PUBLIC CORPORATION Section 15, LGC of 1991 !
Every local government
ATTY. LARGO
EH 407
INTRODUCTION
DISTRIBUTION OF POWERS TO LOCAL GOVERNMENTS
TO LOCAL GOVERNMENTS AS LIMITATION TO POLITICAL
AUTHORITY:
• Horizontal Distribution
- Powers of the government are distributed to the 3
branches of national government: executive,
legislative, judiciary.
- Distribution may either be complete (presidential
systems) or partial (parliamentary systems)
• Vertical Distribution
- Powers of the government are distributed among at
least 2 levels of government: upper level – national
gov’t; lower level – local gov’t
- The distribution of governmental powers among at
least 2 levels of government guarantees liberty and
democracy.
LOCAL GOVERNMENTS AS POLITICAL AND
TERRITORIAL SUBDIVISIONS OF THE STATE
• Local Government
- Political subdivision of a nation /state which is
constituted by law and has substantial control of local
affairs.
- A body politic and corporate endowed with powers to
be exercised by it in conformity with law. It shall
exercise powers as a political subdivision of the
national government. (Sec 15, LGC)
• The power relations between the 2 levels of the
government vary depending on the government system
adopted by a certain jurisdiction:
▪ UNITARY – National government supervises
local government affairs, as the local
governments derive both their existence and
powers from the national government.
▪ FEDERAL – Local governments are
supreme within their own spheres such that
they actually become “quasi-sovereign”
states although still subordinate to the
national government in some respects, such
as in the area of foreign affairs, defense,
currency & commerce.
• The element of SUBORDINATION appears in any
definition of local government for by nature, local
governments are subordinate entities, having no inherent
powers and must look up to the higher governmental level
for delegation of authority.
• Two elements found in any definition of local government:
1. The presence of a higher authority
2. Territorial boundary
LOCAL GOVERNMENTS AS MUNICIPAL CORPORATIONS
- It is a body politic and corporate constituted by the
incorporation of the inhabitants of a city/town for the
purpose of local government thereof.
- Municipal corporations are established by law:
o Partly as an agent of the state to assist in the
civil government of the country, but
o Chiefly to regulate and administer the local
internal affairs of the city, town, or district
incorporated.
- These dual functions of local government are
expressly recognized in
PUBLIC CORPORATION LAW REVIEWER (EH 407)
unit created or recognized under this Code is a body
politic and corporate endowed with powers to be
exercised by it in conformity with law. As such, it shall
exercise powers as a political subdivision of the
national government and as a corporate entity
representing the inhabitants of its territory.
STRUCTURES AND SYSTEM OF PHILIPPINE LOCAL
GOVERNMENT
Creation
- The Philippine remains a unitary state. As such, local
governments are creatures of the national
government.
- The national government, by law, creates, merges or
abolishes local governments, endows with them
powers within their jurisdiction, and determines
national-local government relations.
Tiers of Local Government
- The PROVINCE is the intermediate unit, providing
supervision to the municipalities and component cities
under it, and performing services for national
government.
- The CITIES, MUNICIPALITIES AND BARANGAYS
are the basic unit of the local government, performing
services for people who live together in a community.
The Unitary System of Government
- Municipal governments are only agents of the national
government.
- Local councils exercise only delegated legislative powers
conferred upon them by Congress as the national
lawmaking body.
- Congress retains control of the local government units
although significantly in reduced degree now than under
our previous Constitutions.
- Any form of local autonomy granted to local governments
is limited and confined within the extent allowed by the
central authority.
- The principle of local autonomy under the 1987
Constitution simply means “decentralization.” It does not
make local governments sovereign within the state or an
“imperium in imperio.”
Macariola vs. Asuncion
Branches of Political Law:
Constitutional Law – a. powers and functions of the
government; b. inherent powers of the State in relation to the
Bill of Rights
Administrative Law – modern field of political law.
a. External Admin Law – rules and principles
governing the relationships between
governmental agencies or organs. E.g. President
and Department of Transportation relationship; or
GOCC related to another agency.
b. Internal Admin Law – deals with matters about
public officials. E.g. appointments, qualifications,
promotion, demotion, discipline, etc. (recently,
Internal Admin Law is changed to Law on Public
Officers merged with Election Law).
Local Government Law
Public International Law
PART I: General Principles
A. Corporation
Definition:
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An artificial being created by operation of law, having the right
of successions and the powers, attributes and properties
expressly authorized by law or incident to its existence. (Sec.
2, Corporation Code of the Philippines – BP Blg. 68)
An artificial being, invisible, intangible, and existing only in
contemplation of law. (Dartmouth College Case, US Case)
A legal institution devised to confer upon individuals of which it
is composed of powers, privileges, and immunities which they
would not otherwise possess and the most important of which
are continuous legal identity or unity, and perpetual or indefinite
succession under the corporate name, notwithstanding
successive changes, by death or otherwise, in the corporators
or members. (Dillon, Commentaries on Law of Municipal
Corporations, Vol. 1 – 5th ed.)
Local government unit is a corporation.
Kinds/Classification of Corporations:
1. Private Corporation - Formed for some private purpose,
benefit, aim or end, such as a business corporation
formed and organized under a general law on corporation.
→ It is created for private objectives.
Ø Manner of creating: Private corporation is created
pursuant to a law. A creation of a privation corporation,
through SEC, must be in accordance with the provisions of
a general law—Corporation Code of the Philippines. The
said Code is applicable to all corporations.
Ø Purpose: for private purpose—Profit is the goal unless you
are a charitable organization.
Ø Governed by:
- General law (Corporation Code)
- Its articles of incorporation
2. Public Corporation - Organized for a government of a
portion of a State, such as a local government unit. It is
created for public purposes.
Ø Manner of creating: Created by law. A Charter refers to the
law creating the public corporation. That’s why we have
charter day celebrations. We celebrate the day when the
local government unit had been incorporated directly by
law. Directly by Congress.
Ø Purpose: Public purpose — governance or administration
of a political subdivision and the delivery of basic services
to the inhabitants but only to the extent of its governmental
purpose. We have the national government but since the
national government cannot afford to take care all the
concerns of all geographical components of the territory,
then it has to create subsidiaries and these are LGU, an
agent of the national government. Thus, the obvious public
purpose is GOVERNANCE. LGU’s primary purpose is the
governance of the political subdivision.
Ø Governed by:
- LGC of 1991
- The charter, the law creating it. It looks like a
little LGC.
Special Kinds of Corporations
- defects are present in the creation. thus, not a perfect
corporation but the law treat them as corporation by reason of
equity)
Corporation De Facto
→ Consent of the State is implied rather than expressed, by
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the general consent to that kind of corporation, even though
the conditions of incorporation are not substantially complied
with.
! If the law creating a LGU is declared unconstitutional but the
LGU continues to perform as such. It is a corporation that only
exists in fact but not in law.
Corporation by Prescription
→ Under the principles of common law, where a body of men
have been for a long time in the exercise of corporate powers,
a presumption arises of an ancient charter, granted to their
predecessors, making the exercise of such powers lawful and
rightful. A lost grant or charter from the crown is being
presumed.
! A corporation created many, many years ago and nobody
questioned its existence.
Corporation by Estoppel
- While as against the State, a corporation cannot be
created by the mere agreement or other act or omission
by other persons, yet as between private litigants, they
place themselves where they would not be permitted to
deny the fact of the existence of the corporation, by their
agreements, admissions or conduct.
- A corporation that is defectively created making it not a
truly a corporation but in your dealings with other entities
you represent that you are a corporation.
Kinds of Public Corporation
A. Quasi-Public Corporation
- A private corporation that renders public service or
supplies public wants, such as public utility
companies.
- Though organized for private profit, they are
compelled by law or contract to render public service.
It combines the elements of a public and private
corporation.
Ø Quasi - it is not but it is almost
B. Municipal Corporation (Pure)
A body politic and corporate constituted by the incorporation of
the inhabitants for purposes of local governance thereof.
Referred to as “Local Governments”.
i. Incorporation of the inhabitants, their
participation, means through a plebiscite. (Always
required)
Local Government
→ Political Subdivision of a nation or state which is
constituted by law and has substantial control of local
affairs.
E.g. Provinces – a political subdivision and territorial
subdivision under the 1987 Constitution
Ø LGU, as a political subdivision, are there to handle
local governance and administration of public affairs.
As an agency.
Ø LGU, as a territorial subdivision, is for geographic
purposes. You perceive it as tangible and physical.
LGU, as a limitation to power, is there as a way to
limit the powers of the government. Under the
principle of proper and valid delegation of powers,
when some powers are supposed to be vested on the
national government, we decided to share that power.
And thus, LGU exercises governmental powers as
well. Delegation of powers means that if those powers
were already delegated to LGUs then that means that
central government cannot exercise those powers
until and unless it will decide to re-exercise those
powers.
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Boy Scouts of the Philippines vs. COA
There are 2 types of government corporations:
1. Performing governmental functions (like garbage
disposal, waterworks, etc.)
2. Performing business functions
2 criteria:
o For gov’t corp to prove that they can be efficient in the
areas of their proper functions.
o They should not go into activities that the private
sector can do better.
The BSP charter created the BSP as a “public corporation.”
The public, rather than private, character of the BSP is
recognized by the fact that, along with the Girl Scouts of the
Philippines, it is classified as an attached agency of the DECS
under the Administrative Code of 1987.
Since the BSP in its amended charter continues to be a public
corporation or a government instrumentality, it is subject to the
audit jurisdiction of COA.
B. Municipal Corporations
Elements:
1) Legal Creation or Incorporation – pertains to the law
creating the LGU.
2) Corporate Name – it is required. It cannot be nameless. It is
more than a name because it has to act, as a juridical entity,
carrying only that name in entering contracts. (e.g. “City of
Cebu”) And when the name has to be changed, it can only be
changed upon consultation with the Philippine Historical
Institute. And it must not carry a name of a living person except
when that name connotes to a special, social or political
significance in that place. And thus, you may notice that names
of the municipals are names of dead people. E.g. andres,
narciso, rizal.
3) Inhabitants – people who compose the LGU.
According to Dillon, there can never be a municipal corporation
without inhabitants.
4) Territory – consist of landmass, water and other parts
of a territory.
Dual Nature and Function of LGUs
- An important principle in the study of LGU is that every local
government possesses dual functions: Governmental and
Proprietary.
1. Governmental (also called public or political)
- Administering the powers of the State and promoting the
public welfare
- When exercising such powers, it is considered as a political
subdivision, thus, it becomes accountable to the national
government.
Example: Exercise of local police power; Taxation; Eminent
domain for public works
2. Proprietary
- Exercised for the special benefit or advantage of the
community
- When exercising this corporate power, then it is a
corporate entity representing the inhabitants of its territory.
- Accountable to the people, not to the national government.
Example: Slaughter Houses; Markets; Maintenance of parks;
Cemeteries; Fiesta Celebration
Basis:
PUBLIC CORPORATION LAW REVIEWER (EH 407)
Local Government Code of 1991
Sec. 15 Political and Corporate Nature of Local Government
Units. - Every local government unit created or recognized
under this Code is a body politic and corporate endowed with
powers to be exercised by it in conformity with law. As such, it
shall exercise powers as a political subdivision of the national
government and as a corporate entity representing the
inhabitants of its territory.
What is the legal relevance of characterizing a particular
function of a local government unit as either “public/
governmental” or “private/proprietary”?
1. Liability
2. Garnishment of FUNDS
3. Liability of LGUs for CONTRACTS
4. CONTROL OF CONGRESS OVER LGUs, especially
in matters of disposition of properties held by LGUs
and extent of LGUs exercise of specific powers of
local autonomy
5. Treating an LGU as an “instrumentality of the
government” or not for some legal purpose.
▪ Liability of LGUs for DAMAGES
Question: Suppose that the city mayor ordered the cutting off
of tall trees because of impending storm or typhoon, and he
ordered Juan to go to Plaza Independencia and check if there
are tall trees there and Juan did find an acacia tree so he had it
cut off and incidentally it fell on a pedestrian, Pedro. Pedro died
on the spot. So the heirs of Pedro want to sue. Who should be
the defendants? Should it be Juan who caused the cutting off
of the acacia tree that he did not observe diligence and
therefore he was negligent? Are you going to sue the mayor
because he ordered the cutting off of the tree? Or are you
going to sue the City of Cebu? Probably, you would find the
distinctions between these two functions relevant in this
problem.
Answer: The suability (of whoever can be sued) depends on
the kind of function exercised by the LGU. If governmental,
generally, cannot be sued.
▪ Garnishment of FUNDS
In cases involving monetary claims, the judgment will require
the defendant to pay money. It maybe that before the finality of
the decision (during the pendency of the case), the plaintiff is
able to get a writ preliminary attachment. Or you wait until you
get a favorable decision and it becomes final and executory,
that’s when you ask the court to issue a writ of execution, to
order the sheriff to satisfy the monetary judgment.
If the defendant happens to be a LGU, how will the sheriff
satisfy the judgement? Because when it is a public fund is
beyond garnishment, beyond attachment, beyond execution.
But how do you know that the fund held by the LGU is public or
private?
▪ Liability of LGUs for CONTRACTS
Basic principle in consti: if the State enters into a contract, it
may be held liable ex-contractu (arising out of the contract) on
the basis that if it has descended to the level of an individual by
entering into proprietary or commercial contracts. Therefore,
the State has lost its privilege of being immune from suit. This
is not absolute.
- But if contracts entered into by the State are for public
or governmental purpose, then you cannot sue the
State.
- Suability is not an issue insofar as LGUs are
concerned. LGU CAN BE SUED. The relevant issue
is the liability of the LGUs.
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Sec. 22 of the LGC provides an express consent by law:
SEC. 22. Corporate Powers. (a) Every local government unit,
as a corporation, shall have the following powers:
(1) xx
(2) To sue and be sued
▪ CONTROL OF CONGRESS OVER LGUs
- especially in matters of disposition of properties held by LGUs
and extent of LGUs exercise of specific powers of local
autonomy.
- What properties are held by LGUs and what properties are
under the control of Congress. (Public and Private properties of
LGU)
- The property under whose name it is registered does not
govern. It doesn’t mean that when it is under the name of the
City of Cebu, it is proprietary. It may be held for governmental
capacity and when it is for governmental purpose the LGU
cannot claim deprivation of beneficial use because the LGU
here is an agent only of the government. If it is held on a
proprietary capacity, it is entitled to compensable taking.
Bar Question: Johnny was employed as a driver by the
Municipality of Calumpit, Bulacan. While driving recklessly a
municipal dump truck with its load of sand for the repair of
municipal streets, Johnny hit a jeepney. Two passengers of the
jeepney were killed.
The Sangguniang Bayan passed an ordinance appropriating
P300,000 as compensation for the heirs of the victims.
1. is the municipality liable for the negligence of Johnny?
2. is the municipality ordinance valid?
1st Answer: Yes. Under Section 24 of the LGC of 1991, an LGU
and its officials is not exempted from liability for death or injury
to persons or damages to property. Whether the act is
governmental or proprietary it is still liable.
2nd Answer: No. LGUs are liable for negligent acts (torts) of
regular employees only when they are exercising proprietary
functions. Since they deliver sand and gravel for road repairs, it
is a governmental function. Thus, the LGU must be exempt
from liability. (San Fernando La Union case)
Bara Lidasan vs. Comelec
A municipality in Mindanao was created by a statute. The
problem was when such law was passed, it enumerated
barangays or barrios belonging to a different province.
Could we indulge in the assumption that Congress still
intended, by the Act, to create the restricted area of nine
barrios in the towns of Butig and Balabagan in Lanao del Sur
into the town of Dianaton, if the twelve barrios in the towns of
Buldon and Parang, Cotabato were to be excluded therefrom?
The answer must be in the negative. Municipal corporations
perform twin functions. Firstly. They serve as an instrumentality
of the State in carrying out the functions of government.
Secondly. They act as an agency of the community in the
administration of local affairs. It is in the latter character that
they are a separate entity acting for their own purposes and
not a subdivision of the State.
Consequently, several factors come to the fore in the
consideration of whether a group of barrios is capable of
maintaining itself as an independent municipality. Amongst
these are population, territory, and income. When the foregoing
bill was presented in Congress, unquestionably, the totality of
the twenty-one barrios — not nine barrios — was in the mind of
the proponent thereof.
PUBLIC CORPORATION LAW REVIEWER (EH 407)
And then the reduced area poses a number of questions:
Could the observations as to progressive community, large
aggregate population, collective income sufficient to maintain
an independent municipality, still apply to a motley group of
only nine barrios out of the twenty-one? Is it fair to assume that
the inhabitants of the said remaining barrios would have
agreed that they be formed into a municipality, what with the
consequent duties and liabilities of an independent municipal
corporation? Could they stand on their own feet with the
income to be derived in their community? How about the peace
and order, sanitation, and other corporate obligations?
This Court may not supply the answer to any of these
disturbing questions. And yet, to remain deaf to these
problems, or to answer them in the negative and still cling to
the rule on separability, we are afraid, is to impute to Congress
an undeclared will. With the known premise that Dianaton was
created upon the basic considerations of progressive
community, large aggregate population and sufficient income,
we may not now say that Congress intended to create
Dianaton with only nine — of the original twenty-one — barrios,
with a seat of government still left to be conjectured.
Because of the 2nd function of the LGU as an agency of the
community in the administration of local affairs, an LGU must
be self-sufficient to enable it to exercise its corporate powers
and serve its constituents.
Surigao Electric Co., Inc. vs. Municipality of Surigao
When Municipality of Surigao wanted to operate an electric
company of its own, it did so without a CPC, pursuant to the
Public Service Act which says that “government
instrumentalities or entities are exempt from getting CPC if
they decide to operate public utility companies”. The private
electric company argued that an LGU is not a government
instrumentality or entity.
There has been a recognition by this Court of the dual
character of a municipal corporation, one as governmental,
being a branch of the general administration of the state, and
the other as quasi-private and corporate… It would, therefore,
erode the term "government entities" of its meaning if we are to
reverse the Public Service Commission and to hold that a
municipality is considered as outside its scope.
So, the SC said that as an LGU possessing the first function of
being an agent of the state and that is being a political
subdivision, it is a government instrumentality or entity, and
therefore, it is exempt from obtaining the CPC as provided for
in the Public Service Act.
→ Because of the 1st function of the LGU as an agency of the
State, an LGU can therefore be considered as an
instrumentality of the National Government. Therefore, it is
exempt from obtaining the CPC as provided for in the Public
Service Act.
→ Governmental affairs do not lose their governmental
character by being delegated to the municipal governments.
Nor does the fact that such duties are performed by officers of
the municipality which, for convenience, the state allows the
municipality to select, change their character.
C. Classification of Power
▪ express, implied, inherent (powers necessary and
proper for governance, e.g. to promote health and
safety, enhance prosperity, improve morals of
inhabitants)
▪ public or governmental, private or proprietary
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 ▪ intramural, extramural
▪ mandatory, directory; ministerial, discretionary
D. Sources of Powers
General:
1. 1987 Constitution (Article 10 – Sec. 5, 6 & 7)
Section 5. Each local government unit shall have the power to
create its own sources of revenues and to levy taxes, fees and
charges subject to such guidelines and limitations as the
Congress may provide, consistent with the basic policy of local
autonomy. Such taxes, fees, and charges shall accrue
exclusively to the local governments.
Section 6. Local government units shall have a just share, as
determined by law, in the national taxes which shall be
automatically released to them.
Section 7. Local governments shall be entitled to an equitable
share in the proceeds of the utilization and development of the
national wealth within their respective areas, in the manner
provided by law, including sharing the same with the
inhabitants by way of direct benefits.
2. LGC of 1991 (RA 7160) – the consolidations of past
local government laws.
3. Others statutes or acts not inconsistent with the
foregoing
Specific:
▪ Charter – the statute creating the LGU, insofar as it is
not inconsistent with the LGC of 1991.
Problem 1: A community of people in the northern part of Cebu
had always wanted to have their own local government unit.
Apparently, these people were considered minority of Cebu as
their predecessors were mainly from the province of Bohol.
Claiming that they have unique culture and tradition different
from most Cebuanos, they lobbied in Congress for the
enactment of a law for the creation of a new municipality to be
called “Buenavista 2”. Although lacking in population
requirement, they were able to convince the Congress to pass
a law creating the new municipality. Local officials were then
elected and acted as such for 40 years. Buenavista 2 had then
entered into contracts and transactions with various persons.
What are the legal considerations involved in this problem?
Answer: The existence of the municipality can be questioned
because of the lack in population. If it can be determined
whether it is a de facto corporation or Buenavista 2 is really a
nullity from the start, then the inquiry of its existence can be
collaterally or directly attacked.
The Municipality Of Malabang, Lanao Del Sur vs.
Pangandapun Benito
Amer Macaorao Balindong is the mayor of Malabang, Lanao
del Sur, while Pangandapun Benito is the mayor of the
municipality of Balabagan. Balabagan was formerly a part of
the municipality of Malabang, having been created on March
15, 1960, by Executive Order 386 of the then President Carlos
P. Garcia. Mayor Balindong filed an action for prohibition to
nullify Executive Order 386 and to restrain the municipal
officials of Balabagan from performing the functions of their
respective offices. He argues that Section 23 of Republic Act
2370 [Barrio Charter Act] is a "statutory denial of the
presidential authority to create a new barrio [and] implies a
PUBLIC CORPORATION LAW REVIEWER (EH 407)
negation of the bigger power to create municipalities, as held in
the prior case of Pelaez vs. Auditor General. On the other
hand, the officials of the municipality of Balabagan argue that
the rule announced in Pelaez is not applicable because unlike
the municipalities involved in Pelaez, the municipality of
Balabagan is at least a de facto corporation, having been
organized under color of a statute before this was declared
unconstitutional. Its officers have been either elected or
appointed. The municipality itself has discharged its corporate
functions for the past five years preceding the institution of this
action. It is contended that as a de facto corporation, its
existence cannot be collaterally attacked, although it may be
inquired into directly in an action for quo warranto at the
instance of the State.
ISSUE: Whether or not the Municipality of Balabagan is a de
facto municipal corporation.
RULING: While it is true that an inquiry into the legal existence
of a municipality is reserved to the State in a proceeding for
quo warranto or other direct proceeding, the rule disallowing
collateral attacks applies only where the municipal corporation
is at least a de facto corporation. If it is neither a corporation de
jure nor de facto, but a complete nullity, the rule is that its
existence may be questioned collaterally or directly in any
action or proceeding by any one whose rights or interests are
affected thereby. The municipality of Balabagan was organized
before the promulgation of Pelaez vs. Auditor General. Can the
statute creating Balabagan lend color of validity to an
attempted organization of a municipality despite the fact that
such statute is subsequently declared unconstitutional?
Supreme Court held that the color of authority may be:
1. A valid law enacted by the legislature.
2. An unconstitutional law, valid on its face, which has either (a)
been upheld for a time by the courts or (b) not yet been
declared void; provided that a warrant for its creation can be
found in some other valid law or in the recognition of its
potential existence by the general laws or constitution of the
state.
In the case at bar, what is important is that there must be some
other valid law giving corporate vitality to the organization.
Hence, the mere fact that Balabagan was organized at a time
when the statute had not been invalidated cannot conceivably
make it a de facto corporation, because, aside from the
Administrative Code provision in question, there is no other
valid statute to give color of authority to its creation. An
unconstitutional act is not a law; it confers no rights; it imposes
no duties; it affords no protection; it creates no office; it is, in
legal contemplation, as inoperative as though it had never
been passed. Therefore, Executive Order 386 created no
office. This is not to say, however, that the acts done by the
municipality of Balabagan in the exercise of its corporate
powers are a nullity because the existence of Executive Order
386 is an operative fact which cannot justly be ignored.
Therefore, Executive Order 386 is declared void, and the
municipal officials of the Municipality of Malabang were
permanently restrained from performing the duties and
functions of their respective offices.
Problem 2: The municipality of Pablo was created through EO
288 in 1948 and since then they have been exercising powers
of a local government unit. In 1965, the SC in Pelaez vs
Auditor General invalidated certain EOs issued by the
President creating municipalities on the ground that the power
to create local government is a legislative function. EO 288
was not among those EOs that were declared void. In 1986, a
quo warranto case filed questioning the status of Pablo. Were
the transactions entered into by the Municipality of Pablo valid?
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Answer: Yes, the transactions entered into by the Municipality
of Pablo are valid.
The Municipality of Jimenez vs. Hon. Vicente T. Baz, Jr.
FACTS: The Municipality of Sinacaban was created by
President Elpidio Quirino through Executive Order No. 258,
pursuant to Section 68 of the Revised Administrative Code of
1917. EO 258 stated that the mother Municipality of Jimenez
shall have its present territory, minus the portion thereof
included in the Municipality of Sinacaban. Based on the
technical description stated in the EO, Sinacaban laid claim to
a portion of Barrio Tabo-o and to Barrios Macabayao, Adorable,
Sinara Baja, and Sinara Alto. In response, the Municipality of
Jimenez, while conceding that the disputed area is part of
Sinacaban, nonetheless asserted jurisdiction on the basis of an
agreement it had with the Municipality of Sinacaban. This
agreement was approved by the Provincial Board of Misamis
Occidental in its Resolution No. 77, which fixed the common
boundary of Sinacaban and Jimenez.
On March 20, 1990, Jimenez filed a petition for certiorari,
prohibition, and mandamus in the Regional Trial Court of
Oroquieta City. The suit was filed against Sinacaban and other
government agencies. Jimenez alleged that, in accordance
with the Pelaez ruling, the power to create municipalities is
essentially legislative. Consequently, Sinacaban, which was
created by an executive order, had no legal personality and no
right to assert a territorial claim against Jimenez, of which it
remains part. Jimenez prayed that Sinacaban be enjoined from
assuming control and supervision over the disputed barrios.
RTC, however, maintained the status quo, that is, the
municipality of Sinacaban shall continue to exist and operate
as a regular municipality, for the following reasons: “Sinacaban
is a de facto corporation since it had completely organized
itself even prior to the Pelaez case and exercised corporate
powers for forty years (40) before its existence was
questioned; that Jimenez did not have the legal standing to
question the existence of Sinacaban, the same being reserved
to the State as represented by the Office of the Solicitor
General in a quo warranto proceeding; that Jimenez was
estopped from questioning the legal existence of Sinacaban by
entering into an agreement with it concerning their common
boundary; and that any question as to the legal existence of
Sinacaban had been rendered moot by Sec. 442(d) LGC.
ISSUES:
1. Whether the Municipality of Sinacaban is a legal juridical
entity, duly created in accordance with law;
2. Whether the decision of the Provincial Board regarding the
boundaries had acquired finality.
RULING: The principal basis for the view that Sinacaban was
not validly created as a municipal corporation is the ruling in
Pelaez v. Auditor General that the creation of municipal
corporations is essentially a legislative matter. Therefore, the
President was without power to create by executive order the
Municipality of Sinacaban. However, the Supreme Court had
since held that where a municipality created as such by
executive order is later impliedly recognized and its acts are
accorded legal validity, its creation can no longer be
questioned. This was the ruling in Municipality of San Narciso
v. Mendez, Sr. Here, the same factors are present so as to
confer on Sinacaban the status of at least a de facto municipal
corporation in the sense that its legal existence has been
recognized and acquiesced publicly as shown in the following
circumstances:
1. Sinacaban had been in existence for sixteen years (16)
when Pelaez v. Auditor General was decided on
PUBLIC CORPORATION LAW REVIEWER (EH 407)
December 24, 1965. Yet the validity of E.O. No. 258
creating it had never been questioned. Created in 1949, it
was only 40 years later that its existence was
questioned and only because it had laid claim to a certain
area.
2. The State and even the Municipality of Jimenez itself have
recognized Sinacaban's corporate existence.
a) Under Administrative Order No. 33 and Section 31 of
the Judiciary Reorganization Act of 1980 (B. P. Blg.
129), Sinacaban has a municipal circuit court.
b) For its part, Jimenez had earlier recognized
Sinacaban in 1950 by entering into an agreement
with it regarding their common boundary which was
embodied in Resolution No. 77 of the Provincial
Board of Misamis Occidental.
c) Indeed, Sinacaban has attained de jure status by
virtue of the Ordinance appended to the 1987
Constitution, apportioning legislative districts
throughout the country, which considered Sinacaban
part of the Second District of Misamis Occidental
3. Moreover, following the ruling in Municipality of San
Narciso, Quezon v. Mendez, Sr., Sec. 442(d) of the Local
Government Code of 1991 must be deemed to have cured
any defect in the creation of Sinacaban.
Second, the Supreme Court held that the Provincial Board did
not have the authority to approve the agreement declaring
certain barrios part of one or the other municipality because
the effect would be to amend the technical description stated in
E.O. No. 258. Any alteration of boundaries that is not in
accordance with the law creating a municipality is not the
carrying into effect of that law but is rather considered an
amendment. Since Resolution No. 77 of the Provincial Board
of Misamis Occidental is contrary to the technical description of
the territory of Sinacaban, it cannot be used by Jimenez as
basis for opposing the territorial claim of Sinacaban.
Sinacaban attained a status of at least a de facto municipal
corporation because its existence had not been questioned for
40 years. Thus, there is long use of corporate powers. In fact, it
attained a de jure status when the 1987 Constitution included
in the appended Ordinance for Legislative Districts.
Problem 3: The municipality of Auring was created through EO
405 in 1962 and immediately exercised powers of a LGU. In
1965, the SC in Pelaez vs Auditor General invalidated certain
EOs issued by the President creating municipalities on the
ground that the power to create local government is a
legislative function. EO 405 was among those EOs that were
declared void by the SC. Were the transactions entered into by
the municipality of Auring between 1962-1965 valid?
Answer: No, they were not valid. The case of Sultan Osop
Camid where the municipality was declared void ab initio.
Sultan Osop B. Camid vs. The Office Of The President
FACTS: This case involves the municipality of Andong, Lanao
del Sur, which is a town that is not supposed to exist yet but is
insisted by some as actually alive and thriving. Andong was
created through Executive Order No. 107 issued by Pres.
Macapagal in 1965, which was declared void in the case of
Pelaez vs. Auditor General (1965). Sultan Camid alleges that
Andong “has metamorphosed into a full-blown municipality with
a complete set of officials appointed to handle essential
services for the municipality and its constituents.” He however
concedes that since 1968, no person has been appointed,
elected or qualified to serve any of the elective local
Page 6 of 24
government positions in Andong. He also alleges that the town
has its own high school, Bureau of Posts, DECS Office, among
others. According to him, public officials of Andong have been
serving their constituents in their own little ways and means
despite absence of public funds. To bolster his claims, he
presented to the Court a DENR-CENRO Certification of the
total land area of the Municipality of Andong. He also submitted
a Certification issued by the Provincial Statistics Office of
Marawi City concerning Andong’s population (14,059). He also
lists several government agencies and private groups that
have allegedly recognized Andong. Camid assails the DILG
certification of 18 municipalities certified as “existing” per DILG
records. These 18, were among the 33 municipalities whose
creation was voided by the Court in the Pelaez case. He
imputes grave abuse of discretion on the part of the DILG for
not classifying Andong as a regular existing municipality and in
not including it in its records and official database. Camid also
argues that EO 107 remains valid because of the decision of
court in Municipality of San Narciso vs. Hon. Mendez, where
the court affirmed the unique status of the municipality of San
Andres in Quezon as a de facto municipal corporation. He
insists that inspite of insurmountable obstacles, Andong lives
on. Hence, its existence should be given judicial affirmation.
ISSUE: Whether or not a municipality whose creation by
executive fiat, which was previously voided by the Court, may
attain recognition in the absence of any curative or
implementing statute.
RULING: The Court said that the case is not a fit subject for
the special civil actions of certiorari and mandamus, as it
pertains to the de novo appreciation of factual questions. Also,
the Pelaez case and its offspring cases ruled that the President
has no power to create municipalities, yet limited its
nullificatory effects to the particular municipalities challenged in
actual cases before this Court. However, with the promulgation
of the Local Government Code in 1991, the legal cloud was
lifted over the municipalities similarly created by executive
order but not judicially annulled. The de facto status of such
municipalities as San Andres, Alicia and Sinacaban was
recognized by the Court, and Section 442(b) of the Local
Government Code deemed curative whatever legal defects
these municipalities had labored under. Andong is not similarly
entitled to recognition as a de facto municipal corporation. This
is because there are eminent differences between Andong and
the other municipalities. The most prominent is that, the EO
which created Andong was expressly annulled by the Court in
1965. The court said that if it would affirm Andong’s de facto
status by reason of its alleged continued existence despite its
nullification, it would in effect condone defiance of a valid order
of the Court. Court decisions cannot lose their efficacy due to
the sheer defiance by the parties aggrieved. Andong does not
meet the requisites set forth by Sec. 442(d) of the Local
Government Code (LGC), as it requires that, for the
municipality created by EO to receive recognition, they must
“have their respective set of elective officials holding office at
the time of the effectivity of the LGC. Andong has never elected
its municipal officers at all. The national government ceased to
recognize the existence of Andong, depriving it of its share of
the public funds, and refusing to conduct municipal elections in
the void municipality. Andong is not listed as among the
municipalities of Lanao del Sur in the Ordinance apportioning
the seats of Congress in the 1987 Constitution. Finally, Andong
has not been reestablished through statute. In contrast, the 18
municipalities in the DILG certification, were recognized as
such because subsequent to the ruling in the Pelaez case,
legislation was enacted to reconstitute these municipalities.
Section 442(d) of the LGC does not serve to affirm or
reconstitute the judicially-dissolved municipalities such as
Andong, which had been previously created by presidential
issuances or executive orders. On the other hand, the
PUBLIC CORPORATION LAW REVIEWER (EH 407)
municipalities judicially-dissolved in cases such as Pelaez, San
Joaquin, and Malabang, remain inexistent, unless recreated
through specific legislative enactments, as done with the
eighteen (18) municipalities certified by the DILG.
Problem 4: Municipality of Badong was created in 1959 by EO
353. It became a 5th class municipality 1965. In the same year,
Pelaez vs Auditor General invalidated some EOs (excluding
EO 353) of the President which created some municipalities.
The 1987 Constitution included in its Ordinance (appendix)
which apportioned the seats of the House of Representatives
(as one of the 10 municipalities composing the 4th district of
Mangingit Province). Badong’s existence was questioned in
1989. Were the transactions entered by Badong valid?
Answer: Yes, the transactions are valid.
Municipality Of San Narciso, Quezon Vs. Hon. Antonio V.
Mendez, Sr.
FACTS: On August 20, 1959, President Carlos P. Garcia,
issued Executive Order No. 353 creating the municipal district
of San Andres, Quezon, pursuant to the Sections 68 and 2630
of the Revised Administrative Code. Subsequently, the
municipal district of San Andres was later officially recognized
to have gained the status of a fifth class municipality. On June
5, 1989, the Municipality of San Narciso filed a petition for quo
warranto with the Regional Trial Court against the officials of
the Municipality of San Andres, which sought the declaration of
nullity of Executive Order No. 353 and prayed that the local
officials of the Municipality of San Andres be permanently
ordered to refrain from performing their duties and functions. It
was argued that EO 353, a presidential act, was a clear
usurpation of the inherent powers of the legislature. On
December 2, 1991, the lower court finally dismissed the
petition for lack of cause of action on what it felt was a matter
that belonged to the State, adding that whatever defects were
present in the creation of municipal districts by the President
pursuant to executive orders were cured by the enactment of
RA 7160, otherwise known as Local Government Code of
1991. This prompted the Municipality of San Narciso to file a
petition for review on certiorari.
ISSUE: Whether or not the Municipality of San Andres is a de
facto municipal corporation.
RULING:
When the inquiry is focused on the legal existence of a body
politic, the action is reserved to the State in a proceeding for
quo warranto or any other credit proceeding. It must be
brought in the name of the Republic of the Philippines and
commenced by the Solicitor General Executive Order No. 353
creating the municipal district of San Andres was issued on
August 20, 1959 but it was only after almost thirty (30)
years, or on June 5, 1989, that the municipality of San Narciso
finally decided to challenge the legality of the executive order.
In the meantime, the Municipality of San Andres began and
continued to exercise the powers and authority of a duly
created local government unit. A quo warranto proceeding
assailing the lawful authority of a political subdivision must,
with greatest imperativeness, be timely raised. Public interest
demands it. Granting the Executive Order No. 353 was a
complete nullity for being the result of an unconstitutional
delegation of legislative power, the peculiar circumstances
obtaining in this case hardly could offer a choice other than to
consider the Municipality of San Andres to have at least
attained a status closely approximating that of a de facto
municipal corporation. Created in 1959, by virtue of Executive
Order No. 353, the Municipality of San Andres had been in
existence for more than six years when Pelaez v. Auditor
General was promulgated. The ruling could have sounded the
call for a similar declaration of the unconstitutionality of
Page 7 of 24
Executive Order No. 353 but it did not. On the contrary, certain
governmental acts all pointed to the State's recognition of the
continued existence of the Municipality of San Andres, such as
the following:
1. After more than five years as a municipal district,
Executive Order No. 174 classified the Municipality of
San Andres as a fifth class municipality.
2. Section 31 of Batas Pambansa Blg. 129 or the
Judiciary Reorganization Act of 1980 constituted
Municipality of San Andres as covered by the 10th
Municipal Circuit Court.
3. Under the Ordinance adopted on October 15, 1986,
apportioning the seats of the House of
Representatives, which was appended to the 1987
Constitution, the Municipality of San Andres has been
considered to be as part of the Third District of the
province of Quezon.
Finally, equally significant is Section 442(d) of the Local
Government Code which states that municipal districts
organized pursuant to presidential issuances or executive
orders and which have their respective sets of elective
municipal officials holding office at the time of the effectivity of
this Code shall henceforth be considered as regular
municipalities. The power to create political subdivisions is a
function of the legislature. And Congress did just that when it
incorporated Section 442(d) in the Code. Curative laws, in
essence, are retrospective. They are aimed at giving validity to
acts done that would have been invalid under existing laws. All
considered, the de jure status of the Municipality of San Andres
in the province of Quezon must now be conceded.
San Andres became de jure by subsequent recognition
because it was included in the appended Ordinance for
Legislative District in the 1987 Constitution.
Kinds of Municipal Corporation
▪ De Jure – created with all the elements of a municipal
corporation being present.
▪ De Facto – there is colorable compliance with the
requisites of a de jure municipal corporation.
Doctrine of Operative Fact
→ Before a law is declared unconstitutional or void, it is
presumed to be valid. The acts existed as a fact and these acts
have consequences that cannot be ignored.
Doctrine of De Facto Corporation
→ There is authority in law for a municipal corporation but
there is failure to comply with the constitutional or statutory
requirement, it cannot be said to exist de jure. But when the
organization of the people of a given territory is of a
corporation under a color of delegated authority, followed by a
user in good faith of the governmental powers incidental
thereto, it will be recognized by the law as a municipal
corporation de facto.
→ Municipal corporation may exist by prescription where it is
shown that the community has claimed and exercised
corporate functions, with the knowledge and acquiescence of
the legislature and without interruption or objection for a period
long enough to afford title by prescription.
→ These municipal corporations have exercised their powers
for a long period without objection on the part of the
government and although no charter is in existence, it is
presumed that they were duly incorporated in the first place
and that their charters had been lost.
PUBLIC CORPORATION LAW REVIEWER (EH 407)
Basis: Public policy that supports the security of units of local
government and the conduct of their business against attack
grounded upon collateral inquiry into the legality of their
organization (doctrine of operative fact)
→ Underlies the theory that local units may exist through
prescription.
Effects:
• Where there is at least a de facto municipal
corporation
- Acts of the entity will be respected and will
be recognized as valid and binding by the
State as if it is a de jure public corporation
• No municipality corporation at all
- The acts of the entity are not recognized as
valid by the State.
Note: The State controls the objects and methods of the
creation of local units and to effectuate a policy in that area, it
should be free to challenge local departures from that policy.
Long exercise of corporate powers without question from any
quarter is not enough to silence the State; It might still be
directly attack the legal existence of a local unit, in a quo
warranto or other proceedings, on the ground that there was
no authority in law for its existence or that there were
irregularities in its organization, as the case may be.
• The State may recognized a de facto corporation and
render it de jure by:
- Subsequent legislative recognition; or
- Validation
De Facto Corporation
Elements:
1. Valid law authorizing incorporation
2. Attempt in good faith to organize it
3. Colorable compliance with law
4. Assumption of corporate powers
What’s the relevance if it is de jure and not just de facto?
→ When a corporation is de jure, its existence cannot be
challenged because it is a valid corporation. If it is de facto,
being defective in nature may be challenged.
How do we challenge the existence?
Quo warranto proceeding by the State only. A direct action/
attack.
Collateral attack is not allowed, as a general rule.
- An exception is when a municipal corporation is a
TOTAL nullity (not even a de facto corporation), the charter is
declared void from the beginning or when there had never
been any charter at all. And thus, it can be collateral attack
may be availed of and may be done by a private individual.
Emmanuel Pelaez vs. Auditor General
FACTS: From September 4 to October 29, 1964, the President
of the Philippines issued Executive Orders Nos. 93 to 121, 124
and 126 to 129. These orders created thirty-three (33)
municipalities pursuant to Section 68 of the Revised
Administrative Code, insofar as it grants the President the
power to create municipalities. Thereafter, Vice-President
Pelaez instituted a special civil action for a writ of prohibition
with preliminary injunction to stop the Auditor General from
disbursing funds to said municipalities, alleging that the
executive orders are null and void on the ground that said
Page 8 of 24
Section 68 has been impliedly repealed by Republic Act No.
2370 or the Barrio Charter Act. Since January 1, 1960, when
Republic Act No. 2370 became effective, “barrios can no longer
be created or their boundaries altered nor their names
changed except by Act of Congress or of the corresponding
provincial board upon petition of a majority of the voters in the
areas affected and the recommendation of the council of the
municipality or municipalities in which the proposed barrio is
situated.” It is argued that since the creation of barrios is a
legislative act, the creation of municipalities must also require a
legislative enactment. The Executive Orders are, likewise,
challenged for they constitute an undue delegation of
legislative power. The Auditor General argues that the present
action is premature and that not all proper parties, referring to
the officials of the new political subdivisions in question, have
been impleaded.
ISSUES:
1. Is the President empowered to create a municipality?
2. Is Sec. 68 of the Revised Administrative Code an undue
delegation of legislative power?
RULING: RA 2370, being a statutory denial of the presidential
authority to create a new barrio, it also implies a negation of
the bigger power to create municipalities, each of which
consists of several barrios. The authority to create municipal
corporations is essentially legislative in nature.
With respect to the issue on undue delegation of powers by the
legislature, the Supreme Court held that although Congress
may delegate to another branch of the government the power
to fill in the details in the execution, enforcement or
administration of a law, it is essential, to forestall a violation of
the principle of separation of powers, that said law: (a) be
complete in itself. In other words, it must set forth therein the
policy to be executed, carried out or implemented by the
delegate. And the law must (b) fix a standard. The limits of
which are sufficiently determinate or determinable to which the
delegate must conform in the performance of his functions. In
the case at bar, Section 68 of the Revised Administrative Code
does not meet these well-settled requirements for a valid
delegation of the power to fix the details in the enforcement of
a law. It does not enunciate any policy to be carried out or
implemented by the President. Neither does it give a standard
sufficiently precise to avoid the evil effects above referred to.
Since the creation of municipalities is not an administrative
function, it is essentially and eminently legislative in
character. The question whether or not public interest
demands the exercise of such power is not one of fact. It is
purely a legislative question. The President cannot invoke its
power of control or the right to interfere on the acts of the
officers of the executive departments, bureaus, or offices of the
national government, as well as to act in lieu of such officers.
This power is denied by the Constitution to the Executive,
insofar as local governments are concerned. Hence, the
President cannot interfere with local governments, so long as
the same or its officers act within the scope of their authority.
What he has is a mere power of supervision over the local
government units. As a consequence, the alleged power of the
President to create municipal corporations would necessarily
connote the exercise by him of an authority even greater than
that of control which he has over the executive departments,
bureaus or offices. Clearly, therefore, the Executive Orders
promulgated by him creating municipalities are ultra vires and
therefore, void.
(Jimenez v. Baz, San Narciso v. Mendez, Osop Camid v. Office
of the President – already discussed above)
The Municipality Of Candijay, Bohol vs. Court Of Appeals and
The Municipality Of Alicia, Bohol
PUBLIC CORPORATION LAW REVIEWER (EH 407)
FACTS:
The case revolves around the controversy on territorial
jurisdiction of the Municipality of Alicia, Bohol. During the
proceedings, after presentation of evidence by the Municipality
of Candijay, the latter asked the trial court to bar the
Municipality of Alicia from presenting its evidence on the
ground that it had no juridical personality. It was adjudged by
the lower court that Barangay Pagahat is within the territorial
jurisdiction of the Municipality of Candijay. Therefore, said
barrio forms part and parcel of its territory. The Regional Trial
Court of Bohol permanently enjoined defendant Municipality of
Alicia to respect plaintiff's control, possession and political
supervision of Barangay Pagahat and never to molest, disturb,
harass its possession and ownership over the same barrio.
The Court of Appeals, however, reversed the judgment of the
Regional Trial Court. It ruled that the trial court committed an
error in declaring that Barrio Pagahat is within the territorial
jurisdiction of the Municipality of Candijay because the lower
court rejected the boundary line being claimed by the
Municipality of Alicia based on certain exhibits. If allowed, the
Municipality of Candijay will not only engulf the entire barrio of
Pagahat, but also of many other barrios. Candijay will eat up a
big chunk of territories far exceeding her territorial jurisdiction
under the law creating her. CA also found, after an examination
of the respective survey plans both plans are inadequate
insofar as identifying the monuments of the boundary lines. It
decided the case based on the rule on equiponderance of
evidence. Hence, the Municipality of Candijay now files a
petition for review on certiorari of the Decision of the CA.
ISSUE: Whether or not the Municipality of Alicia has a juridical
personality to claim its territory.
RULING: The Supreme Court finds that the issues of fact in
this case had been adequately passed upon by the Court of
Appeals with the application of the equiponderance doctrine
which states: “When the scale shall stand upon an equipoise
and there is nothing in the evidence which shall incline it to one
side or the other, the court will find for the defendant.” The
determination of equiponderance of evidence by the
respondent Court involves the appreciation of evidence by the
latter tribunal, which will not be reviewed by this Court unless
shown to be whimsical or capricious; here, there has been no
such showing. As to the issue on the personality of the
Municipality of Alicia, it is noteworthy that the Municipality of
Candijay commenced its collateral attack on the juridical
personality of respondent municipality on January 19, 1984 or
some thirty five years after respondent municipality first
came into existence in 1949. The Municipality of Candijay
contended that Executive Order No. 265 issued by President
Quirino on September 16, 1949 creating the Municipality of
Alicia is null and void ab initio, inasmuch as Section 68 of the
Revised Administrative Code constituted an undue delegation
of legislative powers, and was therefore declared
unconstitutional in Pelaez vs. Auditor General. However, the
factual milieu of the Municipality of Alicia is strikingly similar to
that of the Municipality of San Andres in the case of
Municipality of San Narciso vs. Mendez. The latter case, in
appreciating the de jure status of the municipality, considered
the peculiar circumstances supporting its juridical existence.
In the case at bar, respondent Municipality of Alicia was
created by virtue of Executive Order No. 265 in 1949, or ten
years ahead of the municipality of San Andres, and
therefore had been in existence for all of sixteen years
when Pelaez vs. Auditor General was promulgated. And
various governmental acts throughout the years all indicate the
State's recognition and acknowledgment of the existence
thereof. For instance, under Administrative Order No. 33
above-mentioned, the Municipality of Alicia was covered by the
Page 9 of 24
7th Municipal Circuit Court. Likewise, under the Ordinance
appended to the 1987 Constitution, it is one of twenty
municipalities comprising the Third District of Bohol.
Inasmuch as respondent municipality of Alicia is similarly
situated as the municipality of San Andres, it should likewise
benefit from the effects of Section 442(d) of the Local
Government Code, which states that municipal districts
organized pursuant to presidential issuances or executive
orders and which have their respective sets of elective
municipal officials holding office at the time of the effectivity of
this Code shall henceforth be considered as regular
municipalities.
→ Same ruling in Jimenez and Narciso case
→ In addition, the Municipality of Alicia should benefit from the
effects of Section 442 (d) of the LGC of 1991 which was
declared in Narciso as a “curative law” aimed at giving “validity
to acts done that would have been invalid under existing laws,
as if existing laws have been complied with.”
→ Municipality of Alicia attained the status of de jure
municipality.
• Sec. 442 (d) of LGC: “Municipalities existing as of the
date of the effectivity of this Code shall continue to
exist and operate as such. Existing municipal districts
organized pursuant to presidential issuances or EOs
and which have their respective set of elective
municipal officials holding office at the time of the
effectivity of this Code shall henceforth be
considered as regular municipalities.”
Take note of these factual conditions/elements that must be
present:
1. Which have their respective set of elective municipal officials
2. Holding office at the time of the effectivity of the Code.
C. Overview of the Philippine Local Government System
Vertical Classification of Philippine Local System:
UNITARY (as distinguished from Federal)
We are now living in a generation where people believe in the
principle of constitutionalism such that we believe in the
principle of limited government. And so almost always, the
government powers are limited. These powers can be limited in
a lot of ways. Examples are:
o Provisions in the Constitution providing certain
prohibitions. E.g. Bill of Rights
o Social, economic and political principles. E.g.
Democracy – as embedded in our Consti
o Distributing the powers of the government:
1. Horizontal – powers are distributed in the 3
branches of government, namely: Legislative,
Executive and Judicial. It can be Presidential
(separation of powers) or Parliamentary (fusion of
powers of the legislative and executive)
2. Vertical – distribution of powers between the
national government and the local government. It can
be Unitary and Federal.
Federal Government
→ The governmental powers are centered in the governmental
subdivision while they surrender some of their powers to create
the central/federal government.
→ A unitary government is a single, centralized government,
exercising powers over both the internal and external affairs of
the state; the powers are shared by the national government
and the local government.
Unitary Government
PUBLIC CORPORATION LAW REVIEWER (EH 407)
→ The governmental powers reside in the central/national
government and these are distributed to the different political
subdivision.
→ A federal government consists of autonomous state (local)
government units merged into a single state, with the national
government exercising a limited degree of power over the
domestic affairs but generally full direction of the external
affairs of the state, the powers are divided by the national
government and the local government.
→ Powers granted to local governments are enumerated in
the law that created them. Any power that is not conferred to
the local government must, therefore, be a power pertaining to
the national government. (Same as residual power vested in
the president in a horizontal form of government)
The Philippines is not purely a unitary government. We have
adopted a unique kind of system, a decentralization system
which enables political subdivisions to have more autonomy
compared to a unitary set-up.
SEC. 5. Rules of Interpretation - In the interpretation of the
provisions of this Code, the following rules shall apply:
▪ Any provision on a power of a local government unit
shall be liberally interpreted in its favor, and in case of
doubt, any question thereon shall be resolved in favor
of devolution of powers and of the lower local
government unit. Any fair and reasonable doubt as to
the existence of the power shall be interpreted in
favor of the local government unit concerned;
- Atty. DBL’s justification: To ensure local autonomy as
mandated by the Constitution.
Lina vs. Pano
Since Congress has allowed the PCSO to operate lotteries
which PCSO seeks to conduct in Laguna, pursuant to its
legislative grant of authority, the province’s Sangguniang
Panlalawigan cannot nullify the exercise of said authority by
preventing something already allowed by Congress.
Ours is still a unitary form of government, not a federal state.
Being so, any form of autonomy granted to local governments
will necessarily be limited and confined within the extent
allowed by the central authority. Besides, the principle of local
autonomy under the 1987 Constitution simply means
"decentralization". It does not make local governments
sovereign within the state or an "imperium in imperio". To
conclude our resolution of the first issue, respondent mayor of
San Pedro, cannot avail of Kapasiyahan Bilang 508, Taon
1995, of the Provincial Board of Laguna as justification to
prohibit lotto in his municipality. For said resolution is nothing
but an expression of the local legislative unit concerned. The
Board's enactment, like spring water, could not rise above its
source of power, the national legislature. In sum, we find no
reversible error in the RTC decision enjoining Mayor Cataquiz
from enforcing or implementing the Kapasiyahan Blg. 508, T.
1995, of the Sangguniang Panlalawigan of Laguna. That
resolution expresses merely a policy statement of the Laguna
provincial board. It possesses no binding legal force nor
requires any act of implementation. It provides no sufficient
legal basis for respondent mayor's refusal to issue the permit
sought by private respondent in connection with a legitimate
business activity authorized by a law passed by Congress.
Zoomzat, Inc. vs. The People Of The Philippines
FACTS: Petitioner Zoomzat, Inc. alleged that on December 20,
1991, the Sangguniang Panlungsod of Gingoog City passed
Resolution No. 261 which resolved “to express the willingness
of the City of Gingoog to allow Zoomzat to install and operate a
cable TV system.” Thereupon, petitioner applied for a mayor’s
Page 10 of 24
permit but the same was not acted upon by the mayor’s office.
On April 6, 1993, respondents enacted Ordinance No. 19
which granted a franchise to Gingoog Spacelink Cable TV, Inc.
to operate a cable television for a period of ten (10) years,
subject to automatic renewal. On July 30, 1993, Zoomzat filed
a complaint with the Office of the Ombudsman against
respondents for violation of Section 3(e), R.A. No. 3019. The
complaint alleged that in enacting Ordinance No. 19, the
respondents gave unwarranted benefits, advantage or
preference to Spacelink, to the prejudice of Zoomzat who was
a prior grantee-applicant by virtue of Resolution No. 261. A
criminal information for violation of Section 3(e), R.A. No. 3019,
was filed against the respondents before the Sandiganbayan.
However, upon directive by the Sandiganbayan to restudy the
instant case, Special Prosecution Officer II Antonio Manzano
recommended the dismissal of the case and the Information
withdrawn for lack of probable cause. On further investigation,
Special Prosecution Officer III Victor Pascual also
recommended that the case be dismissed for insufficiency of
evidence. On June 17, 1998, the Sandiganbayan issued a
resolution approving the dismissal of the case and ordering the
withdrawal of the Information against the respondents. On
September 9, 1998, the Sandiganbayan denied petitioner’s
motion for reconsideration.
ISSUES:
1. Whether or not LGUs have the authority to grant the
franchise to operate a cable television?
2. Did the petitioners give Spacelink undue or unwarranted
advantage and preference because it stifled business
competition?
RULING: Executive Order No. 205 (REGULATING THE
OPERATION OF CABLE ANTENNA TELEVISION (CATV)
SYSTEMS IN THE PHILIPPINES, AND FOR OTHER
PURPOSES) clearly provides that only the NTC could grant
certificates of authority to cable television operators and issue
the necessary implementing rules and regulations. Likewise,
Executive Order No. 436 (PRESCRIBING POLICY
GUIDELINES TO GOVERN THE OPERATIONS OF CABLE
TELEVISION IN THE PHILIPPINES) vests with the NTC the
regulation and supervision of cable television industry in the
Philippines.
It is clear that in the absence of constitutional or legislative
authorization, municipalities have no power to grant franchises.
Consequently, the protection of the constitutional provision as
to impairment of the obligation of a contract does not extend to
privileges, franchises and grants given by a municipality in
excess of its powers, or ultra vires. It is undisputed that
respondents were not employees of NTC. Instead, they were
charged in their official capacity as members of the
Sangguniang Panlungsod of Gingoog City. As such, they
cannot be charged with violation of Section 3(e), R.A. No. 3019
for enacting Ordinance No. 19 which granted Spacelink a
franchise to operate a cable television. On the second issue,
indeed, under the general welfare clause of the Local
Government Code, the local government unit can regulate the
operation of cable television but only when it encroaches on
public properties, such as the use of public streets, rights of
ways, the founding of structures, and the parceling of large
regions. Beyond these parameters, its acts, such as the grant
of the franchise to Spacelink, would be ultra vires. Plainly, the
Sangguniang Panlungsod of Gingoog City overstepped the
bounds of its authority when it usurped the powers of the NTC
with the enactment of Ordinance No. 19. Being a void
legislative act, Ordinance No. 19 did not confer any right nor
vest any privilege to Spacelink. As such, petitioner could not
claim to have been prejudiced or suffered injury thereby.
Incidentally, petitioner’s claim of undue injury becomes even
more baseless with the finding that Spacelink did not
PUBLIC CORPORATION LAW REVIEWER (EH 407)
commence to operate despite the grant to it of a franchise
under Ordinance No. 19. In addition, petitioner could not
impute manifest partiality, evident bad faith or gross
inexcusable negligence on the part of the respondents when
they enacted Ordinance No. 19. A perfunctory reading of
Resolution No. 261 shows that the Sangguniang Panlungsod
did not grant a franchise to it but merely expressed its
willingness to allow the petitioner to install and operate a cable
television. Had respondents intended otherwise, they would
have couched the resolution in more concrete, specific and
categorical terms. In contrast, Ordinance No. 19 clearly and
unequivocally granted a franchise to Spacelink, specifically
stating therein its terms and conditions. Not being a bona fide
franchise holder, petitioner could not claim prior right on the
strength of Resolution No. 261.
There is no dispute that respondent Sangguniang Panlungsod,
like other local legislative bodies, has been empowered to
enact ordinances and approve resolutions under the general
welfare clause of B.P. Blg. 337, the Local Government Code of
1983. That it continues to possess such power is clear under
the new law, R.A. No. 7160 (the Local Government Code of
1991).
Indeed, under the general welfare clause of the Local
Government Code, the local government unit can regulate the
operation of cable television but only when it encroaches on
public properties, such as the use of public streets, rights of
ways, the founding of structures, and the parceling of large
regions. Beyond these parameters, its acts, such as the grant
of the franchise to Spacelink, would be ultra vires.
Local Autonomy, Decentralization, Devolution, and
Deconcentration
Provisions about local autonomy:
▪ Art. II, Sec 25 (Constitution)—“The State shall ensure
the autonomy of local governments.”
▪ Art. X, Sec 2 (Constitution)—“The territorial and political
subdivisions shall enjoy local autonomy.”
▪ Sec. 2, LGC of 1991— Declaration of Policy. - (a) It is
hereby declared the policy of the State that the territorial
and political subdivisions of the State shall enjoy
genuine and meaningful local autonomy to enable
them to attain their fullest development as self-reliant
communities and make them more effective partners in the
attainment of national goals. Toward this end, the State
shall provide for a more responsive and accountable local
government structure instituted through a system of
decentralization whereby local government units shall be
given more powers, authority, responsibilities, and
resources. The process of decentralization shall proceed
from the national government to the local government
units.
Local Autonomy
The degree of self-determination exercised by LGUs vis-à-vis
the central government. The system of achieving local
autonomy is known as decentralization and this system is
realized through the process called devolution.
In the Philippines, it is the public administrative powers over
local affairs that are delegated to political subdivisions. It
refers to decentralization of administrative powers or functions.
Limbona vs Mangelin
Autonomy is either decentralization of administration or
decentralization of power. The second is abdication by the
national government of political power in favor of the local
government (essence in a federal set-up); the first consists
Page 11 of 24
merely in the delegation of administrative powers to broaden
the base of governmental power (essence in a unitary set-up).
Against the first, there can be no valid constitutional challenge.
Local autonomy is the degree of self-determination exercised
by LGUs vis-à-vis the central government. The system of
achieving local autonomy is known as decentralization and this
system is realized through the process called devolution.
Generally, autonomy is either (1) Decentralization of
administration or (2) Decentralization of power.
a. There is decentralization of administration when the
central government delegates administrative powers to
political subdivisions in order to broaden the base of govt.
power and in the process to make local govts. “more
responsive and accountable,” and “ensure their fullest
development as self-reliant communities and make them
more effective partners in the pursuit of national
development and social progress.”
b. Decentralization of power, on the other hand, involves
an abdication of political power in favour of local
government units declared to be autonomous. In that
case, the autonomous government is free to chart its own
destiny and shape its future with minimum intervention
from central authorities. According to a constitutional
author, decentralization of power amounts to “self-
immolation.” Since in that event, the autonomous
government becomes accountable not to the central
authorities but to its constituency.
Insofar as Autonomous Region of Muslim Mindanao is
concerned, it is important to determine whether we have
granted decentralization of power in order that the courts can
exercise judicial review over issues in ARMM. Because if there
is decentralization of power, then there is total abdication of
power in favor of LGU.
Constitutional provisions regarding abdication of power in
ARMM:
Section 15. There shall be created autonomous regions in
Muslim Mindanao and in the Cordilleras consisting of
provinces, cities, municipalities, and geographical areas
sharing common and distinctive historical and cultural heritage,
economic and social structures, and other relevant
characteristics within the framework of this Constitution and the
national sovereignty as well as territorial integrity of the
Republic of the Philippines.
Section 16. The President shall exercise general supervision
over autonomous regions to ensure that laws are faithfully
executed.
Section 17. All powers, functions, and responsibilities not
granted by this Constitution or by law to the autonomous
regions shall be vested in the National Government.
Section 20. Within its territorial jurisdiction and subject to the
provisions of this Constitution and national laws, the organic
act of autonomous regions shall provide for legislative powers
over:
1. Administrative organization;
2. Creation of sources of revenues;
3. Ancestral domain and natural resources;
4. Personal, family, and property relations;
5. Regional urban and rural planning development;
6. Economic, social, and tourism development;
7. Educational policies;
8. Preservation and development of the cultural
heritage; and
PUBLIC CORPORATION LAW REVIEWER (EH 407)
9. Such other matters as may be authorized by law for
the promotion of the general welfare of the people of the
region.
These are legal basis that although ARMM is different from the
regular political subdivisions, there is no total abdication of
powers in favor of ARMM.
Administrative Powers of Political Powers
What is the kind of decentralization adopted or practiced in the
Philippines?
Answer: Decentralization of administration. Policy-setting for
the entire country still lies in the President.
Pimentel vs. Aguirre
The President cannot order the withholding of 10% of the
LGUs’ internal revenue allotments. This encroaches on the
fiscal autonomy of local government and violates the
Constitution and the LGC.
ISSUE: Whether AO 372 of President Ramos which withholds
10% of LGUs IRA is valid Section 4 of AO 372 cannot,
however, be upheld.
A basic feature of local fiscal autonomy is the automatic
release of the shares of LGUs in the national internal revenue.
This is mandated by no less than the Constitution. The Local
Government Code specifies further that the release shall be
made directly to the LGU concerned within five (5) days after
every quarter of the year and "shall not be subject to any lien
or holdback that may be imposed by the national government
for whatever purpose." As a rule, the term "shall" is a word of
command that must be given a compulsory meaning. The
provision is, therefore, imperative. Section 4 of AO 372,
however, orders the withholding, effective January 1, 1998, of
10 percent of the LGUs' IRA "pending the assessment and
evaluation by the Development Budget Coordinating
Committee of the emerging fiscal situation" in the country.
Such withholding clearly contravenes the Constitution and the
law. Although temporary, it is equivalent to a holdback, which
means "something held back or withheld, often temporarily."
Hence, the "temporary" nature of the retention by the national
government does not matter. Any retention is prohibited. In
sum, while Section 1 of AO 372 may be upheld as an advisory
effected in times of national crisis, Section 4 thereof has no
color of validity at all. The latter provision effectively
encroaches on the fiscal autonomy of local governments.
Concededly, the President was well-intentioned in issuing his
Order to withhold the LGUs’ IRA, but the rule of law requires
that even the best intentions must be carried out within the
parameters of the Constitution and the law. Verily, laudable
purposes must be carried out by legal methods. Respondents
and their successors are hereby permanently PROHIBITED
from implementing Administrative Order Nos. 372 and 43
insofar as local government units are concerned.
Decentralization
→ A system whereby “local government units” shall be given
more powers, authority, responsibilities, and resources.” (Sec.
2, LGC)
→ The Process of decentralization shall proceed from the
National Government to the local government units. (Ibid.)
Devolution
Section 17: (e) National agencies or offices concerned shall
devolve to local government units the responsibility for the
provision of basic services and facilities enumerated in this
Section within six (6) months after the effectivity of this Code.
Page 12 of 24
As used in this Code, the term "devolution" refers to the act by
which the national government confers power and authority
upon the various local government units to perform specific
functions and responsibilities.
→ The act by which the National Government confers power
and authority upon various local government units to perform
specific functions and responsibilities. [Sec. 17(4)(e)]
→ It shall include the transfer to local government units of the
records, equipment, and other assets and personnel of
national agencies and offices corresponding to the devolved
powers, functions, and responsibilities. [Ibid.]
→ The powers conferred are to the local government unit
Deconcentration
SEC. 528. Deconcentration of Requisite Authority and
Power - The national government shall, six (6) months after
the effectivity of this Code, effect the deconcentration of
requisite authority and power to the appropriate regional offices
or field offices of national agencies or offices whose major
functions are not devolved to local government units.
→ The process of transferring authority and power to the
appropriate regional offices or field offices of national agencies
or offices whose major functions are not devolved to local
government units. (Sec. 528, LGC)
→ The powers conferred are to the local offices of the national
government. E.g. central office to regional office.
Basic Distinctions:
1) Local Autonomy – degree of self-determination
exercised by LGUs vis-à-vis the central
government.
2) To a t t a i n l o c a l a u t o n o m y, a s y s t e m o f
Decentralization is a pre-requisite.
3) To effect system of decentralization, a process of
Devolution is applied.
4) Deconcentration refers to the transfer of functions
from national office to regional and local offices
involving administrative functions.
Section 3. Operative Principles of Decentralization - The
formulation and implementation of policies and measures on
local autonomy shall be guided by the following operative
principles:
(a) There shall be an effective allocation among the
different local government units of their respective
powers, functions, responsibilities, and resources;
(b) There shall be established in every local
government unit an accountable, efficient, and
dynamic organizational structure and operating
mechanism that will meet the priority needs and
service requirements of its communities;
(c) Subject to civil service law, rules and regulations,
local officials and employees paid wholly or mainly
from local funds shall be appointed or removed,
according to merit and fitness, by the appropriate
appointing authority;
(d) The vesting of duty, responsibility, and accountability
in local government units shall be accompanied with
provision for reasonably adequate resources to
discharge their powers and effectively carry out their
functions; hence, they shall have the power to create
and broaden their own sources of revenue and the
right to a just share in national taxes and an equitable
share in the proceeds of the utilization and
development of the national wealth within their
respective areas;
(e) Provinces with respect to component cities and
municipalities, and cities and municipalities with
respect to component barangays, shall ensure that
PUBLIC CORPORATION LAW REVIEWER (EH 407)
the acts of their component units are within the scope
of their prescribed powers and functions;
(f) Local government units may group themselves,
consolidate or coordinate their efforts, services, and
resources for purposes commonly beneficial to them;
(g) The capabilities of local government units, especially
the municipalities and barangays, shall be enhanced
by providing them with opportunities to participate
actively in the implementation of national programs
and projects;
(h) There shall be a continuing mechanism to enhance
local autonomy not only by legislative enabling acts
but also by administrative and organizational reforms;
(i) Local government units shall share with the
national government the responsibility in the
management and maintenance of ecological balance
within their territorial jurisdiction, subject to the
provisions of this Code and national policies;
(j) Effective mechanisms for ensuring the accountability
of local government units to their respective
constituents shall be strengthened in order to upgrade
continually the quality of local leadership;
(k) The realization of local autonomy shall be facilitated
through improved coordination of national government
policies and programs and extension of adequate
technical and material assistance to less developed
and deserving local government units;
(l) The participation of the private sector in local
governance, particularly in the delivery of basic
services, shall be encouraged to ensure the
viability of local autonomy as an alternative strategy
for sustainable development; and
(m) The national government shall ensure that
decentralization contributes to the continuing
improvement of the performance of local government
units and the quality of community life.
PROBLEM: Even during the 1973 Constitution, local
governments had already been given “local autonomy.” In the
appointment of a Provincial Accountant, the Sec. of Dept. of
Budget and Management appoints from among the list of
nominees the Governor would submit to the DBM.
This was the case before the Local Government Code of
1991 took effect. When a Governor submitted a list of
nominees, namely X, Y and Z, for the position of Provincial.
Accountant, none of the nominees was a CPA, which was one
of the qualifications for a Provincial Accountant. The Sec. of
DBM appointed instead W, a CPA. What are the legal aspects
of this case?
Answer: Municipality of San Juan vs. Civil Service
Commission
Although it involved validity of the appointment of a Provincial
Budget Officer, the issue actually was the tug of war between
the Secretary of Budget and Management and the Governor of
the Province of Rizal over a position that involved the
application of a most important constitutional policy and
principle of local autonomy.
The SC ruled in favor of the Governor, who was allowed to
nominate another applicant qualified to the position because
the governor was seen to be in a much better position than the
Secretary in determining local needs, stating the need to obey
the clear mandate of local autonomy. Where a law is capable
of 2 interpretations, one in favor of centralized power in
Malacanang and the other beneficial to local autonomy, the
scales must be weighed in favor of local autonomy.
Mayor Pablo P. Magtajas vs. Pryce Properties Corporation, Inc
Page 13 of 24
(PAGCOR wants to build a Casino in CDO)
The only question we can and shall resolve in this petition is
the validity of Ordinance No. 3355 and Ordinance No. 3375-93
as enacted by the Sangguniang Panlungsod of Cagayan de
Oro City. And we shall do so only by the criteria laid down by
law and not by our own convictions on the propriety of
gambling. The tests of a valid ordinance are well established.
A long line of decisions has held to be valid, an ordinance must
conform to the following substantive requirements:
1) It must not contravene the constitution or any statute.
2) It must not be unfair or oppressive.
3) It must not be partial or discriminatory.
4) It must not prohibit but may regulate trade.
5) It must be general and consistent with public policy.
6) It must not be unreasonable.
We begin by observing that under Sec. 458 of the Local
Government Code, local government units are authorized to
prevent or suppress, among others, "gambling and other
prohibited games of chance." Obviously, this provision
excludes games of chance which are not prohibited but are in
fact permitted by law.
The petitioners are less than accurate in claiming that the
Code could have excluded such games of chance which are
not prohibited but are in fact permitted by law. The petitioners
are less than accurate in claiming that the Code could have
excluded such games of chance but did not. In fact it does. The
language of the section is clear and unmistakable. Under the
rule of noscitur a sociis, a word or phrase should be interpreted
in relation to, or given the same meaning of, words which it is
associated. Accordingly, we conclude that since the word
"gambling" is associated with "and other prohibited games of
chance," the word should be read as referring to only illegal
gambling which, like the other prohibited games of chance,
must be prevented or suppressed.
We could stop here as this interpretation should settle the
problem quite conclusively. But we will not. The vigorous efforts
of the petitioners on behalf of the inhabitants of Cagayan de
Oro City, and the earnestness of their advocacy, deserve more
than short shrift from this Court. The apparent flaw in the
ordinances in question is that they contravene P.D. 1869 and
the public policy embodied therein insofar as they prevent
PAGCOR from exercising the power conferred on it to the
operate a casino in Cagayan de Oro City.
Municipal governments are only agents of the national
government. Local councils exercise only delegated legislative
powers conferred on them by Congress as the national
lawmaking body. The delegate cannot be superior to the
principal or exercise powers higher than those of the latter.
Municipal corporations owe their origin to, and derive their
powers and rights wholly from the legislature. This basic
relationship between the national legislature and the local
government units has not been enfeebled by the new
provisions in the Constitution strengthening the policy of local
autonomy. That Congress retains control of the local
government units although in significantly reduced degree now
than under our previous Constitutions. The power to create still
includes the power to destroy.
Laguna Lake Development Authority vs. Court of Appeals
The power of the Authority to grant permits for fishpens,
fishcages, and other aqua-culture structures is for the purpose
of effectively regulating and monitoring activities in the Laguna
de Bay region. It does partake of the nature of police power
PUBLIC CORPORATION LAW REVIEWER (EH 407)
which is the most pervasive, the least limitable and the most
demanding of all State powers including the power of taxation.
- Accordingly, the charter of the Authority which
embodies a valid exercise of police power should
prevail over the Local Government Code of 1991 on
matters affecting Laguna de Bay.
To resolve the conflicts of cases involving whose authority
should prevail:
→ If the legal issues are clear in favor of central government,
the proper judicial reasoning should be in favor of the central
government because we are in a unitary set-up. But in a
situation where there is doubt such that the law is not clear that
it favors central authority, it should be resolve in favor of local
autonomy. To the extent that no national authority is prejudiced
in that interpretation.
Ganzon vs. CA
We come to the core question: Whether or not the Secretary of
Local Government, as the President's alter ego, can suspend
and/or remove local officials.
SC said YES, but note that this was the ruling before where the
president still has the power to remove local officials under the
previous LGC. However, under Sec. 60 of the present LGC,
the president can no longer remove local officials. Such power
is already lodged to the regular courts.
The petitioners are under the impression that the Constitution
has left the President mere supervisory powers, which
supposedly excludes the power of investigation, and denied
her control, which allegedly embraces disciplinary authority. It
is a mistaken impression because legally, "supervision" is not
incompatible with disciplinary authority.
"Control" has been defined as "the power of an officer to alter
or modify or nullify or set aside what a subordinate officer had
done in the performance of his duties and the ability to
substitute the judgment of the subordinate with his own.”
Tano vs. Socrates
LGUs may enact police power measures pursuant to the
general welfare clause. The Sangguniang Panlungsod of
Puerto Princesa City enacted an ordinance banning shipment
of all live fish and lobster outside the said city and prohibiting
the catching, gathering, possessing, buying, selling and
shipment of live marine coral dwelling aquatic organisms.
Petitioners were charged criminally for violation of such
ordinance. They invoke the preferential right of marginal
fishermen under Sec. 149 of the LGC. The so-called
“preferential right” of subsistence or marginal-fishermen to the
use of marine resources is not at all absolute.
The LGC provisions invoked by public respondents seek to
give flesh and blood to the right of the people to a balanced
and healthful ecology. In fact, the general welfare clause,
expressly mentions this right. The LGC explicitly mandates that
the general welfare provisions of the LGC shall be liberally
interpreted to give more powers to the LGUs in accelerating
economic development and upgrading the quality of life for the
people of the community. One of the devolved powers
enumerated in the LGC on devolution is the enforcement of
fishery laws in municipal waters including the conservation of
mangroves. This necessarily includes the enactment of
ordinances to effectively carry out such fishery laws within the
municipal waters. In light then of the principles of
decentralization and devolution enshrined in the LGC, and the
powers granted therein to LGUs under the general welfare
clause, which unquestionably involve the exercise of police
Page 14 of 24
power, the validity of the questioned ordinance cannot be
doubted.
D. Local Governments in the Philippines
“Regular” LGUs Provinces, Cities,
Municipalities, and
Barangays
Autonomous Regions Muslim Mindanao and
Cordilleras
“Special” LGUs Special Metropolitan Political
Subdivisions
Section 1, Article 10, Constitution – The territorial and
political subdivision of the Republic of the Philippines are the
provinces, cities, municipalities and barangays. There shall be
autonomous regions in Muslim Mindanao and the Cordilleras
as hereinafter provided.
PROBLEM: A law was passed calling for the abolition of
barangays. Is the law unconstitutional? Why or why not?
Answer: It is unconstitutional. Section 1, Article 10 of our
Constitution does not create local government units. It only
constitutionally ensures the existence of these territorial and
political units in our structure (Bernas). Hence, a law cannot,
for example, abolish barangays.
While it is true that Congress has the power to create a LGUs
but that power should refer to create a SPECIFIC LGU. And so
the power to destroy should also refer to the power to abolish a
SPECIFIC LGU, assuming the conditions for abolition are
present. But to abolish ALL barangays and consequently,
abolish a barangay system is not allowed because of Sec. 1,
Art. 10 of the Constitution.
PROBLEM: You are asked about the extent of the powers of a
Province over a city which is geographically situated in the
same province. How will you respond? In particular, may the
Provincial Board or SP set aside an ordinance of a city that is
geographically situated in the province? What about the EOs of
the Mayor of that city, may they be set aside by the governor?
May the resident of that city run for Governor?
Answer: It depends.
Section 12, Article 10, Constitution – Cities that are highly
urbanized, as determined by law, and component cities whose
charters prohibit their voters from voting for provincial elective
officials, shall be independent of the province. The voters of
component cities within a province, whose charters contain no
such prohibition, shall not be deprived of their right to vote for
elective provincial officials.
Kinds of Cities:
1. Component City – not qualified to be highly urbanized;
inhabitants can vote for provincial candidates and can run
for provincial elective posts = under the supervisory power
of the province.
2. Independent Component City – independent in the
sense that the charter prohibits the voters from voting for
provincial elective posts = outside the supervisory power
of the province. (Abella vs Comelec)
3. Highly Urbanized City – independent from province by
reason of status = outside the supervisory power of the
province.
PUBLIC CORPORATION LAW REVIEWER (EH 407)
Abella vs Comelec
The main issue in these consolidated petitions centers on who
is the rightful governor of the province of Leyte. The answer
depends on the relationship of the province and the city.
Section 12, Article X of the Constitution is explicit in that aside
from highly-urbanized cities, component cities whose charters
prohibit their voters from voting for provincial elective officials
are independent of the province. In the same provision, it
provides for other component cities within a province whose
charters do not provide a similar prohibition.
Necessarily, component cities like Ormoc City whose charters
prohibit their voters from voting for provincial elective officials
are treated like highly urbanized cities which are outside the
supervisory power of the province to which they are
geographically attached. This independence from the province
carries with it the prohibition or mandate directed to their
registered voters not to vote and be voted for the provincial
elective offices.
The phrase “shall not be qualified and entitled to vote in the
election of the provincial governor and the members of the
provincial board of the Province of Leyte” as found in the
Charter of Ormoc City (ICC) connotes two prohibitions:
From running for provincial elective posts
From voting for provincial candidates
PROBLEM: A highly urbanized city is independent of the
province where it is geographically located. Consequently, its
residents cannot run for provincial posts and cannot as well
vote for provincial candidates. Mandaue City of Cebu is a
HUC, but its residents can still run for provincial post and can
vote for provincial candidates. How was that possible?
Answer: Although Sec. 12, Art. 10 of the Constitution
mandates HUCs are independent from the province and thus,
outside the supervisory power of the province, Sec. 452 of the
LGC provides a vested right for the voters provided that the
conditions required are met.
Section 452. Highly Urbanized City – xxx (c) Qualified voters of
cities, who acquire the right to vote for elective provincial
officers prior to the classification of said cities as HUC after the
ratification of the Constitution and before the effectivity of this
Code, shall continue to exercise such right.
Special Metropolitan Political Subdivisions
Section, 11 Art. 10 of the 1987 Constitution – The Congress
may, by law, create special metropolitan political subdivisions,
subject to a plebiscite as set forth in Section 10 hereof. The
component cities and municipalities shall retain their basic
autonomy and shall be entitled to their own local executive and
legislative assemblies. The jurisdiction of the metropolitan
authority that will thereby be created shall be limited to basic
services requiring coordination.
→ Created by Congress and requires plebiscite.
→ The component cities and municipalities shall retain their
basic autonomy and shall be entitled to their own local
executives and legislative assemblies
→ Jurisdiction is limited to basic services requiring
coordination.
MMDA vs Bel-Air Village
The MMDA which has no police and legislative powers, has no
power to enact ordinances for the general welfare of the
inhabitants of Metro Manila. It has no authority to order the
opening of Neptune Street, a private subdivision road in Makati
Page 15 of 24
City and cause the demolition of its perimeter walls. MMDA is
not even a special metropolitan political subdivision because
there was no plebiscite when the law created it and the
President exercises not just supervision but control over it.
MMMDA has purely administrative function. Because MMDA is
not a political subdivision, it cannot exercise political power like
police power.
E. Loose Federation of LGUs
Section 13, Article 10 of the 1987 Constitution – Local
government units may group themselves, consolidate or
coordinate their efforts, services, and resources for purposes
commonly beneficial to them in accordance with law.
Section 33, Local Government Code. Cooperative
Undertakings Among Local Government Units. - Local
government units may, through appropriate ordinances, group
themselves, consolidate, or coordinate their efforts, services,
and resources for purposes commonly beneficial to them. In
support of such undertakings, the local government units
involved may, upon approval by the sanggunian concerned
after a public hearing conducted for the purpose, contribute
funds, real estate, equipment, and other kinds of property and
appoint or assign personnel under such terms and conditions
as may be agreed upon by the participating local units through
Memoranda of Agreement.
Take note: The resultant consolidation will not be a new
corporate body. Why? Because the requirement that an LGU
should be created by law is of constitutional origin. That
requirement remains, so that it cannot be done either by MOA
or ordinance. It has to be by law. It cannot be given a separate
personality.
LGUs may group themselves, consolidate or coordinate their
efforts, services, and resources for purposes commonly
beneficial to them in accordance with law. (Sec 13 Art X
Consti)
How? (1) Through Ordinances; (2) Upon approval by
the Sanggunian concerned, after lawful hearing, then
contribute funds and assets thru MOA (Sec 33, LGC)
Question: May this federation or consolidation of LGU enter
into contracts? If yes, how may the federation or consolidation
of LGUs enter into contracts? Under what name?
The resultant consolidation would not be a new corporate body,
and therefore, it does not have a personality. It cannot act as if
it is a “person” who can act with juridical effects. What are
consolidated are not corporate personalities but only “efforts,
services, and resources” for purposes commonly beneficial to
them. Thus, what is written in the contracts are the names of
the LGUs concerned.
Regional Development Councils
→ To be established by the President and does not need
authorization from Congress.
→ Composed of LGU officials, regional heads of Depts., and
other government offices and representatives of NGOs within
the region.
Section 14, Article 10 of the 1987 Constitution – The President
shall provide for regional development councils or other similar
bodies composed of local government officials, regional heads
of departments and other government offices, and
representatives from non-governmental organizations within
the regions for purposes of administrative decentralization to
strengthen the autonomy of the units therein and to accelerate
the economic and social growth and development of the units
in the region.
PUBLIC CORPORATION LAW REVIEWER (EH 407)
PART II: THE LOCAL GOVERNMENT CODE OF 1991
Constitutional Mandate for the Local Government Code:
Section 3, Article X: The Congress shall enact a local
government code which shall provide for a more responsive
and accountable local government structure instituted through
a system of decentralization with effective mechanisms of
recall, initiative and referendum, allocate among the different
local government units their powers, responsibilities and
resources, and provide for the qualifications, election,
appointment and removal, term, salaries, powers and functions
and duties of local government officials, and all other matters
relating to the organization and operation of local government
units.
Sources of the Code:
1. The LGC of 1983 (BP Blg. 337)
2. The Local Tax Code (PD 201)
3. The Real Property Tax Code (PD 464)
4. Barangay Justice Law (PD 1508)
Scope and Application of the Code
Section 4. Scope of Application. - This Code shall apply to all
provinces, cities, municipalities, barangays, and other political
subdivisions as may be created by law, and, to the extent
herein provided, to officials, offices, or agencies of the national
government.
Section 526. Application of this Code to Local Government
Units in the Autonomous Regions. - This Code shall apply to all
provinces, cities, municipalities and barangays in the
autonomous regions until such time as the regional
government concerned shall have enacted its own local
government code.
Section 529. Tax Ordinances or Revenue Measures. - All
existing tax ordinances or revenue measures of local
government units shall continue to be in force and effect after
the effectivity of this Code unless amended by the sanggunian
concerned, or inconsistent with, or in violation of, the
provisions of this Code.
Section 534. Repealing Clause. –
(f) All general and special laws, acts, city charters, decrees,
executive orders, proclamations and administrative regulations,
or part or parts thereof which are inconsistent with any of the
provisions of this Code are hereby repealed or modified
accordingly.
Rules of Interpretation
Section 5. Rules of Interpretation. - In the interpretation of the
provisions of this Code, the following rules shall apply:
Any provision on a power of a local government unit shall be
liberally interpreted in its favor, and in case of doubt, any
question thereon shall be resolved in favor of devolution of
powers and of the lower local government unit. Any fair and
reasonable doubt as to the existence of the power shall be
interpreted in favor of the local government unit concerned;
In case of doubt, any tax ordinance or revenue measure shall
be construed strictly against the local government unit enacting
it, and liberally in favor of the taxpayer. Any tax exemption,
incentive or relief granted by any local government unit
pursuant to the provisions of this Code shall be construed
strictly against the person claiming it.
The general welfare provisions in this Code shall be liberally
interpreted to give more powers to local government units in
accelerating economic development and upgrading the quality
of life for the people in the community;
Page 16 of 24
Rights and obligations existing on the date of effectivity of this
Code and arising out of contracts or any other source of
presentation involving a local government unit shall be
governed by the original terms and conditions of said contracts
or the law in force at the time such rights were vested; and
In the resolution of controversies arising under this Code
where no legal provision or jurisprudence applies, resort may
be had to the customs and traditions in the place where the
controversies take place.
Summary:
- Liberal interpretation in favour of LGUs, Devolution of
powers, and General Welfare ordinances
- In case of doubt as to existence of power, resolved in
favour of LGU. (vs residual power doctrine)
- But in tax ordinances are construed strictly against
the LGU and liberally in favour of taxpayer.
- Where no law of jurisprudence applies, customs or
traditions in the locality may be applied to resolve
controversies.
Effectivity of LGC
Section 536. Effectivity Clause. - This Code shall take effect on
January first, nineteen hundred ninety-two, unless otherwise
provided herein, after its complete publication in at least one
(1) newspaper of general circulation.
Effects:
1. All tax ordinances or revenue measures of LGUs
enacted before the LGC of 1991 shall continue to be
in fore and effect after the effectivity of the LGC,
unless amended by the Sanggunian or inconsistent
with or in violation of the provisions of the code.
2. All general and special laws, acts, city charters,
decrees, EOs, Proclamations, and admin regulations
or parts thereof that are inconsistent with any of the
provisions of the Code are repealed or modified
accordingly. Sec 534 (f), LGC.
PART III: CREATION, CONVERSION, DIVISION, MERGER,
SUBSTANTIAL CHANGE OF BOUNDARY OF LOCAL
GOVERNMENT UNITS, AND ABOLITION
A. Regular Political Subdivisions
CREATION OR CONVERSION
General Requirements in the creation or conversion LGU:
1. Law
2. Plebiscite
3. Compliance with Criteria on Income, Land, &/or
Population
Constitutional Mandate:
Section 10, Article X: No province, city, municipality, or
barangay may be created, divided, merged, abolished, or its
boundary substantially altered, except in accordance with the
criteria established in the local government code and subject to
approval by a majority of the votes cast in a plebiscite in the
political units directly affected.
Section 11, Article X: The Congress may, by law, create special
metropolitan political subdivisions, subject to a plebiscite as set
forth in Section 10 hereof. The component cities and
municipalities shall retain their basic autonomy and shall be
entitled to their own local executive and legislative assemblies.
The jurisdiction of the metropolitan authority that will thereby
PUBLIC CORPORATION LAW REVIEWER (EH 407)
be created shall be limited to basic services requiring
coordination.
Local Government Code Provisions:
SECTION 6. Authority to Create Local Government Units. —
A local government unit may be created, divided, merged,
abolished, or its boundaries substantially altered either by law
enacted by Congress in the case of a province, city,
municipality, or any other political subdivision, or by 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
requirements prescribed in this Code.
SECTION 7. Creation and Conversion. — As a general rule,
the creation of a local government unit or its conversion from
one level to another level shall be based on verifiable
indicators of viability and projected capacity to provide
services, to wit:
(a) Income. — It must be sufficient, based 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;
(b) Population. — It shall be determined as the total
number of inhabitants within the territorial
jurisdiction of the local government unit
concerned; and
(c) Land Area. — It must be contiguous, unless it
comprises two (2) or more islands or is separated
by a local government unit independent of the
others; properly identified by metes and bounds
with technical descriptions; and sufficient to
provide for such basic services and facilities to
meet the requirements of its populace.
Compliance with the foregoing indicators shall be attested to
by the Department of Finance (DOF), the National Statistics
Office (NSO), and the Lands Management Bureau (LMB) of the
Department of Environment and Natural Resources (DENR)
SECTION 10. Plebiscite Requirement. — No creation, division,
merger, abolition, or substantial alteration of boundaries
of local government units shall take effect unless approved by
a majority of the votes cast in a plebiscite called for the
purpose in the political unit or units directly affected. Said
plebiscite shall be conducted by the Commission on Elections
(COMELEC) within one hundred twenty (120) days from the
date of effectivity of the law or ordinance effecting such action,
unless said law or ordinance fixes another date.
LAW
League of Cities of the Philippines vs. COMELEC
Case stemmed from the enactment of certain laws, called
“cityhood laws” converting 16 municipalities into cities in the
year 2007 after the effectivity of R.A. 9009 in 2001. R.A. 9009
amended Section 450 of the Local Government Code by
increasing the annual income requirement for conversion of a
municipality or cluster of barangays into a component city from
P20 million to P100 million.
While R.A. No. 9009 was being deliberated upon, Congress
was well aware of the pendency of conversion bills of several
municipalities, including those covered by the Cityhood Laws,
desiring to become component cities which qualified under the
P20 million income requirement of the old Section 450 of the
LGC. The interpellation of Senate President Franklin Drilon of
Senator Pimentel is revealing. Clearly, based on the above
exchange, Congress intended that those with pending cityhood
Page 17 of 24
bills during the 11th Congress would not be covered by the
new and higher income requirement of P100 million imposed
by R.A. No. 9009. When the LGC was amended by R.A. No.
9009, the amendment carried with it both the letter and the
intent of the law, and such were incorporated in the LGC by
which the compliance of the Cityhood Laws was gauged.
Notwithstanding that both the 11th and 12th Congress failed to
act upon the pending cityhood bills, both the letter and intent of
Section 450 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 municipalities from the coverage of R.A.
No. 9009.
First League of Cities decision: The Court declared the
cityhood laws unconstitutional for the reason that the
Constitution specifically and deliberately makes the Local
Government Code the only repository of the criteria and
standards for the creation of any local government unit such
that no other law not even the charter of the city can govern
such creation.
Second League of Cities decision: On Motion for
Reconsideration, the SC reversed itself in 2009 and declared
the 16 cityhood laws not unconstitutional. They noted that the
intent of the lawmakers when they approved the cityhood bills
was really to exempt these bills from the requirements of R.A.
9009 considering that these cityhood bills were proposed much
earlier than the approval of R.A. 9009.
Third League of Cities decision: The SC reverted to the first
decision and affirmed the primacy of the constitutional
requirement that the creation of local governments shall only
be based on uniform criteria set forth in only one law, the Local
Government Code. It said that the clear intent of the
Constitution is to insure that the creation of cities and other
political units must follow the same uniform, non-discriminatory
criteria found solely in the Local Government Code.
Fourth League of Cities decision: The Court reverted back to
ruling that the cityhood laws were not unconstitutional. It cited
the deliberations during R.A. 9009 where Senator Pimentel
made a remark that it would not be fair to make the said bill
retroact to the cityhood bills pending in the Senate.
Last and Final League of Cities decision: The Supreme Court
resolved that there was a clear and unmistakable legislative
intent to exclude these cityhood bills from the application of
R.A. 9009 thus recognizing the certain collective wisdom of
Congress.
Without doubt, the LGC is a creation of Congress through
its law-making powers. Congress has the power to alter or
modify it as it did when it enacted R.A. No. 9009. Such power
of amendment of laws was again exercised when Congress
enacted the Cityhood Laws. When Congress enacted the LGC
in 1991, it provided for quantifiable indicators of economic
viability for the creation of local government units—income,
population, and land area. Congress deemed it fit to modify
the income requirement with respect to the conversion of
municipalities into component cities when it enacted R.A. No.
9009, imposing an amount of P100 million, computed only
from locally-generated sources
However, Congress deemed it wiser to exempt respondent
municipalities from such a belatedly imposed modified income
requirement in order to uphold its higher calling of putting flesh
and blood to the very intent and thrust of the LGC, which is
countryside development and autonomy, especially accounting
PUBLIC CORPORATION LAW REVIEWER (EH 407)
for these municipalities as engines for economic growth in
their respective provinces.
TN: Which League of Cities decision should be used as legal
basis in the exam? Cite the legal standing of the SC in
upholding the Congress’ intent and SC’s legal basis in
upholding the Constitution intent. (2008 ruling and 2011 Ruling)
What is association in Public International Law?
Association - means that the associated state has internal
self- government, while the independent state with which it is
associated is responsible for foreign affairs and defense.
- This happens where two States sort of collaborate or
enter into an agreement where one is considered
inferior and the other superior because it says of
“unequal power”. E.g. colonies
- The weaker State is called Associated and the
superior State is called Principal.
Question: Can an “associated state” be established in the
Philippines?
Province of North Cotabato vs GRP
Facts: The RP entered into a MOA with the MILF. The MOA
provided for the creation of Bangsamoro Juridical Entity (BJE)
whereby there will be some sort of government structure.
There will also be the territory of this Bangsamoro juridical
entity and it has also defined the supposed constituents of
such juridical entity. There is a government, people, and
territory. And insofar as it is allowed to relate itself to foreign
states, the MOA provides that it can do so through the
instrumentality of the national government. In fact, under the
MOA, it mentioned of the so-called association kind of
relationship.
Ruling: Such MOA is unconstitutional. If an associated state is
legally a state then it cannot exist in the Phils. Remember,
sovereignty is indivisible. You cannot divide sovereignty, there
should only be one authority.
The concept of an “associated state” is not sanctioned by the
Constitution. Under Art. X, the following are the only
recognized “political subdivisions” in the Philippines: Provinces,
Cities, Municipalities, Barangays and the ARMM and the
Cordilleras. In general, the objections against the MOA-AD
center on the extent of the powers conceded therein to the
BJE. Petitioners assert that the powers granted to the BJE
exceed those granted to any local government under present
laws, and even go beyond those of the present ARMM.
Before assessing some of the specific powers that would have
been vested in the BJE, however, it would be useful to turn first
to a general idea that serves as a unifying link to the different
provisions of the MOA-AD, namely, the international law
concept of association. Significantly, the MOA-AD explicitly
alludes to this concept, indicating that the Parties actually
framed its provisions with it in mind.
Association is referred to in paragraph 3 on TERRITORY,
paragraph 11 on RESOURCES, and paragraph 4 on
GOVERNANCE. It is in the last mentioned provision, however,
that the MOA-AD most clearly uses it to describe the
envisioned relationship between the BJE and the Central
Government.
The relationship between the Central Government and the
Bangsamoro Juridical Entity shall be associative characterized
by shared authority and responsibility with a structure of
governance based on executive, legislative, judicial and
Page 18 of 24
administrative institutions with defined powers and functions in
the comprehensive compact. A period of transition shall be
established in a comprehensive peace compact specifying the
relationship between the Central Government and the BJE.
The nature of the "associative" relationship may have been
intended to be defined more precisely in the still to be forged
Comprehensive Compact. Nonetheless, given that there is a
concept of "association" in international law, and the MOA-AD -
by its inclusion of international law instruments in its TOR-
placed itself in an international legal context, that concept of
association may be brought to bear in understanding the use of
the term "associative" in the MOA-AD.
In the same MOA-AD, it contains many provisions which are
consistent with the international legal concept of association,
specifically the following: the BJE's capacity to enter into
economic and trade relations with foreign countries, the
commitment of the Central Government to ensure the BJE's
participation in meetings and events in the ASEAN and the
specialized UN agencies, and the continuing responsibility of
the Central Government over external defense. Moreover, the
BJE's right to participate in Philippine official missions bearing
on negotiation of border agreements, environmental protection,
and sharing of revenues pertaining to the bodies of water
adjacent to or between the islands forming part of the ancestral
domain, resembles the right of the governments of FSM and
the Marshall Islands to be consulted by the U.S. government
on any foreign affairs matter affecting them. These provisions
of the MOA indicate, among other things, that the Parties
aimed to vest in the BJE the status of an associated state or, at
any rate, a status closely approximating it. Even the mere
concept animating many of the MOA-AD's provisions,
therefore, already requires for its validity the amendment of
constitutional provisions, specifically the provisions of Article X,
Section 1 & 15.
The BJE is a far more powerful entity than the autonomous
region recognized in the Constitution. It is not merely an
expanded version of the ARMM, the status of its relationship
with the national government being fundamentally different
from that of the ARMM. Indeed, BJE is a state in all but name
as it meets the criteria of a state laid down in the Montevideo
Convention,154 namely, a permanent population, a defined
territory, a government, and a capacity to enter into relations
with other states.
Even assuming arguendo that the MOA-AD would not
necessarily sever any portion of Philippine territory, the spirit
animating it - which has betrayed itself by its use of the
concept of association - runs counter to the national
sovereignty and territorial integrity of the Republic. The defining
concept underlying the relationship between the national
government and the BJE being itself contrary to the present
Constitution, it is not surprising that many of the specific
provisions of the MOA-AD on the formation and powers of the
BJE are in conflict with the Constitution and the laws.
Article X, Section 18 of the Constitution provides that "[t]he
creation of the autonomous region shall be effective when
approved by a majority of the votes cast by the constituent
units in a plebiscite called for the purpose, provided that only
provinces, cities, and geographic areas voting favorably in
such plebiscite shall be included in the autonomous region."
As reflected above, the BJE is more of a state than an
autonomous region. But even assuming that it is covered by
the term "autonomous region" in the constitutional provision
just quoted, the MOA-AD would still be in conflict with it. Under
paragraph 2(c) on TERRITORY in relation to 2(d) and 2(e), the
present geographic area of the ARMM and, in addition, the
municipalities of Lanao del Norte which voted for inclusion in
PUBLIC CORPORATION LAW REVIEWER (EH 407)
the ARMM during the 2001 plebiscite - Baloi, Munai,
Nunungan, Pantar, Tagoloan and Tangkal - are automatically
part of the BJE without need of another plebiscite, in contrast
to the areas under Categories A and B mentioned earlier in the
overview. That the present components of the ARMM and the
above-mentioned municipalities voted for inclusion therein in
2001, however, does not render another plebiscite
unnecessary under the Constitution, precisely because what
these areas voted for then was their inclusion in the ARMM,
not the BJE.
PLEBISCITE
- Who shall participate?
- What is meant by “units affected”?
- In what sense affected?
- How is it different from the manner of creating
autonomous regions?
- How about the downgrading or upgrading the city?
2004 Bar Exam: Madako is a municipality composed of 80
barangays, 30 west of Madako River and 50 east thereof. The
30 western barangays feeling left out of economic initiatives,
wish to constitute themselves into a new and separate town to
be called Masigla. Granting the Masigla’s proponents succeed
to secure a law in their favour, would a plebiscite be necessary
or not? If it is, who should vote or participate in the plebiscite?
Answer: Plebiscite is necessary because this involves a
creation of LGU. Under the Constitution and LGC of 1991, the
creation, conversion, division, merger and substantial change
of boundary requires a plebiscite as an INDISPENSIBLE
REQUIREMENT. All 80 barangays of Madako because there
would be an adverse effect of the mother unit with respect to
income, population and territory.
Tan vs COMELEC
BP 885, creating the Province of Negros del Norte, was
declared unconstitutional because it excluded the voters of the
mother province from participating in the plebiscite (and it did
not comply with the area of criterion prescribed in the LGC). A
plebiscite for creating a new province should include the
participation of the residents of the mother province in order to
conform to the constitutional requirement. In this case, the
plebiscite only included the inhabitants of Negros del Norte.
Where the law authorizing the holding of a plebiscite is
unconstitutional, the Court cannot authorize the holding of a
new one. The fact that the plebiscite which the petition sought
to stop had already been held and officials of the new province
appointed does not make the petition moot and academic, as
the petition raises an issue of constitutional dimension. “Units
affected” means units/residents of the political entity who stand
to be economically dislocated by the separation of a portion
thereof have the right to participate in a plebiscite.
TN: Here, the SC said that the effectivity of the 1987
Constitution has not superseded the 1986 Tan vs. COMELEC
Decision
Padilla, Jr. vs. COMELEC
Even under the 1987 Constitution, the plebiscite shall include
all the voters of the mother province or the mother municipality.
Problem: Confident that Municipality of Consolacion can
qualify as a new city under existing laws, its officials ask you
whether the whole Province of Cebu will participate in the
plebiscite that will be conducted (assuming that they succeed
Page 19 of 24
in persuading Congress to pass a law converting Consolacion
into a city.) What will be your advice?
Answer: If the Charter states that it will become an
independent component city or a highly urbanized city, then
you are essentially carving out. Thus, in that case, it will require
a plebiscite.
Problem: In 1998, by virtue of R.A. No. 8528, the City of
Santiago, Isabela was converted from an independent
component city to a component city. The constitutionality of
R.A. No. 8528 was assailed on the ground of lack of provision
in the said law submitting the same for ratification by the
people of Santiago City on a proper plebiscite. The issue was
whether the downgrading of Santiago City from an
independent component city to a mere component city requires
the approval of the people of Santiago City. Decide.
Answer: Miranda vs. Aguirre
the purpose of ensuring free, orderly, and honest elections.”
The text and intent of Section 2 (1) of Article IX (C) is to give
COMELEC “all necessary and incidental powers for it to
achieve the objective of holding free, orderly, honest, peaceful
and credible elections. (Cagas vs. COMELEC, G.R. No.
209185, October 25, 2013)
COMMON STANDARDS FOR COMPLIANCE OF CRITERIA
Income—c/o Dept. of Finance
Population—c/o NSO
Land Area—c/o DENR (Land Management Bureau)
Note: the criteria call for ‘question of facts.’ Findings of facts by
administrative agencies are binding and conclusive upon
courts unless there is grave abuse of discretion or clear
mistake of facts. Hence, findings of facts by the DOF, NSO,
and DENR deserve great respect, if not finality, and also enjoy
presumption of regularity being acts of government agencies.
BASIS: experts in their fields.

The Court held that the Constitution requires a plebiscite. The Navarro vs. Ermita
resolution of the issue depends on whether or not the
downgrading of Santiago City falls within the meaning of In this case, it was only the Bureau of Local Government
creation, division, merger, abolition or substantial alteration of Finance who certified the annual income requirement of the
boundaries of municipalities in Section 10, Article X of the 1987 porposed Province of Dinagat Islands. While the special
Constitution. A close analysis of the said constitutional census was conducted with the assistance of the District
provision will reveal that the common denominator is the Census Coordinator of the NSO, it was not certified by the
material change in the political and economic rights of the local NSO. The certification contemplated by law must come from
government units directly affected as well as the people the head office.
therein. It is precisely for this reason that the Constitution
requires the approval of the people in the political units “directly In this case, the Province of Dinagat failed to meet the
affected.” Further, Section 10, Chapter 2 of the Local population and land area requirement for the creation of a
Government Code and Rule II, Article 6, par. (f)(1) of the province.
Implementing Rules and Regulations of the Local Government
Code reiterate the constitutional requirement. The following are the requirements that have to be met by the
LGU before it can be created:
Umali vs. COMELEC
Unit Specific Criteria
The primordial issue in this case boils down to whether the
qualified registered voters of the entire province of Nueva Ecija Barangays Population
or only those in Cabanatuan City can participate in the
plebiscite called for the conversion of Cabanatuan City from a Income, population & land
component city into a Highly-Urbanized City. Municipalities
area

While conversion to a Highly-Urbanized City is not explicitly Income, population OR land

Component Cities
provided in Section 10, Article X of the Constitution, the area
conversion of a component city into an HUC is substantial
alteration of boundaries. As the phrase implies, “substantial Highly Urbanized Cities Income and Population
alteration of boundaries” involves and necessarily entails a
change in the geographical configuration of a local government Income, Population or Land
Province
unit or units. The phrase “boundaries” should not be limited to Area
the mere physical one, referring to the metes and bounds of
the LGU, but also to its political boundaries. Thus, the province
will inevitably suffer a corresponding decrease in territory INCOM POPULATI LAND
brought about by Cabanatuan City’s gain of independence. LGU
E ON AREA
With the city’s newfound autonomy, it will be free from the
oversight powers of the Province, which, in effect, reduces the
territorial jurisdiction of the latter. At least
At least Minimum
PROVINCE 2,000
20M 250K
Further, Section 453 of the LGC makes it ministerial for the sq/km
President, upon proper application, to declare a component
city as highly urbanized once the minimum requirements, At least
which are based on certifiable and measurable indices under HIGHLY-URBANIZED At least Minimum
100 sq/
Section 452, are satisfied. The mandatory language “shall” CITY 50M 200K
km
used in the provision leaves the President with no room for
discretion. At least
At least Minimum
CITY 100 sq/
The COMELEC can postpone the holding of a Plebiscite and 100M 150K
km
election to another date.
The COMELEC has “exclusive charge of the enforcement and
administration of all laws relative to the conduct of elections for
PUBLIC CORPORATION LAW REVIEWER (EH 407) Page 20 of 24
 the LGC-IRR, the inclusion was intended to correct the
At least congressional oversight in Section 461 of the LGC – and to
At least Minimum
MUNICIPALITY 50 sq/ reflect the true legislative intent. It would, then, be in order for
2.5M 25K
km the Court to uphold the validity of Article 9(2) of the LGC-IRR.

BARANGAY (outside Boundary

n/a Minimum 2K n/a - should be “properly identified by metes and
Metro Manila)
bounds” (Sec. 7) WHY? –for Jurisdiction.

BARANGAY (Metro Mariano vs COMELEC

Manila, Highly n/a Minimum 5K n/a
Urbanized) The true test is whether or not the description of boundary will
cause territorial confusion. Otherwise, requirement is
substantially complied with. Petitioners assail sec. 2 of RA
LAND AREA
7854 as unconstitutional on the ground that it did not properly
The land area must:
identify the land area or territorial jurisdiction of Makati by
- comply with the area requirement, unless it is an
metes and bounds, in violation of Sec. 10 of the 1987
island.
Constitution in relation to Sec. 7 and 450 of the LGC.
- Must be contiguous, unless: a) two or more islands or
Petitioners have not demonstrated that the delineation of the
b) separated by a local government unit independent
land area of the proposed City of Makati (without metes and
of the others
bounds) will cause confusion as to its boundaries. Congress
- Properly identified by metes and bounds with
has refrained from using the metes and bounds description of
technical descriptions
land areas of other LGUs.
- Be sufficient to provide for such basic services and
facilities to meet the requirements of its populace.
The requirement that the territory of newly-created LGUs be
identified by metes and bounds is intended to provide the
Problem: In the LGC of 1991, a municipality may be created
means by which the area of the LGU may be reasonably
with less than 50 sq. km. if it is an island. Under the LGC of
ascertained, i.e., as a tool in the establishment of the LGU. As
1991, however, there is no such exception when it comes to
long as the territorial jurisdiction of the newly created city may
creation of a province which normally requires at least 2,000
be reasonably ascertained – by referring to common
sq. km. May the implementing rules of the LGC of 1991
boundaries with neighboring municipalities – then, the
provide for a similar exception?
legislative intent has been sufficiently served.
Answer: Only the dry land.
Note: RA 7854, which converted Makati into a city, did not
define the boundaries of the new city by metes and bounds,
Navarro vs. Ermita
because of a territorial dispute between Makati and Taguig,
which was best left for the courts to decide.
One of the arguments of the respondents in order for Dinagat
Islands to comply with the land area requirement was that the
waters between the islands must be counted.
AVERAGE ANNUAL INCOME
- income accruing to the general fund (regular),
The Court held that the use of the word territory reflects that it
exclusive of special funds, trust funds, transfers, and
has reference only to the mass of land area and excludes the
non-recurring income.
waters over which the political unit exercises control.
Alvarez vs. Guingona
Paragraph 2 of Article 9 of the Rules and Regulations
Is the IRA included in the computation of average annual
implementing the LGC, which states that “the land area
income? It is automatically and regularly released, and so
requirement shall not apply where the proposed province, is
“regular” and “recurring” and they form part of the “gross
composed of one or more islands” violates the LGC and is
accretion of funds.”
therefore, null and void. Nowhere in the Local Government
Code is the said provision stated or implied. Under Section 461
However, in the case of conversion of a municipality into a city
of the Local Government Code, the only instance when the
or a cluster of barangays to be formed into a new city, RA 9009
territorial or land area requirement need not be complied with
enacted on June 30, 2001 and amending Sec. 450 of the
is when there is already compliance with the population
Code, IRAs are no longer included in the computation of the
requirement.
annual income for purposes of complying with the income
requirement. “Income” refers to “locally generated” income.
BUT, THIS CASE WAS REVERSED IN 2011 (WTF SIR.)

SC, through Nachura, ruled that Congress intended to apply

POPULATION
the exemption on land area requirements enjoyed by
- it shall be determined as the total number of
municipalities and cities which have islands as territories to the
inhabitants within the territorial jurisdiction of the local
Province. There appears neither rhyme nor reason why this
government unit concerned.
exemption should apply to cities and municipalities, but not to
provinces. In fact, considering the physical configuration of
Aquino III vs COMELEC
the Philippine archipelago, there is a greater likelihood that
islands or group of islands would form part of the land area of a
In this case, the indispensable requirement in the creation of a
newly-created province than in most cities or municipalities. It
province is that of income and either of territory or population.
is, therefore, logical to infer that the genuine legislative policy
Population requirement is not an indispensable requirement,
decision was expressed in Section 442 (for municipalities) and
but merely an alternative addition to the indispensable income
Section 450 (for component cities) of the LGC, but was
requirement.
inadvertently omitted in Section 461 (for provinces). Thus,
when the exemption was expressly provided in Article 9(2) of
PUBLIC CORPORATION LAW REVIEWER (EH 407) Page 21 of 24
Procedure in Creation and Conversion
Creation:
1. Petition by the prospective units in a form of resolution
2. Comments on the Petition by the Sangunian of the mother
unit to be submitted to Congress.
3. Attachment of supporting documents to the Petition
consisting of Certificates of DOF, NSO, and LMB (DENR)
4. Enactment of Law by Congress
5. Plebiscite will be held after law takes effect [Art. 9-11, IRR]
Conversion from Component City to HUC:
1. Resolution by the interested unit [by SP, duly approved
and endorsed by the Mayor] to be submitted to the Office
of President with proofs of compliance with income and
population requirements.
2. Declaration of Conversion by the President – a ministerial
duty on the part of the President
DIVISION AND MERGER
- Same requirements as Creation and Conversion
Conditions and Limitations:
1. should not reduce the land area, population, and
income to less than the minimum requirements under
the Code; and
2. income classification of the original LGU affected shall
not fall below its current classification prior to such
division. [Sec. 8, LGC]
The income classification of local government units shall be
updated within six (6) months from the effectivity of this Code
to reflect the changes in their financial position resulting from
the increased revenues as provided herein.
Merger of LGUs, political subdivisions and the like is a
legislative function. There is a need of a law enacted by
Congress.
Question: Should a law be pass for a merger of
ADMINISTRATIVE REGIONS? For the purpose of allowing a
efficiency and economy in the delivery of services?
Answer: You don’t need a law. Executive function. Only the
President has the power to do that because merger of
administrative regions is for administrative purposes.
SUBSTANTIAL ALTERATION OF BOUNDARIES
- Same as creation and conversion, except that the
criteria on income and population are not factors to
consider.
- But the alteration of the boundaries should not also
reduce the minimum requirements on land area.
ABOLITION
Ground: When its income, population, or land area has been
irreversibly reduced to less than the minimum standards as
certified by the national agencies concerned. [Sec. 9, LGC]
Note: Irreversible reduction to less than the minimum
standards only offers a ground for abolition. Hence, a further
act (law or ordinance) is still required to effect abolition. [DILG
Opinion NO. 17 S. 2006]
Problem: In preparation for the 2016 local and national
elections, the COMELEC conducted investigations in order to
ascertain the veracity of reports of “ghost precincts.” Based on
the investigations it conducted, COMELEC discovered that
there are no inhabitants in Barangay Diwata in Municipality of
PUBLIC CORPORATION LAW REVIEWER (EH 407)
Lazi, Siquijor. Consequently, the COMELEC removed
Barangay Diwata among the list of precincts. May COMELEC
do that?
Answer: No. COMELEC cannot.
Sarangani v. COMELEC
Under the LGC of 1991, the abolition of a local government
unit may be done by Congress in the case of a province, city,
municipality, or any other political subdivision. In the case of a
barangay, except in Metropolitan Manila area and in cultural
communities, it may be done by the Sangguniang
Panlalawigan or Sangguniang Panglungsod concerned subject
to the mandatory requirement of a plebiscite conducted for the
purpose in the political units affected.
Question: Barangay Pobre is the poorest of all barangays in
the Municipality of Carmen mainly because of its rocky, hilly
and mountainous topography. It strives mainly on the IRA that it
receives. Without IRA, it could hardly pay even the honoraria of
tis tanods.
a. Can it lawfully be abolished?
b. If yes, what is the procedure for the abolition of
Barangay Pobre?
Answer:
a. Yes it may be abolished by a law. Section 9 of RA
7160 provides that, “The law or ordinance abolishing
an LGU shall specify the province, city, municipality,
or barangay with which the LGU sought to be
abolished will be incorporated or merged.”
b. When the law takes effect, there must be a plebiscite.
BOUNDARY DISPUTES
2005 Bar: There was a boundary dispute between Duenas, a
municipality, and Passi, and independent component city, both
of the same province. State how the two local government
units should settle their boundary dispute.
Answer: Settlement of Boundary Disputes
1. It is mandated that boundary disputes between and
among local government units shall, as much as possible,
be settled amicably.
2. Amicable settlement is within the jurisdiction of the
Sanggunian/s of the mother unit/s as a general rule.
3. In case of failure to settle, the Sanggunian concerned tries
this case.
4. Within the time and manner prescribed by the Rules of
Court, any party may elevate the decision of the
sanggunian concerned to the proper RTC having
jurisdiction over the area.
B. Autonomous Regions
Manner of Creation:
a. Law
b. plebiscite
Dual Purpose of Plebiscite:
- Determine will of the people whether to create an
Autonomous Region;
- Determine which LGU shall form part of AR. (only
those with majority votes, provided more than one)
[Abbas and Ordillo Cases]
Abbas vs. COMELEC
As provided in the Constitution, the creation of the Autonomous
region in Muslim Mindanao is made effective upon the approval
Page 22 of 24
"by majority of the votes cast by the constituent units in a
plebiscite called for the purpose" [Art. X, sec. 18]. The question
has been raised as to what this majority means. Does it refer to
a majority of the total votes cast in the plebiscite in all the
constituent units, or a majority in each of the constituent units,
or both?
We need not go beyond the Constitution to resolve this
question. If the framers of the Constitution intended to require
approval by a majority of all the votes cast in the plebiscite they
would have so indicated. Thus, in Article XVIII, section 27, it is
provided that "[t]his Constitution shall take effect immediately
upon its ratification by a majority of the votes cast in a
plebiscite held for the purpose ... Comparing this with the
provision on the creation of the autonomous region, which
reads:
The creation of the autonomous region shall be effective when
approved by majority of the votes cast by the constituent units
in a plebiscite called for the purpose, provided that only
provinces, cities and geographic areas voting favorably in such
plebiscite shall be included in the autonomous region. [Art. X,
sec, 18, para, 2].
It will readily be seen that the creation of the autonomous
region is made to depend, not on the total majority vote in the
plebiscite, but on the will of the majority in each of the
constituent units and the proviso underscores this. for if the
intention of the framers of the Constitution was to get the
majority of the totality of the votes cast, they could have simply
adopted the same phraseology as that used for the ratification
of the Constitution, i.e. "the creation of the autonomous region
shall be effective when approved by a majority of the votes
cast in a plebiscite called for the purpose."
It is thus clear that what is required by the Constitution is a
simple majority of votes approving the organic Act in individual
constituent units and not a double majority of the votes in all
constituent units put together, as well as in the individual
constituent units.
Ordillo vs. COMELEC
Under the Constitution and R.A. No 6734, the creation of the
autonomous region shall take effect only when approved by a
majority of the votes cast by the constituent units in a
plebiscite, and only those provinces and cities where a majority
vote in favor of the Organic Act shall be included in the
autonomous region. The provinces and cities wherein such a
majority is not attained shall not be included in the autonomous
region. It may be that even if an autonomous region is created,
not all of the thirteen (13) provinces and nine (9) cities
mentioned in Article II, section 1 (2) of R.A. No. 6734 shall be
included therein. The single plebiscite contemplated by the
Constitution and R.A. No. 6734 will therefore be determinative
of (1) whether there shall be an autonomous region in Muslim
Mindanao and (2) which provinces and cities, among
those enumerated in R.A. No. 6734, shall compromise it.
There must be at least 2 LGUs because the Constitution says
“units”, so in the case of Cordillera, it’s not duly created
because only 1 province got an affirmative plebiscite, which is
only the Ifugao province, and the rest are negative. So, no
Cordillera Autonomous Region, but simply Administrative
Region of the Cordilleras. No local government powers.
The sole province of Ifugao cannot validly constitute the
Cordillera Autonomous Region. The keyword in Article X,
Section 15 of the 1987 Constitution – provinces, cities,
municipalities and geographical areas connote that “region” is
to be made up of more than one constituent unit. The term
PUBLIC CORPORATION LAW REVIEWER (EH 407)
“region” used in its ordinary sense means two or more
provinces. Rule in statutory construction must be applied here:
the language of the Constitution, as much as possible should
be understood in the sense it has in common use and that the
words used in constitutional provisions are to be given their
ordinary meaning except where technical terms are employed.
The entirety of Republic Act No. 6766 creating the Cordillera
Autonomous Region is infused with provisions which rule
against the sole province of Ifugao constituting the Region. It
can be gleaned that Congress never intended that a single
province may constitute the autonomous region. If this were
so, we would be faced with the absurd situation of having two
sets of officials: a set of provincial officials and another set of
regional officials exercising their executive and legislative
powers over exactly the same small area.
Counting of the plebiscite votes:
REGULAR LGUs AUTONOMOUS REGIONS
Majority of TOTAL votes of Majority of the votes in EACH
ALL UNITS UNIT
As a general rule, the autonomous regions will be governed by
their organic acts. [This is different because LGUs will have to
be governed primarily by the LGC and secondarily by their
charter insofar as the provisions are not inconsistent with the
Code.]
Elections
Kida vs Senate
Assailed in this petition is R.A. 10153 that reset the next
ARMM regular elections to May 2013 to coincide with the
regular local and national elections of the country. Does the
1987 Constitution mandate the synchronization of elections
including the ARMM elections?
While the Constitution does not expressly state that Congress
has to synchronize national and local elections, the clear intent
towards this objective can be gleaned from the Transitory
Provisions (Article XVIII) of the Constitution, which show the
extent to which the Constitutional Commission, by deliberately
making adjustments to the terms of the incumbent officials,
sought to attain synchronization of elections. The Constitutional
Commission exchanges, read with the provisions of the
Transitory Provisions of the Constitution, all serve as patent
indicators of the constitutional mandate to hold synchronized
national and local elections, starting the second Monday of
May 1992 and for all the following elections.
In this case, the ARMM elections, although called “regional”
elections, should be included among the elections to be
synchronized as it is a “local” election based on the wording
and structure of the Constitution.
Thus, it is clear from the foregoing that the 1987 Constitution
mandates the synchronization of elections, including the
ARMM elections.
We admit that synchronization will temporarily disrupt the
election process in a local community, the ARMM, as well as
the community’s choice of leaders. However, we have to keep
in mind that the adoption of this measure is a matter of
necessity in order to comply with a mandate that the
Constitution itself has set out for us. Moreover, the
implementation of the provisions of RA No. 10153 as an interim
measure is comparable to the interim measures traditionally
Page 23 of 24
practiced when, for instance, the President appoints officials
holding elective offices upon the creation of new local
government units.

C. Beginning of Corporate Existence

Section 14. Beginning of Corporate Existence. - When a new

local government unit is created, its corporate existence shall
commence upon the election and qualification of its chief
executive and a majority of the members of its sanggunian,
unless some other time is fixed therefor by the law or
ordinance creating it.

The LGU’s corporate existence begins:

a) As fixed by the law or ordinance (usually effectivity of
law) creating the LGU, or
b) Election and Qualifications of LCE and majority of
Sanggunian members (when not fixed by law or
ordinance or when it is silent)

“Election” – refers to having been proclaimed as winners in the

election

“Qualifications” – refers to the oath-taking that qualifies the

public official

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