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    Feliciano v. COA

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    JORLAND MARVIN BUCU
    This case involved whether or not the Leyte Metropolitan Water District (LMWD) is subject to audits by the Commission on Audit (COA). The Supreme Court ruled that LMWD, as a local water district created under Presidential Decree 198, is a government-owned and controlled corporation. As such, it falls under the audit jurisdiction of the COA based on the Constitution. The Court affirmed the COA's resolution denying LMWD's request to be exempt from COA audits and fees.

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    Feliciano v. COA

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    JORLAND MARVIN BUCU
    29 views2 pages
    This case involved whether or not the Leyte Metropolitan Water District (LMWD) is subject to audits by the Commission on Audit (COA). The Supreme Court ruled that LMWD, as a local water district created under Presidential Decree 198, is a government-owned and controlled corporation. As such, it falls under the audit jurisdiction of the COA based on the Constitution. The Court affirmed the COA's resolution denying LMWD's request to be exempt from COA audits and fees.

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    11. Feliciano v. COA

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    This case involved whether or not the Leyte Metropolitan Water District (LMWD) is subject to audits by the Commission on Audit (COA). The Supreme Court ruled that LMWD, as a local water district created under Presidential Decree 198, is a government-owned and controlled corporation. As such, it falls under the audit jurisdiction of the COA based on the Constitution. The Court affirmed the COA's resolution denying LMWD's request to be exempt from COA audits and fees.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    29 views2 pages

    Feliciano v. COA

    Uploaded by

    JORLAND MARVIN BUCU
    This case involved whether or not the Leyte Metropolitan Water District (LMWD) is subject to audits by the Commission on Audit (COA). The Supreme Court ruled that LMWD, as a local water district created under Presidential Decree 198, is a government-owned and controlled corporation. As such, it falls under the audit jurisdiction of the COA based on the Constitution. The Court affirmed the COA's resolution denying LMWD's request to be exempt from COA audits and fees.

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    CORPORATION AND SECURITIES LAW CASE DIGEST ATTY.

    CO-PUA

    I. SHORT TITLE: FELICIANO V. COA

    II. FULL TITLE: Engr. Ranulfo C. Feliciano, in his capacity as General Manager of the Leyte
    Metropolitan Water District (LMWD), Tacloban City, petitioner, vs.
    Commission On Audit (COA), Chairman Celso D. Gangan,
    Commissioners Raul C. Flores and Emmanuel M. Dalman, and Regional
    Director of COA Region VIII, respondents. – G.R. No. 147402, January
    14, 2004, J. Carpio

    III. TOPIC: Classes of Corporation – Government Corporation

    IV. STATEMENT OF FACTS:


    A Special Audit Team from COA audited the accounts of LMWD. LMWD received a letter from
    COA requesting payment of auditing fees. However, petitioner informed COA’s Regional
    Director that the water district could not pay the auditing fees based on Sections 6 and 20 of PD
    198, and Section 18 of RA 6758. Petitioner wrote to COA asking for refund of all auditing fees
    that they previously paid, however it was denied.

    V. STATEMENT OF THE CASE:


    A petition for certiorari to annul the COA’s resolution in denying the motion for reconsideration
    filed by the petitioner. The COA denied petitioner’s request for COA to cease all audit services,
    and to stop charging auditing fees, to LMWD. The COA also denied petitioner’s request for COA
    to refund all auditing fees previously paid by LMWD.

    VI. ISSUE:
    Whether or not LWD is a government-owned or controlled corporation (GOCC)
    subject to the audit jurisdiction of COA.

    VII. RULING:
    Yes. The Constitution recognizes two classes of corporations. The first refers to private
    corporations created under a general law. The second refers to GOCCs created by special charters.
    The Constitution authorizes Congress to create GOCCs through special charters. Since private
    corporations cannot have special charters, it follows that Congress can create corporations with
    special charters only if such corporations are government-owned or controlled.

    Evidently, LWDs are not private corporations because they are not created under the Corporation
    Code. LWDs are not registered with the Securities and Exchange Commission (SEC). LWDs have
    no articles of incorporation, no incorporators and no stockholders or members. There are no
    stockholders or members to elect the board directors of LWDs as in the case of all corporations
    registered with the SEC. LWDs exist by virtue of PD 198, which constitutes their special charter.
    Since under the Constitution only GOCCs may have special charters, LWDs can validly exist only
    if they are government-owned or controlled.

    The Constitution vests in the COA audit jurisdiction over "government-owned and controlled
    corporations with original charters," and "government-owned or controlled corporations without
    original charters”. GOCCs with original charters are subject to COA pre-audit, while GOCCs
    without original charters are subject to COA post-audit. The nature or purpose of the corporation
    CORPORATION AND SECURITIES LAW CASE DIGEST ATTY. CO-PUA

    is not material in determining COA’s audit jurisdiction. Neither is the manner of creation of a
    corporation, whether under a general or special law. The determining factor of COA’s audit
    jurisdiction is government ownership or control of the corporation. The criterion of ownership and
    control is more important than the issue of original charter.

    Certainly, the government owns and controls LWDs. The government organizes LWDs in
    accordance with a specific law, PD 198. There is no private party involved as co-owner in the
    creation of LWD. Just prior to the creation of LWDs, the national or local government owns and
    controls all their assets.

    VIII. DISPOSITIVE PORTION:


    Wherefore, the resolution of the COA and the decision denying petitioner’s Motion for
    Reconsideration are affirmed. The second sentence of Section 20 of PD No. 198 is declared void
    for being inconsistent with Sections 2 (1) and 3, Article IX-D of the Constitution.

    PREPARED BY: Mary Pauline L. Jimenez


    ______________________________________________________________________________

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