LOCAL GOVERNMENTS

Q: What is a public corporation?

Ans: A public corporation is a corporation created by the State as the latter’s own agency or
instrumentality to help it in carrying out its governmental functions (Philippine Society for the
Prevention of Cruelty to Animals v. Commissoin on Audit G.R. No. 169752 September 25, 2007)

A local government is a "political subdivision of a nation or state which is constituted by

law and has substantial control of local affairs."

Public Corporations

Public corporations are those created for political purposes connected with the public good in the
administration of the civil government. They are formed and organized by the State for the government
and may thereby exercise state powers such as police power, taxation and eminent domain. It is
organized for the government of a portion of the state.

Public corporations may only be created through a statute.

Government Owned or Controlled Corporation

A government-owned or controlled corporation (GOCC) is a stock or a non-stock corporation, whether

performing governmental or proprietary functions, which is directly chartered by a special law or if
organized under the general corporation law is owned or controlled by the government directly, or
indirectly through a parent corporation or subsidiary corporation, to the extent of at least a majority of
its outstanding capital stock or of its outstanding voting capital stock.

GOCCs may be created by special charters in the interest of the common good and subject to
the test of economic viability.

Classifications of PUBLIC CORPORATIONS

Q: What are the classifications of public corporations?

Ans: Public corporations may be classified into (a) quasi-corporations; and (b) municipal corporations.

QUASI-COPORATIONS – private corporations created as agencies of State for narrow and limited
purposes without the powers and liabilities of self-governing corporations. A municipal corporation is a
body politic and corporate constituted by the incorporation of inhabitants for purposes of local
government. It is established by law partly as an agency of the State to assist in the civil government of
the Country, but chiefly to regulate and administer the local or internal affairs of the city, town or
district which is incorporated.

MUNICIPAL CORPORATIONS

Q: What are the elements of a municipal corporation?

Ans: A municipal corporation must have: 1) legal creation or incorporation, 2) a corporate name, 3)
inhabitants constituting the population, and territory.

Q: May municipal corporations be created by prescription?

Ans: Yes. These are referred to as de facto municipal corporations. It has been opined that municipal
corporations 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 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 that
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.

Q: Discuss the dual nature of municipal corporations.

Ans: Every local government unit shall exercise powers as a political subdivision of the national
government and as a corporate entity representing the inhabitants of its territory. Thus, a municipal
corporation has a governmental function where it acts as an agent of the State for the government
and the inhabitants within the municipal limits. It exercises by delegation a part of the sovereignty of
the State, including the use of legislative, executive and judicial powers. A municipal corporation also
has a private/proprietary function where it acts in a similar category as a business corporation,
performing functions not strictly governmental or political; those exercised for the special benefit and
advantage of the community.

Q: What are the requisites for creation, conversion, division, merger of dissolution of local government
units?

Ans: The following are the requirements for the creation and conversion of LGUs:

a) a law or ordinance providing for creation or conversion;

 NOTE: 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 (Sec. 6,
LGC).

b) Income sufficient to provide for all the essential government facilities and services
commensurate with the size of the population of the LGU concerned (Sec. 7, LGC).

c) Population – total number of inhabitants within the territorial jurisdiction (Sec. 7, LGC)

d) Land area or territory which must be contiguous except for islands or when divided/separated
by an LGU independent of the others, property identified by metes and bounds, and sufficient to
provide for such basic services and facilities

e) Attestation given by the DOF for income, NSO for population and LMB for land area

f) Approval of a majority of the majority votes cast in a plebiscite in the political units directly
affected.

From slides last year

Structure of Local Governments

- The national government by law creates, merges, or abolishes LGUs, endows them with powers
within their jurisdictions.
- While these local units may be created by law, the Local Government Code mandates that the
residents of the areas affected by the creation should approve the measure in a plebiscite.

Verifiable Indicators

INCOME: must be sufficient to provide for all the essential government services expected of it.

POPULATION: there has to be a particular size in terms of the number of people within its territory

LAND AREA: must generally be contiguous, unless the LGU concerned is composed of islands or
separated by a LGU independent of the others.
In the supervisory structure of the local government system, the President has general supervision over
all local government units. But his direct supervisory contact is with autonomous regions, provinces, and
independent cities. The rest follow a hierarchical order.

The fund sources of the local governments are:

a) Local taxes, fees and charges;

b) Its share in the national taxes;
c) Its share in the proceeds of the utilization of natural resources within their respective areas;
d) Other “sources of revenues” which they may legitimately make use of either in their public or
private capacity.

POWER TO TAX:

The share of taxes of LGUs has been increased from 11% to 40% under the following schedule:

1) 30% upon the effectivity of the Code on January 1, 1992;

2) 35% on January 1, 1993; and
3) 40% on January 1, 1994

Also, LGUs are invested with increased power to tax, thereby empowering them a wider capacity to
raise their own revenues within their respective territorial jurisdictions.

NOTES:

1. Share of LGUs in national taxes is limited to the internal revenue taxes.

2. The share of each LGU should be released, without need of any further action, directly to the
provincial, city, municipal or barangay treasurer. Release is made on a quarterly basis within 5
days after the end of each quarter.
3. The share of each LGU should not be subject to any lien or holdback that may be imposed by the
national government for whatever purpose.

There should be representatives from:

1) The women’s sector;

2) The workers; and
3) Third sector (can be chosen from any of the following)
a) Urban poor
 b) Indigenous cultural communities
c) Disabled persons; or
d) Any other sector as may be determined by the sanggunian

NOTES:

1. Requisites
a. Compliance with the requirements of the Local Government Code; and
b. Approved by a majority of the votes cast in a plebiscite held in the political units
DIRECTLY affected

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 COMELEC within 120 days
from the date of effectivity of the law or ordinance effecting such action, unless said law
or ordinance fixes another date.

2. Example: a province which is supposed to be divided into two (2) separate provinces, plebiscite
will include voters of the ENTIRE province, and not just the area to comprise the new province.

3. LGC requirements relate to matters such as population, revenue, and area requirements.

NOTES:

1. This provision is not intended to preserve the Metropolitan Manila commission but is an
attempt to preserve part of it as a supra municipal authority with limited jurisdiction thereby
leaving the National Capital Region from relegation to a constitutional limbo. The provision also
authorizes the creation of similar authorities in other metropolitan regions. The area of
jurisdiction would not be the totality of municipal government but only basic services.

2. MMDA is not a political unit of the government.

CLASSIFICATION OF CITIES

1. Highly urbanized (as determined by law)

2. Component cities (cities that are still under provincial control); and
 3. Independent Component cities (non-highly urbanized cities whose voters are prohibited by the
city charter from voting in provincial elections)

** The third category is envisioned as an ad hoc category to take care of existing charters; but these
cities can become either “highly urbanized” or they may be demoted to component cities qualified to
vote in provincial elections.

NOTE:

1. Consolidation and Coordination of Efforts, Services, and Resources

2. It is optional on the part of LGUs as shown by the use of the word “may.”
3. It can be done for purposes commonly beneficial to them in accordance with the law.

NOTE:

1. Currently, we have EO No. 325 dated April 12, 1996 which provides for the Reorganization of the
Regional Development Councils.

LOCAL DEVELOPMENT COUNCILS are legally mandated to “assist the corresponding sanggunian
in setting the direction of economic and social development, and coordinating development
efforts within its territorial jurisdiction.”

POWERS OF LGUs

- strictly speaking, different LGUs have different powers and responsibilities.

- the code mandates the devolution of certain national government powers to and increase of (a) the
share of national taxes for the local LGUs and (b) their power to tax.

DEVOLUTION

o 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.
This includes the transfer to the local government units of the records, equipment and
other assets and personnel of national agencies and offices. Regional offices of national
agencies shall be phased out within one year from the approval of this code. Career
regional directors who cannot be absorbed by the local government unit shall be
retained by the national government, without diminution in rank, salary, or tenure.
By horizontal distribution of powers, the powers of the government are distributed among the three (3)
branches of the national government.

By vertical contribution of powers, the powers of the government are distributed among at least two
levels of government, the upper and lower levels. The upper level is the national government, and the
lower level is the local level government.

The following are the powers devolved to the LGUs by the Local Government Code:

a. Health
b. Agriculture
c. Maintenance of Public Works and Highways
d. Environmental Protection
e. Social Welfare
f. Certain tourism functions; and
g. Construction of School buildings and facilities are now devolved to LGUs.

National supervision over LGUs is the norm. LGUs have the power to enact ordinances within their
territory.

FIELD ORGANIZATION versus LOCAL GOVERNMENT

Local Governments

4) Perform a number of services, and the authority they exercise is political in nature. Political powers
include legislation through locally elected or selected councils which also exercise the power of
taxation.

Field Offices

5) Perform specific governmental functions in designated areas, and the nature of their delegated
functions is administrative.
6) Heads of field offices are appointed generally by the head of the national agency or department.

LOCAL OFFICIALS

- Local Chief Executives

- Province = Governor
 - City = City Mayor

- Municipality = Municipal Mayor

- Barangay = Barangay Captain

- In addition to the elected officials, there are ex-officio members (local presidents of the league of
barangays, presidents of the local federation of Sangguniang Kabataan, presidents of the federation of
Sangguniang members and three sectoral representatives (from women, workers and special sectors)

- appointive officials in the LGUs are the Secretary to the Sanggunian, Treasurer, Assessor, Budget
Officer, Civil Registrar, Administrator, Legal Officer, Agriculturist, Social Welfare Officer and
Development Officer, etc.

FROM NACHURA’S BOOK

1. Constitutional Provisions
7) Sec. 24, Art. II: The State shall ensure the autonomy of local governments.
8) Sec. 2, Article X: The territorial and political subdivisions shall enjoy local autonomy.

2. The principle of local autonomy under the 1987 Constitution simply means
“DECENTRALIZATION;” it does not make local governments within the state or an “imperium in
imperio.”
a) AUTONOMY is either decentralization of administration or decentralization of power.

* decentralization of administration
- consists merely of the delegation of administrative powers to broaden the
base of governmental power.

 decentralization of power
i) abdication by the national government of political power in favour of the local government.

RULES OF INTERPRETATION OF THE LOCAL GOVERNMENT CODE

 1. Any provision on a power of a local government unit shall be liberally interpreted in its favour,
and an in case of doubt, any question thereon shall be resolved in favour of devolution of
powers and of the local government unit.
2. Any tax ordinance or revenue measure shall be construed strictly against the local government
unit enacting it and liberally in favour of the taxpayer.
3. The general welfare provisions 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.
4. Rights and obligations existing on the date of effectivity of this Code and arising out of contracts
or any other source of prestation involving a local government unit shall be governed by the
terms and conditions of said contracts or the law in force at the time such rights were vested.
5. 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.

Sec. 16: GENERAL WELFARE

Sec. 17 : BASIC SERVICES

LIABILITY FOR CONTRACTS

- Ordinarily, the doctrine of estoppel does not lie against the municipal corporation.

DOCTRINE OF IMPLIED MUNICIPAL LIABILITY

- A municipality may become obligated upon an implied contract to pay the reasonable
value of the benefits accepted or appropriated by it as to which it
has the general power to contract. The doctrine applies to all cases where money
or other property of a party is received under such circumstances that the general law,
independent of an express contract, implies an obligation to do justice with respect to the same.
ADMINISTRATIVE LAW
Defined. That branch of public law that fixes the organization and determines the competence of
administrative authorities and indicates to the individual remedies for the violation of his rights.

ADMINISTRATIVE BODIES OR AGENCIES

Defined. Organ of government, other than a court and other than a legislature, which affects the
rights of private parties either through adjudication or rule-making.

Creation. They are created by:

1) Constitutional provision;
2) Legislative enactment;
3) Authority of law

Criterion. A body or agency is administrative where its function is primarily regulatory even if it
conducts hearings and determines controversies to carry out its regulatory duty.

POWERS OF ADMINISTRATIVE BODIES

1) Quasi-legislative or rule-making power;

Nature. This is the exercise of delegated legislative power, involving no discretion as to what the
law shall be, but merely the authority to fix the details in the execution or enforcement of a
policy set out in the law itself.

Kinds of administrative rules or regulations

Supplementary or detailed legislation. They are rules and regulations “to fix the details” in the
execution and enforcement of a policy set out in the law.

2) Quasi-judicial or adjudicatory power; and

3) Determinative powers