National Irrigation Administration v. Enciso
REITERATIONFacts
The Antecedents: The National Irrigation Administration (NIA) commenced a river widening project. Contractors were assigned sections without formal contracts, with payment contingent upon completion and NIA's satisfaction. Respondent Enciso, doing business as LCE Construction, completed his assigned section and was paid for his first billing. However, his second and final billing of P259,154.01 was denied by NIA on the ground that the work on the right side of the river was not accomplished. Procedural History: Respondent filed a complaint for collection of a sum of money with damages and attorney's fees against NIA before the RTC of Makati City. NIA filed a motion to dismiss, citing non-exhaustion of administrative remedies and lack of cause of action, which the RTC denied. The RTC rendered judgment ordering NIA to pay respondent P259,154.01 with interest, attorney's fees, and costs. Both parties appealed to the Court of Appeals (CA). NIA argued that the trial court erred in denying its motion to dismiss and holding it liable. Respondent argued that NIA's co-defendants should be held personally liable and that NIA was solely liable based on the work accomplished. The CA affirmed the RTC decision. The Petition: NIA filed a petition for review on certiorari with the Supreme Court, raising two issues: (a) the CA erred in affirming the RTC's denial of NIA's motion to dismiss for failure to exhaust administrative remedies, and (b) the CA erred in holding NIA liable for the alleged work done in violation of existing rules and regulations.
Issue(s)
Whether the Court of Appeals erred in affirming the Regional Trial Court's ruling that denied petitioner's motion to dismiss, which averred, among other things, that respondent failed to exhaust administrative remedies available to him under the law. Whether the Court of Appeals erred in declaring that petitioner is liable to respondent for the alleged work at petitioner's project though the alleged assignment was done in violation of existing rules and regulations.
Ruling
The petition is GRANTED. The appealed decision of the Court of Appeals is REVERSED and SET ASIDE, and respondent's Complaint before the Regional Trial Court is DISMISSED for lack of cause of action, with costs against respondent.
Ratio Decidendi
On the issue of exhaustion of administrative remedies: The Court found the petition meritorious. Petitioner NIA raised the issue of non-exhaustion of administrative remedies before the Court of Appeals, arguing that respondent failed to file his claim before the Commission on Audit (COA) prior to initiating a collection case in the RTC. The CA, however, failed to rule on this issue, instead discussing NIA's separate corporate personality, which was deemed a non-issue. The Supreme Court held that NIA, as a government entity disbursing public funds, is subject to COA's jurisdiction, and any claim for collection of a sum of money against it, especially when not covered by a written contract, must initially be lodged with the COA. The Court emphasized that the doctrine of exhaustion of administrative remedies is a prerequisite to judicial intervention, and premature invocation of court intervention is fatal to a cause of action. Since respondent did not fall under any of the recognized exceptions to this doctrine, NIA's motion to dismiss should have been granted. The Court reiterated that the proper remedy for refusal or failure by public officials to act on a money claim, or mere inaction for an unreasonable period, is to file the claim with the COA, as such inaction is tantamount to a disallowance. Only after COA has ruled on the claim may judicial intervention be sought. The Court cited Paat v. Court of Appeals in reiterating the importance and exceptions to the doctrine of exhaustion of administrative remedies. On the issue of NIA's liability for alleged work: The Court stated that the legality or regularity of NIA's payment of respondent's claim would be best addressed in a proper case before the COA, considering that factual matters might be involved, which are not within the purview of a petition for review on certiorari.
Main Doctrine
A claim for sum of money against a government entity, especially when not covered by a written contract, must first be filed with the Commission on Audit (COA) before resorting to judicial intervention. Failure to exhaust administrative remedies is a ground for dismissal of the case for lack of cause of action.