Ateneo 2011 Political Law (Law on Public Corporations and LGU) Copy

8/22/2019 Ateneo 2011 Political Law (Law on Public Corporations and LGU) Copy

1/46

FRATERNAL ORDEROF UTOPIA

ATENEO DE MANILA UNIVERSITY

SCHOOLOFLAW ARIS S. MANGUERA

Article XLOCAL GOVERNMENT

I. LOCAL GOVERNMENTS(Sections 1, 10-14)II. LOCAL AUTONOMY(Section 2)III. LOCAL GOVERNMENT CODE(Section 3)IV. GENERAL POWERS AND ATTRIBUTES(Section 5,6,7)V. MUNICIPAL LIABILITYVI. LOCAL OFFICIALS(Section 8,9)VII. AUTONOMOUS REGIONSVIII.INTER-GOVERNMENTAL RELATIONSIX. LOCAL INITIATIVE AND REFERENDUM

GENERAL PROVISIONS

I. Local Governments

Local Government UnitQuotable Quotes on Nature of Local GovernmentsTerritorial and Political SubdivisionsThe BarangayThe MunicipalityThe CityThe ProvinceLeagues of LGUs/Officials

Section 1. The territorial and political subdivisions of theRepublic of the Philippines are the provinces, cities,municipalities, and barangays. There shall be autonomousregions in Muslim Mindanao and the Cordilleras as

hereinafter provided.

A. What is a Local Government Unit?

A local government unit is a political subdivisionof the State which is constituted by law andpossessed of substantial control over its ownaffairs. In a unitary system of government, it is anintra-sovereign subdivision of one sovereignnation, not intended to be an imperium in imperio[empire within an empire)]. (Alvarez v. GuingonaGR 118303, 1996)

When the Drafters of the 1987 Constitutionenunciated the policy of ensuring the autonomy of

local governments, it was never their intention tocreate an imperium in imperio and install an intra-sovereign political subdivision independent of asingle sovereign state. (Batangas CATV v. Court of

Appeals, GR No. 138810, 2004)

Q: What is the present form of local government?A: The present form consists of an executive distinctfrom the legislative body.639

639Bernas Primer at 416 (2006 ed.)

B. Quotable Quotes on Nature of LocalGovernments

1. Ours is still a unitary form of government,not a federal state. Being so, any form ofautonomy granted to local governments will

necessarily be limited and confined within the extentallowed by the central authority. (Lina v. Pano,GR 129093, 08.30.2001)

2. A Local Government Unit is a politicalsubdivision of the Statewhich is constituted bylaw and possessed of substantial control over itsown affairs. Remaining to be an intra sovereignsubdivision of one sovereign nation, but notintended, however, to be an imperium in imperio,the local government unit is autonomous in thesense that it is given more powers, authority,responsibilities and resources. Power which used tobe highly centralized in Manila, is therebydeconcentrated, enabling especially the peripherallocal government units to develop not only at theirown pace and discretion but also with their own

resources and assets.(Alvarez v. Guingona, GR118303, 01.31.96)

3. An LGGU is created by law and all itspowers and rights are sourced therefrom. Ithas therefore no power to amend or act beyond theauthority given and the limitations imposed on it by

law. (Paranaque v. VM Realty Corp., GR127820, 07.20.98)

C. Enumerate the Territorial and PoliticalSubdivisions in Section 1:

The territorial and political subdivisions of theRepublic of the Philippines are the:

1. Provinces2. Cities3. Municipalities4. BarangaysThere shall be autonomous regions in MuslimMindanao and Cordilleras as provided in theConstitution. (Section1)

Significance of Section 1. The constitutionalsignificance of Section 1 is that provinces, citiesand municipalities and barangays have been fixedas the standard territorial and political subdivisionsof the Philippines. This manner of subdividingthe Philippines cannot go out of existenceexcept by a constitutional amendment.640

Q: EO 220 dated July 15, 1987 creates the CordilleraAdministrative Region (CAR) creating a temporaryadministrative agency pending the creation of Cordillera

Autonomous Region. Does EO 222 thereby create aterritorial and political subdivision?A: No. What is created is not a public corporation but anexecutive agency under the control of the nationalgovernment. It is more similar to the regionaldevelopment councils which the President may create


I sweat, I bleed, I soar

Service, Sacrifice, Excellence158


2/46




under Article X, Section 14. (Cordillera Board Coalition v.COA, 1990)

D. Municipal Corporations

1. Municipal Corporation

A body politic and corporate constituted by theincorporation of the inhabitants for the purpose oflocal government.641

2. Elements of a Municipal Corporation642

1. Legal creation or incorporation- the lawcreating or authorizing the creation orincorporation of a municipal corporation.

2. Corporate name- The name by which thecorporation shall be known.

The Sangguniang Panlalawigan may, inconsultation with the Philippine HistoricalInstitute, change the name of the componentcities and municipalities, upon therecommendation of the sanggunian concerned;

provided that the same shall be effective onlyupon the ratification in a plebiscite conductedfor the purpose in the political unit directlyaffected. (RA 7160, Section 13)

3. Inhabitants- The people residing in theterritory of the corporation.

4. Territory- The land mass where theinhabitants reside, together with the internaland external waters, and the air space abovethe land waters.

3. Dual Nature and Functions

Every local government unit created or organized(under the Local Government Code) is a bodypolitic and corporate endowed with powers to beexercised by it in conformity with law. As such, itshall exercise powers as a political subdivision ofthe National Government and as a corporate entityrepresenting the inhabitants of its territory. (RA7160, Section 15) Accordingly it has dual functionsnamely:

1. Public or governmental- It acts as anagent of the State for the government ofthe territory and the inhabitants.

2. Private or proprietary- It acts as anagent of the community in theadministration of local affairs. As such, itacts as a separate entity, for its ownpurposes, and not as a subdivision of the

State (Bara Lidasan v. Comelec, 21 SCRA496)

E. Creation/ Dissolution of Municipal Corporations

1. Authority to Create

641Antonio Nachura, Outline on Political Law, 553 (2006)


A local government unit may be created, divided,merged, abolished, or its boundaries substantiallyaltered either by law enacted by Congress in thecase of a province, city, municipality or any otherpolitical subdivision, or by ordinance passed by thesangguniang panlalawigan or sagguniangpanlungsod concerned in the case of a barangaylocated within its territorial jurisdiction, subject tosuch limitations and requirements prescribed in theLocal Government Code (RA 7160, Section 6)

2. Requisites/Limitations on Creation orConversion

Article X, Section 10: No province, city,municipality or any barangay may be created,divided, merged, abolished, or is its boundarysubstantially altered, except in accordance with thecriteria established in the local government codeand subject to approval by a majority of the votescast in a PLEBISCITE in the political units directlyaffected.

RA 7160, Section 10: No creation, division ormerger, abolition or substantial alteration ofboundaries of local government units shall takeeffect unless approved by a majority of the votescast in a plebiscite called for the purpose in thepolitical unit or units directly affected. Saidplebiscite shall be conducted by the Comelecwithin 120 days from the date of effectivity of thelaw or ordinance effecting such action, unless saidlaw or ordinance fixes another date.

It was held that a plebiscite for creating a newprovince should include the participation of theresidents of the mother province in order to conformto the constitutional requirement. (Tan v. Comelec,142 SCRA 727; Padilla v. Comelec, 214 SCRA 735)In other words, all political units affected should

participate in the plebiscite. If what is involved is abarangay, the plebiscite should be municipality orcity-wide; if a municipality or component city,province wide. If a portion of province is to be carvedout and made into another province, the plebisciteshould include the mother province. (Tan v.COMELEC, 1986)

RA 7160, Section 7: Based on verifiable indicatorsof viability and projected capacity to provideservices, to wit:

1. Income- Income must be sufficient, based onacceptable standards, to provide for allessential government facilities and servicesand special functions commensurate with the

size of population, as expected of the localgovernment unit concerned. Average annualincome for the last two consecutive yearsbased on 1991 constant prices should be atleast:Municipality: 2.5 MCity: 100M (Year 2000 constant prices,amended by RA 9009)Highly urbanized city: 50MProvince: 20M




3/46




It was held that the Internal RevenueAllotments (IRAs) should be included in thecomputation of the average annual income ofthe municipality (for purposes of determiningwhether the municipality may be validlyconverted into a city), but under RA 9009, it isspecifically provided that for conversion to

cities, the municipalitys income should notinclude the IRA. (Alvarez v. Guingona, 252SCRA 695)

2. Population- it shall be determined as the totalnumber of inhabitants within the territorial

jurisdiction of the local government unitconcerned.

3. Land Area- It must be contiguous, unless itcomprises two or more islands or is separatedby a local government unit independent of theothers; properly identified by metes andbounds with technical descriptions andsufficient to provide for such basic servicesand facilities to meet the requirements of itspopulace.

Income Population Land AreaBarangay 2,000 inhabitants

(except in MetroManila and othermetropolitanpoliticalsubdivisions orin highlyurbanized citieswhere therequirement is5,000inhabitants)

Municipality

2.5M 25,000 50sqkm

City 100M 150,000 100sqkm

HighlyUrbanizedCity

50M 200,000

Province 20M 250,000 2,000sqhkm

Compliance with the foregoing indicators shall beattested to by the Department of Finance, the NSOand the Lands Management Bureau of the DENR.

The SC said that the requirement that the territoryof newly-created local government units beidentified by metes and bounds is intended toprovide the means by which the area of the localgovernment unit may be reasonably ascertained,i.e., as a toll in the establishment of the local

government unit. As long as the territorialjurisdiction of the newly created city may bereasonably ascertainedby referring to commonboundaries with neighboring municipalitiesthenthe legislative intent has been sufficiently served.(Mariano v. Comelec, 242 SCRA 211)[Note: RA 7854, which converted Makati into a city,did not define the boundaries of the new city bymetes and bounds, because of a territorial disputebetween Makati and Taguig, which was best left forthe courts to decide]

3. Beginning of Corporate Existence

Upon the election and qualification of its chiefexecutive and a majority of the members of itssanggunian, unless some other time is fixedtherefor by the law or ordinance creating it. (RA7160, Section 14)

4. Division and Merger; Abolition of LGUs

Division and merger shall comply with samerequirements, provided that such division shall notreduce the income, population or land area of thelocal government unit or units concerned to lessthan the minimum requirements prescribed;provided further that the income classification ofthe original local government unit or units shall notfall below its current income classification prior tothe division. (RA 7160, Section 8)

Abolition. A local government unit may beabolished when its income, population or land area

has been irreversibly reduced to less than theminimum standards prescribed for its creation, ascertified by the national agencies mentioned. Thelaw or ordinance abolishing a local government unitshall specify the province, city, municipality orbarangay with which the local government unitsought to be abolished will be incorporated ormerged. (RA 7160, Section 9)

5. De Facto Municipal Corporations

Requisites:1. Valid law authorizing incorporation2. Attempt in good faith to organize under it3. Colorable compliance with the law.4. Assumption of corporate powers

The SC declared as unconstitutional Section 68 of theRevised Administrative Code which authorized thePresident to create municipalities through ExecutiveOrder. With this declaration, municipalities created byExecutive Order could not claim to be de facto municipalcorporations because there was no valid law authorizingincorporation. (Pelaez v. Auditor General, 15 SCRA 569)

6. Attack Against Invalidity of Incorporation

No collateral attack shall lie; and inquiry into thelegal existence of a municipal corporation isreserved to the State in a proceeding for quowarranto or other direct proceeding. (Malabang v.Benito, 27 SCRA 533) But this rule applies onlywhen the municipal corporation is at least a defacto municipal corporation.

However, where the challenge was made nearly 30years after the executive order; creating themunicipality was issued, or where the municipalityhas been in existence for all of 16 years before theruling in Pelaez v. Auditor Generalwas promulgatedand various governmental acts throughout the yearsindicate the States recognition and acknowledgmentof the existence of the municipal corporation, themunicipal corporation should be considered as aregularde jure municipality.




4/46




2004 Bar Question:Q:MADAKO is a municipality composed of 80barangays, 30 west of Madako River and 50 eastthereof. The 30 western barangays, feeling left outof economic initiatives, wish to constitutethemselves into a new and separate town to becalled Masigla. A law is passed creating Masiglaand a plebiscite is made in favor of the law. B.Suppose that one year after Masigla wasconstituted as a municipality, the law creating it isvoided because of defects. Would that invalidatethe acts of the municipality and/or its municipalofficers? Explain briefly.Suggested Answer: Although the municipalitycannot be considered as a de facto corporation,because there is no valid law under which it wascreated, the acts of the municipality and of itsofficers will not be invalidated, because theexistence of the law creating it is an operative factbefore it was declared unconstitutional. Hence, theprevious acts of the municipality and its officers

should be given effect as a matter of fairness andjustice. (Municipality ofMalabang v. Benito, 27SCRA 533 [1969]

F. The Barangay

As the basic political unit, the barangay serves asthe primary planning and implementing unit ofgovernmental policies, plans, programs, projectsand activities in the community, as a forum whereinthe collective views of the people may beexpressed , crystallized and considered, and wheredisputes may be amicably settled. (RA 7160,Section 384)

G. The Municipality

The municipality, consisting of a group of baranays,serves primarily as a general purpose governmentfor the coordination of and delivery of basic, regularand direct services and effective governance of theinhabitants within its jurisdiction. (RA 7160, Section440)RA 7160 Sections 440-447

H. The City

The city, composed of more urbanized anddeveloped barangays, serves as a general-

purpose government for the coordination anddelivery of basic, regular and direct services andeffective governance of the inhabitants within itsterritorial jurisdiction. (RA 7160, Section 448)RA 7160 Sections 448-258

Section 12. Cities that are highly urbanized,as determined by law, and component citieswhose charters prohibit their voters fromvoting for provincial elective officials, shall beindependent of the province. The voters of

component cities within a province, whosecharters contain no such prohibition, shall notbe deprived of their right to vote for electiveprovincial officials.

Q: May a resident of component cities whose charterprohibit their voters from voting for provincial elective

officials run for a provincial elective office?A: No. Section 12 says, these are independent of theprovince. This independence includes the incapacity of itsresidents to run for provincial office. (Abella v. COMELEC,1991)

I. The Province

The province composed of a cluster ofmunicipalities and component cities, and as apolitical and corporate unit of government, servesas a dynamic mechanism for developmentalprocesses and effective governance of localgovernment units within its territorial jurisdiction.(RA 7160, Section 459)

(See RA 7160 Sections 459-468)

J. Autonomous regions in Muslim Mindanao and inCordilleras

(This will be discussed under Section 15)(As of this writing, only one autonomous region,that of the Muslim Mindanao, has beenestablished.)

K. Special Metropolitan Political Subdivisions

Section 11. The Congress may, by law, create specialmetropolitan political subdivisions, subject to a plebiscite asset forth in Section 10 hereof. The component cities andmunicipalities shall retain their basic autonomy and shall beentitled to their own local executive and legislative

assemblies. The jurisdiction of the metropolitan authoritythat will thereby be created shall be limited to basic servicesrequiring coordination.

Pursuant to Article X, Section 11, Congress may,by law, create special metropolitan politicalsubdivisions subject to a plebiscite set forth inSection 20, but the component cities andmunicipalities shall retain their basic autonomy andshall be entitled to their own local executives andlegislative assemblies. The jurisdiction of themetropolitan authority that will thereby created shallbe limited to basic services requiring coordination.

NOTE: As earlier decided in the Belair case, the

MMDA is NOT the metropolitan political unitcontemplated in Section 11. Rather it is anadministrative agency of the government and assuch it does not possess police power. It mayexrcise only such powers as are given to it by law.Hence, where there is a traffic law or regulationvalidly enacted by the legislature or those agenciesto whom legislative powers have been delegated(the City of Manila in this case) empowering it toconfiscate suspend licenses of erring drivers, it




5/46




may do perform such acts. Without such law,however, the MMDA has no power.643

L. Leagues of LGUs/Officials

(See RA 7160 Sections 491-495; 496-498)

Section 13. Local government units may group themselves,consolidate or coordinate their efforts, services, andresources for purposes commonly beneficial to them inaccordance with law.

Q: Does the grouping contemplated in Section 13create a new juridical entity?A: No.644

Q: May local government units create these groupingseven without prior enabling law?A: Yes.

Liga ng mga Barangay- Organization of allbarangay for the primary purpose of determining

the representation of the Liga in the sanggunians,and for ventilating, articulating and crystallizingissues affecting barangay governmentadministration and securing, through proper andlegal means, solutions thereto.

2003 Bar QuestionQ: Can the Liga ng mga Barangay exerciselegislative powers?SUGGESTED ANSWER: The Liga ng MgaBarangay cannot exercise legislative powers. Asstated in Bito-Onon v. Fernandez. 350 SCRA 732[2001], it is not a local government unit and itsprimary purpose is to determine representation ofthe mga in the sanggunians; to ventilate, articulate,and crystallize issues affecting barangay

government administration; and to secure solutionsfor them through proper and legal means.

League of Municipalities. Organized for theprimary purpose of ventilating, articulating andcrystallizing issues affecting municipal governmentadministration, and securing, through proper andlegal means, solutions thereto.

M. Regional Development Councils

Section 14. The President shall provide for regionaldevelopment councils or other similar bodies composed oflocal government officials, regional heads of departmentsand other government offices, and representatives from

non-governmental organizations within the regions forpurposes of administrative decentralization to strengthen theautonomy of the units therein and to accelerate theeconomic and social growth and development of the units inthe region.

Purpose. The purpose of this provision is to fosteradministrative decentralization as a complement to

643MMDA v. Garin, G.R. No. 130230, April 15, 2005.


political decentralization. This is meant to allowbottom-to-top planning rather than the reverse.645

Power to Create RDCs. It will be noted that thepower to form these development councils is givento the President. He does not need authorizationfrom Congress.646

II. Local Autonomy

Section 2. The territorial and political subdivisions shallenjoy local autonomy.

A. Constitutional Provisions

Article II, Section 25: The State shall ensure theautonomy of local governments.Article X, Section 2: The territorial and politicalsubdivisions shall enjoy local autonomy.(See also Sections 4,5,6, 7 and 10 of Article X)

B. Significance of Declaration of Local Autonomy

It is meant to free local governments from the well-nigh absolute control by the legislature whichcharacterized local government under the 1935Constitution. Thus, although a distinction is madebetween local governments in general andautonomous regions, even those outside theautonomous regions are supposed to enjoyautonomy.647

D. Rules on Local Autonomy

In resum, the Court is laying down the following

rules:1. Local autonomy, under the Constitution,involves a mere decentralization ofadministration, not of power, in which localofficials remain accountable to the centralgovernment in the manner the law mayprovide;

2. The new Constitution does not prescribefederalism;

3. The change in constitutional language (withrespect to the supervision clause) was meantbut to deny legislative control over localgovernments; it did not exempt the latter fromlegislative regulations provided regulation isconsistent with the fundamental premise of

autonomy;4. Since local governments remain accountable

to the national authority, the latter may, by law,and in the manner set forth therein, imposedisciplinary action against local officials;

645Bernas Commentary, p 1098 (2003 ed).






6/46




5. "Supervision" and "investigation" are notinconsistent terms; "investigation" doesnot signify "control" (which the Presidentdoes not have); xxx (Ganzon v. CA, GR93252, 08.05.91)

E. Meaning of Local Autonomy

*Local autonomy, under the Constitution,involves a mere DECENTRALIZATION OF

ADMINISTRATION, not of power.... (Ganzon v.CA, 1991)

Nachura and Agra Notes: The principle of localautonomy under the 1987 Constitution simply meansdecentralization. (Basco v. Pagcor, 197 SCRA52)648(Lina v. Pano, 2001)

Bernas: Local autonomy means more than justdecentralization. But the concept of autonomy isrelative. Autonomy for local governments in generalwill be less than for the autonomous regions.649

However, even as we recognize that theConstitution guarantees autonomy to localgovernment units, the exercise of local autonomyremains subject to the power of control byCongress, and the power of general supervision bythe President. (Judge Dadole v. COA, 2002)

Q: What is the meaning of local autonomy as it hasemerged in recent decisions?A: It means that local governments have certainpowers given by the Constitution which may not becurtailed by the national government, but that,outside of these, local governments may not pass

ordinances contrary to statute. (Magtajas v. PryceProperties, 234 SCRA 255 (1994)).650

Q: Do local governments have the power to grantfranchise to operate CATV system.A: No. (Batangas CATV v. CA, 2004)

Q: The law says that the budget officer shall beappointed by the Department head upon therecommendation of the head of local governmentsubject to civil service rules and regulations. If noneof those recommended by the local governmenthead meets the requirements of law, may theDepartment head appoint anyone he chooses?A: No, he must return the recommendations of thelocal government head explaining why therecommendees are not qualified and ask for a new

recommendation. In other words, therecommendation of the local government head is acondition sine qua non of the Departmentsappointing authority. This is the only way localautonomy can be given by recognition theConstitution wants it to have. When in doubt, favorautonomy. (San Juan v. CSC, 1991)




Q: May COA reduce the allowance given to judgesby local governments?A: No. Since the Local Government Code authorizeslocal governments to give allowance to judges anddecide how much this should be, local autonomyprohibits the Commission on Audit from interfering

with the authority of the local a government byreducing what has been decided by the localgovernment. (Dadole v. COA, 2002; Leynes v. COA,2003)

F. Regional Autonomy

Regional autonomy is the degree of self-determination exercised by the localgovernment unit vis--vis the centralgovernment. (Disomangcop v. Secretary of PublicWorks and Highways, GR 149848, 11.25.2004)

Regional autonomy refers to the granting ofbasic internal government powers to the people

of a particular area or region with least controland supervision from the central government .The objective of the autonomy system is to permitdetermined groups, with a common tradition andshared social-cultural characteristics, to developfreely their ways of life and heritage, exercise theirrights, and be in charge of their own business.(Disomangcop v. Secretary of Public Works andHighways, GR 149848, 11.25.2004)

Regional autonomy is also a means towardssolving existing serious peace and orderproblems and secessionist movements.Parenthetically, autonomy, decentralization andregionalization, in international law, have become

politically acceptable answers to intractableproblems of nationalism, separatism, ethnic conflictand threat of secession. However, the creation ofautonomous regions does not signify theestablishment of a sovereignty distinct from that ofthe Republic, as it can be installed only "within theframework of this Constitution and the nationalsovereignty as well as territorial integrity of theRepublic of the Philippines. (Disomangcop v.Secretary of Public Works and Highways, GR149848, 11.25.2004)

G. Fiscal Autonomy

Local autonomy includes both administrative

and fiscal autonomy. xxx The Court declaredtherein that local fiscal autonomy includes thepower of the LGUs to, inter alia, allocate theirresources in accordance with their own priorities.xxx Further, a basic feature of local fiscal autonomyis the constitutionally mandated automatic releaseof the shares of LGUs in the national internalrevenue. (Province of Batangas v. Romulo, GR152774, 05.27.2004)




7/46




Under existing law, local government units, inaddition to having administrative autonomy in theexercise of their functions, enjoy fiscal autonomyas well. Fiscal autonomy means that localgovernments have the power to create theirown sources of revenue in addition to theirequitable share in the national taxes releasedby the national government, as well as thepower to allocate their resources in accordancewith their own priorities. It extends to thepreparation of their budgets, and local officials in turn-have to work within the constraints thereof. They are notformulated at the national level and imposed on localgovernments, whether they are relevant to local needsand resources or not. Hence, the necessity of a balancingof viewpoints and the harmonization of proposals fromboth local and national officials, who in any case arepartners in the attainment of national goals. Local fiscalautonomy does not however rule out any manner ofnational government intervention by way of supervision,in order to ensure that local programs, fiscal andotherwise, are consistent with national goals.Significantly, the President, by constitutional fiat, is the

head of the economic and planning agency of thegovernment, primarily responsible for formulating andimplementing continuing, coordinated and integratedsocial and economic policies, plans and programs for theentire country. However, under the Constitution, theformulation and the implementation of such policies andprograms are subject to "consultations with theappropriate public agencies, various private sectors, andlocal government units. The President cannot do so

unilaterally. (Pimentel v. Aguirre, GR 132988,07.19.2000)

xxx the limited and restrictive nature of the taxexemption privileges under the LocalGovernment Code is consistent with the Statepolicy to ensure autonomy of localgovernments and the objective of the LocalGovernment Code to grant genuine andmeaningful autonomy to enable local governmentunits to attain their fullest development as self-reliant communities and make them effectivepartners in the attainment of national goals. Theobvious intention of the law is to broaden the taxbase of local government units to assure them ofsubstantial sources of revenue. (PHILRECA v.DILG, GR 143076, 06.10.2003)

With the added burden of devolution, it is evenmore imperative forgovernment entities to sharein the requirements of development, fiscal or

otherwise, by paying taxes or other charges duefrom them. (NAPOCOR v. Cabanatuan City, GR149110, 04.09.2003)

xxx in taxing government-owned or controlledcorporations, the State ultimately suffers noloss. (Philippine Ports Authority v. Iloilo City, GR109791, 07.14.2003)

The important legal effect of Section 5 (of Article Xof the 1987 Constitution) is that henceforth, in

interpreting statutory provisions on municipalfiscal powers, doubts will have to be resolved infavor of municipal corporations. (San Pablo City v.Reyes, GR 127708, 03.25.99)

ACORD v. Zamora (GR 144256, 06.08.2005)Constitution provides for automatic release of

IRA.The General Appropriation Act of 2000 cannotplace a portion of the Internal Revenue

Allotment (P10B) in an Unprogrammed Fundonly to be released when a condition is met i.e.the original revenue targets are realized, sincethis would violate the automatic releaseprovision under Section 5, Article X of theConstitution. As the Constitution lays upon theexecutive the duty to automatically release the

just share of local governments in the nationaltaxes, so it enjoins the legislature not to passlaws that might prevent the executive fromperforming this duty. Both the executive andlegislative are barred from withholding therelease of the IRA. If the framers of theConstitution intended to allow the enactment ofstatutes making the release of IRA conditionalinstead of automatic, then Article X, Section 6of the Constitution would have been wordeddifferently. Congress has control only over theshare which must be just, not over the mannerby which the share must be released whichmust be automatic since the phrase asdetermined by law qualified the share, not therelease thereof.

Province of Batangas v. Romulo (GR 152774,05.27.2004)GAA cannot amend LGC. Constitution providesfor automatic release of IRA.

The General Appropriation Acts of 1999, 2000and 2001 and resolutions of the Oversight

Committee cannot amend the 1991 LocalGovernment Code insofar as they provide forthe local governments share in the InternalRevenue Allotments as well as the time andmanner of distribution of said share. A nationalbudget cannot amend a substantive law, in thiscase the Code. The provisions in the GAAcreating the Local Government SpecialEqualization Fund and authorizing the non-release of the 40% to all local governments areinappropriate provisions. Further, therestrictions are violative of fiscal autonomy.Fiscal autonomy means that local governmentshave the power to create their own sources ofrevenue in addition to their equitable share inthe national taxes released by the nationalgovernment, as well as the power to allocate

their resources in accordance with their ownpriorities. It extends to the preparation of theirbudgets, and local officials in turn have to workwithin the constraints thereof. They are notformulated at the national level and imposed onlocal governments, whether they are relevant tolocal needs and resources or not. Further, abasic feature of local fiscal autonomy is theconstitutionally mandated automatic release ofthe shares of local governments in the nationalinternal revenue.




8/46




Civil Service Commission v. Department ofBudget and Management (GR 158791,07.22.2005)No Report, No Release policy violates fiscalautonomy.

A no report, no release policy may not bevalidly enforced against offices vested with

fiscal autonomy. Such policy cannot beenforced against offices possessing fiscalautonomy such as Constitutional Commissionsand local governments. The automatic releaseprovision found in the Constitution means thatthese local governments cannot be required toperform any act to receive the just shareaccruing to them from the national coffers.

Pimentel v. Aguirre (GR 132988, 07.19.2000)Executive withholding of 10% of the InternalRevenue Allotment without complying withrequirements set forth in Section 284 LGCviolated local autonomy and fiscal autonomy oflocal governments; Withholding amounted toexecutive control

Under existing law, local government units, in

addition to having administrative autonomy inthe exercise of their functions, enjoy fiscalautonomy as well and that fiscal autonomymeans that local governments have the powerto create their own sources of revenue inaddition to their equitable share in the nationaltaxes released by the national government, aswell as the power to allocate their resources inaccordance with their own priorities.

Dadole v. Commission on Audit (GR 125350,12.03.2002)

DBM cannot impose a limitation when the lawimposes none.

DBM Local Budget Circular No. 55 which

provides a limit to allowance that may be givenby local governments to judges is null and voidsince the 1991 Local Government does notprescribe a limit. By virtue of his/ her power ofsupervision, the President can only interfere inthe affairs and activities of a local governmentunit if it has acted contrary to law.

Leynes v. COA (GR 143596, 12.11.2003)DBM cannot nullify a statutory power.

A National Compensation Circular by theDepartment of Budget and Management cannotnullify the authority of municipalities to grantallowances to judges authorized in the 1991Local Government Code. The Circular prohibitsthe payment of representation and

transportation allowances from more than onesource from national and local governments.

G. Self-Determination

Self-determination refers to the need for a politicalstructure that will respect the autonomous peoples'uniqueness and grant them sufficient room for self-expression and self-construction. (Disomangcop v.Secretary of Public Works and Highways, GR149848, 11.25.2004)

H. Decentralization

A necessary prerequisite of autonomy isdecentralization. Decentralization is a decision bythe central government authorizing its

subordinates, whether geographically orfunctionally defined, to exercise authority in certainareas. It involves decision-making by subnationalunits. It is typically a delegated power, wherein alarger government chooses to delegate certainauthority to more local governments. Federalismimplies some measure of decentralization, butunitary systems may also decentralize.Decentralization differs intrinsically from federalismin that the sub-units that have been authorized toact (by delegation) do not possess any claim ofright against the central government.Decentralization comes in two forms deconcentration and devolution. Deconcentration is administrative in nature; it

involves the transfer of functions or the delegationof authority and responsibility from the nationaloffice to the regional and local offices. This mode ofdecentralization is also referred to asadministrative decentralization.Devolution, on the other hand, connotes politicaldecentralization, or the transfer of powers,responsibilities, and resources for the performanceof certain functions from the central government tolocal government units. This is a more liberal formof decentralization since there is an actual transferof powers and responsibilities. It aims to grantgreater autonomy to local government units incognizance of their right to self-government, tomake them self-reliant, and to improve their

administrative and technical capabilities.(Disomangcop v. Secretary of Public Works andHighways, GR 149848, 11.25.2004)

Decentralization simply means the devolutionof national administration, not power, to localgovernments. Local officials remain accountableto the central government as the law may provide.(Pimentel v. Aguirre, GR 132988, 07.19.2000)

Q:Are autonomy and decentralization the same?A: Not really. Autonomy is either decentralizationof administration ordecentralization of power.There is decentralization of administration whenthe central government delegates administrativepowers to political subdivisions in order to broadenthe base of governmental power an in the process tomake local governments more responsive andaccountable and ensure their fullest development asself-reliant communities and make them moteeffective partners in the pursuit of nationaldevelopment and social progress. At the same timeit relieves the central government of the burden ofmanaging local affairs and enable it to concentrateon national concerns




9/46




Decentralization of power on the other hand,involves an abdication of political power in favor oflocal government units declared to be autonomous.In that case the autonomous government is free tochart its own destiny and shape its future withminimum intervention from central governmentauthorities. According to a constitutional author,

decentralization of power amounts to self-immolation, since in that event, the autonomousgovernment becomes accountable not to the centralauthorities but to its constituency. (Limbona v. ConteMiguelin, 1989 citing Bernas, Brewing the StormOver Autonomy)651

I. Presidents General Supervision

Section 4. The President of the Philippines shall exercisegeneral supervision over local governments. Provinces withrespect to component cities and municipalities, and citiesand municipalities with respect to component barangays,shall ensure that the acts of their component units are withinthescope of their prescribed powers and functions.

1. Power of General Supervision

The power of general supervision is the power of asuperior officer to see to it that the lower officersperform their functions in accordance with law. Itdoes not include the power to substitute ones

judgment for that of a lower officer in matters wherea lower officer has various legal alternatives tochoose from.652

Consistent with the doctrine that local governmentdoes not mean the creation of imperium in imperioor a state within a State, the Constitution hasvested the President of the Philippines the power ofgeneral supervision over local government units.

Such grant of power includes the power ofdiscipline over local officials, keeping themaccountable to the public, and seeing to it that theiracts are kept within the bounds of law. Needless tosay, this awesome supervisory power, however,must be exercised judiciously and with utmostcircumspection so as not to transgress the avowedconstitutional policy of local autonomy. (Malonzov. Zamora, GR 137718, 07.27.99)

Hand in hand with the constitutional restraint onthe President's power over local governments isthe state policy of ensuring local autonomy. xxxParadoxically, local governments are stillsubject to regulation, however limited, for the

purpose of enhancing self-government.(Pimentel v. Aguirre, GR 132988, 07.19.2000)

Q: When Section 187 of the Local GovernmentCode authorizes the Secretary of Justice to pass

judgment on the constitutionality or legality of taxordinances or revenue measures, does he notexercise the power of control?



A: No. He does not thereby dictate the law shouldbe but merely ensures that the ordinance is inaccordance with law. (Drilon v. Lim)

Q: Petitioner challenges the right of the President,through the Secretary of Interior to suspend him onthe ground that the removal of the phrase As may

be provided by law from unconstitutional provisionhas stripped the President and legislature of thepower over local governments. Corollarily, he arguesthat new Constitution has effectively repealedexisting laws on the subject. Decide.A: The power of general supervision of the Presidentincludes the power to investigate and remove.Moreover, Section 3 itself of this Article provides thatthe Local Government Code (LGC) may provide forremoval thus indicating that laws on the subject arenot out of the compass of the legislature. Autonomydoes not transform local governments into kingdomsunto themselves. (Ganzon v. CA, 1991)

Q: May the Secretary of the local Governmentannul the election of officers of a federation ofbarangay officials?

A: No. Such annulment would amount to control andtherefore in excess of executive supervisory powers.(Taule v. Secretary Santos, 1991)653

2. Supervisory Structure in the LocalGovernment System

The President has general supervision over allLGUs. But his direct supervisory contact is withautonomous regions, provinces, and independentcities. The rest follow in hierarchal order asindicated in Section 4.

J. Local Autonomy and Legislative Control

The Constitution did not, however, intend, for the

sake of local autonomy, to deprive the legislatureof all authority over municipal corporations, inparticular, concerning discipline. The change inconstitutional language did not exempt localgovernments from legislative regulation providedregulation is consistent with the fundamentalpremise of autonomy. (Ganzon v. CA, GR 93252,08.05.91)

This basic relationship between the nationallegislature and the local government units has notbeen enfeebled by the new provisions in theConstitution strengthening the policy of localautonomy. Without meaning to detract from thatpolicy, we here confirm that Congress retains

control of the local government units althoughin significantly reduced degree now than underour previous Constitutions. The power to create stillincludes the power to destroy. The power to grantstill includes the power to withhold or recall. xxx Byand large, however, the national legislature is stillthe principal of the local government units, whichcannot defy its will or modify or violate it.





10/46




(Magtajas v. Pryce Properties, GR 111097,07.20.94)

III. Local Government Code

Principal Guidelines Given to CongressEffectivity of LGC

Scope of ApplicationDeclaration of PolicyRules of Interpretation

Section 3. The Congress shall enact a local governmentcode which shall provide for a more responsive andaccountable local government structure instituted through asystem of decentralization with effective mechanisms ofrecall, initiative, and referendum, allocate among thedifferent local government units their powers,responsibilities, and resources, and provide for thequalifications, election, appointment and removal, term,salaries, powers and functions and duties of local officials,and all other matters relating to the organization andoperation of the local units.

A. Principal Guidelines Given to Congress

The principal guidelines given to Congress forstructuring LGUs are:

1. That the structure must be responsive andaccountable and instituted though a systemof decentralization.

2. The structure must be both sensitive to theneeds of the locality, accountable to theelectorate of the locality, and freed as much aspossible from central governmentinterference.654

Q: The 1973 Constitution contained a provision

which said that No change in the existing form ofgovernment shall take effect until ratified by amajority of the votes cast in a plebiscite called forthe purpose. Why was this not retained?A: The provision was considered too limitive of thepower of Congress.655

B. Effectivity of LGC

January 1, 1992, unless otherwise providedherein, after its complete publication in at least onenewspaper of general circulation (RA 7160, Section536)

C. Scope of LGCs Application

The Code shall apply to all provinces, cities,municipalities, barangays and other politicalsubdivisions as may be created by law, and , to theextent herein provided, to officials, offices oragencies of the National Government (RA 7160,Section 536)



D. Declaration of Policy (Section 2)

1. The territorial and political subdivisions of theState shall enjoy genuine and meaningful localautonomy to enable them to attain their fullest

development as self-reliant communities andmake them more effective partners in theattainment of national goals;

2. Ensure accountability of local governmentunits through the institution of effectivemechanisms of recall, initiative andreferendum; and

3. Require all national agencies and offices toconduct periodic consultations with appropriatelocal government units, non-governmental andpeoples organizations, and other concernedsectors of the community before any project orprogram is implemented in their respective

jurisdictions.

E. Rules of Interpretation

1. Any provision on a power of local governmentunit shall be liberally interpreted in its favor,and in case of doubt, any question thereonshall be resolved in favor of devolution ofpowers and of the local government unit.

2. Any tax ordinance or revenue measure shallbe construed strictly against the localgovernment unit enacting it and liberally infavor of the taxpayer. Any tax exemption,incentive or relief granted by any localgovernment unit shall be construed strictlyagainst the person claiming it.

3. The general welfare provisions shall beliberally interpreted to give more powers tolocal government units in acceleratingeconomic development and upgrading thequality of life for the people in the community.

4. Rights and obligations existing on the date ofeffectivity of this Code and arising out ofcontracts or any other source of prestationinvolving a local government unit shall begoverned by the original terms and conditionsof said contracts or the law in force at the timesuch rights were vested.

5. In the resolution of controversies arising underthis Code where no legal provision or

jurisprudence applies, resort may be had to

the customs and traditions in the place wherethe controversies take place.656

(See page 676-697 of Jacks Compendium(2006))

IV. General Powers and Attributes of LGUs

Powers in GeneralGovernmental PowersCorporate Powers





11/46




Section 5. Each local government unit shall have the powerto create its own sources of revenues and to levy taxes,fees and charges subject to such guidelines and limitationsas the Congress may provide, consistent with the basicpolicy of local autonomy. Such taxes, fees, and chargesshall accrue exclusively to the local governments.

Section 6. Local government units shall have a just share,as determined by law, in the national taxes which shall beautomatically released to them.

Section 7. Local governments shall be entitled to anequitable share in the proceeds of the utilization anddevelopment of the national wealth within their respectiveareas, in the manner provided by law, including sharing thesame with the inhabitants by way of direct benefits.

A. Powers in General

1. Sources

1. Article II, Section 25: The Sate shall

ensure the autonomy of localgovernments.2. Article X, Sections 5,6, & 7.3. Statutes (e.g., RA 7160)4. Charter (particularly of cities)

2. Classification

1. Express , implied, inherent (powersnecessary and proper for governance,e.g., to promote health and safety,enhance prosperity, improve morals ofinhabitants)

2. Public or governmental; Private orproprietary

3. Intramural, extramural4. Mandatory , directory; Ministerial,

discretionary.

Governmental Powers Corporate Powers

1. General Welfare2. Basic Services and

Facilities3. Power to Generate

and Apply Resources4. Eminent Domain5. Reclassification of

Lands6. Closure and Opening

of Roads7. Local Legislative

Power8. Authority over Police

Units

1. To have continuoussuccession in itscorporate name.

2. To sue and be sued3. To have and use a

corporate seal4. To acquire and

convey real or personal property

5. Power to enter intocontracts

6. To exercise suchother powers as aregranted tocorporations, subjectto the limitationsprovided in the Codeand other laws.

3. Execution of Powers

1. Where statute prescribes the manner ofexercise, the procedure must be followed;

2. Where the statute is silent, localgovernment units have discretion to selectreasonable means and methods ofexercise.657

B. Governmental Powers

1. General Welfare (RA 7160, Section 16)2. Basic Services and Facilities (RA 7160, 17)3. Power to Generate and Apply Resources (RA

7160 18; Article X, 5-7)4. Eminent Domain (RA 7160, 19)5. Reclassification of Lands (RA 7160, 20)6. Closure and Opening of Roads (RA 7160,

21)7. Local Legislative Power (RA 7160, 48-59)8. Authority over Police Units (See Article XVI,

Section 6; PNP Act)

1. General Welfare

RA 7160, Section 16: Every local government unitshall exercise the powers expressly granted, those

necessarily implied therefrom, as well as powersnecessary, appropriate, or incidental for its efficientand effective governance, and those which areessential to the promotion of general welfare.Within their respective territorial jurisdiction, localgovernment units shall ensure and support, amongother things, the preservation and enrichment ofculture, promote health and safety, enhance theright of the people to a balanced ecology,encourage and support the development ofappropriate and self-reliant scientific andtechnological capabilities, improve public morals,enhance economic prosperity and social justice,promote full employment among its residents,maintain peace and order, and preserve thecomfort and convenience of their inhabitants.

Police power. The general welfare clause isthe statutory grant of police power to localgovernment units.

The general welfare clause has twobranches.(1) General legislative power, authorizes themunicipal council to enact ordinances andmake regulations not repugnant to law, as maybe necessary to carry into effect and dischargethe powers and duties conferred upon themunicipal council by law.(2) Police power proper, authorizes the

municipality to enact ordinances as may benecessary and proper for the health andsafety, prosperity, morals, peace, good order,comfort, and convenience of the municipalityand its inhabitants, and for the protection oftheir property. (Rural Bank of Makati v.Makati, GR 150763, 07.02.2004)





12/46




As with the State, the local government maybe considered as having properly exercised itspolice power only if the following requisites aremet: (1) the interests of the public generally,as distinguished from those of a particularclass, require the interference of the State, and(2) the means employed are reasonablynecessary for the attainment of the objectsought to be accomplished and not undulyoppressive upon individuals. Otherwisestated, there must be a concurrence of alawful subject and lawful method. (LucenaGrand Central v. JAC, GR 14833902.23.2005)

Limitations on the exercise of powers underthis clause:

1. Exercisable only within territorial limits of thelocal government unit, except for protection ofwater supply.

2. Equal protection clause. (The interests of thepublic in general, as distinguished from thoseof a particular class, require the exercise of thepower.

3. Due process clause . (The means employedare reasonably necessary for theaccomplishment of the purpose and not undulyoppressive on individuals)

4. Must not be contrary to the Constitution andthe laws. Prohibited activities may not belegalized in the guise of regulation; activitiesallowed by law cannot be prohibited, onlyregulated.

Magtajas v. Pryce Properties: To bevalid , an ordinance:a. Must not contravene the Constitution and

any statute;b. Must not be unfair or oppressive;c. Must not be partial or discriminatory;d. Must not prohibit, but ay regulate trade;e. Must not be unreasonable and;f. Must be general in application and

consistent with public policy.

Cases:Valid Exercise of Police Power

1. Closure of Bank. A local government unit may, inthe exercise of police power under the generalwelfare clause, order the closure of a bank for failureto secure the appropriate mayors permit andbusiness licenses. (Rural Bank of Makati v.Municipality of Makati, 2004)

2. Ban on Shipment. The SC upheld, as legitimateexercise of the police power, the validity of thePuerto Princesa Ordinance banning the shipment ofall live fish and lobster outside Puerto Princesa from1993-1998 as well as the SangguniangPanlalawigan Resolution prohibiting that catching,gathering, possessing, buying, selling and shipmentof live marine coral dwelling of aquatic organisms fora period of 5 years, coming from Palawan waters.

3. It was held that the power of municipal corporationsis broad and has been said to be commensuratewith but to exceed the duty to provide for the realneeds of the people in their health, safety, comfortand convenience, and consistently as may be withprivate rights. Ordinance is not unconstitutionalmerely because it incidentally benefits a limited

number of persons. The support for the poor haslong been an accepted exercise of the police powerin the promotion of the common good. (Binay v.Domingo, 201 SCRA 508)

4. Imposition of Annual Fee. It was held that wherepolice power is used to discourage non-usefuloccupations or enterprises, an annual permit/license fee of P100.00 although a bit exorbitant, isvalid. (Physical Therapy Organization of thePhilippines v. Municipal Board of Manila)

5. The ordinance requiring owners of commercialcemeteries to reserve 6% of their burial lots forburial grounds of paupers was held invalid; it wasnot an exercise of the police power, but of eminentdomain. (QC v. Ericta, 122 SCRA 759)

6. The Manila Ordinance prohibiting barber shops fromconducting massage business in another room washeld valid, as it was passed for the protection ofpublic morals. (Velasco v. Villegas, 120 SCRA 568)

7. Zoning Ordinance. A zoning ordinancereclassifying residential into commercial or lightindustrial area is a valid exercise of the police power.(Ortigas v. Feati Bank, 94 SCRA 533)

8. The act of the Municipal Mayor in opening Jupiterand Orbit Streets of Bel Air Subdivision, to the publicwas deemed a valid exercise of police power.(Sangalang v. IAC, 176 SCRA 719)

Invalid Ordinances

1. LGU may not regulate subscriber rate. A localgovernment unit may not regulate the subscriberates charged by CATV operators within its territorial

jurisdiction. The regulation and supervision of theCATV industry shall remain vested solely in theNTC. Considering that the CATV industry is sotechnical a field, NTC, a specialized agency, is in abetter position than the local government units toregulate it. This does not mean, however, that theLGU cannot prescribe regulations over CATVoperators in the exercise of the general welfareclause. (Batangas CATV v. CA, 2004)

2. Ordinance contrary to statute held invalid. Theordinance prohibiting the issuance of a businesspermit to, and cancelling any business permit of anyestablishment allowing its premises to be used as acasino, and the ordinance prohibiting the operationof a casino, were declared invalid for being contraryto PD 1869 (Charter of PAGCOR)which has the

character and force of a statute. (Magtajas)3. Where power to grant franchise not granted.

What Congress delegated to the City of Manila in RA409 (Revised Charter of Manila) with respect towagers and betting was the power to license, permitor regulate, not the power to franchise. This meansthat the license or permit issued by the City ofManila to operate wager or betting activity, such as

jai-lai, would not amount to something meaningfulunless the holder of the license or permit was alsofranchised by the National Government to operate.Therefore, Manila Ordinance No. 7065, which




13/46




purported to grant ADC a frachise to conduct jai-alaioperations, is void and ultra vires (Lim v. Pacquing)

RA 7160 expressly authorizes the Mayor toissue permits and licenses for the holding ofactivities for any charitable or welfare purpose;thus, the Mayor cannot feign total lack ofauthority to act on requests for such permits.

(Olivares v. Sandiganbayan , 1995) But its isthe Laguna Lake Development Authority(LLDA), not the municipal government, whichhas the exclusive jurisdiction to issue permitsfor the enjoyment of fishery privileges inLaguna de Bay, by virtue of RA 4850, PD 813and EO 927, because although RA 7160 vestsin municipalities the authority to grant fisheryprivileges in municipal waters, RA 7160 did notrepeal the charter of LLDA, and the latter is anexercise of the police power. (LLDA v. CA)

4. The ordinance of Bayambang, Pangasinan,appointing Lacuesta manager of fisheries for 25years, renewable for another 25 years, was heldinvalid, ultra vires, as it effectively amends a generallaw.(Terrado, v. CA, 131 SCRA 373)

5. An ordinance imposing P0.30 police inspection fee

per sack of cassava flour produced and shipped outof the municipality was held invalid. It is not a licensefee but a tax, unjust and unreasonable, since theonly service of the municipality is for the policemanto verify from the drivers of trucks of petitioner thenumber of sacks actually loaded. (Matalin Coconut v.Municipal Council of Malabang, 143 SCRA 404)

6. The power to issue permits to operate cockpits isvested in the Mayor, in line with the policy of localautonomy. (Philippine Gamefowl Commission v. IAC)

7. The Bocaue, Bulacan ordinance prohibiting theoperation of night-clubs, was declared invalid,because of his prohibitory, not merely regulatory,character. (Dela Cruz v. Paras, 123 SCRA 569)

8. It was held that the ordinance penalizing personscharging full payment for admission of children

(ages 7-12) in moviehouses was an invalid exerciseof police power for being unreasonable andoppressive on business of petitioners. (Balacuit v.CFI)

1993 Bar QuestionQ: Mayor Alfredo Lim closed the funhouses in the Ermitadistrict suspected of being fronts for prostitution. Todetermine the feasibility of putting up a legalized red lightdistrict, the city council conducted an inquiry and invitedoperators of the closed funhouses to get their views. Noone honored the invitation. The city council issuedsubpoenas to compel the attendance of the operators butwhich were completely disregarded. The council declaredthe operators guilty of contempt and issued warrants fortheir arrest. The operators come to you for legal advice,asking the following questions: (1) Is the council

empowered to issue subpoenas to compel theirattendance? (2) Does the council have the power to citefor contempt?Suggested Answer: (1) The city council is notempowered to issue subpoenas to compel the attendanceof the operators of the fun-houses In the Ermita district.There is no provision in the Constitution, the LocalGovernment Code, or any law expressly granting locallegislative bodies the power to subpoena witnesses. Asheld in Negros Oriental II Electric Cooperative, Inc. vs.Sangguniang Panlungsod of Dumaguete, 155 SCRA 421,such power cannot be implied from the grant of delegated

legislated power. Such power is Judicial. To allow locallegislative bodies to exercise such power without expressstatutory basis would violate the doctrine of separation ofpowers.(2) The city council does not have the power to cite forcontempt. There is likewise no provision in theConstitution, the Local Government Code, or any other

laws granting local legislative bodies the power to cite forcontempt. Such power cannot be deemed implied in thedelegation of legislative power to local legislative bodies,for the existence of such power poses a potentialderogation of individual rights.

2. Basic Services and Facilities

RA 7160, Section 17: Local government units shallendeavor to be self-reliant and shall continueexercising the powers and discharging the dutiesand functions currently vested upon them. Theyshall also discharge the functions andresponsibilities of national agencies and officesdevolved to them pursuant to this Code (within 6months after the effectivity of this Code) They shalllikewise exercise such other powers and discharge

such other functions as are necessary, appropriate,or incidental to efficient and effective provision ofthe basic services and facilities enumerated herein.

Note that public works and infrastructure projectsand other facilities, programs and services fundedby the national government under the General

Appropriations Act and other laws, are not coveredunder this section, except where the localgovernment unit is duly designated as theimplementing agency for such projects, facilities,programs and services.658

Devolution. Devolution refers to the act by whichthe national government confers power and authorityupon the various local government units to performspecific functions and responsibilities. This includesthe transfer to the local government units of the

records, equipment and other assets and personnelof national agencies and offices. Regional offices ofnational agencies shall be phased out within oneyear form the approval of this Code. Career regionaldirectors who cannot be absorbed by the localgovernment unit shall be retained by the nationalgovernment, without diminution in rank, salary ortenure.659

3. Power to Generate and Apply Resources

RA 7160, Section 18: Local government units shallhave the power and authority to establish anorganization that shall be responsible for theefficient and effective implementation of theirdevelopment plans, program objectives andpriorities; to create their own sources of revenueand to levy taxes, fees and charges which shallaccrue exclusively to their use and disposition andwhich shall be retained by them; to have a justshare in the national taxes which shall beautomatically and directly released to them withoutneed of further action; to have an equitable sharein the proceeds from the utilization and






14/46




development of the national wealth and resourceswithin their respective territorial jurisdictionsincluding develop, lease, encumber, alienate orotherwise dispose of real or personal property heldby them in their proprietary capacity and to applytheir resources and assets for productive,developmental or welfare purposes, in the exerciseof furtherance of their governmental or proprietarypowers and functions and thereby ensure theirdevelopment into self-reliant communities andactive participants in the attainment of nationalgoals.

Section 18 of RA 7160 restates andimplements Sections 5,6,7 of Article X . Butthis power is always subject to the limitations whichthe Congress may provide by law. (Basco v.PAGCOR, 197 SCRA 52) Thus, it was held that thelocal government units have no power to taxinstrumentalities of the National Government, suchas PAGCOR.

The power to tax is primarily vested in the

Congress; however, in our jurisdictions, it may beexercised by local legislative bodies, no longermerely by virtue of a valid delegation as before,but pursuant to direct authority conferred bySection 5, Article X of the Constitution. Under thelatter the exercise of the power may be subject tosuch guidelines and limitations as the Congress mayprovide which, however, must be consistent with thebasic policy of local autonomy. xxx These policyconsiderations are consistent with the State policy toensure autonomy to local governments and theobjective of the LGC that they enjoy genuine andmeaningful local autonomy to enable them to attaintheir fullest development as self-reliant communitiesand make them effective partners in the attainmentof national goals. The power to tax is the mosteffective instrument to raise needed revenues to

finance and support myriad activities of localgovernment units for the delivery of basic servicesessential to the promotion of the general welfare andthe enhancement of peace, progress, and prosperityof the people. (Mactan Cebu International Airport v.Marcos, GR 110082, 09.11.96)

Q: What are the fund sources of localgovernments?A: They are:1. Local taxes, fees and charges;2. Its share in the national taxes;3. Its share in the proceeds of the utilization of

national resources within their respectiveareas;

4. Other sources of revenues which they maylegitimately make use of either in their publicor governmental capacity, or private orproprietary capacity.660

Q: What is the scope of their power to levy taxes,fees, and charges?A: They are subject to such guidelines andlimitations as Congress may provide. However, suchguidelines and limitations to be imposed by


Congress must not be such as to frustrate the basicpolicy of local autonomy.661

Q: What is the share of the national government insuch taxes, fees and charges?A: None.662

Q: In what way can local governments share in thefruits of the utilization of local natural resources?A: Local governments can either have shares fromrevenues accruing through fees and charges or theycan receive direct benefits such as lower rates, e.g.,for consumption of electricity generated within theirlocality.663

Fundamental Principle Governing the Exercise ofthe Taxing and other Revenue-Raising Powers ofLGUs (RA 7160, Section 130)1. Taxation shall be uniform in each LGU;2. Taxes, fees, charges and other impositions

shall be equitable and based as far aspracticable on the taxpayers ability to pay;levied and collected only for public purposes;not unjust, excessive, oppressive or

confiscatory; and not contrary to law, publicpolicy, national economic policy, or in restraintof trade;

3. The collection of local taxes, fees and chargesand other impositions shall in no case be let toany private person;

4. The revenue collected shall inure solely to thebenefit of, and be subject to disposition by thelocal government unit, unless specificallyprovided herein; and

5. Each LGU shall as far as practicable evolve aprogressive system of taxation.

Cases:

1. The exercise by local governments of the power totax is ordained by the present Constitution; onlyguidelines and limitations that may be established byCongress can define and limit such power of localgovernments. (Philippine Petroleum Corporation v.Municipality of Pililia, Rizal, 198 SCRA 82)

2. Congress has the power of control over localgovernments; if Congress can grant a municipalcorporation the power to tax certain matters, it canalso provide for exemptions or even take back thepower. xxx The power of local governments toimpose taxes and fees is always subject tolimitations which Congress may provide by law.xxxLocal governments have no power to taxinstrumentalities of the National Government and istherefore exempt from local taxes. (Basco v.PAGCOR, 197 SCRA 52)

3. LGUs have the power to create their own sources ofrevenue, levy taxes, etc., but subject to suchguidelines set by Congress. (Estanislao v. costales,196 SCRA 853)

4. Section 187, RA 7160 which authorizes theSecretary of Justice to review the constitutionality oflegality of a tax ordinanceand if warranted, torevoke it on either or both groundsis valid, and







15/46




does not confer the power of control over localgovernment units in the Secretary of Justice, aseven if the latter can set aside a tax ordinance, hecannot substitute his own judgment for that of thelocal government unit. (Drilon v. Lim, 1994)

5. The City of Cebu as a LGU, the power to collect realproperty taxes from the Mactan Cebu International

Airport Auhtority (MCIAA v. Marcos, 1996) There isno question that under RA 6958, MCIAA is exemptform the payment of realty taxes imposed by theNational Government or any of its politicalsubdivisions; nevertheless, since taxation is the rule,the exemption may be withdrawn at the pleasure ofthe taxing authority. The only exception to this rule iswhere the exemption was granted to private partiesbased on material consideration of a mutual nature,which then becomes contractual and is thus coveredby the non-impairment clause of the Constitution.

6. While indeed local governments are authorized toimpose business taxes, they can do so only if theentity being subjected to business tax is a business.(Thus, for Makati to impose a business tax on acondominium, the city must prove that the

condominium is engaged in business.)664

Article X, Section 6: Local government unitsshall have a just share, as determined by law, inthe national taxes which shall be automaticallyreleased to them.

Share in National Taxes. Section 6 mandates that(1) the LGUs shall have a "just share" in the nationaltaxes; (2) the "just share" shall be determined bylaw; and (3) the "just share" shall be automaticallyreleased to the LGUs. Thus, where the localgovernment share has been determined by theGeneral Appropration Act, its relese may not bemade subject to te condition that "such amount shallbe released to the local government units subject tothe implementing rules and regulations, including

such mechanisms and guidelines for the equitableallocations and distribution of said fund among localgovernment units subject to the guidelines that maybe prescribed by the Oversight Committee onDevolution." To subject its distribution and release tothe vagaries of the implementing rules andregulations, including the guidelines andmechanisms unilaterally prescribed by the OversightCommittee from time to time, as sanctioned by theassailed provisos in the GAAs of 1999, 2000 and2001 and the OCD resolutions, makes the releasenot automatic and a flagrant violation of theconstitutional and statutory mandate that the "justshare" of the LGUs "shall be automatically releasedto them."665

Moreover, neither Congress nor the Executive mayimpose conditions on the release. As theConstitution lays upon the executive the duty toautomatically release the just share of localgovernments in the national taxes, so it enjoins thelegislature not to pass laws that might prevent theexecutive from performing this duty. To hold that theexecutive branch may disregard constitutional

664Yamane v. BA Lepanto Condominium, G.R. No. 154993, October

25, 2005.665

Batangas v. Executive Secretary, G.R. No. 152774. May 27,

2004

provisions which define its duties, provided it has thebacking of statute, is virtually to make theConstitution amendable by statute a propositionwhich is patently absurd. Moreover, if it were theintent of the framers to allow the enactment ofstatutes making the release of IRA conditionalinstead of automatic, then Article X, Section 6 of the

Constitution would have been worded to say shallbe [automatically] released to them as provided bylaw.666

Fundamental Principle Governing the FinancialAffairs, Transactions and Operations of LGUs(RA 7160, Section 305)1. No money shall be paid out of the local treasury

except in pursuance of an appropriationordinance of law;

2. Local government funds and monies shall bespent solely for public purposes;

3. Local revenue is generated only from sourcesexpressly authorized by law or ordinance, andcollection thereof shall at all t imes beacknowledged properly.

4. All monies officially received by a localgovernment officer in any capacity or on anyoccasion shall be accounted for as local funds,unless otherwise provided by law;

5. Trust funds in the local treasury shall not bepaid out except in fulfillment of the purpose forwhich the trust was created or the fundsreceived;

6. Every officer of the local government unitwhose duties permit or require the possessionor custody of local funds shall be properlybonded, and such officer shall be accountableand responsible for said funds and for thesafekeeping thereof in conformity with theprovisions of law;

7. Local governments shall formulate soundfinancial plans, and the local budgets shall be

based on functions, activities, and projects interms of expected results;

8. Local budget plans and goals shall, as far aspracticable, be harmonized with nationaldevelopment plans, goals and strategies inorder to optimize the utilization of resourcesand to avoid duplication in the use of fiscal andphysical resources.

9. Local budgets shall operationalize approvedlocal development plans;

10. LGUs shall ensure that their respective budgetsincorporate the requirements of theircomponent units and provide for equitableallocation of resources among thesecomponent units;

11. National planning shall be based on localplanning to ensure that the needs andaspirations of the people is articulated by theLGUs in their respective local developmentplans are considered in the formulation ofbudgets of national line agencies or offices;

12. Fiscal responsibility shall be shared by all thoseexercising authority over the financial affairs,transactions, and operations of the LGUs; and

13. The LGU shall endeavor to have a balancedbudget in each fiscal year of operation.

666Alternative Center v. Zamora, G.R. No. 144256, June 8, 2005.




16/46




1991 Bar QuestionQ:The province of Palawan passes an ordinancerequiring all owners/operators of fishing vesselsthat fish in waters surrounding the province toinvest ten percent (10%) of their net profits fromoperations therein in any enterprise located inPalawan. NARCO Fishing Corp., a Filipinocorporation with head office in Navotas, MetroManila, challenges the ordinance asunconstitutional. Decide the case.Suggested Answer: The ordinance is invalid. Theordinance was apparently enacted pursuant to

Article X, Sec. 7 of the Constitution, which entitleslocal governments to an equitable share in theproceeds of the utilization and development of thenational wealth within their respective areas.However, this should be made pursuant to law. Alaw is needed to implement this provision and alocal government cannot constitute itself unto alaw. In the absence of a law the ordinance inquestion is invalid.

4. Eminent Domain

RA 7160, Section 19: A Local Government Unitmay, through its chief executive and actingpursuant to an ordinance, exercise power ofeminent domain for public use, or purpose, orwelfare for the benefit of the poor and the landless,upon payment of just compensation, pursuant tothe provisions of the Constitution and pertinentlaws: Provided, however, That the power ofeminent domain may not be exercised unless avalid and definite offer has been previously madeto the owner and such offer was not accepted:Provided, further, That the LGU may immediatelytake possession of the property upon the filing of

expropriation proceedings and upon making adeposit with the proper court of at least 15% of thefair market value of the property based on thecurrent tax declaration of the property to beexpropriated: Provided, finally, That the amount tobe paid for the expropriated property shall bedetermined by the proper court, based on the fairmarket value at the time of the taking of theproperty.

Local government units have no inherent powerof eminent domain and can exercise it only whenexpressly authorized by the legislature. By virtue ofRA 7160, Congress conferred upon localgovernment units the power to expropriate. xxxThere are two legal provisions which limit theexercise of this power: (1) no person shall be

deprived of life, liberty, or property without dueprocess of law, nor shall any person be denied theequal protection of the laws; and (2) private propertyshall not be taken for public use without justcompensation. Thus, the exercise by localgovernment units of the power of eminent domain isnot absolute. In fact, Section 19 of RA 7160 itselfexplicitly states that such exercise must comply withthe provisions of the Constitution and pertinentlaws. (Lagcao v. Labra, GR 155746, 10.13. 2004)

Strictly speaking, the power of eminent domaindelegated to an LGU is in reality not eminent but"inferior" domain, since it must conform to thelimits imposed by the delegation, and thus partakesonly of a share in eminent domain. Indeed, "thenational legislature is still the principal of the localgovernment units, which cannot defy its will or

modify or violate it. (Paranaque v. VM Realty Corp.,GR 127820, 07.20.98)

It is true that local government units have noinherent power of eminent domain and can exerciseit only when expressly authorized by the legislature.It is also true that in delegating the power toexpropriate, the legislature may retain certain controlor impose certain restraints on the exercise thereofby the local governments. While such delegatedpower may be a limited authority, it is completewithin its limits. Moreover, the limitations on theexercise of the delegated power must be clearlyexpressed, either in the law conferring the power orin other legislations. Statutes conferring the powerof eminent domain to political subdivisionscannot be broadened or constricted by

implication. (Province of Camarines Sur v. CA,222 SCRA 173)

Limitations on the Exercise of the Power ofEminent Domain by Local Government Units:1. Exercised only by the local chief executive,

acting pursuant to a valid ordinance;2. For public use or purpose or welfare, for the

benefit of the poor and the landless;3. Only after a valid and definite offer had been

made to, and not accepted by, the owner.

It was held that the Sangguniang Panlalawigancannot validly disapprove the resolution of themunicipality expropriating a parcel of land for theestablishment of a government center. The power ofeminent domain is explicitly granted to themunicipality under the Local Government Code.

2005 Bar QuestionQ: The Sangguniang Bayan of the Municipality of Santa,Ilocos Sur passed Resolution No. 1 authorizing its Mayorto initiate a petition for the expropriation of a lot owned byChristina as site for its municipal sports center. This wasapproved by the Mayor. However, the SangguniangPanlalawigan of Ilocos Sur disapproved the Resolution asthere might still be other available lots in Santa for asports center. Nonetheless, the Municipality of Santa,through its Mayor, filed a complaint for eminent domain.Christina opposed this on the following grounds: (a) theMunicipality of Santa has no power to expropriate; (b)Resolution No. 1 has been voided since the Sangguniang

Panlalawigan disapproved it for being arbitrary; and (c)the Municipality of Santa has other and better lots for thatpurpose. Resolve the case with reasons.Suggested Answer: Under Section 19 of R.A. No. 7160,the power of eminent domain is explicitly granted to themunicipality, but must be exercised through an ordinancerather than through a resolution. (MunicipalityofParanaque v. V.M. Realty Corp., G.R. No. 127820, July20, 1998)The Sangguniang Panlalawigan of Ilocos Sur was withoutthe authority to disapprove Resolution No. 1 as themunicipality clearly has the power to exercise the right of




17/46




eminent domain and its Sangguniang Bayan the capacityto promulgate said resolution. The only ground uponwhich a provincial board may declare any municipalresolution, ordinance or order invalid is when suchresolution, ordinance or order is beyond the powersconferred upon the council or president making the same.Such is not the situation in this case. (Moday v. Court of

Appeals, G.R. No. 107916, February 20, 1997)The question of whether there is genuine necessity forthe expropriation of Christina's lot or whether themunicipality has other and better lots for the purpose is amatter that will have to be resolved by the Court uponpresentation of evidence by the parties to the case.

5. Reclassification of Lands

A city or municipality may, through an ordinancepassed after conducting public hearings for thepurpose, authorize the reclassification ofagricultural lands and provide for the manner oftheir utilization or disposition:

1. When the land ceases to be economicallyfeasible and sound for agriculturalpurposes as determined by the

Department of Agriculture, or2. Where the land shall have substantially

greater economic value for residential,commercial or industrial purposes, asdetermined by the sanggunian;

Provided that such reclassification shall belimited to the following percentage of the totalagricultural land area at the time of thepassage of the ordinance:

i. For highly urbanized cities andindependent component cities: 15%

ii. For component cities and 1st to 3rd

class municipalities: 10%

iii. For 4th to 6th municipalities: 5%.

Provided that agricultural land distributed toland reform beneficiaries shall not beaffected by such reclassification.

6. Closure and Opening of Roads

RA 7160, Section 21. A local government unit may,pursuant to an ordinance, permanently ortemporarily close or open any local road, alley, parkor square falling within its jurisdiction, provided thatin case of permanent closure, such ordinance mustbe approved by at least 2/3 of all the members ofthe sanggunian, and when necessary, an adequatesubstitute for the public facility shall be provided.

Additional limitations in case of permanentclosure:1. Adequate provision for the maintenance of

public safety must be made;2. The property may be used or conveyed for any

purpose for which other real property may belawfully used or conveyed, but no freedompark shall be closed permanently withoutprovision for its transfer or relocation to a newsite.

Note: Temporary closure may be made during anactual emergency, fiesta celebrations, public rallies,etc.

Cases:1. A municipality has the authority to prepare and

adopt a land use map, promulgate a zoning

ordinance, and close any municipal road.(Pilapil v. CA, 216 SCRA 33)

2. The closure of 4 streets in Baclaran,Paranaque was held invalid for non-compliancewith MMA Ordinance No. 2. Further, provincialroads and city streets are property for publicuse under Article 424, Civil Code, hence underthe absolute control of Congress. They areoutside the commerce of man, and cannot bedisposed of to private persons. (Note: Thiscase was decided under the aegis of the oldLocal Government Code) (Macasiano v.Diokno, 212 SCRA 464)

3. One whose property is not located on theclosed section of the street ordered closed bythe Provincial Board of Catanduanes has no

right to compensation for the closure if he stillhas reasonable access to the general systemof streets. (Cabrera v. CA, 195 SCRA 314

Documents

Ateneo 2011 Political Law (Law on Public Corporations and LGU) Copy