GR 158253; (March, 2007) (Digest)
G.R. No. 158253 . March 2, 2007.
Republic of the Philippines, represented by the Department of Public Works and Highways, Commission on Audit and The National Treasurer, Petitioner, vs. Carlito Lacap, doing business under the name and style Carwin Construction and Construction Supply, Respondent.
FACTS
The Department of Public Works and Highways (DPWH) awarded a road concreting project to respondent Carlito Lacap, doing business as Carwin Construction. A contract was executed, and Lacap completed the project, which was inspected and accepted as 100% complete by the DPWH. The DPWH prepared a disbursement voucher for payment.
However, the Commission on Audit (COA) District Auditor disapproved the payment on the sole ground that Lacap’s contractor’s license had expired at the time of the contract’s execution. Despite a legal opinion from the DPWH’s own Legal Department stating that the contract was enforceable and recommending payment, the government withheld the funds. Lacap filed a complaint for Specific Performance and Damages before the Regional Trial Court (RTC).
ISSUE
Whether the respondent’s failure to appeal the COA auditor’s disapproval to the Commission proper constitutes a fatal failure to exhaust administrative remedies, thereby depriving the trial court of jurisdiction over his money claim against the government.
RULING
The Supreme Court ruled that exhaustion of administrative remedies was not required under the circumstances, affirming the decisions of the lower courts. The Court clarified that while the COA possesses primary jurisdiction over money claims against the government under the Constitution and P.D. No. 1445, the doctrine of exhaustion is subject to exceptions.
A recognized exception is when the issue raised is a purely legal question. Here, the core issue was whether the government was estopped from denying payment after it had accepted and benefited from a fully completed project, despite a technical licensing defect. This presented a legal question appropriate for judicial resolution. Furthermore, the Court found that the government, through the DPWH, had already made a final decision by adopting the legal opinion of its Legal Department recommending payment. An appeal to the COA would have been a superfluity, as the DPWH itself was advocating for the claim’s validity. The government cannot invoke its own failure to follow its internal recommendation to defeat a legitimate claim. Thus, the RTC properly assumed jurisdiction, and the government was ordered to pay the contract price with interest.