Case Summary (G.R. No. 197592)
Facts
• January 12, 1998: Phase I contract worth ₱38,900,000 (₱18,700,000 for passenger terminal; ₱20,200,000 for jetty port)
• During construction, the Province issued and the contractor performed agreed change orders for additional works
• January 5, 2001: Phase II contract for passenger terminal building at ₱2,475,345.54
• October 22, 2001: Respondent demanded ₱22,419,112.96 for unpaid change orders, taxes, price escalation, additional labor and overhead costs, and contractual interest
• July 13, 2006: Respondent sued in RTC Marikina for collection; preliminary attachment issued August 17, 2006
• August 14, 2009: RTC rendered judgment for respondent, awarding ₱7,396,143.09 (additional works), ₱884,098.59 (tax refund), ₱1,291,714.98 (price escalation), ₱3,303,486.60 (labor), ₱1,101,162.00 (overhead), ₱3,442,507.50 (interest), plus 3% monthly interest from October 16, 2001, ₱500,000 moral damages, ₱300,000 exemplary damages, ₱200,000 attorney’s fees, and costs
• September 2009: Motion for reconsideration deemed filed late and denied; November 24, 2009: writ of execution issued; garnishment notices refused by banks citing government-claims procedures
Procedural History in the Court of Appeals
• CA-G.R. SP No. 111754 (challenging writ of execution): Petition dismissed October 18, 2010; motion for reconsideration denied July 5, 2011
• CA-G.R. SP No. 114073 (challenging denial of appeal notice): Petition dismissed August 31, 2011; motion for reconsideration denied June 27, 2012
Issues
- Whether the RTC had jurisdiction over respondent’s money claims against a local government unit or whether COA had primary jurisdiction
- Whether the RTC gravely abused its discretion in issuing the writ of execution in violation of COA’s primary jurisdiction and Supreme Court Administrative Circular No. 10-2000
Applicable Law
• 1987 Philippine Constitution, Art. IX-A, Sec. 6 (COA rule-making authority)
• Commonwealth Act No. 327, as amended by P.D. 1445, Sec. 26 (COA’s exclusive audit and settlement power over government money claims)
• 2009 Revised Rules of Procedure of the Commission on Audit, Rule II Sec. 1 and Rule VIII Sec. 1 (original jurisdiction over money claims due from or owing to government)
• Doctrine of Primary Jurisdiction (cases such as Industrial Enterprises v. CA, Euro-Med Laboratories v. Province of Batangas)
Analysis of Primary Jurisdiction
• The doctrine requires that claims falling under an administrative agency’s specialized competence (here, COA’s power to audit and settle money claims against government units) be first referred to that agency.
• Respondent’s suit for fixed, liquidated sums against a local government unit clearly falls within COA’s exclusive jurisdiction under P.D. 1445 and COA rules.
• The RTC should have suspended proceedings and referred the matter to COA; failure to do s
Case Syllabus (G.R. No. 197592)
Case Background
- Consolidated petitions for certiorari under G.R. Nos. 197592 & 202623 seeking to reverse:
- CA Decision dated October 18, 2010 and Resolution dated July 5, 2011 in CA-G.R. SP No. 111754
- CA Decision dated August 31, 2011 and Resolution dated June 27, 2012 in CA-G.R. SP No. 114073
- RTC of Marikina City Civil Case No. 06-1122-MK as the trial forum for the collection suit
Contracts and Scope of Work
- January 12, 1998: Original contract between Province of Aklan and Jody King for Caticlan Jetty Port and Terminal (Phase I)
- Total cost: ₱38,900,000 (₱18,700,000 for passenger terminal; ₱20,200,000 for jetty port facility)
- Issuance of agreed variation/change orders during construction for additional works
- January 5, 2001: Negotiated contract (Phase II) for Passenger Terminal Building at Caticlan Jetty Port
- Contract price: ₱2,475,345.54
Demand for Payment
- October 22, 2001: Respondent’s demand of ₱22,419,112.96 for alleged unsettled items:
- ₱12,396,143.09 – unpaid additional works
- ₱884,098.59 – refund of taxes
- ₱1,291,714.98 – price escalation (per § 7.5 of original contract)
- ₱3,303,486.60 – additional labor cost
- ₱1,101,162.60 – additional overhead cost
- ₱3,442,507.50 – interest (per § 7.3.b of original contract)
Trial Court Proceedings
- July 13, 2006: Respondent filed collection suit in RTC Marikina City
- August 17, 2006: Issuance of writ of preliminary attachment
- Petitioner’s defense:
- Denial of unpaid balances and interest
- Claimed sums were not in approved Change Order No. 3
- Reliance on respondent’s June 10, 2003 letter absolving petitioner of further liability
- August 14, 2009 RTC Decision in favor of Jody King:
- Awards for unpaid works, tax refund, escalation, labor and overhead costs, interest up to October 15, 2001
- Post-October 15, 2001 interest at 3% per month
- ₱500,000 moral damages; ₱300,000 exemplary damages; ₱200,000 attorney’s fees; costs of suit
- Motion for reconsideration (filed Octo