Winter 2004-03 Bill to reverse Supreme Court ruling on government contract nullity

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Number 54
Winter 2004
Follow up

Bill to reverse Supreme Court ruling on government contract nullity

Contracts with municipalities and other government instrumentalities would no longer be null if not filed with the Office of the Comptroller, if House Bill 4158 becomes law.

Background

As reported in the Fall, 2003, issue of Puerto Rico Business Law Developments, the Supreme Court of Puerto Rico ruled that all government contracts must be filed with the Comptroller's office in order to be valid. Las Marías Reference Laboratory Corp. v. Municipio de San Juan, 2003 TSPR 121, and Ríos v. Municipio de Isabela, 2003 TSPR 122. The fact that such nullity adversely affects innocent private parties who have no control over the filing process did not move the Court. Equitable remedies-such as unjust enrichment-are not applicable when dealing with the government, the Court stated.

The bill

Bill 4158 would reverse the ruling. Expressly mentioning the Las Marías case in its Statement of Motives, the bill provides that a government contract that is otherwise valid may not be annulled by the agency's failure to file it with the Comptroller. Certain contracts need not be filed, to wit:

sporadic personal services contracts for less than six months and amounts lower than $2,000,

contracts for professional services for one year or less and amounts not exceeding $5,000,

contracts of public works not exceeding $2,000,

contracts adjudicated through a bidding process, other than for construction,

other contracts designated by the Comptroller.

Procedure

The bill also sets forth a filing certification process, which it adopted from the Supreme Court opinion.

At the time of filing with the Comptroller's office, the government agency must certify the following under penalty of perjury to the other parties to the contract:

names of the parties to the contract,

nature of the contract,

its date of execution,

term,

amount to be paid by the agency,

that the agency assigned a number to the contract and recorded it,

that the contract was filed with the Comptroller,

that the contract complies with all applicable local and federal laws and regulations.

Effectiveness

The bill would apply to all government contracts in effect at the time that it becomes law.


© 2004 Goldman Antonetti