LAW ON PUBLIC CORPORATION

Corporation
 An artificial being created by operation of law, having the right of succession
and the powers, attributes and properties expressly authorized by law or incident
to its existence. [Corporation Code, sec 2; Act 1459, sec 2]

Classification of Corporation [according to purpose]:

1. Public Corporation/ Municipal Corporations
 Local Government Units
2. Private Corporation
3. Quasi-Public Corporation
 Private corporation that renders public service or supply public wants

Municipal Corporations/ Local Government Units:

1. Province
2. City
3. Municipality
4. Barangay
5. Autonomous regions
a) ARMM/ Autonomous Region of Muslim Mindanao
 The only successful autonomous region
b) CAR/ Cordillera Administrative Region -
 NOT an autonomous region
 During the plebiscite, it failed the required number of votes

Dual-Nature/ Two-Fold Character of Municipal Corporations

 Every local government unit created or organized [under the Local Government
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. [Sec. 15, RA 7160]
1. Body politic
 Exercises governmental functions
 According to the 1987 Constitution, only the police power and
eminent domain may be delegated to the LGUs
(a) Police power
(b) Eminent domain
(c) Power of taxation
 It acts as an agent of the State for the government of the territory and the
inhabitants
 Failure to perform these functions, the LGU is accountable to the State
2. Corporate enity
 Exercises proprietary or business functions
 It acts as an agent of the community in the administration of local affairs.
 As such, it acts as a separate entity, for its own purposes, and not as a
 subdivision of the State.
 Failure to perform these functions will not make the LGU accountable to the
State, but it is accountable to its people/inhabitants

SECTION 24. Liability for Damages. - Local government units and their officials are not
exempt from liability for death or injury to persons or damage to property. [Local
Government Code]
 No qualification on whether the function is governmental or proprietary function
is performed
 As opposed to the Law on Torts and Damages wherein an official is only liable if
performing proprietary functions, not governmental functions

Law or Ordinance
A local government unit may be created, divided, merged, abolished, or its boundaries
substantially altered EITHER:
1. By law enacted by CONGRESS in the case of provinces, cities, municipalities,
and any other political subdivision; OR
2. By ordinance passed by the SANGGUNIANG PANLALAWIGAN or
SANGGUNIANG PANLUNGSOD in the case of a barangay within its territorial
jurisdiction.
i. In the case of the creation of barangays by the Sangguniang Panlalawigan,
the recommendation of the Sangguniang Bayan concerned shall be
necessary. [LGC, sec 6]

Elements of Municipal Corporations

1. Legal creation or incorporation
 The law creatinf or authorizing the creation or incorporation of a municipal
corporation
 Power of creation is legislative in nature
 Congress
 Sangguniang Panlalawigan or Sangguniang Panlungsod for the creation of
barangays only
 If the creation of the baranggay is AFTER the effectivity of LGC of
1991 [January 1, 1992], the barangays cannot receive Internal Revenue
Allotment Share
2. Corporate name by which the entity is known and in which all corporate acts are done

SECTION 13. Naming of Local Government Units and Public Places, Streets
and Structures.
(a) The Sangguniang Panlalawigan may, in consultation with the Philippine
Historical Commission (PHC), change the name of the following within its territorial
jurisdiction:
(1) Component cities and municipalities, upon the recommendation of
the Sanggunian concerned;
(2) Provincial roads, avenues, boulevards, thorough-fares, and bridges;
(3) Public vocational or technical schools and other post-secondary and
 tertiary schools;
(4) Provincial hospitals, health centers, and other health facilities; and
(5) Any other public place or building owned by the provincial
government.
cultural, or ethnic significance shall not be changed, unless by a
unanimous vote of the Sanggunian concerned and in consultation with the
PHC.
(b) The Sanggunian of highly urbanized cities and of component cities whose
charters prohibit their voters from voting for provincial elective officials, hereinafter
referred to in this Code as independent component cities, may, in consultation with
the Philippine Historical Commission, change the name of the following within its
territorial jurisdiction:
(1) City Barangays, upon the recommendation of the Sangguniang
Barangay concerned;
(2) City roads, avenues, boulevards, thorough fares, and bridges;
(3) Public elementary, secondary and vocational or technical schools,
community colleges and non-chartered colleges;
(4) City hospitals, health centers and other health facilities; and
(5) Any other public place or building owned by the city government.
(c) The Sanggunians of component cities and municipalities may, in consultation
with the Philippine Historical Commission, change the name of the following within
its territorial jurisdiction:
(6) city and municipal Barangays, upon recommendation of the
Sangguniang Barangay concerned;
(7) city, municipal and Barangay roads, avenues, boulevards, thorough
fares, and bridges;
(8) city and municipal public elementary, secondary and vocational or
technical schools, post-secondary and other tertiary schools;
(9) city and municipal hospitals, health centers and other health
facilities; and (5)Any other public place or building owned by the municipal
government.
(d) None of the foregoing local government units, institutions, places, or
buildings shall be named after a living person, nor may a change of name be made
unless for a justifiable reason and, in any case, not oftener than once every ten (10)
years. The name of a local government unit or a public place, street or structure with
historical, cultural, or ethnic significance shall not be changed, unless by a
unanimous vote of the Sanggunian concerned and in consultation with the PHC.
(e) A change of name of a public school shall be made only upon the
recommendation of the local school board concerned.
(f) A change of name of public hospitals, health centers, and other health
facilities shall be made only upon the recommendation of the local health board
concerned.
(g) The change of name of any local government unit shall be effective only
upon ratification in a plebiscite conducted for the purpose in the political unit directly
affected. In any change of name, the Office of the President, the representative of the
legislative district concerned, and the Bureau of Posts shall be notified. [1987
 Constitution]

3. Population which is invested with the powers of the corporation through duly
constituted officers and agents
4. Territory within which the local government exercises civil and corporate functions

Supervision v. Control
Article X, SECTION 4. The President of the Philippines shall exercise general
supervision over local governments. Provinces with respect to component cities and
municipalities, and cities and municipalities with respect to component barangays shall
ensure that the acts of their component units are within the scope of their prescribed
powers and functions. [1987 Constitution]

Supervision Control
Overseeing; the power or authority of an Power of an officer to alter or modify or
officer to see that subordinate officers nullify or set aside what a subordinate
perform their duties officer has done in the performance of his
duties
If subordinate fails, superior may take such If subordinate fails, superior may substitute
action or step as prescribed by law to make the judgment of the latter for that of the
them perform their duties former
Officers in control lay down the rules in the May prescribe their own manner of
performance or accomplishment of an act. execution of the act; lay down the rule, or
If these rules are not followed, the may, in discretion to modify or replace them
their discretion, order the act undone or
redone by their subordinates or even decise
to do it themselves.
The Constitution confines the President’s power over local governments to one of general
supervision.

Sources of Powers in Local Government Units

1. Article X, 1987 Constitution
2. RA 7160/ Local Government Code
3. Statutes or Acts, provided that these acts are not inconsistent with the Constitution
4. Charter, that which creates the Local Government Unit
 If there is conflict between the Local Government Code and the Charter
regarding the creation of the local government unit, the latter law prevails

De jure v. De facto Municipal Corporations

1. De Jure Municipal Corporation
 Created or recognized by operation of law
 All four elements are present
2. De Facto Municipal Corporation
 Formed when there is defect in the creation of a municipal corporation but its
legal existence has been recognized and acquiesced publicly and officially
 Where the people have organized themselves, under color of law, into ordinary
municipal bodies, and have gone on, year after year, raising taxes, making
improvements, and exercising their usual franchises, with their rights dependent
quite as much in acquiescence as on the regularity of their origin
 Requisites
(a) Apparently valid law under which the corporation may be formed
(b) Attempt in good faith to organize the corporation
(c) Colorable compliance with law
(d) Assumption of corporate powers
 “Doctrine of operative fact”
 “Void for vagueness doctrine”

Classification of Powers
1. Express, implied, inherent
 “Doctrine of necessary implication”
2. Public or governmental, private or proprietary
3. Intramural, extramural [ as to its territorial jurisdiction]
4. Mandatory, directory: ministerial, discretionary

SECTION 16. General Welfare. - Every local government unit shall exercise the
powers expressly granted, those necessarily implied there from, as well as powers
necessary, appropriate, or incidental for its efficient and effective governance, and those
which are essential to the promotion of the general welfare. Within their respective
territorial jurisdictions, local government units shall ensure and support, among other
things, the preservation and enrichment of culture, promote health and safety, enhance the
right of the people to a balanced ecology, encourage and support the development of
appropriate and self-reliant scientific and technological capabilities, improve public
morals, enhance economic prosperity and social justice, promote full employment among
their residents, maintain peace and order, and preserve the comfort and convenience of
their inhabitants. [Local Government Code of 1991]

CREATION, CONVERSION, DIVISION, MERGER OR DISSOLUTION

Municipal Corporations/ Local Government Units:

1. Province
 Composed of a cluster of municipalities, or municipalities and component cities,
and as a political and corporate unit of government, serves as a dynamic
mechanism for developmental processes and effective governance of local
government units within its territorial jurisdiction
2. City
 Composed of more urbanized and developed barangays, serves as a general-
 purpose government for the coordination and delivery of basic, regular, and
direct services and effective governance of the inhabitants within its jurisdiction
a) Component Cities
 Allowed to participate in a provincial electoral process
b) Independent Component Cities
 The Charter prohibits participation in provincial electoral process
 Are those whose charters prohibit their voters from voting for provincial
elective officials
 Independent of the province
c) Highly Urbanized Cities
 Are those that meet the higher population threshold for cities in the LGC
 Independent of the province
SECTION. 452. Highly Urbanized Cities. - (a) Cities with a minimum
population of two hundred thousand (200,000) inhabitants, as certified by the
National Statistics Office, and with the latest annual income of at least Fifty Million
Pesos(Php50,000,000.00) based on 1991 constant prices, as certified by the city
treasurer, shall be classified as highly urbanized cities.
(b) Cities which do not meet the above requirements shall be considered
component cities of the province in which they are geographically located. If a
component city is located within the boundaries of two (2) or more provinces,
such city shall be considered a component of the province of which it used to be
a municipality.
(c) Qualified voters of highly urbanized cities shall remain excluded from
voting for elective provincial officials.
Unless otherwise provided in the Constitution or this Code, qualified voters
of independent component cities shall be governed by their respective charters,
as amended, on the participation of voters in provincial elections.
Qualified voters of cities who acquired the right to vote for elective
provincial officials prior to the classification of said cities as highly-urbanized
after the ratification of the Constitution and before the effectivity of this Code,
shall continue to exercise such right.

3. Municipality
 Consisting of a group of barangays, serves primarily as a general purpose
government for the coordination and delivery of basic, regular, and direct
services and effective governance of the inhabitants within its jurisdiction
4. Barangay
 Basic political unit, serves as the planning and implementing unit of government
policies, plans, programs, projects and activities in the community, and as a
forum wherein the collective views of the people may be expressed, crystallized
and considered, and where disputes may be amicably settled
5. Autonomous regions
a) ARMM/ Autonomous Region of Muslim Mindanao
 The only successful autonomous region
b) CAR/ Cordillera Administrative Region -
 NOT an autonomous region
  During the plebiscite, it failed the required number of votes

Case(s):
MMDA v. Bel-Air (2000)
The MMDA is not an LGU, much less a special metropolitan political
subdivision. The MMDA is a ‘development authority’ which is a ‘national agency’, not a
policical government authority.
The scope of the MMDA’s function is limited to the delivery of 7 basic services
enumerated in its charter. It is not vested with police power, let alone legislative power
[e.g., ordinance]. All its functions are administrative in nature.

General Requirements:
1. Applicable to all LGUs
2. Law or Ordinance
3. Plebiscite
4. Election and Qualification of Elective Officials

Ratification/ Plebescite Requirement

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. [Local Government Code]

Article X, SECTION 10. 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.[1987
Constitution]
Plebiscite must be “in the political units directly affected”
 The residents of the political entity who would be economically disclocated by
the separation of a portion thereof have the right to vote in said plebiscite
 “Material change” or substantial change as standard: If the creation,
division, merger, abolition or substantial alteration or boundaries of an LGU will
cause a material change in the political and economic rights of a political unit,
the residents of such political unit should have the right to participate in the
required plebiscite
 In the conversion of a component city to a highly urbanized city, the residents of
the province must participate. The conversion of the city will, among others,
result in reduction in taxing jurisdiction and reduced economic viability of the
province.
 Same rule if from a component city to an independent component city
 In a conversion of a barangay into a municipality, all electorate of the
municipality
  In a creation of a new barangay from a barangay, all electorate of the mother
barangay
 In downgrading, the same rules will apply

When Plebiscite is NOT Required [if not political subdivisions]

1. MMDA
2. Legislative districts
 These are not political subdivisions through which functions of the government
are carried out
3. Administrative Regions
 Not Autonomous regions
 These are not territorial and political subdivisions
 The power to create and merge administrative regions is traditionally vested in
the President, through both his supervision AND control

Case(s):
Sema v. COMELEC (2008)
Power to create provinces cannot be delegated. Section 19, Article VI of RA 9054
is unconstitutional insofar as it grants to ARMM Regional Assembly the power to create
provinces and cities. Congress’ delegation of the power to create includes the creation of
a legislative district, which is unconstitutional, since legislative districts may be created
or reapportioned only by an Act of Congress.
There is no provision in the Constitution that conflicts with the delegation to regional
legislative bodies of the power to create municipalities and barangays. However, the
creation of provinces and cities is another matter. ONLY CONGRESS can create
provinces and cities because the creation of the same necessarily includes the creation of
legislative districts, a power only Congress can exercise under Section 5, Article VI of the
Constitution and Section 3 of the Ordinance appended to it.

Requisites/Limitations to the creation and conversion of municipal corporations:

1. Law
2. Verifiable Indicators
a) Income
b) Population
 To create a legislative district within a province, there is no population
requirement
c) Territory/ Land Area
3. Plebiscite
4. No inconsistencies with the provisions of the 1987 Constitution [Sema case]

Verifiable Indicators [economic purpose]

Income (Average Population Land Area
Annual Income)
Province (Sec. 461) Php 20M 250,000 2,000 sq.m.
Highly Urbanized Php 50M 200,000 100 sq.m.
City (Sec. 452)
Component City Php 100M 150,000 100 sq.m.
excluding Internal
Revenue Allotment
Municipality Php 2.5M 25,000 50 sq.m.
Barangay - 2,000 or None, except for
5,000 if Metro contiguity
Manila or HUCs

What requirements must be satisfied

Province or Component 1. Income AND
City 2. EITHER population OR
land area
Highly Urbanized City 1. Income
2. Population
Municipality 1. Income
2. Population; and
3. Land Area
Barangay 1. Population ONLY

Beginning of Corporate Existence[Section 14, LGC]

General Rule: The corporate existence of an LGU commences upon the election
AND qualification [taking of oath or the commencement of exercise of functions] of its
chief executive and a majority of the members of its sanggunian
Exception: Unless some other time is fixed therefor by the law or ordinance creating
it.