4 Republic of the Philippines } DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT DILG-NAPOLCOM Building, EDSA comer Quezon Avenue, Quezon City t ‘wore dig. gov ph OFFICE OF THE UNDERSECRETARY FOR LOCAL GOVERNMENT i Rail ae wi DILG Legal Opinion No. 29, 5. 2014 HON. ARTHUR A. LEGASPI Vice May Municipal of Norzagaray Province alacan 30 JUL 2014 | Dear Vi “savor Legaspi: This refex:. to your 26 June 2014 letter requesting opinion relative to the “hiring” of consultant: through negotiated procurements under Republic Act No. 9184 (RA 9184), namely: "1. Should all consultants that were hired through Negotiated Procurement be subsequently and mandatorily covered by contracts of seroice with the municipal mayor? If so, does the latter need the Sanggunian Bayan ‘aut’. rization for him tq sign and execute the said contract? 2 Are there specific cases wherein the municipal mayor does not nt ulhorization from the Sanggunian Bayan in signing contracts? Are a emptions? 3. If the municipal mayor signs a contract with its consultant u authority from the Sanggunian Bayan, does the latter have the power tor oy or terminate the same contract? 4 Are there existing guidelines and policies in the determination of salries, compensations and limitations on the hiring of consultants? 5, Does the hiring agency, or in this case, the municipal mayor, ave thu; sole or excusive prerogative and discretion in determining the anicunt of salary or compensation of its consultants?” Before pr. ‘ding to answer the query, it should be emphasized that selection and engagem +.‘ £ services of individual personnel under Job Order or Contract of Service is distinct fi > the procurement of Consulting Services, The following are some of the noted di.“ ons:Job Order or Contract of Service are covered by COA Rules', while a Consulting Service is governed by RA 9184. The Government Procurement Policy Board (GPPB) in PMO2- 2012, dated 21 November 2012, opined that ‘I/F the desired service would require adequate external technical aid professional capability and expertise that are beyond the existing capacity of the procuring entity, then the rules and regulation on the procuremenc of consulting services under RA 9184 and its IRR shall be applicable. Conversely, 2A 9184 and its IRR will not apply in the hiring of individual personnel under Job Order or Contract of Service because the engagement does not require that level of expeitise as primary consideration for its selection, but merely pertains to the engageme .Sprdinary piece of work or intermittent job of short duration.” Secondly, + Order or Contract of Service, which does not cover special or technical skills or w..ore the functions to be performed are clerical or administrative in nature or where the work is also performed by the regular personnel of the agency, may be entered into only when done in the exigency of the service and it is not feasible for the agency to 's under a casual or contractual appointment? On the other hand, the services of consaltants may be engaged by any procuring entity for government projects or related activities of such magnitude and/or scope as would require a level of expertise or attention beyond the optimum in-house capability of the procuring entity concerned and consistent with the Government's policy not to compete with the private sector’, Necessity gunian Authorization before _ntscing Into Procurement Contracts ‘The GPPL i NM 017-2014, dated 05 May 2014, opined that “(7)here is a need for the Mayor to secure authorization from the Sanggunian to enter into contracts. The authorization Irom the Sangguniang Bayan is an indispensable requirement before the Municipal Mayor may enter into and sign all contracts and obligations in behalf of the Municipality, as explained in Non-Policy Matter No. 084-2004 (16 June 2004).” ‘Nonetheless, thz Supreme Court En Bane in Hon. Gabriel Luis Quisumbing, et al. vs. Hon. Gwendolyn F. Garcia, et al, (G.R. No. 175527, 28 December 2008) held that the sthorization may already be contained in the appropriations ordinance if there is a pzovision therein which specifically covers the expense to be incurred or the contract to 2 entered into. Hence, no further authorization is required as the same sufficient, complies with Section 22 (c) of the Code. However, if the project is described in generi~ i208 under the appropriations ordinance, there is an obvious need for a sanggunia * GPP® Resolution No. 09.2012 dated 27 Ape} 2012 2 CSC Memorandt:n Crtlar No, 245 2002 entitle Clarifications on Paley Gudeines or Contract of Sruces » Annex "B"-Genera Prcipes on Consulting Srvices~ an covering contract for.ery specific project that in turn requires the approval by the sanggunian, viz; ‘The question of whether a sunggunian authorization separate from the appropriation ordinance is required should be resolved depending on the particular circumstances of the case. Resort fo the appropriation ordinance is necessery in order to determine if there is a provision therein which specifiecily covers the expense to be incurred or the contract to be entered into, Should the appropriation ordinance, for instance, already contain in sufficicnt detail the project and cost of a capital outlay such that all that the loca’ cities executive needs to do after undergoing the requisite public bidding is vkecule the contract, no further authorization is required, the approprigtion ordinance alreudy being sufficient. On the other hand, should the appropriation ordinance describe the projects in generic terms such as “infrastructure projects,” “inter-municipal waterworks, drainage and sewerage, flood control, and irrigation systems projects,” “reclamation projects” or “roads and bridges,” there is an obvious need for a covering contract for every specific project that in turn requires appescal by the sanggunian, Specific sanggunian approval may also. be required for the purchase of goods and services which are neither specified in the copropriation ordinance nor encompassed within the regular personal ser sic sand maintenance operating expenses. Hence, assuming, that a local chief executive executed a contract without complying with Section 22 (c) gf the Code but said contract was specifically authorized/contained in the appropriations ordinance of the LGU, the subsequent ratification by the concerned sanggunian of the contract is a mere superfluity. Exception to Saaggunian Authorization Prior to LC!*s Entry into Contracts Under Section 22 (c) of Republic Act No. 7160 (hereinafter, the “Code”), no contract may be entered into by the local chief executive (LCE) in behalf of the local government unit without pric authorization by the sanggunian concerned, unless otherwise provided in the Code. Notably, the LGE’s authority to represent the local government unit (LGU) in all its business transac:ions and sign in its behalf all bonds, contracts, and obligations may be| m= i “made a) ur: prior at...ority of the sanggunian; or b) pursuant to law; or c) pursuant to * ordinance «., highlighted under Sections 444 (b) (1) (vi)*, 455 (b) (1)°, and 465 (b) (vi)® of the Code. Clearly, prior snggunian authorization may be considered a superfluity if the particular business transaction, bonds, contracts and obligations are made pursuant to the express authority of law or ordinance. Generally, -vatcacts entered into by the LCE without the prior authorization of the sangguni-. + unenforceable unless ratified expressly or impliedly by the sanggunian pursuant ‘ction 1403 in relation to Section 1317, both of the Civil Code of the Philippines, v % ‘{Section 1403. The following contracts are unenforceable, unless they are ratified: (1) Those entered into in the name of another person by one who has been given no authority or legal representation, or who has acted beyond his powers;” * section 424.1. 1 eaccutve: Powers, Odes, Functions and Compensation {0) For etic), «ay and economical governance the purpose of which s the general welfare ofthe municipality ants inabans| pursuant to S716. this Code, the muni mayor shal (a) Exerc ginal supervision and conto ver al programs, projet, series, and atts ofthe munkpal goverment, and ints connection, shal (i) Upon act vrieation by the sangguniang baya, represent the munity inal ts business transactions and sign omits behalf all bop, contacts and obligations and such other dacaments made purant tla or ordnance, ‘Section 485: Chie Executive: Powers, Dus, Functions and Compensation (0) For eticien, ertectiye ane economical governance the purpose of which she ganaral welaeof the ey and ts nhabants pursuant to Section 16 of hie Cage, the cy mayor hal (0) eres genera supervision and corr ove al programs, projects, services, and acts of he ety government andi thi (Reese: the city in allits busines transactions and sgn i its bala ands, contac, and lations, and such other dcumcnts pon author ofthe sangsuning pnlungsod o pursuant to law or ordinance * Section a6 The Chit Power, tis, Functions snd Compensation (0) For eficion,efsctve and eccnomial governance the purpose of which the general welfare ofthe province and its inabitants ‘pursuant a Sein 15 this Coe, the prouincl governor shal: (0) en gncral supervision nd control ove al programs, projets, services, and activites of he cy government, and in ths [wi Ropfesont the province inal its business transactions and signin ts behalf al bonds, contrac, and obligations, and such fer duns upon authority ofthe sanggunangpanistwgan or pursuant aw or ordnance~ “Section. 317. No one may contract in the name vy another without being aushorized by the latter, or unless he has by law or tight to represent hint. 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 unenforvable, unless it is ratified, exp wr impliedly, by the person_on whose be'alf it has been executed, before it is revoked by the other contracting pari.” [Underscoring ours] ‘The ratifi-. Zon of contracts is explained in Yasuma vs, Heirs of Cecilio S. de Villa, et al. (GR.No - “30, 22 August 2006), as follows: “Ratification means that the principal voluntarily adopts, confirms and ,iods sanction to some unauthorized act of its agent on its behalf. It is this voluntary choice, knowingly made, which amounts to a ratification of ‘what was theretofore unauthorized and becomes the authorized act of the party so making the ratification. The substance of the doctrine is confirmation after conduct, amounting to a substitute for a prior authority. Ratification can be ‘made either expressly or impliedly. Implied ratification may take various forms — like silence or acquiescence, acts showing approval or adoption of the act, or acce:.tance and retention of benefits flowing therefrom. In City cf Quezon vs. Lexber Incorporated (G.R. No. 141616, 15 March 2001), the Supreme.“ subseque therefro, t recognized the LGU's constructive ratification of contracts through ts showing approval or adoption of the contract and acceptance of benefits “We are not dissuaded by petitioner's arguments that there can be no ratification due to the absence of an explicit or tacit approval of the second negotiated contract. At the outset, the issue raised by petitioner that the subject contract is null and void ab initio, and therefore not capable of ratification, has been laid to rest by the inevitable conclusion that the said contract is valid and binding. Consequently, ratification of the subject contractis not necessary, He that as it may, it cannot be denied that there was constructive ratification on the part of petitioner. The records show that upon completion of tHe infrastructure and other facilities, petitioner, albeit still under the adm:ctisiration of Mayor Brigido Simon, Jr., started to dump garbage in the presizes! In fact, on December 11, 1991, a Notice to Commence Work, im, le, ‘enting the contract for the maintenance of the sanitary landfill starting Decenuiier 15, 1991 to December 31, 1995, was issued by said Mayor, as reconttnended by Project Manager Rene R. Lazaro and City Engineer Alfredo Macapusay. :~ 5 The'recorts...iso reveal that petitioner issued Disbursement Vouchers of a various amounts covering the period between March 1, 1992 to April 30, 1992 Jor the services rendered by the Mud Regal Group, Incorporated to haul ‘garbage 10 the sanitary landfill, The said disbursement vouchers were passed in auditiand duly approved and paid by petitioner. These are facts and circumstances on record which led the trial court, the appellate court, and this Court to affirm the conclusion that petitioner had actually ratified the subject contract.” Unenforce!!» contracts cannot be sued upon or enforced unless ratified, thus it is as if they have -. »ffect yet. But they may be ratified, hence they can have in such a case the effect of \.. 2cntracts. In one sense therefore they may called validable? ‘As such, 1+ contract entered into by the Mayor need not be terminated considering its unenforceability. | ‘Notwithstanting the foregoing, note that RA 9184 and its IRR provides the grounds and procedure for the termination of valid procurement contracts. Salaries, Compensation and Limitations of Hiring (su {tants ‘As discussc . sbove, the procurement of Consulting Services is governed by RA 9184 and its IRR. A cussion on the cost of consultancy may be found under Item 2.2 of the GPPB Manual «cedures for the Procurement of Consulting Services for LGUs-Volume IV Consult»: -vices It should be emphasized that the Approved Budget for the Contract (ABC) is. ceiling for bid prices in all government procurement. The ABC as defined under Section 5 (a) of RA 9484 refers to the budget for the contract approved by the respective Sngxrunian, in the case of LGUs. We hope to hav? enlightened you on the foregoing. Very truly yours, » Edgar L Pa, Cu Code ofthe Pippine Annoteted (cng the Report af the Code Commission, 130) {Mana,Philpines: Rex Bookstore, 1981, 82