Prior Sanggunian Authorization to Sign Contracts

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Prior Sanggunian Authorization to Sign Contracts

Post by RDV @ GP3i on Fri Mar 27, 2009 12:50 pm

There has always been the issue of whether or not a prior Sanggunian authorization is required before any Local Chief Executive (LCE) could validly enter into procurement contracts (as R.A. 9184 is silent on the matter).

Despite DILG Opinion No. 9 s. 2006 - http://www.gppb.gov.ph/laws_rules/laws/DILG%20Opinion%20on%20SP.pdf - one reason why the issue persists is due, perhaps, to the fact that it is only an opinion and it was rendered on a particular case of a province, which municipalities/cities may find inapplicable to them under the provisions of the Local Government Code.

Most of us are, probably, unaware of the Supreme Court decision in the Province of Cebu (another province, but, don't worry, the decision is of general application to LGUs in GR. No. 175527 - http://sc.judiciary.gov.ph/jurisprudence/2008/december2008/175527.htm), the pertinent decision of which on the subject matter is quoted below:

In cases, for instance, where the local government unit operates under an annual as opposed to a re-enacted budget, it should be acknowledged that the appropriation passed by the sanggunian may validly serve as the authorization required under Sec. 22(c) of R.A. No. 7160. After all, an appropriation is an authorization made by ordinance, directing the payment of goods and services from local government funds under specified conditions or for specific purposes. The appropriation covers the expenditures which are to be made by the local government unit, such as current operating expenditures and capital outlays.

“The question of whether a sanggunian authorization separate from the appropriation ordinance is required should be resolved depending on the particular circumstances of the case. Resort to the appropriation ordinance is necessary in order to determine if there is a provision therein which specifically covers the expense to be incurred or the contract to be entered into. Should the appropriation ordinance, for instance, already contain in sufficient detail the project and cost of a capital outlay such that all that the local chief executive needs to do after undergoing the requisite public bidding is to execute the contract, no further authorization is required, the appropriation ordinance already 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 approval by the sanggunian. Specific sanggunian approval may also be required for the purchase of goods and services which are neither specified in the appropriation ordinance nor encompassed within the regular personal services and maintenance operating expenses
.”

From the above-quoted decision, the following are clear:

  • If the LGU operates on an Annual/Supplemental budget, not on a re-enacted budget, the appropriation passed by the Sanggunian may validly serve as the authorization under Sec. 22© of R.A. 7160 PROVIDED that the appropriation ordinance already contain in sufficient detail the project and the cost of a capital outlay such that all the LCE needs to do after the requisite public bidding is to execute the contract;

  • If, however, the appropriation ordinance describe the project(s) in generic terms, there is a need for a covering contract for every specific project which, in turn, would require approval by the sanggunian;

  • Specific sanggunian approval may also be required for the purchase of goods and services which are neither specified in the appropriation ordinance not encompassed within the regular personal services and MOOE.

The last bulleted item would be something that need further clarification (maybe by the GPPB) because it could be interpreted in a number of ways, the effect of which could derail procurement of goods and services.
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Re: Prior Sanggunian Authorization to Sign Contracts

Post by engrjhez® on Fri Mar 27, 2009 2:06 pm

RDV wrote:
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 approval by the sanggunian. Specific sanggunian approval may also be required for the purchase of goods and services which are neither specified in the appropriation ordinance nor encompassed within the regular personal services and maintenance operating expenses.”
Does this section supercedes the formulation and approval of the APP? Considering a detailed PPMP as to what projects are to be implemented thru the Engineering Office?
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Re: Prior Sanggunian Authorization to Sign Contracts

Post by RDV @ GP3i on Fri Mar 27, 2009 2:11 pm

engrjhez wrote:
RDV wrote:
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 approval by the sanggunian. Specific sanggunian approval may also be required for the purchase of goods and services which are neither specified in the appropriation ordinance nor encompassed within the regular personal services and maintenance operating expenses.”
Does this section supercedes the formulation and approval of the APP? Considering a detailed PPMP as to what projects are to be implemented thru the Engineering Office?

I think so, since the details are not in the ordinance. Because of this SC ruling, during the preparation of the Executive Budget, all LGUs should see to it that the details are already there in order to preclude going back to the sanggunian for authorization prior to contract signing. The details in the PPMP and APP, since they are done after the appropriation ordinance and since the PPMP and APP do not require approval by the sanggunian, would not matter.


Last edited by RDV on Sun Mar 29, 2009 12:04 pm; edited 2 times in total
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Re: Prior Sanggunian Authorization to Sign Contracts

Post by engrjhez® on Fri Mar 27, 2009 3:18 pm

RDV wrote:I think so, since the details are not in the ordinance. Because of this SC ruling, during the preparation of the Executive Budget, all LGUs should see to all that the details are already there in order to preclude going back to the sanggunian for authorization prior to contract signing. The details in the PPMP and APP, since they are done after the appropriation ordinance and since the PPMP and APP does not require approval by the sanggunian, would not matter.
I believe the GPPB must make the appropriate ISSUANCE for this. This is a very crucial matter, especially to LGUs. bounce
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Re: Prior Sanggunian Authorization to Sign Contracts

Post by RDV @ GP3i on Fri Mar 27, 2009 3:36 pm

engrjhez wrote:
RDV wrote:I think so, since the details are not in the ordinance. Because of this SC ruling, during the preparation of the Executive Budget, all LGUs should see to all that the details are already there in order to preclude going back to the sanggunian for authorization prior to contract signing. The details in the PPMP and APP, since they are done after the appropriation ordinance and since the PPMP and APP does not require approval by the sanggunian, would not matter.
I believe the GPPB must make the appropriate ISSUANCE for this. This is a very crucial matter, especially to LGUs. bounce

EXACTLY. Bulleted Items 2 and 3 are very crucial.

I am aware that there are many LGUs where some, if not most, of their infrastructure projects are in lump-sums or in generic terms. Likewise, the goods and services to be procured are not specified in the appropriation ordinance.

Going by that SC decision, these LGUs will now have to back to the Sanggunian for an authorization to enter into a procurement contract. Rolling Eyes
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Re: Prior Sanggunian Authorization to Sign Contracts

Post by riddler on Fri Mar 27, 2009 8:05 pm

I think this is a classic case of bloated bureacracy! under the GPRA the HOPE is given a certain period of time to Sign Contracts and issue Notice to Proceed (NTP) otherwise, the Contract is already valid.
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Re: Prior Sanggunian Authorization to Sign Contracts

Post by RDV @ GP3i on Sat Mar 28, 2009 9:40 pm

tianchon,ruel wrote:I think this is a classic case of bloated bureacracy! under the GPRA the HOPE is given a certain period of time to Sign Contracts and issue Notice to Proceed (NTP) otherwise, the Contract is already valid.

Yes, the HOPE has seven (7) calendar days to approve the Contract, but if he is unable to sign it within that period of time, the contract is not deemed approve. So, I have to disagree with you, engr. ruel, on that.

If the reason for being unable to sign/approve the contract is because a prior Sanggunian authorization is required, that is a justifiable reason. But of course, the problem arises when it takes long for the Sanggunian to pass the authorization, or, worse, if the Sanggunian sits down on the request for authority to sign the Contract. Project implementation is hampered.
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Re: Prior Sanggunian Authorization to Sign Contracts

Post by riddler on Mon Mar 30, 2009 9:54 am

RDV wrote.

"Yes, the HOPE has seven (7) calendar days to approve the Contract, but if he is unable to sign it within that period of time, the contract is not deemed approve. So, I have to disagree with you, engr. ruel, on that.

If the reason for being unable to sign/approve the contract is because a prior Sanggunian authorization is required, that is a justifiable reason. But of course, the problem arises when it takes long for the Sanggunian to pass the authorization, or, worse, if the Sanggunian sits down on the request for authority to sign the Contract. Project implementation is hampered."


You are right RDV, but I think the IRR is silent with regards to the action of the HOPE to approved/disapproved BAC’s Recommendation of the Award, Contract signing, and the Issuance of the Notice to Proceed (NTP). I presumed that the Contract is deemed approved if there is no action made by the HOPE within a specific period under the IRR.



If the HOPE sits on the BAC’s Recommendation of the Award for more than seven (7) days, what is the action now? Disapproved or Approved? If no action is made, who will request the HOPE to state the reason/s for its inaction as required by the IRR?
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Re: Prior Sanggunian Authorization to Sign Contracts

Post by RDV @ GP3i on Mon Mar 30, 2009 10:40 am

tianchon,ruel wrote:
You are right RDV, but I think the IRR is silent with regards to the action of the HOPE to approved/disapproved BAC’s Recommendation of the Award, Contract signing, and the Issuance of the Notice to Proceed (NTP). I presumed that the Contract is deemed approved if there is no action made by the HOPE within a specific period under the IRR.

If the HOPE sits on the BAC’s Recommendation of the Award for more than seven (7) days, what is the action now? Disapproved or Approved? If no action is made, who will request the HOPE to state the reason/s for its inaction as required by the IRR?

Since the IRR-A is silent on the automatic approval of the contract if the HOPE is unable to sign it within the period, you cannot presume that it is deemed approve.

If the HOPE sits down on the BAC recommendation without justifiable reason, then he could be held administratively liable for neglect of duty or even criminally liable, if so warranted.

The following provision of Sec. 38.2, which provides that: "If no action on the contract is taken by the head of the procuring entity within the periods specified in Section 37.4 of this IRR-A, the contract concerned shall be deemed approved", specifically refers only to situations when the contract is subject to approval by higher authority. The HOPE being referred to in that particular section is the higher authority, whoever that might be (Sec. 37.4).

That provision in not true in case of the HOPE, or his duly authorized representative, as the approving authority of the contract in the level of the procuring entity.
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Re: Prior Sanggunian Authorization to Sign Contracts

Post by riddler on Mon Mar 30, 2009 12:22 pm

Sec. 38.2, which provides that: "If no action on the contract is taken by the head of the procuring entity within the periods specified in Section 37.4 of this IRR-A, the contract concerned shall be deemed approved", specifically refers only to situations when the contract is subject to approval by higher authority. The HOPE being referred to in that particular section is the higher authority, whoever that might be (Sec. 37.4).

That provision in not true in case of the HOPE, or his duly authorized representative, as the approving authority of the contract in the level of the procuring entity.

May I ask now RDV, who is now the higher authority as referred to in Sec. 38.2 for LGU's?. Is it not the Mayor or Governor? 'sensya na kung makulit ako. thnks.
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Re: Prior Sanggunian Authorization to Sign Contracts

Post by RDV @ GP3i on Mon Mar 30, 2009 2:15 pm

tianchon,ruel wrote:May I ask now RDV, who is now the higher authority as referred to in Sec. 38.2 for LGU's?. Is it not the Mayor or Governor? 'sensya na kung makulit ako. thnks.[/b]
The Mayor or Governor is the head of the procuring entity (HOPE), he is not the one being referred to as the higher authority in Sec. 37.4. That particular section refers to a "further approval by higher authority." For example, if the contract approved by the Mayor or the Governor is subject to approval by the DILG, that would be the higher authority. In other words, that particular section will only apply if the contract is subject to further approval by higher authority, like the Office of the President. However, in the case of contracts subject to further approval by the Office of the President, Sec. 38.2 provides that it is not deemed approved until the OP gives final approval.

In the case of LGUs, approval by the LCE is enough, therefore, Sec. 37.4 and 38.2 will not necessarily apply.
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Re: Prior Sanggunian Authorization to Sign Contracts

Post by riddler on Mon Mar 30, 2009 3:57 pm

RDV wrote:
tianchon,ruel wrote:May I ask now RDV, who is now the higher authority as referred to in Sec. 38.2 for LGU's?. Is it not the Mayor or Governor? 'sensya na kung makulit ako. thnks.[/b]
The Mayor or Governor is the head of the procuring entity (HOPE), he is not the one being referred to as the higher authority in Sec. 37.4. That particular section refers to a "further approval by higher authority." For example, if the contract approved by the Mayor or the Governor is subject to approval by the DILG, that would be the higher authority. In other words, that particular section will only apply if the contract is subject to further approval by higher authority, like the Office of the President. However, in the case of contracts subject to further approval by the Office of the President, Sec. 38.2 provides that it is not deemed approved until the OP gives final approval.

In the case of LGUs, approval by the LCE is enough, therefore, Sec. 37.4 and 38.2 will not necessarily apply.


I think Sec. 38.2 will necessarily apply to LGU where the HOPE is already the higher authority. I believed this Section is made to require the HOPE of every LGU to act within an applicable period of time on matters pertaining to procurement, to streamline the process. Othewise, public service will be sacrificed.

For BOT Law projects, there is that section that limits the amount of the approval of the LOcal Chief Executive to enter into a contract with the winning bidder ( I guess 300 million and below). Above that amount requires the approval of the higher authority which is the President of the Philippines.
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Re: Prior Sanggunian Authorization to Sign Contracts

Post by RDV @ GP3i on Mon Mar 30, 2009 4:42 pm

tianchon,ruel wrote:
RDV wrote:
tianchon,ruel wrote:May I ask now RDV, who is now the higher authority as referred to in Sec. 38.2 for LGU's?. Is it not the Mayor or Governor? 'sensya na kung makulit ako. thnks.[/b]
The Mayor or Governor is the head of the procuring entity (HOPE), he is not the one being referred to as the higher authority in Sec. 37.4. That particular section refers to a "further approval by higher authority." For example, if the contract approved by the Mayor or the Governor is subject to approval by the DILG, that would be the higher authority. In other words, that particular section will only apply if the contract is subject to further approval by higher authority, like the Office of the President. However, in the case of contracts subject to further approval by the Office of the President, Sec. 38.2 provides that it is not deemed approved until the OP gives final approval.

In the case of LGUs, approval by the LCE is enough, therefore, Sec. 37.4 and 38.2 will not necessarily apply.


I think Sec. 38.2 will necessarily apply to LGU where the HOPE is already the higher authority. I believed this Section is made to require the HOPE of every LGU to act within an applicable period of time on matters pertaining to procurement, to streamline the process. Othewise, public service will be sacrificed.

You have to read Sec 38.2 in relation to Sec. 37.4, in which the latter refers to "further approval by higher authority." You are right, in the case of the LGUs the HOPE is the "higher authority" already, therefore, Sec. 37.4 will not apply. If the Mayor or Governor has delegated the authority to sign to a lower level official, that is it. There is no more need for his further approval because the signing of the Mayor's or Governor's authorized signing official is enough.

The point of this post is the Supreme Court decision on a prior Sanggunian authorization pursuant to Sec. 22(c) of the LGC.

Assuming you are correct, the case of the Compostela Valley, which was the subject of the DILG Opinion No. 9 s. 2006, would not have been elevated to the DILG. The award was already approved by the Governor, but he did not sign the contract from 17 June 2005 until that DILG opinion was issued on 17 February 2006, which took 8 months. Going by your argument, the contract should have been deemed approved, but it was not.
http://www.gppb.gov.ph/laws_rules/laws/DILG%20Opinion%20on%20SP.pdf
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Re: Prior Sanggunian Authorization to Sign Contracts

Post by riddler on Mon Mar 30, 2009 5:17 pm

ok RDV, 'got it now. I wish you can be of help to all the LGU's in the proposed revision of the IRR to address this concerns. RE: to streamline the process to minimize red tape and make it more effecient. But, i submit to the law.thanks again. (Hope i am not giving you a headache sa kakulitan ko).. Very Happy
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Re: Prior Sanggunian Authorization to Sign Contracts

Post by RDV @ GP3i on Mon Mar 30, 2009 6:02 pm

tianchon,ruel wrote:ok RDV, 'got it now. I wish you can be of help to all the LGU's in the proposed revision of the IRR to address this concerns. RE: to streamline the process to minimize red tape and make it more effecient. But, i submit to the law.thanks again. (Hope i am not giving you a headache sa kakulitan ko).. Very Happy

As a matter of fact, I have posted on 23 February a similar topic in the discussion on the draft IRR, to address the seeming confusion.

http://gppb.topicsolutions.net/topics-on-the-draft-gpra-irr-f3/draft-irr-contract-signing-and-approval-t46.htm

On that Supreme Court decision, I think, GPPB may not even be aware of it yet. I posted it as soon as I came across it and because it will affect all LGUs. I don't know how GPPB will react to it and I don't think it could even be done through the IRR which is being revised considering that the IRR cannot amend the provision of the LGC.
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Re: Prior Sanggunian Authorization to Sign Contracts

Post by engrjhez® on Tue Mar 31, 2009 10:41 am

[quote="tianchon,ruel"][quote="RDV"]
tianchon,ruel wrote:
For BOT Law projects, there is that section that limits the amount of the approval of the LOcal Chief Executive to enter into a contract with the winning bidder ( I guess 300 million and below). Above that amount requires the approval of the higher authority which is the President of the Philippines.
As a supplementary input and additional info to this paragraph mentioned as applicable to LGUs, the IRR of RA 7718 (BOT Law), Section 2.7b provides:
i. to the municipal development council for projects costing up to PhP 20 million;
ii. to the provincial development council for those costing above PhP 20 million up to PhP 50 million;
iii. to the city development council for those costing up to PhP 50 million;
iv. to the regional development council or, in the case of Metro Manila projects, the Regional Development Council for Metropolitan Manila, for those costing above PhP 50 million up to PhP 200 million; and
v. to the ICC for those costing above PhP 200 million.
Final approval of projects classified under b.i to b.iv of this section is vested on the Local Sanggunians per provision of the Local Government Code.


Very Happy
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Re: Prior Sanggunian Authorization to Sign Contracts

Post by RDV @ GP3i on Tue Mar 31, 2009 10:50 am

[quote="engrjhez"][quote="tianchon,ruel"]
RDV wrote:
tianchon,ruel wrote:
For BOT Law projects, there is that section that limits the amount of the approval of the LOcal Chief Executive to enter into a contract with the winning bidder ( I guess 300 million and below). Above that amount requires the approval of the higher authority which is the President of the Philippines.
As a supplementary input and additional info to this paragraph mentioned as applicable to LGUs, the IRR of RA 7718 (BOT Law), Section 2.7b provides:
i. to the municipal development council for projects costing up to PhP 20 million;
ii. to the provincial development council for those costing above PhP 20 million up to PhP 50 million;
iii. to the city development council for those costing up to PhP 50 million;
iv. to the regional development council or, in the case of Metro Manila projects, the Regional Development Council for Metropolitan Manila, for those costing above PhP 50 million up to PhP 200 million; and
v. to the ICC for those costing above PhP 200 million. Final approval of projects classified under b.i to b.iv of this section is vested on the Local Sanggunians per provision of the Local Government Code.
Very Happy

But of course, the BOT law is one of the exceptions to the coverage of R.A. 9184. So, in BOT projects, it is the BOT law which would apply not the GPRA.
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