FACTS:

Aquino was invited by DPWH to a bidding for the construction of a dike by bulldozing a part of the Porac River at Barangay Ascomo-Pulungmasle, Guagua, Pampanga. Aquino was subsequently awarded the “Contract of Agreement” by the said government agency.

By 9 July 1992, the project was duly completed by respondent, who was then issued a Certificate of Project Completion dated 16 July 1992. However, claimed that PhP1,262,696.20 was still due him, but petitioners refused to pay the amount. He thus filed a Complaint for the collection of sum of money with damages before the Regional Trial Court of Guagua, Pampanga. Petitioners, for their part, set up the defense 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.

The trial court ruled in favor of the respondent. Petitioners (DPWH) then appealed the case before the CA which ruled in their favor, declaring the contract null and void ab initio but ordered compensation to Aquino for worked delivered, subject to Commission on Audit rules. Unsatisfied with the CA’s decision, Petitioners then raised the issue before the Supreme Court seeking complete dismissal of the case without paying Aquino any money.

ISSUE:

Was the doctrine of sovereign immunity properly invoked?

RULING:

No. The Supreme Court said that the doctrine of governmental immunity from suit cannot serve as an instrument for perpetrating an injustice to a citizen. Citing their decision in EPG Construction (G.R. No. 131544, March 16, 2001, 354 SCRA 566), the court said that it would be the apex of injustice and highly inequitable if the respondent is not duly compensated for actual work performed and services rendered, where both the government and the public have received benefits from the project and reaped the fruits of respondent’s honest toil and labor. The Court further said that the no government agency or agent can conveniently hide under the State’s cloak of invincibility against suit, because this principle has limitations especially when that the ends of justice would be subverted if we were to uphold, in this particular instance, the State’s immunity from suit. The Court finally said that in this case, it can’t be an instrument of injustice by upholding the immunity from suit principle and affirmed the decision of the Court of Appeals.