Flavio K. Macasaet & Associates v. Commission On Audit

Summary

This case involved a contract interpretation dispute between a private architectural firm and the Philippine Tourism Authority over additional professional fees. The petitioner claimed 7% of escalation costs paid to the main contractor, arguing that the contract's reference to 'final actual project cost' included such costs. The Commission on Audit denied the claim, reasoning that no additional services were rendered. The Supreme Court reversed, emphasizing that contract terms must be interpreted literally when clear. The Court distinguished between 'actual construction cost' and 'final actual project cost,' holding that the latter encompasses all costs actually and finally determined, including price escalations. This decision reinforces the principle that contractual obligations must be performed in good faith and that clear contract language governs the parties' rights and obligations, regardless of whether additional work was performed.