MARILAO WATER CONSUMERS ASSOC.

The juridical entities known as water districts created

by PD 198, although considered as quasi-public
vs. IAC
corporations and authorized to exercise the powers,
G.R. No. 72807 September 9, 1991
rights and privileges given to private corporations
under existing laws are entirely distinct from
FACTS:
corporations organized under the Corporation Code,
Pursuant to the provisions of P.D. 168 (Provincial
PD 902-A, as amended.
Water Utilities Act of 1973), Marilao Water District
(MWD) was formed by Resolution of the
Sangguniang Bayan of the Municipality of Marilao The Corporation Code has nothing whatever to do
dated September 18, 1982, which resolution was with their formation and organization, all the terms
thereafter forwarded to the LWUA and "duly filed" by and conditions for their organization and operation
it on October 4, 1982 after ascertaining that it being particularly spelled out in PD 198.
conformed to the requirements of the law.
The resolutions creating them, their charters, in other
Marilao Waters Consumers Association, Inc.
words, are filed not with the Securities and Exchange
(MWCA), a non-stock, non-profit corporation, filed a
Commission but with the LWUA. It is these resolutions
petition before the RTC of Malolos, Bulacan claiming
qua charters, and not articles of incorporation drawn
that the creation of the water district is defective and
up under the Corporation Code, which set forth the
illegal. Impleaded as respondents were the Marilao
name of the water districts, the number of their
Water District, as well as the Municipality of Marilao,
directors, the manner of their selection and
Bulacan; its Sangguniang Bayan; and Mayor Nicanor
replacement, their powers, etc.
V. GUILLERMO. The petition prayed for the dissolution
of the water district.
The SEC which is charged with enforcement of the
MWD filed its Answer with an affirmative defences Corporation Code as regards corporations,
that the RTC lacked jurisdiction over the subject partnerships and associations formed or operating
matter since the water districts dissolution fell under under its provisions, has no power of supervision or
the original and exclusive jurisdiction of the SEC. control over the activities of water districts.

MWCA countered thatsince the Marilao Water District

The "Provincial Water Utilities Act of 1973" has a
had not been organized under the Corporation Code,
specific provision governing dissolution of water
the SEC had no jurisdiction over a proceeding for its
districts created thereunder This is Section 45 of PD
dissolution and that under Section 45 of PD 198, the
198. Under this provision, it is the LWUA which is the
proceeding to determine if the dissolution of the
administrative body involved in the voluntary
water district is for the best interest of the people, is
dissolution of a water district; it is with it that the
within the competence of a regular court of justice.
resolution of dissolution is filed, not the Securities
and Exchange Commission. And this provision is
RTC dismissed the MWCAs suit ruling that it is the
evidently quite distinct and different from those on
SEC which has exclusive and original jurisdiction over
dissolution of corporations "formed or organized
the case.
under the provisions of the Corporation Code under
which dissolution may be voluntary (by vote of the
ISSUE:
stockholders or members), generally effected by the
Which triburial has jurisdiction over the dissolution of
filing of the corresponding resolution with the
a water district organized and operating as a quasi-
Securities and Exchange Commission, or involuntary,
public corporation under the provisions of
commenced by the filing of a verified complaint also
Presidential Decree No. 198, as amended: the
with the SEC.
Regional Trial Court, or the Securities & Exchange
Commission.
Although described as quasi-public corporations, and
RULING: granted the same powers as private corporations,
The present case does not fall within the limited water districts are not really corporations. They
jurisdiction of the SEC, but within the general have no incorporators, stockholders or
jurisdiction of RTCs. members, who have the right to vote for directors,
or amend the articles of incorporation or by-laws, or
PD 198 authorizes the formation, lays down the pass resolutions, or otherwise perform such other
powers and functions, and governs the operation of acts as are authorized to stockholders or members of
water districts throughout the country; it is "the corporations by the Corporation Code. In a word,
source of authorization and power to form and there can be no such thing as a relation of
maintain a (water) district." Once formed, it says, a corporation and stockholders or members in a water
district is subject to its provisions and is not under district for the simple reason that in the latter there
the jurisdiction of any political subdivision. are no stockholders or members. Between the water
district and those who are recipients of its water
The juridical entities thus created and organized services there exists not the relationship of
under PD 198 are considered quasi-public corporation-and-stockholder, but that of a service
corporations, performing public services and agency and users or customers.
supplying public wants.
There can therefore be no such thing in a water
district as "intra-corporate or partnership
relations, between and among stockholders,
members or associates (or) between any or all of
them and the corporation, partnership or association
of which they are stockholders, members or
associates, respectively," within the contemplation of
Section 5 of the Corporation Code so as to bring
controversies involving them within the competence
and cognizance of the SEC.