CorporationA corporation is an artificial being created by operation of law, having the right of succession and the powers, attributes, and properties expressly authorized by law or incident to its existence. It exists only in contemplation of law.A corporation is a legal institution devised to confer upon the individuals of which it is composed powers, privileges, and immunities which they would not otherwise possess, the most important of which are continuous legal identity or unity, and perpetual or indefinite succession under the corporate name, notwithstanding successive changes by death or otherwise, in the corporators or members.

B. Classes of corporations1. Public formed or organized for the government of a portion of a State for the accomplishment of parts of its own public works. These are created by State either by special or general act.2. Privateformed for some private purpose, benefit, aim or end; organized wholly for the profit and advantage of their own members and cannot constitutionally be granted governmental powers. These are created by the will of the incorporators with the recognizance of the State.Public vs Private Consider as criterion the relation of the corporation to the State. If it is created by the State as its own agency or instrumentality to help it carry out its governmental functions, then it is public. Otherwise, it is private.3. Quasi-publicprivate corporations that render public service or supply public wants; while purposely organized for the gain or benefit of its members, the law requires them to discharge functions for the public benefit (i.e. utility companies).Classes of public corporations1. Quasi-Corporationspublic corporations created as agencies of the State for a narrow and limited purpose. They differ from other public corporations in that they do not possess the powers and liabilities of self-governing corporations. Instead, their powers generally relate to matters of State, and not municipal concerns. Thus, although they are public in nature, they cannot be strictly considered municipal corporations because of their limited number of corporate powers and low grade of corporate existence. The main purpose of their creation is to aid the State in, or to take charge of, some public or state work other than community government for the general welfare.2. 2. Municipal corporations

a. Classes of CorporationsPrivate CorporationPublic Corporation

-those formed for some private purpose, benefit, aim or end.

DEFINITION-one created by the State either by general or special act for purposes of administration of local government or rendering service in the public interest.

-created for private aim, gain, or benefits of its membersPURPOSE OF CREATION-established for purposes connected with the administration of civil or local governments

-created by the will of the incorporators with the recognizance of the State.CREATORS-creations of the State either by general or special act

-constitute a voluntary agreement by and among its membersNATURE-involuntary consequence of legislation

Metropolitan Manila Development Authority vs. Bel-Air Village Association, IncG.R. No. 135962, March 27, 2000

A local government is a "political subdivision of a nation or state which is constituted by law and has substantial control of local affairs." The Local Government Code of 1991 defines a local government unit as a "body politic and corporate"-- one endowed with powers as a political subdivision of the National Government and as a corporate entity representing the inhabitants of its territory. Local government units are the provinces, cities, municipalities and barangays. They are also the territorial and political subdivisions of the state

b. Classes of Public CorporationsQuasi-public CorporationsMunicipal Corporations/Local Government

-created as agencies of the State for narrow and limited purposes without the powers and liabilities of self-governing corporations.-body politic and corporate constituted by the incorporation of the inhabitants for purposes of local government thereof.

-established by law partly as an agency of the State to assist in the civil government of the country, but chiefly to regulate and administer the local or internal affairs of the city, town or district which is incorporated.

-political subdivision of a nation or state which is constituted by law and has substantial control of local affairs

B1.Elements: Municipal Corporations1. A legal creation or incorporation2. A corporate name by which the artificial personality or legal entity is known and in which all corporate acts are done3. Inhabitants constituting the population who are invested with the political and corporate power which are executed through duly constituted officers and agents4. A place or territory within which the local civil government and corporate functions are exercised

2. Dual Nature and Function

Local Government: Dual PersonalityPublic or GovernmentalPrivate or Corporate

-it is an agent of the state for the government of the territory and the inhabitants within the local government limits-acts in a similar category as a business corporation, performing functions not strictly governmental or political

-exercises by delegation a part of the sovereignty of the state-patrimonial powers

-they serve as an instrumentality of the State in carrying out the functions of government.-they act as an agency of the community in the administration of local affairs.

Bara Lidasan v. Comelec, 21 SCRA 496The question initially presented to the Commission on Elections,1is this: Is Republic Act 4790, which is entitled "An Act Creating the Municipality of Dianaton in the Province of Lanao del Sur", but which includes barrios located in another province Cotabato to be spared from attack planted upon the constitutional mandate that "No bill which may be enacted into law shall embrace more than one subject which shall be expressed in the title of the bill"? Comelec's answer is in the affirmative. Offshoot is the present original petition forcertiorariand prohibition.On June 18, 1966, the Chief Executive signed into law House Bill 1247, known as Republic Act 4790, now in dispute.It came to light later that barrios Togaig and Madalum just mentioned are within the municipality ofBuldon,Province of Cotabato, and that Bayanga, Langkong, Sarakan, Kat-bo, Digakapan, Magabo, Tabangao, Tiongko, Colodan and Kabamakawan are parts and parcel of another municipality, the municipality ofParang, also in theProvince of Cotabatoand not of Lanao del Sur.Prompted by the coming elections, Comelec adopted its resolution of August 15, 1967, the pertinent portions of which are:For purposes of establishment of precincts, registration of voters and for other election purposes, the Commission RESOLVED that pursuant to RA 4790, the new municipality of Dianaton, Lanao del Sur shall comprise the barrios of Kapatagan, Bongabong, Aipang, Dagowan, Bakikis, Bungabung, Losain, Matimos, and Magolatung situated in the municipality of Balabagan, Lanao del Sur, the barrios of Togaig and Madalum situated in the municipality of Buldon, Cotabato, the barrios of Bayanga, Langkong, Sarakan, Kat-bo, Digakapan, Magabo, Tabangao, Tiongko, Colodan and Kabamakawan situated in the municipality of Parang, also of Cotabato.Doubtless, as the statute stands, twelve barrios in two municipalities in the province of Cotabato are transferred to the province of Lanao del Sur. This brought about a change in the boundaries of the two provinces.Apprised of this development, on September 7, 1967, the Office of the President, through the Assistant Executive Secretary, recommended to Comelec that the operation of the statute be suspended until "clarified by correcting legislation."Comelec, by resolution of September 20, 1967, stood by its own interpretation, declared that the statute "should be implemented unless declared unconstitutional by the Supreme Court." This triggered the present original action for certiorari and prohibition by Bara Lidasan, a resident and taxpayer of the detached portion of Parang, Cotabato, and a qualified voter for the 1967 elections. He prays that Republic Act 4790 be declared unconstitutional; and that Comelec's resolutions of August 15, 1967 and September 20, 1967 implementing the same for electoral purposes, be nullified.

RA 4790 creating the Muncipality of Dianaton in the Province of Lanao del Sur was enacted into law. Section 1 of the act reads:" xxxSECTION 1.Barrios Togaig, Madalum, Bayanga,Langkong, Sarakan, Kat-bo, Digakapan, Magabo, Tabangao,Tiongko, Colodan, Kabamawakan, Kapatagan, Bongabong,Aipang, Dagowan, Bakikis, Bungabung, Losain, Matimos and Magolatung, in the Municipalities of Butig and Balabagan,Province of Lanao del Sur, are separated from said municipalities and constituted into a distinct and independent municipality of the same province to be known as the Municipality of Dianaton, Province of Lanao del Sur. The seat of government of the municipality shall be in TagalogxxxBara Lidasan, petitioner in this instant case, filed a petition for certiorari and prohibition before the Commission on Elections citing that the said law included two barrios from the Municipality of Buldon, Province of Cotabato, and, ten barrios that are parts and parcel of the Municipality of Parang, also in the Province of Cotabato, not Lanao del Sur thereby changing the boundaries of the two provinces. Since election are forthcoming, the COMELEC issued a resolution on August 15, 1967 which still puts the twelve barrios from Cotabato Province under the new Municipality of Dianaton, Province of Lanao del Sur. The Office of the President thereafter recommended to COMELEC that the operation of the statute be suspended until clarified by correcting legislation but the COMELEC declared that the statute must be implemented unless declared unconstitutional by the Supreme Court.

HELD: Municipal corporations perform twin functions.Firstly. They serve as an instrumentality of the State in carrying out the functions of government.Secondly. They act as an agency of the community in the administration of local affairs. It is in the latter character that they are a separate entity acting for their own purposes and not a subdivision of the State.13Consequently, several factors come to the fore in the consideration of whether a group of barrios is capable of maintaining itself as an independent municipality. Amongst these are population, territory, and income. It was apparently these same factors which induced the writing out of House Bill 1247 creating the town of Dianaton. Speaking of the originaltwenty-one barrioswhich comprise the new municipality, the explanatory note to House Bill 1247, now Republic Act 4790, reads:The territory is now a progressive community; the aggregate population is large; and the collective income is sufficient to maintain an independent municipality.This bill, if enacted into law, will enable the inhabitants concerned to govern themselves and enjoy the blessings of municipal autonomy.When the foregoing bill was presented in Congress, unquestionably, the totality of the twenty-one barrios not nine barrios was in the mind of the proponent thereof. That this is so, is plainly evident by the fact that the bill itself, thereafter enacted into law, states that the seat of the government is in Togaig, which is a barrio in the municipality of Buldon in Cotabato. And then the reduced area poses a number of questions, thus: Could the observations as to progressive community, large aggregate population, collective income sufficient to maintain an independent municipality, still apply to a motley group of only nine barrios out of the twenty-one? Is it fair to assume that the inhabitants of the said remaining barrios would have agreed that they be formed into a municipality, what with the consequent duties and liabilities of an independent municipal corporation? Could they stand on their own feet with the income to be derived in their community? How about the peace and order, sanitation, and other corporate obligations? This Court may not supply the answer to any of these disturbing questions. And yet, to remain deaf to these problems, or to answer them in the negative and still cling to the rule on separability, we are afraid, is to impute to Congress an undeclared will. With the known premise that Dianaton was created upon the basic considerations of progressive community, large aggregate population and sufficient income, we may not now say that Congress intended to create Dianaton with only nine of the original twenty-one barrios, with a seat of government still left to be conjectured. For, this unduly stretches judicial interpretation of congressional intent beyond credibility point. To do so, indeed, is to pass the line which circumscribes the judiciary and tread on legislative premises. Paying due respect to the traditional separation of powers, we may not now melt and recast Republic Act 4790 to read a Dianaton town of nine instead of the originally intended twenty-one barrios. Really, if these nine barrios are to constitute a town at all, it is the function of Congress, not of this Court, to spell out that congressional will.Republic Act 4790 is thus indivisible, and it is accordingly null and void in its totality.14

Surigao Electric Co., Inc. vs. Municipality of Surigao 24 SCRA 898In this petition for review, a case of first impression, petitioner Surigao Electric Co., Inc., a legislative franchise holder, and petitioner Arturo Lumanlan to whom, on February 16, 1962, the rights and privileges of the former as well as its plant and facilities were transferred, challenge the validity of the order of respondent Public Service Commission, dated July 11, 1963, wherein it held that it had "no other alternative but to approve as [it did approve] the tentative schedule of rates submitted by the applicant," the other respondent herein, the Municipality of Surigao.3In the above order, the issue, according to respondent Commission, "boils down to whether or not a municipal government can directly maintain and operate an electric plant without obtaining a specific franchise for the purpose and without a certificate of public convenience and necessity duly issued by the Public Service Commission."4Citing the above amendments introduced by Republic Act No. 2677, respondent Commission answered the question thus: "A municipal government or a municipal corporation such as the Municipality of Surigao is a government entity recognized, supported and utilized by the National Government as a part of its government machinery and functions; a municipal government actually functions as an extension of the national government and, therefore, it is aninstrumentalityof the latter; and by express provisions of Section 14(e) of Act 2677,an instrumentality of the national governmentis exempted from the jurisdiction of the PSC except with respect to the fixing of rates. This exemption is even clearer in Section 13(a)."5The above formulation of respondent Commission could be worded differently. There is need for greater precision as well as further elaboration. Its conclusion, however, can stand the test of scrutiny. We sustain the Public Service Commission.The question involved is one of statutory interpretation. We have to ascertain the intent of Congress in introducing the above amendments, more specifically, in eliminating the requirement of the certificate of public convenience and necessity being obtained by government entities, or by government-owned or controlled corporations operating public services. Here, the Municipality of Surigao is not a government-owned or controlled corporation. It cannot be said, however, that it is not a government entity.HELD: As early as 1916, inMendoza v. de Leon,6there has been a recognition by this Court of the dual character of a municipal corporation, one as governmental, being a branch of the general administration of the state, and the other as quasi-private and corporate. A well-known authority, Dillon, was referred to by us to stress the undeniable fact that "legislative and governmental powers" are "conferred upon a municipality, the better to enable it to aid a state in properly governing that portion of its people residing within its municipality, such powers [being] in their nature public, ..."7As was emphasized by us in the Mendoza decision: "Governmental affairs do not lose their governmental character by being delegated to the municipal governments. Nor does the fact that such duties are performed by officers of the municipality which, for convenience, the state allows the municipality to select, change their character. To preserve the peace, protect the morals and health of the community and so onIt would, therefore, be to erode the term "government entities" of its meaning if we are to reverse the Public Service Commission and to hold that a municipality is to be considered outside its scope. It may be admitted that there would be no ambiguity at all had the term "municipal corporations" been employed. Our function, however, is to put meaning to legislative words, not to denude them of their contents. They may be at times, as Cohen pointed out, frail vessels in which to embark legislative hopes, but we do not, just because of that, allow them to disappear perpetually from sight to find eternal slumber in the deep. It would be far from manifesting fidelity to the judicial task of construing statutes if we were to consider the order under review as a failure to abide by what the law commands. With the view we thus take of the amendatory statute, the errors assigned by petitioner, which would seek to fasten, mistakenly to our mind, an unwarranted restriction to the amendatory language of Republic Act No. 2677, need not be passed upon. An alleged error imputed to respondent Commission, however, needs further discussion. Petitioners seek refuge in the legislative franchise granted them.10Whatever privilege may be claimed by petitioners cannot override the specific constitutional restriction that no franchise or right shall be granted to any individual or corporation except under a condition that it shall be subject to amendment, alteration or repeal by Congress.11Such amendment or alteration need not be express; it may be implied from a latter act of general applicability, such as the one now under consideration. Moreover, under a well-settled principle of American origin, one which upon the establishment of the Philippine Government under American tutelage was adopted here and continued under our Constitution, no such franchise or right can be availed of to defeat the proper exercise of the police power. An early expression of this view is found in the leadingAmerican case of Charles River Bridge v. Warren Bridge,12an 1837 decision, the opinion being penned by Chief Justice Taney: "The continued existence of a government would be of no great value, if by implications and presumptions it was disarmed of the powers necessary to accomplish the ends of its creation; and the functions it was designed to perform, transferred to the hands of privileged Corporations. .. While the rights of private property are sacredly guarded, we must not forget that the community also have rights, and that the happiness and well-being of every citizen depend on their faithful preservation." Clearly, then, the relevancy of the statute providing for the taking or operation of the government of public utilities, appears, to put it at its mildest, far from clear. Petitioners' contention as to this alleged error being committed, therefore, far from being strengthened by such a reference, suffers from a fate less auspicious.the authority "to enact rules and regulations for the promotion of the general welfare. on a legislative franchise to operate an electric plant.

Sec. 15 LGC of 1991

Section 15.Political and Corporate Nature of Local Government Units.- Every local government unit created or recognized under this Code is a body politic and corporate endowed with powers to be exercised by it in conformity with law. As such, it shall exercise powers as a political subdivision of the national government and as a corporate entity representing the inhabitants of its territory.

3 Sources of Powers

Local Governments: Power and FunctionsSources of Power of Local governments1. Constitution2. R. A. No. 71603. All existing laws, acts, decrees. Executive orders, proclamations and administrative orders not inconsistent with the Constitution and R. A. No. 7160.A. Sources of Power1. Constitution of a state2. Statutes of a state including a) those applicable to all municipal corporation or to the class to which the particular municipal corporation belongs and b) special act of the legislature, as far as authorized, applicable to the particular municipal corporation.3. The charter4. Doctrine of inherent right of self-government with respect to certain municipal matters (applicable to states which adhere to it

4 Classification of local government powerExpress power- those granted in express wordsImplied powers- those necessarily or fairly implied in or incident to the powers expressly grantedInherent powers- those essential to the declared objects and purposes of the corporation not simply convenient but indispensable.Legislative powers- power to make lawsExecutive powers- power to execute laws.Intramural powers- those exercised within the corporate limits of a municipal corporationExtramural powers- those exercised outside of the corporate limits, like those given for the protection of water supply, prevention of nuisance and also for police forcesGovernmental powers- administer the powers of the State and promoting the public welfare within it. Example: Police power, Power of Eminent Domain. Power of TaxationMunicipal powers- those for the special benefit and advantage of the community. Example: erection of waterworks, gas works, electric plants, from which profits may be derived by the municipality.

B. Classification of Power1.) Express, implied and inherent powera. Express - those granted in express word by the special charter or the general law under which corporation is organized.b. Implied- those granted which arise by natural implication from the granted of express power or by necessary inference from the purposes or function of the corporation (e.g. an ordinance to prevent fires necessarily carries with it the authority to chase fire trunks).c. Inherent-those which are necessary and inseparable from every corporation, and which come into existence as a matter of course as soon as an MC is created they are:1. To have perpetual succession2. To sue and be sued, implead, grant and receive by its corporation name and other acts as a judicial person3. To make by laws and ordinances for the government of the corporation.4. To make and ordinance for the government of the corporation.Note: Usually these so-called inherent powers are expressly provided in MCs charter.

2.) Legislative and executive powersa. Legislative authority to make lawsb. Executive authority to enforce lawsNOTE: The test to determine what is legislative and what is administrative is whether the ordinance is one making a new or one executing law already in existence. The former is legislative; the latters executive.3.) Intramural and extramural powers1.) Intramural those exercised within the corporate limits of a municipal corporation.2.) Extramural those exercised without like those given for the protection of water supply, prevention of Nuisance, and also for police purposes.

4.) Governmental and municipal powers1.) Governmental those exercised by the corporation in administering the powers of the state and promoting the public welfare within. They include those which are legislative, judicial, public and political. Specific examples are: Administration of justice, police power; eminent domain; promotes public education; fire prevention and safety; and all other powers to be exercised by the MC as an agent the State, for the benefit of the public or of the exercise of which the corporation receives consideration.2.) Municipal those exercised for the specified benefits and advantage of the urban community and they include those which are ministerial, preemptory, private and corporate plans of which the corporation receives no compensation.

5.) mandatory and discretionary powersa.) Mandatory those the exercise of which are required of municipal corporations.b.) Discretionary those which the corporations may perform or not depending upon own judgment and discretion

5 Types of Municipal CorporationsTYPES OF LOCAL GOVERNMENTS1. De jure Municipal Corporations- those created or recognized by operation of law.2. De facto municipal corporations- where the people have organized themselves, under color of law, into ordinary municipal bodies, and have gone on, year after year, raising taxes, making improvements, and exercising their usual franchises, with their rights dependent quite as much on acquiescence as on the regularity of their originElements:a. A valid law authorizing incorporationb. An attempt in good faith to organize under itc. A colorable compliance with lawd. An assumption of corporate powers

3. Municipal Corporation by prescription- exercised their powers from time immemorial with a charter which is presumed to have been lost or destroyed.

A municipal corporation is a body politic constituted by the incorporation of the inhabitants of a city or town for the purpose of its local government. It is established by law partly as an agency of the State to assist in the civil government of a country, but chiefly to regulate and administer the local or internal affairs of the city/town/district which is incorporated. Courts regard these as subordinate branches of government of the State exercising delegated powers (municipal administration as an instrumentality of state administration). Municipal corporations are granted charters for the better government of particular areas or districts.Municipal corporation vs public corporationAll municipal corporations are public corporations, but not all public corporations are municipal corporations. Municipal corporations refer to incorporated villages, towns, and cities with powers of local administration.

Kinds:1. Municipal Corporation Properincorporated cities/towns/villages invested with the power of local legislation. These exist and are governed by their respective charters. Its distinctive purpose and distinguishing feature is the power of local government.2. Quasi-municipal corporationsame as a quasi-corporation, i.e. it operates directly as an agency of the State to help in the administration of public functions.Municipal corporation proper vs quasi municipal corporation When invested with the power of local government, the municipal corporation as an agency of the state becomes a municipal corporation proper. Consider as criterion the voluntary or involuntary nature of the corporation; the existence or non-existence of a charter; and whether the purpose of the corporation is solely a governmental agency or one for self-government.

Municipal corporation proper vs quasi corporation Both are agents of the state for limited and narrow purposes but have different powers and liabilities. Municipal corporations proper are created either by the direct solicitation or by the free consent of the persons composing them while quasi corporations (also called involuntary corporations) are only local organizations which, for purposes of civil administration, are invested with some characteristics of corporate existence. They are local subdivisions of the state, created by the sovereign legislative power of its own sovereign will and without any particular solicitation, consent or concurrent action from the inhabitants (West Chicago Park Commissioners vs Chicago).

6 De facto Municipal Corporation Doctrine; Elements

De facto municipal corporations- where the people have organized themselves, under color of law, into ordinary municipal bodies, and have gone on, year after year, raising taxes, making improvements, and exercising their usual franchises, with their rights dependent quite as much on acquiescence as on the regularity of their originElements:e. A valid law authorizing incorporationf. An attempt in good faith to organize under itg. A colorable compliance with lawh. An assumption of corporate powers

Municipality of Jimenez vs. Baz, Jr. 265 SCRA 182By virtue of Municipal Council Resolution No. 171,[2]dated November 22, 1988, Sinacaban laid claim to a portion of Barrio Tabo-o and to Barrios Macabayao, Adorable, Sinara Baja, and Sinara Alto,[3]based on the technical description in E.O. No. 258.The claim was filed with the Provincial Board of Misamis Occidental against the Municipality of Jimenez.In its answer, the Municipality of Jimenez, while conceding that under E.O. No. 258 the disputed area is part of Sinacaban, nonetheless asserted jurisdiction on the basis of an agreement it had with the Municipality of Sinacaban.This agreement was approved by the Provincial Board of Misamis Occidental, in its Resolution No. 77, dated February 18, 1950, which fixed the common boundary of Sinacaban and Jimenez. In its decision dated October 11, 1989,[5]the Provincial Board declared the disputed area to be part of Sinacaban.It held that the previous resolution approving the agreement between the municipalities was void because the Board had no power to alter the boundaries of Sinacaban as fixed in E.O. No. 258, that power being vested in Congress pursuant to the Constitution and the Local Government Code of 1983 (B.P. Blg. 337), 134.[6]The Provincial Board denied in its Resolution No. 13-90 dated January 30, 1990 the motion of Jimenez seeking reconsideration.[7]On March 20, 1990, Jimenez filed a petition forcertiorari, prohibition, andmandamusin the Regional Trial Court of Oroquieta City, Branch 14.The suit was filed against Sinacaban, the Province of Misamis Occidental and its Provincial Board, the Commission on Audit, the Departments of Local Government, Budget and Management, and the Executive Secretary.Jimenez alleged that, in accordance with the decision inPelaez v. Auditor General,[8]the power to create municipalities is essentially legislative and consequently Sinacaban, which was created by an executive order, had no legal personality and no right to assert a territorial claimvis--visJimenez, of which it remains part.Jimenez prayed that Sinacaban be enjoined from assuming control and supervision over the disputed barrios; that the Provincial Board be enjoined from assuming jurisdiction over the claim of Sinacaban; that E.O. No. 258 be declared null and void; that the decision dated October 11, 1989 and Resolution No. 13-90 of the Provincial Board be set aside for having been rendered without jurisdiction; that the Commission on Audit be enjoined from passing in audit any expenditure of public funds by Sinacaban; that the Department of Budget and Management be enjoined from allotting public funds to Sinacaban; and that the Executive Secretary be enjoined from exercising control and supervision over said municipality.ISSUE A.Whether the Municipality of Sinacaban is a legal juridical entity, duly created in accordance with law;B.If not, whether it is ade factojuridical entityHeld: The RTC,inter alia, held that Sinacaban is ade factocorporation since it had completely organized itself even prior to the Pelaez case and exercised corporate powers for forty years before the existence was questioned; that Jimenez did not have the legal standing to question the existence of Sinacaban, the same being reserved to the State as represented by the Office of the Solicitor General in aquo warrantoproceeding; that Jimenez was estopped from questioning the legal existence of Sinacaban by entering into an agreement with it concerning their common boundary; and that any question as to the legal existence of Sinacaban had been rendered moot by 442 (d) of the Local Government Code of 1991 (R.A. No. 7160), which provides:Municipalities existing as of the date of the effectivity of this Code shall continue to exist and operate as such.Existing municipal districts organized pursuant to presidential issuances or executive orders and which have their respective set of elective municipal officials holding office at the time of the effectivity of this Code shall henceforth be considered as regular municipalities. The principal basis for the view that Sinacaban was not validly created as a municipal corporation is the ruling in Pelaez v. Auditor General that the creation of municipal corporations is essentially a legislative matter and therefore the President was without power to create by executive order the Municipality of Sinacaban.However, we have since held that where a municipality created as such by executive order is later impliedly recognized and its acts are accorded legal validity, its creation can no longer be questioned.In Municipality of San Narciso, Quezon v. Mendez, Sr., this Court considered the following factors as having validated the creation of a municipal corporation, which, like the Municipallity of Sinacaban, was created by executive order of the President before the ruling in Pelaez v. Auditor general: (1) the fact that for nearly 30 years the validity of the creation of the municipality had never been challenged; (2) the fact that following the ruling in Pelaez noquo warrantosuit was filed to question the validity of the executive order creating such municipality; and (3) the factthat the municipality was later classified as a fifth class municipality, organized as part of a municipal circuit court and considered part of a legislative district in the Constitution apportioning the seats in the House of Representatives.Above all, it was held that whatever doubt there might be as to thede jurecharacter of the municipalitymust be deemed to have been put to rest by the local Government Code of 1991 (R.A. no. 7160), 442 (d) of which provides that municipal districts organized pursuant to presidential issuances or executive orders and which have their respective sets of elective officials holding office at the time of the effectivity of this Code shall henceforth be considered as regular municipalities.Here, the same factors are present so as to confer on Sinacaban the status of at least ade factomunicipal corporation in the sense that its legal existence has been recognized and acquiesced publicly and officially.Sinacaban had been in existence for sixteen years when Pelaez v. Auditor General was decided on December 24, 1965.Yet the validity of E.O. No. 258 creating it had never been questioned.Created in 1949, it was only 40 years later that its existence was questioned and only because it had laid claim to an area that apparently is desired for its revenue.This fact must be underscored because under Rule 66, 16 of the Rules of Court, aquo warrantosuit against a corporation for forfeiture of its charter must be commenced within five (5) years from the time the act complained of was done or committed.On the contrary, the State and even the municipality of Jimenez itself have recognized Sinacabans corporate existence.Under Administrative order no. 33 dated June 13, 1978 of this Court, as reiterated by 31 of the judiciary Reorganization Act of 1980 (B.P. Blg. 129), Sinacaban is constituted part of municipal circuit for purposes of the establishment of Municipal Circuit Trial Courts in the country.For its part, Jimenez hadearlier recognized Sinacaban in 1950 by entering into an agreement with it regarding their common boundary.The agreement was embodied in Resolution no. 77 of the Provincial Board of Misamis Occidental.Indeed Sinacaban has attainedde jurestatus by virtue of the Ordinance appended to the 1987 Constitution, apportioning legislative districts throughout the country, which considered Sinacaban part of the Second District of Misamis Occidental.Moreover following the ruling in Municipality of san Narciso, Quezon v. Mendez, Sr., 442(d) of the Local Government Code of 1991 must be deemed to have cured any defect in the creation of Sinacaban.

Mun. of San Narcsio vs. Mendez, Sr. 239 SCRA 11EO 353 creating the municipal district of San Andres was issued on 20 August 1959 but it was only after almost thirty (30) years, or on 05 June 1989, that the municipality of San Narciso finally decided to challenge the legality of the executive order. In the meantime, the Municipal district, and later the Municipality of San Andres, began and continued to exercise the powers and authority of a duly created LGU. Granting that EO 353 was a complete nullity for being the result of an unconstitutional delegation of legislative power, the peculiar circumstances obtaining in this case hardly could offer a choice other than to consider the Municipality of San Andres to have at least attained a status uniquely of its own closely approximating, if not in fact attaining, that of a de facto municipal corporation. Conventional wisdom cannot allow it to be otherwise. Created in 1959 by virtue of EO 353, the Municipality of San Andres had been in existence for more than six years when, on 24 December 1965, Pelaez vs. Auditor General was promulgated. The ruling could have sounded the call for a similar declaration of the unconstitutionality of EO 353 but it was not to be the case. On the contrary, certain governmental acts all pointed to the State's recognition of the continued existence of the Municipality of San Andres: While petitioners would grant that the enactment of Republic Act No. 7160 [Local Government Code of 1991] may have converted the Municipality of San Andres into ade factomunicipality, they, however, contend that since the petition forquo warrantohad been filed prior to the passage of said law, petitioner municipality had acquired a vested right to seek the nullification of Executive Order No. 353, and any attempt to apply Section 442 of Republic Act 7160 to the petition would perforce be violative of due process and the equal protection clause of the Constitution. Petitioner's theory might perhaps be a point to consider had the case been seasonably brought. Executive Order No. 353 creating the municipal district of San Andres was issued on 20 August 1959 but it was onlyafter almost thirty (30) years, or on 05 June 1989, that the municipality of San Narciso finally decided to challenge the legality of the executive order. In the meantime, the Municipal district, and later the Municipality of San Andres, began and continued to exercise the powers and authority of a duly created local government unit. In the same manner that the failure of a public officer to question his ouster or the right of another to hold a position within a one-year period can abrogate an action belatedly file, so also, if not indeed with greatest imperativeness, must aquo warrantoproceeding assailing the lawful authority of a political subdivision be timely raised. Public interest demands it. Granting that Executive Order No. 353 was a complete nullity for being the result of an unconstitutional delegation of legislative power, the peculiar circumstances obtaining in this case hardly could offer a choice other than to consider the Municipality of San Andres to have at least attained a status uniquely of its own closely approximating, if not in fact attaining, that of ade facto municipal corporation. Conventional wisdom cannot allow it to be otherwise. Created in 1959 by virtue of Executive Order No. 353, the Municipality of San Andres had been in existence for more than six years when, on 24 December 1965,Pelaez vs.Auditor Generalwas promulgated. The ruling could have sounded the call for a similar declaration of the unconstitutionality of Executive Order No. 353 but it was not to be the case. On the contrary, certain governmental acts all pointed to the State's recognition of the continued existence of the Municipality of San Andres. Thus, after more than five years as a municipal district, Executive Order No. 174 classified the Municipality of San Andres as a fifth class municipality after having surpassed the income requirement laid out in Republic Act No. 1515. Section 31 of Batas Pambansa Blg. 129, otherwise known as the Judiciary Reorganization Act of 1980, constituted as municipal circuits, in the establishment of Municipal Circuit Trial Courts in the country, certain municipalities that comprised the municipal circuits organized under Administrative Order No. 33, dated 13 June 1978, issued by this court pursuant to Presidential Decree No. 537. Under this administrative order, the Municipality of San Andres had been covered by the 10th Municipal Circuit Court of San Francisco-San Andres for the province of Quezon.At the present time, all doubts on thede jurestanding of the municipality must be dispelled. Under the Ordinance (adopted on 15 October 1986) apportioning the seats of the House of Representatives, appended to the 1987 Constitution, the Municipality of San Andres has been considered to be one of the twelve (12) municipalities composing the Third District of the province of Quezon. Equally significant is Section 442 (d) of the Local Government Code to the effect that municipal districts "organized pursuant to presidential issuances or executive orders and which have their respective sets of elective municipal officials holding office at the time of the effectivity of (the) Code shall henceforth be considered as regular municipalities." No pretension of unconstitutionalityper seof Section 442 (d) of the Local Government Code is proffered. It is doubtful whether such a pretext, even if made, would succeed. The power to create political subdivisions is a function of the legislature. Congress did just that when it has incorporated Section 442 (d) in the Code.Curativelaws, which in essence are retrospective, and aimed at giving "validity to acts done that would have been invalid under existing laws, as if existing laws have been complied with," are validly accepted in this jurisdiction, subject to the usual qualification against impairment of vested rights.All considered, thede jurestatus of the Municipality of San Andres in the province of Quezon must now be conceded.

Mun. of Candijay vs. CA, 251 SCRA 530The lower court's decision, among other things, declared "barrio/barangay Pagahat as within the territorial jurisdiction of the plaintiff municipality of Candijay, Bohol, therefore, said barrio forms part and parcel of its territory, therefore, belonging to said plaintiff municipality", and further permanently enjoined defendant municipality of Alicia "to respect plaintiff's control, possession and political supervision of barangay Pagahat and never to molest, disturb, harass its possession and ownership over the same barrio. On appeal, the respondent Court stated that "(S)crutiny of the conflicting claims and the respective evidence of the parties lead to the conclusion that the trial court committed an error in declaring that Barrio Pagahat is within the territorial jurisdiction of plaintiff-appellee (municipality of Candijay)." Said Court rejected the boundary line being claimed by petitioner based on certain exhibits, since it would in effect place "practically all of Barrio Pagahat . . . , part of Barrio Cagongcagong and portions of Barrio Putlongcam and La Hacienda and all of Barrio Mahayag and Barrio del Monte within the territorial jurisdiction of plaintiff-appellee Candijay." Added the respondent Court, "As aptly pointed out by defendant-appellant in its appeal brief, 'the plaintiff municipality will not only engulf the entire barrio of Pagahat, but also of the barrios of Putlongcam, Mahayag, Del Monte, Cagongcagong, and a part of the Municipality of Mabini. Candijay will eat up a big chunk of territories far exceeding her territorial jurisdiction under the law creating her. Her claim opens the floodgate of controversies over boundaries, including with Mabini. )ISSUE: the respondent municipality's purported lack of juridical personality, as a result of having been created under a void executive order,HELD On this issue, we noted that petitioner commenced its collateral attack on the juridical personality of respondent municipality on 19 January 1984 (or some thirty five years after respondent municipality first came into existence in 1949) during the proceedings in the courta quo. It appears that, after presentation of its evidence, herein petitioner asked the trial court to bar respondent municipality from presenting its evidence on the ground that it had no juridical personality. Petitioner contended that Exec. Order No. 265 issued by President Quirino on September 16, 1949 creating respondent municipality is null and voidab initio, inasmuch as Section 68 of the Revised Administrative Code, on which said Executive Order was based, constituted an undue delegation of legislative powers to the President of the Philippines, and was therefore declared unconstitutional, per this Court's ruling inPelaez vs.Auditor General.3In this regard, we call to mind the ruling of this Court inMunicipality of San Narciso, Quezon vs.Mendez, Sr.4, which will be found very instructive in the case at bench. Therein we stated:While petitioners would grant that the enactment of Republic Act No. 7160 [Local Government Code of 1991] may have converted the Municipality of San Andres into ade factomunicipality, they, however, contend that since the petition forquo warrantohad been filed prior to the passage of said law, petitioner municipality had acquired a vested right to seek the nullification of Executive Order No. 353, and any attempt to apply Section 442 of Republic Act 7160 to the petition would perforce be violative of due process and the equal protection clause of the Constitution. Respondent municipality of Alicia was created by virtue of Executive Order No. 265 in 1949, or ten years ahead of the municipality of San Andres, and therefore had been in existence for all of sixteen years whenPelaez vs.Auditor Generalwas promulgated. And various governmental acts throughout the years all indicate the State's recognition and acknowledgment of the existence thereof. For instance, under Administrative Order No. 33 above-mentioned, the Municipality of Alicia was covered by the 7th Municipal Circuit Court of Alicia-Mabini for the province of Bohol. Likewise, under the Ordinance appended to the 1987 Constitution, the Municipality of Alicia is one of twenty municipalities comprising the Third District of Bohol. Inasmuch as respondent municipality of Alicia is similarly situated as the municipality of San Andres, it should likewise benefit from the effects of Section 442 (d) of the Local Government Code, and should henceforth be considered as a regular,de juremunicipality.WHEREFORE, the instant petition for review oncertiorariis hereby DENIED, with costs against petitioner.

Sultan Osop Camid vs. Office of the President, GR No. 161414 Jan 2005ThisPetition for Certioraripresents this Court with the prospect of our ownBrigadoon1the municipality of Andong, Lanao del Surwhich like its counterpart in filmdom, is a town that is not supposed to exist yet is anyway insisted by some as actually alive and thriving. Yet unlike in the movies, there isnothing mystical, ghostly or anything even remotely charming about the purported existence of Andong. The creation of the putative municipality was declaredvoid ab initioby this Court four decades ago, but the present petition insists that in spite of this insurmountable obstacle Andong thrives on, and hence, its legal personality should be given judicial affirmation. The Executive Orders in question are declared null and voidab initioand the respondent permanently restrained from passing in audit any expenditure of public funds in implementation of said Executive Orders or any disbursement by the municipalities above referred to. It is so ordered.10Among the Executive Orders annulled was Executive Order No. 107 which created the Municipality of Andong. Nevertheless, the core issue presented in the present petition is the continued efficacy of the judicial annulment of the Municipality of Andong. Petitioner Sultan Osop B. Camid (Camid) represents himself as a current resident of Andong,11suing as a private citizen and taxpayer whoselocus standi"is of public and paramount interest especially to the people of the Municipality of Andong, Province of Lanao del Sur."12He alleges that Andong "has metamorphosed into a full-blown municipality with a complete set of officials appointed to handle essential services for the municipality and its constituents,"13even though he concedes that since 1968, no person has been appointed, elected or qualified to serve any of the elective local government positions of Andong.14Nonetheless, the municipality of Andong has its own high school, Bureau of Posts, a Department of Education, Culture and Sports office, and at least seventeen (17) "barangay units" with their own respective chairmen.15From 1964 until 1972, according to Camid, the public officials of Andong "have been serving their constituents through the minimal means and resources with least (sic) honorarium and recognition from the Office of the then former President Diosdado Macapagal." Since the time of Martial Law in 1972, Andong has allegedly been getting by despite the absence of public funds, with the "Interim Officials" serving their constituents "in their own little ways and means. Camid imputes grave abuse of discretion on the part of the DILG "in not classifying [Andong] as a regular existing municipality and in not including said municipality in its records and official database as [an] existing regular municipality."21He characterizes such non-classification as unequal treatment to the detriment of Andong, especially in light of the current recognition given to the eighteen (18) municipalities similarly annulled by reason ofPelaez. As appropriate relief, Camid prays that the Court annul the DILGCertificationdated 21 November 2003; direct the DILG to classify Andong as a "regular existing municipality;" all public respondents, to extend full recognition and support to Andong; the Department of Finance and the Department of Budget and Management, to immediately release the internal revenue allotments of Andong; and the public respondents, particularly the DILG, to recognize the "Interim Local Officials" of Andong.22Moreover, Camid insists on the continuing validity of Executive Order No. 107. He argues thatPelaezhas already been modified by supervening events consisting of subsequent laws and jurisprudence. Particularly cited is ourDecision in Municipality of San Narciso v. Hon. Mendez,23wherein the Court affirmed the unique status of the municipality of San Andres in Quezon as a "defactomunicipal corporation."24Similar to Andong, the municipality of San Andres was created by way of executive order, precisely the manner which the Court in Pelaez had declared as unconstitutional. Moreover,SanNarcisocited, as Camid does, Section 442(d) of the Local Government Code of 1991 as basis for the current recognition of the impugned municipality. Section 442.Requisites for Creation.- xxx(d) Municipalities existing as of the date of the effectivity of this Code shall continue to exist and operate as such. Existing municipal districts organized pursuant to presidential issuances or executive orders and which have their respective sets of elective municipal officials holding office at the time of the effectivity of (the) Code shall henceforth be considered as regular municipalities.HELD: The importance of proper factual ascertainment cannot be gainsaid, especially in light of the legal principles governing the recognition ofdefactomunicipal corporations. It has been opined that municipal corporations may exist by prescription where it is shown that the community has claimed and exercised corporate functions, with the knowledge and acquiescence of the legislature, and without interruption or objection for period long enough to afford title by prescription.26These municipal corporations have exercised their powers for a long period without objection on the part of the government that although no charter is in existence, it is presumed that they were duly incorporated in the first place and that their charters had been lost.27They are especially common in England, which, as well-worth noting, has existed as a state for over a thousand years. The reason for the development of that rule in England is understandable, since that country was settled long before the Roman conquest by nomadic Celtic tribes, which could have hardly been expected to obtain a municipal charter in the absence of a national legal authority. What is clearly essential is a factual demonstration of the continuous exercise by the municipal corporation of its corporate powers, as well as the acquiescence thereto by the other instrumentalities of the state. These disquisitions aside, the central issue remains whether a municipality whose creation by executive fiat was previously voided by this Court may attain recognition in the absence of any curative or reimplementing statute. Apparently, the question has never been decided before,San Narcisoand its kindred cases pertaining as they did to municipalities whose bases of creation were dubious yet were never judicially nullified. The effect of Section 442(d) of the Local Government Code on municipalities such as Andong warrants explanation. Besides, the residents of Andong who belabor under the impression that their town still exists, much less those who may comport themselves as the municipalitys "Interim Government," would be well served by a rude awakening. The Court can employ a simplistic approach in resolving the substantive aspect of the petition, merely by pointing out that the Municipality of Andong never existed.29Executive Order No. 107, which established Andong, was declared "null and voidab initio" in 1965 by this Court inPelaez, along with thirty-three (33) other executive orders. The phrase "ab initio" means "from the beginning,"30"at first,"31"from the inception."32Pelaezwas never reversed by this Court but rather it was expressly affirmed in the cases ofMunicipality of San Joaquin v. Siva,33Municipality of Malabang v. Benito,34and Municipality of Kapalong v. Moya.35No subsequent ruling by this Court declared Pelaez as overturned or inoperative. No subsequent legislation has been passed since 1965 creating a Municipality of Andong. Given these facts, there is hardly any reason to elaborate why Andong does not exist as a duly constituted municipality. This ratiocination does not admit to patent legal errors and has the additional virtue of blessed austerity. Still, its sweeping adoption may not be advisedly appropriate in light of Section 442(d) of the Local Government Code and our ruling inMunicipality of San Narciso, both of which admit to the possibility ofdefactomunicipal corporations. From this survey of relevant jurisprudence, we can gather the applicable rules.Pelaezand its offspring cases ruled that the President has no power to create municipalities, yet limited its nullificatory effects to the particular municipalities challenged in actual cases before this Court. However, with the promulgation of the Local Government Code in 1991, the legal cloud was lifted over the municipalities similarly created by executive order but not judicially annulled. Thede factostatus of such municipalities as San Andres, Alicia and Sinacaban was recognized by this Court, and Section 442(b) of the Local Government Code deemed curative whatever legal defects to title these municipalities had labored under.Is Andong similarly entitled to recognition as ade factomunicipal corporation? It is not. There are eminent differences between Andong and municipalities such as San Andres, Alicia and Sinacaban. Most prominent is the fact that the executive order creating Andong was expressly annulled by order of this Court in 1965. If we were to affirm Andongsde factostatus by reason of its alleged continued existence despite its nullification, we would in effect be condoning defiance of a valid order of this Court.l^vvphi1.netCourt decisions cannot obviously lose their efficacy due to the sheer defiance by the parties aggrieved.It bears noting that based on Camids own admissions, Andong does not meet the requisites set forth by Section 442(d) of the Local Government Code. Section 442(d) requires that in order that the municipality created by executive order may receive recognition, they must "have their respective set of elective municipal officials holding office at the time of the effectivity of [the Local Government] Code." Camid admits that Andong has never elected its municipal officers at all.60This incapacity ties in with the fact that Andong was judicially annulled in 1965. Out of obeisance to our ruling inPelaez, the national government ceased to recognize the existence of Andong, depriving it of its share of the public funds, and refusing to conduct municipal elections for the void municipality.The failure to appropriate funds for Andong and the absence of elections in the municipality in the last four decades are eloquent indicia of the non-recognition by the State of the existence of the town. The certifications relied upon by Camid, issued by the DENR-CENRO and the National Statistics Office, can hardly serve the purpose of attesting to Andongs legal efficacy. In fact, both these certifications qualify that they were issued upon the request of Camid, "to support the restoration or re-operation of the Municipality of Andong, Lanao del Sur,"61thus obviously conceding that the municipality is at present inoperative. We thus assert the proper purview to Section 442(d) of the Local Government Codethat it does not serve to affirm or reconstitute the judicially dissolved municipalities such as Andong, which had been previously created by presidential issuances or executive orders. The provision affirms the legal personalities only of those municipalities such as San Narciso, Alicia, and Sinacaban, which may have been created using the same infirm legal basis, yet were fortunate enough not to have been judicially annulled. On the other hand, the municipalities judicially dissolved in cases such asPelaez, San Joaquin,andMalabang, remain inexistent, unless recreated through specific legislative enactments, as done with the eighteen (18) municipalities certified by the DILG. Those municipalities derive their legal personality not from the presidential issuances or executive orders which originally created them or from Section 442(d), but from the respective legislative statutes which were enacted to revive them.

7. Method of challenging existence of municipal corporation

Quo Warranto must be timely filed; quo warranto suit against corporation for forfeiture of charter must be commenced within 5 years from time that act complained of was done or committed.Any other direct proceeding which must be brought in the name of the Republic.To change the name of a local government unit, a plebiscite is required to be conducted in the unit or units directly effected. Cannot be effected by mere resolution of sanggunian.Since the LGC is silent, sanggunian panlalawigan has no authority to change the name of its province authority lies with Congress.In cases where a de facto municipal corporation was recognized as such despite the fact that the statute creating it was later invalidated, the decisions could fairly be made to rest on the consideration that there was some other valid law giving corporate vitality to the organization. In the present case, the mere fact that the municipality of Balabagan was organized at a time when the statute had not been invalidated cannot make it a de facto corporation, because independently of Sec 68 of the Administrative Code, there is no other valid statute to give color of authority to its creation. An unconstitutional act is not a law; it is, in legal contemplation, as inoperative as though it had never been passed.

Attack against the validity of incorporationThe validity of incorporation and the corporate existence of a municipal corporation may not be attacked collaterally. It may be challenged only by the State in a direct proceeding such as quo warranto.But this rule applies only where the municipal corporation is at least a public corporation. Where it is neither a corporation de facto or de jure but a nullity, its existence may be questioned collaterally or directly in any action or proceeding by anyone whose rights or interests are affected thereby, including the citizens of territory incorporated unless they are estopped from doing so (Municipality of Malabang vs Benito).The principle of estoppel applies to an individual who wants to attack the validity of incorporation of a municipal corporation. Where an individual dealt with it and acquiesced in the exercise of its corporate functions, or where he has entered into a contract with the said corporation, he may be estopped to deny its corporate existence.A person or private corporation may likewise be precluded by laches from attacking the validity of the incorporation of a municipality.

Malabang vs. Benito, 27 SCRA 533The petitioner Amer Macaorao Balindong is the mayor of Malabang, Lanao del Sur, while the respondent Pangandapun Bonito is the mayor, and the rest of the respondents are the councilors, of the municipality of Balabagan of the same province. Balabagan was formerly a part of the municipality of Malabang, having been created on March 15, 1960, by Executive Order 386 of the then President Carlos P. Garcia, out of barrios and sitios1of the latter municipality. The petitioners brought this action for prohibition to nullify Executive Order 386 and to restrain the respondent municipal officials from performing the functions of their respective office relying on the ruling of this Court inPelaez v. Auditor General2andMunicipality of San Joaquin v. Siva.3InPelaezthis Court, through Mr. Justice (now Chief Justice) Concepcion, ruled: (1) that section 23 of Republic Act 2370 [Barrio Charter Act, approved January 1, 1960], by vesting the power to createbarriosin the provincial board, is a "statutory denial of the presidential authority to create a newbarrio[and] implies a negation of thebiggerpower to create municipalities," and (2) that section 68 of the Administrative Code, insofar as it gives the President the power to create municipalities, is unconstitutional (a) because it constitutes an undue delegation of legislative power and (b) because it offends against section 10 (1) of article VII of the Constitution, which limits the President's power over local governments to mere supervision. As this Court summed up its discussion: "In short, even if it did not entail an undue delegation of legislative powers, as it certainly does, said section 68, as part of the Revised Administrative Code, approved on March 10, 1917, must be deemed repealed by the subsequent adoption of the Constitution, in 1935, which is utterly incompatible and inconsistent with said statutory enactment."On the other hand, the respondents, while admitting the facts alleged in the petition, nevertheless argue that the rule announced inPelaezcan have no application in this case because unlike the municipalities involved inPelaez, the municipality of Balabagan is at least ade factocorporation, having been organized under color of a statute before this was declared unconstitutional, its officers having been either elected or appointed, and the municipality itself having discharged its corporate functions for the past five years preceding the institution of this action. It is contended that as ade factocorporation, its existence cannot be collaterally attacked, although it may be inquired into directly in an action forquo warrantoat the instance of the State and not of an individual like the petitioner Balindong. It is indeed true that, generally, an inquiry into the legal existence of a municipality is reserved to the State in a proceeding forquo warrantoor other direct proceeding, and that only in a few exceptions may a private person exercise this function of government.4But the rule disallowing collateral attacks applies only where the municipal corporation is at least ade factocorporations.5For where it is neither a corporationde jurenorde facto, but a nullity, the rule is that its existence may be, questioned collaterally or directly in any action or proceeding by anyone whose rights or interests are affected thereby, including the citizens of the territory incorporated unless they are estopped by their conduct from doing so.6And so the threshold question is whether the municipality of Balabagan is ade factocorporation.As earlier stated, the claim that it is rests on the fact that it was organized before the promulgation of this Court's decision in Pelaez.Accordingly, we address ourselves to the question whether a statute can lend color of validity to an attempted organization of a municipality despite the fact that such statute is subsequently declared unconstitutional. This has been a litigiously prolific question, sharply dividing courts in the United States. Thus, some hold that ade factocorporation cannot exist where the statute or charter creating it is unconstitutional because there can be node factocorporation where there can be node jureone,8while others hold otherwise on the theory that a statute is binding until it is condemned as unconstitutional.9An early article in the Yale Law Journal offers the following analysis: It appears that the true basis for denying to the corporation ade factostatus lay in the absence of any legislative act to give vitality to its creation. An examination of the cases holding, some of them unreservedly, that ade factooffice or municipal corporation can exist under color of an unconstitutional statute will reveal that in no instance did the invalid act give life to the corporation, but that either in other valid acts or in the constitution itself the office or the corporation was potentially created. The principle that color of title under an unconstitutional statute can exist only where there is some other valid law under which the organization may be effected, or at least an authorityin potentiaby the state constitution, has its counterpart in the negative propositions that there can be no color of authority in an unconstitutional statute that plainly so appears on its face or that attempts to authorize the ousting of ade jureorde factomunicipal corporation upon the same territory; in the one case the fact would imply the imputation of bad faith, in the other the new organization must be regarded as a mere usurper. As a result of this analysis of the cases the following principles may be deduced which seem to reconcile the apparently conflicting decisions:I. The color of authority requisite to the organization of ade factomunicipal corporation may be:1. A valid law enacted by the legislature.2. An unconstitutional law, valid on its face, which has either (a) been upheld for a time by the courts or (b) not yet been declared void;providedthat a warrant for its creation can be found in some other valid law or in the recognition of its potential existence by the general laws or constitution of the state.II. There can be node factomunicipal corporation unless either directly or potentially, such ade jure corporation is authorized by some legislative fiat.III. There can be no color of authority in an unconstitutional statute alone, the invalidity of which is apparent on its face.IV. There can be node factocorporation created to take the place of an existingde jurecorporation, as such organization would clearly be a usurper.10In the cases where ade factomunicipal corporation was recognized as such despite the fact that the statute creating it was later invalidated, the decisions could fairly be made to rest on the consideration that there was some other valid law giving corporate vitality to the organization. Hence, in the case at bar, the mere fact that Balabagan was organized at a time when the statute had not been invalidated cannot conceivably make it ade factocorporation, as, independently of the Administrative Code provision in question, there is no other valid statute to give color of authority to its creation. Indeed, inMunicipality of San Joaquin v. Siva,11this Court granted a similar petition for prohibition and nullified an executive order creating the municipality of Lawigan in Iloilo on the basis of thePelaezruling, despite the fact that the municipality was created in 1961, before section 68 of the Administrative Code, under which the President had acted, was invalidated. 'Of course the issue ofDe Facto Municipal Corporation did not arise in that case. Executive Order 386 "created no office." This is not to say, however, that the acts done by the municipality of Balabagan in the exercise of its corporate powers are a nullity because the executive order "is, in legal contemplation, as inoperative as though it had never been passed." For the existence of Executive, Order 386 is "an operative fact which cannot justly be ignored. There is then no basis for the respondents' apprehension that the invalidation of the executive order creating Balabagan would have the effect of unsettling many an act done in reliance upon the validity of the creation of that municipality. ACCORDINGLY, the petition is granted, Executive Order 386 is declared void, and the respondents are hereby permanently restrained from performing the duties and functions of their respective offices.

C Overview of Philippine Local Government SystemPhilippines under the Spanish Regime The basic unit of local administration was the pueblo, composed of numerous barrios, and governed by the cabeza de barangay, an honorific title continued by the Spaniards. Towns were organized, under the government of a gobernadorcillo, also called capitan, who represented the provincial governor as the arbiter of local questions, collected taxes, assisted the parish priest and entertained visiting officials. He was assisted by tenientes (deputies), alguaciles (subordinate employees) and chiefs of police. Elections for these municipal offices were held annually.Barangays were administered by cabezas de barangay whose principal duties were to act as agents for the collection of taxes. They paid no tribute on their own account and were members of the principalia, the voting and privileged class. The position was originally hereditary and breaks were filled by appointments, but eventually, the position became elective and service compulsory.The Maura Law constituted a municipal council of 1 captain and 4 lieutenants, in charge of the active work of governing the municipality, such as administration of public works and the details of taxation. These positions were honorary, and each of the members was required to have special qualifications. The Governor General, provincial council and provincial governor retained disciplinary jurisdiction over the council and its individual members.Philippines under the American Regime General Order No. 43, series of 1899 first provided for the government of municipalities. This was superseded by General Order No. 40, series of 1900, promulgated by the Military Governor, supposedly to give the Filipino people the right to elect their municipal officers, only slightly restricted by certain conditions. President McKinleys instructions to the 2nd Philippine Commission also directed the body to devote their attention to the establishment of municipal governments, giving the natives of the islands the opportunity to manage their own local affairs to the fullest extent of which they are capable, and subject to the least degree of supervision and control which a careful study of their capacities and observation of the workings of native controls show to be consistent with the maintenance of law, order and loyalty.The Philippine Commission passed Act No. 82 on January 31, 1901, providing for the organization and government of municipalities and Act No. 83 on February 5, 1901, for the organization of provinces. These were later modified in the Administrative Code.

1. The Unitary vs. the Federal Forms of GovernmentsAunitary stateis astategoverned as one single unit in which thecentral governmentis supreme and anyadministrative divisions(subnational units) exercise only powers that their centralgovernmentchooses to delegate. Many states in the world have a unitarysystem of government.Unitary states are contrasted withfederal states(federations): In a unitary state, subnational units are created and abolished and their powers may be broadened and narrowed, by the central government. Althoughpolitical powerin unitary states may be delegated throughdevolutiontolocal governmentbystatute, the central government remains supreme; it may abrogate the acts of devolved governments or curtail their powers. TheUnited Kingdomis an example of a unitary state.Scotland,Wales, andNorthern Irelandwhich, along withEnglandare the fourconstituentcountries of the United Kingdom, have a degree of autonomous devolved power theScottish GovernmentandScottish Parliamentin Scotland, theWelsh GovernmentandNational Assembly for Walesin Wales, and theNorthern Ireland ExecutiveandNorthern Ireland Assemblyin Northern Ireland. But such devolved power is only delegated byBritain's central government, more specifically by theParliament of the United Kingdom,[clarification needed]which is supreme under the doctrine ofparliamentary supremacy. Further, the devolved governments cannot challenge theconstitutionalityofacts of Parliament, and the powers of the devolved governments can be revoked or reduced by the central government (the Parliament with a government comprising theCabinet, headed by thePrime Minister). For example, the Northern Ireland Assembly has been suspended four times, with its powers reverting to the central government'sNorthern Ireland Office. Ukraineis another example of a unitary state (seeConstitution of Ukraine).Republic of Crimeawithin the country has a degree of autonomy and is governed by its Cabinet of Ministers and legislative Council. In early 1990s the republic also had a post of president which was terminated due to separatist tendencies intended to transfer Crimea to Russia. Infederalstates, by contrast,statesor other subnational units share sovereignty with the central government, and the states comprising the federation have an existence and power functions that cannot be unilaterally changed by the central government. In some cases, such as in theUnited States, it is the federal government that has only those powers expressly delegated to it.A system in which political power is divided between a central (national) government and smaller government units.The central government is often called the federal government and the smaller units, states or provinces. In a true federal system, citizens owe their loyalty directly to the central government, even though they live in states or provinces. The central government has direct authority over the people concerning powers granted to it in the constitution. An example of a federal state is theUnited States; under theUnited States Constitution, power is shared between thefederal government of the United Statesand theU.S. states. Many federal states also have unitary lower levels of government; while the United States is federal, the states themselves are unitary underDillon's Rulecountiesandmunicipalitieshave only the authority granted to them by thestate governmentsby thestate constitutionorlegislative act.

Zoomsat, Inc. vs. People , GR No. 135535 February 14,2005Petitioner Zoomzat, Inc. alleged that on December 20, 1991, theSangguniang Panlungsodof Gingoog City passed Resolution No. 2613which resolved"to express the willingness of the City of Gingoog to allow Zoomzat to install and operate a cable TV system."Thereupon, petitioner applied for a mayors permit but the same was not acted upon by the mayors office.Subsequently, or on April 6, 1993, respondents enacted Ordinance No. 194which granted a franchise to Gingoog Spacelink Cable TV, Inc. to operate a cable television for a period of ten (10) years, subject to automatic renewal.Hence, on July 30, 1993, petitioner filed a complaint with the Office of the Ombudsman against herein respondents for violation of Section 3(e), R.A. No. 3019. The complaint alleged that in enacting Ordinance No. 19, the respondents gave unwarranted benefits, advantage or preference to Spacelink, to the prejudice of petitioner who was a prior grantee-applicant by virtue of Resolution No. 261.Consequently, on June 17, 1998, the Sandiganbayan issued the now assailed resolution approving the dismissal of the case and ordering the withdrawal of the Information against the respondents. On September 9, 1998, the Sandiganbayan denied petitioners motion for reconsideration.Hence, the instant petition. Petitioner assails the findings of Special Prosecutor Pascual that under Executive Order No. 205,9it is the National Telecommunications Commission (NTC), and not the local government unit, that has the power and authority to allow or disallow the operation of cable television. It argues that while the NTC has the authority to grant the franchise to operate a cable television, this power is not exclusive because under the Local Government Code, the city council also has the power to grant permits, licenses and franchises in aid of the local government units regulatory or revenue raising powers.Petitioner also contends that the grant of exclusive franchise to Spacelink for a period of ten (10) years subject to automatic renewal, contravenes Section 2 of Executive Order No. 205, which provides that"a certificate of authority to operate a CATV by the Commission shall be on a non-exclusive basis and for a period not to exceed 15 years."Thus, in awarding an exclusive franchise, the petitioner asserts that respondents gave Spacelink undue or unwarranted advantage and preference because it stifled business competition. It claims that, even assuming the lack of actual damage or injury, the fact remains that respondents extended undue favor and advantage to Spacelink, which makes them liable under Section 3(e) of R.A. No. 3019.HELD: The petition is bereft of merit.Respondents were charged with violation of Section 3(e), R.A. No. 3019, which states:Section 3. Corrupt practices of public officers. In addition to acts or omissions of public officers already penalized by existing law, the following shall constitute corrupt practices of any public officer and are hereby declared to be unlawful:(e) Causing any undue injury to any party, including the Government, or giving any private party any unwarranted benefits, advantage or preference in the discharge of his official, administrative or judicial functions through manifest partiality, evident bad faith or gross inexcusable negligence.This provision shall apply to officers and employees of offices or government corporations charged with the grant of licenses or permits or other concessions. (Emphasis ours)Thus, for one to be held liable under Section 3(e), R.A. No. 3019, he must be an officer or employee of offices or government corporations charged with the grant of licenses or permits or other concessions.Executive Order No. 205 clearly provides that only the NTC could grant certificates of authority to cable television operators and issue the necessary implementing rules and regulations. Likewise, Executive Order No. 436,10vests with the NTC the regulation and supervision of cable television industry in the Philippines.Our pronouncement inBatangas CATV, Inc. v. Court of Appeals,11is pertinent:There is no law specifically authorizing the LGUs to grant franchises to operate CATV system. Whatever authority the LGUs had before, the same had been withdrawn when President Marcos issued P.D. No. 1512 "terminating all franchises, permits or certificates for the operation of CATV system previously granted by local governments." Today, pursuant to Section 3 of E.O. No. 436, "only persons, associations, partnerships, corporations or cooperatives granted a Provisional Authority or Certificate of Authority by the NTC may install, operate and maintain a cable television system or render cable television service within a service area."It is clear that in the absence of constitutional or legislative authorization, municipalities have no power to grant franchises. Consequently, the protection of the constitutional provision as to impairment of the obligation of a contract does not extend to privileges, franchises and grants given by a municipality in excess of its powers, or ultra vires.It is undisputed that respondents were not employees of NTC. Instead, they were charged in their official capacity as members of theSangguniang Panlungsodof Gingoog City. As such, they cannot be charged with violation of Section 3(e), R.A. No. 3019 for enacting Ordinance No. 19 which granted Spacelink a franchise to operate a cable television.Petitioner, however, insists that while the NTC is the licensing and regulatory body, nonetheless, the actual operations of cable television entails other activities, which may be regulated by the local government unit pursuant to the general welfare clause or subject to its revenue generating powers. But, lest we be misunderstood, nothing herein should be interpreted as to strip LGUs of their general power to prescribe regulations under the general welfare clause of the Local Government Code. It must be emphasized that when E.O. No. 436 decrees that the "regulatory power" shall be vested "solely" in the NTC, it pertains to the "regulatory power" over those matters, which are peculiarly within the NTCs competence .There is no dispute that respondentSangguniang Panlungsod, like other local legislative bodies, has been empowered to enact ordinances and approve resolutions under the general welfare clause of B.P. Blg. 337, the Local Government Code of 1983. That it continues to possess such power is clear under the new law, R.A. No. 7160 (the Local Government Code of 1991).Indeed, under the general welfare clause of the Local Government Code, the local government unit can regulate the operation of cable television but only when it encroaches on public properties, such as the use of public streets, rights of ways, the founding of structures, and the parceling of large regions.13Beyond these parameters, its acts, such as the grant of the franchise to Spacelink, would beultra vires.Plainly, theSangguniang Panlungsodof Gingoog City overstepped the bounds of its authority when it usurped the powers of the NTC with the enactment of Ordinance No. 19. Being a void legislative act, Ordinance No. 19 did not confer any right nor vest any privilege to Spacelink.

LGUs as agents and delegates of the National governmentMunicipal Corporations (MC) derive their powers and rights from the legislature they can only exercise delegated legislative powers conferred by Congress as the national lawmaking body, therefore they cannot defy Congress will, nor modify or violate it. As agents, they are vested with the power of subordinate legislation, wherein the delegate cannot be superior to the principal or exercise higher powers.MCs have no power to impose tax on natl govt instrumentalities, or otherwise retard, impede, burden or in any manner control the operations of constitutional law enacted by Congress to execute powers vested in the natl govt. Otherwise, mere creatures of the State can defeat national policies.

Exercise of governmental functionsAs agencies of the State, MCs enjoy sovereign immunity from suit when engaged in governmental functions. However, they are subject to suit even in the performance of these functions if their charter so provides. Under the Real Property Tax Code, LGUs have no choice but to collect real property tax this means it is the national government expressing itself through the legislative branch that is levying the tax. The LGUs are merely constituted as agents to fix the rates.As agencies of the State for the promotion and maintenance of local self-government, MCs are endowed with police power in order to effectively accomplish and carry out the declared objects of their creation.

Batangas CATV vs. CA.It is appropriate to stress that where the state legislature has made provision for the regulation of conduct, it has manifested its intention that the subject matter shall be fully covered by the statute, and that a municipality, under its general powers, cannot regulate the same conduct.39InKeller vs. State,40it was held that: "Where there is no express power in the charter of a municipality authorizing it to adopt ordinances regulating certain matters which are specifically covered by a general statute, a municipal ordinance, insofar as it attempts to regulate the subject which is completely covered by a general statute of the legislature, may be rendered invalid. Where the subject is of statewide concern, and the legislature has appropriated the field and declared the rule, its declaration is binding throughout the State." A reason advanced for this view is that such ordinances are in excess of the powers granted to the municipal corporation.Since E.O. No. 205, a general law, mandates that the regulation of CATV operations shall be exercised by the NTC, an LGU cannot enact an ordinance or approve a resolution in violation of the said law.It is a fundamental principle that municipal ordinances are inferior in status and subordinate to the laws of the state. An ordinance in conflict with a state law of general character and statewide application is universally held to be invalid.42The principle is frequently expressed in the declaration that municipal authorities, under a general grant of power, cannot adopt ordinances which infringe the spirit of a state law or repugnant to the general policy of the state.43In every power to pass ordinances given to a municipality, there is an implied restriction that the ordinances shall be consistent with the general law. The rationale of the requirement that the ordinances should not contravene a statute is obvious. Municipal governments are only agents of the national government. Local councils exercise only delegated legislative powers conferred on them by Congress as the national lawmaking body. The delegate cannot be superior to the principal or exercise powers higher than those of the latter. It is a heresy to suggest that the local government units can undo the acts of Congress, from which they have derived their power in the first place, and negate by mere ordinance the mandate of the statute.Municipal corporations owe their origin to, and derive their powers and rights wholly from the legislature. It breathes into them the breath of life, without which they cannot exist. As it creates, so it may destroy. As it may destroy, it may abridge and control. Unless there is some constitutional limitation on the right, the legislature might, by a single act, and if we can suppose it capable of so great a folly and so great a wrong, sweep from existence all of the municipal corporations in the State, and the corporation could not prevent it. We know of no limitation on the right so far as to the corporation themselves are concerned. They are, so to phrase it, the mere tenants at will of the legislature.This basic relationship between the national legislature and the local government units has not been enfeebled by the new provisions in the Constitution strengthening the policy of local autonomy. Without meaning to detract from that policy, we here confirm that Congress retains control of the local government units although in significantly reduced degree now than under our previous Constitutions. The power to create still includes the power to destroy. The power to grant still includes the power to withhold or recall. True, there are certain notable innovations in the Constitution, like the direct conferment on the local government units of the power to tax, which cannot now be withdrawn by mere statute.By and large, however, the national legislature is still the principal of the local government units, which cannot defy its will or modify or violate it."

2. Philippine Local Government System and the concepts of local Autonomy, Decentralization, Devolution, and Decentralization.

Local Government Unit is a political subdivision constituted by law, possessing substantial control over its own affairs. In a unitary system of government, it is an intra-sovereign subdivision of one sovereign nation, and is not intended to be imperium in imperio (empire within an empire). The 1987 Philippine Constitution does not prescribe federalism. Autonomy does not contemplate the creation of mini-states. A Chartered City is a political body corporate, endowed with faculties of municipal corporations exercised through its city government in conformity with law and its proper corporate name; may sue and be sued, enter into contracts and be contracted with. No plebiscite is necessary when creating a national government agency such as the Metropolitan Manila Development A