G.R. No. 252411 . February 15, 2022.
METRO LAUNDRY SERVICES, REPRESENTED BY ROWELA T. TINDOG, HEIR OF PROPRIETOR, MS. ELIZABETH T. TINDOG, PETITIONER, VS. THE COMMISSION PROPER, COMMISSION ON AUDIT, AND THE CITY OF MANILA, RESPONDENTS.

FACTS

The City of Manila, through its Bids and Awards Committee, conducted a public bidding for laundry services for the Ospital ng Maynila Medical Center (OMMC) for the 3rd and 4th quarters of 2010. Metro Laundry Services was declared the winning bidder and provided services under a contract expiring December 31, 2010. Upon request of the OMMC Officer-in-Charge, Metro Laundry’s services were retained from January 1 to March 31, 2011, under an executed Extension Contract. OMMC further retained Metro Laundry’s services from April 1 to December 31, 2011, without a written contract, but with OMMC issuing Certificates of Acceptance and Use. Metro Laundry was not paid for this period due to the city’s lack of funds. The claim, amounting to P1,851,814.45, was included in the city’s 2013 budget under “Prior Year’s Obligations,” and various city offices issued certifications and justifications affirming the obligation and the lack of funds. Disbursement vouchers were issued but funds were not released. The City Accountant referred the matter to the City Auditor, who recommended payment on the basis of quantum meruit but advised filing the claim directly with the COA Proper. Metro Laundry filed a Petition for Money Claim before the COA Proper. The City of Manila, in its Answer, denied liability and argued liability should lie with the OMMC officers who ordered the extension without prior appropriation and a written contract. The Supervising Auditor and COA Regional Director recommended denial due to irregularities (lack of public bidding, written contract, and appropriation). COA Proper Decision No. 2020-043 denied the claim, ruling that the disregard of mandatory procurement requirements under R.A. No. 9184 and P.D. No. 1445 nullified the claim, and recourse should be against the OMMC officials. COA Chairperson Michael G. Aguinaldo dissented, arguing for payment on quantum meruit, stating COA Resolution No. 86-58 was obsolete and that the contractor should not be penalized absent proof of collusion with government officials. Metro Laundry filed a petition for certiorari directly with the Supreme Court.

ISSUE

Whether the Commission on Audit Proper committed grave abuse of discretion in denying Metro Laundry Services’ money claim for unpaid services rendered to OMMC from April to December 2011.

RULING

The Supreme Court granted the petition. The Court ruled that the COA Proper committed grave abuse of discretion in denying the claim solely based on the illegality of the contract and in rigidly applying the obsolete COA Resolution No. 86-58. The Court held that the principle of quantum meruit applies. A contractor who has rendered services and furnished materials which are accepted and utilized by the government should be compensated for the reasonable value of the services and materials, even if the contract is void for non-compliance with legal requirements, provided the contractor is not in pari delicto. The Court found no proof that Metro Laundry colluded with government officials to violate procurement laws. The City of Manila, through OMMC, accepted and benefited from the services, as evidenced by the Certificates of Acceptance and Use, and repeatedly acknowledged the obligation through various justifications and budget inclusions. The denial of the claim would unjustly enrich the government at the expense of the contractor. The case was remanded to the COA Proper for the determination of the exact amount due to Metro Laundry based on quantum meruit, considering the actual services rendered and their reasonable value, and for the possible deduction of any amount already paid (as indicated by the City Accountant’s certification of a lower amount and a possible payment for October 2011). The Court also directed the COA to refer the matter to the Office of the Ombudsman for investigation of the government officials involved in the irregular transaction.