G.R. No. 147402, 14 January 2004
Special Audit Team from COA Regional Office audited the accounts of LMWD. Subsequently, LMWD received a letter from COA requesting payment of auditing fees. Petitioner sent a reply informing COA’s Regional Director that the water district could not pay the auditing fees. Petitioner cited as basis for his action Sections 6 and 20 of Presidential Decree 198, as well as Section 18 of Republic Act No. 6758. The Regional Director referred petitioner’s reply to the COA Chairman.
Petitioner wrote COA through the Regional Director asking for refund of all auditing fees LMWD previously paid to COA but COA Chairman Celso D. Gangan’s Resolution denied his requests. Petitioner filed a motion for reconsideration which COA denied.
Petitioner filed this instant petition.
Whether a Local Water District (“LWD”) created under PD 198, as amended, is a government-owned or controlled corporation subject to the audit jurisdiction of COA.
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.
Unlike private corporations, which derive their legal existence and power from the Corporation Code, LWDs derive their legal existence and power from PD 198.
Clearly, LWDs exist as corporations only by virtue of PD 198, which expressly confers on LWDs corporate powers. Section 6 of PD 198 provides that LWDs “shall exercise the powers, rights and privileges given to private corporations under existing laws.” Without PD 198, LWDs would have no corporate powers. Thus, PD 198 constitutes the special enabling charter of LWDs. The ineluctable conclusion is that LWDs are government-owned and controlled corporations with a special charter.
*Case digest by Teonilo M. Bagalanon Jr., JD – 4, Andres Bonifacio College, SY 2019 – 2020