Feliciano vs. COA

FELICIANO v. COA, G.R. No. 147402, January 14, 2004 (Water District is a GOCC with an original charter under the audit jurisdiction of COA; COA may charge GOCCs actual audit cost)

  • “The Constitution recognizes two classes of corporation. The first refers to private corporations created under a general law. The second refers to government-owned or controlled corporations created by special charters. (See Sec. 16, Art. XII) Xxx only corporations created under a general law can qualify as private corporations. xxx. The Constitution authorizes Congress to create government-owned or controlled corporations through special charters. xxx. This Court has ruled that LWDs are not created under the Corporation Code. (Davao City Water District v. CSC and COA, 201 SCRA 593) LWDs exist by virtue of PD 198, which constitutes their special charter. Since under the Constitution only government-owned or controlled corporations may have special charters, LWDs can validly exist only if they are government-owned or controlled. To claim that LWDs are private corporations with a special charter is to admit that their existence is constitutionally infirm. xxx. There is no difference between the term “original charters” and “special charters.”
  • “An LWD is a GOCC with an original charter. xxx. The COA’s audit jurisdiction extends not only to government ‘agencies or instrumentalities,’ but also to ‘government-owned and controlled corporations with original charters’ as well as ‘other government-owned or controlled corporations’ without original charters.”
  • “The determining factor of COA’s audit jurisdiction is government ownership or control of the corporation. xxx. 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 an LWD. Xxx. The government controls LWDs because under PD 198 the municipal or city mayor, or the provincial governor, appoints all the board directors of an LWD for a fixed term of six years.”
  • “The Local Government Code does not vest in the Sangguniang Bayan the power to create corporations. (See Sec. 447 of the LGC) What the Local Government Code empowers the Sangguniang Bayan to do is to provide for the establishment of a waterworks system “subject to existing laws.” xxx. However, the Sangguniang Bayan may avail of existing enabling laws, like PD 198, to form and incorporate a water district.”
  • “PD 198 cannot prevail over the Constitution. No amount of clever legislation can exclude GOCCs like LWDs from COA’s audit jurisdiction. Section 3, Article IX-D of the Constitution outlaws any scheme or devise to escape COA’s audit jurisdiction xxx. We rule that the second sentence of Section 20 of PD 198 is unconstitutional since it violates Section 2(1) and 3, Article IX-D of the Constitution.”
  • “Section 18 of RA 6758 prohibits COA personnel from receiving any kind of compensation from any government entity except “compensation paid directly by COA out of its appropriations and contributions.” Thus, RA 6758 itself recognizes an exception to the statutory ban on COA personnel receiving compensation from GOCCs. In Tejada, the Court explained the meaning of the word “contributions” in Section 18 of RA 6758, which allows COA to charge GOCCs the cost of its audit services. xxx. COA may charge GOCCs “actual audit cost” but GOCCs must pay the same directly to COA and not to COA auditors.”

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