Osmena v Coa Digest

TOMAS R. OSMEÑA vs. COMMISSION COMMISSION ON AUDIT, and Honorable COMMISSIONERS DOMINGO, ESPIRITU and ORSAL, G.R. No. 110045, November 29, 1994, J. Narvasa Facts: The controversy had its origin in the stabbing of Reynaldo de la Cerna, the son of of the de la Cerna Spouses. He was rushed to the Cebu City Medical Center, but died due to severe loss of   blood. The de la Cerna Spouses Spouses claimed claimed that their son died because of the ineptitude, ineptitude, gross neglige negligence, nce, irresp irresponsi onsibil bility, ity, stupidi stupidity ty and incompe incompetenc tencee of the medical medical staff. staff. They filed filed a complaint for damages in the Regional Trial Court of Cebu City against the city of Cebu, the Sangguniang Sangguniang Panlungsod, Panlungsod, and five physicians. physicians. The City of Cebu was impleaded impleaded as defendant on the theory that as employer of the doctors, it was vicariously responsible for the latter’s negligence. An amicable settlement was entered into between the parties whereby the City of Cebu agreed to  pay the plaintiff plaintiff the sum of P30,000.00 P30,000.00 as financial financial assistance. assistance. This agreement agreement was ratified ratified by the Sangg Sangguni uniang ang Panlu Panlungs ngsod od and the City City Budge Budgett Offi Office cerr was was author authorize ized d to inclu include de in the Supplemental Budget for the year 1989 the amount of P30,000.00. The agreement was approved  by the Regional Regional Trial Trial Court. Court. About About eleven eleven (11) (11) months months later, later, the Commis Commissio sion n on Audit Audit (COA) (COA) disallo disallowed wed the financia financiall assistance declaring that it is not within the powers of the Sangguniang Panlungsod to provide monetary assistance that would promote the economic condition and private interests of certain individuals only. The Motion for Reconsideration of the City was denied by COA, hence, this petition ascribing grave abuse of discretion to the COA and its Members. Issue: Issue: Whethe Whetherr or not COA committed committed grave abuse abuse of discretio discretion n in disallow disallowing ing the city’s appropriation of P30,000.00 made conformably with the compromise agreement in the civil suit against the City of Cebu. Held: COA’s disallowance of the the appropriation is tainted by grave abuse of discretion and should  be rectified. rectified. The participation by the City in negotiations for an amicable settlement of a pending litigation and its eventual execution of a compromise relative thereto, are indubitably within its authority and capacity as a public corporation; and a compromise of a civil suit in which it is involved as a party, is a perfectly legitimate transaction, not only recognized but even encouraged by law. That the City of Cebu complied with the relevant formalities contemplated by law can hardly be doubted. The compromise agreement was submitted to its legislative council, the Sangguniang Panlungsod, which approved it conformably with its established rules and procedure. Neither may it be disputed that since, as a municipal corporation, Cebu City has the power to sue and be sued, it has the authority to settle or compromise suits, as well as the obligation to pay just and valid claims against it. The COA failed to realize that payment thereof was part of the consideration, not merely for the settle settlement ment of a claim, claim, but for the settlem settlement ent of an actual controver controversy. sy. By making recipro reciprocal cal concessions, the parties put an end to the action in a manner acceptable to all of them, thus eliminated the contingency of being made to assume heavier liability in said suit for damages instituted against it in in connection with activities being undertaken by it in in its proprietary functions and in accordance with which it may be held liable ex contractu or ex delito, for the negligent  performance  performance of its corporate, corporate, propriet proprietary ary or business business functions functions..