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7. Disqualifications of parties

The party/officer contracting for and on behalf of the Government must possess the legal capacity and authority to do so, otherwise, the contract is unenforceable and does not bind the Government. Stated otherwise, every officer entering into contract for the Government must be duly authorized and not otherwise disqualified by law or regulations.

Applicable Laws, Rules and Regulations

Section 36, Chapter 9, Book I, RAC - Inhibition Against Purchase of Property at Tax Sale

No officer or employee of the government shall purchase directly or indirectly any property sold by the government for non-payment of any tax, fee or other public charge. Any such purchase by an officer or employee shall be void.

Section 36, Chapter 9, Book I, RAC - Inhibition Against Purchase of Property at Tax Sale

Section 3, RA 3019 as amended - Corrupt Practices of Public Officers

In addition to acts or omissions of public officers already penalized by existing law, the following shall constitute corrupt practices of any public officer and are hereby declared to be unlawful:

(g) Entering, on behalf of the Government, into any contract or transaction manifestly and grossly disadvantageous to the same, whether or not the public officer profited or will profit thereby.

(h) Directly or indirectly having financial or pecuniary interest in any business, contract or transaction in connection with which be intervenes or takes part in his official capacity, or in which he is prohibited by the Constitution or by any law from having any interest.

Section 108, PD 1445 - Prohibition Against Pecuniary Interest

No accountable or responsible officer shall be pecuniarily interested, directly or indirectly, in any contract or transaction of the agency in which he is such an officer.

Illustrative Decisions

COA Decision No. 2175 dated January 31, 1992 - Government official prohibited from engaging in business with the agency or LGU in which he is an officer

Various disbursement vouchers covering several expenditures in the aggregate amount of P67,270.69 were disallowed by the Provincial Auditor of Lanao del Norte for alleged violations by the Provincial Governor of the provisions of Section 108 of PD 1445 as well as Section 41(1) of BP 337 and/or Section 3(i) of RA 3019. While the Governor admitted that the two suppliers, J & L Supermart and Corpus Christi Service Center, are owned by his two daughters, he, however, averred that the business transactions or dealings in question with these suppliers were done in good faith and that quality supplies or equipment were delivered and found to be in accordance with the specifications in the purchase orders.

Upon the advice of the Provincial Auditor, the Governor has ordered the stoppage of business dealings of the provincial Government with his two daughters. However, the Auditor noted that the aforementioned relatives of the Governor still continued conducting business with the province.

The Commission held that, indeed, the Provincial Governor of Lanao del Norte has violated the clear and explicit provisions of the aforementioned laws prohibiting government officials from directly or indirectly engaging in business with the agency or local government unit in which he is an officer. Thus, his request for reconsideration may not be given due course and the disallowance is affirmed.