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Public Corporations

Atty. Rafaelito Garayblas

Republic Act No. 7160 - An Act Providing for A Local Government Code of 1991

1. Define Body Politic and Corporate corporations. A municipal corporation is a public

corporation because it is created under the general
-Section 15 – Political and Corporate Nature of welfare clause.
Local Government Units
Every local government unit under this Code is a 3. How corporations are created, merged,
body politic and corporate endowed with powers divided (specific provisions of the law)
to be exercised by it in conformity with law. As
such, it shall exercise powers as a political -Section 6 – Authority to Create LGUs
subdivision of the National Government and as a A local government unit may be created, divided,
corporate entity representing the inhabitants of its merged, abolished, or its boundaries substantially
territory. altered either by law enacted by Congress in the
case of a province, city, municipality or any other
Body politic and corporate – public corporation political subdivision, or by ordinance passed by
invested with powers and duties of government; the sangguniang panlalawigan or sangguniang
often used to designate the state or nation or panlunsod concerned in case of a barangay located
sovereign power, or the government of a within its territorial jurisdiction, subject to such
municipality, without distinctly connoting any limitations and requirements prescribed in this
express and individual corporate character Code.
-Section 7 – Creation and Conversion
2. Characteristics and Qualities of a corporation As a general rule, the creation of a local
government unit or its conversion from one level
-Section 14 – Beginning of Corporate Existence to another level shall be based on verifiable
When a new LGU is created, its corporate indicators of viability and projected capacity to
existence shall commence upon the election and provide services, to wit:
qualification of its chief executive and a majority  Income – it must be sufficient, based on
of the members of its sangguniang, unless some acceptable standards, to provide for all
other time is fixed therefore by the law or essential government facilities and
ordinance creating it. services and special functions
commensurate with the size of the
Dual Nature and Functions of Municipal population, as expected of the LGU
Corporations: concerned.
a. Public or governmental – acts as an agent of  Population – it shall be determined as the
the state for the government of the territory total number of inhabitants within the
and the inhabitants; and territorial jurisdiction of the LGU
b. Private or proprietary – acts as an agent of the concerned.
community in the administration of local  Land Area – it must be contiguous, unless
affairs, as such, acts as a separate entity for its it comprises 2 or more islands or is
own purposes and not as a subdivision of the separated by an LGU independent of
State. others; properly identified by metes and
bounds with technical descriptions; and
*a municipal corporation is a public corporation sufficient to provide for such basic
but not all public corporations are municipal
services and facilities to meet the effective mechanisms of recall, initiative and
requirements of its populace. referendum
 To require all national agencies and offices to
-Section 10 – Plebiscite Requirement conduct periodic consultations with
No creation, division, merger, abolition, or appropriate LGUs, NGOs, and other
substantial alteration of boundaries of local concerned sectors of the community before
government units shall take effect unless approved any project or program is implemented in
by a majority of the votes cast in a plebiscite called their respective jurisdictions
for the purpose in the political unit or units
directly affected. Said plebiscite shall be Devolution – political decision with
conducted by COMELEC within 120 days from managerial consequences. It is usually a
the date of effectivity of the law or ordinance, response to demands for more local or
unless said law or ordinance fixes another date. regional autonomy to which government
officials in the central government reluctantly
4. Objective and enactment of the LGU (what accede.
enhanced the powers; decentralization)
-Section 22 – Corporate Powers
-Section 2 – Declaration of Policy (a)Every LGU, as a corporation, shall have the
 Territorial and political subdivisions shall following powers:
enjoy genuine and meaningful autonomy to  To have continuous succession in its
attain their fullest development as self-reliant corporate name
communities and make them partners in the  To sue and be sued
attainment of national goals. The State shall  To have and use a corporate seal
provide for a more responsive and  To acquire and convey a real or personal
accountable local government structure property
instituted through a system of  To enter into contracts
decentralization.  To exercise such other powers as are
granted to corporations, subject to the
Decentralization – local government units shall be limitations provided in this code
given more powers, authority, responsibilities and
resources. It proceeds from the National (d)LGUs shall enjoy full autonomy in the exercise
Government. of their proprietary functions and in the
 Decentralization of Administration management of their economic enterprises,
-delegation by the central government of subject to the limitations provided in this Code
administrative powers to local and other applicable laws.
 Decentralization of power 5. Exploitation of natural resources and the LGU
-abdication of political power in favor of involved
local government units declared to be a. Obligation of the government to impose
anonymous (administrative autonomy); taxation, levies, revenue allotment
free to chart their own destiny with *taxes section128, 18
minimum intervention from central b. Make periodic reports
authorities. c. Ecological balance; pollution sec3(i); sec26
d. Objective of the LGU -> economy
 To ensure the accountability of local
government through the institution of

-Section 18 – Power to Generate and Apply -Section 3 (i) – LGUs shall share with the national
Resources government the responsibility in the management
LGUs shall have the power and authority to and maintenance of ecological balance within their
establish an organization that shall be responsible territorial jurisdiction, subject to the provisions of
for the efficient and effective implementation of this Code and national policies
their development plans, program objectives and
priorities; to create their own sources of revenues -Section 26 – Duty of National Government
and to levy taxes, fees, and charges which shall Agencies in the Maintenance of Ecological
accrue exclusively for their use and disposition Balance
and which shall be retained by them; to have just It shall be the duty of every national agency or
share of national taxes…; to have an equitable GOCC authorizing or involved in the planning
share in the proceeds from the utilization and and implementation of any project or program
development of the national wealth and resources that may cause pollution, climatic change,
within their respective territorial jurisdiction…; to depletion or non-renewable resources, loss of
acquire, develop, lease, encumber, alienate, or cropland, rangeland, or forest cover, and
otherwise dispose of real or personal property extinction of animal or plant species, to consult
held by them in their proprietary capacity and to with the LGUs, NGOs, and other sectors
apply their resources and assets for productive concerned and explain the goals and objectives of
developmental, or welfare purposes, in the the project or program, its impact upon the
exercise or furtherance of their governmental or people and the community in terms of
proprietary powers and functions and thereby environmental or ecological balance, and the
ensure their development into self-reliant measures that will be undertaken to prevent or
communities and active participants in the minimize the adverse effects thereof.
attainment of national goals.
6. Able-bodied citizens to render service
-Section 129 – Power to Create Sources of
Revenue -Ordinance requiring able-bodied males to
Each LGU shall exercise its power to create its perform patrol duty to assist policemen and
own sources of revenue and to levy taxes, fees and barangay tanods in apprehending thieves is valid
charges subject to the provisions herein, because it is for the maintenance of peace and
consistent with the policy of local autonomy. Such order of the City of Manila. [assuming all
taxes, fees, and charges shall accrue exclusively to requisites of valid ordinance are present]
the local government units.
7. Police Power; inherent powers of the state
-Section 97 – Annual Report
On or before March 31 of each year, every local Police power is inherent in the State but not in
chief executive shall submit an annual report to municipal corporations. For a municipal
the sangguniang concerned on the socio- corporation to exercise police power, there must
economic, political and peace and order be a legislative grant which necessarily sets the
conditions, and other matters concerning the local limits for the exercise of the power.
government unit, which shall cover the
immediately preceding calendar year. A copy shall -Section 16 – General Welfare
be forwarded to the DILG. Component cities and Every LGU shall exercise the powers expressly
municipalities shall likewise provide the SP copies granted, those necessarily implied therefrom, as
of their respective annual reports. well as the powers necessary, appropriate or
incidental for its efficient and effective

governance, and those which are essential to the 9. Resolution vs Ordinance
promotion of the general welfare.
Resolution – a formal expression of the opinion
8. Eminent Domain or will of an official municipal body adopted by a
a. How exercised vote.
b. Requirements
Ordinance – a rule, law, or statute adopted by a
-Section 19 – Eminent Domain municipal legislative body for the proper conduct
An LGU may, through its chief executive and of its affairs or the government of its inhabitants.
acting pursuant to an ordinance, exercise the It has the force and effect of a law, the violation
power of eminent domain for public use, or of which may be enforced in city municipal court.
purpose, or welfare for the benefit of the poor
and the landless, upon payment of just Tests for a Valid Ordinance:
compensation, pursuant to the provisions of the  Must not contravene the Constitution or
Constitution and pertinent laws; provided, any statute
however, that the power of eminent domain may  Must not be unfair or oppressive
not be exercised unless a valid and definite offer  Must not be partial or discriminatory
has been previously made to the owner; and such  Must not prohibit but may regulate trade
offer was not accepted; Provided further, that the  Must be general and consistent with
LGU may immediately take possession of the public policy
property upon the filing of the expropriation  Must not be unreasonable
proceedings and upon making a deposit with the
proper court of at least 15% of the FMV of the 10. Form of Government (provisions in the form
property based on the current tax declaration of of government)
the property to be expropriated; provided finally,
that the amount to be paid for the expropriated -Section1, Article II, Constitution
property shall be determined by the proper court, The Philippines is a democratic and republican
based on the FMV at the time of the taking of the State. Sovereignty resides in the people and all
property. government authority emanates from them.

Essential Elements: Democracy – all people have an equal say in the

 An ordinance granting chief executive decisions that affect their lives; allows citizens to
power to exercise power of eminent participate either directly or indirectly in the
domain proposal, development and creation of laws.
 It is for public use or purpose or welfare
for the benefit of the poor and the Republic – the country is not the private concern
landless or property of the rulers and where offices of
 Payment of just compensation states are elected or appointed rather than
 A valid and definite offer the property inherited; head of the state is not a monarch
was made and such offer was refused
11. Can a local chief executive perform an activity
-a property devoted to public use can be (perform a contract) moto proprio? No.
expropriated for the same purpose or public use
by a law enacted by congress. *city of manila vs -Section 22 – Corporate Powers
Chinese community of manila (c) Unless otherwise provided in this Code, no
contract may be entered into by the local chief
executive in behalf of the local government unit

without prior authorization by the sangguniang -Section 24 – Liability for Damages
concerned. A legible copy of such contract shall LGUs and their officials are not exempt from
be posted at a conspicuous place in the provincial liability for death or injury to persons or damage
capitol or the city, municipal or barangay hall. to property.

-Section 23 – Authority to Negotiate and Secure 13. Recall

Grants a. Basis
Local chief executives may, upon authority of the b. Span of time
sangguniang, negotiate and secure financial grants c. Initiative vs recall
or donations in kind… from local and foreign
assistance agencies without necessity of securing Recall – procedure by which voters can remove
clearance or approval therefor from any agency, of elected officials from office through direct vote
office of the National Government or from any
higher LGU, provided that the projects are -Section 70 – Initiation of Recall Process
approved by the national agency concerned, … commenced by a petition of a registered voter
provided further that when such national agency in the local government unit concerned and
fails to act on request for approval within 30 days, supported by the registered voters in the local
the same shall be deemed approved. government unit concerned during the election in
which the local official sought to be recalled was
12. Can the local government be sued? elected…
a. Proprietary function
b. City of Manila vs Chinese Community of -Section 69 – By Whom Exercised
Manila The power to recall for loss of confidence shall be
c. Section 24 exercised by the registered voters of a local
government unit to which the local elective
The state and its political subdivisions may not be official subject to such recall belongs.
sued without their consent. They are open to suit
but only when they consent it. Consent is implied -Section 74 – Limitations on Recall
when the government enters into a business Any elective local official may be the subject of a
contract, as it descends to the level of the other recall election only once during his term of office
contracting party; or it may be embodied in a for loss of confidence.
general or special law. Where consent to be sued is No recall shall take place within 1 year from the
given by general or special law, the implication date of the official’s assumption to office or 1 year
thereof is limited only to the resultant verdict on immediately preceding a regular local election.
the action before execution of the judgment.
-Section 120 – Local Initiative Defined
City of Manila vs Chinese Community of Manila Local initiative is the legal process whereby the
-the moment the municipal corporation or entity registered voters of a local government unit may
attempts to exercise the authority conferred, it directly propose, enact or amend any ordinance.
must comply with the conditions accompanying
the authority. The courts have the power of -Section 121 – Who May Exercise
restricting the exercise of eminent domain to the …may be exercised by all registered voters of the
actual reasonable necessities of the case and for provinces, cities, municipalities, and barangays.
the purposes designated by the law.
-Section 124 – Limitations on Local Initiatives
… power shall not be exercised more than once a
year, …shall extend only to subjects or matters

within the legal powers of the sanggunians to For Residency (candidate for election) – No, not
enact… is before initiative is held, sangguniang indicated in the law.
adopts in toto and the local chief executive -Commonwealth Act No. 473, Section 2
approves, initiative shall be cancelled. Applicant must possess the following
qualifications… He must own real estate in the
-Section 126 – Local Referendum Defined Philippines worth not less than Php 5, 000,
Local referendum is the legal process whereby the Philippine currency, or must have some known
registered voters of the local government units lucrative trade, profession, or lawful occupation…
may approve, amend or reject any ordinance
enacted by the sanggunian. -Article V, 1987 Constitution
Section 1. Suffrage may be exercised by all citizens
14. Citizenship of the Philippines not otherwise disqualified by
a. Who are citizens? law, who are at least 18 years of age, and who shall
b. How acquired? have resided in the Philippines for at least 1 year
c. 2 tests and in the place wherein they propose to vote for
d. Can a deaf-mute be naturalized? at least 6 months immediately preceding the
Assuming that he does not possess any of election. No literacy, property, or other
the disqualifications? YES. substantive requirement shall be imposed on the
exercise of suffrage.
-Article IV, 1987 Constitution
Section 1. The following are citizens of the -Section 39 – Qualifications
Philippines: An elective official must be a citizen of the
 Those who are citizens of the Philippines Philippines; a registered voter in the barangay,
at the time of the adoption of this municipality, city or province or, in case of a
Constitution member of the sangguniang panlalawigan or
 Those whose fathers and mothers are sangguniang panlungsod, or sangguniang bayan,
citizens of the Philippines the district where he intends to be elected; a
 Those born before January 17, 1973, of resident therein for at least 1 year immediately
Filipino mothers, who elect Philippine preceding the day of the election; able to read and
citizenship upon reaching the age of write Filipino or any other local language or
majority dialect. He must be of age depending on the
position aiming for.
 Those who are naturalized in accordance
with the law
16. Legislative Inquiry
How acquired:
-Section 21, Article VI, Constitution
 By Birth
The Senate or the HOR or any of its
 By Naturalization
representative committees may conduct inquiries
in aid of legislation in accordance with its duly
2 Tests:
published rules of procedure. The rights of
 Jus Sanguinis – right of blood; descent
persons appearing in or affected by such inquiries
from a parent who is a citizen or national
shall be respected.
of the Philippines
 Jus Soli – born on the soil of the country
17. Parliamentary Immunity (when invoked)

15. Is property requirement mandatory?

 Privilege from Arrest
For naturalization – yes
-congress is in session
For suffrage - No
-offenses punishable by not more than 6 20. MMDA – is it a political subdivision ? No.
years (cannot be used for offenses
punishable by more than 6 years) MMDA is not a local government unit but rather
an administrative agency tasked to implement and
 Privilege of Speech and Debate discharge their functions as such for the peace and
-in session order of the Metro Manila area.
-made in connection with official duties It has no power to enact laws or ordinances in
carrying out its mandate of public service.
18. Immunity from arrest It does not possess the elements of a municipal
a. When availed corporation which are: (1.) Legal incorporation;
b. Grounds (2.) Corporate name; (3.) Inhabitants; and (4.)
c. Who can avail Territory.

-Section 11, Article VI, Constitution 21. Power of the president over the LGUs
A senator, or member of the HOR shall, in all a. Is supervision direct?
offenses punishable by not more than 6 years b. Control
imprisonment, be privileged from arrest while
Congress is in session. No member shall be -Section 25 – National Supervision over Local
questioned nor be held liable in any other place Government Units
for speech or debate in the Congress or in any The president shall exercise general supervision
committee thereof. over LGUs to ensure that their acts are within the
scope of their prescribed powers and functions
19. Every act, in the title, must contain only 1 [-to ensure that local affairs are administered
subject according to law (President’s mandate to ensure
a. Purpose faithful execution of the laws) but he has no
b. Is it also true to local government control over their acts (he cannot substitute their
(ordinances)? judgment with his own.]
The president shall exercise supervisory authority
-Constitutional requirements in the enactment of a directly over provinces, highly urbanized cities,
statute: (1/3) and independent component cities; through the
Every bill passed by Congress shall embrace only province with respect to component cities and
one subject which shall be expressed in the title municipalities; and through the city and
thereof. The purposes of this are: municipality with respect to barangays.
 To prevent hodge-podge or log-rolling
legislation 22. Supervision vs Control
 To prevent surprise or fraud upon the
legislature -Section 17, Article VII, Constitution
 To fairly appraise the people, through The president shall have control of all the
such publications of proceedings as is executive departments, bureaus and offices. He
usually made, of the subjects of legislation shall ensure that the laws be faithfully executed.
that are being considered, in order that
they may have opportunity of being heard The president’s power of general supervision over
thereon by petition or otherwise, if they local government units is vested upon him by the
shall so desire. Constitution. He has full control of all the
members of the Cabinet, the latter being an alter
ego or extension of the personality of the
President. Their acts “performed and promulgated

in regular course of business, are unless designate in writing the OIC, specifying the powers and
disapproved or reprobated by the Chief functions (except power to appoint, suspend or dismiss).
Executive, presumptively the acts of the Chief
Executive”. (d)if no authorization, vices and highest ranking
sanggunian shall have the right to assume the powers,
Supervision – refers to the power of a superior duties and functions on the 4th day (except power to
officer to see to it that the lower officers perform appoint, suspend or dismiss).
their functions in accordance with the law.
(e)authorization is limited to vice governor, vice mayor and
highest ranking sanggunian, as the case may be.
Control – the power of an officer to alter, modify,
or set aside what a subordinate officer had done in
the performance of his duties and to substitute the Disciplinary Actions
judgment of the former.
Section 60 – Grounds for Disciplinary Actions
An elective official may be disciplined, suspended, or
Vacancies and Succession removed from office on any of the following grounds:
a) Disloyalty to the Republic of the Philippines
Section 44 – Permanent Vacancies in the Offices of the b) Culpable violation of the Constitution
Governor, Vice-Governor, Mayor, and Vice-Mayor c) Dishonesty, oppression, misconduct in the office,
If a permanent vacancy occurs in the office of the gross negligence, or dereliction of duty
governor and the mayor, vices shall become such. If no d) Commission of any offense involving moral
vices, highest ranking sanggunian member, then second turpitude, or an offense punishable by at least
highest…and so on. prison mayor
e) Abuse of authority
Section 45 – Permanent Vacancies in the Sanggunian f) Unauthorized absences for 15 consecutive days
-where automatic successions do not apply, shall be filled (except for SP, Sp, SB, Sb)
by appointment: g) Application for, or acquisition of, foreign
1. The President, through Executive Secretary, SP, citizenship or residence, or status of an immigrant
SP of highly urbanized cities an independent of another country
component cities h) Such other grounds as may be provided in this
2. Governor, SP of component cities and SB code or other laws
3. City or municipal mayor, sangguniang barangay
Section 63 – Preventive Suspension
*except for sangguniang barangay, nominee must be from
same political party, to serve unexpired term. If no party, -may be imposed at any time, when the evidence of guilt is
appoint qualified person. strong, and given the gravity of the offense, there is a great
probability that the continuance in the office of the
Section 46 – Temporary Vacancy in the Office of the respondent could influence the witnesses or pose a threat
Local Chief Executive to the safety and integrity of the records and other
(a)If gov, mayor or punong barangay is temporarily
incapaciatated, the vices or the highest ranking sanggunian -single preventive suspension shall not last more than 30d
shall automatically exercise powers and functions except -several admin cases not more than 90 days within a year
power to appoint, suspend or dismiss employees (can -expiration of the term, deemed reinstated
exercise if incapacity exceeds 30 days) -proceedings terminated within 120 days from time of
(c) if local CE is travelling within the country but outside
his territorial jurisdiction (not exceeding 3 days), he may