DOCTRINE OF PRIMARY JURISDICTION

Doctrine of primary jurisdiction

"The doctrine of primary jurisdiction holds that if a case is such that its
determination requires the expertise, specialized training and knowledge of
the proper administrative bodies, relief must first be obtained in an
administrative proceeding before a remedy is supplied by the courts even if
the matter may well be within their proper jurisdiction.22 It applies where a
claim is originally cognizable in the courts, and comes into play whenever
enforcement of the claim requires the resolution of issues which, under a
regulatory scheme, have been placed within the special competence of an
administrative agency. In such a case, the court in which the claim is sought
to be enforced may suspend the judicial process pending referral of such
issues to the administrative body for its view or, if the parties would not be
unfairly disadvantaged, dismiss the case without prejudice.23
The objective of the doctrine of primary jurisdiction is to guide the
court in determining whether it should refrain from exercising its jurisdiction
until after an administrative agency has determined some question or some
aspect of some question arising in the proceeding before the court.24."

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. Nos. 197592 & 20262

November 27, 2013

THE PROVINCE OF AKLAN, Petitioner,

vs.
JODY KING CONSTRUCTION AND DEVELOPMENT CORP., Respondent.
DECISION
VILLARAMA, JR., J.:
These consolidated petitions for review on certiorari seek to reverse and set aside the following: (1)
Decision1dated October 18, 2010 and Resolution2 dated July 5, 2011 of the Court of Appeals (CA) in
CA-G.R. SP No. 111754; and (2) Decision3 dated August 31, 2011 and Resolution4 dated June 27,
2012 in CA-G.R. SP No. 114073.
The Facts
On January 12, 1998, the Province of Aklan (petitioner) and Jody King Construction and
Development Corp. (respondent) entered into a contract for the design and -construction of the
Caticlan Jetty Port and Terminal (Phase I) in Malay, Aklan. The total project cost is P38,900,000: P
18,700,000 for the design and construction of passenger terminal, and P20,200,000 for the design

and construction of the jetty port facility.5 In the course of construction, petitioner issued
variation/change orders for additional works. The scope of work under these change orders were
agreed upon by petitioner and respondent.6
On January 5, 2001, petitioner entered into a negotiated contract with respondent for the
construction of Passenger Terminal Building (Phase II) also at Caticlan Jetty Port in Malay, Aklan.
The contract price for Phase II is P2,475,345.54.7
On October 22, 2001, respondent made a demand for the total amount of P22,419,112.96 covering
the following items which petitioner allegedly failed to settle:
1. Unpaid accomplishments on additional works
undertaken - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Php 12,396,143.09
2. Refund of taxes levied despite it not being
covered by original contract- - - - - - - - - - - - - - - - - - - - - - Php 884,098.59
3. Price escalation (Consistent with Section 7.5,
Original Contract- - - - - - - - - - - - - - - - - - - - - - - - - - - - Php 1,291,714.98
4. Additional Labor Cost resulting [from]
numerous change orders issued sporadically - - - - - - - - Php 3,303,486.60
5. Additional Overhead Cost resulting [from]
numerous Orders issued sporadically - - - - - - - - - - - - - Php 1,101,162.60
6. Interest resulting [from] payment delays
consistent with Section 7.3.b of the Original
Contract - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Php 3,442,507.50.8
On July 13, 2006, respondent sued petitioner in the Regional Trial Court (RTC) of Marikina City (Civil
Case No. 06-1122-MK) to collect the aforesaid amounts.9 On August 17, 2006, the trial court issued
a writ of preliminary attachment.10
Petitioner denied any unpaid balance and interest due to respondent. It asserted that the sums being
claimed by respondent were not indicated in Change Order No. 3 as approved by the Office of
Provincial Governor. Also cited was respondents June 10, 2003 letter absolving petitioner from
liability for any cost in connection with the Caticlan Passenger Terminal Project.11
After trial, the trial court rendered its Decision12 on August 14, 2009, the dispositive portion of which
reads:
WHEREFORE, foregoing premises considered, judgment is hereby rendered in favor of plaintiff Jody
King Construction And Development Corporation and against defendant Province of Aklan, as
follows:
1. ordering the defendant to pay to the plaintiff the amount of Php7,396,143.09 representing
the unpaid accomplishment on additional works undertaken by the plaintiff;
2. ordering the defendant to refund to the plaintiff the amount of Php884,098.59 representing
additional 2% tax levied upon against the plaintiff;

3. ordering the defendant to pay to the plaintiff price escalation in the amount of
Php1,291,714.98 pursuant to Section 7.5 of the original contract;
4. ordering the defendant to pay to the plaintiff the amount of Php3,303,486.60 representing
additional labor cost resulting from change orders issued by the defendant;
5. ordering the defendant to pay to the plaintiff the sum of Php1,101,162.00 overhead cost
resulting from change orders issued by the defendant;
6. ordering the defendant to pay the sum of Php3,442,507.50 representing interest resulting
from payment delays up to October 15, 2001 pursuant to Section 7.3.b of the original
contract;
7. ordering the defendant to pay interest of 3% per month from unpaid claims as of October
16, 2001 to date of actual payment pursuant to Section 7.3.b[;]
8. ordering the [defendant] to pay to the plaintiff the sum of Php500,000.00 as moral
damages;
9. ordering the defendant to pay to the plaintiff the sum of Php300,000.00 as exemplary
damages;
10. ordering the defendant to pay the plaintiff the sum of Php200,000.00, as and for
attorneys fees; and
11. ordering the defendant to pay the cost of suit.
SO ORDERED.13
Petitioner filed its motion for reconsideration14 on October 9, 2009 stating that it received a copy of
the decision on September 25, 2009. In its Order15 dated October 27, 2009, the trial court denied the
motion for reconsideration upon verification from the records that as shown by the return card, copy
of the decision was actually received by both Assistant Provincial Prosecutor Ronaldo B. Ingente
and Atty. Lee T. Manares on September 23, 2009. Since petitioner only had until October 8, 2009
within which to file a motion for reconsideration, its motion filed on October 9, 2009 was filed one day
after the finality of the decision. The trial court further noted that there was a deliberate attempt on
both Atty. Manares and Prosecutor Ingente to mislead the court and make it appear that their motion
for reconsideration was filed on time. Petitioner filed a Manifestation16 reiterating the explanation set
forth in its Rejoinder to respondents comment/opposition and motion to dismiss that the wrong date
of receipt of the decision stated in the motion for reconsideration was due to pure inadvertence
attributable to the staff of petitioners counsel. It stressed that there was no intention to mislead the
trial court nor cause undue prejudice to the case, as in fact its counsel immediately corrected the
error upon discovery by explaining the attendant circumstances in the Rejoinder dated October 29,
2009.
On November 24, 2009, the trial court issued a writ of execution ordering Sheriff IV Antonio E.
Gamboa, Jr. to demand from petitioner the immediate payment of P67,027,378.34 and tender the
same to the respondent. Consequently, Sheriff Gamboa served notices of garnishment on Land
Bank of the Philippines, Philippine National Bank and Development Bank of the Philippines at their
branches in Kalibo, Aklan for the satisfaction of the judgment debt from the funds deposited under
the account of petitioner. Said banks, however, refused to give due course to the court order, citing

the relevant provisions of statutes, circulars and jurisprudence on the determination of government
monetary liabilities, their enforcement and satisfaction.17
Petitioner filed in the CA a petition for certiorari with application for temporary restraining order
(TRO) and preliminary injunction assailing the Writ of Execution dated November 24, 2009, docketed
as CA-G.R. SP No. 111754.
On December 7, 2009, the trial court denied petitioners notice of appeal filed on December 1, 2009.
Petitioners motion for reconsideration of the December 7, 2009 Order was likewise denied.18 On May
20, 2010, petitioner filed another petition for certiorari in the CA questioning the aforesaid orders
denying due course to its notice of appeal, docketed as CA-G.R. SP No. 114073.
By Decision dated October 18, 2010, the CAs First Division dismissed the petition in CA-G.R. SP
No. 111754 as it found no grave abuse of discretion in the lower courts issuance of the writ of
execution. Petitioner filed a motion for reconsideration which was likewise denied by the CA. The CA
stressed that even assuming as true the alleged errors committed by the trial court, these were
insufficient for a ruling that grave abuse of discretion had been committed. On the matter of
execution of the trial courts decision, the appellate court said that it was rendered moot by
respondents filing of a petition before the Commission on Audit (COA).
On August 31, 2011, the CAs Sixteenth Division rendered its Decision dismissing the petition in CAG.R. SP No. 114073. The CA said that petitioner failed to provide valid justification for its failure to
file a timely motion for reconsideration; counsels explanation that he believed in good faith that the
August 14, 2009 Decision of the trial court was received on September 25, 2009 because it was
handed to him by his personnel only on that day is not a justifiable excuse that would warrant the
relaxation of the rule on reglementary period of appeal. The CA also held that petitioner is estopped
from invoking the doctrine of primary jurisdiction as it only raised the issue of COAs primary
jurisdiction after its notice of appeal was denied and a writ of execution was issued against it.
The Cases
In G.R. No. 197592, petitioner submits the following issues:
I.
WHETHER OR NOT THE DECISION DATED 14 AUGUST 2009 RENDERED BY THE
REGIONAL TRIAL COURT, BRANCH 273, MARIKINA CITY AND THE WRIT OF
EXECUTION DATED 24 NOVEMBER 2009 SHOULD BE RENDERED VOID FOR LACK OF
JURISDICTION OVER THE SUBJECT MATTER OF THE CASE.
II.
WHETHER OR NOT THE REGIONAL TRIAL COURT, BRANCH 273, MARIKINA CITY
GRAVELY ABUSED ITS DISCRETION AMOUNTING TO LACK OR IN EXCESS OF
JURISDICTION IN RENDERING THE DECISION DATED 14 AUGUST 2009 AND ISSUING
THE WRIT OF EXECUTION DATED 24 NOVEMBER 2009 EVEN IT FAILED TO DISPOSE
ALL THE ISSUES OF THE CASE BY NOT RESOLVING PETITIONERS "URGENT
MOTION TO DISCHARGE EX-PARTE WRIT OF PRELIMINARY ATTACHMENT" DATED
31 AUGUST 2006.
III.

WHETHER OR NOT THE WRIT OF EXECUTION DATED 24 NOVEMBER 2009 WHICH

WAS HASTILY ISSUED IN VIOLATION OF SUPREME COURT ADMINISTRATIVE
CIRCULAR NO. 10-2000 SHOULD BE RENDERED VOID.19
The petition in G.R. No. 202623 sets forth the following arguments:
Petitioner is not estopped in questioning the jurisdiction of the Regional Trial Court, Branch 273,
Marikina City over the subject matter of the case.20
The petition for certiorari filed before the CA due to the RTCs denial of petitioners Notice of Appeal
was in accord with jurisprudence.21
The Issues
The controversy boils down to the following issues: (1) the applicability of the doctrine of primary
jurisdiction to this case; and (2) the propriety of the issuance of the writ of execution.
Our Ruling
The petitions are meritorious.
COA has primary jurisdiction over private respondents money claims Petitioner is not estopped from
raising the issue of jurisdiction
The doctrine of primary jurisdiction holds that if a case is such that its determination requires the
expertise, specialized training and knowledge of the proper administrative bodies, relief must first be
obtained in an administrative proceeding before a remedy is supplied by the courts even if the matter
may well be within their proper jurisdiction.22 It applies where a claim is originally cognizable in the
courts, and comes into play whenever enforcement of the claim requires the resolution of issues
which, under a regulatory scheme, have been placed within the special competence of an
administrative agency. In such a case, the court in which the claim is sought to be enforced may
suspend the judicial process pending referral of such issues to the administrative body for its view
or, if the parties would not be unfairly disadvantaged, dismiss the case without prejudice.23
The objective of the doctrine of primary jurisdiction is to guide the court in determining whether it
should refrain from exercising its jurisdiction until after an administrative agency has determined
some question or some aspect of some question arising in the proceeding before the court.24
As can be gleaned, respondent seeks to enforce a claim for sums of money allegedly owed by
petitioner, a local government unit.
Under Commonwealth Act No. 327,25 as amended by Section 26 of Presidential Decree No. 1445,26 it
is the COA which has primary jurisdiction over money claims against government agencies and
instrumentalities.
Section 26. General jurisdiction. The authority and powers of the Commission shall extend to and
comprehend all matters relating to auditing procedures, systems and controls, the keeping of the
general accounts of the Government, the preservation of vouchers pertaining thereto for a period of
ten years, the examination and inspection of the books, records, and papers relating to those
accounts; and the audit and settlement of the accounts of all persons respecting funds or property
received or held by them in an accountable capacity, as well as the examination, audit, and

settlement of all debts and claims of any sort due from or owing to the Government or any of its
subdivisions, agencies and instrumentalities. The said jurisdiction extends to all government-owned
or controlled corporations, including their subsidiaries, and other self-governing boards,
commissions, or agencies of the Government, and as herein prescribed, including non-governmental
entities subsidized by the government, those funded by donations through the government, those
required to pay levies or government share, and those for which the government has put up a
counterpart fund or those partly funded by the government. (Emphasis supplied.)
Pursuant to its rule-making authority conferred by the 1987 Constitution27 and existing laws, the COA
promulgated the 2009 Revised Rules of Procedure of the Commission on Audit. Rule II, Section 1
specifically enumerated those matters falling under COAs exclusive jurisdiction, which include
"money claims due from or owing to any government agency." Rule VIII, Section 1 further provides:
Section 1. Original Jurisdiction - The Commission Proper shall have original jurisdiction over:
a) money claim against the Government; b) request for concurrence in the hiring of legal retainers by
government agency; c) write off of unliquidated cash advances and dormant accounts receivable in
amounts exceeding one million pesos (P1,000,000.00); d) request for relief from accountability for
loses due to acts of man, i.e. theft, robbery, arson, etc, in amounts in excess of Five Million pesos
(P5,000,000.00).
In Euro-Med Laboratories Phil., Inc. v. Province of Batangas,28 we ruled that it is the COA and not the
RTC which has primary jurisdiction to pass upon petitioners money claim against respondent local
government unit. Such jurisdiction may not be waived by the parties failure to argue the issue nor
active participation in the proceedings. Thus:
This case is one over which the doctrine of primary jurisdiction clearly held sway for although
petitioners collection suit for P487,662.80 was within the jurisdiction of the RTC, the circumstances
surrounding petitioners claim brought it clearly within the ambit of the COAs jurisdiction.
First, petitioner was seeking the enforcement of a claim for a certain amount of money against a
local government unit. This brought the case within the COAs domain to pass upon money claims
against the government or any subdivision thereof under Section 26 of the Government Auditing
Code of the Philippines:
The authority and powers of the Commission [on Audit] shall extend to and comprehend all matters
relating to x x x the examination, audit, and settlement of all debts and claims of any sort due from or
owing to the Government or any of its subdivisions, agencies, and instrumentalities. x x x.
The scope of the COAs authority to take cognizance of claims is circumscribed, however, by an
unbroken line of cases holding statutes of similar import to mean only liquidated claims, or those
determined or readily determinable from vouchers, invoices, and such other papers within reach of
accounting officers. Petitioners claim was for a fixed amount and although respondent took issue
with the accuracy of petitioners summation of its accountabilities, the amount thereof was readily
determinable from the receipts, invoices and other documents. Thus, the claim was well within the
COAs jurisdiction under the Government Auditing Code of the Philippines.
Second, petitioners money claim was founded on a series of purchases for the medical supplies of
respondents public hospitals. Both parties agreed that these transactions were governed by the
Local Government Code provisions on supply and property management and their implementing
rules and regulations promulgated by the COA pursuant to Section 383 of said Code. Petitioners
claim therefore involved compliance with applicable auditing laws and rules on procurement. Such

matters are not within the usual area of knowledge, experience and expertise of most judges but
within the special competence of COA auditors and accountants. Thus, it was but proper, out of
fidelity to the doctrine of primary jurisdiction, for the RTC to dismiss petitioners complaint.
Petitioner argues, however, that respondent could no longer question the RTCs jurisdiction over the
matter after it had filed its answer and participated in the subsequent proceedings. To this, we need
only state that the court may raise the issue of primary jurisdiction sua sponte and its invocation
cannot be waived by the failure of the parties to argue it as the doctrine exists for the proper
distribution of power between judicial and administrative bodies and not for the convenience of the
parties.29 (Emphasis supplied.)
Respondents collection suit being directed against a local government unit, such money claim
should have been first brought to the COA.30 Hence, the RTC should have suspended the
proceedings and refer the filing of the claim before the COA. Moreover, petitioner is not estopped
from raising the issue of jurisdiction even after the denial of its notice of appeal and before the CA.
There are established exceptions to the doctrine of primary jurisdiction, such as: (a) where there is
estoppel on the part of the party invoking the doctrine; (b) where the challenged administrative act is
patently illegal, amounting to lack of jurisdiction; (c) where there is unreasonable delay or official
inaction that will irretrievably prejudice the complainant; (d) where the amount involved is relatively
small so as to make the rule impractical and oppressive; (e) where the question involved is purely
legal and will ultimately have to be decided by the courts of justice; (f) where judicial intervention is
urgent; (g) when its application may cause great and irreparable damage; (h) where the controverted
acts violate due process; (i) when the issue of non-exhaustion of administrative remedies has been
rendered moot; (j) when there is no other plain, speedy and adequate remedy; (k) when strong
public interest is involved; and, (l) in quo warranto proceedings.31 However, none of the foregoing
circumstances is applicable in the present case.
The doctrine of primary jurisdiction does not warrant a court to arrogate unto itself authority to
resolve a controversy the jurisdiction over which is initially lodged with an administrative body of
special competence.32 All the proceedings of the court in violation of the doctrine and all orders and
decisions rendered thereby are null and void.33
Writ of Execution issued in violation of COAs primary jurisdiction is void
Since a judgment rendered by a body or tribunal that has no jurisdiction over the subject matter of
the case is no judgment at all, it cannot be the source of any right or the creator of any
obligation.34 All acts pursuant to it and all claims emanating from it have no legal effect and the void
judgment can never be final and any writ of execution based on it is likewise void.35
Clearly, the CA erred in ruling that the RTC committed no grave abuse of discretion when it ordered
the execution of its judgment against petitioner and garnishment of the latters funds.
In its Supplement to the Motion for Reconsideration, petitioner argued that it is the COA and not the
RTC which has original jurisdiction over money claim against government agencies and
subdivisions. The CA, in denying petitioner's motion for reconsideration, simply stated that the issue
had become moot by respondent's filing of the proper petition with the COA. However, respondent's
belated compliance with the formal requirements of presenting its money claim before the COA did
not cure the serious errors committed by the RTC in implementing its void decision. The RTC's
orders implementing its judgment rendered without jurisdiction must be set aside because a void
judgment can never be validly executed.
1wphi1

Finally, the RTC should have exercised utmost caution, prudence and judiciousness in issuing the
writ of execution and notices of garnishment against petitioner. The RTC had no authority to direct
the immediate withdrawal of any portion of the garnished funds from petitioner's depositary
banks.36 Such act violated the express directives of this Court under Administrative Circular No. 102000,37 which was issued "precisely in order to prevent the circumvention of Presidential Decree No.
1445, as well as of the rules and procedures of the COA."38 WHEREFORE, both petitions in G.R.
Nos. 197592 and 202623 are GRANTED. The Decision dated October 18, 2010 and Resolution
dated July 5 2011 of the Court of Appeals in CA-G.R. SP No. 111754, and Decision dated August
31, 2011 and Resolution dated June 27, 2012 in CA- G.R. SP No. 114073 are hereby REVERSED
and SET ASIDE. The Decision dated August 14 2009, Writ of Execution and subsequent issuances
implementing the said decision of the Regional Trial Court of Marikina City in Civil Case No. 061122-MK are all SET ASIDE. No pronouncement as to costs.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 148106

July 17, 2006

EURO-MED LABORATORIES, PHIL., INC., represented by LEONARDO H. TORIBIO, petitioner,

vs.
THE PROVINCE OF BATANGAS, represented by its Governor, HON. HERMILANDO I.
MANDANAS,respondent.
DECISION
CORONA, J.:
Before the Court is a petition for review on certiorari1 assailing, on pure questions of law, the March 7
and May 16, 2001 orders of the Regional Trial Court (RTC) of Batangas City2 in Civil Case No. 5300.
Civil Case No. 5300 was a complaint for sum of money3 filed by petitioner Euro-Med Laboratories,
Phil., Inc. against respondent Province of Batangas. The pertinent portions of the complaint read:
3. On several occasions, particularly from the period of 19 August 1992 to 11 August 1998,
defendant [respondent here], thru its various authorized representatives of the government
hospitals identified and listed below, purchased various Intravenous Fluids (IVF) products
from the plaintiff [petitioner here], with an unpaid balance of Four Hundred Eighty Seven
Thousand Six Hundred Sixty-Two Pesos and Eighty Centavos (P487,662.80), as of 28
February 1998, broken down as follows: x x x x which purchases were evidenced by invoices
duly received and signed by defendants authorized representatives, upon delivery of the
merchandise listed in said invoices.

4. Under the terms and conditions of the aforesaid invoices, defendant agreed and
covenanted to pay plaintiff, without need of demand, its obligations in the above-enumerated
invoices on various terms indicated therein.
5. Plaintiff made several demands for defendant to pay its accountabilities, including setting
up several dialogues with plaintiffs representatives, but these proved fruitless.
6. Despite repeated demands by plaintiff for defendant to pay and settle its unpaid and
outstanding accounts under the aforementioned invoices, said defendant has failed and still
fails to comply therewith.4
In its answer,5 respondent admitted most of the allegations in the complaint, denying only those
relating to the unpaid balance supposedly still due petitioner. Respondent alleged that some
payments it had already made were not reflected in the computation set forth in the complaint and
that it was continuously exerting genuine and earnest efforts "to find out the true and actual amount
owed."6 Pre-trial and trial followed.
At the conclusion of petitioners presentation of evidence, respondent filed a motion to dismiss7 the
complaint on the ground that the primary jurisdiction over petitioners money claim was lodged with
the Commission on Audit (COA). Respondent pointed out that petitioners claim, arising as it did
from a series of procurement transactions with the province, was governed by the Local Government
Code provisions and COA rules and regulations on supply and property management in local
governments. Respondent argued that the case called for a determination of whether these
provisions and rules were complied with, and that was within the exclusive domain of COA to make.
Finding the motion to be well-taken, the RTC issued on March 7, 2001 an order8 dismissing
petitioners complaint without prejudice to the filing of the proper money claim with the COA. In a
subsequent order dated May 16, 2001,9 the RTC denied petitioners motion for reconsideration.
Hence, this petition.
The resolution of this case turns on whether it is the COA or the RTC which has primary jurisdiction
to pass upon petitioners money claim against the Province of Batangas. We rule that it is the COA
which does. Therefore, we deny the petition.
The doctrine of primary jurisdiction holds that if a case is such that its determination requires the
expertise, specialized training and knowledge of an administrative body, relief must first be obtained
in an administrative proceeding before resort to the courts is had even if the matter may well be
within their proper jurisdiction.10 It applies where a claim is originally cognizable in the courts and
comes into play whenever enforcement of the claim requires the resolution of issues which, under a
regulatory scheme, have been placed within the special competence of an administrative agency. In
such a case, the court in which the claim is sought to be enforced may suspend the judicial process
pending referral of such issues to the administrative body for its view11 or, if the parties would not be
unfairly disadvantaged, dismiss the case without prejudice.12
This case is one over which the doctrine of primary jurisdiction clearly held sway for although
petitioners collection suit for P487,662.80 was within the jurisdiction of the RTC,13 the circumstances
surrounding petitioners claim brought it clearly within the ambit of the COAs jurisdiction.
First, petitioner was seeking the enforcement of a claim for a certain amount of money against a
local government unit. This brought the case within the COAs domain to pass upon money claims
against the government or any subdivision thereof under Section 26 of the Government Auditing
Code of the Philippines:14

The authority and powers of the Commission [on Audit] shall extend to and comprehend all
matters relating to x x x x the examination, audit, and settlement of all debts and claims of
any sort due from or owing to the Government or any of its subdivisions, agencies, and
instrumentalities. x x x x.
The scope of the COAs authority to take cognizance of claims is circumscribed, however, by an
unbroken line of cases holding statutes of similar import to mean only liquidated claims, or those
determined or readily determinable from vouchers, invoices, and such other papers within reach of
accounting officers.15 Petitioners claim was for a fixed amount and although respondent took issue
with the accuracy of petitioners summation of its accountabilities, the amount thereof was readily
determinable from the receipts, invoices and other documents. Thus, the claim was well within the
COAs jurisdiction under the Government Auditing Code of the Philippines.
Second, petitioners money claim was founded on a series of purchases for the medical supplies of
respondents public hospitals. Both parties agreed that these transactions were governed by the
Local Government Code provisions on supply and property management16 and their implementing
rules and regulations promulgated by the COA17 pursuant to Section 383 of said Code.18 Petitioners
claim therefore involved compliance with applicable auditing laws and rules on procurement. Such
matters are not within the usual area of knowledge, experience and expertise of most judges but
within the special competence of COA auditors and accountants. Thus, it was but proper, out of
fidelity to the doctrine of primary jurisdiction, for the RTC to dismiss petitioners complaint.
Petitioner argues, however, that respondent could no longer question the RTCs jurisdiction over the
matter after it had filed its answer and participated in the subsequent proceedings. To this, we need
only state that the court may raise the issue of primary jurisdiction sua sponte and its invocation
cannot be waived by the failure of the parties to argue it as the doctrine exists for the proper
distribution of power between judicial and administrative bodies and not for the convenience of the
parties.19
WHEREFORE, the petition is hereby DENIED. The March 7, and May 16, 2001 orders of the
Regional Trial Court of Batangas City are hereby AFFIRMED.
Costs against petitioner.
SO ORDERED.

Republic of the Philippines

Supreme Court
Manila
THIRD DIVISION
REPUBLIC OF THE PHILIPPINES,
G.R. No. 158253
represented by the DEPARTMENT
OF PUBLIC WORKS AND HIGHWAYS,

COMMISSION ON AUDIT and THE

NATIONAL TREASURER,
Petitioner,
Present:

- versus -

YNARES-SANTIAGO, J.,
(Chairperson)
AUSTRIA-MARTINEZ,
CALLEJO, SR.,
CHICO-NAZARIO, and
NACHURA, JJ.

CARLITO LACAP, doing business

under the name and style CARWIN
CONSTRUCTION AND
CONSTRUCTION SUPPLY,
Promulgated:
Respondent.
March 2, 2007
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

DECISION
AUSTRIA-MARTINEZ, J.:
Before the Court is a Petition for Review on Certiorari under Rule 45 of the
Revised Rules of Court assailing the Decision[1] dated April 28, 2003 of the Court
of Appeals (CA) in CA-G.R. CV No. 56345 which affirmed with modification the
Decision[2] of the Regional Trial Court, Branch 41, San Fernando, Pampanga
(RTC) in Civil Case No. 10538, granting the complaint for Specific Performance
and Damages filed by Carlito Lacap (respondent) against the Republic of the
Philippines (petitioner).
The factual background of the case is as follows:
The District Engineer of Pampanga issued and duly published an
Invitation To Bid dated January 27, 1992. Respondent, doing business under the
name
and
style CarwinConstruction
and
Construction
Supply
(Carwin Construction), was pre-qualified together with two other contractors.

Since respondent submitted the lowest bid, he was awarded the contract for the
concreting of Sitio 5 Bahay Pare.[3] On November 4, 1992, a Contract Agreement
was executed by respondent and petitioner.[4] On September 25, 1992, District
Engineer Rafael S. Ponio issued a Notice to Proceed with the concreting
of Sitio 5 Bahay Pare.[5] Accordingly, respondent undertook the works, made
advances for the purchase of the materials and payment for labor costs.[6]
On October 29, 1992, personnel of the Office of the District Engineer of San
Fernando, Pampanga conducted a final inspection of the project and found it 100%
completed in accordance with the approved plans and specifications. Accordingly,
the Office of the District Engineer issued Certificates of Final Inspection and Final
Acceptance.[7]
Thereafter, respondent sought to collect payment for the completed
project.[8] The DPWH prepared the Disbursement Voucher in favor of
petitioner.[9] However, the DPWH withheld payment from respondent after the
District Auditor of the Commission on Audit (COA) disapproved the final release
of funds on the ground that the contractors license of respondent had expired at
the time of the execution of the contract. The District Engineer sought the opinion
of the DPWH Legal Department on whether the contracts of Carwin Construction
for various Mount Pinatubo rehabilitation projects were valid and effective
although its contractors license had already expired when the projects were
contracted.[10]
In a Letter-Reply dated September 1, 1993, Cesar D. Mejia, Director III of
the DPWH Legal Department opined that since Republic Act No. 4566 (R.A. No.
4566), otherwise known as the Contractors License Law, does not provide that a
contract entered into after the license has expired is void and there is no law which
expressly prohibits or declares void such contract, the contract is enforceable and
payment may be paid, without prejudice to any appropriate administrative liability
action that may be imposed on the contractor and the government officials or
employees concerned.[11]
In a Letter dated July 4, 1994, the District Engineer requested clarification
from the DPWH Legal Department on whether Carwin Construction should be

paid for works accomplished despite an expired contractors license at the time the
contracts were executed.[12]
In a First Indorsement dated July 20, 1994, Cesar D. Mejia, Director III of
the Legal Department, recommended that payment should be made to Carwin
Construction, reiterating his earlier legal opinion.[13] Despite such recommendation
for payment, no payment was made to respondent.
Thus, on July 3, 1995, respondent filed the complaint for Specific
Performance and Damages against petitioner before the RTC.[14]
On September 14, 1995, petitioner, through the Office of the Solicitor
General (OSG), filed a Motion to Dismiss the complaint on the grounds that the
complaint states no cause of action and that the RTC had no jurisdiction over the
nature of the action since respondent did not appeal to the COA the decision of the
District Auditor to disapprove the claim.[15]
Following the submission of respondents Opposition to Motion to
Dismiss,[16] the RTC issued an Order dated March 11, 1996 denying the Motion to
Dismiss.[17] The OSG filed a Motion for Reconsideration[18] but it was likewise
denied by the RTC in its Order dated May 23, 1996.[19]
On August 5, 1996, the OSG filed its Answer invoking the defenses of nonexhaustion of administrative remedies and the doctrine of non-suability of the
State.[20]
Following trial, the RTC rendered on February 19, 1997 its Decision, the
dispositive portion of which reads as follows:
WHEREFORE, in view of all the foregoing consideration,
judgment is hereby rendered in favor of the plaintiff and against the
defendant, ordering the latter, thru its District Engineer at Sindalan, San
Fernando, Pampanga, to pay the following:
a) P457,000.00 representing the contract for the
concreting project of Sitio 5 road, Bahay
Pare,
Candaba, Pampanga plus

interest at 12% from demand until fully

paid; and

b) The costs of suit.

SO ORDERED.[21]

The RTC held that petitioner must be required to pay the contract price since
it has accepted the completed project and enjoyed the benefits thereof; to hold
otherwise would be to overrun the long standing and consistent pronouncement
against enriching oneself at the expense of another.[22]
Dissatisfied, petitioner filed an appeal with the CA.[23] On April 28, 2003,
the CA rendered its Decision sustaining the Decision of the RTC. It held that since
the case involves the application of the principle of estoppel against the
government which is a purely legal question, then the principle of exhaustion of
administrative remedies does not apply; that by its actions the government is
estopped from questioning the validity and binding effect of the Contract
Agreement with the respondent; that denial of payment to respondent on purely
technical grounds after successful completion of the project is not countenanced
either by justice or equity.
The CA rendered herein the assailed Decision dated April 28, 2003,
the dispositive portion of which reads:

WHEREFORE, the decision of the lower court is hereby

AFFIRMED with modification in that the interest shall be six percent
(6%) per annum computed from June 21, 1995.
SO ORDERED.[24]

Hence, the present petition on the following ground:

THE COURT OF APPEALS ERRED IN NOT FINDING THAT

RESPONDENT HAS NO CAUSE OF ACTION AGAINST
PETITIONER, CONSIDERING THAT:
(a)

RESPONDENT
FAILED
TO
ADMINISTRATIVE REMEDIES; AND

EXHAUST

(b)

IT IS THE COMMISSION ON AUDIT WHICH HAS

THE PRIMARY JURISDICTION TO RESOLVE
RESPONDENTS MONEY CLAIM AGAINST THE
GOVERNMENT.[25]

Petitioner contends that respondents recourse to judicial action was

premature since the proper remedy was to appeal the District Auditors disapproval
of payment to the COA, pursuant to Section 48, Presidential Decree No. 1445
(P.D. No. 1445), otherwise known as the Government Auditing Code of the
Philippines; that the COA has primary jurisdiction to resolve respondents
money claim against the government under Section 2(1),[26] Article IX of the
1987 Constitution and Section 26[27] of P.D. No. 1445; that non-observance of the
doctrine of exhaustion of administrative remedies and the principle of primary
jurisdiction results in a lack of cause of action.
Respondent, on the other hand, in his Memorandum[28] limited his discussion
to Civil Code provisions relating to human relations. He submits that equity
demands that he be paid for the work performed; otherwise, the mandate of the
Civil Code provisions relating to human relations would be rendered nugatory if
the State itself is allowed to ignore and circumvent the standard of behavior it sets
for its inhabitants.
The present petition is bereft of merit.
The general rule is that before a party may seek the intervention of the court,
he should first avail of all the means afforded him by administrative
processes.[29] The issues which administrative agencies are authorized to decide
should not be summarily taken from them and submitted to a court without first

giving such administrative agency the opportunity to dispose of the same after due
deliberation.[30]
Corollary to the doctrine of exhaustion of administrative remedies is the
doctrine of primary jurisdiction; that is, courts cannot or will not determine a
controversy involving a question which is within the jurisdiction of the
administrative tribunal prior to the resolution of that question by the administrative
tribunal, where the question demands the exercise of sound administrative
discretion requiring the special knowledge, experience and services of the
administrative tribunal to determine technical and intricate matters of fact.[31]
Nonetheless, the doctrine of exhaustion of administrative remedies and the
corollary doctrine of primary jurisdiction, which are based on sound public policy
and practical considerations, are not inflexible rules. There are many accepted
exceptions, such as: (a) where there is estoppel on the part of the party invoking
the doctrine; (b) where the challenged administrative act is patently illegal,
amounting to lack of jurisdiction; (c) where there is unreasonable delay or
official inaction that will irretrievably prejudice the complainant; (d) where
the amount involved is relatively small so as to make the rule impractical and
oppressive; (e) where the question involved is purely legal and will ultimately
have to be decided by the courts of justice;[32] (f) where judicial intervention is
urgent; (g) when its application may cause great and irreparable damage; (h) where
the controverted acts violate due process; (i) when the issue of non-exhaustion of
administrative remedies has been rendered moot;[33] (j) when there is no other
plain, speedy and adequate remedy; (k) when strong public interest is involved;
and, (l) in quo warranto proceedings.[34] Exceptions (c) and (e) are applicable to
the present case.
Notwithstanding the legal opinions of the DPWH Legal Department
rendered in 1993 and 1994 that payment to a contractor with an expired
contractors license is proper, respondent remained unpaid for the completed work
despite repeated demands. Clearly, there was unreasonable delay and official
inaction to the great prejudice of respondent.
Furthermore, whether a contractor with an expired license at the time of the
execution of its contract is entitled to be paid for completed projects, clearly is a

pure question of law. It does not involve an examination of the probative value of
the evidence presented by the parties. There is a question of law when the doubt or
difference arises as to what the law is on a certain state of facts, and not as to the
truth or the falsehood of alleged facts.[35] Said question at best could be resolved
only tentatively by the administrative authorities. The final decision on the matter
rests not with them but with the courts of justice. Exhaustion of administrative
remedies does not apply, because nothing of an administrative nature is to be or
can be done.[36] The issue does not require technical knowledge and experience but
one that would involve the interpretation and application of law.
Thus, while it is undisputed that the District Auditor of the COA
disapproved respondents claim against the Government, and, under Section
48[37] of P.D. No. 1445, the administrative remedy available to respondent is an
appeal of the denial of his claim by the District Auditor to the COA itself, the
Court holds that, in view of exceptions (c) and (e) narrated above, the complaint
for specific performance and damages was not prematurely filed and within the
jurisdiction of the RTC to resolve, despite the failure to exhaust administrative
remedies. As the Court aptly stated in Rocamora v. RTC-Cebu (Branch VIII):[38]
The plaintiffs were not supposed to hold their breath and wait
until the Commission on Audit and the Ministry of Public Highways had
acted on the claims for compensation for the lands appropriated by the
government. The road had been completed; the Pope had come and
gone; but the plaintiffs had yet to be paid for the properties taken from
them. Given this official indifference, which apparently would continue
indefinitely, the private respondents had to act to assert and protect their
interests.[39]

On the question of whether a contractor with an expired license is entitled to

be paid for completed projects, Section 35 of R.A. No. 4566 explicitly provides:
SEC. 35. Penalties. Any contractor who, for a price, commission,
fee or wage, submits or attempts to submit a bid to construct, or
contracts to or undertakes to construct, or assumes charge in a
supervisory capacity of a construction work within the purview of this
Act, without first securing a license to engage in the business of
contracting in this country; or who shall present or file the license

certificate of another, give false evidence of any kind to the Board, or

any member thereof in obtaining a certificate or license, impersonate
another, or use an expired or revoked certificate or license, shall be
deemed guilty of misdemeanor, and shall, upon conviction, be sentenced
to pay a fine of not less than five hundred pesos but not more than five
thousand pesos. (Emphasis supplied)

The plain meaning rule or verba legis in statutory construction is that if

the statute is clear, plain and free from ambiguity, it must be given its literal
meaning and applied without interpretation.[40] This rule derived from the
maxim Index animi sermo est (speech is the index of intention) rests on the valid
presumption that the words employed by the legislature in a statute correctly
express its intention or will and preclude the court from construing it
differently. The legislature is presumed to know the meaning of the words, to have
used words advisedly, and to have expressed its intent by use of such words as are
found in the statute.[41] Verba legis non est recedendum, or from the words of a
statute there should be no departure.[42]
The wordings of R.A. No. 4566 are clear. It does not declare, expressly or
impliedly, as void contracts entered into by a contractor whose license had already
expired. Nonetheless, such contractor is liable for payment of the fine prescribed
therein. Thus, respondent should be paid for the projects he completed. Such
payment, however, is without prejudice to the payment of the fine prescribed under
the law.
Besides, Article 22 of the Civil Code which embodies the maxim Nemo ex
alterius incommode debet lecupletari (no man ought to be made rich out of
anothers injury) states:
Art. 22. Every person who through an act of performance by
another, or any other means, acquires or comes into possession of
something at the expense of the latter without just or legal ground, shall
return the same to him.

This article is part of the chapter of the Civil Code on Human Relations, the
provisions of which were formulated as basic principles to be observed for the

rightful relationship between human beings and for the stability of the social order,
x x x designed to indicate certain norms that spring from the fountain of good
conscience, x x x guides human conduct [that] should run as golden threads
through society to the end that law may approach its supreme ideal which is the
sway and dominance of justice.[43] The rules thereon apply equally well to the
Government.[44] Since respondent had rendered services to the full satisfaction and
acceptance by petitioner, then the former should be compensated for them. To
allow petitioner to acquire the finished project at no cost would undoubtedly
constitute unjust enrichment for the petitioner to the prejudice of
respondent. Such unjust enrichment is not allowed by law.
WHEREFORE, the present petition is DENIED for lack of merit. The
assailed Decision of the Court of Appeals dated April 28, 2003 in CA-G.R. CV
No. 56345 is AFFIRMED. No pronouncement as to costs.
SO ORDERED.