Feliciano v. Commission on Audit
REITERATIONFacts
The Antecedents: Engr. Ranulfo C. Feliciano, General Manager of Leyte Metropolitan Water District (LMWD), requested the Commission on Audit (COA) to cease all audit services and stop charging auditing fees to LMWD, citing Sections 6 and 20 of PD 198 and Section 18 of RA 6758. Petitioner also requested a refund of previously paid auditing fees. Procedural History: The COA, through its Resolution dated 3 January 2000 and Decision dated 30 January 2001 denying the motion for reconsideration, denied petitioner's requests. Petitioner filed a petition for certiorari with the Supreme Court. The Petition: Petitioner contends that COA committed grave abuse of discretion by auditing LMWD and charging auditing fees, arguing that LWDs are not GOCCs subject to COA's audit jurisdiction.
Issue(s)
Whether a Local Water District (LWD) created under PD 198, as amended, is a government-owned or controlled corporation (GOCC) subject to the audit jurisdiction of COA. Whether Section 20 of PD 198, as amended, prohibits COA's certified public accountants from auditing local water districts. Whether Section 18 of RA 6758 prohibits COA from charging government-owned and controlled corporations auditing fees.
Ruling
The petition is denied. The Resolution of the Commission on Audit dated 3 January 2000 and the Decision dated 30 January 2001 denying petitioner’s Motion for Reconsideration are AFFIRMED. The second sentence of Section 20 of Presidential Decree No. 198 is declared VOID for being inconsistent with Sections 2 (1) and 3, Article IX-D of the Constitution.
Ratio Decidendi
On whether LWDs are GOCCs subject to COA's audit jurisdiction: The Court reiterated that Local Water Districts (LWDs) are government-owned and controlled corporations (GOCCs) with original charters. This is because they are created by virtue of PD 198, which serves as their special charter, and not under the general Corporation Code. The Constitution mandates that only GOCCs may be created by special charters. LWDs are not private corporations as they are not registered with the Securities and Exchange Commission, have no incorporators, stockholders, or members, and their directors are appointed by local executives. The government owns and controls LWDs, making them subject to COA's audit jurisdiction as provided by Section 2(1), Article IX-D of the Constitution. The Court emphasized that the determining factor for COA's audit jurisdiction is government ownership or control, not the nature or purpose of the corporation. On whether Section 20 of PD 198 prohibits COA's audit: The Court declared the second sentence of Section 20 of PD 198, which states that auditing shall be performed by a certified public accountant not in the government service, as unconstitutional. This provision attempts to exempt LWDs from COA's audit jurisdiction, which is contrary to Section 3, Article IX-D of the Constitution. This constitutional provision explicitly prohibits any law from exempting any entity of the government or its subsidiary, in any guise whatever, from the jurisdiction of the Commission on Audit. Therefore, PD 198 cannot prevail over the Constitution. On the legality of COA charging auditing fees: The Court found no basis for the petitioner's claim that COA's practice of charging auditing fees violates Section 18 of RA 6758. Section 18 allows COA personnel to receive compensation paid directly by COA out of its appropriations and contributions. The Court clarified in Tejada v. Domingo that 'contributions' refer to the actual cost of audit services, including personnel services, maintenance, operating expenses, and overhead, which are paid directly to COA, not to individual auditors. Petitioner failed to allege that COA charged fees in excess of actual audit cost or that fees were paid directly to individual auditors, thus the contention must fail.
Main Doctrine
Local Water Districts (LWDs) created under Presidential Decree No. 198 are government-owned and controlled corporations (GOCCs) with original charters, and are therefore subject to the audit jurisdiction of the Commission on Audit (COA). Any provision of law, such as Section 20 of PD 198, that exempts GOCCs from COA's audit jurisdiction is unconstitutional.