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Osmena V. Coa G.R. No. 98355 March 2, 1994

The City of Cebu decided to construct a modern abattoir in 1985 and awarded the construction project to H. Franco Construction Company (HFCCI) through a public bidding process. However, Senator John Osmeña then suspended the project and ordered the Commission on Audit (COA) to review the contract. HFCCI claimed P2.14 million for work already accomplished. When HFCCI was unable to collect payment after repeated demands, it filed a civil case. The Supreme Court ruled that while COA has the authority to audit government accounts and contracts, it cannot declare a contract already executed as void.

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439 views1 page

Osmena V. Coa G.R. No. 98355 March 2, 1994

The City of Cebu decided to construct a modern abattoir in 1985 and awarded the construction project to H. Franco Construction Company (HFCCI) through a public bidding process. However, Senator John Osmeña then suspended the project and ordered the Commission on Audit (COA) to review the contract. HFCCI claimed P2.14 million for work already accomplished. When HFCCI was unable to collect payment after repeated demands, it filed a civil case. The Supreme Court ruled that while COA has the authority to audit government accounts and contracts, it cannot declare a contract already executed as void.

Uploaded by

Gin Fernandez
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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OSMENA v.

COA
G.R. No. 98355 March 2, 1994

Facts:
Sometime in 1985 the City of Cebu decided to construct a modern abattoir. For this project, the
City Treasurer, Ricardo Pestano, issued a certificate of availability of funds, in the amount
P5,419,180.00, specifically "for the construction of Cebu City Abbatoir (sic)." 1 After a public
bidding, H. Franco Construction Company, Inc. (HFCCI) was awarded to do the construction of
the abattoir. Thus, the City of Cebu, through its Mayor, Ronald R. Duterte, entered into a
contract with HFCCI.

Sen. John H. Osmeña, then Officer-In-Charge of the City of Cebu, ordered the suspension of
the project and review of the contract by the COA. He also wrote HFCCI asking them to account
for the value of their progress. On April 24, 1986, HFCCI claimed the amount of P2,142,964.29
as the value of the work accomplished.

Unable to collect the said amount after so many demands, HFCCI instituted a civil action.

Issue:
Whether COA has no authority to declare a contract already executed void,

Ruling:
Yes.

The Commission on Audit has the power, authority and duty to examine, audit and settle all
accounts pertaining to revenue and receipts of and expenditures or uses of funds and property,
owned of held in trust by, or pertaining to, the government, or any of its subdivisions, agencies
or instrumentalities.

The Auditing Code of the Philippines (P.D. 1445) further provides that no contract involving the
expenditure of public funds shall be entered into unless there is an appropriation therefor 10 and
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 the
amount necessary to cover the proposed contract for the current year is available for
expenditure on account thereof. Any contract entered into contrary to the foregoing
requirements shall be VOID.

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