE).  He could not invoke the provisions of CSC MC No. 9, Series of 2005, issued on March 22, 2005 because the invalidation of his temporary appointment was made earlier on July 16, 2004. Moreover, CSC Office Memorandum No. 05, Series of 2005, issued on August 5, 2005 as a clarification on CSC MC No. 9, Series of 2005, expressly provides that “all renewals issued on or after July 24, 2005 can no longer be renewed after they lapse.”

          Aggrieved, Agyao filed this petition for review before this Court raising the following

ISSUES

WHETHER OR NOT THE COURT OF APPEALS ERRED AND ABUSED ITS DISCRETION IN UPHOLDING THE FINDINGS OF THE CIVIL SERVICE COMMISSION DECLARING THE APPOINTMENT OF THE PETITIONER AS DEPARTMENT MANAGER II OF THE PEZA AS INVALID.

WHETHER OR NOT THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE POSITION OF THE PETITIONER AS DEPARTMENT MANAGER II IS NOT COVERED UNDER THE CAREER EXECUTIVE SERVICE CONSIDERING THE FACT THAT HE IS NOT A PRESIDENTIAL APPOINTEE.

            Agyao argues that CSC MC No. 9, Series of 2005, is applicable to him because its provisions are favorable to him. He claims that CSC Office Memorandum No. 05, Series of 2005, which clarified CSC MC No. 9, Series of 2005, allows one renewal of temporary third level appointments issued before July 24, 2005 subject to existing rules and regulations regardless of previous renewals granted before said date. Accordingly, he insists that the renewal of his appointment was valid because it was made on June 16, 2004.

          Agyao further points out that there are no qualified applicants actually available and willing to assume his position as Director Manager II at the PEZA. Director Tabao’s “qualified eligibles” in her list are from different agencies of the government and that none of them has applied for the position. It is the reason why the position is still vacant.

Finally, Agyao contends that the position of Department Manager II of PEZA is not among those covered by the Career Executive Service (CES) also known as presidential appointees. The appointment to the position is made by the PEZA Director-General. Accordingly, he does not need to possess the required CESO/CSEE to continue acting as Department Manager II.

          The CSC, on the other hand, argues that Agyao’s temporary appointment on June 16, 2004 was properly invalidated because he lacked the eligibility to qualify as Department Manager II.  Although he was re-appointed several times to the position, he still failed to acquire third level eligibility considering that he failed in the November 2004 CSEE.

          Moreover, CSC MC No. 9, Series of 2005, and CSC Office Memorandum No. 05, Series of 2005, cannot apply in Agyao’s favor because they were issued after the invalidation of his fifth temporary appointment and did not provide for a retroactive application.

          The CSC also regards Agyao’s contention that there are no qualified applicants who are actually willing to assume the position of Department Manager II as speculative and hearsay.  Actually, Director Tabao certified and furnished PEZA a list of qualified eligibles for possible appointment as Department Manager II.

          Finally, the CSC argues that although the position of Department Manager II does not require a presidential appointment, it is a third level position which requires either a CESO or CSEE eligibility. The list of third level positions in the Career Executive Service enumerated in the Administrative Code of 1987, namely: Undersecretary, Assistant Secretary, Bureau Director, Assistant Bureau Director, Regional Director, Assistant Regional Director, Chief of Department Service and other officers of equivalent rank as may be identified by the Career Executive Service Board, is not strictly limited. Citing jurisprudence,^[3][3] the CSC avers that the classification of a particular position in the bureaucracy is determined by the nature of the functions of the office. The third level embraces positions of a managerial character involving the exercise of management functions such as planning, organizing, directing, coordinating, controlling, and overseeing the activities of an organization or of a unit thereof.  It also requires some degree of professional, technical or scientific knowledge and experience, and application of managerial or supervisory skills necessary to carry out duties and responsibilities involving functional guidance, leadership and supervision.

The rank of Department Manager II falls under the coverage of CES under the aforementioned CSC issuances as the same is a third level career position above the division chief level and performing executive or managerial functions. Pursuant to the merit-and-fitness rule in the Constitution, the consistent policy is to the effect that non-presidential appointees to positions with managerial and executive functions must possess third level eligibility.

           In sum, the core issue to be resolved in this case is whether or not the position of Department Manager II of PEZA requires CESO or CSEE eligibility.

RULING OF THE COURT

The issue is not novel.  In Office of the Ombudsman v. Civil Service Commission cases,^[4][4] Home Insurance Guarantee Corporation v. Civil
Service Commission^[5][5] and National Transmission Corporation v. Hamoy,^[6][6] the Court has consistently ruled that the CES covers presidential appointees only. Corollarily, as the position of Department Manager II of the PEZA does not require appointment by the President of the Philippines, it does not fall under the CES.

Section 8, Chapter 2, Book V, Title 1 (Subtitle A) of Executive Order No. 292, otherwise known as The Revised Administrative Code of 1987, classifies the positions in the Civil Service as follows:

Section 8.  Classes of positions in the Career Service.—( 1) Classes of positions in the career service appointment to which requires examinations shall be grouped into three  major levels as follows:

(a)      The first level shall include clerical, trades, crafts and custodial service positions which involve non-professional or sub-professional work in a non-supervisory or supervisory capacity requiring less than four years of collegiate studies;

(b)     The second level shall include professional, technical, and scientific positions which involve professional, technical or scientific work in a non-supervisory or supervisory capacity requiring at least four years of college work up to Division Chief levels; and

(c)      The third level shall cover positions in the Career Executive Service.

          In the Home Insurance case, the Court ruled that “the position of Vice-President of HIGC does not belong to the 3^rd level of the career service. Respondent Cruz has not satisfactorily shown that his former position as Vice-President in the HIGC belongs to the third level in the career service as prescribed by law. His former position as Vice President is not among those enumerated by law as falling under the third level, nor has he established that it is one of those identified by the Career Executive Service Board as of equivalent rank to those listed by law. Neither is it claimed that he was appointed by the President.”

In the Office of the Ombudsman case, the Court wrote:

The CSC’s opinion that the Director II positions in the Central Administrative Service and the Finance and Management Service of the Office of the Ombudsman are covered by the CES is wrong. Book V, Title I, Subtitle A, Chapter 2, Section 7 of EO[7][7][7] 292, otherwise known as “The Administrative Code of 1987,” provides: 

SECTION 7.  Career Service. – The Career Service shall be characterized by (1) entrance based on merit and fitness to be determined as far as practicable by competitive examination, or based on highly technical qualifications; (2) opportunity for advancement to higher career positions; and (3) security of tenure.

The Career Service shall include:

(1)       Open Career positions for appointment to which prior qualification in an appropriate examination is required;

(2)       Closed Career positions which are scientific, or highly technical in nature; these include the faculty and academic staff of state colleges and universities, and scientific and technical positions in scientific or research institutions which shall establish and maintain their own merit systems;

(3)       Positions in the Career Executive Service; namely, Undersecretary, Assistant Secretary, Bureau Director, Assistant Bureau Director, Regional Director, Assistant Regional Director, Chief of Department Service and other officers of equivalent rank as may be identified by the Career Executive Service Board, all of whom are appointed by the President;

x x x          x x x          x x x (emphasis supplied) 

Thus, the CES covers presidential appointees only. As this Court ruled in Office of the Ombudsman v. CSC [G.R. No. 159940, 16 February 2005, 451 SCRA 570]: 

From the above-quoted provision of the Administrative Code, persons occupying positions in the CES are presidential appointees. x x x (emphasis supplied)

Under the Constitution, the Ombudsman is the appointing authority for all officials and employees of the Office of the Ombudsman, except the Deputy Ombudsmen. Thus, a person occupying the position of Director II in the Central Administrative Service or Finance and Management Service of the Office of the Ombudsman is appointed by the Ombudsman, not by the President. As such, he is neither embraced in the CES nor does he need to possess CES eligibility.

To classify the positions of Director II in the Central Administrative Service and the Finance and Management Service of the Office of the Ombudsman as covered by the CES and require appointees thereto to acquire CES or CSE eligibility before acquiring security of tenure will lead to unconstitutional and unlawful consequences. It will result either in (1) vesting the appointing power for said position in the President, in violation of the Constitution or (2) including in the CES a position not held by a presidential appointee, contrary to the Administrative Code.

The same ruling was cited in the National Transmission Corporation case, where it was further written:

 “Positions in the CES under the Administrative Code include those of Undersecretary, Assistant Secretary, Bureau Director, Regional Director, Assistant Regional Director, Chief of Department Service and other officers of equivalent rank as may be identified by the Career Executive Service Board, all of whom are appointed by the President.  Simply put, third-level positions in the Civil Service are only those belonging to the Career Executive Service, or those appointed by the President of the Philippines.  This was the same ruling handed down by the Court in Office of the Ombudsman v. Civil Service Commission, wherein  the Court declared   that the CES covers presidential appointees only. 

x x x               x x x               x x x

Respondent was appointed Vice-President of VisMin Operations & Maintenance by Transco President and CEO Alan Ortiz, and not by the President of the Republic. On this basis alone, respondent cannot be considered as part of the CES. 

Caringal and Erasmo cited by petitioner are not in point.  There, the Court ruled that appointees to CES positions who do not possess the required CES eligibility do  not enjoy security of tenure.  More importantly, far from holding that presidential appointment is not required of a position to be included in the CES, we learn from Caringal that the appointment by the President completes the  attainment of the CES rank, thus:

Appointment to CES Rank

Upon conferment of a CES eligibility and compliance with the other requirements prescribed by the Board, an incumbent of a CES position may qualify for appointment to a CES rank.  Appointment to a CES rank is made by the President upon the recommendation of the Board. This process completes the official’s  membership in the CES and most importantly, confers on him security of tenure in the CES. 

To classify other positions not included in the above enumeration as covered by the CES and require appointees thereto to acquire CES or CSE eligibility before acquiring security of tenure will lead to unconstitutional and unlawful consequences.  It will result either in (1) vesting the appointing power for non- CES positions in the President, in violation of the  Constitution; or (2) including  in the CES  a position not held by presidential appointee, contrary to the Administrative Code.

Interestingly, on 9 April 2008, CSC Acting Chairman Cesar D. Buenaflor issued Office Memorandum No. 27, s. 2008, which states in part: 

For years, the Commission has promulgated several policies and issuances identifying positions in the Career Service above Division Chief Level performing executive and managerial functions as belonging to the Third Level covered by the  Career Executive Service (CES) and those outside the CES, thus, requiring third level eligibility for purposes of permanent appointment and security of tenure.

However, the issue as to whether a particular position belongs to the Third Level has been settled by jurisprudence enshrined in Home Insurance and Guaranty Corporation v. Civil Service Commission, G.R. No. 95450 dated March 19, 1993 and Office of the Ombudsman (OMB) v. Civil Service Commission; G.R. No. 162215 dated July 30, 2007, where the Honorable Supreme Court ruled citing the provision of Section 7(3) Chapter 2, Title I-A, Book V of Administrative Code of 1987, that the Third Level shall cover positions in the Career Executive Service (CES).  Positions in the Career Executive Service consists of Undersecretary, Assistant  Secretary, Bureau Director, Assistant Bureau Director, Regional Director, Assistant Regional Director, Chief of Department Service and other officers of equivalent rank as may be identified by the Career Executive Service Board (CESB), all of whom are appointed by the President. To classify other positions not included in the above enumeration as covered by the CES and require appointees thereto to acquire CES or CSE eligibility before acquiring security of tenure will lead to unconstitutional and unlawful consequences.  It will result either: in (1) vesting the appointing power for non-CES positions in the President, in violation of the Constitution; or, (2) including in the CES  a position not held by presidential appointee, contrary to the Administrative Code.

x x x 

While the above-cited ruling of the Supreme Court refer to particular positions in the OMB and HIGC, it is clear, however, that the intention was to make the doctrine enunciated therein applicable to similar and comparable positions in the bureaucracy. To reiterate, the Third Level covers only the positions in the CES as enumerated in the Administrative Code of 1987 and those identified by the CESB as of equivalent rank, all of whom are appointed by the President of the Philippines.  Consequently, the doctrine enshrined in these Supreme Court decisions has ipso facto nullified all resolutions, qualification standards, pronouncements and/or issuances of the Commission insofar as the requirement of third level eligibility to non-CES positions is concerned.

In view thereof, OM No. 6, series of 2008 and all other issuances of the Commission inconsistent with the afore-stated law and jurisprudence are likewise deemed repealed, superseded and abandoned. x x x (Emphasis supplied)

Thus, petitioner can no longer invoke Section 1(b) of Memorandum Circular (MC) No. 21, it being inconsistent with the afore-quoted Office Memorandum and thus deemed repealed by no less than the CSC itself.

All three cases were also cited in the recent case of Civil Service Commission v. Court of Appeals and Philippine Charity Sweepstakes Office,^[8][8] where a similar ruling was handed down.

Doubtless, the position of Director Manager II at the PEZA is not among the enumerated positions in the Career Executive Service, much less, a position that requires presidential appointment.  Even the CSC admits that the position of Director Manager II does not require presidential appointment.

For said reason, Agyao only needs the approval of the PEZA Director-General to validate his appointment or re-appointment.  As he need not possess a CESO or CSEE eligibility, the CSC has no valid and legal basis in invalidating his appointment or re-appointment as Department Manager II.

WHEREFORE, the September 26, 2007 Decision of the Court of Appeals is hereby REVERSED and SET ASIDE and another one entered holding that the appointment of Modesto Agyao, Jr. as Department Manager II of PEZA was valid.

SO ORDERED.

JOSE CATRAL MENDOZA

                                                                                       Associate Justice

WE CONCUR:

RENATO C. CORONA

Chief Justice

ANTONIO T. CARPIO                      CONCHITA CARPIO MORALES

                                                                                                                                        Associate Justice                                           Associate Justice

PRESBITERO J. VELASCO, JR.      ANTONIO EDUARDO B. NACHURA

                                                                                                                                                  Associate Justice                                      Associate Justice

TERESITA J. LEONARDO-DE CASTRO       ARTURO D. BRION

                   Associate Justice                                       Associate Justice

DIOSDADO M. PERALTA                             LUCAS P. BERSAMIN

  Associate Justice                                                Associate Justice

                                                                                                                                                          (No part)

MARIANO C. DEL CASTILLO                        ROBERTO A. ABAD

                                                                                                                                                Associate Justice                                        Associate Justice

MARTIN S. VILLARAMA, JR.                JOSE PORTUGAL PEREZ

                                                                                                                                                Associate Justice                                   Associate Justice

MARIA LOURDES P.A. SERENO

                                                                                                                                                                             Associate Justice

C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court.

RENATO C. CORONA

Chief Justice

CASE  2011-0038: GREGORIO R. VIGILAR, SECRETARY OF THE DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS (DPWH), DPWH UNDERSECRETARIES TEODORO E. ENCARNACION AND EDMUNDO E. ENCARNACION AND EDMUNDO V. MIR, DPWH ASSISTANT SECRETARY JOEL L. ALTEA, DPWH REGIONAL DIRECTOR VICENTE B. LOPEZ, DPWH DISTRICT ENGINEER ANGELITO M. TWAÑO, FELIX A. DESIERTO OF THE TECHNICAL WORKING GROUP VALIDATION AND AUDITING TEAM, AND LEONARDO ALVARO, ROMEO N. SUPAN, VICTORINO C. SANTOS OF THE DPWH PAMPANGA 2^ND ENGINEERING DISTRICT VS. ARNULFO D. AQUINO (G.R. No. 180388, 18 JANUARY 2011, SERENO, J.) SUBJECTS: EXCEPTION TO EXHAUSTION OF ADMIN REMEDIES; GOVT IMMUNITY FROM SUIT NOT APPLIED. (BRIEF TITLE: VIGILAR ET AL VS. AQUINO)

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D E C I S I O N

SERENO, J.:

Before the Court is a Petition for Review on Certiorari^[1][1] under Rule 45 of the Rules of Court, assailing the Decision^[2][2] of the Court of Appeals in C.A.-G.R. CV No. 82268, dated 25 September 2006.

The antecedent facts are as follows:

          On 19 June 1992, petitioner Angelito M. Twaño, then Officer-in-Charge (OIC)-District Engineer of the Department of Public Works and Highways (DPWH) 2^nd Engineering District of Pampanga sent an Invitation to Bid to respondent Arnulfo D. Aquino, the owner of A.D. Aquino Construction and Supplies. The bidding was for the construction of a dike by bulldozing a part of the Porac River at Barangay Ascomo-Pulungmasle, Guagua, Pampanga.

Subsequently, on 7 July 1992, the project was awarded to respondent, and a “Contract of Agreement” was thereafter executed between him and concerned petitioners for the amount of PhP1,873,790.69, to cover the project cost.

By 9 July 1992, the project was duly completed by respondent, who was then issued a Certificate of Project Completion dated 16 July 1992. The certificate was signed by Romeo M. Yumul, the Project Engineer; as well as petitioner Romeo N. Supan, Chief of the Construction Section, and by petitioner Twaño.

Respondent Aquino, however, claimed that PhP1,262,696.20 was still due him, but petitioners refused to pay the amount. He thus filed a Complaint^[3][3] for the collection of sum of money with damages before the Regional Trial Court of Guagua, Pampanga. The complaint was docketed as Civil Case No. 3137.

Petitioners, for their part, set up the defense^[4][4] that the Complaint was a suit against the state; that respondent failed to exhaust administrative remedies; and that the “Contract of Agreement” covering the project was void for violating Presidential Decree No. 1445, absent the proper appropriation and the Certificate of Availability of Funds.^[5][5]

On 28 November 2003, the lower court ruled in favor of respondent, to wit:

WHEREFORE, premises considered, defendant Department of Public Works and Highways is hereby ordered to pay the plaintiff Arnulfo D. Aquino the following:

1.      PhP1,873,790.69, Philippine Currency, representing actual amount for the completion of the project done by the plaintiff;

2.      PhP50,000.00 as attorney’s fee and

3.      Cost of this suit.

SO ORDERED. ^[6][6] 

It is to be noted that respondent was only asking for PhP1,262,696.20; the award in paragraph 1 above, however, conforms to the entire contract amount.

On appeal, the Court of Appeals reversed and set aside the Decision of the lower court and disposed as follows:

WHEREFORE, premises considered, the appeal is GRANTED. The “CONTRACT AGREEMENT” entered into between the plaintiff-appellee’s construction company, which he represented, and the government, through the Department of Public Works and Highway (DPWH) – Pampanga 2^nd Engineering District, is declared null and void ab initio.

The assailed decision of the court a quo is hereby REVERSED AND SET ASIDE.

In line with the pronouncement in Department of Health vs. C.V. Canchela & Associates, Architects,^[7][7] the Commission on Audit (COA) is hereby ordered to determine and ascertain with dispatch, on a quantum meruit basis, the total obligation due to the plaintiff-appellee for his undertaking in implementing the subject contract of public works, and to allow payment thereof, subject to COA Rules and Regulations, upon the completion of the said determination.

No pronouncement as to costs.

SO ORDERED.^[8][8]

Dissatisfied with the Decision of the Court of Appeals, petitioners are now before this Court, seeking a reversal of the appellate court’s Decision and a dismissal of the Complaint in Civil Case No. G-3137. The Petition raises the following issues:

1.      WHETHER OR NOT THE COURT OF APPEALS ERRED IN HOLDING THAT THE DOCTRINE OF NON-SUABILITY OF THE STATE HAS NO APPLICATION IN THIS CASE.

2.      WHETHER OR NOT THE COURT OF APPEALS ERRED IN NOT DISMISSING THE COMPLAINT FOR FAILURE OF RESPONDENT TO EXHAUST ALL ADMINISTRATIVE REMEDIES.

3.      WHETHER OR NOT THE COURT OF APPEALS ERRED IN ORDERING THE COA TO ALLOW PAYMENT TO RESPONDENT ON A QUANTUM MERUIT BASIS DESPITE THE LATTER’S FAILURE TO COMPLY WITH THE REQUIREMENTS OF PRESIDENTIAL DECREE NO. 1445.

After a judicious review of the case, the Court finds the Petition to be without merit.

Firstly, petitioners claim that the Complaint filed by respondent before the Regional Trial Court was done without exhausting administrative remedies. Petitioners aver that respondent should have first filed a claim before the Commission on Audit (COA) before going to the courts. However, it has been established that the doctrine of exhaustion of administrative remedies and the doctrine of primary jurisdiction are not ironclad rules. In Republic of the Philippines v. Lacap,^[9][9] this Court enumerated the numerous exceptions to these rules, namely: (a) where there is estoppel on the part of the party invoking the doctrine; (b) where the challenged administrative act is patently illegal, amounting to lack of jurisdiction; (c) where there is unreasonable delay or official inaction that will irretrievably prejudice the complainant; (d) where the amount involved is relatively so small as to make the rule impractical and oppressive; (e) where the question involved is purely legal and will ultimately have to be decided by the courts of justice; (f) where judicial intervention is urgent; (g) where the application of the doctrine may cause great and irreparable damage; (h) where the controverted acts violate due process; (i) where the issue of non-exhaustion of administrative remedies has been rendered moot; (j) where there is no other plain, speedy and adequate remedy; (k) where strong public interest is involved; and (l) in quo warranto proceedings. In the present case, conditions (c) and (e) are present.

The government project contracted out to respondent was completed almost two decades ago. To delay the proceedings by remanding the case to the relevant government office or agency will definitely prejudice respondent. More importantly, the issues in the present case involve the validity and the enforceability of the “Contract of Agreement” entered into by the parties. These are questions purely of law and clearly beyond the expertise of the Commission on Audit or the DPWH. In Lacap, this Court said:

… It does not involve an examination of the probative value of the evidence presented by the parties. There is a question of law when the doubt or difference arises as to what the law is on a certain state of facts, and not as to the truth or the falsehood of alleged facts. Said question at best could be resolved only tentatively by the administrative authorities. The final decision on the matter rests not with them but with the courts of justice. Exhaustion of administrative remedies does not apply, because nothing of an administrative nature is to be or can be done. The issue does not require technical knowledge and experience but one that would involve the interpretation and application of law. (Emphasis supplied.)

Secondly, in ordering the payment of the obligation due respondent on a quantum meruit basis, the Court of Appeals correctly relied on Royal Trust Corporation v. COA,^[10][10] Eslao v. COA,^[11][11] Melchor v. COA,^[12][12] EPG Construction Company v. Vigilar,^[13][13] and Department of Health v. C.V. Canchela & Associates, Architects.^[14][14] All these cases involved government projects undertaken in violation of the relevant laws, rules and regulations covering public bidding, budget appropriations, and release of funds for the projects. Consistently in these cases, this Court has held that the contracts were void for failing to meet the requirements mandated by law; public interest and equity, however, dictate that the contractor should be compensated for services rendered and work done.

Specifically, C.V. Canchela & Associates is similar to the case at bar, in that the contracts involved in both cases failed to comply with the relevant provisions of Presidential Decree No. 1445 and the Revised Administrative Code of 1987. Nevertheless, “(t)he illegality of the subject Agreements proceeds, it bears emphasis, from an express declaration or prohibition by law, not from any intrinsic illegality.  As such, the Agreements are not illegal per se, and the party claiming thereunder may recover what had been paid or delivered.”^[15][15]

The government project involved in this case, the construction of a dike, was completed way back on 9 July 1992. For almost two decades, the public and the government benefitted from the work done by respondent. Thus, the Court of Appeals was correct in applying Eslao to the present case. In Eslao, this Court stated:

…the Court finds that the contractor should be duly compensated for services rendered, which were for the benefit of the general public. To deny the payment to the contractor of the two buildings which are almost fully completed and presently occupied by the university would be to allow the government to unjustly enrich itself at the expense of another. Justice and equity demand compensation on the basis of quantum meruit. (Emphasis supplied.)

Neither can petitioners escape the obligation to compensate respondent for services rendered and work done by invoking the state’s immunity from suit.  This Court has long established in Ministerio v. CFI of Cebu,^[16][16] and recently reiterated in Heirs of Pidacan v. ATO,^[17][17] that the doctrine of governmental immunity from suit cannot serve as an instrument for perpetrating an injustice to a citizen. As this Court enunciated in EPG Construction:^[18][18]

To our mind, it would be the apex of injustice and highly inequitable to defeat respondent’s right to be duly compensated for actual work performed and services rendered, where both the government and the public have for years received and accepted benefits from the project and reaped the fruits of respondent’s honest toil and labor.

…                                 …                                 …

Under these circumstances, respondent may not validly invoke the Royal Prerogative of Dishonesty and conveniently hide under the State’s cloak of invincibility against suit, considering that this principle yields to certain settled exceptions. True enough, the rule, in any case, is not absolute for it does not say that the state may not be sued under any circumstance.

…                                 …                                 …

Although the Amigable and Ministerio cases generously tackled the issue of the State’s immunity from suit vis a vis the payment of just compensation for expropriated property, this Court nonetheless finds the doctrine enunciated in the aforementioned cases applicable to the instant controversy, considering that the ends of justice would be subverted if we were to uphold, in this particular instance, the State’s immunity from suit.

To be sure, this Court — as the staunch guardian of the citizens’ rights and welfare — cannot sanction an injustice so patent on its face, and allow itself to be an instrument in the perpetration thereof. Justice and equity sternly demand that the State’s cloak of invincibility against suit be shred in this particular instance, and that petitioners-contractors be duly compensated — on the basis of quantum meruit — for construction done on the public works housing project. (Emphasis supplied.)

          WHEREFORE, in view of the foregoing, the Petition is DENIED for lack of merit. The assailed Decision of the Court of Appeals in CA-G.R. No. 82268 dated 25 September 2006 is AFFIRMED.

          SO ORDERED.

MARIA LOURDES P. A. SERENO

Associate Justice

WE CONCUR:

RENATO C. CORONA

Chief Justice

      ANTONIO T. CARPIO                   CONCHITA CARPIO MORALES

           Associate Justice                                             Associate Justice

PRESBITERO J. VELASCO, JR.      ANTONIO EDUARDO B. NACHURA

              Associate Justice                                              Associate Justice

     TERESITA J. LEONARDO-DE CASTRO            ARTURO D. BRION

               Associate Justice                                          Associate Justice   

            DIOSDADO M. PERALTA                         LUCAS P. BERSAMIN

               Associate Justice                                         Associate Justice                              

       MARIANO C. DEL CASTILLO                 ROBERTO A. ABAD

                  Associate Justice                                            Associate Justice

       MARTIN S. VILLARAMA, JR.            JOSE PORTUGAL PEREZ

                  Associate Justice                                           Associate Justice

JOSE CATRAL MENDOZA

Associate Justice

C E R T I F I C A T I O N

            Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court.

RENATO C. CORONA

                                                                                                Chief Justice