SC: Osmeña not liable to reimburse P2.6M

CEBU, Philippines - The Supreme Court has cleared Cebu City south district Rep. Tomas Osmeña of any obligation to reimburse the P2.6 million he earlier paid as damages and court litigation expenses to the two private contractors of the Cebu City Sports Center.

The High Tribunal granted Osmeña’s petition for certiorari against the Commission on Audit which earlier ordered him to reimburse the P2,514,255.40 and P102,015.00 that the city government paid to WT Construction and Dakay Construction and Development Corporation, respectively.

In an en banc decision penned by Justice Arturo Brion, the Supreme Court ruled that Osmeña, then the city mayor, could not be held liable for the charges of damages, attorney’s fees and litigation expenses that the Regional Trial Court has awarded to the two contractors.

COA issued in 2008 an order for Osmeña to reimburse the amount of damages the city government paid to the two contractors of the sports center, which was built for the Palarong Pampansa that the city hosted in 1994.

COA found Osmeña liable for the damages because he allegedly failed to comply with the legal requirements for the funds’ disbursement.

According to COA, Osmeña allowed additional works without the authority from the City Council. There were allegedly 20 extra works that Osmeña allowed the WT Construction and Dakay Construction to undertake even without the council’s approval.

The extra works, which cost P35,418,142.42 for WT Construction and P15,744,525.24 for Dakay Construction, were not covered by any supplemental agreement nor an authorization of the council.

Osmeña allowed the extra works to proceed despite the absence of the council approval because of the urgency of the project.

WT and Dakay Construction demanded payment for the extra works, prompting then councilor and now Vice Mayor Joy Augustus Young, the one in-charge of the project, to sponsor a resolution authorizing Osmeña to execute the supplemental agreements with the two companies.

But some councilors had opposed the resolution, making the extra works completed by WT and Dakay Construction not covered by the necessary appropriation to effect payment. This prompted the two companies to file collection cases before the court.

The Regional Trial Court had found the claims of the two companies meritorious, and ordered the city to pay for their extra works.

It likewise awarded damages, litigation expenses and attorney’s fees in favor of WT and Dakay Construction.

 The council later passed an ordinance to ensure such payment, a move that COA disallowed.

 The state auditors concluded that such were unnecessary expenses for which the public officers should be held liable.

But the COA later declared that the payment for damages and attorney’s fees should be Osmeña’s liability since it was him who ordered for the change or extra work without the supplemental agreement required by law.

Osmeña explained that the damages and interest charges were awarded by the court because of the delayed payment of the extra works done by WT and Dakay Construction due to the council’s refusal to appropriate funds.

He said that the contractors themselves did not want to embarrass the city so they proceeded to do the extra works even without the supplemental agreement. 

Section 103 of the Government Auditing and Accounting Manual provides that expenditures of government funds or uses of government property in violation of law or regulations shall be a personal liability of the official or employee found to be directly responsible.

But the Supreme Court ruled that the damages were paid to WT and Dakay Construction pursuant to final judgments rendered against the city for its unreasonable delay in paying its obligations.

COA said the judgment would not be rendered against the city had it not been for the change and extra works that Osmeña made.

It said the extra works were unnecessary, without the council’s approval, and not covered by a supplemental agreement.

However, the SC found out that the Pre-Qualification, Bids and Awards Committee (PBAC), upon the recommendation of the technical committee, had approved the change and extra works. 

During the deliberation of the technical committee, a COA representative did not pose objection to the lack of authorization from the council or a supplemental agreement.

The High Tribunal found no proofs that showed Osmeña was ill-motivated, had personally profited or sought to profit from the transactions.

“All in all, the circumstances showed that Osmeña issued the change and extra work orders for the city’s successful hosting of the Palaro, and not for any other nefarious endeavour,” the SC ruling reads. 

The SC even noted that the funds for the construction of the sports center, which was placed in a time deposit, earned an interest of P12.8 million, which was more than enough to cover the P2.6 million worth of damages awarded to the two construction companies. — /FPL (FREEMAN)