University of Santo Tomas, Faculty of Civil Law

The Law on PUBLIC

CORPORATION
Based from the lecture of Atty. Enrique V. dela Cruz, Jr.

James Christian S. Ballecer

2014

I.

Basic Principles/ General Powers and Attributes

(First Meeting)
LOCAL AUTONOMY, DEVOLUTION, &
DECENTRALIZATION
Q: Can the President subject to certain
conditions the release of the IRA of LGUs?
A: No. (Province of Batangas v. Romulo, G.R.
No. 152774, May 27, 2004)
Art X, Sec. 6. Local Government units shall have
a just share, as determined by law, in the
national taxes which shall be automatically
released to them.
Q: Can the Congress take back what it has
already devolved to the Autonomous Region of
Muslim Mindanao (ARMM)?
A: (Disomangcop v. Daatumanong, 444 SCRA
203)
In this case, R.A. No. 8999 was enacted by
Congress establishing an engineering district of
the DPWH in Lanao del Sur
The Court upheld the petitioners. In so doing, it
came up with certain observations about
regional autonomy and the idea of
decentralization, as well as the significance of
Organic Acts.
Congress cannot take back by law (R.A. 8999)
what has already been devolved by another
law, if there is any amendment, it must pass
through a plebiscite.
Section 16, Article X of the 1987 Constitution
limits the power of the President over
autonomous regions. In essence, the provision
al. the Power of Congress over autonomous
regions.
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Q: Can the Congress postpone the ARMM

elections?
A: (Datu Abas Kida v. Senate, Oct. 18, 2011)
YES. R.A. No. 10153 did not amend the Organic
Act (R.A. No. 9054) - which only provides for the
schedule of the first ARMM elections and does
not fix the date of the regular elections.
A need therefore existed for Congress to fix the
date of subsequent ARMM regular elections
R.A. 10153 merely filled in a gap in R.A. No.
9054 or supplemented the law by providing the
date of regular elections.
Q: Who has the authority to create municipal
corporations? How is a public corporation
created?
A: A Local Government Unit may be created,
divided, merged, abolished or its boundaries
substantially altered either by:
1. Law enacted by Congress in case of
province, city, municipality, or any other
political subdivision; or
2. An ordinance passed by the
Sangguniang
Panlalawigan
or
Sangguniang Panlungsod concerned in
the case of a barangay located within
its territorial jurisdiction, subject to such
limitations and powers described in the
LGC. (Sec . 6, R.A.7160)
Q: What are the requisites or limitations
imposed on the creation or conversion of
municipal corporations?

A: Plebiscite requirement must be approved

by majority of the votes cast in a plebiscite
called for such purpose ion the political unit or
units affected.
Q: May Congress validly delegate to the
ARMM Regional Assembly the power to create
provinces, cities, and municipalities with the
ARMM, pursuant to Congress plenary
legislative powers?
A: NO. There is no provision in the Constitution
that conflicts with the delegation to regional
legislative bodies of the power to create
municipalities and barangays.
However, the creation of provinces and cities is
another matter. Only Congress can create
provinces and cities because the creation of the
same necessarily includes the creation of
legislative districts, a power only Congress can
exercise under Section 5, Art. VI of the 1987
Constitution and Section 3 of the Ordinance
appended to it. (Bai Sandra S.A. Sama v.
COMELEC, et al. G.R. No. 178628, July 18, 2008)
Q: Considering the legislative power validly
delegated to the ARMM Regional Assembly,
what is the limitation of such that prevents the
same to create legislative districts?
A: The ARMM Regional Assembly cannot enact
a law creating a national office like the office of
a district representative of Congress because
the legislative powers of the ARMM Regional
Assembly operate only within its territorial
jurisdiction, as provided in Section 20, Art. X of
the 1987 Constitution. (Bai Sandra S.A. Sama v.
COMELEC, et al. G.R. No. 178628, July 18, 2008)

CREATION or CONVERSION of LGUS

I.

Income Requirement must be

sufficient on acceptable standards
to provide for all essential
government facilities and services
and
special
functions
commensurate with the size of its
population, as expected of the local
government unit concerned.

Average annual income for the last two (2)

consecutive years should be at least:
City P100M (as amended by R.A. 9009)
Highly Urbanized City P50M
Province P20M
Municipality P2.5M
Q: At the end of the 11th Congress existence,
several bills aiming to convert certain
municipalities into cities were pending; the
same were not entered into law.
The 12th Congress enacted R.A. No. 9009,
amending the Local Government Code (LGC) by
increasing the income requirement for the
conversion of municipalities mentioned earlier
from the new income requirement. However,
no concrete action came out of such
deliberations.
The municipalities filed through their
respective sponsors, individual cityhood bills
containing a common proviso exempting them
from the new income requirement. The
Congress approved the same. Concerned
parties protested such laws allowing a
wholesale conversion of municipalities as
being unconstitutional. Decide.
Are the cityhood laws valid?

1 jcsb

bills pending during the 11th Congress,

but have also complied with the
requirements of the LGC prescribed
prior to its amendment by R.A. No.
9009. Congress undeniably gave these
cities all the considerations that justice
and fair play demanded.

A: The challenged cities claim that it was the

intent of Congress anyway to grant them
exemption from the income requirement, as
per the deliberations of the 11th Congress. What
became of the cityhood bills and their
deliberations that were pending at the
adjournment of the 11th Congress?
League of Cities v. COMELEC
On November 18, 2008, then SC ruled the
cityhood laws unconstitutional.
The COMELEC filed the first motion for
reconsideration, which was denied on March
31, 2009.
On April 28, 2009 the SC en banc, by a split
vote, denied a second motion for
reconsideration
The decision
executory.

then

becomes

final

and

However, on Dec. 21, 2009, the SC ruled on 3rd

MR and reversed its own judgement.
The 16 cities were allowed to hold election in
2010.
Then again, on a 4th MR the SC in a decision
dated August 24, 2010, reversed its decision
and ruled that the 16 cityhood laws were
unconstitutional. The decision then became
final and executory (again).
Surprisingly, on a 5th MR, last April 12, 2011 the
SC again reversed itself and upheld the
constitutionality of the creation of the 16 new
cities.
ANSWER:
1. Yes, The 16 cities covered by the
Cityhood laws not only had conversion

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Hence, this Court should do no less by stamping

its imprimatur to the clear and unmistakeable
legislative intent and by duly recognizing the
certain collective wisdom of Congress. (League
of Cities of the Philippines (LCP) v. COMELEC,
G.R. No. 176951, April 12, 2011)
2. Notwithstanding that both the 11th and
12th Congress ask upon the pending
cityhood bills, both the letter and intent
of Section 45 of the LGC, as amended
by R.A. No. 9009, were carried on until
the 13th Congress, when the Cityhood
Laws were enacted.
The exemption clauses found in the individual
Cityhood Laws are the express articulation of
that intent to exempt respondent municipality
from the coverage of R.A. No. 9009 (League of
Cities of the Philippines (LCP) v. COMELEC, G.R.
No. 176951, February 15, 2012)
II.

Population requirement - to be
determined as the total number of
inhabitants within the territorial
jurisdiction of the local government
unit concerned. The required
populations shall be:

Barangay 2K
But 5K in:
-Metro Manila
- Highly urbanized cities
Municipality 25K
City- 150K
Province 250K

Q: Congress enacted a law creating the

legislative district of Malolos based on a
certification of the demographic projection
from NSO stating that by 2010, Malolos is
expected to reach the population of 250, 000,
hence entitling it to one legislative district. Is
the law valid?
A: No. Congress cannot establish a new
legislative district based on a projected
population requirement of the Constitution in
the reappointment of legislative districts.
A city that has attained a population of 250,000
is entitled to a legislative district only in the
immediately following election. In short, a city
must first attain 250,000 population, and
thereafter, in the immediately following
election, such city shall have a district
representative. There is no showing in the
present case that City of Malolos has attained
or will attain the 250,000 population, whether
actual or projected, before May 10, 2010
elections. Thus, the City if Malolos is not
qualified to have a legislative district of its own
Section 5 (3), Article VI of the 1987 Constitution
and Section 3 of the Ordinance appended to the
1987 Constitution (Aldaba v. Comelec, G.R.
188078, Jan. 25, 2010)
Q: Congress enacted a law reapportioning the
composition of the Province of Camarines Sur
and created legislative districts thereon,
Aquino challenged the law because it runs
afoul to the constitutional requirement that
there must be 250,000 population to create
legislative districts.
Comelec argued that the mentioned
requirement does not apply to provinces. Is the
250,000 population standard an indispensible
requirement for the creation of a legislative
district in provinces?
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A: No. Section 5(3), Article VI of the 1987

Constitution, which requires 250,000 minimum
population requirement apply only for a city to
be entitled to a representative but not for a
province.
The provision draws a plain and clear distinction
between the entitlements of a city to a district
on the other. For while a province is entitled to
at least a representative, with nothing
mentioned about population, a city must first
meet a population minimum of 250,000 in
order to be similarly situated. (Aquino and
Robredo v. Comelec, G.R. No. 189793, April 7,
2010)
Q: Congress passed a law providing for the
apportionment of a new legislative district in
CDO City. The COMELEC subsequently issued a
resolution implementing the law. B now assails
the resolution, contending that rules for the
conduct of a plebiscite must first be laid down,
as part of the requirements under the
Constitution.
According
to
B,
the
apportionment is a conversion and division of
CDO City, falling under Section 10, Art. X of the
Constitution, which provides for the rule on
creation, division, merger, and abolition of
LGU. Decide.
A: There is no need for a plebiscite. CDO City
politically remains a single unit and its
administration is not divided along territorial
lines. Its territory remains whole and intact.
Thus, Section 10, Art. X of the 1987
Constitution does not come into play. (Rogelio
Z. Bagabuyo v. COMELEC, G.R. No. 17690, Dec.
8, 2008)
III.

Land requirement must be

contiguous, unless it comprises two
or more islands or is separated by a
local government unit; properly

identified by metes and bounds and

sufficient to provide for such basic
services and facilities.
Area requirements are:
Province 2, 000 sq.km.
City 100 sq.km.
Municipality 50 sq.km.
-

The territory need not be contiguous if

it comprises of two (2) or more islands;
The land area requirement shall not
apply where the proposed province is
composed of one (1) or more islands.

(Navarro v. Executive Secretary)

-

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When the Dinagat Island was

proclaimed a new province on
December 3, 2006, it had an
approximate land area of 802.12 sq.km.
The law requires at least 2,000 sq.km.
in land area
Petitioners argued that the province
which was composed of more than one
island is exempted from the land area
requirement based on the provision in
paragraph 2, Article IX of the IRR of LGC.
On 12 May 2010, the SC held that
paragraph 2 of Article IX of the IRR of
LGC is null and void, because the
exemption is not found in Section 461
of the LGC.
The exemption should pertain to the
requirement of territorial contiguity and
not on land area.
However, in a decision dated 20 May
2011, the SC reversed itself and ruled
that the creation of the Dinagat Island
Province is constitutional.

(Second Meeting)
POLICE POWER, CORPORATE POWERS and
GENERAL WELFARE CLAUSE
Q: In creating an LGU, is it necessary that
the territorial boundaries be expressed in
meets and bounds?
A: No.
-

The Constitution does not provide for a

description by metes and bounds as a
condition sine qua non for the creation
of a local government unit or its
conversion from one level to another.
Section 450 of R.A. No. 7160 only
applies to the conversion of a
municipality or a cluster of barangays
into a competent city, not a highly
urbanized city.
At the time of the consideration of R.A.
No. 7854, the territorial dispute
between the municipalities of Makati
and Taguig over Fort Bonifacio was
under court litigation. Out of a
becoming sense of respect to a co-equal
department of government, the
legislations felt that the dispute should
be left to the courts to decide.
They did not want to foreclose the
dispute by making legislative finding of
fact which could decide the issue. This
would have ensued if they defined the
land area of the proposed city by its
exact metes and bounds, with technical
descriptions.

(Mariano v. COMELEC, 242 SCRA 211 1995)

Q: Can the creation of an additional
congressional seat be included in the same
law converting the municipality into a city?

A: YES.
-

Petitioners contend that the addition of

another legislative district in Makati is
unconstitutional for:
1. Reapportionment cannot
made by a special law;
2. The addition of a legislative
district is not expressed in
the title of the bill 7; and
3. Makatis population, as per
the 1990 census, stands at
only four hundred fifty
thousand (450,000)
Reapportionment of legislative districts
may be made through a special law,
such as in the charter of a new city. The
Constitution clearly provides that
Congress shall be composed of not
more than two hundred fifty (250)
members, unless otherwise fixed by
law.
As thus worded, the Constitution did
not preclude Congress from increasing
its membership by passing a law, other
than a general reapportionment law.
Otherwise, if Makati is made to wait for
a general apportionment law, it would
create an inadequate situation where a
new city created by Congress will be
denied legislative representation for an
indeterminate period of time.

(Mariano v. COMELEC, 242 SCRA 211 1995)

Q: Can the Governor declare a State of
Emergency and call out the Armed Forces
and the Police?
A: NO.

5 jcsb

Respondent provincial governor is not

endowed with the power to call upon
the armed forces, the police, and his
own Civilian Emergency Force.
The calling-out powers contemplated
under the Constitution is EXCLUSIVE to
the President. An exercise by another
official, even if he is the local chief
executive, is ultra vires, and may not be
justified by the invocation of Section
465 of the Local Government Code.

(Jamar M. Kulayan, et al. v. Gov. Abdusakur

M. Tan, et al., GR No. 187298, July 3, 2012)
Q: Can the Mayor be compelled by writ of
Mandamus to issue a business permit?
A: NO.
-

A Mayor cannot be compelled by

Mandamus to issue business permit
since the exercise of the same is a
delegated
police
power,
hence
discretionary in nature.
Section 443 (b) (3) (iv) of the Local
Government Code of 1991, whereby
the power of the respondent mayor is
circumscribed, is a manifestation of the
delegated police power of municipal
corporation.
Necessarily, the exercise thereof cannot
be deemed ministerial. As to the
question whether power is validly
exercised, the matter is within the
province of a writ of certiorari, but
certainly, not of mandamus.

(Rimando v. Naguilan Emission Testing

Center, Inc., G.R. No. 198860, July 23, 2012)
Q: Can an LGU, pursuant to its police
power, require private cinemas in the city

to give 50% discount to minors for their

admission tickets?
A: NO.
-

To invoke the exercise of police power,

not only must it appear that the
interest of the public generally
requires an interference with private
rights, but the means adopted must be
reasonably
necessary
for
the
accomplishment of the purpose and
not
unduly
oppressive
upon
individuals.
The legislature may not, under the guise
of protecting the public interest,
arbitrarily interfere with private
business, or impose unusual and
unnecessary restrictions upon unlawful
occupations.
In other words, the determination as to
what is a proper exercise of its police
power is not final or conclusive, but is
subject to supervision of courts.

Q: Can an LGU be held liable for torts

committed by its personnel?
A: It depends.
-

(Balacuit v. CFI of Agusan del Norte, 163

SCRA 182 - 1998)
Q: Can an LGU, pursuant to its police
power, allot funds for a Burial Assistance
Program where bereaved families are
given P500 each?
A: YES.
-

6 jcsb

COA is not attuned to the changing of

the times. Public purpose is not
unconstitutional
merely
because
incidentally benefits a limited number
of persons.
The care for the poor is generally
recognized as a public duty. The
support for the poor has long been an

accepted exercise of police power in

the promotion of the common good.
There is no violation of the equal
protection clause in classifying paupers
as subject of legislation. Paupers may
be reasonably classified. Different
groups may receive varying treatment.
(Binay v. Domingo, 201 SCRA 508 1991)

Municipal Corporations are suable

because their charters grant them the
competence to sue and be sued.
Nevertheless, they are generally not
liable for torts committed by them in
the
discharge
of
governmental
functions and can be held answerable
only if it can be shown that they were
acting in proprietary capacity.
The municipality cannot be held liable
for the torts committed by its regular
employee, who was then engaged in
the
discharge
of
governmental
functions.
Hence, the death of the passenger
tragic and deplorable though it may be
imposed on the municipality, no duty to
pay
monetary
compensation.
(Municipality of San Fernando v. Firme,
GR No. 52179, April 8, 1991)

Q: May an LGU alter the zoning

classification of a portion of its territory
and order the transfer of businesses
located therein?
A: YES.

The power to establish zones for

industrial, commercial, and residential
uses is derived from the protection and
benefit of the residents of a locality.

That these motels and clubs are used as

venues for prostitution is of no
moment. Sexual immorality may take
place in the most innocent of places.

(Social Justice Society v. Atienza, Jr., 517

SCRA 92 - 2008)

(City of Manila v. Laguio, Jr., 455 SCRA 308 2005)

Q: May an LGU prescribe a central terminal

for public utility vehicles within its
territory?

Q: May an LGU regulate the short-time

periods and wash free of motels, to protect
public morals?

A: NO.

A: NO.

Since the compulsory use of the

terminal would subject the users
thereof to fees, rentals and charges,
such measure us unduly oppressive.

(Lucena Grand Central Terminal, Inc. v. JAC

Liner, Inc., 452 SCRA 174 - 2005)

Q: May an LGU regulate the subscriber

rates charged by CATV operators within its
territorial jurisdiction?

A: NO.
-

Regulation of CATV Subscriber Rates is

lodged in the NTC, not LGUs.
LGUs, likewise, have no authority to
grant franchises for such undertakings.

(Batangas CATV Inc. v. CA, 493 SCRA 326 2004)

Q: May an LGU enact an ordinance to
phase out motels, night clubs, and other
establishments to protect public morals?
A: NO.
-

7 jcsb

Business may only be regulated but

cannot be altogether be prohibited.
Simply because there are no pure
places where there are impure men.

Individual rights may be adversely

affected only to the extent that may
fairly be required by the legitimate
demands of public interest or public
welfare.
However
well-intentioned
the
Ordinance may be, it is in effect an
arbitrary and whimsical intrusion into
the rights of the establishment as well
as their patrons.
The Ordinance needlessly restraints the
operation of the petitioners as well as
restricting the rights of their patrons
without sufficient justification.
The Ordinance rashly equates wash
rates and renting out a room more than
twice a day with immorality without
accommodating innocuous intentions.

(White Light Corporation v. City of Manila,

576 SCRA 416 - 2009)

EMINENT DOMAIN
1. An expropriation suit is incapable of
pecuniary estimation. Barangay San
Roque v. Heirs of Pastor, 334 SCRA 127
2000
2. Section 19 of the LGC requires an
ordinance, not a resolution, for the

exercise of eminent domain. Suguitan

v. City of Mandaluyong, 328 SCRA 137 2000
3. A valid and definite offer to acquire
the property is necessary prior to the
exercise of the power of eminent
domain. The offer must not be
accepted. Jesus is Lord Christian School
Foundation, Inc. v. Municipality of
Pasig, GR No. 152230, August 9, 2005
Procedure of Eminent Domain:
-

The land must be a private property

It must be for a public purpose
There must be genuine necessity;
There must be previous valid and
definite offer to buy the private
property in WRITING. It shall specify
the property sought to be acquired, the
reasons for the acquisition, and the
price offered.
The offer is DENIED or REJECTED
If the owner rejects the offer, the LGU
can then file a complaint for
expropriation in the RTC
The LGU must then deposit the amount
equivalent to 15% of the fair market
value of the property to be
expropriated based on its current tax
declaration
The LGU may then enter the property
The COURT will determine the amount
of just compensation for the property
expropriated

Q: May an LGU expropriate a property for the

benefit of a specific homeowners association?
A: NO.
-

8 jcsb

A local government unit cannot use the

power of eminent domain to

expropriate a property merely for the

purpose of providing a sports and
recreational facility to a small group of
persons, such as those belonging to
homeowners association.
-

Where the taking by the State of private

property is done for the benefit of a
small community which seeks to have
its own sports and recreational facility,
notwithstanding that there is such
recreational facility only a short
distance away, such taking cannot be
considered to be for public use. Its
expropriation is NOT VALID.

(Masikip v. City of Pasig, 479 SCRA 391 - 2006)

Q: May an LGU expropriate property to provide

a right-of-way to a specific community?
(Barangay Sindalan, San Fernando, Pampanga v.
Court of Appeals, 518 SCRA 649 - 2007)
In this case, a barangay sought to expropriate
private lands to secure a right-of-way for
residents of a subdivision.
The SC declared that the failure of the
subdivision owner to provide an access road
does not shift the burden to the barangay itself.
To deprive the private persons of their property
instead of compelling the subdivision owner to
comply with its obligation under the law is an
abuse of the power of eminent domain and is
patently illegal, which misuse of public funds for
a private purpose could amount to a possible
case of malversation.

TAXATION
Q: What are the requisites for a valid tax
ordinance?
A:
1. The procedure applicable to local
government ordinances, in general,
should be observed. (Sec. 187, LGC)
2. Public hearings are required before any
local tax ordinance is enacted. (Sec.
187, LGC)
3. Within 10 days after their approval,
PUBLICATION in FULL for 3 consecutive
days in a newspaper of general
circulation. In the absence of such
newspaper in the province, city, or
municipality, then the ordinance may
be posted in at least two conspicuous
and publicly accessible places. (Secs.
188 and 189, LGC)

thereof to the Secretary of Justice who shall

render a decision within sixty (60) days
from the date of receipt of the appeal.
Provided, however, that such appeal shall
not have the effect of suspending the
effectivity of the ordinance and the accrual
and payment of the tax, fee, or charge
levied therein.
Provided, finally, that within the sixty-day
period without the Secretary of Justice
acting upon the appeal, the aggrieved party
may file appropriate proceedings with a
court of competent jurisdiction (RTC).
(Sec. 187, LGC)
Q: Can a dissatisfied tax payer go directly
to court to question a tax ordinance?
A: NO.
-

Q: What is the effect if the tax ordinance was

not published in full (only excerpts/summary)?
A: The requirement of publication in full for 3
consecutive days is MANDATORY for a tax
ordinance to be VALID.
-

The tax ordinance will be null and void

if it fails to comply with such publication
requirement. (Coca-Cola v. City of
Manila, GR No. 161893 June 27, 2006)

Q: Who determines the legality or propriety of

a local tax ordinance or revenue measure?
A: It is the SECRETARY OF JUSTICE who shall
determine questions on the legality and
constitutionality or revenue measures. (Weird
accdg. to Atty. Dela Cruz but thats it)
Such questions shall be raised on appeal
within thirty (30) days from the effectivity
9 jcsb

The law requires that the dissatisfied

taxpayer who questions the validity or
legality of a tax ordinance must file his
appeal to the Secretary of Justice,
within 30 days from effectivity thereof.
In case the Secretary of Justice decides
the appeal, a period also of 30 days is
allowed for an aggrieved party to go to
court. But if the Secretary of Justice
does not act thereon, after the lapse of
60days, a party could already proceed
to seek relief in court.
These three separate periods are clearly
given for compliance as a prerequisite
before seeking redress in a competent
court. Such statutory periods are set to
prevent delays as well as enhance the
orderly and speedy discharge of judicial
functions.

For this reason, the courts construe that

the three above-mentioned provisions
of statutes as MANDATORY.

Q: Does the LGU has the power to impose

Franchise Tax?

(Smart Communications, Inc. v. City of Davao,

565 SCRA 237 - 2008)
-

In this case, Smart contends that its

telecenter in Davao City is exempt from
payment of franchise tax to the City,
because its franchise by virtue of a
charter (R.A. No. 7294 - 1992) includes
the clause in lieu of all taxes
Smart alleges that the in lieu of all
taxes clause in its franchise exempts it
from all taxes both local and national.
The Local Government Code, which
allowed the imposition of franchise tax
by LGUs, took effect 2 months ahead of
Smarts franchise
The SC ruled that the In lieu of all
taxes clause applies only to National
Interest Revenue taxes and NOT TO
LOCAL TAXES.

*The LGC took effect on January 1, 1992. PLDTs

legislative franchise was granted sometime
before 1992. Its franchise provides that PLDT
will pay only 3% franchise tax to BIR in lieu of all
taxes.
*The legislative franchise of Smart and Globe
Telecoms were granted in 1998. Their legislative
franchises state that they will pay only 5%
franchise tax to the BIR in lieu of all taxes.
Sample Problem:
-

10 jcsb

The province of Zamboanga del Norte

passed an ordinance in 1997 that

imposes a local franchise tax on all

telecommunication
companies
operating within the province.
The tax is 50% of 1% of the gross annual
receipts of the preceding calendar year
based on the incoming receipts, or
receipts realized, within its territorial
jurisdiction.

Q: Is the ordinance valid? Are PLDT, Smart,

and Globe liable to pay franchise taxes to
the Province of Zamboanga?
A: YES.
-

The ordinance is VALID. The LGC

explicitly
authorizes
provincial
governments, notwithstanding any law
or other special law, to impose a tax on
business enjoynh a franchise at the
ratge of 50% of 1% based on the gross
annual receipts during the preceding
year within the province. (Section 137,
LGC)
PLDT is liable to the franchise tac levied
by the province of Zamboanga del
Norte. The tax exemption privileges on
franchises granted before the passage
of the Local Government Code are
effectively repealed by the latter law.

(PLDT v. City of Davao, GR No. 143867

August 22, 2002)
A: While Smart and Globes franchises were
enacted after the enactment of LGC, still,
Smart and Globe are also liable to pay
franchise tax to the province.
The SC ruled that the in lieu of all taxes
clause applies only to national internal
revenue taxes and not to local taxes.

The in lieu of all taxes clause in a

legislative franchise should categorically
state that the exemption applies to both
local and national taxes; otherwise, the
exemption claimed should be strictly
construed against the taxpayer liberally in
favour of the taxing authority. (Smart
Communications, Inc. v. The City of Davao,
GR No. 155491 - July 21, 2009)
Q: Does the LGU have the power to adjust local
tax rates?
A: YES. Provided that the adjustment of the tax
rates be prescribed in an ordinance but should
not be oftener than once every five (5) years,
and in no case shall adjustment exceed ten
percent (10%) of the rates fixed under the LGC.
(Sec. 191, LGC)
Q: What are the taxes, fees, and charges which
a province or a city mayor may levy?
A:
1. Tax on transfer of real property
ownership (Sec. 135, LGC)
2. Tax on business of printing and
publication (Sec. 136, LGC)
3. Franchise Tax (Sec. 137, LGC)
4. Tax on sand, gravel, and other quarry
resources (Sec. 138, LGC)
5. Professional Tax (Sec. 139, LGC)
6. Amusement Tax (Sec. 140, LGC)
7. Annual fixed tax for every delivery
truck or van of manufacturer or
producers, wholesalers of, dealers, or
retailer in certain products (Sec. 141,
LGC)
Q: What are the taxes that a municipality may
impose under the LGC?
1. Tax on business (Sec. 143, LGC)
11 jcsb

2. Fees and charges on business and

occupation (Sec. 147, LGC)
3. Fees for sealing and licensing weights
and measures (Sec. 148, LGC)
4. Fishery rentals, fees and charges (Sec.
149, LGC)
Q: (Sample Problem)
Mr. Fermin, a resident of Bulacan, is a Certified
Public Accountant-Lawyer engaged in the
practice of his two professions.
He has his main office in Makati City and
maintains a branch office in Pasig City.
Mr. Fermin pays his professional tax as a CPA
in Makati City and his professional tax as a
Lawyer in Pasig.
Q: May Makati City, where he has his main
office, require him to pay his professional tax
as lawyer?
A: NO. Makati City where Mrf. Fermikn has his
main office may not require him to pay his
professional tax as a lawyer.
Mr. Fermin has the option of paying his
professional tax as lawyer in Pasig City where he
practices law or in Makati City where he
maintains his principal office (Sec. 139[b], LGC)
Q: May the Province of Bulacan, where he has
his residence, and where he also practices his
two professions, go after him for the payment
of his professional tax as a CPA and lawyer?
A: NO.
The situs of the professional tax is the city
where the professional practices his profession
or where he maintains his principal office in
case he practices his profession in several
places.

The Province of Bulacan has no right to collect

professional tax from Mr. Fermin as the place of
residence of the taxpayer is NOT THE PROPER
SITUS in the collection of the professional tax.
(Sec. 139 [b], LGC)
Q: Does the province has the authority to
impose taxes on sand, gravel and other quarry
resources extracted on private lands?

A: NO.
-

A: NO.
-

Professional basketball games are

within the ambit of national taxation,
as it is presently being taxed under the
provisions of the NIRC.
Furthermore, the income from cession
of streamers and advertising spaces is
subject to amusement taxes under the
NIRC because the definition under the
Tax Code is broad enough to include the
cession of streamers and advertising
spaces as the same includes all the
receipts of the proprietor, lessee or
operator of the amusement place.

A province is not expressly authorized

to do so. Such tax is a tax upon the
performance, carrying on, or exercise of
an activity. Hence, an excise tax upon
an activity already being taxed under
the NIRC.

(Philippine Basketball Association v. CA, GR

No. 119122 August 8, 2000)

(Province of Bulacan, et.al., v. CA, GR No.

126232 November 27, 1998)

Q: What are the common revenue raising

powers of LGUs?

Q: What are the amusement places upon

which provinces or cities cannot impose
amusement taxes?
A:
1.
2.
3.
4.
5.
6.
7.

Cockpits
Cabarets
Night or day clubs
Boxing exhibitions
Professional Basketball games
Jai-Alai
Racetracks

Note: There can be no imposition of

amusement taxes on the above-mentioned
amusement places since the NIRC already
imposes amusement taxes on them under
Section 125 thereof.
Q: May LGUs collect amusement taxes on
admission tickets to the Philippine Basketball
Association (PBA) games held in the LGU?
12 jcsb

A:
1. Fees, service or user charges LGUs
may impose and collect such
reasonable fees and charges for
services rendered. (Sec. 153, LGC)
2. Public Utility Charges may fix the
rates for the operation of public utilities
owned, operated and maintained by
them within their jurisdiction. (Sec. 154,
LGC)
3. Toll fees or charges The sanggunian
concerned may prescribe the terms and
conditions and fix the rates and fix the
rates for the imposition of toll fees or
charges for the use of any public road,
pier, or wharf, waterway, bridge, ferry,
or telecommunication system funded
and constructed by the LGU concerned.
(Sec. 155, LGC)

Q: What are the common limitations on

the taxing powers of the LGUs?
A: The exercise of the taxing power of
provinces, cities, municipalities, and
barangays shall not extend to the levy of
the following:
1. Taxes which are levied under the NIRC,
unless otherwise provided by LGC.
2. Taxes, fees, and charges which are
imposed under the Tariffs and Customs
Code.
3. Taxes, fees, and charges where the
imposition of which contravenes
existing governmental policies or which
are violative of the fundamental
principles of taxation.
4. Taxes, fees and charges imposed under
special laws.
Q: What should be the basis of business tax
gross receipt or gross revenue?
A: GROSS RECEIPTS, as the law is clear.
-

Gross receipts include money or its

equivalent actually or constructively
received in consideration of services
rendered or articles, sold, exchanged or
leased, whether actual or constructive.
To tax on gross revenue rather than
gross receipts will amount to double
taxation inasmuch as the revenue or
income for a taxable year includes gross
receipts already reported during the
previous year for which local business
taxes had already been paid.

(Ericsson Telecommunications, Inc. ,v. City of

Pasig, etc., et. Al., GR No. 176667 November
22, 2007)

13 jcsb

Q: Are condominium corporations liable to pay

business taxes under the Local Government
Code?
A: NO.
-

As a rule, a city or municipality is

authorized to impose a tax on business,
which is defined under the LGC as
trade or commercial activity regularly
engaged as a means of livelihood or
with view of profit.
By its very nature, a condominium
corporation is not engaged in business,
and any profit it derives is merely
incidental, hence, it may not be the
subject of business taxes.

(Yamane, etc., v. BA Lepanto Condominium

Corporation, GR No. 154993, October 25,
2005)
Q: What are the penalties for unpaid taxes,
fees or charges?
A:
1. Surcharge of 25% on taxes, fees or
charges not paid on time; and
2. Interest not exceeding 2% per month of
the unpaid taxes, fees or charges
including surcharges, until the amount
is fully paid. In no case shall the total
interest exceed 36 months. (Sec. 168,
LGC)
Q: What is the period of assessment of local
taxes?
A: GR Local taxes, fees or charges shall be
assessed within five (5) years from the date
they became due. No action for the collection
of such taxes, fees or charges, whether

administrative or judicial, shall be instituted

after the expiration of such period.
XPN: In case of fraud or intent to evade the
payment of taxes, fees or charges, the same
may be assessed within ten (10) years from
discovery of the fraud or intent to evade
payment. (Sec. 184 [a] and [b], LGC)
Q: What is the period of collection of local
taxes?
A: Local taxes, fees or charges may be collected
within five (5) years from the date of
assessment by administrative or judicial
action. (Sec. 194(c), LGC)
Q: When is the running of the prescriptive
period be suspended?
A: The running of the periods of prescription
for the collection of local taxes shall be
suspended for the time during which:
1. The treasurer is legally prevented from
making the assessment of collection;
2. The
taxpayer
requests
for
a
reinvestigation and executes a waiver in
writing before expiration of the period
within which to assess or collect; and
3. The taxpayer is out of the country or
otherwise cannot be located. (Sec. 195
[d],LGC)

Internal Rules of Procedure

-

Sanggunian Committees
-

First Day of Session

14 jcsb

On the first day of session following the

election of its members and within 90
days thereafter, the sangguian
concerned shall adopt or update its
existing rules of procedure; (Article 103,
IRR-LGC)

The manner of selecting the Chairman

and Members of various committess is
through election. (Sec. 50, LGC)
The majority can prepare a list and the
sanggunian can vote to approve it,
provided this is indicated in the IRP.
DILG Opinion No. 1122-98 (09-07-1998)

Ex-Officio members and the selection of

committee chairs

Sessions and Quorum

The task of drafting the internal rules

may be delegated to a committee;
The proposed IRP can then be adopted
by the sanggunian in a regular session;
(Article 103, IRR-LGC)

SK Chairmen and Punnong Barangay s

are non-partisan.
Thus, they cannot participate in the
election of officers (minority and
majority leaders and deputies
because this is mainly dependent on
the majority and minority party
affiliation in the sangguinian.
However, these ex-officio members are
assured of the chairmanship of the
corresponding sectors that they are
representing in the sanggunian, that is,
the youth and barangay affairs,
respectively. They may also chair other
regular committees.
An ex-officio member, president of the
liga ng mga barangay affairs and may
chair another committee.
The creation of the committee on
barangay affairs is mandatory.
The youth and sports development
committee is a mandatory committee

similar to those other committee

enumerated in the LGC.
Q: Can the vice mayor chair a committee?

Determining Quorum

A: NO.
-

The vice mayor may chair a special

committee created for a special
purpose (DILG Opinions, Nos 243-1992;
156-1994) but cannot head a regular
committee.( DILG Opinions, Nos 2431992; 156-1994)

Q: What is Quorum?
A: A majority of all the members of the
sanggunian who have been elected and
qualified shall constitute a quorum to transact
official business. (Section 5t3, LGC)
Q: What is meant by majority?
A: 50% plus one of the entire membership of
the sanggunian.
-

(DILG Opinion No. 28-2000, dated 17 April 2000;

La Carlota City vs. Atty. Rex Rojo, G.R. No.
181367, April 24, 2012)

The closest number to more than onehalf of the total membership of the
sanggunian;

Vote required in Sessions

-

Two-thirds (2/3) Vote Required

-

Q: Is the vice mayor include in the

determination of quorum?

15 jcsb

The Vice Mayor is a member of the

Sanggunian
He will thus be include in the total
number of sanggunian members for
purposes of determining the quorum.

Ordinary measures shall be decide by

simple majority of the members
presents at any meeting there being a
quorum.

(DILG Opinions Nos. 26-1996; 183-1994)

(La Carlota City vs. Atty. Rex Rojo, G.R. No.

181367, April 24, 2012)

A: YES.

19 members = 19/2 = 9.5 + 1 = 10.5

The quorum for a sanggunian with 19
members is therefore 10
11 members = 11/2 = 5.5 +1 = 6.5
The quorum for a sanggunian with 11
members is therefore 6

Extending Loans or entering into

contracts;
Issuance of bonds or securities;
Authorizing the lessee of public
property;
Grant of franchise
Creation of LGU liability or
indebtedness;
Over-ride veto of the Mayor;
Grant of Tax exemptions
Levy of Taxes
Discipline/suspend a member of the
sanggunian;
Opening or closing of roads;
Selection and transfer of government
site or offices
Concurrence in the appointment of
personnel;

(DILG Opinion No. 107-2003, dated 15

August 2003)
Vice Mayor as Presiding Officer
-

Being the presiding officer of the

council, a vice mayor is considered a
regular member of the local legislative
council concerned. (DILG Opinion Nos.
138, 342 1992; 81-1995)
But a vice mayor acting as mayor
cannot preside over the council until
the mayor reassumes his/her position
since this will violate the local
separation of powers. (Gamboa v.
Aguirre)
In such situation, the senior councillor
may preside. (DILG Opinions Nos. 142,
174-1994)

Presiding Officer as member

-

As presiding officer, he can only vote to

break a tie;
As a member, he may participate in the
deliberations, vote, sponsor or coauthor a bill or chair a special
committee.
He/She may temporarily relinquish
his/her chair as presding officerto
the majority floor leader or to any
sanggunian member. (DILG Opinion No.
65-1995)
If he will participate in the session as a
member, he may choose the
temporary presiding officer. (DILG
Opinions Nos. 29, 132-1993)

Temporary Presiding Officer

-

16 jcsb

In case of temporary absence of the

presiding officer, the members present
and constituting a quorum shall elect

from among themselves a temporary

presiding officer.
He shall certify within 10 days from the
passage of ordinances/resolutions
adopted by the sanggunian in the
session over which he temporary
presided. (Article 102 IRR, LGC)

Permanent Vacancy: Presiding Officer

-

In case of permanent vacancy in the

position of vice mayor, the highest
ranking sanggunian member will
succeed as vice mayor/presiding
officer.
The vacancy shall be filled by the other
members of the sanggunian in
accordance to their ranking. (Section
44, LGC)
In case the permanent vacancy was
caused by a member who belongs to a
political party, the party will appoint
the replacement;
If he does not belong to any political
party, the other members of the
sangguian will nominate, and the
president will appoint the
replacement. (Section 45, LGC)

Sanggunian Secretary
-

The secretary to the sanggunian is a

career public official with rank and
salary equal to a head of a department.
(DILG Opinions Nos. 91, 253, 286
1992; 78-1995)
A sanggunian secretary shall
automatically continue in office despite
the lapse of 3-year terms of elective
officials unless otherwise removed for
cause. (DILG Opinion No. 176-1992)

Appointment of Sanggunian Secretary

It is the vice mayor, not the mayor,

who is authorized to appoint the
secretary to the sanggunian (CSC En
Banc Resolution Nos. 94-7153,
December 29, 1994, 92-111, August 20,
1992; DILG Opinions Nos. 348-1992; 7,
155, 236, 245-1993; 85-1995) with the
concurrence of the sanggunian
concerned. (DILG Opinion No. 8-1995)

Temporary Vacancy: Mayor

-

A mayor may designate in writing an

officer-in-charge (e.g. councilor, any
appointive official or employee) to
assume the office but only for three (3)
days.
On the 4th day, the vice mayor assumes
the post regardless of the nature of the
absence of the mayor. (DILG Opinions
Nos. 22, 30, 87-A 1993; 52, 53-1994)
Henceforth, the designation of the
officer-in-charge ceases. (DILG Opinion
No. 87-A- 1993)

Powers: Acting Mayor

-

A vice mayor acting as mayor possesses

the powers incidental to the office,
including the authority to solemnize
marriages, during the period of
temporary incapacity. (DILG Opinion
No. 25-1994)
An acting mayor can exercise the
power to appoint and to discipline only
after lapse of 30 working days from the
time the mayor is temporarily
incapacitated. (CSC En Banc Resolution
Nos. 94-0959, February 15, 1994; 946892, December 20, 1994)

Acting Mayor CANNOT:

17 jcsb

Administer oaths (DILG Opinion No.

136-1994)
The power to approve or disapprove
ordinances and resolutions enacted by
the council (DILG Opinion No. 1491993)
Preside over council sessions (DILG
Opinions Nos. 270-1992; 142, 1741994)
Appoint, suspend or dismiss employees
within 30 days except when the cause
of the temporary incapacity of the
mayor is suspension for more than 30
days.

Q: Is the signature of the vice mayor on an

enacted ordinance necessary?
A: NO.
-

Section 469 (c)(3) of the LGC provides

that enacted ordinances must be
certified by the presiding officer before
they are submitted to the mayor for his
approval.
An acting mayor can exercise the
power to appoint and to discipline only
after lapse of 30 working days from the
time the mayor is temporarily
incapacitated. (CSC En Banc Resolution
Nos. 94-0959, February 15, 1994; 946892, December 20, 1994)

Q: May an ordinance become valid even

without the signature of the mayor?
A: YES.
-

If he fails to act on an ordinance

submitted to him for his review within
10 days from his receipt thereof;
When the sanggunian overrides the
veto of the mayor by 2/3 vote.

(DILG Opinion No. 22-2003, date February

27, 2003)
Legislative Oversight
Sec. 56. Review of Ordinances by the
Sangguniang Panlalawaigan (a) Within three
(3) days after approval the secretary to the
sanggunian panlungsod or sangguniang bayan
shall forward to the sangguniang panlalawigan
for review, copies of approved ordinances and
the resolutions approving the local
development plans and public investment
programs formulated by the local development
council.
(b) Within thirty (30) days after receipt of
copies of such ordinances and resolutions, the
sangguniang panlalawigan shall examine the
documents or transmit them to the provincial
attorney, or if there be none, to the provincial
prosecutor for prompt examination.
(c) If the sangguniang panlalawigan finds that
such an ordinance or resolution is beyond the
power conferred upon the sangguniang
panlungsod or sangguniang bayan concerned, it
shall declare such ordinance or resolution
invalid in whole or in part. The sanggunian
panlalawigan shall enter its action in the
minutes and shall advise the corresponding city
or municipal authorities of the action it has
taken.
(d) If no action has been taken by the
sangguniang panlalawigan within thirty (30)
days after submission of such an ordinance or
resolution, the same shall be presumed
consistent with law and therefore valid.
Sec. 57. Review of Ordinances by the
Sangguiang Panlungsod or Bayan. (a) Within
ten (10) days after its enactment, the
sangguniang barangay shall furnish copies of all
barangay ordinances to the sangguniang
panlungsod or sangguniang bayan concerned
for review as to whether the ordinance is

18 jcsb

consistent with law and city or municipal

ordinances.
(b) If the sanghuniang panlungsod or
sangguniang bayan, as the case may be, fails to
take action on barangay ordinances within
thirty (30) days from receipt thereof, the same
shall be deemed approved.
(c) I f the sangguniang panlungsod or
sangguniang bayan, as the case may be, finds
the barangay ordinances inconsistent with law
or city or municipal ordinances, the sanggunian
concerned shall, within thirty (30) days from
receipt thereof, return the same with its
comments and recommendations to the
sangguniang barangay concerned for
adjustment, amendment, or modification; in
which case, the effectivity of the barangay
ordinance is suspended until such time as the
revision called for is effected.
Q: May the Sanggunian declare a local
ordinance under review as void and illegal?
A: NO.
- The only ground upon which a
provincial board may declare any
municipal resolution, ordinance, or
order invalid is when such resolution,
ordinance, or order is beyond the
powers conferred upon the sanggunian
making the same.
- Absolutely no other ground is
recognized by the law.
(Moday v. CA, Feb. 20, 1997; DILG Opinion
NO. 3-2005 {January 21, 2005})
Q: May the Sanggunian exceed the 30-day
period of review because of time spent in
referral to its committee or legal office?
A: NO.
- The sanggunian is required to take
action on the ordinance on review
within thirty (30) days after its
submission

The phrase take action should be

construed as either approval or
disapproval of the ordinance and not
just any other action of the reviewing
sanggunian, such as referral to a
committee.
After the lapse of such period, and no
official and/or formal document, such
as a resolution, was issued by the
Sanggunian, it can be validly stated that
the Sanggunian failed to act within
thirty (30) days and the ordinance or
resolution under review can be
presumed consistent with law and
therefore valid. (DILG Opinion No. 192009, April 28, 2009; DILG Opinion No.
62-2012, Nov. 7, 2012)

(b) Within the 60-day period, the sangguniang

panlungsod or the sangguniang bayan
concerned shall return the barangay budget to
the punong barangay with the advice of action
thereon for proper adjustments, in which event,
the barangay shall operate on the ordinance
authorizing annual appropriations of the
preceding fiscal year until such time that the
new ordinance authorizing annual
appropriations shall have met the objections
raised.
Upon receipt of such advice, the barangay
treasurer or the city or municipal treasurer
who has custody of the funds shall not make
further disbursement from any item of
appropriation declared inoperative,
disallowed, or reduced.

Review of Appropriation Ordinances

Q: Who prepares the budget?
Sec. 327. Review of Appropriation Ordinances
of Competent Cities and Municipalities.

A:

The sangguniang panlalawigan shall within the

same 90-day period advise the sangguniang
bayan concerned through the local chief
excecutive of any action on the ordinance under
review.
Upon receipt of such advise, the municipal
treasurer concerned shall not make further
disbursements of funds from any of the items
of appropriate declared inoperative,
disallowed or reduced.

The Local Development Council (LDC)

prepares the Local Development Plan
(LDP) [Sec. 109, LGC]

The sanggunian will then approve or

disapprove the LDP thru a Resolution
[Sec. 114, LGC]
The LDP will then be submitted to the
mayor, who may approve or veto the
same [Sec. 55, LGC]
The approved LDP will then be
submitted to the Local Finance
Committee (LFC) for budget preparation
[Art. 410, IRR, LGC]
The proposed budget will be submitted
by the local chief executive to the
sanggunian for enactment into an
ordinance. [Sec. 316, LGC; DILG Opinion
No. 137-2003]

Sec. 333. Review of the Barangay Budget - (a)

Within ten (10) days from its approval, copies
of the barangay budget shall be furnished the
sangguniang panlungsod or the sangguniang
bayan, as the case may be.
If within sixty (60) days after the receipt of the
ordinance, the sanggunian concerned takes no
action thereon, the same shall continue to be in
full force and effect.

Q: Can the Sanggunian reduce the proposed

budget?
A:
-

19 jcsb

Article 415 of the IRR states that: the

local sanggunian may not increase the

proposed amount in the executive

budget nor include new items except to
provide for statutory and contractual
obligations but in no case shall it exceed
the total appropriations in the
executive budget.
Considering that the only prohibition is
against any increase, the sanggunian
may reduce the executive budget
proposed by the LCE, provided,
however, that the requirements as well
as the general limitations in the use of
government funds provided for under
Sections 324 and 325 of the Code are
complied with.

Q: Is there any penalty for an LCE who fails to

prepare and submit the annual budget on
time?
A: YES. Pursuant to Sec. 318 of R.A. No. 7160, an
LCE who fails to submit the budget on or before
October 16 of the current year shall be subject
to such criminal and administrative penalties as
may be provided by the Local Government Code
and other applicable laws.
Q: What is the period for enactment of the
annual budget (Re-enacted Budget)
- Under Section 323 of the LGC, if the
sanggunian fails to enact the annual
budget after ninety (90) days from the
beginning of the fiscal year, the
ordinance authorizing the
appropriations of the preceding year
shall be deemed re-enacted and shall
remain in force and effect until the
ordinance authorizing the proposed
appropriations is passed by the
sanggunian concerned.
- However, only the annual
appropriations for salaries and wages of
existing positions, statutory and
contractual obligations, and essential
operating expenses authorized in the
annual and supplemental budgets for
the preceding year shall be deemed re-

20 jcsb

enacted and disbursement of funds

shall be in accordance therewith.
Effectivity of Budget
Section 320 of the LGC provides that:
-

The ordinance enacting the annual

budget shall take effect on the ensuing
calendar year.
An ordinance enacting a supplemental
budget, however, shall take effect upon
its approval or on the date fixed
therein.
The review of the budget by the
sangguniang panlalawigan is not a
requisite for validity or effectivity.

(DILG Opinion No. 90-2000, dated August

21, 2000)

Supplemental Budget
-

No ordinance providing for a

supplemental budget shall be enacted,
except:
(a) when supported by funds actually
available as certified by the local
treasurer, which shall refer to the
amount of money actually collected
during a given fiscal year that is over
and above the realized estimated
income of that year; or
(b) in times of public calamity by way of
budgetary realignment to set aside
appropriations for the purchase of
supplies and materials or the payment
of services, which are exceptionally
urgent or absolutely indispensible to
prevent imminent danger to, or loss of
life or property, in the jurisdiction of the
LGU or in other areas declared in a state
of calamity by the President. (Art. 417,
IRR)

Intelligence Fund

Section 325 (h) of R.A. 7160 provides

that: annual appropriations for
discretionary purposes of the local chief
executive shall not exceed two percent
(2%) of the actual receipts derived from
the basic real property tax in the next
preceding calendar year.
Pursuant to DILG Memorandum Circular
No. 99-65 to determine the amount to
be utilized for intelligence and
confidential purposes, it shall be based
on the: (a) 30% of the peace and order
allocation, or (b) 3% of the annual
appropriations, whichever is lower.

Q: May the Sanggunian modify or reduce a

local budget ordinance under review?
A: YES.
- Expressly included in the sanggunians
power to review the local budget
ordinance of a lower LGU is the clipping
power to disallow or reduce
accordingly and even declare the
ordinance inoperative in part or in its
entirety if the appropriations are found
to be excess of the amounts prescribed
or if it does not comply with budgetary
requirements and limitations under the
law.
(DILG Opinion No. 101-1995, dated August
31, 1995)
Q: What are the grounds or questions that the
reviewing Sanggunian can use to assail a local
budget under review?
A: Sec. 325, LGC
- The total appropriations, whether
annual or supplemental, for personal
services of a local government unit for
one (1) fiscal year shall not exceed
forty-five percent (45%) in the case of
first to third class provinces, cities, and
municipalities, and fifty-five percent
(55%) in the case of fourth class or
lower, of the total annual income from
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regular sources realized in the next

preceding fiscal year.
-

The appropriations for salaries, wages,

representation, and transportation
allowances of officials and employees of
the public utilities and economic
enterprises owned, operated, and
maintained by the local government
unit concerned shall not be included in
the annual budget or in the
computation of the maximum amount
of personal services.

Q: What are the grounds or questions that the

reviewing Sanggunian can use to assail a local
budget under review?
A: Sec. 325, LGC
- No official or employee shall be entitled
to a salary with higher than the
maximum fixed for the position or other
positions of equivalent rank by
applicable laws or rules and regulations
issued thereunder.
- The creation of new positions and
salary increases or adjustments shall in
no case be made retroactive and
- The annual appropriations for
discretionary purposes of the local
chief executive shall not exceed two
percent (2%) of the actual receipts
derived from the basic real property
tax in the next preceding calendar
year.
Q: What are the grounds or questions that the
reviewing Sanggunian can use to assail a local
budget under review?
A: Sec. 324, LGC
-

The aggregate amount appropriated

shall not exceed the estimates of
income.

Full provision shall be made for all

statutory and contractual obligations of

the local government unit concerned.

Provided, however, that the amount of
appropriations for debt servicing shall
not exceed twenty percent (20%) of
the regular income of the local
government unit concerned.
-

appropriations from one item to

another.
-

Five percent (5%) of the estimated

revenue from regular sources shall be
set aside as an annual lump
appropriation for unforeseen
expenditures arising from the
occurrence of calamities.

However, the local chief executive or

the presiding officer of the sanggunian
concerned may, by ordinance, be
authorized to augment any item in the
approved annual budget for their
respective offices from savings in other
items within the same expense class of
their respective appropriations.

Q: How can the Sanggunian monitor that the

funds are properly disbursed?
Q: What are the restrictions on disbursement
of Funds?
A: Sec. 344. Certification on, and Approval of
Vouchers No money shall be disbursed unless
the local budget officer certifies to the
existence of appropriation that has been
legally made for the purpose, the local
accountant has obliged said appropriation, and
the local treasurer certifies to the availability
of funds for the purpose.
-

A: Sec. 346. Disbursement of the Local Funds

and Statement of Accounts. Disbursements
shall be made in accordance with the ordinance
authorizing the annual or supplemental
appropriations without the prior approval of
the sanggunian concerned.
-

Vouchers and payrolls shall be certified

to and approved by the head of the
department or office who has
administrative control of the fund
concerned, as to validity, propriety, and
legality of the claim involved.

Within thirty (30) days after the close

of each month, the local accountant
shall furnish the sanggunian with such
financial statements as may be
prescribed by the Commission on Audit.
In the case of the year-end statement of
accounts, the period shall be sixty (60)
days after the thirty-first (31st) of
December.

Q: Who will be held liable for improper

disbursement of funds?
Q: Can the local chief executive declare savings
and transfer it to augment other expenses
(DAP)?

A: NO.
- Sec. 336. Use of Approriated Funds and
Savings. Funds shall be available
exclusively for the specific purpose for
which they have been appropriated.
-

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No ordinance shall be passed

authorizing any transfer of

A: Sec. 340. Persons accountable for Local

Government Funds. Any officers of the local
government unit whose duty permits or
requires the possession or custody of the local
government funds shall be accountable and
responsible for the safekeeping thereof in
conformity with the provisions of this Title.
-

Other local officers who, though not

accountable by the nature of their
duties, may likewise be similarly held
accountable and responsible for local

government funds through their

participation in the use or application
thereof. (emphasis supplied)
Sec. 342. Liability for Acts Done Upon Direction
of Superior Officer, or Upon Participation of
Other Department Heads or Officers of
Equivalent Rank. -

Unless he registers his objection in

writing, the local treasurer, accountant,
budget officer, or other accountable
officer shall not be relieved of liability
for illegal or improper use or
application or deposit of government
funds or property by reason of his
having acted upon the direction of a
superior officer, elective or appointive,
or upon participation of other
department heads or officers of
equivalent rank.
The superior office directing, or the
department head participating in such
illegal or improper use or application
or deposit of government funds or
property, shall be jointly and severally
liable with the local treasurer,
accountant, budget officer, or other
accountable officer for the sum or
property so illegally or improperly
used, applied or deposited.

QUALIFICATIONS
Q: What are the qualifications of elective
government official?
- Must be as resident therein for at least 1 year
immediately preceding the day of the election;
- Able to read and write Filipino/any other local
language or dialect
- Age requirement (Sec. 39, LGC):
23 y/o governor, vice-governor, mayor, vicemayor, councillor (Highly urbanized cities)
21 y/o mayor, vice-mayor (component
cities/municipalities)
18 y/o sanggunian members and punong
barangay
Q: When should the citizenship requirement be
possessed?
A: The citizenship requirement in the LGC is to
be possessed by the elective official, at the
latest, as of the time he is proclaimed and at the
start of the term of office to which he has been
elected.
- The LGC does not specify any particular
date or time when the candidate must
possess citizenship, unlike the
requirements for residence and age.
Repatriation under P.D. 825 is valid and
effective and retroacts to the date of
the application.
(Frivaldo v. Comelec, G.R. No. 120295, June
28, 1996)
Q: X was a natural-born Filipino who went to
the USA to work and subsequently became a
naturalized American citizen.
However, prior to the filing of his Certificate of
Candidacy for the Office of Mayor of the
Municipality of General McArthur, Eastern

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Samar, on 28 March 2007, he applied for

reacquisition of his Philippine Citizenship.
Such application was subsequently granted. Y
filed a petition to disqualify X on the ground of
failure to comply with the 1-year residency
requirement.
Y argues that reacquisition of Philippine
citizenship, by itself, does not automatically
result in making X a resident of the locality.
Is Y correct?
A: YES. Xs reacquisition of his Philippine
citizenship under R.A. 9225 had no automatic
impact or effect on his residence/domicile.
-

24 jcsb

He could still retain his domicile in the

USA, and he did not necessarily regain
his domicile in the Municipality of
General McArthur, Eastern Samar,
Philippines.
X merely had the option to again
establish his domicile in the
Municipality of General McArthur,
Eastern Samar, Philippines, said place to
have become his new domicile of
choice. The length of his residence
therein shall be determined from the
time he made it his domicile of choice,
and it shall not retroact to the time of
his birth. It is the fact of residence that
is the decisive factor in determining
whether or not an individual has
satisfied the residency qualification
requirement.
However, even if Ys argument is
correct, this does not mean that X
should be automatically disqualified as
well, since there is proof that aside
from reacquisition of his Philippine
Citizenship, there are other subsequent
acts executed by X which shows his
intent to make General McArthur,
Eastern Samar his domicile. Thus,
making him qualified to run for Mayor.

(Japzon v. COMELEC, G.R. No. 180088,

Jan. 19, 2009)

Q: Imelda Marcos indicated in her COC that

her residence in Leyte is 7months. The
Constitution 1 year residence. Is he qualified to
run?
A: YES. The principle of animus revertendi was
used to show that she has an intention to
return to the place where she seeks to be
elected.
-

The SC held that the term residence is

VAGUE. It ruled that domicile and
residence are synonymous.

(Marcos v. COMELEC, G.R. No. 119976,

September 18, 1995)

Q: Butz Aquino was a Senator residing in Tarlac

when he filed a COC for Congressman of
Makati City. He bought a condo unit in Makati
City 1 year before the election. Is he qualified?
A: NO. The term residence, as used in the law,
is CLEAR.
It imports not only an intention to
reside in a fixed place, but also a
personal presence in that place,
coupled with conduct indicative of such
intention.
(Aquino v. COMELEC, 1995)
*Comment of Atty. Buko: Weird Supreme
Court.
Q:What is RESIDENCE for election purposes?
A: It implies the factual relationship of an
individual to a certain place. It is the physical
presence of a person in a given area,
community, or country. For election purposes,

the concepts of residence and domicile are

dictated by the peculiar criteria of political laws.
- As these concepts have evolved in our
election law, what has clearly and
unequivocally emerged is the fact that
residence for election purposes is used
synonymously with domicile.
(Marcos v. COMELEC, G.R. No. 119976,
September 18, 1995)
Q: What is the effect of transfer of residence?
A: Any person who transfers residence solely by
reason of his occupation, profession, or
employment in private or public service,
education, etc., shall not be deemed to have
lost his original residence.

one in the place where he seeks to run in order

to qualify for a congressional seat in that other
district.
- Neither do we see the fact that
Fernandez was only leasing in Sta. Rosa
at the time of his candidacy as a barrier
for him to run in that district. Certainly,
the Constitution does not require a
congressional candidate to be a
property owner in a district where he
seeks to run but only that he resides in
that district for at least one year prior
to the Election Day.
-

To use ownership of property in the

district as the determinative indicium of
permanence of domicile or residence
implies that only the landed can
establish compliance with the residency
requirement.

This Court would be in effect imposing a

property requirement to the right to
hold public office, which property
requirement would be unconstitutional.

(Astio v. Aguirre, G.R. No. 191124, April 27,

2010)
Q: Dan Fernandez ran for congressman of the
First District of Laguna. In his COC, he indicated
that his complete/exact address is in Sta. Rosa
City Laguna.
Vicente sought the cancellation of the COC of
Dan Fernandez and his disqualification as a
candidate on the ground of an alleged material
misrepresentation in his COC regarding his
place of residence, because during past
elections, he had declared Pagsanjan, Laguna
as his address, and Pagsanjan was located in
the Fourth District of Laguna, and that Dan
Fernandez is merely leasing a property in his
alleged residence in Sta. Rosa.
Does the Constitution require that a candidate
be a property owner in the district where he
intends to run?
A: NO. Although it is true that the latest
acquired abode is not necessarily the domicile
of choice of a candidate, there is nothing in the
Constitution or our election laws which require
a congressional candidate to sell a previously
acquired home in one district and buy a new
25 jcsb

(Fernandez v. HRET, G.R. No. 187478, Dec. 29,

2009)