Republic Vs.

Lacap
Facts

The District Engineer of Pampanga, issued and duly published an “invitation to bid”, where Lacap was
awarded as the lowest bidder. Accordingly, the latter undertook the works, made advances for the
purchase of materials and payment for labor costs.

On October 29, 1992 the office of the DE issued Certification of Final Inspection and Acceptance for
100% completion of project in accordance with specifications.

The respondent sought to collect payment but Department of Public Works and Highways withheld
payment after the District Auditor of Commission on Audit disapproved final release of funds on the
ground that contractor’s license had expired.

Opinion of the DPWH Legal Department was sought by the District Engineer. The former then responded
that RA No. 4566 does not provide that a contract entered into after the license has expired is void and
that there is no law which expressly prohibits such a contract void. Furthermore, Cesar D. Mejia, Director
III of the Legal Department in a First Indorsement, recommended the payment should be made to Carwin
Construction. However, no payment was made.

On July 3, 1995, respondent filed the complaint through Office of the Solicitor General for Specific
Performance and Damages against petitioner before the RTC. Petitioner filed a Motion to Dismiss the
complaint on September 14, 1995 on the grounds that complaint states no cause of action and RTC had no
jurisdiction since respondent did not appeal to COA. RTC denied the Motion to Dismiss.

The OSG filed a Motion for Reconsideration but was likewise denied by RTC, in its order on May 23,
1996. On August 5, 1996, the OSG filed its Answer invoking defense of non-exhaustion of administrative
remedies and doctrine of non-suability of the State.

Following the trial, the RTC rendered on February 19, 1997 its decision ordering the DPWH to pay the
contract price plus interest at 12% from demand until fully paid and the costs of the suit.

Issue: Whether or not a contractor with an expired license at the time of execution of its contract is
entitled to be paid for completed projects?

Held:
Yes. The petitioner must be required to pay the contract price since it has accepted the completed project
and enjoyed the benefits thereof. To allow petitioner to acquire the finished project at no cost would
undoubtedly constitute unjust enrichment for the petitioner to the prejudice of respondent. Such unjust
enrichment is not allowed by law.