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PROVINCE OF AKLAN v. JODY KING CONSTRUCTION

FACTS:

The Province of Aklan entered into two contracts with Jody King Construction and Development Corp. for the construction of the Caticlan Jetty Port and Terminal and the Passenger Terminal Building. Jody King filed a lawsuit against the Province of Aklan to collect unpaid amounts, taxes, price escalation, additional labor cost, additional overhead cost, and interest. The trial court ruled in favor of Jody King and ordered the Province of Aklan to pay the claimed amounts, damages, attorney's fees, and costs of suit. The Province of Aklan filed a motion for reconsideration, but it was denied. A writ of execution order was issued by the trial court.

The Regional Trial Court issued a decision ordering the petitioner to pay the respondent a certain amount. The trial court issued a writ of execution, but the banks refused to comply with it, citing relevant provisions of statutes, circulars, and jurisprudence. The petitioner filed a petition for certiorari with the Court of Appeals (CA) to question the writ of execution. The trial court denied petitioner's notice of appeal and motion for reconsideration. Petitioner filed another petition for certiorari with the CA, but both petitions were dismissed by the CA. The CA held that petitioner failed to provide a valid justification for its failure to file a timely motion for reconsideration and that it is estopped from invoking the doctrine of primary jurisdiction.

The case is now before the Supreme Court, with the petitioner raising issues concerning the jurisdiction of the trial court, alleged abuse of discretion by the trial court, and the validity of the writ of execution.

ISSUES:

  1. Whether the Commission on Audit (COA) has primary jurisdiction over private respondent's money claims against the government

  2. Whether petitioner is estopped from raising the issue of jurisdiction

  3. Whether the Regional Trial Court (RTC) had jurisdiction over the money claim against a local government unit.

  4. Whether the doctrine of primary jurisdiction applies in this case.

RULING:

  1. Yes, the COA has primary jurisdiction over private respondent's money claims against the government. Pursuant to Commonwealth Act No. 327, as amended by Section 26 of Presidential Decree No. 1445, it is the COA which has primary jurisdiction over money claims against government agencies and instrumentalities. The COA's jurisdiction extends to all matters relating to auditing procedures, systems and controls, the examination and inspection of the books and records of government accounts, and the audit and settlement of debts and claims due from or owing to the government or any of its subdivisions, agencies, and instrumentalities.

  2. No, 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 and specialized training of the proper administrative bodies, relief must first be obtained in an administrative proceeding before a remedy is supplied by the courts. In this case, the COA's expertise is necessary to determine the money claims against the government. The parties' failure to argue the issue or their active participation in the proceedings does not waive the COA's jurisdiction.

  3. The RTC did not have jurisdiction over the money claim against a local government unit. The claim should have been first brought to the Commission on Audit (COA). The RTC should have suspended the proceedings and referred the filing of the claim before the COA.

  4. The doctrine of primary jurisdiction applies in this case. The RTC should have dismissed the complaint and deferred to the COA's special competence in auditing laws and rules on procurement. The issue of primary jurisdiction cannot be waived by the parties and can be raised by the court sua sponte.

PRINCIPLES:

  • Doctrine of primary jurisdiction - If a case requires the specialized knowledge and expertise of an administrative agency, relief must first be sought in an administrative proceeding before resorting to the courts.

  • COA's jurisdiction - The COA has primary jurisdiction over money claims against government agencies and instrumentalities, as well as the examination, audit, and settlement of debts and claims due from or owing to the government or any of its subdivisions, agencies, and instrumentalities. The COA's authority extends to all matters relating to auditing procedures, systems and controls, and the examination and inspection of government accounts.

  • The doctrine of primary jurisdiction exists for the proper distribution of power between judicial and administrative bodies. It is not for the convenience of the parties.

  • The court may raise the issue of primary jurisdiction sua sponte and its invocation cannot be waived.

  • The exceptions to the doctrine of primary jurisdiction include cases where there is estoppel, the challenged administrative act is patently illegal, there is unreasonable delay or official inaction, the amount involved is small, the question involved is purely legal, judicial intervention is urgent, the application may cause irreparable damage, the controverted acts violate due process, the issue of non-exhaustion of administrative remedies has been rendered moot, there is no other plain, speedy and adequate remedy, strong public interest is involved, and in quo warranto proceedings. None of these exceptions apply in this case.

  • A void judgment rendered by a body or tribunal that has no jurisdiction over the subject matter of the case cannot create any right or obligation. Any acts pursuant to it and claims emanating from it have no legal effect. A writ of execution based on a void judgment is likewise void.

  • The court should exercise utmost caution, prudence, and judiciousness in issuing writs of execution and notices of garnishment. It should follow the directives of the Supreme Court and the rules and procedures of the COA.