Law Summary
Preconditions for Contract Signing
- Contracts may only be signed when supported by available funds.
- Availability of funds must be verified before a contract is entered into.
Role of Agency Heads and Authorized Officials
- Only agency heads or duly authorized officials are empowered to sign contracts.
- Such signing is conditioned on the prior verification of fund availability.
Responsibilities of the Chief Accountant
- The Chief Accountant must sign as a witness to contracts.
- Contracts without the Chief Accountant’s signature as witness are null and void.
- The Chief Accountant is tasked with verifying the availability of funds.
- Verification includes ensuring programmed appropriations have been released by the Ministry of the Budget and received by the agency.
- The signature of the Chief Accountant constitutes certification that funds are available.
Treatment of Letter-Contracts
- Letter-contracts requiring the conformity of the head of the agency or authorized official must also be reviewed and signed or initialed by the Chief Accountant in the same manner as regular contracts.
Regional or District Officials
- Contracts signed by regional or district officials under delegated authority must also be witnessed by the responsible accounting official under the same terms and conditions.
Maintenance of Contract Records
- The Accounting Division of agencies is responsible for maintaining a file of copies of contracts.
Penalties for Non-Compliance
- Accountants who sign contracts without available funds will face penalties as provided by accounting and budget laws related to improper payments and certifications.
Oversight and Audit by Commission on Audit (COA)
- The COA shall examine agency contracts during audits.
- COA verifies compliance with the Letter of Instructions.
- The COA shall also enforce Section 86 of P.D. No. 1445, the Auditing Code of the Philippines, in its examination of contracts.
Legal Effect and Enforcement
- Contracts not adhering to the fund availability and witnessing requirements are null and void.
- The letter reinforces the requirement of fiscal responsibility and ensures government contracts are executed only when funds are adequately secured.