Rivera v. Municipality of Malolos
REITERATIONFacts
The Antecedents: Petitioner Pedro P. Rivera entered into a contract with the Municipality of Malolos on August 31, 1949, for the supply of 2,700 cubic meters of crushed adobe stone (cascajo) and 1,400 cubic meters of gravel for P19,235. Rivera delivered the materials as stipulated. He subsequently claimed payment, but it remained unpaid. The Municipal Council later passed Resolution No. 68 on October 16, 1951, ratifying the public bidding and the contract. Procedural History: Rivera filed a complaint in the Court of First Instance of Bulacan to collect the sum due. The case was dismissed without prejudice. He then sought the intervention of the Presidential Complaints and Action Committee, which forwarded his claim to the Auditor General. The Auditor General denied the claim, citing the lack of appropriation to meet the obligation at the time of contract execution, rendering the contract void under Section 608 of the Revised Administrative Code, and the inability to verify deliveries. Rivera's motion for reconsideration was denied, leading to his appeal to the Office of the Auditor General and subsequently to the Supreme Court via a petition for review. The Petition: Petitioner Rivera argued that the municipality should not be allowed to invoke technicalities to avoid payment, especially after the Municipal Council acknowledged the indebtedness. He contended that the municipality had a source of funds (allotment from Motor Vehicle Law collections) and that there was no dispute regarding the contract's validity or the delivery and receipt of materials. He cited Sections 2165 and 2196 of the Revised Administrative Code to support the municipality's capacity to contract and argued that Section 1920, read with Sections 1912 and 1913, did not preclude the designation of a municipal officer to execute such contracts.
Issue(s)
Whether the contract entered into by the Municipality of Malolos with Pedro P. Rivera for the supply of road construction materials is valid despite the alleged lack of prior appropriation and certification of funds. Whether the Municipality of Malolos can be compelled to pay for the delivered materials when the contract is allegedly void ab initio. Whether the Auditor General erred in denying the claim for payment of the delivered materials.
Ruling
The Supreme Court affirmed the decision of the Auditor General denying the claim. The contract was declared void for non-compliance with legal requirements regarding appropriation and certification of funds. The Court held that the municipality could not be compelled to pay for materials delivered under a void contract, and the Auditor General acted correctly in disallowing the claim.
Ratio Decidendi
On Issue 1: The Court held that the contract entered into by the Municipality of Malolos with Pedro P. Rivera was void. The law requires that before a municipality can enter into a contract involving an expenditure of P2,000 or more, the municipal treasurer must certify that funds have been duly appropriated for such purpose and that the amount necessary to cover the proposed contract is available for expenditure. In this case, there was no such certification, and the contract was entered into without a valid appropriation, rendering it void pursuant to Section 608 of the Revised Administrative Code. The subsequent ratification by the Municipal Council could not validate a contract that was void from its inception due to a fundamental legal defect. On Issue 2: Since the contract was declared void ab initio, the Municipality of Malolos could not be compelled to pay for the materials delivered under it. The principle that a municipality must act within the scope of its legal authority and in compliance with statutory requirements is paramount. Entering into a contract without the necessary appropriation and certification of funds violates these requirements. Therefore, the petitioner's claim, which is based on this void contract, is without legal basis, and the municipality cannot be held liable for payment. On Issue 3: The Auditor General did not err in denying the petitioner's claim. The Auditor General's duty includes auditing claims against the government. If a contract is void and the expenditures made under it are not in accordance with law, the Auditor General is not bound to pass and allow the claim in audit. Furthermore, the law requires that the provincial auditor or his representative must check up the deliveries made by a contractor pursuant to a lawfully and validly entered contract. In this case, there was no such check-up, and the Auditor General correctly pointed out that the deliveries could not be verified. The purpose of this checking requirement is to forestall fraud and collusion, and its absence further supports the denial of the claim.
Main Doctrine
A contract entered into by a municipality for the supply of materials, especially for public works, is void if there is no prior appropriation of funds to meet the obligation and no certification from the municipal treasurer that the necessary funds are available. Furthermore, the delivery of such materials must be verified by the provincial auditor or his representative for the claim to be validly audited and paid. The municipality cannot be estopped from invoking these legal technicalities when the contract itself is fundamentally flawed.