F.F. Mañacop Construction Co., Inc. v. Court of Appeals
REITERATIONFacts
The Antecedents: Petitioner F. F. Mañacop Construction Co., Inc. (petitioner) commenced the construction of a perimeter fence for respondent Manila International Airport Authority (MIAA) in September 1995, for a quoted price of P307,440.00. Petitioner proceeded with the construction despite the Notice to Proceed not being fully signed, due to the urgency of preventing squatters. After the February 1986 revolution, the new general manager of MIAA stopped the construction when it was 95% complete, valued by petitioner at P282,068.00. Petitioner made repeated demands for payment, which were ignored by MIAA for two years, leading petitioner to file a case and incur attorney's fees. Procedural History: The Regional Trial Court (RTC) found that petitioner rendered services to MIAA and ordered MIAA to pay P238,501.48 based on quantum meruit, citing the absence of a written contract. The RTC also awarded attorney's fees, finding MIAA acted in bad faith. On appeal, the Court of Appeals (CA) agreed that petitioner was entitled to payment but set aside the RTC decision, directing that the computation of the amount due be referred to the Commission on Audit (COA), citing Eslao v. Commission on Audit. A motion for reconsideration was denied. The Petition: Petitioner sought review from the Supreme Court, arguing that the CA erred in taking cognizance of the issue of referral to COA, which was raised for the first time on appeal, and in relying on Eslao v. COA and Royal Trust Co. vs. COA.
Issue(s)
Whether the Court of Appeals erred in taking cognizance of the issue of referring the computation of the amount due to the Commission on Audit, an issue not raised before the trial court. Whether the claim for payment for services rendered should be based on quantum meruit. Whether the matter of determining the amount due to petitioner should be referred to the Commission on Audit. Whether the award of attorney's fees is proper.
Ruling
The Supreme Court set aside the decision of the Court of Appeals and reinstated the decision of the Regional Trial Court. The Court held that while the issue of referral to COA was raised for the first time on appeal, it could be considered for a just and complete resolution, especially given the involvement of public funds. However, the Court found that a claim based on quantum meruit is an unliquidated claim, which is a justiciable question ripe for judicial determination and beyond the COA's adjudicatory powers. The Court affirmed that courts of law and equity are capable of determining such factual matters. The award of attorney's fees was upheld based on the finding of bad faith by the lower courts.
Ratio Decidendi
On the issue of the Court of Appeals taking cognizance of the referral to COA: The Court acknowledged the general rule that issues not raised before the lower court cannot be raised for the first time on appeal, as it is offensive to basic rules of fair play. However, it noted that in this instance, the issue of referral to the COA was closely related to the determination of the amount due to the petitioner. Furthermore, considering that the case involved the disposition of public funds and the performance of a constitutional duty by the COA, the Court deemed it appropriate to consider the issue to avoid defeating the process by mere technicalities of procedure. The Court cited Garrido v. CA in support of considering related issues for a just and complete resolution. On whether the claim should be based on quantum meruit: The Court affirmed that petitioner is entitled to payment for the construction made, arising from a quasi-contractual relation. The Court found that payment based on quantum meruit is appropriate, citing the Eslao case. The reasons provided include the absence of fraud or mala in se in the quasi-contract, the project being covered by a specific appropriation, the existence of an implied obligation to pay the government, the property or benefit not being ultra vires, the project falling within exemptions from public bidding due to public necessity or time essence, substantial compliance by the contractor in good faith, the claim being supported by equity as the respondent is reaping benefits, and the absence of proof of collusion. The payment was limited to the actual cost chargeable against authorized funds. On whether the matter should be referred to the Commission on Audit: The Court distinguished the present case from Eslao and Royal Trust Co.. It explained that quantum meruit allows recovery of the reasonable value, entitling a party to "as much as he, reasonably deserves." Unliquidated claims, like those based on quantum meruit, present a justiciable question ripe for judicial determination and are beyond the COA's power to adjudicate because their settlement requires judgment and discretion, not simple arithmetical processes. In Eslao and Royal Trust, the issue was entitlement to payment, not the exact amount, necessitating COA review of factual findings. Here, the lower court had already made a factual finding on the amount due after scrutinizing the evidence. The Court emphasized that courts are not powerless to determine factual matters in accordance with both law and equity. On the award of attorney's fees: The Court upheld the award of attorney's fees, which was premised on the uncontroverted factual finding of the lower court, affirmed by the appellate court, that the private respondent acted in bad faith in refusing payment to the petitioner. The Court stated that such factual findings are accorded great weight and finality when supported by substantial evidence, and no reason appeared in the case to justify a departure from this doctrine.
Main Doctrine
A claim based on quantum meruit, being in the nature of an unliquidated claim requiring the application of judgment and discretion, is a justiciable question ripe for judicial determination and is beyond the powers of the Commission on Audit to adjudicate. Courts of law and equity are empowered to determine such factual matters.