G.R. NO. 158253 - REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS, COMMISSION ON AUDIT AND THE NATIONAL TREASURER, VS. CARLITO LACAP, DOING BUSINESS UNDER THE NAME AND STYLE CARWIN CONSTRUCTION AND CONSTRUCTION SUPPLY.D E C I S I O N - Supreme Court E-Library

Ruling

Accordingly, respondent undertook the works, made advances for the purchase of the materials and payment for labor costs. [6] On October 29, 1992, personnel of the Office of the District Engineer of San Fernando, Pampanga conducted a final inspection of the project and found it 100% completed in accordance with the approved plans and specifications. Accordingly, the Office of the District Engineer issued Certificates of Final Inspection and Final Acceptance. [7] Thereafter, respondent sought to collect payment for the completed project. [8] The DPWH prepared the Disbursement Voucher in favor of petitioner. [9] However, the DPWH withheld payment from respondent after the District Auditor of the Commission on Audit (COA) disapproved the final release of funds on the ground that the contractor's license of respondent had expired at the time of the execution of the contract. The District Engineer sought the opinion of the DPWH Legal Department on whether the contracts of Carwin Construction for various Mount Pinatubo rehabilitation projects were valid and effective although its contractor's license had already expired when the projects were contracted. [10] In a Letter-Reply dated September 1, 1993, Cesar D. Mejia, Director III of the DPWH Legal Department opined that since Republic Act No. 4566 (R.A. No. 4566), otherwise known as the Contractor's License Law, does not provide that a contract entered into after the license has expired is void and there is no law which 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. [11] In a Letter dated July 4, 1994, the District Engineer requested clarification from the DPWH Legal Department on whether Carwin Construction should be paid for works accomplished despite an expired contractor's license at the time the contracts were executed. [12] In a First Indorsement dated July 20, 1994, Cesar D. Mejia, Director III of the Legal Department, recommended that payment should be made to Carwin Construction, reiterating his earlier legal opinion. [13] Despite such recommendation for payment, no payment was made to respondent. Thus, 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. [15] Following the submission of respondent's Opposition to Motion to Dismiss, [16] the RTC issued an Order dated March 11, 1996 denying the Motion to Dismiss. [17] The OSG filed a Motion for Reconsideratio