Republic v. Lacap, G.R. No.

158253 March 2, 2007 FACTS : Case is a petition for certoriari, assailing the decision of the Court of Appeals which affirmed, with modifications, ruling by the RTC granting the complaint for Specific Performance and damages filed by Lacap against RP Dist. Eng. Of Pampanga issued an invitation to bid dated Jan 27, 1992 where Lacap and two other contractors were pre-qualified Being the lowest bidder, Lacap won the bid for concreting of a certain baranggay, and thereafter undertook the works and purchased materials and labor in connection with On Oct 29, 1992, Office of the Dist. Eng conducted final investigation of end product and fount it 100% completed according to specs. Lacap thereafter sought the payment of the DPWH DPWH withheld payment on the grounds that the CoA disapproved final release of funds due to Lacaps license as contractor having expired Dist. Eng sought the opinion of DPWH legal. Legal then responded to Dist. Eng that the Contractors License Law (RA 4566) does not provide that a contract entered into by a contractor

after expiry of license is void and that there is no law that expressly prohibits or declares void such a contract DPWH Legal Dept, through Dir III Cesar Mejia, issued First Indorsement on July 20 1994 recommending that payment be made to Lacap. Despite such recommendation, no payment was issued 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. Following the submission of respondents Opposition to Motion to Dismiss,the RTC issued an Order dated March 11, 1996 denying the Motion to Dismiss. The OSG filed a Motion for Reconsideration but it was likewise denied by the RTC in its Order dated May 23, 1996. On August 5, 1996, the OSG filed its Answer invoking the defenses of non-exhaustion of administrative remedies and the doctrine of non-suability of the State Following trial, the RTC rendered on February 19, 1997 a decision ordering DPWH to pay Lacap for the contract of the project, 12% interest from demand until fully paid, and the costs of the suit CA affirmed the decision but lowered interest to 6%

ISSUE: WON a contractor with an expired license is entitled to be paid for completed projects RULING: A contractor with an expired license is entitled payment for completed projects, but does not exonerate him from corresponding fines thereof. Section 35 of R.A. No. 4566 explicitly provides: SEC. 35. Penalties. Any contractor who, for a price, commission, fee or wage, submits or attempts to submit a bid to construct, or contracts to or undertakes to co nstruct, or assumes charge in a supervisory capacity of a construction work within the purview of this Act, without first securing a license to engage in the business of contracting in this country; or who shall present or file the license certificate of another, give false evidence of any kind to the Board, or any member thereof in obtaining a certificate or license, impersonate another, or use an expired or revoked certificate or license, shall be deemed guilty of misdemeanor, and shall, upon conviction, be sentenced to pay a fine of not less than five hundred pesos but not more than five thousand pesos. The "plain meaning rule" or verba legis in statutory construction is that if the statute is clear, plain and free from ambiguity, it must be given its literal meaning and applied without interpretation. The wordings of R.A. No. 4566 are clear. It does not declare, expressly or impliedly, as void contracts entered into by a contractor whose license had already expired. Nonetheless, such contractor is liable for payment of the fine prescribed therein. Thus, respondent should be paid for the projects he completed. Such payment, however, is without prejudice to the payment of the fine prescribed under the law.