public corporation 2009

8/3/2019 Public Corporation 2009

1/32

UST GOLDEN NOTES 2009

PUBLIC CORPORATIONS

GENERAL PRINCIPLES

Q: What is a Public Corporation?

A: It is one created by the state either by generalor special act for purposes of administration oflocal government or rendering service in the publicinterest. (Rodriguez, p. 2, LGC 5th Ed.)

Q: Distinguish public corporation from privatecorporation.

A:PUBLIC

CORPORATIONPRIVATE

CORPORATION

Purpose Administration oflocal government

Private purpose

Who

creates

By the state either

by general or special act

By incorporators

with recognizanceof the state

Howcreated

By legislation By agreement of members

Q: What is the criterion to determine whether acorporation is a public corporation?

A: By the relationship of the corporation to thestate; if created by the state as its own agency tohelp the state in carrying out its governmentalfunctions, it is public, otherwise, it is private.

Q: What are the dual characteristics of public

corporations?

A:

1. Public or governmental acts as an agent

of the state for the government of theterritory and its inhabitants.

2. Private or proprietary acts as an agent of

the community in the administration oflocal affairs. As such, it acts as separateentity for its own purposes, and not asubdivision of the state. (Bara Lidasan v.COMELEC, G.R. No. L28089, October 25, 1967 citing McQuillin, Municipal Corporations, 3d ed., pp. 456464)

Note: Every LGU created or recognized under this codeis a body politic and corporate endowed with powers tobe exercised by it in conformity with law. As such, it shallexercise powers as a political subdivision of the nationalgovernment and has a corporate entity representing theinhabitants of its territory Sec.15, LGC,199

Q: What are the classes of corporation?

A:

1. Quasi-public corporations public

corporations created as agencies of statefor narrow and limited purposes withoutthe powers and liabilities of self-governing

corporations.2. Municipal corporations body politic and

corporate constituted by the incorporationof inhabitants for purposes of localgovernment. It is established by law partlyas an agency of the state to assist in thecivil government of the country, but chieflyto regulate and administer the local orinternal affairs of the city, town or districtwhich is incorporated.(Dillon, Municipal Corporations, Vol.2, pp.

5859.)

Q: What are the essential elements of amunicipal corporation?

A:1. Legal creation2. Corporate name

Note: The sangguniang panlalawigan may, inconsultation with the Philippine Historical Commissionchange the name of component cities and municipalities,upon the recommendation of the sangguniang concernedprovided that the same shall be effective only uponratification in a plebiscite conducted for the purpose inthe political unit directly affected. (R.A. 7160, sec. 13)

3. Inhabitants constituting the population whoare invested with political and corporatepowers

4. Territory

Q: What are the different types of municipalcorporations?

A:1. De jure Municipal Corporations created

or recognized by operation of law.

2. Municipal Corporation by Prescription exercised their powers from timeimmemorial with a charter, which ispresumed to have been lost or destroyed.

3. De facto Municipal Corporations wherethe people have organized themselves,under color of law, into ordinary municipalbodies, and have gone on, year after year,raising taxes, making improvements, andexercising their usual franchises, with theirrights dependent quite as much on

156


2/32


acquiescence as on the regularity of theirorigin.

Note: An inquiry into the legal existence of a de factocorporation is reserved to the State in a proceeding forquo warranto or other direct proceeding.

Q: What are the essential requisites of a de

facto corporation?

A: VACA

a. Valid law authorizing incorporation

b. Attempt in good faith to organize under it

c. Colorable compliance with law

d. Assumption of corporate powers

Q: MADAKO is a municipality composed of 80barangays, 30 west of Madako River and 50east thereof. The 30 western barangays, feelingleft out of economic initiatives, wish to

constitute themselves into a new and separatetown to be called Masigla. A law is passedcreating Masigla and a plebiscite is made infavor of the law.Suppose that one year afterMasigla was constituted as a municipality, thelaw creating it is voided because of defects.Would that invalidate the acts of themunicipality and/or its municipal officers?Explain briefly.

A: Although the municipality cannot be consideredas a de facto corporation, because there is no validlaw under which it was created, the acts of themunicipality and of its officers will not be

invalidated, because the existence of the lawcreating it is an operative fact before it wasdeclared unconstitutional. Hence, the previous actsof the municipality and its officers should be giveneffect as a matter of fairness and justice. (2004Bar Question)

Q: What is the concept of principle of localautonomy?

A: Under the 1987 Constitution, it simply meansdecentralization; it does not make the localgovernments sovereign within the state or animperium in imperio. (Basco v. PAGCOR, GR

91649 May 14, 1991)

Q: Distinguish Decentralization of Administration from Decentralization of Power.

A:DA DP

Consists merely in thedelegation of administrative powersto broaden the base ofgovernmental power.

Involves abdication bythe national governmentof political power in favorof LGUs declaredautonomous.

Q: Define devolution with respect to localgovernment units.

A: The act by which the national governmentconfers power and authority upon the various localgovernment units to perform specific functions andresponsibilities.

A. CREATION OF PUBLIC

CORPORATIONS

Q: Who has the authority to create municipalcorporations? How is a public corporation

created?

A: An LGU may be created, divided, merged,abolished or its boundaries substantially alteredeither by:

1. Law enacted by congress in case ofprovince, city, municipality or any otherpolitical subdivision;

2. By an ordinance passed by the

Sangguniang Panlalawigan or Sangguniang Panlungsod concerned inthe case of a barangay located within itsterritorial jurisdiction, subject to such

limitations and requirements prescribed inthe LGC. (Sec. 6, R.A. 7160)

Q: What are the requisites or limitationsimposed on the creation or conversion ofmunicipal corporations?

A:1. Plebiscite requirement approved by

majority of the votes cast in a plebiscitecalled for such purpose in the political unitor units directly affected.

Note: Plebiscite should include the participation of the

residents of the mother province in order to conform tothe constitutional requirement.

2. Income requirement must be sufficienton acceptable standards to provide for allessential government facilities andservices and special functionscommensurate with the size of itspopulation as expected of the localgovernment unit concerned. Average

157


3/32

PUBLIC CORPORATIONS

annual income for the last consecutiveyear which should be at least:

a. Province P20,000,000.00b. Highly Urbanized City-P50,000,000.00

c. City P20,000,000.00 (100M RA

9009 amending sec. 450 LGC)d. Municipality P2,500,000.00

Q: Are the Internal Revenue Allotments (IRAs)considered income and, therefore, to beincluded in the computation of the averageannual income of a municipality for purposesof its conversion into an independentcomponent city?

A: Yes. The IRAs are items of income becausethey form part of the gross accretion of the funds ofthe local government unit. The IRAs regularly andautomatically accrue to the local treasury withoutneed of any further action on the part of the localgovernment unit. They thus constitute incomewhich the local government can invariably relyupon as the source of much needed funds.(Alvarez v. Guingona, GR 118303 Jan. 31, 1996)

3. Population requirement- to be determinedas the total number of inhabitants withinthe territorial jurisdiction of the localgovernment unit concerned. The requiredminimum population are:

a. Barangay 2,000 but in MetroManila and Highly urbanized city 5,000b. Municipality 25,000c. City 150,000d. Province 250,000

4. Land requirement must be contiguous,unless it comprises two or more islands oris separated by a local government unit;properly identified by metes and bounds;and sufficient to provide for such basicservices and facilities. Area requirementsare:

a.Municipality: 50 sq. km. (Sec.442)

b. City: 100 sq. km. (Sec. 450)

c. Province: 2,000 (Sec. 461)

Q: When does corporate existence begin?

A: Upon the election and qualification of its chiefexecutive and a majority of the members of itssanggunian, unless some other time is fixedtherefore by law or ordinance creating it.

Q: What is the rule relative to the merger anddivision of local government units?

A:1. Such division or merger shall not reduce

the income, population or land area of thelocal government concerned less than theminimum requirement

2. That the income classification of theoriginal LGU/s shall not fall below itscurrent income classification prior to thedivision

3. Plebiscite be held in LGUs affected4. Assets and liabilities of creation shall be

equitably distributed between the LGUsaffected and new LGU.

Note: When a municipal district of other territorialdivisions is converted or fused into a municipality allproperty rights vested in original territorial organizationshall become vested in the government of themunicipality.

B. DIVISION, MERGER, ABOLITION

Q: What are the requirements for division andmerger of local government units?

A: Same requirements as creation of LGU

provided:1. It shall not reduce the income, populationor land area of the LGU/S concerned toless than minimum requirementsprescribed;

2. Income classification of the original LGU/S

shall not fall below its current incomeclassification prior to division.

3. Plebiscite be held in LGUs affected

4. Assets and liabilities of creation shall beequitably distributed between the LGUs

affected and new LGU.

Q: When may an LGU be abolished?

A: When its income, population or land area hasbeen irreversibly reduced to less than the minimumstandards prescribed for its creation, as certified bythe national agencies mentioned.

U NIVERSITY OF S ANTO T

OMAS

F

a c u l t a d d e D e r e c h o C i v i l

1


4/32


C. LOCAL GOVERNMENT CODE

Q: How should the LGC be interpreted?

A:GR: That any doubt or question on a power oflocal government shall be resolved in favor ofdevolution of powers and in favor of the LGU.

XPN: In case of tax measures enacted by localgovernment, any doubts shall be strictly againstthe local government and liberally in favor of thetaxpayer.

Q: What are the different rules in interpretingthe Local Government Code?

A:1. In case of doubt in favor of any provision

on a power of a local government unit: Infavor of devolution of powers and favor ofthe LGU

2. In case of doubt in favor of tax measures:Strictly against the LGU and liberally infavor of the tax payer; Tax exemption,incentive or relief is construed strictlyagainst the person claiming it

3. General Welfare provisions: l iberallyinterpreted to give more powers to thelocal government units in acceleratingeconomic development and upgrading thequality of life for the people in thecommunity

4. Rights and obligations existing oneffectivity of this Code and arising out ofcontracts: governed by the original termsand conditions of said contracts or the lawin force at the time such rights werevested

5. Resolution of controversies where no legalprovision or jurisprudence applies: Resortto the customs and traditions of the placewhere the controversies take place.

GENERAL POWERS AND ATTRIBUTES OF ALOCAL GOVERNMENT UNIT

Q: What are the sources of powers of amunicipal corporation?

A: Constitution, Statutes (e.g. LGC), Charter,Doctrine of Right to self-government but only tothose where it can be applied.

Q: What are the classifications of municipalpowers?

A:

1.Express, Implied, Inherent2.Government or public, Corporate orprivate3.Intramural, extramural4.mandatory, directory; ministerial,discretionary

Q: How are powers to be executed?

A:a. where statute prescribes the manner of

exercise, procedure must be followed.b. where the law is silent, LGU have the

discretion to select reasonable means andmethods to exercise

A. GOVERNMENTAL POWERS

Q: What are the different governmental powersof the LGU?

A:

1. Police power2. Basic services and facilities3. Power to generate and apply resources4. Power of Eminent Domain5. Reclassification of Land6. Closure and Opening of Roads7. Local Legislative Power8. Authority over Police Units

I. POLICE POWER

Q: What is the nature of the police power of theLGU?

A: The police power of the LGU is not inherent.LGUs exercise the police power under the generalwelfare clause. (Sec 16, RA 7160)

Q: What are the requisites/limitations for theexercise of the police power for it to beconsidered as properly exercised?

A:

1. The interests of the public generally,

as distinguished from those of a particularclass, require the interference of the state.(equal protection clause)

2. The means employed are reasonably

necessary for the attainment of the objectsought to be accomplished and not dulyoppressive. (due process clause)

3. Exercisable only within the territorial

limits of the LGU, except for protection ofwater supply. (Sec 16)

159


5/32

PUBLIC CORPORATIONS

4. Must not be contrary to theConstitution and the laws.

Q: The Municipality of Binangonan, Rizal,passed a resolution authorizing the operationof an open garbage dumpsite in a 9- hectarelanding the Reyes Estate within the

Municipalitys territorial limits. The LLDAissued to the Binangonan municipalgovernment a cease and desist order to stopthe operation of the dumpsite because of itsproven harmful effects to the health ofresidents and environment. The Municipality ofBinangonan filed a case to annul the orderissued by the LLDA.

1. Can the Municipality of Binangonan

invoke police power to prevent itsresidents and the LLDA frominterfering with the operation of thedumpsite by the Municipality? Explain.

2. Can the LLDA justify its order by

asserting that the health of theresidents will be adversely affected?Explain.

A:

1. No, the Municipality of Binangonan cannot

invoke its police power. According toLaguna Lake Development Authority v.Court of Appeals, 231 SCRA 292, underRepublic Act No, 4850, the Laguna LakeDevelopment Authority is mandated to

promote the development of the LagunaLake area, including the surroundingProvince of Rizal, with due regard to theprevention of pollution. The Laguna LakeDevelopment Authority is mandated topass upon and approve or disapprove allprojects proposed by local governmentoffices within the region.

2. Yes, the Laguna Lake Development

Authority can justify its order. Since it hasbeen authorized by Executive Order No.927 to make orders requiring thediscontinuance of pollution, its power to

issue the order can be inferred from this.Otherwise, it will be a toothless agency.Moreover, the Laguna Lake DevelopmentAuthority is specifically authorized underits Charter to issue cease and desistorders. (1995 Bar Question)

Q: May a nuisance be abated without a judicialproceeding?

A: Yes. The abatement of nuisances withoutjudicial proceedings applies to nuisance per se orthose which affect the immediate safety of personsand property and may be summarily abated under

the undefined law of necessity. (Tayaban v. PeopleGR 150194 Mar.6, 2007)

Note: The local sanggunian does not have the power tofind, as a fact, that a particular thing is a nuisance per se,a thing which must be determined and resolved in theordinary courts of law (AC Enterprise, Inc. v. FrabelleProperties Corporation, 506 SCRA 629)

Q: What does the power to issue licenses andpermits include?

A: The power to issue licenses and permitnecessarily includes the power to revoke, withdraw

or restrict through the imposition of certainconditions. However, the conditions must bereasonable and cannot amount to an arbitraryinterference with the business.(Acebedo Optical v. CA, G.R. No. 100152, Mar. 31, 2000)

Note: Only the Sanggunian, not the mayor of the city,has the power to allow cockpits, stadiums, etc. Withoutan ordinance, he cannot compel mayor to issue him abusiness license (Canet v. Decena GR 155344 Jan.20,2004)

Q: Distinction between the grant of a license orpermit to do business and the issuance of a

license to engage in the practice of a particularprofession.

A:License/permit to do

businessLicense to engage in a

profession

Granted by the localauthorities

Board or Commissiontasked to regulate theparticular profession

Authorizes the personto engage in thebusiness or some formof commercial activity

Authorizes a naturalperson to engage in thepractice or exercise ofhis or her profession

Note: A business permit cannot, by the imposition ofcondition, be used to regulate the practice of aprofession. [Acebedo Optical v. CA (2000)]

II. EMINENT DOMAIN

Q: What are the requisites for a valid exerciseof power of eminent domain by LGU?


OMAS

F


1


6/32


A: OPOC

1. An Ordinance is enacted by the local

legislative council authorizing the localchief executive, in behalf of the localgovernment unit, to exercise the power ofeminent domain or pursue expropriationproceeding over a particular property.

Note: A resolution will not suffice for a LGU to be able toexpropriate private property; a municipal ordinance isdifferent from a resolution in that an ordinance is a lawwhile a resolution is merely a declaration of the sentimentor opinion of a lawmaking authority on a specific matter.

2. For Public use, purpose or welfare of for

the benefit of the poor or landless

3. Payment of just Compensation

4. A valid and definite Offer has been

previously made to the owner of theproperty sought to be expropriated, but

said offer was not accepted.

Note: Offer must be in writing specifying the propertysought to be acquired, the reason for acquisition and theprice offered.

If owner accepts offer: a contract of sale will be executedIf owner accepts but at a higher price: Local chiefexecutive shall call for a conference for the purpose ofreaching an agreement on the selling price; If agreed,contract of sale will be drawn. (Art. 35 LGC IRR)

Q: What are the requisites for an authorizedimmediate entry?

A: 1. The filling of a complaint for expropriation sufficient in form andsubstance

2. The deposit of the amount equivalentto fifteen percent (15%) of the fair marketvalue of the property to be expropriatedbased on its current tax declaration. (Cityof Iloilo v. Legaspi. GR No. 154614,Nov;;ember 25, 2005; Sec. 19 LGC)

Note: Upon compliance, the issuance of writ ofpossession becomes ministerial.

Q: What are the two phases of expropriationproceedings?

A:1. The determination of the authority to

exercise the power of eminent domain andthe propriety of its exercise in the contextof the facts involved in the suit.

2. The determination by the court of the just

compensation for the property sought tobe taken. (Brgy. Son Roque, Talisay,Cebu v. Heirs of Francisco Pastor, GR138896 June 20, 2000)

Q: XYZ, a corporation organized under the lawsof Hongkong, with 100% foreign equity,obtained from the Securities and ExchangeCommission a license to operate a prawnhatchery project on a piece of land leased fromthe City of Dagupan. The land was formerly apark and plaza belonging to the City and wasconverted by the City to derive much neededfunds.

1. May the City of Dagupan lawfullyconvert the park to prawn ponds andlease the same? Explain your answer.

2. May the City of Dagupan and XYZcorporation validly enter into the leasecontract for the prawn ponds? Answerwith reasons.

A:

1. Yes, the City of Dagupan may lawfully

convert the park into prawn ponds andlease them. A city may close a park andplaza and once the property has beenwithdrawn from public use, it falls withinthe commerce of man and may be leased.Section 10 of the Local Government Codeprovides: "A local government unit maylikewise, through its head acting pursuantto a resolution of its sanggunian and in

accordance with existing law and theprovisions of this Code, close anybarangay, municipal, city or provincialroad, street, alley park or square. No suchway or place or any part thereof shall beclosed without indemnifying any personprejudiced thereby. A property thuswithdrawn from public use may be used orconveyed for any purpose for which otherreal property belonging to the local unitconcerned might be lawfully used orconveyed." In Favis v. City of Baguio, GRL-29910 April 25, 1969 it was held that theCity of Baguio could close a street and

lease it since it had become patrimonialproperty. Likewise, in Cebu Oxygen andAcetylene Company, Inc. v. Bercilles, GRL-40474 Aug.29, 1975it was held that theCity of Cebu could close a street and sell itthereafter.

2. Since the City of Dagupan has the power

to convert the park into prawn ponds it canalso lease it to XYZ even though XYZ is a

161


7/32

PUBLIC CORPORATIONS

100%- foreign corporation. The operationof a prawn hatchery does not involveexploitation of natural resources within themeaning of Sections 2 and 3, Article XII ofthe 1987 Constitution. (Secretary ofJustice, Op. No. 3, s. 1988) Since theportion of the park had been withdrawn

from public use, it could be disposed forany lawful purpose including leasing it to aforeign corporation. (1990 Bar Question)

Q: May the Sangguniang Panlalawigan validlydisapprove a resolution or ordinance of amunicipality calling for the expropriation ofprivate property to be made site of a FarmersCenter and Other Government Sports Facilitieson the ground that said expropriation isunnecessary considering that there are stillavailable lots of the municipality for theestablishment of a government center?

A: Under the LGC, the Sangguniang Panlalawiganis granted the power to declare a municipalresolution invalid on the sole ground that it isbeyond the power of the Sangguniang Bayan orMayor to issue. As held in Velazco v. Blas GR L-30456 July 30, 1982 The only ground upon whicha provincial board may declare any municipalresolution, ordinance or order invalid is when suchresolution, ordinance, or order is beyond thepowers conferred upon the council or presidentmaking the same. A strictly legal question isbefore the provincial board in its consideration of amunicipal resolution, ordinance, or order. Theprovincial boards disapproval of any resolution,

ordinance, or order must be premised specificallyupon the fact that such resolution, ordinance, ororder is outside the scope of the legal powersconferred by law. If a provincial board passesthese limits, it usurps the legislative functions of themunicipal council or president. Such has been theconsistent course of executive authority. (Modayv. CA, G.R. No. 107916, February 20, 1997)

III. TAXATION

Q: What is the nature of the power of taxationin LGUs?

A: The power to tax LGUs is now pursuant to directauthority conferred by the 1987 Constitution. SinceLGUs have no inherent power to tax, their powermust yield to a legislative act.

Q: What are the fundamental principles thatshall govern the exercise of the taxing and

revenue-raising powers of local governmentunits?

A:1. Taxation shall be uniform in each local

government unit2. Taxes, fees, charges and other impositions

shall be equitable and based as far aspracticable on the taxpayers ability to pay;be levied and collected only for publicpurpose; not be unjust, excessive,oppressive, or confiscatory; not be contraryto law, public policy, national economicpolicy, or restraint of trade;

3. The collection of local taxes, fees, charges

and other impositions shall in no case be leftto any private person

4. The revenue collected shall inure solely tothe benefit of and be subject to dispositionby, the local government unit, unlessspecifically provided therein;

5. Each local government, as far as

practicable, evolves a progressive system oftaxation. (Sec. 130, RA 7160)

Q: What are the fundamental principlesgoverning financial affairs, transactions andoperations of local government units?

A:1. No money shall be paid out of the local

treasury except in pursuance of an

appropriation ordinance or law;2. Local government funds and monies shallbe spent solely for public purposes;

3. Local revenue is generated only fromsources expressly authorized by law orordinance, and collection thereof shall atall times be acknowledged property

4. All monies officially received by a localgovernment officer in any capacity or onany occasion shall be accounted for aslocal funds, unless otherwise provided

5. Trust funds in the local treasury shall not

be paid out except in the fulfillment of thepurpose for which the trust was created or

the funds received6. Every officer of the local government unit

whose duties permit or require thepossession or custody of local funds shallbe properly bonded, and such officer shallbe accountable and responsible for saidfunds and for the safekeeping thereof inconformity with the provisions of law;


OMAS

F


1


8/32


7. Local governments shall formulate asound financial plans and local budgetsshall be based on functions, activities andprojects, in terms of expected results

8. Local budget plans and goals shall, so faras practicable, be harmonized withnational development plans, goals and

strategies in order to optimize theutilization of resources and to avoidduplication in the use of fiscal and physicalresources

9. Local budgets shall operationalizeapproved local development plans

10. Local government units shall ensure thattheir respective budgets incorporate therequirements of their component units andprovide for equitable allocation ofresources among these component units

11. National planning shall be based on localplanning to ensure that the needs andaspirations of the people as articulated by

the local government units in theirrespective local development places, areconsidered in the formulation of budgets ofnational line agencies or offices

12. Fiscal responsibility shall be shared by allthose exercising authority over thefinancial affairs, transactions andoperations of the local government units;and

13. The local government unit shall endeavorto have a balanced budget in each fiscalyear of operation(Sec. 305, RA 7160)

Q: What are the taxes that may be imposed by

the LGUs?

A:1. For provinces

a. Tax on transfer of real property ownership

(sale, donation, barter, or any other modeof transferring ownership): not more than50% of 1% of the total considerationinvolved in the acquisition of the property

b. Tax on business of printing andpublication: not exceeding 50% of 1% ofthe gross annual receipt

c. Franchise tax: not exceeding 50% of 1%of the gross annual receipt

d. Tax on sand, gravel and other quarryresources: not more than 10% of the fairmarket value per cubic meter. Proceedswill be distributed as follows:

i. Province 30%ii. Component city or municipality where

it was extracted 30%iii. Barangay where it was extracted 40%

e. Professional tax: not exceeding P300.00f. Amusement tax: not more than 30% of the

gross receiptsg. Annual fixed tax for every delivery truck or

van of manufacturers or producers,wholesalers of, dealers, or retailers in

certain products: not exceeding P500.00

2. For municipalities

a. Tax on businessb. Fees and charges on business and

occupation except those reserved for theprovince

c. Fees for sealing and licensing of weightsand measures

d. Fishery rentals, fees and charges

3. For cities

a. May levy taxes, fees and charges whichthe province and municipality may imposeprovided:

i. That the taxes, fees and charges leviedand collected of highly urbanized andindependent component cities shall accrueto them, andii.That the rate that the city may levy may

exceed the maximum rates allowed for theprovince or municipality by not more than50% except the rates of professional andamusement taxes

Q: What are the taxes, fees and charges that

may be imposed by the barangay?

A:1. City barangays may tax stores and retails

whose gross sales do not exceed P 50,000per annum. Municipal barangays may taxthose whose sales do not exceed P 30,000per annum.

2. Barangays may also impose fees for: a)services rendered; b) barangay clearances;c) commercial breeding of fighting cocks; d)cockfights; e) cockpits; f) places ofrecreation which charge admission fees; f)

billboards; and g) neon signs.

Note: Where the Secretary of Justice reviews, pursuantto law, a tax measure enacted by a local government unitto determine if the officials performed their functions inaccordance with law, i.e, with the prescribed procedurefor the enactment of tax ordinances and the grant ofpowers under the Local Government Code, the same isan act of mere supervision and not control (Drilon v Lim,GR 112497 Aug.4, 1994).

163


9/32

PUBLIC CORPORATIONS

Q: The Province of Palawan passes anordinance requiring all owners/operators offishing vessels that fish in waters surroundingthe province to invest ten percent (10%) of theirnet profits from operations therein in anyenterprise located in Palawan. NARCO FishingCorp., a Filipino corporation with head office in

Navotas, Metro Manila, challenges theordinance as unconstitutional. Decide the case.

A: The ordinance is invalid. The ordinance wasapparently enacted pursuant to Article X, Sec. 7ofthe Constitution, which entitles local governmentsto an equitable share in the proceeds of theutilization and development of the national wealthwithin their respective areas. However, this shouldbe made pursuant to law. A law is needed toimplement this provision and a local governmentcannot constitute itself unto a law. In the absenceof a law the ordinance in question is invalid.

Q: What is the nature of a community tax?

A: Community tax is a poll or capitation tax whichis imposed upon person who resides within aspecified territory.

Q: Who are exempted from the payment of thecommunity tax?

A:a. Diplomatic and consular representatives;

b. Transient visitors when their stay in the

Philippines does not exceed 3 months.Q: What are the remedies available to the localgovernment units to enforce the payment oftaxes?

A:1. Imposing penalties (surcharges and

penalty interest) in case of delinquency;2. Availing local governments liens;3. Administrative action through distraint of

goods, chattels, and other personalproperty;

4. By judicial action

Q: What are the other sources of revenue?

A: The local government units are entitled todefinite shares in:

1. The proceeds from development andutilization of mines, forests, and marineresources up to 40% of the grosscollections there from by the nationalgovernment;

2. The proceeds of government owned orcontrolled corporations engaged in theutilization and development of the nationalwealth up to 1% of the gross sales or 40%of the gross collections made by thenational government there from,whichever is higher.

Q: State the disposition of the proceeds of thenatural resources.

A: The distribution of shares of the localgovernment derived from the development and useof natural resources located in a province are asfollows:

1. 20% to the province;2. 45% to the component city or municipality

where located, and3. 35% to the barangay where located.

If the natural resources are located in highly

urbanized city, the distributions of shares are asfollows:

1. 65% to the city; and2. 35% to the barangay.

Q: What are real property taxes?

A: These are direct imposed on privilege to usereal property such as land, building, machinery,and other improvements, unless specificallyexempted.Note: Real property taxes are local taxes and notnational taxes.

Q: How much real property tax can be imposedby the local government units?A: A real estate levy may be imposed by theprovince or city as follows:

1. By the province, not exceeding 1% of theassessed value of the property; and

2. By the city, not exceeding 2% of theassessed value of the property.

Q: The Province of X required the NationalDevelopment Company to pay real estate taxeson the land being occupied by NDC and thelatter argued that since it is a government-owned corporation, its properties are exempt

from real estate taxes. If you were the Judge,how would you decide the case? Reason out.

A: In National Development Company v. Cebu CityGR 51593 Nov. 5, 1992 the Supreme Court heldthat the National Development Company was notliable for real estate tax on the property belongingto the government which it occupy. However,Section 234 of the Local Government Code


OMAS

F


1


10/32


subsequently withdrew the exemption from realproperty taxes of government-owned or controlledcorporations. If I were the Judge, I would hold theNational Development Company liable for realestate taxes. (1999 Bar Question)

Q: Bayantel was granted by Congress after the

effectivity of the Local Government Code(LGC), a legislative franchise with taxexemption privileges which partly reads thegrantee, its successors or assigns shall beliable to pay the same taxes on their real estate,buildings and personal property, exclusive ofthis franchise, as other persons orcorporations are now or hereafter may berequired by law to pay. This provision existedin the companys franchise prior to theeffectivity of the LGC. Quezon City thenenacted an ordinance imposing a reallyproperty on all real properties located withinthe city limits and withdrawing all exemptions

previously granted. Among properties coveredare those owned by the company. Bayantel isimposing that its properties are exempt fromtax under its franchise. Is the Bayantel correct?

A: The properties are exempt from taxation. Thegrant of taxing powers to local governments underthe Constitution and the LGC does not affect thepower of Congress to grant tax exemptions.

The term "exclusive of the franchise" is interpretedto mean properties actually, directly andexclusively used in the radio andtelecommunications business. The subsequent

piece of legislation which reiterated the phraseexclusive of this franchise found in the previoustax exemption grant to the company is an expressand real intention on the part of the Congress toonce against remove from the LGCs delegatedtaxing power, all of the companys properties thatare actually, directly and exclusively used in thepursuit of its franchise. (The City Government ofQuezon City, et al., v. Bayan Telecommnications,Inc., GR No. 162015, March 6, 2006)

Q: Under the Constitution, what are the threemain sources of revenues of local governmentunits?

A:

1. Taxes, fees, and charges. (Section 5,

Article X, 1987 Constitution)

2. Share in the national taxes. (Section

6,Article X, 1987 Constitution)

3. Share in the proceeds of the utilizations

and development of the national wealth

within their areas. (Section 7, Article X,1987 Constitution)

Note: An ordinance levying taxes, fees or charges shallnot be enacted without any prior public hearing

conducted for the purpose.(Figuerres v. CA, GR 119172Mar.25, 1999)

Q: What are the special levies on real property?

A:1. A special education fund may also be

assessed in provinces, cities, orMetropolitan Manila municipalities up to amaximum of 1% of the assessed value ofa real property.

2. Idle lands in provinces, cities or municipalities in Metro Manila may beadditionally taxed at not exceeding 5% oftheir assessed value.

3. Lands benefited by public works projectsor improvements in provinces, cities andmunicipalities may be levied a special taxof not exceeding 60% of the actual cost ofthe project.

Q: What are the requisites so that the Presidentmay interfere in local fiscal matters?

A:1. An unmanaged public sector deficit of the

national government;2. Consultations with the presiding officers of

the Senate and the House of Representatives and the presidents of thevarious local leagues;

3. And the corresponding recommendation ofthe secretaries of the Department ofFinance, Interior and Local Government,and Budget and Management.

Q: May a local government unit (LGU) regulatethe subscriber rates charged by CATVoperators within its territorial jurisdiction?

A: Under E.O. No. 205, the NationalTelecommunications Commission has exclusive

jurisdiction over matters affecting CATV operation,including specifically the fixing of subscriber rates.CATV system is not a mere local concern. Thecomplexities that characterize this new technologydemand that it be regulated by a specializedagency. This is particularly true in the area of rate-fixing. However, there is nothing under E.O. 205precludes LGUs from exercising its general power,under R.A. No. 7160, to prescribe regulations topromote health, morals, peace, education, goodorder or safety and general welfare of theirconstituents. (Batangas CATV, Inc. v. Court of

Appeals, GR 138810 Sept.29, 2004)

165


11/32

PUBLIC CORPORATIONS

IV. RECLASSIFICATION OF LANDS

Q: When may an LGU be authorized toreclassify lands?

A: Through an ordinance passed after conductingpublic hearings for the purpose.

Q: What are the grounds for reclassification oflands?

A:1. When the land ceases to be economically

feasible and sound for agriculturalpurposes as determined by DAR.

Note: In Fortich v. Corona GR 131457 April 24, 1998 ,LGU need not obtain approval of DAR to convert orreclassify land from agricultural to non-agricultural and

Roxas v. CA: DAR is mandated to approve or disapproveapplications for conversion.

2. Where the land shall have substantiallygreater economic value for residential,commercial or industrial purposes asdetermined by the sanggunian, limited tothe following percentage of agriculturalland area:

a. For HUC and independentcomponent cities: 15%

b. For component cities and 1st to 3rd

class municipalities: 10%

c. For 4th to 6th class municipalities:

5%

Note: The President may, when public interest sorequires and upon recommendation of the NEDA,authorize a city or municipality to reclassify lands inexcess of the limits set.

V. LOCAL LEGISLATIVE POWER

Q: Who exercises local legislative power andtheir presiding officer?

A:Province Sangguniang

panlalawiganVice-governor

City Sangguniangpanlungsod City vice-mayor

Municipality Sangguniangbayan

Municipalityvice-mayor

Barangay Sangguniangbarangay

Punongbarangay

Note: The presiding officer shall vote only to break a tie.

Q: In the absence of the regular presidingofficer, who presides in the sangguniangconcerned?

A: The members present and constituting aquorum shall elect from among themselves atemporary presiding officer.

Note: He shall certify within 10 days from the passage ofordinances enacted and resolutions adopted by thesangguniang in the session over which he temporarilypresided.

Q: May an Incumbent Vice-Governor, whileconcurrently the Acting Governor, continue topreside over the sessions of the SangguniangPanlalawigan? If no, who may preside in themeantime?

A: A vice-governor who is concurrently an actinggovernor is actually a quasi-governor. For

purposes of exercising his legislative prerogativesand powers, he is deemed a non member of theSP for the time being.In the event of inability of the regular presidingofficer to preside at the sanggunian session, themembers present and constituting a quorum shallelect from among themselves a temporarypresiding officer.(Gamboa v. Aguirre, GR 134213July 20, 1999)

Q: What is a quorum in the sanggunian?A: A majority of all the members of the sanggunianwho have been elected and qualified.

Q: What are the procedural steps or actions tobe taken by the Presiding officer if there is aquestion of forum and if there is not forum?

A: Should there be a question of forum raisedduring a session, the PO shall immediatelyproceed to call the roll of the members andthereafter announce the results.

If there is no quorum:1. Declare a recess until such time that

quorum is constituted2. Compel attendance of the member absent

without justifiable cause3. Declare the session adjourned for lack of

quorum and no business shall betransacted

Q: How are sessions fixed?

A:

If regular sessions If special sessions

by resolution on the 1st

day of the sessionwhen public interests sodemand may be called


OMAS

F


1


12/32


immediately followingthe election theelections of its members

by the Local chief executive or by amajority of the membersof the sanggunian

Q: What are the requirements of a sangguniangsession?

A:1. Shall be open to public unless it is closed-door

session2. No two sessions, regular or special, may be held in

a single day3. Minutes of the session be recorded and each

sanggunian shall keep a journal and record of itsproceedings which may be published uponresolution of the sanggunian concerned.

4. In case of special sessions

a. Written notice to the membersmust be served personally at least 24

hours before

b. Unless otherwise concurred inby 2/3 votes of the sanggunianmembers present, there being noquorum, no other matters may beconsidered at a special sessionexcept those stated in the notice.

Q: On its first regular session, may theSanggunian transact business other than thematter of adopting or updating its existing rulesor procedure?

A: There is nothing in the language of the LGCthat restricts the matters to be taken up during thefirst regular session merely to the adoption orupdating of the house rules. (Malonzo v. Zamora,GR 137718 July 27, 1999).

Q: What are the products of legislative actionand their requisites for validity?A:

1. Ordinance2. Resolution

Ordinance Resolution

Law Merely a declaration of

the sentiment or opinionof a lawmaking body ona specific matter

General andpermanent character

Temporary in nature

Third reading isnecessary for anordinance

Not necessary inresolution (EXP: unlessdecided otherwise by amajority of all thesangguniang members

The requisites for validity are:1. Must not contravene the constitution

and any statute2. Must not be unfair or oppressive3. Must not be partial or discriminatory4. Must not prohibit, but may regulate

trade5. Must not be unreasonable6. Must be general in application and

consistent with public policy

Q: How is a review of the ordinances orresolutions done?

A:Review of Component

city and municipalordinances or

resolutions

Review of BarangayOrdinances

Who reviews

Sanggunian Panlalawigan SangguniangPanglungsod or Sangguniang Bayan

When copies of ordinance or resolutions beforwarded

Within 3 days after approval

Within 10 days afterits enactment

Period to examine

Within 30 days after thereceipt; may examine ormay transmit to theprovincial attorney orprovincial prosecutor.If the latter, must submithis comments or recommendations within10 days from receipt ofthe document

Within 30 days afterthe receipt

When declared valid

If no action has beentaken within 30 days aftersubmission

Same

When invalid (grounds)

If beyond the powerconferred on thesangguniang panlungsod

If inconsistent with thelaw or city or municipal ordinance

Effect: Brgy ordinanceis suspended until

such time as therevision called iseffected

(Sec. 56 and 58, RA 7160)

Q: What is the effect of the enforcement of adisapproved ordinance or resolution?

167


13/32

PUBLIC CORPORATIONS

A: It shall be sufficient ground for the suspensionor dismissal of the official or employee (Sec. 58,RA 7160)

Q: When is the effectivity of ordinances orresolutions?

A:GR: Within 10 days from the date a copy isposted in a bulletin board and in at least 2conspicuous spaces.

XPN: Unless otherwise stated in the ordinanceor resolution.

Q: What ordinances require publication for itseffectivity?

A:1. Ordinances that carry with them penal

sanctions

2. Ordinances and resolutions passed byhighly urbanized and independentcomponent cities

Q: What are the instances of approval ofordinances?

A:a. If the chief executive approves the same,

affixing his signature on each and everypage thereof

b. If the local chief executive vetoes thesame, and the veto is overridden by 2/3vote of all members of the sanggunian.

Note: Local Chief Executive may veto the ordinance onlyonce on the ground that the ordinance is ultra vires and prejudicial to public welfare. The veto must becommunicated to the sanggunian within

a. 15 days = provinceb. 10 days = city or municipality

Q: What are the items that the local chiefexecutive Items he may veto:

A:a. Item/s of an appropriation ordinance.b. Ordinance/resolution adopting local

development plan and public investmentprogramc. Ordinance directing the payment of money

or creating liability

Note: Ordinances enacted by the sangguniang barangayshall, upon approval by a majority of all its members besigned by the punong barangay. The latter has no vetopower.

Note: The local legislative assembly can override theveto of the local chief executive by two-thirdsvote of all its members.

Q: Due to over-crowding in the public market inPaco, Manila, the City Council passed anordinance allowing the lease to vendors of

parts of the streets where the public market islocated, provided that the lessees pay to thecity government a fee of P50 per square meterof the area occupied by the lessees. Theresidents in the area complained to the Mayorthat the lease of the public streets would causeserious traffic problems to them. The Mayorcancelled the lease and ordered the removal ofthe stalls constructed on the streets. Was theact of the Mayor legal?

A: The cancellation of the lease and the removal ofthe stalls are valid. As held in Macasiano v.Diokno, GR 97764 Aug. 10, 1992 the lease of

public streets is void, since they are reserved forpublic use and are outside the commerce of man.(1997 Bar Question)

Q: An aggrieved resident of the City of Manilafiled mandamus proceedings against the citymayor and the city engineer to compel theseofficials to remove the market stalls fromcertain city streets which they had designatedas flea markets. Portions of the said city streetswere leased or licensed by the respondentofficials to market stallholders by virtue of acity ordinance. Decide the dispute.

A: The petition should be granted. In accordancewith Macasiano v. Diokno GR 97764 Aug. 10,1992since public streets are properties for publicuse and are outside the commerce of man, the CityMayor and the City Engineer cannot lease orlicense portions of the city streets to marketstallholders.

Q:Johnny was employed as a driver by theMunicipality of Calumpit, Bulacan. Whiledriving recklessly a municipal dump truck withits load of sand for the repair of municipalstreets, Johnny hit a jeepney. Two passengersof the jeepney were killed.

The Sangguniang Bayan passed an ordinanceappropriating P300,000 as compensation forthe heirs of the victims.

Is the municipal ordinance valid?

A: The ordinance appropriating P300,000.00 forthe heirs of the victims of Johnny is void. This


OMAS

F


1


14/32


amounts to appropriating public funds for a privatepurpose. Under Section 335 of the LocalGovernment Code, no public money shall beappropriated for private purposes.

Q: State whether or not the following cityordinances are valid and give reasons in

support of your answers:1. An ordinance on business

establishments to raise funds for theconstruction and maintenance of roadsin private subdivisions, which roadsare open for use by segments of thepublic who may have business insidethe subdivision.

2. An ordinance prohibiting barbershopoperators from rendering massageservice to their customers in a separateroom.

A:

1. The ordinance is valid. The charge on the

business establishments is not a tax but aspecial assessment. Hence, the holding inPascual v. Secretary of Public Works, GRL-10405 Dec.29, 1960 that public fundscannot be appropriated for theconstruction of roads in a privatesubdivision, does not apply. As held in

Apostolic Prefect v. City Treasurer ofBaguio, GR L-47252 April 18, 1941,special assessments may be charged toproperty owners benefited by publicworks, because the essential difference

between a tax and such assessment isprecisely that the latter is based wholly onbenefits received. However, if theordinance levies a tax on all businessestablishments located outside the privatesubdivision, then it is objectionable on theground that it appropriate private funds fora public purpose.

2. The ordinance is valid. In Velasco v,

Villegas GR L-24153 Feb.14, 1983 suchordinance was upheld on the ground that itis a means of enabling the City of Manilato collect a fee for operating massage

clinics and of preventing immorality whichmight be committed by allowing theconstruction of separate rooms in barbershops.(1987 Bar Question)

Q: Jose Y. Sabater is a real estate developer.He acquires raw lands and converts them intosubdivisions. After acquiring a lot of around 15hectares in Cabanatuan City, he caused thepreparation of a subdivision plan for the

property. Before he was able to submit thesubdivision plan to the Bureau of Lands and/orLand Registration Commission for verificationand/or approval, he was informed that he mustfirst present the plan to the City Engineer whowould determine whether the zoning ordinanceof the Cabanatuan City had been observed. He

was surprised when he was asked to pay thecity government a service fee of P0.30 persquare meter of land, covered by hissubdivision plan. He was even more surprisedwhen informed that a fine of P200.00 and/orimprisonment for not exceeding six months orboth, have been fixed in the ordinance aspenalty for violation thereof. Believing that thecity ordinance is illegal, he filed suit to nullifythe same. Decide the case with reasons.

A: The ordinance is null and void. In Villacorta v.Bernardo, GR L-31249 Aug.19, 1986the SupremeCourt held that a municipal ordinance cannot

amend a national law in the guise of implementingit. In this case, the requirement actually conflictswith sec. 44 of Act No. 496 because the latter doesnot require subdivision plans to be submitted to theCity Engineer before they can be submitted forapproval to, and verification by, the LandRegistration Commission and/or the Bureau ofLands. (1988 Bar Question)

Q: PAGCOR decided to operate a casino inTacloban City under authority of P.D. No. 1869.It leased a portion of a building belonging toEllen McGuire renovated and equipped it inpreparation for its inauguration. The

Sangguniang Panlungsod of Tacloban Cityenacted an ordinance prohibiting the operationof casinos in the City and providing penalty forits violation. Ellen McGuire and PAGCORassailed the validity of the ordinance in court.How would you resolve the issue? Discussfully.

A: The ordinance should be declared invalid. Asheld in Magtajas v. Pryce Properties Corporation.Inc., GR 111079 July 20, 1994. such an ordinancecontravenes Presidential Decree No. 1869, whichauthorizes the Philippine Amusement and GamingCorporation to operate casinos within the territorial

Jurisdiction of the Philippines, because it preventsthe said corporation from exercising the powerconferred on it to operate a casino in TaclobanCity. The power of Tacloban City to suppressgambling and prohibited games of chanceexcludes of chance permitted by law. Impliedrepeals are not favored. (Basco v. PAGCOR GR91649 May 14, 1991)(1995 Bar Question)

169


15/32

PUBLIC CORPORATIONS

Q: The Municipality of Alcoy, Cebu, passedOrdinance No. 10, series of 1991, requiringowners, administrators, or tenants of buildingsand premises to keep and maintain them insanitary condition, and should they fail to doso, cause them to be cleared and kept insanitary condition and the cost thereof to be

assessed against the owner, administrator ortenant, as the case may be, which cost shallconstitute a lien against the property. It furtherpenalizes violation thereof with a fine notexceeding One Thousand Pesos (P1,000.00) orimprisonment for one (1) year at the discretionof the court. Is the ordinance valid?

A: The ordinance is valid insofar as it requiresowners, administrators, or tenants of buildings andpremises to keep and maintain them in sanitarycondition and provides that should they fail to doso, the municipality shall cause them to be cleanedand the cost shall be assessed against the owner,

administrator, or tenant and shall be a lien againstthe property. This is expressly authorized by Sec.149(kk) of the Local Government Code. However,the penalty for the violation of the ordinance isinvalid, because it is excessive. The penalty in thiscase is a fine not exceeding P1,000 orimprisonment for one year, in the discretion of thecourt. Under Sec. 149 (c) of the Local GovernmentCode, however, the penalty for the violation of amunicipal ordinance cannot exceed a fine ofP1,000.00 or Imprisonment for six months, or bothat the discretion of the court.(1991 Bar Question)

VI. BASIC SERVICES AND FACILITIES

Q: What are the instances of the basic servicesand facilities that the LGU must provide?

A:1. For barangay

a. Agricultural support servicesb. Health services (barangay health

center and day-care center)c. Social welfare servicesd. General hygiene and sanitatione. Solid waste collectionf. Maintenance of katarungang

pambarangayg. Maintenance of barangay roads

and bridges and water supplysystems

h. Infrastructure facilitiesi. Information and reading center

j. Satellite or public market

2. For municipalitya. Extension and on-site research

services related to agriculture andfishery activities

b. Health services (secondary andtertiary health services)

c. Solid waste disposal system or

environment management systemd. Municipal buildings, cultural

centers, public parks and sportsfacilities, etc.;

e. Infrastructure facilities funded bythe municipal funds

f. Information services;maintenance of a public library

g. Public markets, slaughterhousesand other municipal enterprise

h. Implementation of communitybased forestry programs

i. Public cemeteryj. Tourism facilities and other tourist

attractionsk. Sites for police station, fire station

and jail

3. For provincea. Agricultural extension and on-site

research services and facilitiesb. Industrial research and

development facilities as well asthe transfer of appropriatetechnology

c. Enforcement of forestry lawsd. Health services (hospitals and

other tertiary health services)

e. Social welfare services (rebel

returnees and evacuees; reliefoperations and populationdevelopment services

f. Provincial bldg., provincial jails,public assembly areas, etc.

g. Infrastructure facilities funded outof provincial funds

h. Programs and projects for low-cost housing and other massdwellings (EXP: SSS, GSIS andHDMF)

i. Investment support services j. Upgrading and modernization of

tax information and collectionservices

k. Inter-municipaltelecommunications services

l. Tourism development andpromotion programs

4. For a City


OMAS

F


1


16/32


a. All the services and facilities ofthe municipality and province

b. Adequate communication andtransportation facilities

c. Support for education, police andfire services and facilities(Sec. 17, RA 7160)

VII. CLOSURE OF ROADS

Q: What are subjects to the power of an LGU toopen or close a road?

A: Any local road, alley, park, or square fallingwithin its jurisdiction, either permanently ortemporary.

Q: What are the limitations in case ofpermanent closure? In case of temporaryclosure?

A:In case of permanent closure:

1. Must be approved by at least 2/3 of all themembers of the sanggunian and whennecessary provide for an adequatesubstitute for the public facility

2. Adequate provision for the public safetymust be made

3. The property may be used or conveyed forany purpose for which other real propertymay be lawfully used or conveyed, but no

freedom park shall be closed permanentlywithout provision for its transfer orrelocation to a new site

In case of temporary closure:1. For actual emergency, fiesta celebration,

public rallies, agricultural or industrialworks and highway telecommunicationsand water work projects

2. Duration of which shall be specified3. Except for those activities not officially

sponsored or approved by the LGUconcerned

Note: Any city, municipality or barangay may, byordinance, temporarily close and regulate the use of alocal street, road, thoroughfare or any other public placewhere shopping, Sunday, flea or night markets may beestablished and where articles of commerce may be soldor dispensed with to the general public

B. CORPORATE POWERS

Q: What are the corporate powers of an LGU?

A:1. To have continuoussuccession in its corporate name2. To sue and be sued

Note: Only the Provincial Fiscal or the Municipal Attorneycan represent a province or municipality in lawsuits. This

is mandatory. Hence, a private attorney cannot representa province or municipality.

Q: Who has the authority to commence suits?

A:GR: suit is commenced by the local executive,upon authority of the sanggunian.

XPN: the city councilors, by themselves and asrepresentatives of or on behalf of the City, bringthe action to prevent unlawful disbursement ofcity funds (City Council of Cebu v. Cuizon, 47SCRA 325)

3. To have and use a corporate seal

Note: Any new corporate seals or changes on such shallbe registered with DILG.

4. To acquire and convey real or personalproperty

5. To enter into contracts; and

6. To exercise such other powers as granted

to corporations (Sec. 21, RA 7160)

Q: What are the requisites of a valid municipalcontract?

A:1. The local government unit has the

express, implied or inherent power toenter into the particular contract

2. The contract is entered into by the properdepartment board, committee, officer oragent.

Note: No contract may be entered into by the local chiefexecutive on behalf of the local government without priorauthorization by the sanggunian concerned, unlessotherwise provided.

3. The contract must comply with certainsubstantive requirements (Actualappropriation and certificate of availabilityof funds).

4. The contract must comply with the formalrequirements of written contracts

171


17/32

PUBLIC CORPORATIONS

Note: This includes the power to acquire and conveyproperties by the LGUs through written contracts.

Q: What are ultra vires contracts?

A: These are contracts entered into without the first

and third requisites. Such is null and void andcannot be ratified or validated.

Q: Is there an instance when it can be ratified?

A: Yes. Ratification is possible when there is non-compliance with the second and fourth requisite. Itmay be express or implied ratification.

Q: Who has the authority to negotiate andsecure grants?

A: The local chief executive may, upon authority ofthe sanggunian, negotiate and secure financial

grants or donations in kind, in support of the basicservices and facilities enumerated under sec. 17,RA 7160 from local and foreign assistanceagencies without necessity of securing clearanceor approval of any department, agency, or office ofthe national government or from any higher localgovernment unit; Provided that projects financedby such grants or assistance with national securityimplications shall be approved by the nationalagency concerned.

MUNICIPAL LIABILITY

Q: What is the scope of municipal liability?

A: Municipal liabilities arise from various sources inthe conduct of municipal affairs, both governmentaland proprietary.

Q: What is the rule with respect to the liabilitiesof local government units and their officials?

A: LGUs and their officials are not exempt fromliability for death or injury to persons or damage toproperty (Sec. 24, R.A. 7160).

Q: What are the specific provisions making

LGUs liable?

A:

a. LGU shall be liable for damages for the

death of, or injuries suffered by, anyperson by reason of the defectivecondition of roads, streets, bridges, publicbuildings, and other public works under

their control or supervision. (Art.2189,NCC)

Note: LGU is liable even if the road does not belong to itas long as it exercises control or supervision over saidroads.

b. The State is responsible when it actsthrough a special agent. (Art. 2180, NCC)

c. When a member of a city or municipal

police force refuses or fails to render aidor protection to any person in case ofdanger to life or property, such peaceofficer shall be primarily l iable fordamages and the city or municipality shallbe subsidiarily responsible therefor.(Art.34, NCC)

Q: What are the bases for municipal liabilities?

A:

1. Liability arising from violation of lawsuch

as closing municipal street withoutindemnifying persons prejudiced thereby,non-payment of wages to its employees orits refusal to abide a temporary restrainingorder may result in contempt charge andfine.

2. Liability on contracts

Note: LGU is liable on a contract it enters into providedthat the contract is intra vires. Ifultra vires they are notliable.

Q: What are the conditions under which a localexecutive may enter into a contract in behalf ofhis government unit? What are the legalrequisites therefore?

A: WAFAC

a. The contract must be Within the power of

the municipality;

b. The contract must be entered by

Authorized officer (i.e. mayor with properresolution by the Sangguniang Bayan,Sec. 142 LGC);

c. There must be appropriation andCertificate to availability of funds;

d. The contract must conform with the

Formal requisites of a written contract asprescribed by law; and

e. In some cases the contract must be

Approved by the President and/or


OMAS

F


1


18/32


provincial governor (Sec. 2068 and Sec.2196, Revised Adm. Code)

Q: What is the doctrine of implied municipalliability?

A: A municipality may become obligated upon an

implied contract to pay the reasonable value of thebenefits accepted or appropriated by it as to whichit has the general power to contract. (Province ofCebu v. IAC, G.R. No. L-72841, January 29, 1987)

Note:Estoppel cannot be applied against a municipalcorporation in order to validate a contract which themunicipal corporation has no power to make or which it isauthorized to make only under prescribed limitations or ina prescribed mode or manner even if the municipalcorporations has accepted benefits thereunder.

3. Liability for tort- may be held for torts

arising from the performance of its private

and proprietary functions under theprinciple ofrespondeat superior. They arealso liable for back salaries for employeesillegally dismissed/separated or for itsrefusal to reinstate employees.

Q: State the rules on municipal liability for tort.

A:1.LGU engaged governmental function not liable2.LGU - engaged proprietary function -liable

LOCAL OFFICIALS

A. ELECTIVE OFFICIALS

Q: What are the qualifications of electivegovernment official?

A:a. Must be a Filipino citizen

Note: The citizenship requirement in the LGC is to bepossessed by the elective official, at the latest, as of thetime he is proclaimed and at the start of the term of officeto which he has been elected. The LGC does not specify

any particular date or time when the candidate mustpossess citizenship, unlike the requirements forresidence and age. Repatriation under PD 825 is validand effective and retroacts to the date of the application(Frivaldo v. COMELEC, G.R. No. 120295, June28,1996).

Note: Filing of certificate of candidacy is sufficient torenounce foreign citizenship (Valles v.COMELEC, 2000).However in the case of Lopez v. COMELEC, G.R. No.182701, June 23, 2008, the SC held that the Courts

2000 ruling in Valles has been superseded by theenactment of R.A. No. 9225 in 2003. R.A. No. 9225 Sec.5 expressly provides for the conditions before those whore-acquired Filipino citizenship may run for a public officein the Philippines

Note: Upon repatriation, a former natural-born Filipino isdeemed to have recovered his original status as a

natural-born citizen (Bengzon III v. HRET, GR 142840May 7, 2001)

b. Must be a registered voter in:

i. The barangay, municipality, city

or province where he intends to beelected

ii. The district where he intends to

be elected in case of a member if theSangguniang Panlalawigan,Sangguniang Panlungsod, orSangguniang Bayan

c. Resident therein for at least 1 yearimmediately preceding the day of theelection;

Note: The term residence under Section 39(a) of theLGC of 1991 is to be understood not in its commonacceptation as referring to dwelling or habitation, butrather to domicile or legal residence that is, the placewhere a party actually or constructively has hispermanent home, where he, no matter where he may befound at any given time, eventually intends to return andremain ( animus manendi)( Coquilla v. COMELEC, G.R.151914, July 31, 2002).

Q: X was a natural-born Filipino who went to

the USA to work and subsequently became anaturalized American citizen. However, prior tofiling his Certificate of Candidacy for the Officeof Mayor of the Municipality of GeneralMacarthur, Eastern Samar, on 28 March 2007,he applied for reacquisition of his PhilippineCitizenship. Such application wassubsequently granted. Y filed a petition todisqualify X on the ground of failure to complywith the 1-year residency requirement. Yargues that reacquisition of Philippinecitizenship, by itself, does not automaticallyresult in making X a resident of the locality. Is Ycorrect?

A: Yes. Xs reacquisition of his Philippinecitizenship under Republic Act No. 9225 had noautomatic impact or effect on hisresidence/domicile. He could still retain hisdomicile in the USA, and he did not necessarilyregain his domicile in the Municipality of GeneralMacarthur, Eastern Samar, Philippines. X merelyhad the option to again establish his domicile in theMunicipality of General Macarthur, Eastern Samar,

173


19/32

PUBLIC CORPORATIONS

Philippines, said place becoming his new domicileof choice. The length of his residence therein shallbe determined from the time he made it hisdomicile of choice, and it shall not retroact to thetime of his birth. It is the fact of residence that isthe decisive factor in determining whether or not anindividual has satisfied the residency qualification

requirement.

However, even if Ys argument is correct, this doesnot mean that X should be automaticallydisqualified as well, since there is proof that asidefrom reacquisition of his Philippine Citizenship,there are other subsequent acts executed by Xwhich show his intent to make General Arthur,Eastern Samar his domicile, thus making himqualified to run for Mayor. (Japzon v. COMELECGR 180088 Jan.19, 2009)

d. Able to read and write Filipino/ any other

local language or dialect

e. Age requirement:

POSITION AGEREQUIREMENT

Governor, Vice Governor,Mayor, Vice Mayor, member ofSangguniang Panlungsod inhighly urbanized cities

At least 23 yearsold on electionday

Mayor, Vice Mayor of Independent component citiesor municipalities

At least 21 yearsold

Member of SangguniangPanglungsod, member of Sangguniang Bayan, PunongBarangay, Member of Sangguniang Barangay

At least 18 yearsold

Candidates for theSangguniang Kabataan

At least 15 yearsof age but notmore than 18years of age onelection day (asamended underRA 9164)

Q: Who are persons disqualified from runningfor any elective local position?

A:1. Sentenced by final judgment for an

offense involving moral turpitude or for anoffense punishable by 1 year or more ofimprisonment, within 2 years after servingsentence;

2. Removed from office as a result of anadministrative case;

3. Convicted by final judgment for violatingthe oath of allegiance of the Republic

4. With dual citizenship

Note: The phrase dual citizenship as a disqualificationin R.A. No. 7160, 40(d) and in R.A. No. 7854, 20 mustbe understood as referring to dual allegiance. (Mercado

v. Manzano, G.R. No. 135083, May 26,1999)

5. Fugitives from justice in criminal or non-political cases here or abroad

Note: Fugitives from justice in criminal and non- criminalcases here and abroad include not only those who fleeafter conviction to avoid punishment, but likewise thosewho after being charged, flee to avoid prosecution(Marquez v. COMELEC, G.R. No. 112889, April 18,1995;Rodriguez v. COMELEC, GR 120099 July 24, 1996)

6. Permanent residents in a foreign countryor those who have acquired the right toreside abroad and continue to avail of the

same right after the effectively of this LGC;

7. Insane or feeble-minded

Other grounds for disqualification:

a. Vote buying (upon determination in a

summary administrative proceeding)(Nolasco v COMELEC, GR Nos. 122250& 122258 July 21, 1997)

b. Removal by administrative proceedings

(perpetual disqualification) (Lingating vCOMELEC GR 153475 Nov. 13, 2002)

Q: May an official removed from office as aresult of an administrative case, before theeffectivity of the LGC be disqualified underSection 40 of said law?

A: No. Section 40 (b) of the LGC has noretroactive effect and therefore, disqualifies onlythose administratively removed from office afterJanuary 1,1992 when LGC took effect (Greco v.COMELEC, GR 125955 June 19, 1997). It shouldbe a final determination (Lingating v COMELECGR 153475 Nov. 13, 2002).

Q: What is the significance of possession of agreen card by a candidate for an electiveposition?

A: Possession of a green card is an ampleevidence to show that the person is an immigrantto or a permanent resident of the U.S. Hence,immigration to the US by virtue of a Green cardwhich entitles one to reside permanently in that


OMAS

F


1


20/32


country, constitutes abandonment of domicile inthe Philippines.

Q: Can a candidate receiving the next highestvote be declared the winner after the candidatereceiving the majority of votes is declaredineligible?

A: No. The ineligibility of a candidate receiving themajority of votes does not entitle the eligiblecandidate receiving the next highest number ofvotes to be declared winner. The rule would bedifferent if the electorate, fully aware of acandidates disqualification so as to bring suchawareness within the realm of notoriety, wouldnonetheless cast the votes in favor of the ineligiblecandidate. In such case, the electorate may besaid to have waived the validity and efficacy oftheir votes by notoriously applying their franchisesor throwing away their votes in which case, theeligible candidate obtaining the next highest

number of votes may be deemed elected (Labo v.COMELEC, GR 105111 July 3, 1992).

VACANCIES AND SUCCESSION

Q: What are the two classes of vacancies in theelective post?

A:Permanent Vacancy

(Sec 44)Temporary Vacancy

(Sec 46)

Arises when:

a. elective local officialf ills a higher vacantofficeb. refuses to assumeofficec. fails to qualifyd. diese. removed from officef. voluntarily resignsg. permanentlyincapacitated todischarge the functionsof his office

Arises when an elected

official is temporaryincapacitated to performtheir duties due to legalor physical reasons suchas physical sickness,leave of absence, travelabroad or suspensionfrom office

Q: What are the two ways of filling thevacancy?

A:1. AutomaticSuccession2. By appointment

Q: State the rules of succession in case ofpermanent vacancies.

A:In case of permanent vacancy:

a. Office of the governor: vice- governorb. Office of the mayor: vice-mayor

c. Office of the governor, vice governor,

mayor or vice-mayor: highest rankingSanggunian member or in case of hispermanent inability, the second highestranking Sanggunian member

d. Office of the punong barangay: the highest

ranking sangguniang barangaymember

Note: In case of tie between and among the highestranking Sangguniang members, resolved by drawing lots(Section 44, LGC).

Note: For purposes of succession, ranking in theSanggunian shall be determined on the basis of theproportion of the votes obtained by each winningcandidate to the total number of registered voters in eachdistrict in the preceding election.

Note: The general rule is that the successor (byappointment) should come from the same political partyas the Sangunian member whose position has becomevacant. The exception would be in the case of vacancy inthe Sangguniang barangay.

In case automatic succession is not applicable andthere is vacancy in the membership of thesanggunian the rules being as follows:

a. The President thru the ExecutiveSecretary shall appoint the politicalnominee of the local executive for thesangguniang panlalawigan/panlungsod of

highly urbanized cities/independentcomponent cities;

b. The Governor, shall appoint the politicalnominees for the sanggunian panlungsodof component cities/bayan;

c. The city/municipal mayor shall appoint therecommendee of the sangguniangbarangay concerned.

Note: The last vacancy in the Sanggunian refers to thatcreated by the elevation of the member formerlyoccupying the next higher in rank which in turn also hadbecome vacant by any of the causes alreadyenumerated. The term last vacancy is thus used inSection 45(b) to differentiate it from the other vacancypreviously created. The term by no means refers to thevacancy in the No.8 position which occurred with theelevation of 8th placer to the seventh position in theSanggunian. Such construction will result in absurdity(Navarro v. Court of Appeals, G.R. No. 141307, March28,2001).

Note: In case of vacancy in the representation of theyouth and the barangay in the Sanggunian, vacanciesshall be filled automatically with the official next in rank ofthe organization concerned.

175


21/32

PUBLIC CORPORATIONS

Q: State the rules in case of temporaryvacancies in local positions.

A:

a. In case of temporary vacancy of the post

of the local executive (leave of absence,travel abroad, suspension): vice-governor, vice mayor, highest rankingsangguniang barangayshall automaticallyexercise the powers and perform thefunctions of the local Chief Executiveconcerned.

GR: he cannot exercise thepower to appoint, suspend or dismissemployees

XPN: if the period of temporaryincapacity exceeds 30 working days.

b. If travelling within the country, outside his jurisdiction, for a period not exceeding 3days: he may designate in writing theofficer-in-charge. The OIC cannot exercisethe power to appoint, suspend or dismissemployee.

c. If without said authorization, the vice-

governor, vice-mayor or the highestranking sangguniang barangay membershall assume the powers on the 4 th day ofabsence. (Sec 46)

Q: How is temporary incapacity terminated?

A: If the temporary incapacity was due to leave ofabsence, travel abroad, suspension, it shallterminate upon submission to the appropriatesanggunian of a written declaration by the localchief executive concerned that he has reportedback to office.

If the temporary incapacity was due to legalreasons, the local chief executive should alsosubmit necessary documents showing that thelegal cause no longer exist.

Q: May the local chief executive authorized anylocal official to assume the powers, duties and

functions of the office other than the vice-governor, city or municipal vice-mayor, orhighest ranking sangguniang barangaymember as the case maybe?

A:GR: No.

XPN: If travelling within the country, outside hisjurisdiction.

Note: In Gamboa v. Aguirre, G.R. No. 134213, July20,1999, a vice-governor who is concurrently an actinggovernor is actually a quasi-governor. For the purpose ofexercising his legislative prerogatives and powers, he is

deemed a non-member of the sangguninangpanlalawigan for the time being.

DISCIPLINARY ACTIONS

Q: What are the grounds for disciplinaryactions?

A: An elective local official may be disciplined,suspended or removed from office on any of thefollowing grounds:

1. Disloyalty to the Republic of thePhilippines;

Note: An administrative, not criminal, case for disloyaltyto the Republic only requires substantial evidence(Aguinaldo v. Santos, G.R. No. 94115, August 21,1992).

2. Culpable violation of the Constitution;3. Dishonesty, oppression, misconduct in

office, gross negligence, dereliction ofduty;

4. Commission of nay offense involving

moral turpitude or an offense punishableby at leastprision mayor;

5. Abuse of authority;6. Unauthorized absence for 15 consecutive

working days, except in the case ofmembers of the SangguniangPanlalawigan, Sangguniang Panglunsod,Sangguniang Bayan, SangguninangBarangay;

7. Application for or acquisition of foreigncitizenship or residence or the status of animmigrant of another country;

8. Such other grounds as may be providedby the Code/other laws.

Note: An elective local official may be removed fromoffice on the ground enumerated above by order of theproper court only. The Office of the President is without

any power to remove elected officials, since such poweris exclusively vested in the proper courts as expresslyprovided for in the last paragraph of Section 60, LGC.(Salalima v. Guingona, G.R. No. 117589, May 22,1996).

Q: Who may file an administrative action?

A:


OMAS

F


1


22/32


1. any private individual or any governmentofficer or employee by filling a swornwritten complaint (verified);

2. Office of the President or any government

agency duly authorized by law to ensurethat LGUs act within their prescribedpowers and functions.

Q: Where should administrative complaint befiled?

A: A verified complaint shall be filed with thefollowing:

a. Office of the President- against elective

official of provinces, HUC, ICC,component cities.

b. Sangguniang Panlalawigan- elective

officials of municipalities; and

c. Sangguniang Panglunsod or Bayan-

elective barangay officials

Note: A re-elected local official may not be heldadministratively accountable for misconduct committedduring his prior term of office. There is no distinction as tothe precise timing or period when the misconduct wascommitted, reckoned from the date of the officials re-election, except that it must be prior to said date (Garciav. Mojica, G.R.139043, September 10 ,1999).

Q: When is subsequent re-election considereda condonation?

A: When proceeding is abated due to electionsand there is no final determination of misconductyet (Malinao v Reyes, GR 117618 Mar.29, 1996)

Note: Subsequent re-election cannot be deemed acondonation if there was already a final determination ofhis guilt before the re-election (Reyes v COMELEC,1996).

Note: The rule that public official cannot be removed foradministrative misconduct committed during a prior term,since his re-election to office operates as a condonationof the officers previous misconduct to the extent ofcutting off the right to remove him therefore, has noapplication to pending criminal cases against petitionerfor the acts he may have committed during a failed coup(Aguinaldo v. Santos, G.R. No. 94115, August 21,1992).

Q: When should preventive suspension beimposed?

A:a. After the issues are joined;b. When the evidence of guilt is strong;

c. Given the gravity of the offense, there is

great probability that the continuance inoffice of the respondent could influencethe witnesses or pose a threat to the

safety and integrity of the records andother evidence. (Section 63, LGC)

Q: Who can impose preventive suspension?

A:Respondent Local Official

President Elective official of a province,highly urbanized or independentcomponent city

Governor Elective official of a componentcity of municipality

Mayor Elective official of a barangay

Q: State the rule on preventive suspension.

A:

1. A single preventive suspension shall not

extend beyond 60 days;

2. In the event that there are several

administrative cases filed, the electiveofficial cannot be preventively suspendedfor more than 90 days within a single yearon the same ground or grounds existingand known at the time of his firstsuspension.

Q: State the rules on administrative appeals.

A: Decisions in administrative cases may, within 30days from receipt thereof, be appealed to thefollowing:

1. The Sangguniang panlalawigan, in case ofdecisions of the sangguniang panlungsodof component cities and the sangguniangbayan; and

2. The Office of the President, in the case ofdecisions of the sangguniangpanlalawigan and the sangguniangpanlungsod of highly urbanized cities andindependent component cities.

Note: Decisions of the President shall be final andexecutory.

Q: When is resignation of a public officialeffective?

A: Resignation of elective officials shall be deemed

effective only upon acceptance by the followingauthorities:

1. The President, in case of governors, vice-

governors, and mayors and vice-mayorsof highly urbanized cities and independentand component cities;

2. The Governor, in the case of municipal

mayors and vice-mayors, city mayors andvice-mayors of component cities;

177


23/32

PUBLIC CORPORATIONS

3. The Sanggunian concerned, in case of

sangguninan members;

4. The City or Municipal Mayor, in case of

barangay officials.

Q: Does the LGC withdraw the power of the

Ombudsman under RA 6770 to conductadministrative investigation?

A: No. Hence, the Ombudsman and the Office ofthe President have concurrent jurisdiction toconduct administrative investigations over electiveofficials. (Hagad v. Gozo-Dadole, GR 108072Dec.12, 1995)).

Q: What is the difference between thepreventive suspension provided under RA 6770and under LGC?

A:

Preventive Suspensionunder RA 6770 Preventive Suspensionunder LGC

Requirements:1.The evidence of guilt isstrong; and2. That any of thefollowing circumstancesare present:

a. The charge against

the officer of employee shouldinvolve dishonesty,oppression or gravemisconduct or neglect in theperformance ofduty;

b. the charges shouldwarrant removalfrom office; or

c. The respondentscontinued stay inoffice wouldprejudice the casefiled against him.

Requirements:1. there is reasonable

ground to believe thatthe respondent hascommitted the act oracts complained of;

2. the evidence of culpability is strong;

3.the gravity of theoffense so warrants;

4.the continuance inoffice of therespondent could

influence thewitnesses or pose athreat to the safetyand integrity of therecords and otherevidence.

Maximum period: 6months

Maximum period: 60days

Q: Who may sign an order preventively

suspending officials?

A: It is not only the Ombudsman, but also hisDeputy, who may sign an order preventivelysuspending officials. Also, the length of the periodof suspension within the limits provided by law andthe evaluation of the strength of the evidence bothlie in the discretion of the Ombudsman. It isimmaterial that no evidence has been adduced to

prove that the official may influence possiblewitnesses or may tamper with the public records. Itis sufficient that there exists such a possibility(Castilo-Co v. Barbers,GR 129952 June 16, 1998).

RECALL

Q: What is recall?

A: Recall is a mode of removal of a public officerby the people before the end of his term. Thepeoples prerogative to remove a public officer isan incident of their sovereign power and in theabsence of constitutional restraint; the power isimplied in all governmental operations.

Note: Expenses for the conduct of recall elections:Annual General Appropriations Act has a contingencyfund at the disposal of the COMELEC (Sec. 75, LGC).

Q: What

public corporation 2009

Documents