Agency of first recourse no more

April 3, 2019

QUALIFIED OPINION
by Ma. Grace M. Pulido Tan

It has been a long standing practice that any money claim against government must be filed with the Commission on
Audit. As provided under its 2009 Revised Rules of Procedure, it has “original jurisdiction” over such claims, defined as “a
demand for payment of a sum of money, reimbursement, or compensation arising from law or contract due from or owing
to a government agency.”

When I came into COA in 2011, there was a horde of these claims pending disposition, many of them dragging for
years. Most were claims by contractors and other suppliers of government for unpaid goods and services that their
customer agencies refused or failed to pay for various reasons.

Now comes the case of TIEZA vs. Global-V Builders recently decided by the Supreme Court, holding that government
contracts procured under the provisions of the Procurement Act (Rep. Act No. 9184), shall be subject to arbitration – by
express mandate itself of said law that “any and all disputes arising from the implementation of a contract covered by [the
Act] shall be submitted to arbitration in the Philippines according to the provisions of Rep. Act No. 876, the Arbitration Law.”
However, “disputes that are within the competence of the Construction Industry Arbitration Commission (CIAC) to resolve
shall be referred thereto.”

The Supreme Court went on to say that by virtue of the Procurement Act, “CIAC is vested with jurisdiction” over construction
contracts, even if the agreement does not contain an arbitration clause, because “applicable laws form part of, and are read
into contracts.” In other words, even if there is no provision in the contract to refer disputes to arbitration, the CIAC has
jurisdiction over construction contracts because the Procurement Act and Exec. Order No. 1008 (the law creating the CIAC)
have so granted it.

Indeed, Exec. Order No. 1008 confers “original and exclusive” jurisdiction on the CIAC over disputes arising from, or
connected with, contracts involved in domestic construction. The court noted that “if it is the COA which has jurisdiction
over such disputes, the law should have expressly mentioned such intent, but it did not.”

The Supreme Court also ruled, citing an earlier case, that there is no need to first file a money claim with the COA when the
concerned official “unreasonably delays” payment. I submit, however, that the contract involved in Vigilar was made before
the effectivity of the Procurement Act and, therefore, not covered by the mandatory arbitration required by said law.

The TIEZA case is definitely a game changer. The Supreme Court has spoken: by virtue of the Procurement Act, COA is no
longer the agency of first resort for contractual money claims. It is without jurisdiction over all such claims, even if the
contracts do not contain an arbitration clause. Such claims should be referred to arbitration and, for construction contracts
specifically, to the CIAC.

So what happens to the money claims still pending with the COA? Should they be dismissed motu proprio, or should the
claimants withdraw them and arbitrate instead? Perhaps, the COA should look into this matter forthwith and take this
opportunity to unclog its dockets. After all, should a claimant finally prevail, it may have to go back to COA to authorize
payment – this time, of a money claim by virtue of a final and executory judgment.