P102M worth of unsupported contracts: SC reverses RTC ruling that cleared Garcia

CEBU – The Supreme Court en banc has recently reversed and set aside the ruling of a regional trial court in Cebu City that cleared Governor Gwendolyn Garcia of any liability for entering into contracts without prior authorization from the Provincial Board.

In a 18-page decision penned by Associate Justice Dante Tinga, the High Tribunal reversed the ruling of RTC Branch-9 Judge Geraldine Faith Econg and remanded the case to the court that handled it for further proceedings.

Chief Justice Reynato Puno has concurred with the findings of all the SC justices that the instant case should be treated as an ordinary civil action requiring for its complete adjudication the confluence of all relevant facts.

“The trial court should receive further evidence in order to determine the nature of the questioned contracts entered into by Governor Garcia and the existence of ordinances authorizing her acts,” the SC ruling reads.

The case stemmed from the 2004 annual audit report of the Commission on Audit, which announced that there were “several contracts in the total amount of P102,092,841.47 were not supported with a Sanguniang Panlalawigan resolution authorizing the governor to enter into a contract as provided for under section 22 of the Local Government Code.”

The state auditors recommended that the governor must secure a resolution from the Provincial Board authorizing her to enter into a contract to make her transactions legal.

Garcia quickly sought for the reconsideration of the findings and recommendation of the COA, but before her request can be acted upon, she had filed a civil action in court for declaratory relief and named the COA officials and the Provincial Board as defendants.

Judge Econg supported the arguments of Garcia that she don’t need anymore to secure prior authorization from the Provincial Board by way of a resolution before she enters into a contract involving monetary obligations on the part of the Province of Cebu when there is a prior appropriation ordinance enacted.

The SC said that Garcia’s petition for declaratory relief should have been dismissed because it was instituted after the COA had already found her in violation of Sec. 22(c) of R.A. No. 7160. 

“One of the important requirements for a petition for declaratory relief under Sec. 1, Rule 63 of the Rules of Court is that it be filed before breach or violation of a deed, will, contract, other written instrument, statute, executive order, regulation, ordinance or any other governmental regulation,” the high tribunal explained. 

Also, the SC said that when the RTC rendered a decision on the case, it failed to take heed of the incongruent facts presented by the parties.

It added that what the trial court should have done, instead of deciding the case based merely on the memoranda submitted by the parties, was to conduct a full-blown trial to thresh out the facts and make an informed and complete decision.

PB members Gabriel Luis Quisumbing, Estrella P. Yapha, Victoria G. Corominas, and Raul D. Bacaltos have filed a petition for review of the RTC’s decision that said Garcia need not secure the prior authorization of the Sangguniang Panlalawigan before entering into contracts committing the province to monetary obligations.

The records showed that in 2004, the Provincial Board has failed to approve an annual budget on time that is why the Cebu province was operating under a reenacted appropriation ordinance.

Justice Tinga said there are two basic issues that the court can proceed to discuss about the case.

First, the province of Cebu was operating under a reenacted budget in 2004, and Garcia entered into contracts on behalf of the province while this reenacted budget was in force.

Section 465 of the Local Government Code provides that the governor shall represent the province in all its business transactions and to sign in its behalf all bonds, contracts, and obligations, and such other documents upon authority of the provincial board.

Supreme Court said it confirms the indispensability of the provincial board’s authorization – by way of a resolution or an ordinance—in the execution of contracts which bind the local government unit to new obligations.

The Supreme Court said the declaration of the trial court to the effect that no prior authorization is required when there is a prior appropriation ordinance enacted does not put the controversy to rest.

Tinga said the question which should have been answered by the trial court, and which it failed to do was whether, during the period in question, there exist ordinances authorizing the governor to enter into the questioned contracts.

Since the Province of Cebu operated under a reenacted budget in 2004, the law provides that “only the annual appropriations for salaries and wages of existing positions, statutory and contractual obligations, and essential operating expenses authorized in the annual and supplemental budgets for the preceding year shall be deemed reenacted and disbursement of funds shall be in accordance therewith.”

Justice Tinga said the law clearly provides that contractual obligations which were not included in the previous year’s annual and supplemental budgets cannot be disbursed by the local government unit without the approval of the Sanggunian. — Rene U. Borromeo/WAB (THE FREEMAN)