Request for Guidance on the Validity and Effect of Executive Order No. 39, Series of 2025, Suspending the Collection of Septage Management Fees under Tripartite Memorandum of Agreement (MOA)

[2025-08-13-072] The authority of the Municipal Mayor under Section 444(b)(1)(vi) of Republic Act No. 7160, otherwise known as the Local Government Code of 1991, includes the power to represent the municipality in all business transactions and to sign contracts on its behalf when duly authorized by the sanggunian bayan. Such authority, however, should not be construed as including the power to unilaterally disregard or impair contractual obligations that have already attached under a perfected agreement. In this regard, the Supreme Court has consistently recognized that local government contracts, once validly executed, are governed not only by public law considerations but likewise by the fundamental principles of contract law. The Court underscored that the authority of the local chief executive to enter into contracts emanates from prior authorization by the sanggunian.! Such authorization enables the execution of the contract but does not necessarily imply a power on the part of either the mayor or the sanggunian to unilaterally cancel a contract. Nonetheless, a unilateral cancellation of a contract may be questioned in courts by the affected party to determine whether or not cancellation is warranted.? In relation thereto, disputes involving the rescission, termination, or interpretation of contracts are generally judicial in nature and are properly resolved through the remedies provided by law, unless the contract stipulates extrajudicial action among the parties. Furthermore, while the Municipal Mayor may direct a review of an existing contract and may recommend amendments thereto in the exercise of administrative supervision, the suspension of obligations arising from a subsisting agreement may raise legal issues that ultimately require judicial determination, particularly where such action affects vested contractual rights and obligations. As regards the remedies available to the private contracting parties, it is well settled that LGUs, when entering into proprietary or contractual relations, descend to the level of private persons and may be held accountable for contractual breaches in accordance with law.? Thus, should it be established in the proper forum that the suspension of fee collection constitutes a breach of the MOA or an unjustified impairment of contractual rights, the aggrieved party may avail of such judicial remedies as may be appropriate under the circumstances. Whether liability actually exists, however, is a factual and legal question that properly falls within the jurisdiction of the courts based on the facts and evidence presented to it, and not before this Department. Anent the issuance of executive orders, no provision of the LGC prescribes a uniform or fixed period for their effectivity. Executive orders derive their validity not from their duration but from their conformity with the Constitution, statutes, and other applicable laws. Consequently, the legal effect of an executive order depends upon the existence of lawful authority for its issuance and the consistency of its provisions with existing legal and contractual obligations. Finally, concerning the implementation of the municipality's septage management program, it bears emphasis that Republic Act No. 9275, otherwise known as the Philippine Clean Water Act of 2004, together with its implementing rules and related policies, imposes upon local government units responsibilities relating to wastewater and septage management. The extent to which the suspension of fee collection may 1 See Lao, Jr. v. Local Government Unit of Cagayan de Oro City, G.R. No. 187869, 13 September 2017. 2 Sangguniang Panlungsod ng Baguio City v. Jadewell Parking Systems Corporation, G.R. No. 160025, April 23, 2014. 3 See City of Quezon v. Lexber Incorporated, G.R. No. 141616, March 15, 2001. Page 3 of 4