Title
Vicencio vs. Villar
Case
G.R. No. 182069
Decision Date
Jul 3, 2012
Vice-Mayor Vicencio entered consultancy contracts in 2005 under a 2003 ordinance limited to 2003 services. COA disallowed payments, upheld by SC, citing lack of authority and violation of public fund rules.

Case Summary (G.R. No. 182069)

Factual Background — Ordinance and 2003 Consultancy Contracts

On 30 October 2003 the Sangguniang Panglungsod of Malabon enacted City Ordinance No. 15‑2003 titled “An Ordinance Granting Authority to the City Vice‑Mayor, Hon. Jay Jay Yambao, to Negotiate and Enter into Contract for Consultancy Services …” The ordinance named three consultant positions, set compensation at P22,000 each per month, and expressly limited the source of appropriations to funds covering the period June to December 2003. Pursuant to that ordinance, in late 2003 and early 2004 the city (represented by Hon. Benjamin Galauran) entered into consultancy contracts with three individuals for the mid‑2003 period.

Factual Background — 2005 Consultancy Contracts and Services Rendered

After petitioner Vicencio assumed office as City Vice‑Mayor in May 2004, he considered hiring consultants to augment the Sanggunian Secretariat. He sought the City Legal Officer’s opinion (letter dated 19 July 2004). The City Legal Officer responded (26 July 2004) that ratification by the Sangguniang Panglungsod was unnecessary “provided that the contract of consultancy services to be executed is precisely the services stipulated in said ordinance.” On 21 January 2005 the Sangguniang Panglungsod adopted the 2005 appropriations ordinance allocating P792,000 for consultancy services under the Legislative Secretariat. In February 2005 Vicencio executed consultancy contracts with three consultants (Catindig, delos Santos, Amiana), who thereafter rendered services and were paid under those contracts.

Audit, Audit Observation Memorandum and Notice of Disallowance

On 19 December 2005 the City Auditor issued Audit Observation Memorandum No. 2005‑12‑019, finding the P384,980 disbursement improper. The AOM concluded that Ordinance No. 15‑2003 specifically authorized only Vice‑Mayor Yambao for June–December 2003 and did not authorize the incumbent vice‑mayor to hire consultants for 2005; that progress accomplishment reports were not attached to disbursement vouchers; that the method used by the BAC in hiring the consultants was not shown; and that contracts and supporting documents were not submitted to the City Auditor within five days as required by COA Circular No. 76‑34. On 12 May 2006 City Auditor Elizabeth S. Zosa issued Notice of Disallowance No. 06‑009‑101(05) disallowing P384,980 and naming as liable: petitioner Vicencio (for certifying and approving the transactions), Eustaquio M. Angeles (Officer‑in‑Charge, City Accountant), and the three consultant payees.

Administrative Adjudication at COA — ASB Decision and Commission Proper Action

Petitioner appealed to the Adjudication and Settlement Board (ASB) of the COA. On 12 June 2007 the ASB issued Decision No. 2007‑030: it denied Vicencio’s appeal and affirmed the disallowance as to him and the payees, but granted the appeal of Mr. Eustaquio Angeles, excluding him from liability. Petitioner sought reconsideration from the Commission Proper; his letter was treated as an appeal and, by order dated 15 February 2008, the Commission denied the appeal (the assailed order).

Judicial Proceeding: Petition and Issues Raised

Petitioner filed a petition for certiorari under Rule 64, in relation to Rule 65 of the Rules of Court, challenging COA’s affirmation of the disallowance. The core issue presented was whether the Commission on Audit committed grave abuse of discretion amounting to lack or excess of jurisdiction in affirming ASB Decision No. 2007‑030 disallowing disbursements for consultant services allegedly unauthorized by Ordinance No. 15‑2003.

Procedural Finding — Verification Defect in the Petition

The Supreme Court noted a procedural defect: petitioner’s pleading was verified on “his own personal knowledge and belief and based on authentic records and/or documents.” Under Section 4, Rule 7 of the Rules of Court, verifications based on “knowledge and belief” render the pleading treated as unsigned and produce no legal effect, subject to the court’s discretion to allow correction. The Court observed that this defect could merit outright dismissal, but proceeded to resolve the substantive issues.

Substantive Analysis — Scope of Vice‑Mayor’s Authority Under R.A. 7160

The Court examined the powers of the city vice‑mayor under Section 456 of R.A. No. 7160 (Local Government Code). While the vice‑mayor is presiding officer of the sanggunian and signs warrants for sanggunian expenditures, the Code does not vest the vice‑mayor with the general authority to represent the city in business transactions or to sign city contracts; that prerogative is provided to the city mayor (citing Sec. 456(b)(1)(vi)). Consequently, any authority of the vice‑mayor to enter into contracts on behalf of the city must derive from a specific ordinance and is strictly circumscribed by the terms of that ordinance.

Interpretation of Ordinance No. 15‑2003 — Clear and Limited Grant of Authority

The Court focused on the ordinance’s plain language. Ordinance No. 15‑2003 explicitly granted authority to “the City Vice Mayor, Hon. Jay Jay G. Yambao” to negotiate and enter into consultancy contracts for specified consultant positions, to be paid P22,000 each per month, and expressly authorized appropriation of funds “covering the period from June to December of 2003.” The Court found the ordinance clear, precise, and unambiguous; it therefore must be given its literal meaning. Because the grant was neither framed as a continuing authority nor as a grant to the office irrespective of the named incumbent, the ordinance did not authorize petitioner Vicencio, as a subsequent vice‑mayor, to execute consultancy contracts for 2005. The Court stressed that where words are clear and free from ambiguity, literal application is required and interpretation is resorted to only if literal application is impossible, absurd, or unjust — none of which were present here.

Procedural and Documentary Deficiencies Noted by COA

The COA’s findings additionally included the absence of monthly progress accomplishment reports to substantiate services rendered, lack of documentation showing the BAC’s method of engaging the consultants (selection or direct hiring), and failure to submit approved contracts and supporting documents to the City Auditor within five days as required by COA Circular No. 76‑34. These deficiencies supported th

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