Metro Laundry Services v. Commission on Audit
REITERATIONFacts
The Antecedents: Metro Laundry Services (Metro Laundry) was the winning bidder for laundry services for the Ospital ng Maynila Medical Center (OMMC) for the 3rd and 4th Quarter of 2010. Its services were extended from January 1, 2011, to March 31, 2011, through an Extension Contract of Services. Subsequently, OMMC retained Metro Laundry's services from April 1, 2011, to December 2011 without a written contract and prior appropriation due to the City of Manila's lack of funds. Metro Laundry rendered services, evidenced by a Certificate of Acceptance and Certificate of Use, but remained uncompensated. Procedural History: Metro Laundry's claim for P1,851,814.45 was included in the City of Manila's 2013 budget. Various city offices issued certifications and justifications acknowledging the obligation. The City Auditor affirmed the obligation on a quantum meruit basis but recommended filing the claim with the COA Proper. A Certification from the City Accountant stated an unpaid claim of P1,629,926.25 for the period April 1-December 31, 2011. Metro Laundry filed its Petition for Money Claim for P1,851,814.45 before the COA Proper. The City of Manila, in its Answer, denied liability and argued that OMMC officers should be held liable. The Supervising Auditor recommended denial due to irregularities (lack of public bidding, written contract, appropriation) and an alleged overpayment for October 2011. The COA Proper, in Decision No. 2020-043, denied the claim, citing violations of RA 9184 and PD 1445, and stating Metro Laundry's recourse should be against OMMC officials. Chairperson Aguinaldo dissented, advocating for payment on a quantum meruit basis. The Petition: Metro Laundry filed a Petition for Certiorari before the Supreme Court, assailing the COA Proper's decision and insisting on payment based on quantum meruit for services rendered.
Issue(s)
Whether the COA Proper gravely abused its discretion in denying Metro Laundry's money claim due to the irregularities that attended the extension of its contract of service with OMMC, and whether Metro Laundry is entitled to payment on the basis of quantum meruit despite the contract's invalidity. On the determination of the proper amount to be paid to Metro Laundry.
Ruling
The Supreme Court partly granted the petition, set aside the COA Proper Decision No. 2020-043, and remanded the case to the COA for the determination of the proper amount to be paid to Metro Laundry Services. The City of Manila is ordered to pay Metro Laundry Services such determined amount.
Ratio Decidendi
On the issue of COA's grave abuse of discretion and entitlement to payment on quantum meruit: The Court found merit in the petition. It reiterated that payment for services rendered to the government cannot be avoided despite the irregularity or nullity of the contract, especially when the government has benefited from the services. The Court acknowledged that Metro Laundry's extended contract with OMMC violated procurement laws (RA 9184) and essential requirements like prior appropriation and written contracts under PD 1445, rendering the contract void. However, the Court highlighted that OMMC and the City of Manila consistently recognized Metro Laundry's entitlement to payment, as evidenced by various certifications and vouchers issued by city officials. The Court emphasized that it has consistently sustained the grant of compensation to contractors on the basis of quantum meruit, even for void contracts, citing cases like Royal Trust Construction v. Commission on Audit, Dr. Eslao v. The Commission on Audit, Melchor v. Commission on Audit, EPG Construction Co. v. Hon. Vigilar, and RG Cabrera Corporation, Inc. v. Department of Public Works and Highways. The Court found no justification for the COA Proper to impose upon Metro Laundry the burden of pursuing its claim against public officials, stating that the liability of erring officers may be pursued in separate disallowance, administrative, or criminal cases. Therefore, the Court ruled that there was no obstacle to ordering payment based on quantum meruit. On the determination of the proper amount to be paid: The Court noted the discrepancy in the amounts claimed and admitted by the parties. Metro Laundry claimed P1,851,814.45, while the City Accountant's certification stated P1,629,926.25, and the OSG suggested P1,666,633.00 based on disbursement vouchers. Due to this paucity of evidence and conflicting allegations, the Court found it necessary to remand the case to the COA for a post-audit to determine the actual reasonable value of the services rendered on a quantum meruit basis.
Main Doctrine
The Supreme Court reiterated that payment for services rendered to the government cannot be avoided on the basis of the invalidity or irregularity of the contract, especially when the government has benefited from the services, and directed the Commission on Audit to determine the compensation on a quantum meruit basis.