Republic of the philippines

I)EPARTMENT OF I'HE INTERIOR AND LOCAL GOVERNMENT

DILC Napc,lcom Cenrre, EDSA corner euezon Avenue
er"rezon City

OFFICE OF THE UNDERSECRXTARY FOR LOCAL GOVERNMENT

O 7 JAN ZO14

DILG LegfOpinion No. 2, S. 2014

Mayor RC'':fJO D. ARANA

Municipa- f, li1',,rr
Municipality of Midsayap
Province of Corabaro

Dear Mayor Ara tia:

This has reference to your lerter seeking legal opinion on the validity of the
drsapproval of Eo No. 40 by the provinciar Governor on review, ancr your
further query
on the statris,:,ithe contract ar; a. legal consequence of such disapproval.

Bast,J on the doc[me,nts submitted to this Departmenr, you promulgared

Executive r.I ,':rr No. 40 (EO No. 40') for the purpose of nullifying, cancelling,
and
declaring r:. :nd void the cc,'tract entered into by the for'rer Municipal Mayor
of
Midsayap ',,,r. a private e'tit.r', Marcus Constmction. In your letter, yo' also
alleged
that the - Mayor entered into the said contract withour obtaininq anv aurhoritv
'
from the 3a-);lguniang Bayan ol Nlidsayap.
t
'I're1.r)v, we limit the issues to whether a local chief executive as Heacl
of the
Procuring Entity can terminate a procurement contract prior to its irnplementatior.r;
if in
the affirmative, whether an lixecutive order is a valid act to effect a terrni'ation
of a
procuremenl contract; ancl, finally, in the event of a review which invalidates
an
Executive Crder annulling a col_.tract, what is the status ofthe contract/

Discttssiot:

on the Fht rssue: The Loca.tc-hief Executive as Head of the procuring Entity can
terminate ;. | ,-,,.urement contra,:t.

A l-'r ':i . rief executive is vested with powers upon whicrr o.e can exercise and
perform thc iiuries under Republic Act No. 7160 or rhe Local Governmenr code
of r991
('LG Code').

{
 Fo ''jir''-ient, effectiv. a'd eco'omicar governance
the purpose of wrrich is the
general weilare of the municipariry and irs inhabitants pursuanr
ro Section 16 of the LG
Coder, a n:rrnicipal mayor sl.rall exercise general supervrsrql)
and control over all
programs, projects, services, and activities of the municipal
[overnment, and in this
connection2, represent the mu'iciparity in a its busioess
transactions and sign, on its
behalf, contracts, among others, upon authorization of the
sangguniang bayanj. This is
co'sistent to the exercise of..r: of the corporate powers of a local
governmer.rt ,,nit under
Section 22r t-,1 r he LC Code

As a .ontracting party aed representative of the municipality,

-
is bound to respect the provisi')rls of the contract which rikewise
a municipal mayor
includes provision for
termination fhe binding effe:t of any agreement between the parties to
a contract is
premised cf' .',r"o settled principles: (1) that obligations
arisi'g from contracrs have the
force of law between the cot{racting parties; and (2) that
there m'st be m'tuality
between ti-r-- parties based on their essential equality to which
is repugnant to have one
party bour.1 5y the contract leaving the other free therefrom.5

Thus, in the exercise oft'e powers granted upo. him under

tl.re LG Code, a local
chief executive, or in this case, a municipar mayor, may terminate
an existing contr.act. It
is deemed a valid exercise of sur:h powers.

f
on the seciii;J Issue: The detetLnination whether an Executive order
may be one of the
means to cau'e the tertnination of a procutement contract,
is a psticiabre issue which
only rhe p'.'a..r court can dererntjne.

on i ir': issue of whet}rer an Eo by itself is a valid act to cause the termination

or
nullificatii:,r rl the procuremeLrt contract, it is our view that
the same should be
adjudicatee- r. :1re proper courts because the facts are in ihe nature
ol.lusticiable issues.

we also take note that ttre governing guidelines under the procurement law
does
not preqcribq the manner or lorm of the order which shalr be the finar
docume't
completi'g the terminatio' aft:r. complying with the procedures give..
With more
reason that the Department is i. no positior to cletermine
the same. pursua't to DILG
Memorandum Order No. 2010-02 , this Department is constrained frorn
rendering an
opinion where another goverrrment age'cy, such as the GppB, exetcises
orimarv
authority or i,xpertise on the sutrject matter of the query, that is, the t"._irruttr,
of
procuremenr cciltract. The GPPll, vested with primary authorirypn
procurement issues,"
f
L
Secrion 1.14(Dj, t{A 7160
, Secrion.l44 (r,rl i;,
itA 716
r Section .{44(' , l):rr),
fu{ 7160
{ Section 22(r .l (6), RA 7160
5
Reynaldo P. , i . i,:e'do fr. vs N{etrop'lir,rn Bank and ,l'msr Co.,
G.R. No, 14g325, 03 Seprember 2007
Page | 2
 (

o
may ren*'r ;r'r opinion on rhe matter.
Likewise, consi.dering the colflicting issues
parties u'i,l .i Interests are cleaily opposed, from
the appropriate courts are the proper venue
to ventil; '-r :11r.fi iss11g5.

on the Third Issue: r4/'ithr'tLtr n ing on the varitrity of L'o

terminated, and nullified the procurement
No. r0 which cancered,
contract, the status ol said contrac,t remains
as such

In the review of the subject EO conducted by the

Governor of Cotabato who
invalidated riO No. 40, it
i;; our view that tlr" ,u_" shoutd be confined
determinatiorr whether an ext-'cutive order is to the
co'siste't with the laws in order to rure on
its validity, a! statecl in Section ljo(b)r
olpn 7160 or the Lo
(LG Code) ln a' instances of the
"rlilffll,i,lH:,""';:: :::i
review, the local .n,",
execuuve r-r'rers are withi' the powers granted
by law and in confbrmity with provincial,
city' or mr:rrii:iual ordinances.T Administrative or
executive acts, orders and regurations
shall be vali,-i o'iy when they are not contrary
to the laws or the constitution.8

In this case, the Governor of cotabato

foun. ir-rvatid to No. 40 for severar reasons.
Based on the review, the main basis for prornulgating EO No.
40 was the findings of the
Ad Hoc Committee wl.rich was creared prrrrlu.,i,o
fO No. 26, Series of 2013, an order
which did nor pass the review c,f the provincial
Governor of cotabato. on this premise,
the committee findings and rer:ommendadons were
rendered of doubtful legality and
validity' including the basis for rhe issuance of Eo
No. 40. Further,
tltl.ltent cf upholding the varidity of the procuremenr contracr rhe review went ro
on the provisio. of
Build a'd Tr.nsfer scheme, corrrary to the legal
premises cited i'EO No. 40. These acts
of therevrewing authority appear to be beyond
what is required under Section 30 (a) and
(b) of RA 7l6r).

The :r.;tinent issue henrr:forth touches on the status

of the contract a{ter the
Governor u.l - '.:abato held invalid EO No. 40.
{
EO No. .10,
which you pr.mulgated, terminated the procurement
*
Departrnent u'ill'ot intervene to rure on its procedural
contract. This
and substantive valicrity because
to do so is to anogate trre powrrs of the j'criciary in
the determination of a justiciabre
issue we were asked to deterr,ine the status of contract
after you termi'ated it. The
Department has no further role r.o determine its status
-- the contract remains as such,
upon exercising the powers granted to local chief executives
under the LG code. The

t'section 30 kri'-r'o|E^ecutive
orrlerr. (a)-.ucr (b) rf the gover nor or the city or. municipar mayor fa s
to acr on said (--lltltivc order$ rvithin thirtv (30) days
after their submission, the sume shall be deened
col'lsisrent with 1..r.;ncl rherefbre vaho
7 Scclion 30 (aj. til| 7160
3 Article 7, M Ji. .,r rhe C-ivil Cocle of r:lr philippines
Page | 3

f
other contrairting party, howe\,er, is not precluded to seek the legal remedies provided in
the same .L'rriract and govcrnirrg laws, such as arbitration mechanism and/or litigation in
Proper cc rr r!

Fin:rii-,., r,vitlr the allegation that the contract was executed by the former Mayor of
Misdayap rvithout any prior :iuthority from the Sangguniang Byyan of Midsayap. will
the contract still be valid and eil'ective? I
Under Section 22(c) of RA 7160, the local chief executive canltor enrer into a
contract in behalf of the local ilovernment unit (LGU) withour prior aurhorization from
the sanggunian concemed.e To reconcile this provision relative to procurement under
RA 9184, the case of Qr,risurrbing vs Garciar,l explaiirs rhis further by indicating the
citcumstances when a prior authorization from the local sanggunian is required or not:

'R.A. No. 9181 establishes the law and procedure for public
prorrrement. Sec. 317 thereof explicitly makes the approval of the
ap ,' '1..'riate authoity v'hich, in the case of local government units, is the
sat,qrutian, the point ol reference for the notice to proceed to be issued to
tht trinning bidder. 7'his provision, rather than being in conflict with or
provtding at1 exception to Sec. 22(c) of R.A. No. 7160, blends seamlessly
with the latter and eten acknowledges that in the exercise of the local
govefnment unit's cotp,trate powerc, the chief executive acts nerely as an
insnumentality of the Jocal council. Read together, the cited provisions
mandate the local chief executive to secure the sanggynian's approv-al
before entering into procurentent contt-acts and to traffmft the uotice to
. proceed to the winning bidder not later than seven (7) calendar days
therefront.

Jal Ll

The cluestion of whether a sanggunian authoization sepatate fiom

'rhe :ppt'opriation ordinance is required should
be resolved depending on
tht: ,i',ttr icular cilcunstances of the case. Resort to the appropriation
oreiJtence is necessarr. tn order to determine if there is a provision therein
whLh specifically cove,,.s the expense to be incurred or the corittact to be
entered into. ShoulLl the appropriation ordinance, for instance, already
contain in sufficient detail the project and cost ofa capital outlay such that
all that the local chief executive needs to do alter undergoing the requisite
public bidding is to erecute the cont.ract, no funher authoization is
requied, the appropriation ordinance already being sufficient.

{
'r See also Qtr':ruilbilg vs Garcia, Ci.R. No. 175527, 08 December 2008.
r0
C.R. 1755../ (rB Llecernber 2008
 t
{

t)n the other hand, should the appropriation ordinance describe the
projects in generic terms such as 'tnfrastructure projects," "inter-municipal
water\totks, drainage arul sewerage, flood control, and irigation systems
projcfls," ''reclanation pnjects" or 'iroads and bridges," there is an obuious
need lor for every specifrc project that in tum requires
a covering contntct
approual by the sanggunian. Specific approual may also be
required for the purchase ofgoods and seruices which are neither specified
in the appropt'iation ordinance nor encompassed within the regular
personal seruices and mainrenance operating expenses-

In addition, it is noted thirt there is no sufficient information to render an opinion

whether the subject procuremem was made through an appropriation ordinance or not.

We hL,,pe the foregoing suffrciently addresses your conceY

AUS RX.A. PANADERO

Copy Furnjshed:
DILGOUSIC
Dir. REYNALDO M. BUNCUBUNC
OfEcer- in'Charse
DILC Regional Office No. XJI
Sumpay Compound, Dlk .1 Maranon Village
(oronadal City

Rel: (51) rl 20 3C. a: /l l- 18-239

lS:55

Page | 5