Part 2

Republic v. Lacap, G.R. No. 158253 March 2, 2007

FACTS • Case is a petition for certoriari, assailing the decision of the Court of Appeals which affirmed,
with modifications, ruling by the RTC granting the complaint for Specific Performance and
damages filed by Lacap against RP
• Dist. Eng. Of Pampanga issued an invitation to bid dated Jan 27, 1992 where Lacap and two
other contractors were pre-qualified
• Being the lowest bidder, Lacap won the bid for concreting of a certain baranggay, and
thereafter undertook the works and purchased materials and labor in connection with
• On Oct 29, 1992, Office of the Dist. Eng conducted final investigation of end product and fount
it 100% completed according to specs. Lacap thereafter sought the payment of the DPWH
• DPWH withheld payment on the grounds that the CoA disapproved final release of funds due
to Lacap’s license as contractor having expired
• Dist. Eng sought the opinion of DPWH legal. Legal then responded to Dist. Eng that the
Contractors License Law (RA 4566) does not provide that a contract entered into by a
contractor after expiry of license is void and that there is no law that expressly prohibits or
declares void such a contract
• DPWH Legal Dept, through Dir III Cesar Mejia, issued First Indorsement on July 20 1994
recommending that payment be made to Lacap. Despite such recommendation, no payment
was issued
• 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.
• Following the submission of respondent’s Opposition to Motion to Dismiss,the RTC issued an
Order dated March 11, 1996 denying the Motion to Dismiss. The OSG filed a Motion for
Reconsideration18 but it was likewise denied by the RTC in its Order dated May 23, 1996.
• On August 5, 1996, the OSG filed its Answer invoking the defenses of non-exhaustion of
administrative remedies and the doctrine of non-suability of the State
• Following trial, the RTC rendered on February 19, 1997 a decision ordering DPWH to pay
Lacap for the contract of the project, 12% interest from demand until fully paid, and the costs of
the suit
• CA affirmed the decision but lowered interest to 6%
ISSUE WON a contractor with an expired license is entitled to be paid for completed projects
RULING A contractor with an expired license is entitled payment for completed projects, but does not
exonerate him from corresponding fines thereof. 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. 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. 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.