Bidding Rights No Cause of Action for Disappointed Bidders Under Philippine Law

The Supreme Court recently reminded contractors and bidders that participating in a public bidding does not guarantee payment, and that the Commission on Audit (COA) has broad powers to determine how much the government actually owes. In Lotrim Construction, Inc. v. Commission on Audit (G.R. No. 270295, April 29, 2026), the Court En Banc dismissed a contractor's petition for being filed out of time and, on the merits, upheld COA's finding that the contractor had been overpaid and must return the excess.

The case arose from a 2012 project to expand the Administration Building of the Bureau of Customs (BOC) Port of Davao. Lotrim Construction, Inc. won the public bidding with a bid of PHP 17,203,203.18, and a contract was executed in March 2013. The BOC paid Lotrim a 15% advance payment and a first partial payment. However, COA issued Notices of Disallowance against these payments, finding that the BOC had used funds from its Maintenance and Other Operating Expenses (MOOE) to finance the project, in violation of Presidential Decree No. 1445 (the Government Auditing Code) and related budget rules. Because no valid appropriation covered the project, COA declared the contract void.

The case eventually reached COA Proper, which applied the principle of quantum meruit ("as much as he deserves") to compensate Lotrim for the work actually accomplished. However, after an inspection by COA's technical office, COA determined that Lotrim's actual accomplishment was only PHP 6,347,826.73, not the PHP 13,878,362.71 that Lotrim claimed. Since the BOC had already paid Lotrim PHP 6,756,685.89 (net of recoupment and retention), COA found that Lotrim had been overpaid by PHP 408,859.16 and ordered it to return the excess.

Lotrim challenged COA's ruling before the Supreme Court, raising three main arguments: (1) it was denied due process because COA's technical inspection was conducted without notice; (2) COA had no jurisdiction to determine the degree of work accomplishment, which should have been referred to the Construction Industry Arbitration Commission (CIAC); and (3) COA should have issued a separate audit observation memorandum before making its findings.

The Court dismissed the petition on two grounds.

First, the petition was filed out of time. Under Rule 64 of the Rules of Court, a petition for certiorari must be filed within 30 days from notice of the judgment or resolution sought to be reviewed. The filing of a motion for reconsideration interrupts this period, but if the motion is denied, the petitioner has only the remaining period, which shall not be less than five days, to file the petition. Here, Lotrim received COA Proper's Decision on October 16, 2018, and filed its motion for reconsideration 27 days later, leaving only three days. When the motion was denied, the remaining period became five days, reckoned from notice of denial. Lotrim received notice of denial on August 31, 2023, so it had until September 5, 2023 to file its petition. It filed only on October 2, 2023 — nearly a month late. The Court applied the doctrine of immutability of judgment: a decision that has acquired finality may no longer be modified, even to correct errors of fact or law.

Second, even on the merits, the petition failed. The Court rejected Lotrim's due process argument. The essence of due process is the opportunity to be heard, and Lotrim was given ample opportunity: it filed an appeal before the COA Cluster Director, a motion for reconsideration before COA Proper, and its own independent assessment (the MGCF Report) was even examined and compared against COA's findings. The Court also noted that COA's technical office is an internal body answerable only to COA, and no rule requires it to furnish a copy of its inspection report to a private contractor.

The Court likewise rejected Lotrim's belated claim that COA lacked jurisdiction. While the CIAC generally has jurisdiction over construction disputes subject to arbitration, a party may waive that right by actively participating in another forum and seeking affirmative relief there. Lotrim participated in COA proceedings for nearly eight years and sought compensation based on quantum meruit before raising the CIAC issue. The Court found this to be an unreasonable delay and barred Lotrim from invoking arbitration at that late stage.

Finally, the Court upheld COA's determination of the amount due. The principle of quantum meruit cuts both ways: it protects contractors from being uncompensated for work actually rendered, but it also protects public funds by allowing the recovery of overpayments. The Court recognized COA's expertise in determining the value of government projects and affirmed that its factual findings, supported by substantial evidence, are entitled to great respect and finality.

Practical takeaways

• Bidders have no vested right to payment merely by winning a bid. A contract with the government is void if no valid appropriation covers the project, and the contractor may only recover on the equitable principle of quantum meruit.
• Quantum meruit is a two-way street. It compensates contractors for work actually performed, but it also requires them to return any amount that exceeds the reasonable value of that work.
• COA has broad audit powers. It may determine the extent of work accomplished and adjust amounts due, even if this goes beyond the grounds initially cited in a Notice of Disallowance.
• Raise jurisdictional objections early. A party that actively participates in proceedings before COA and seeks affirmative relief may be estopped from later invoking CIAC arbitration.
• Respect procedural deadlines. Under Rule 64, a petition for certiorari must be filed within 30 days from notice, and a motion for reconsideration leaves only the remaining period (not less than five days) to file. Belated filing is fatal and renders the COA ruling final and immutable.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.