03 January 2013

Hon. REYNALDO S. WAJE
Sangguniang Bayan Member
Orion, Bataan

Dear SBM Waje,

This pertains to your letter seeking answers on questions stated therein.

Anent your first query on whether or not the Mayor can enter into a contract sans prior authority from the sangguniang bayan, we attached herewith Legal Opinion No. 09, s. 2006 dated 17 February 2006 treating a relevant issues such as the one presented to us.

Anent your second query, in order to address the same, we have to relate the answer based on your representation that the donated funds amounting to Php 600,000.00 which is equivalent to one (1) unit of school bus is booked under trust fund.  Trust Fund as defined under the LGC consists of private monies and public monies which have officially come into the possession of the local government or of local government official as trustee, agent or administrator, or which have been received as a guaranty for the fulfillment of some obligation.  A trust fund shall only be used for the specific purpose for which it was created or for which it came into the possession of the local government unit.  In this regard, the donated funds intended for the purchase of school bus can never be utilized into some other purpose than the sole purpose to which it was intended by the donor.  Ergo, no need to appropriate the funds for the purchase of that vehicle as the fund is already saved for that specific purpose.

On the other hand, as also stated in the attached opinion, R.A. 9184 is the governing law.

That law made no mention that the Head of the Procuring Entity still needs to secure authorization from the sanggunian.  It is noteworthy that the fund is not a public fund and not appropriated by the sanggunian; thus, the first requisite is not met.  However, as represented, the donated fund was booked as trust fund, hence, cannot be spent to any other purpose than that intended by the donor.  Considering that the fund is a private donation and the purpose of which is for the purchase of school bus, we are of the belief that prior authorization from the sanggunian is no longer required.  It is significant to point, at this juncture, that the procedural guidelines laid by R.A. 9184 were observed.  The head of the procuring agency which is the mayor, needs no prior authorization from the sanggunian to enter into a contract with the winning bidder as it could not be the intent of the Congress to paralyze local government projects/contracts through circuitous or redundant process.  It must be noted that the authority of the Mayor was pursuant to an existing law i.e., R.A. 9184.

With regard to your fifth query, ratification is always an option for the sangguniang bayan in order to cure any defect of an unenforceable contract.  The exercise of the power and authority of the local chief executive is being regulated by the sangguniang bayan thru the issuance of an appropriate resolution granting the LCE to enter into any contracts; however, as discussed elsewhere above, such prior authorization is not a hard and fast rule.  As long as there is either a law or ordinance, the authorization is no longer required.  Further, the general welfare provision shall be liberally interpreted to give more powers to the LGUs in accelerating economic development and upgrading the quality of life for the people in the community.  Also, as you correctly opined, ratification of defective contracts is possible only when there is non-compliance with the second and fourth requirements stated in your letter.  It does not provide, however, that the absence of an appropriation ordinance ipso facto makes a contract entered into by a LGU null and void.  Public funds may be disbursed not only pursuant to an appropriation law, but also pursuant to other specific statutory authority.  (underlining ours for emphasis).

Foregoing considered it is with more reason that an authority is no longer necessary considering that the donated fund is a private one and specifically intended for the purchase of school bus.

We hope we have enlightened you on the matter.

Very truly yours,

(sgd.)                       
FLORIDA M. DIJAN, DPA, CESO IV
Regional Director

Copy Furnished:

Atty. Jesus B. Doque IV        Ms. Amada T. Dumagat
Director-Legal Service         OIC-Provincial Director
    DILG Central                             DILG Bataan