G.R. No. 261207 , August 22, 2023
TOPBEST PRINTING CORPORATION, AS DULY REPRESENTED BY SHIRLEY L. DIONISIO, PETITIONER, VS. SOFIA C. GEMORA, IN HER CAPACITY AS DIRECTOR IV OF THE COMMISSION ON AUDIT, EDNA P. SALAGUBAN, SUPERVISING AUDITOR, FAHAD BIN ABDUL MALIK N. TOMAWIS, AUDIT TEAM LEADER, RESPONDENTS.

FACTS

The National Printing Office (NPO) entered into Equipment Lease Agreements (ELAs) with Topbest Printing Corporation (Topbest) to lease printing equipment to fulfill its daily printing activities. In 2016, NPO awarded Topbest a contract to lease a printing machine for PHP 49,500,000.00. The following year, Topbest received a Notice of Award for a Joint Venture Undertaking with NPO, but NPO applied the ELA terms with payment on a “per-usage basis” via work orders. This arrangement was flagged in a 2017 Audit Observation Memorandum (AOM) as contrary to Government Procurement Policy Board Resolution No. 05-2010 and Section 22(a) of the 2017 General Appropriations Act, which prohibit Recognized Government Printers from subcontracting printing services. The AOM matured into Notice of Disallowance (ND) No. 19-001-207542-(17), which disallowed the rental fees paid to Topbest as irregular expenses, holding Topbest liable to return PHP 6,039,057.54. Topbest directly filed a Petition for Review before the Supreme Court via Rule 64, mistakenly believing it had only one day to file with the COA Commission Proper, when it actually had two days. The ponencia held the ND was validly issued and the COA-NGAS Decision had become final due to Topbest’s failure to exhaust administrative remedies.

ISSUE

Whether the doctrine of finality of judgment should be relaxed to allow Topbest to retain the payment it received from NPO based on quantum meruit, despite the procedural misstep and the finding that the ELA was a prohibited subcontracting arrangement.

RULING

Justice Caguioa, in his Concurring and Dissenting Opinion, concurred with the ponencia that the ND was validly issued and the COA-NGAS Decision became final due to Topbest’s failure to exhaust administrative remedies. However, he dissented in part, maintaining that the doctrine of finality of judgment should yield to substantial justice to allow Topbest to retain the payment based on quantum meruit. He voted to remand the case to determine Topbest’s liability, if any, after deducting the value of the lease of its equipment and services. He argued that the circumstances met most considerations for relaxing the rule on immutability of final judgment as outlined in Estalilla v. Commission on Audit: (1) the disallowance implicated Topbest’s property; (2) a compelling circumstance existed as upholding the disallowance would result in unjust enrichment, as NPO and requisitioning agencies benefited from Topbest’s equipment free-of-charge; (3) Topbest’s cause was meritorious as it performed its obligations under the ELAs; (4) the petition was not frivolous or dilatory; and (5) the government would not be unjustly prejudiced as it accepted and benefited from the equipment. He contended that the ELA, by its terms, was a contract of lease where Topbest leased equipment to be operated by NPO personnel, and the bundling of maintenance and production costs into the rental fee was a natural arrangement given NPO’s lack of funding for capital outlay. He concluded that Topbest should be compensated based on quantum meruit for the undisputed use of its equipment by the government.