PRESIDENTIAL DECREE No. 1445, "Government Auditing Code of the Philippines.

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Section 85. Appropriation before entering into contract.

1. No contract involving the expenditure of public funds shall be entered into unless
there is an appropriation therefor, the unexpended balance of which, free of other
obligations, is sufficient to cover the proposed expenditure.
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Section 87. Void contract and liability of officer. Any contract entered into contrary to the
requirements of the two immediately preceding sections shall be void, and the officer or
officers entering into the contract shall be liable to the government or other contracting
party for any consequent damage to the same extent as if the transaction had been wholly
between private parties.

DILG Legal Opinion No. 22, s. 2015

1. Whether or not the LCE can enter into contracts without authority from the
Sangguniang Bayan.

 The mayor may represent the municipality in all its contracts even without
prior authorization from the Sangguniang Bayan, for as long as there is either a
law or ordinance that authorizes him/her to do so. (Sec. 444 (b)(1)(vi) of the
LGC in relation to Sec. 22 (c) of the LGC)

2. What is the effect of contracts entered by the Mayor without authority if it is found by
COA to be defective?

 “a contract entered into in the name of another by one who has no authority or
legal representation, or who has acted beyond his powers, shall be
unenforceable, xxx” (Art. 1403, Civil Code)