Is a separate authorization required for a Mayor to enter into a Consultancy Services contract?

Facts:

In May 2013, petitioner, Alfredo G. Germar (Germar), won the mayoralty position. He replaced the former mayor, respondent Feliciano P. Legaspi (Legaspi).

During Germar's term, he entered into contracts for professional service with six (6) consultants wherein they have to advice the office of the mayor on municipal administration and governance, barangay affairs, business investment and trade, calamity and disaster, and on security relations. The budget for the salary of the consultants is found in the appropriation ordinance of the municipality for the year 2013. Particularly, it is a line-item called as "Consultancy Services" found under the category "Maintenance and Other Operating Expenses" of the Office of the Mayor.

Legaspi et. al., filed a complaint both criminal and administrative, included Grave Misconduct, Gross Dishonesty, Grave Abuse of Authority, Malversation and Violation of Republic Act (R.A.) No 7160, R.A. No. 6713, R.A. No. 3019 (docketed as OMB-L-C-15-0039 to 40), and R.A. No. 9184 against Germar, before the Office of the Ombudsman (OMB). Legaspi averred that Germar entered into these contracts of professional service without the prior authorization of the Sangguniang Bayan. This, Legaspi asserted, is a violation of Section 444 of the Local Government Code, which deals with the powers, duties, function, and compensation of the local chief executive.

In his defense, Germar recognized the clear mandate of Sections 22 and 444(b)(l)(vi). He, however, averred that he has indeed acquired the required "prior authorization" from the Sangguniang Bayan. Germar posited that the appropnation ordinance, which clearly provided for funds for "Consultancy Services" is the "prior authorization" required of Sections 22 and 444(b)(l)(vi).

Ruling of the Office of the Ombudsman

According to the OMB, Germar violated Section 22(c), in relation to Section 444(b)(l)(vi), of the Local Government Code, which requires an authorization from the Sangguinang Bayan before Germar, could enter into contracts in behalf of the municipality. The OMB further said that no local ordinance was presented either to reflect that the Sanggunian even ratified the contracts.

The ruling of the Ombudsman was affirmed in toto by the Court of Appeals

Ruling of the Supreme Court

The Supreme Court upheld that Germar's action of entering into contracts of professional service with the six (6) consultants could not be considered as a transgression of an established and definite rule of action, nor could it be considered a forbidden act, a dereliction of duty, or an unlawful behavior.

Discussion:

First, the Court agreed that if the project is already provided for in the appropriation ordinance in sufficient detail, then no separate authorization is necessary. On the other hand, if the project is couched in general terms, then a separate approval by the Sangguniang Bayan is required.

It is further elaborated in the recent case of Verceles, Jr. v. Commission on Audit that the prior authorization for the local chief executive to enter into contracts on behalf of the municipality may be in the form of an appropriation ordinance, for as long as the same specifically covers the project, cost, or contract to be entered into by the local government unit.

As to the efficacy of the subject line item, in Belgica, et al. v. Hon. Exec. Sec. Ochoa, Jr., et al., a line item is defined as "an item of appropriation must be an item characterized by singular correspondence-meaning an allocation of a specified singular amount for a specified singular purpose. By this standard, the Court, considered the "Calamity Fund, Contingent Fund and the Intelligence Fund" as line-items as they are "appropriations which state a specified amount for a specific purpose." Further, Belgica ruled that "a valid appropriation may even have several related purposes that are by accounting and budgeting practice considered as one purpose, e.g., MOOE (maintenance and other operating expenses), in which case the related purposes shall be deemed sufficiently specific x x x"

By analogy, these asseverations in the line-items of appropriation laws may also be applied to appropriation ordinances.

In this case, the Sangguinang Bayan's appropriation ordinance for the fiscal year 2013 allocated P40,609,457.62 to the "Mayor's Office." While this allocation contained no specific line-item, Section 1 of the same ordinance provided for the incorporation of several documents to be made as integral part thereof. Particularly, it included the budget document denominated as "Budget of Expenditures and Sources of Financing." A review of the records revealed that the subject line-item "Consultancy Services" is found in the MOOE along with other line-items such as travelling expenses, training expenses, representation expenses, and intelligence expenses.

In effect, the subject line-item in this case, like the other line-items in the appropriations ordinance, is a specific allocation to a specific purpose for the specific maintenance and operating expense of a specific office. In the language used in Belgica, this line-item which is found in the MOOE of the Office of the Mayor shall already be deemed sufficiently specific.

The contract for professional services entered into by Germar, has been properly and dearly identified in the appropriations ordinance. Clearly, the line-item "Consultancy Services" in the MOOE budget of the Office of the Mayor is meant to provide consultants to the Office of the Mayor for the purpose of its day-to-day operations. This is as specific as the line-item could be reasonably provided for in the appropriation ordinance, and the Sangguniang Bayan, by including this in the appropriation ordinance, already acceded to the procurement of consulting services by the Office of the Mayor.

Conclusion

As a general rule, YES.

However, since the prior authorization by the Sanggunian for the local chief executive to enter into contracts on behalf of the municipality may be in the form of an appropriation ordinance, for as long as the same specifically covers the project, cost, or contract to be entered into by the local government unit, another authorization is no longer needed.

(The case of ALFREDO G. GERMAR, Petitioner, v. FELICIANO P. LEGASPI, Respondent, G.R. No. 232532, October 01, 2018)

(This is also published in the DILG R3 newsletter "Insights")