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.

FACTS

Petitioner Euro-Med Laboratories filed a complaint for sum of money against respondent Province of Batangas before the Regional Trial Court (RTC). The claim, amounting to P487,662.80, arose from the unpaid balance for various intravenous fluids purchased by the province’s government hospitals from August 1992 to August 1998. Petitioner alleged that despite repeated demands, the province failed to settle its obligations as evidenced by invoices signed by the latter’s authorized representatives.
Respondent province, in its answer, admitted most allegations but contested the accuracy of the claimed unpaid balance, asserting that some payments were not reflected. After pre-trial and during the presentation of petitioner’s evidence, respondent filed a motion to dismiss, arguing that the Commission on Audit (COA) had primary jurisdiction over the money claim. The RTC granted the motion and dismissed the complaint without prejudice, directing petitioner to file the proper claim with the COA.

ISSUE

Whether the RTC correctly dismissed the complaint on the ground that the Commission on Audit, not the trial court, has primary jurisdiction over petitioner’s money claim against the Province of Batangas.

RULING

The Supreme Court affirmed the RTC’s dismissal, upholding the application of the doctrine of primary jurisdiction. The Court ruled that although the collection suit for a sum exceeding P300,000 was within the RTC’s jurisdiction under Batas Pambansa Blg. 129, the claim fell under the COA’s special competence. First, the claim was against a local government unit, and Section 26 of the Government Auditing Code (P.D. 1445) vests the COA with authority to examine, audit, and settle all debts and claims due from or owing to the government or its subdivisions. Petitioner’s claim was liquidated, being for a fixed amount determinable from invoices and receipts, which squarely places it within the COA’s jurisdiction over such liquidated claims.
Second, the transactions involved procurement of medical supplies for public hospitals, governed by the Local Government Code’s provisions on supply and property management and implementing rules issued by the COA. Determining compliance with these auditing laws and procurement regulations requires the expertise, specialized knowledge, and technical competence of COA auditors, not of judges. The doctrine of primary jurisdiction precisely mandates that courts should defer to administrative agencies on issues within their special competence. The Court also held that the doctrine can be raised sua sponte by the court and is not subject to waiver by the parties, as it concerns the proper distribution of power between judicial and administrative bodies.