Thursday, December 16, 2010

Melchor vs. COA

MARIO R. MELCHOR, petitioner, vs.
COMMISSION ON AUDIT, respondent.
G.R. No. 95398
August 16, 1991

GUTIERREZ, JR., J.

FACTS:

Petitioner Mario R. Melchor entered into a contract with Cebu Diamond Construction for the construction of Phase I of the home Technology Building of Alangalang Agro-Industrial School of Alangalang, Leyte, for the price of P488, 000. Pablo Narido, chief accountant of the school, issued a certificate of availability of funds to cover the construction cost. Narido, however, failed to sign as a Witness to the contract, contrarily to the requirement of Section I of Letter of Instruction (LOI) No. 968.

While the construction of Phase I was under way, the contractor, in a letter dated November 8, 1983 addressed to Melchor, sought an additional charge of P73,000 equivalent to 15% of the stipulated amount due to an increase in the cost of labor and construction materials. The petitioner then sent a letter asking for the approval of the Regional Director of the Ministry of Education, Culture and Sports (MECS) on the contractor's additional charge which the latter later approved.

The contractor requested series of extensions for the completion of the construction which the petitioner granted. However, the contractor later gave up the project mainly to save itself from further losses due to, among other things, increased cost of construction materials and labor.
The Commission on Audit Regional Director, Cesar A. Damole, disallowed the payment of P515,305.60 in post-audit on the ground that the contract was null and void for lack of signature of the chief accountant of the school as witness to it.

ISSUE: Whether or not the petitioner should be held personally liable for the amount paid for the construction of a public school building on the ground that the infrastructure contract is null and void for want of one signature?

RULING:

The Court finds that the contract executed by the petitioner and Cebu Diamond Construction is enforceable and, therefore, the petitioner should not be made to personally pay for the building already constructed.

In the case before us, the chief accountant issued a certificate of availability of funds but failed to sign the contract as witness. But since Section 86 states that the certificate shall be attached to and become an integral part of the proposed contract, then the failure of the chief accountant to affix his signature to the contract was somehow made up by his own certification which is the basic and more important validating document. We agree with the petitioner's view that there was substantial compliance with the requirements of LOI 968 in the execution of the contract.

LESSON:
It is a rule of statutory construction that the court may consider the spirit and reason of a statute where a literal meaning would lead to absurdity, contradiction, injustice or would defeat the clear purpose of the lawmakers.

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