The Supreme Court has clarified that a local government official’s power to enter contracts on behalf of the government is limited to the specific authority granted by law or ordinance. In Vicencio v. Villar, the Court ruled that an ordinance authorizing a specific city vice-mayor to enter into consultancy contracts for a limited period did not grant continuing authority to subsequent vice-mayors. This decision underscores the principle that public officials can only exercise powers expressly delegated to them, ensuring accountability and preventing the unauthorized use of public funds.

Ordinance Interpretation: Can a Specific Grant of Authority Extend Beyond Its Terms?

The case revolves around Arnold D. Vicencio, who, as the City Vice-Mayor of Malabon, entered into consultancy contracts in 2005. These contracts were later disallowed by the Commission on Audit (COA) because they were deemed unauthorized. The COA argued that City Ordinance No. 15-2003, which Vicencio relied on for authority, specifically authorized the former vice-mayor, Hon. Jay Jay Yambao, to enter into consultancy contracts only for the period of June to December 2003. Thus, the central legal question is whether Ordinance No. 15-2003 granted a general power to the Office of the Vice-Mayor, or a specific, time-bound authority to a particular individual.

Vicencio argued that the ordinance authorized the Office of the Vice-Mayor, not just Yambao, to enter into such contracts. He pointed out that Hon. Benjamin C. Galauran, as acting Vice-Mayor, had also entered into consultancy contracts under the same ordinance. Moreover, he contended that there was no indication in the ordinance’s preamble that it was intended to empower only Yambao or to limit the power to hire consultants to the period of June to December 2003. In essence, Vicencio claimed that the ordinance should be interpreted broadly to allow for the continued hiring of consultants to support the Sanggunian’s (city council’s) work.

The Supreme Court disagreed with Vicencio’s interpretation. The Court emphasized that under Section 456 of the Local Government Code (Republic Act No. 7160), a city vice-mayor does not have the inherent authority to enter into contracts on behalf of the local government unit. Unlike a city mayor, whose powers include representing the city in business transactions and signing contracts with the Sanggunian’s authorization, the vice-mayor’s powers are primarily related to presiding over the Sanggunian and appointing its staff. Therefore, any authority for the vice-mayor to enter into contracts must be expressly granted by law or ordinance.

The Court scrutinized the language of Ordinance No. 15-2003, which states:

City Ordinance No. 15-2003
An Ordinance Granting Authority to the City Vice Mayor, Hon. Jay Jay G. Yambao, to Negotiate, and Enter into a Contract for Consultancy Services in the Sanggunian Secretariat Tasked to Function in their Respective Areas of Concern, as Aforementioned, To Wit:

The Court found the ordinance to be clear and precise. It explicitly authorized Vice-Mayor Yambao to enter into consultancy contracts in specific areas. Furthermore, the ordinance specified that the appropriations for these contracts were limited to the period of June to December 2003. This additional limitation reinforced the Court’s view that the power granted under Ordinance No. 15-2003 was not a general grant of authority to the Office of the Vice-Mayor, but a specific authorization to a particular individual for a limited time.

The Court invoked the principle of statutory construction that where the words of a statute are clear and unambiguous, they must be given their literal meaning and applied without attempted interpretation. This principle, articulated in cases like National Federation of Labor v. National Labor Relations Commission, underscores the importance of adhering to the plain language of the law. Interpretation is only necessary when a literal interpretation would lead to an absurd or unjust result, which the Court did not find to be the case here.

The Court also addressed the issue of personal liability for unauthorized expenditures. Section 103 of Presidential Decree No. 1445 states that expenditures of government funds in violation of law or regulations shall be the personal liability of the official or employee directly responsible. Since Vicencio entered into the consultancy contracts without the requisite authority, he was held personally liable for the disallowed amounts. While the Court acknowledged that Vicencio may have relied on the opinion of the City Legal Officer, this reliance only demonstrated his good faith but did not absolve him from liability for violating the Local Government Code.

The Supreme Court upheld the COA’s decision, emphasizing its constitutional mandate to protect and conserve government funds and property. The Court recognized the COA’s role in preventing irregular, unnecessary, excessive, or extravagant expenditures. By disallowing the unauthorized consultancy contracts, the COA was simply fulfilling its duty to ensure that public funds are used in accordance with the law.

This case serves as a crucial reminder for local government officials to act within the bounds of their delegated authority. It underscores the importance of carefully interpreting ordinances and statutes to ensure that their actions are legally sound. Public officials must be vigilant in safeguarding public funds and accountable for any unauthorized expenditures. The principle of strict interpretation of delegated powers is fundamental to maintaining transparency and accountability in local governance.

FAQs

What was the key issue in this case?	The key issue was whether a city vice-mayor had the authority to enter into consultancy contracts based on an ordinance that specifically authorized his predecessor to do so for a limited period. The Supreme Court ruled that the ordinance did not grant a continuing authority.
What is the significance of City Ordinance No. 15-2003?	City Ordinance No. 15-2003 was central to the case because it was the purported source of authority for the vice-mayor to enter into the consultancy contracts. However, the Court found that it only authorized a specific individual for a specific time.
What does the Local Government Code say about a vice-mayor’s powers?	The Local Government Code outlines the powers and duties of a city vice-mayor, which primarily involve presiding over the city council and appointing its staff. It does not grant inherent authority to enter into contracts on behalf of the city.
What is the rule on statutory interpretation applied in this case?	The Court applied the principle that when a statute’s words are clear and unambiguous, they must be given their literal meaning and applied without attempted interpretation. This means courts should adhere to the plain language of the law.
Why was the vice-mayor held personally liable in this case?	The vice-mayor was held personally liable because he authorized expenditures of government funds without the necessary legal authority. This violated Section 103 of Presidential Decree No. 1445, which makes officials personally liable for unauthorized expenditures.
What role does the Commission on Audit play in this case?	The Commission on Audit (COA) plays a crucial role in safeguarding government funds. In this case, the COA disallowed the unauthorized consultancy contracts, ensuring that public funds are used in accordance with the law.
What is the practical implication of this ruling for local government officials?	The ruling emphasizes the need for local government officials to act within the bounds of their delegated authority and to carefully interpret ordinances and statutes to ensure their actions are legally sound.
How does this case relate to good governance?	This case promotes good governance by upholding the principles of transparency, accountability, and the proper use of public funds. It reinforces the idea that public officials must be accountable for their actions.

In conclusion, Vicencio v. Villar underscores the importance of adhering to the specific grants of authority in local governance. It serves as a reminder that public officials must operate within the bounds of the law, ensuring that public funds are used responsibly and in accordance with established legal frameworks. The ruling reinforces the principles of accountability and transparency in local government operations.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Vicencio v. Villar, G.R. No. 182069, July 03, 2012