17.1 Section 86 of PD No. 1445, otherwise known as the State Audit Code of the
Philippines, provides as follows:
“Section 86. Certificate showing appropriation to meet contract. Except in the case
of a contract for personal service, for supplies for current consumption or to be
carried in stock not exceeding the estimated consumption for three months, or
banking transactions of government-owned or controlled banks no contract
involving the expenditure of public funds by any government agency shall be
entered into or authorized unless the proper accounting official of the agency
concerned shall have certified to the officer entering into the obligation that funds
have been duly appropriated for the purpose and that the amount necessary to cover
the proposed contract for the current fiscal year is available for expenditure on
account thereof, subject to verification by the auditor concerned. The certificate
signed by the proper accounting official and the auditor who verified it, shall be
attached to and become an integral part of the proposed contract, and the sum so
certified shall not thereafter be available for expenditure for any other purpose until
the obligation of the government agency concerned under the contract is fully
extinguished.”
17.2 The post-audit of disbursements pertaining to the procurement of construction
materials and supplies, as well as construction contracts entered into by the City
Government totaling ₱109,328,343.75, showed that these were not supported with
the required CAF from the City Accountant. Inquiry with Management revealed
that the issuance of CAF was omitted in the documentary requirements for these
disbursements for the reason that the City Treasurer already certified the
availability of funds on the face of the disbursement vouchers. Moreover, the
existence of available appropriations is also certified by the City Budget Officer
on the obligation request form.
17.3 Transactions without the required CAF are considered void pursuant to Section 87
of the same Presidential Decree, quoted hereunder:
“Section 87. Void contract and liability of officer. Any contract entered into
contrary to the requirements of the two immediately preceding sections shall be
void, and the officer or officers entering into the contract shall be liable to the
government or other contracting party for any consequent damage to the same
extent as if the transaction had been wholly between private parties.”
17.4 It must be noted that COA Circular No. 2012-003, dated October 29, 2012 entitled
“Updated Guidelines for the Prevention and Disallowance of Irregular,
Unnecessary, Excessive, Extravagant, and Unconscionable Expenses,” cited the
abovementioned practice – entering into contracts without covering certificates of
availability of funds issued by the Chief Accountant – as an illegal expenditure. In
fact, GR Nos. 151373-74, dated November 17, 2005, in the case of Department of
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