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REPUBLIC v. CARLITO LACAP

FACTS:

The District Engineer of Pampanga issued an "Invitation to Bid" in 1992 for a construction project. Respondent Carlito Lacap, doing business as Carwin Construction, was awarded the contract as the lowest bidder. A Contract Agreement was executed, and respondent commenced work on the project. After completion, the Office of the District Engineer issued Certificates of Final Inspection and Final Acceptance. Respondent then sought payment for the completed project, but the Department of Public Works and Highways (DPWH) withheld payment due to the expired contractor's license of respondent. The DPWH sought the opinion of its Legal Department, which opined that the contract is enforceable. Despite this, no payment was made to respondent. Respondent filed a complaint for specific performance and damages against the Republic of the Philippines before the Regional Trial Court (RTC) in 1995. The RTC denied the Motion to Dismiss filed by the Office of the Solicitor General (OSG), and eventually rendered a decision in favor of respondent. On appeal, the Court of Appeals (CA) affirmed the decision of the RTC, finding that the government was estopped from questioning the validity of the contract. Petitioner now files a Petition for Review on Certiorari to the Supreme Court, arguing that respondent should have exhausted administrative remedies and that the Commission on Audit has the primary jurisdiction to resolve respondent's money claim against the government.

ISSUES:

  1. Whether respondent failed to exhaust administrative remedies.

  2. Whether the Commission on Audit has primary jurisdiction to resolve respondent's money claim against the government.

RULING:

  1. The Court held that respondent's recourse to judicial action was not premature and that there was no need to exhaust administrative remedies. The principle of exhaustion of administrative remedies does not apply in this case because it involves the application of the principle of estoppel against the government, which is a purely legal question.

  2. The Court also held that while the Commission on Audit has primary jurisdiction to resolve money claims against the government, this case falls under the exception to this rule. The government is estopped from questioning the validity and binding effect of the contract agreement with the respondent. Denying payment on purely technical grounds after the successful completion of the project is not countenanced by justice or equity.

PRINCIPLES:

  • Principle of estoppel against the government.

  • Exception to the principle of exhaustion of administrative remedies.

  • Doctrine of non-suability of the State.