RP v Lacap

Facts: Review on Certiorari assailing CA's decision in affirming RTC's decision with modification in granting
Lacap's complaint for Specific Performance and Damages against the Republic.
In a bidding for the project of concreting Sitio 5 Bahay Pare, Lacap's Carwin Construction won and
subsequently he undertook the works, made advances for the purchase of the materials and payment for
labor costs. The Office of the District Engineer issued Certificates of Final Inspection and Final Acceptance
after the project's completion but when Lacap sought to college the payment, DPWH withheld the payment
after COA's District Auditor disapproved the final release of funds on the ground that the contractor's
license of Carwin Construction had expired at the time of the execution of the contract. The District
Engineer sought the opinion of DPWH's Legal Department regarding the enforceability of the contract to
which said department opined that since RA 4566 (Contractor's License Law) did not provide that a
contract entered into after the license has expired is void and there is no law that expressly prohibits or
declares void such contract, the contract is enforceable and payment may be paid, without prejudice to
any appropriate administrative liability action that may be imposed on the contractor and the government
officials or employees concerned. DPWH's Director of Legal Department Mejia recommended that payment
should be made, despite reiterating such recommendation, no payment was made. Lacap filed a complaint
for Specific Performance and Damages against RP (DPWH, COA and The National Treasurer) before the RTC.
OSG filed a motion to dismiss on the ground that the complaint states no cause of action and RTC has no
jurisdiction over the nature of the action since Lacap did not appeal to the COA the District Auditor's
decision to disapprove the claim. RTC denied the MTD and MFR. OSG invoked the defense of nonexhaustion of admin remedies and the doctrine of non-suability of the State. RTC rendered a decision in
favor of Lacap and ordered the District Engineer to pay for the amount due to Lacap by virtue of the
concreting project completed since it has accepted the completed project and enjoyed the benefits
thereof, to hold otherwise would be to overrun the long standing and consistent pronouncement against
enriching oneself at the expense of another. RP appealed with CA which sustained RTC's decision, holding
that since the case involves the application for the principle of estoppel against the government, the
principle of exhaustion of administrative remedies does not apply. The government by its actions is
estopped from questioning the validity and binding effect of the Contract of Agreement with Carwin
Construction and the denial of payment on purely technical grounds after successful completion of the
project is not countenanced either by justice or equity.
Issue: W/N an expired license is a valid ground to withhold payment, within the purview of unjust
enrichment.
Ruling: OSG maintains that Lacap failed to exhaust admin remedies because it is the COA which has the
primary jurisdiction to resolve the money claim against the govt.
Whether a contractor with an expired license at the time of the execution of the contract is entitled to be
paid for completed projects is clearly a pure question of law. Exhaustion of admin remedies do not apply
because nothing of an administrative nature is to be or can be done since the issue does not require
technical knowledge and experience but involves the interpretation and application of the law. While it is
the District Auditor of COA that disapproved Carwin's claim against the government, under PD 1445, Sec.
4837, the admin remedy available to Lacap is an appeal of the denial or his claim by the District Auditor to
the COA, the Court holds that in view of the exceptions: unreasonable delay or official inaction that
irretrievably prejudiced Lacap and the question involved is purely legal and will ultimately have to be
decided by the courts of justice, the complaint for specific performance and damages was not prematurely
filed despite the non-exhaustion of admin remedies by Lacap.
In Rocamora v RTC Cebu, the plaintiffs are not supposed to hold their breath and wait until the COA and
Ministry of PWH had acted on the claims for compensation, the road had been completed but the plaintiffs
had yet to be paid for the properties taken from them. Given this official indifference, which apparently
would continue indefinitely, the plaintiffs had to act to assert and protect their interests. Sec. 35 of RA
4566 provides for the penalties incurred by a contractor entering into a contract without license which will
constitute misdemeanor and upon conviction shall be subject to a fine of not less that P500 but not more
than P5000. The words of RA 4566 are clear, it does not declare - expressly or impliedly, as void the
contracts entered into by a contractor whose license had already expired. Nonetheless, the contractor is
liable for payment of the fine prescribed. Carwin should be paid for the projects he completed, without
prejudice to the payment of the fine prescribed by law. Art. 22 of the Civil Code embodies the maxim nemo
ex alterius incommode debet lecupletari (no man ought to be made rich out of another's injury) which form

part of the basic principles to be observed in human relations and these rules apply equally to the govt.
Carwin rendered services to the full satisfaction and acceptance by the RP, he should be compensated for
them. To allow RP to acquire the finished project at no cost would constitute unjust enrichment for the RP
to the prejudice of Carwin and is not allowed by law. CA's decision is affirmed.