Case Summary (G.R. No. 148106)
Procedural Posture
Petitioner filed a collection suit (Civil Case No. 5300) in the RTC seeking P487,662.80 as unpaid balances for intravenous fluids delivered to provincial government hospitals. After presentation of petitioner’s evidence, respondent moved to dismiss on the ground that primary jurisdiction for money claims against local government units rested with the Commission on Audit (COA). The RTC granted the motion and dismissed the complaint without prejudice (order of March 7, 2001), and denied petitioner’s motion for reconsideration (order of May 16, 2001). Petitioner sought review by the Supreme Court via Rule 45.
Facts Alleged by Petitioner
Petitioner alleged repeated purchases of various intravenous fluid products by respondent’s authorized representatives for government hospitals during the period from 19 August 1992 to 11 August 1998, evidenced by invoices and receipts. Petitioner claimed an outstanding balance of P487,662.80 as of 28 February 1998, alleged contractual agreement to pay under the invoices, and recounted unsuccessful demands for payment.
Respondent’s Answer and Position
Respondent admitted most factual allegations but disputed the exact amount claimed, alleging that some payments had been made and not reflected in petitioner’s computation. Respondent asserted active efforts to determine the true amount owed. At trial, respondent contended that COA had primary jurisdiction over petitioner’s money claim because the dispute involved procurement transactions and compliance with auditing rules and supply management rules for local governments.
Issue Presented
Whether the Commission on Audit or the Regional Trial Court has primary jurisdiction to pass upon petitioner’s money claim against the Province of Batangas.
Legal Doctrine Applied: Primary Jurisdiction
The Court applied the doctrine of primary jurisdiction: when resolution of a civil claim requires the specialized expertise, technical knowledge, or administrative judgment of a regulatory agency, the claimant must first pursue administrative remedies before judicial enforcement. The doctrine permits courts to suspend or dismiss judicial proceedings (often without prejudice) to allow administrative determination when the regulatory scheme places key issues within an agency’s special competence. The decision cites Industrial Enterprises, Inc. v. Court of Appeals and recognized authorities explaining that administrative determination may either substitute for or furnish foundation for later judicial proceedings.
Application — COA’s Jurisdiction Over Money Claims Against Government
First, the Court found that COA’s authority under PD 1445 to examine, audit, and settle debts and claims due from or owing to the Government or its subdivisions squarely covered petitioner’s claim for a fixed monetary amount against a local government unit. The Court relied on precedent construing such auditing statutes to embrace liquidated claims—those determinable from vouchers, invoices, and related papers. Because petitioner’s claim was a fixed sum readily determinable from the invoices and receipts furnished, it fell within COA’s cognizance under the Government Auditing Code.
Application — Procurement and Auditing Rules Within COA Competence
Second, the Court emphasized that the claim arose from a series of purchases for medical supplies for public hospitals, transactions governed by the Local Government Code provisions on supply and property management and by COA’s implementing rules (promulgated under Section 383 of the Local Government Code). Determination of compliance with applicable procurement and auditing rules involves questions of accounting, inspection, testing, and standardization—areas of specialized expertise vested in COA auditors and acc
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Procedural Background
- Petition for review on certiorari filed under Rule 45 in relation to Rule 41, Section 2(c) of the Rules of Court; the petition was captioned erroneously as a petition for certiorari (see footnote [1]).
- The petition assails, on pure questions of law, the Regional Trial Court (RTC) of Batangas City’s orders dated March 7, 2001 and May 16, 2001 in Civil Case No. 5300 (Branch 84, presided by Executive Judge Paterno V. Tac-an) (see footnotes [2], [8], [9]).
- Civil Case No. 5300 was a complaint for sum of money filed by petitioner Euro-Med Laboratories, Phil., Inc. against respondent Province of Batangas (see source).
- At the close of petitioner’s evidence, respondent moved to dismiss on the ground that the Commission on Audit (COA) had primary jurisdiction over petitioner’s money claim; the RTC granted the motion and dismissed the complaint without prejudice to filing the proper money claim with the COA (March 7, 2001 order) and denied petitioner’s motion for reconsideration (May 16, 2001 order) (see source).
Facts as Alleged in the Complaint and Pleadings
- Between 19 August 1992 and 11 August 1998, respondent, through various authorized representatives of government hospitals identified and listed in the complaint, purchased various Intravenous Fluids (IVF) products from petitioner (see complaint excerpt).
- As of 28 February 1998, petitioner alleged an unpaid balance of P487,662.80 arising from those purchases, the amount allegedly evidenced by invoices duly received and signed by respondent’s authorized representatives upon delivery (see complaint excerpt).
- Under the terms of the invoices, respondent agreed and covenanted to pay petitioner without need of demand, on the terms indicated therein (see complaint excerpt).
- Petitioner alleged it made several demands and held dialogues with respondent’s representatives, which proved fruitless; despite repeated demands respondent failed to pay (see complaint excerpt).
- In its answer, respondent admitted most allegations but denied that the unpaid balance claimed by petitioner was still due; respondent asserted some payments it had made were not reflected in petitioner’s computation and that respondent was exerting efforts to determine the true and actual amount owed (see answer excerpt).
- Pre-trial and trial ensued; at the conclusion of petitioner’s presentation of evidence, respondent filed a motion to dismiss asserting COA primary jurisdiction because the claim arose from procurement transactions governed by the Local Government Code and COA rules (see source).
Issue Presented
- Whether primary jurisdiction to adjudicate petitioner’s money claim against the Province of Batangas lies with the Commission on Audit (COA) or with the Regional Trial Court (RTC).
Governing Legal Provisions and Authorities Cited
- Section 26 of the Government Auditing Code of the Philippines (PD 1445): COA’s authority and powers extend to “the examination, audit, and settlement of all debts and claims of any sort due from or owing to the Government or any of its subdivisions, agencies, and instrumentalities” (see footnote [14] and quoted text).
- The Local Government Code provisions on supply and property management found in Title VI, Book II of the Local Government Code (see footnote [16]).
- Section 383 of the Local Government Code: empowers the Chairman of the COA to promulgate rules and regulations necessary to implement Title VI, including requirements as to testing, inspection, and standardization of supply and property (see footnote [18] and quoted text).
- COA Circular No. 92-386 as an implementing regulation referenced by the Court (see footnote [17]).
- Jurisdictional threshold of the RTC under BP 129, Sec. 19(8) as amended by R.A. 7691 (pertaining to monetary jurisdiction) referenced for context (see footnote [13]).
- Doctrine and authorities cited regarding primary jurisdiction: Industrial Enterprises, Inc. v. Court of Appeals, G.R. No. 88550, 18 April 1990, 184 SCRA 426 (see footnote [10]); 2 Am Jur 2d, Administrative Law (see footnote [12]); Aircraft & Diesel Equipment Corp. v. Hirsch, 331 U.S. 752, 767 (1947) quoted; and other precedents interpreting COA scope: Compania General de Tabacos v. French and Unson (39 Phil. 34, 1918); Philippine Operations, Inc. v. Auditor General (94 Phil. 868, 1954); Insurance Company of North America v. Republic (128 Phil. 44, 1967); Firemen’s Fund Insurance Co. v. Republic (128 Phil. 494, 1967) (see footnote [15]).
- 2 Am Jur 2