University of Santo Tomas, Faculty of Civil Law

The Law on PUBLIC CORPORATION Based from the lecture of Atty. Enrique V. dela Cruz, Jr.

James Christian S. Ballecer © 2014

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I. Basic Principles/ General Powers and Attributes

(First Meeting)

LOCAL AUTONOMY, DEVOLUTION, &

DECENTRALIZATION

Q: Can the President subject to certain

conditions the release of the IRA of LGU’s?

A: No. (Province of Batangas v. Romulo, G.R.

No. 152774, May 27, 2004)

Art X, Sec. 6. Local Government units shall have

a just share, as determined by law, in the

national taxes which shall be automatically

released to them.

Q: Can the Congress take back what it has

already devolved to the Autonomous Region of

Muslim Mindanao (ARMM)?

A: (Disomangcop v. Daatumanong, 444 SCRA

203)

In this case, R.A. No. 8999 was enacted by

Congress establishing an engineering district of

the DPWH in Lanao del Sur

The Court upheld the petitioners. In so doing, it

came up with certain observations about

regional autonomy and the idea of

decentralization, as well as the significance of

Organic Acts.

Congress cannot take back by law (R.A. 8999)

what has already been devolved by another

law, if there is any amendment, it must pass

through a plebiscite.

Section 16, Article X of the 1987 Constitution

limits the power of the President over

autonomous regions. In essence, the provision

al…. the Power of Congress over autonomous

regions.

Q: Can the Congress postpone the ARMM

elections?

A: (Datu Abas Kida v. Senate, Oct. 18, 2011)

YES. R.A. No. 10153 did not amend the Organic

Act (R.A. No. 9054) - which only provides for the

schedule of the first ARMM elections and does

not fix the date of the regular elections.

A need therefore existed for Congress to fix the

date of subsequent ARMM regular elections

R.A. 10153 merely filled in a gap in R.A. No.

9054 or supplemented the law by providing the

date of … regular elections.

Q: Who has the authority to create municipal

corporations? How is a public corporation

created?

A: A Local Government Unit may be created,

divided, merged, abolished or its boundaries

substantially altered either by:

1. Law enacted by Congress in case of

province, city, municipality, or any other

political subdivision; or

2. An ordinance passed by the

Sangguniang Panlalawigan or

Sangguniang Panlungsod concerned in

the case of a barangay located within

its territorial jurisdiction, subject to such

limitations and powers described in the

LGC. (Sec . 6, R.A.7160)

Q: What are the requisites or limitations

imposed on the creation or conversion of

municipal corporations?

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A: Plebiscite requirement – must be approved

by majority of the votes cast in a plebiscite

called for such purpose ion the political unit or

units affected.

Q: May Congress validly delegate to the

ARMM Regional Assembly the power to create

provinces, cities, and municipalities with the

ARMM, pursuant to Congress plenary

legislative powers?

A: NO. There is no provision in the Constitution

that conflicts with the delegation to regional

legislative bodies of the power to create

municipalities and barangays.

However, the creation of provinces and cities is

another matter. Only Congress can create

provinces and cities because the creation of the

same necessarily includes the creation of

legislative districts, a power only Congress can

exercise under Section 5, Art. VI of the 1987

Constitution and Section 3 of the Ordinance

appended to it. (Bai Sandra S.A. Sama v.

COMELEC, et al. G.R. No. 178628, July 18, 2008)

Q: Considering the legislative power validly

delegated to the ARMM Regional Assembly,

what is the limitation of such that prevents the

same to create legislative districts?

A: The ARMM Regional Assembly cannot enact

a law creating a national office like the office of

a district representative of Congress because

the legislative powers of the ARMM Regional

Assembly operate only within its territorial

jurisdiction, as provided in Section 20, Art. X of

the 1987 Constitution. (Bai Sandra S.A. Sama v.

COMELEC, et al. G.R. No. 178628, July 18, 2008)

CREATION or CONVERSION of LGU’S

I. Income Requirement – must be

sufficient on acceptable standards

to provide for all essential

government facilities and services

and special functions

commensurate with the size of its

population, as expected of the local

government unit concerned.

Average annual income for the last two (2)

consecutive years should be at least:

City – P100M (as amended by R.A. 9009)

Highly Urbanized City – P50M

Province – P20M

Municipality – P2.5M

Q: At the end of the 11th Congress’ existence,

several bills aiming to convert certain

municipalities into cities were pending; the

same were not entered into law.

The 12th Congress enacted R.A. No. 9009,

amending the Local Government Code (LGC) by

increasing the income requirement for the

conversion of municipalities mentioned earlier

from the new income requirement. However,

no concrete action came out of such

deliberations.

The municipalities filed through their

respective sponsors, individual cityhood bills

containing a common proviso exempting them

from the new income requirement. The

Congress approved the same. Concerned

parties protested such laws allowing a

“wholesale conversion” of municipalities as

being unconstitutional. Decide.

Are the cityhood laws valid?

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A: The challenged “cities” claim that it was the

intent of Congress anyway to grant them

exemption from the income requirement, as

per the deliberations of the 11th Congress. What

became of the cityhood bills and their

deliberations that were pending at the

adjournment of the 11th Congress?

League of Cities v. COMELEC

On November 18, 2008, then SC ruled the

cityhood laws unconstitutional.

The COMELEC filed the first motion for

reconsideration, which was denied on March

31, 2009.

On April 28, 2009 the SC en banc, by a split

vote, denied a second motion for

reconsideration

The decision then becomes final and

executory.

However, on Dec. 21, 2009, the SC ruled on 3rd

MR and reversed its own judgement.

The 16 cities were allowed to hold election in

2010.

Then again, on a 4th MR the SC in a decision

dated August 24, 2010, reversed its decision

and ruled that the 16 cityhood laws were

unconstitutional. The decision then became

final and executory (again).

Surprisingly, on a 5th MR, last April 12, 2011 the

SC again reversed itself and upheld the

constitutionality of the creation of the 16 new

cities.

ANSWER:

1. Yes, The 16 cities covered by the

Cityhood laws not only had conversion

bills pending during the 11th Congress,

but have also complied with the

requirements of the LGC prescribed

prior to its amendment by R.A. No.

9009. Congress undeniably gave these

cities all the considerations that justice

and fair play demanded.

Hence, this Court should do no less by stamping

its imprimatur to the clear and unmistakeable

legislative intent and by duly recognizing the

certain collective wisdom of Congress. (League

of Cities of the Philippines (LCP) v. COMELEC,

G.R. No. 176951, April 12, 2011)

2. Notwithstanding that both the 11th and

12th Congress ask upon the pending

cityhood bills, both the letter and intent

of Section 45 of the LGC, as amended

by R.A. No. 9009, were carried on until

the 13th Congress, when the Cityhood

Laws were enacted.

The exemption clauses found in the individual

Cityhood Laws are the express articulation of

that intent to exempt respondent municipality

from the coverage of R.A. No. 9009 (League of

Cities of the Philippines (LCP) v. COMELEC, G.R.

No. 176951, February 15, 2012)

II. Population requirement - to be

determined as the total number of

inhabitants within the territorial

jurisdiction of the local government

unit concerned. The required

populations shall be:

Barangay – 2K

But 5K in:

-Metro Manila

- Highly urbanized cities

Municipality – 25K

City- 150K

Province – 250K

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Q: Congress enacted a law creating the

legislative district of Malolos based on a

certification of the demographic projection

from NSO stating that by 2010, Malolos is

expected to reach the population of 250, 000,

hence entitling it to one legislative district. Is

the law valid?

A: No. Congress cannot establish a new

legislative district based on a projected

population requirement of the Constitution in

the reappointment of legislative districts.

A city that has attained a population of 250,000

is entitled to a legislative district only in the

“immediately following election.” In short, a city

must first attain 250,000 population, and

thereafter, in the immediately following

election, such city shall have a district

representative. There is no showing in the

present case that City of Malolos has attained

or will attain the 250,000 population, whether

actual or projected, before May 10, 2010

elections. Thus, the City if Malolos is not

qualified to have a legislative district of its own

Section 5 (3), Article VI of the 1987 Constitution

and Section 3 of the Ordinance appended to the

1987 Constitution (Aldaba v. Comelec, G.R.

188078, Jan. 25, 2010)

Q: Congress enacted a law reapportioning the

composition of the Province of Camarines Sur

and created legislative districts thereon,

Aquino challenged the law because it runs

afoul to the constitutional requirement that

there must be 250,000 population to create

legislative districts.

Comelec argued that the mentioned

requirement does not apply to provinces. Is the

250,000 population standard an indispensible

requirement for the creation of a legislative

district in provinces?

A: No. Section 5(3), Article VI of the 1987

Constitution, which requires 250,000 minimum

population requirement apply only for a city to

be entitled to a representative but not for a

province.

The provision draws a plain and clear distinction

between the entitlements of a city to a district

on the other. For while a province is entitled to

at least a representative, with nothing

mentioned about population, a city must first

meet a population minimum of 250,000 in

order to be similarly situated. (Aquino and

Robredo v. Comelec, G.R. No. 189793, April 7,

2010)

Q: Congress passed a law providing for the

apportionment of a new legislative district in

CDO City. The COMELEC subsequently issued a

resolution implementing the law. B now assails

the resolution, contending that rules for the

conduct of a plebiscite must first be laid down,

as part of the requirements under the

Constitution. According to B, the

apportionment is a conversion and division of

CDO City, falling under Section 10, Art. X of the

Constitution, which provides for the rule on

creation, division, merger, and abolition of

LGU. Decide.

A: There is no need for a plebiscite. CDO City

politically remains a single unit and its

administration is not divided along territorial

lines. Its territory remains whole and intact.

Thus, Section 10, Art. X of the 1987

Constitution does not come into play. (Rogelio

Z. Bagabuyo v. COMELEC, G.R. No. 17690, Dec.

8, 2008)

III. Land requirement – must be

contiguous, unless it comprises two

or more islands or is separated by a

local government unit; properly

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identified by metes and bounds and

sufficient to provide for such basic

services and facilities.

Area requirements are:

Province – 2, 000 sq.km.

City – 100 sq.km.

Municipality – 50 sq.km.

- The territory need not be contiguous if

it comprises of two (2) or more islands;

- The land area requirement shall not

apply where the proposed province is

composed of one (1) or more islands.

(Navarro v. Executive Secretary)

- When the Dinagat Island was

proclaimed a new province on

December 3, 2006, it had an

approximate land area of 802.12 sq.km.

- The law requires at least 2,000 sq.km.

in land area

- Petitioners argued that the province

which was composed of more than one

island is exempted from the land area

requirement based on the provision in

paragraph 2, Article IX of the IRR of LGC.

- On 12 May 2010, the SC held that

paragraph 2 of Article IX of the IRR of

LGC is null and void, because the

exemption is not found in Section 461

of the LGC.

- The exemption should pertain to the

requirement of territorial contiguity and

not on land area.

- However, in a decision dated 20 May

2011, the SC reversed itself and ruled

that the creation of the Dinagat Island

Province is constitutional.

(Second Meeting)

POLICE POWER, CORPORATE POWERS and

GENERAL WELFARE CLAUSE

Q: In creating an LGU, is it necessary that

the territorial boundaries be expressed in

meets and bounds?

A: No.

- The Constitution does not provide for a

description by metes and bounds as a

condition sine qua non for the creation

of a local government unit or its

conversion from one level to another.

- Section 450 of R.A. No. 7160 only

applies to the conversion of a

municipality or a cluster of barangays

into a competent city, not a highly

urbanized city.

- At the time of the consideration of R.A.

No. 7854, the territorial dispute

between the municipalities of Makati

and Taguig over Fort Bonifacio was

under court litigation. Out of a

becoming sense of respect to a co-equal

department of government, the

legislations felt that the dispute should

be left to the courts to decide.

- They did not want to foreclose the

dispute by making legislative finding of

fact which could decide the issue. This

would have ensued if they defined the

land area of the proposed city by its

exact metes and bounds, with technical

descriptions.

(Mariano v. COMELEC, 242 SCRA 211 -

1995)

Q: Can the creation of an additional

congressional seat be included in the same

law converting the municipality into a city?

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A: YES.

- Petitioners contend that the addition of

another legislative district in Makati is

unconstitutional for:

1. Reapportionment cannot

made by a special law;

2. The addition of a legislative

district is not expressed in

the title of the bill 7; and

3. Makati’s population, as per

the 1990 census, stands at

only four hundred fifty

thousand (450,000)

- Reapportionment of legislative districts

may be made through a special law,

such as in the charter of a new city. The

Constitution clearly provides that

Congress shall be composed of not

more than two hundred fifty (250)

members, unless otherwise fixed by

law.

- As thus worded, the Constitution did

not preclude Congress from increasing

its membership by passing a law, other

than a general reapportionment law.

- Otherwise, if Makati is made to wait for

a general apportionment law, it would

create an inadequate situation where a

new city created by Congress will be

denied legislative representation for an

indeterminate period of time.

(Mariano v. COMELEC, 242 SCRA 211 -

1995)

Q: Can the Governor declare a State of

Emergency and call out the Armed Forces

and the Police?

A: NO.

- Respondent provincial governor is not

endowed with the power to call upon

the armed forces, the police, and his

own Civilian Emergency Force.

- The calling-out powers contemplated

under the Constitution is EXCLUSIVE to

the President. An exercise by another

official, even if he is the local chief

executive, is ultra vires, and may not be

justified by the invocation of Section

465 of the Local Government Code.

(Jamar M. Kulayan, et al. v. Gov. Abdusakur

M. Tan, et al., GR No. 187298, July 3, 2012)

Q: Can the Mayor be compelled by writ of

Mandamus to issue a business permit?

A: NO.

- A Mayor cannot be compelled by

Mandamus to issue business permit

since the exercise of the same is a

delegated police power, hence

discretionary in nature.

- Section 443 (b) (3) (iv) of the Local

Government Code of 1991, whereby

the power of the respondent mayor is

circumscribed, is a manifestation of the

delegated police power of municipal

corporation.

- Necessarily, the exercise thereof cannot

be deemed ministerial. As to the

question whether power is validly

exercised, the matter is within the

province of a writ of certiorari, but

certainly, not of mandamus.

(Rimando v. Naguilan Emission Testing

Center, Inc., G.R. No. 198860, July 23, 2012)

Q: Can an LGU, pursuant to its police

power, require private cinemas in the city

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to give 50% discount to minors for their

admission tickets?

A: NO.

- To invoke the exercise of police power,

not only must it appear that the

interest of the public generally

requires an interference with private

rights, but the means adopted must be

reasonably necessary for the

accomplishment of the purpose and

not unduly oppressive upon

individuals.

- The legislature may not, under the guise

of protecting the public interest,

arbitrarily interfere with private

business, or impose unusual and

unnecessary restrictions upon unlawful

occupations.

- In other words, the determination as to

what is a proper exercise of its police

power is not final or conclusive, but is

subject to supervision of courts.

(Balacuit v. CFI of Agusan del Norte, 163

SCRA 182 - 1998)

Q: Can an LGU, pursuant to its police

power, allot funds for a Burial Assistance

Program where bereaved families are

given P500 each?

A: YES.

- COA is not attuned to the changing of

the times. Public purpose is not

unconstitutional merely because

incidentally benefits a limited number

of persons.

- The care for the poor is generally

recognized as a public duty. The

support for the poor has long been an

accepted exercise of police power in

the promotion of the common good.

- There is no violation of the equal

protection clause in classifying paupers

as subject of legislation. Paupers may

be reasonably classified. Different

groups may receive varying treatment.

(Binay v. Domingo, 201 SCRA 508 -

1991)

Q: Can an LGU be held liable for torts

committed by its personnel?

A: It depends.

- Municipal Corporations are suable

because their charters grant them the

competence to sue and be sued.

- Nevertheless, they are generally not

liable for torts committed by them in

the discharge of governmental

functions and can be held answerable

only if it can be shown that they were

acting in proprietary capacity.

- The municipality cannot be held liable

for the torts committed by its regular

employee, who was then engaged in

the discharge of governmental

functions.

- Hence, the death of the passenger –

tragic and deplorable though it may be

imposed on the municipality, no duty to

pay monetary compensation.

(Municipality of San Fernando v. Firme,

GR No. 52179, April 8, 1991)

Q: May an LGU alter the zoning

classification of a portion of its territory

and order the transfer of businesses

located therein?

A: YES.

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- The power to establish zones for

industrial, commercial, and residential

uses is derived from the protection and

benefit of the residents of a locality.

(Social Justice Society v. Atienza, Jr., 517

SCRA 92 - 2008)

Q: May an LGU prescribe a central terminal

for public utility vehicles within its

territory?

A: NO.

- Since the compulsory use of the

terminal would subject the users

thereof to fees, rentals and charges,

such measure us unduly oppressive.

(Lucena Grand Central Terminal, Inc. v. JAC

Liner, Inc., 452 SCRA 174 - 2005)

Q: May an LGU regulate the subscriber

rates charged by CATV operators within its

territorial jurisdiction?

A: NO.

- Regulation of CATV Subscriber Rates is

lodged in the NTC, not LGU’s.

- LGUs, likewise, have no authority to

grant franchises for such undertakings.

(Batangas CATV Inc. v. CA, 493 SCRA 326 -

2004)

Q: May an LGU enact an ordinance to

phase out motels, night clubs, and other

establishments to protect public morals?

A: NO.

- Business may only be regulated but

cannot be altogether be prohibited.

- Simply because there are no “pure”

places where there are impure men.

- That these motels and clubs are used as

venues for prostitution is of no

moment. Sexual immorality may take

place in the most innocent of places.

(City of Manila v. Laguio, Jr., 455 SCRA 308 -

2005)

Q: May an LGU regulate the short-time

periods and wash free of motels, to protect

public morals?

A: NO.

- “Individual rights” may be adversely

affected only to the extent that may

fairly be required by the legitimate

demands of public interest or public

welfare.

- However well-intentioned the

Ordinance may be, it is in effect an

arbitrary and whimsical intrusion into

the rights of the establishment as well

as their patrons.

- The Ordinance needlessly restraints the

operation of the petitioners as well as

restricting the rights of their patrons

without sufficient justification.

- The Ordinance rashly equates wash

rates and renting out a room more than

twice a day with immorality without

accommodating innocuous intentions.

(White Light Corporation v. City of Manila,

576 SCRA 416 - 2009)

EMINENT DOMAIN

1. An expropriation suit is incapable of

pecuniary estimation. Barangay San

Roque v. Heirs of Pastor, 334 SCRA 127

– 2000

2. Section 19 of the LGC requires an

ordinance, not a resolution, for the

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exercise of eminent domain. Suguitan

v. City of Mandaluyong, 328 SCRA 137 -

2000

3. A valid and definite offer to acquire

the property is necessary prior to the

exercise of the power of eminent

domain. The offer must not be

accepted. Jesus is Lord Christian School

Foundation, Inc. v. Municipality of

Pasig, GR No. 152230, August 9, 2005

Procedure of Eminent Domain:

- The land must be a private property

- It must be for a public purpose

- There must be genuine necessity;

- There must be previous valid and

definite offer to buy the private

property in WRITING. It shall specify

the property sought to be acquired, the

reasons for the acquisition, and the

price offered.

- The offer is DENIED or REJECTED

- If the owner rejects the offer, the LGU

can then file a complaint for

expropriation in the RTC

- The LGU must then deposit the amount

equivalent to 15% of the fair market

value of the property to be

expropriated based on its current tax

declaration

- The LGU may then enter the property

- The COURT will determine the amount

of just compensation for the property

expropriated

Q: May an LGU expropriate a property for the

benefit of a specific homeowners association?

A: NO.

- A local government unit cannot use the

power of eminent domain to

expropriate a property merely for the

purpose of providing a sports and

recreational facility to a small group of

persons, such as those belonging to

homeowners’ association.

- Where the taking by the State of private

property is done for the benefit of a

small community which seeks to have

its own sports and recreational facility,

notwithstanding that there is such

recreational facility only a short

distance away, such taking cannot be

considered to be for public use. It’s

expropriation is NOT VALID.

(Masikip v. City of Pasig, 479 SCRA 391 - 2006)

Q: May an LGU expropriate property to provide

a right-of-way to a specific community?

(Barangay Sindalan, San Fernando, Pampanga v.

Court of Appeals, 518 SCRA 649 - 2007)

In this case, a barangay sought to expropriate

private lands to secure a right-of-way for

residents of a subdivision.

The SC declared that the failure of the

subdivision owner to provide an access road

does not shift the burden to the barangay itself.

To deprive the private persons of their property

instead of compelling the subdivision owner to

comply with its obligation under the law is an

abuse of the power of eminent domain and is

patently illegal, which misuse of public funds for

a private purpose could amount to a possible

case of malversation.

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TAXATION

Q: What are the requisites for a valid tax

ordinance?

A:

1. The procedure applicable to local

government ordinances, in general,

should be observed. (Sec. 187, LGC)

2. Public hearings are required before any

local tax ordinance is enacted. (Sec.

187, LGC)

3. Within 10 days after their approval,

PUBLICATION in FULL for 3 consecutive

days in a newspaper of general

circulation. In the absence of such

newspaper in the province, city, or

municipality, then the ordinance may

be posted in at least two conspicuous

and publicly accessible places. (Secs.

188 and 189, LGC)

Q: What is the effect if the tax ordinance was

not published in full (only excerpts/summary)?

A: The requirement of publication in full for 3

consecutive days is MANDATORY for a tax

ordinance to be VALID.

- The tax ordinance will be null and void

if it fails to comply with such publication

requirement. (Coca-Cola v. City of

Manila, GR No. 161893 – June 27, 2006)

Q: Who determines the legality or propriety of

a local tax ordinance or revenue measure?

A: It is the SECRETARY OF JUSTICE who shall

determine questions on the legality and

constitutionality or revenue measures. (Weird –

accdg. to Atty. Dela Cruz but that’s it)

Such questions shall be raised on appeal

within thirty (30) days from the effectivity

thereof to the Secretary of Justice who shall

render a decision within sixty (60) days

from the date of receipt of the appeal.

Provided, however, that such appeal shall

not have the effect of suspending the

effectivity of the ordinance and the accrual

and payment of the tax, fee, or charge

levied therein.

Provided, finally, that within the sixty-day

period without the Secretary of Justice

acting upon the appeal, the aggrieved party

may file appropriate proceedings with a

court of competent jurisdiction (RTC).

(Sec. 187, LGC)

Q: Can a dissatisfied tax payer go directly

to court to question a tax ordinance?

A: NO.

- The law requires that the dissatisfied

taxpayer who questions the validity or

legality of a tax ordinance must file his

appeal to the Secretary of Justice,

within 30 days from effectivity thereof.

- In case the Secretary of Justice decides

the appeal, a period also of 30 days is

allowed for an aggrieved party to go to

court. But if the Secretary of Justice

does not act thereon, after the lapse of

60days, a party could already proceed

to seek relief in court.

- These three separate periods are clearly

given for compliance as a prerequisite

before seeking redress in a competent

court. Such statutory periods are set to

prevent delays as well as enhance the

orderly and speedy discharge of judicial

functions.

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- For this reason, the courts construe that

the three above-mentioned provisions

of statutes as MANDATORY.

Q: Does the LGU has the power to impose

Franchise Tax?

(Smart Communications, Inc. v. City of Davao,

565 SCRA 237 - 2008)

- In this case, Smart contends that its

telecenter in Davao City is exempt from

payment of franchise tax to the City,

because its franchise by virtue of a

charter (R.A. No. 7294 - 1992) includes

the clause “in lieu of all taxes”

- Smart alleges that the “in lieu of all

taxes” clause in its franchise exempts it

from all taxes both local and national.

- The Local Government Code, which

allowed the imposition of franchise tax

by LGUs, took effect 2 months ahead of

Smart’s franchise

- The SC ruled that the “In lieu of all

taxes” clause applies only to National

Interest Revenue taxes and NOT TO

LOCAL TAXES.

*The LGC took effect on January 1, 1992. PLDT’s

legislative franchise was granted sometime

before 1992. Its franchise provides that PLDT

will pay only 3% franchise tax to BIR in lieu of all

taxes.

*The legislative franchise of Smart and Globe

Telecoms were granted in 1998. Their legislative

franchises state that they will pay only 5%

franchise tax to the BIR in lieu of all taxes.

Sample Problem:

- The province of Zamboanga del Norte

passed an ordinance in 1997 that

imposes a local franchise tax on all

telecommunication companies

operating within the province.

- The tax is 50% of 1% of the gross annual

receipts of the preceding calendar year

based on the incoming receipts, or

receipts realized, within its territorial

jurisdiction.

Q: Is the ordinance valid? Are PLDT, Smart,

and Globe liable to pay franchise taxes to

the Province of Zamboanga?

A: YES.

- The ordinance is VALID. The LGC

explicitly authorizes provincial

governments, notwithstanding any law

or other special law, to impose a tax on

business enjoynh a franchise at the

ratge of 50% of 1% based on the gross

annual receipts during the preceding

year within the province. (Section 137,

LGC)

- PLDT is liable to the franchise tac levied

by the province of Zamboanga del

Norte. The tax exemption privileges on

franchises granted before the passage

of the Local Government Code are

effectively repealed by the latter law.

(PLDT v. City of Davao, GR No. 143867 –

August 22, 2002)

A: While Smart and Globe’s franchises were

enacted after the enactment of LGC, still,

Smart and Globe are also liable to pay

franchise tax to the province.

The SC ruled that the “in lieu of all taxes”

clause applies only to national internal

revenue taxes and not to local taxes.

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The “in lieu of all taxes” clause in a

legislative franchise should categorically

state that the exemption applies to both

local and national taxes; otherwise, the

exemption claimed should be strictly

construed against the taxpayer liberally in

favour of the taxing authority. (Smart

Communications, Inc. v. The City of Davao,

GR No. 155491 - July 21, 2009)

Q: Does the LGU have the power to adjust local

tax rates?

A: YES. Provided that the adjustment of the tax

rates be prescribed in an ordinance but should

not be oftener than once every five (5) years,

and in no case shall adjustment exceed ten

percent (10%) of the rates fixed under the LGC.

(Sec. 191, LGC)

Q: What are the taxes, fees, and charges which

a province or a city mayor may levy?

A:

1. Tax on transfer of real property

ownership (Sec. 135, LGC)

2. Tax on business of printing and

publication (Sec. 136, LGC)

3. Franchise Tax (Sec. 137, LGC)

4. Tax on sand, gravel, and other quarry

resources (Sec. 138, LGC)

5. Professional Tax (Sec. 139, LGC)

6. Amusement Tax (Sec. 140, LGC)

7. Annual fixed tax for every delivery

truck or van of manufacturer or

producers, wholesalers of, dealers, or

retailer in certain products (Sec. 141,

LGC)

Q: What are the taxes that a municipality may

impose under the LGC?

1. Tax on business (Sec. 143, LGC)

2. Fees and charges on business and

occupation (Sec. 147, LGC)

3. Fees for sealing and licensing weights

and measures (Sec. 148, LGC)

4. Fishery rentals, fees and charges (Sec.

149, LGC)

Q: (Sample Problem)

Mr. Fermin, a resident of Bulacan, is a Certified

Public Accountant-Lawyer engaged in the

practice of his two professions.

He has his main office in Makati City and

maintains a branch office in Pasig City.

Mr. Fermin pays his professional tax as a CPA

in Makati City and his professional tax as a

Lawyer in Pasig.

Q: May Makati City, where he has his main

office, require him to pay his professional tax

as lawyer?

A: NO. Makati City where Mrf. Fermikn has his

main office may not require him to pay his

professional tax as a lawyer.

Mr. Fermin has the option of paying his

professional tax as lawyer in Pasig City where he

practices law or in Makati City where he

maintains his principal office (Sec. 139[b], LGC)

Q: May the Province of Bulacan, where he has

his residence, and where he also practices his

two professions, go after him for the payment

of his professional tax as a CPA and lawyer?

A: NO.

The situs of the professional tax is the city

where the professional practices his profession

or where he maintains his principal office in

case he practices his profession in several

places.

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The Province of Bulacan has no right to collect

professional tax from Mr. Fermin as the place of

residence of the taxpayer is NOT THE PROPER

SITUS in the collection of the professional tax.

(Sec. 139 [b], LGC)

Q: Does the province has the authority to

impose taxes on sand, gravel and other quarry

resources extracted on private lands?

A: NO.

- A province is not expressly authorized

to do so. Such tax is a tax upon the

performance, carrying on, or exercise of

an activity. Hence, an excise tax upon

an activity already being taxed under

the NIRC.

(Province of Bulacan, et.al., v. CA, GR No.

126232 – November 27, 1998)

Q: What are the amusement places upon

which provinces or cities cannot impose

amusement taxes?

A:

1. Cockpits

2. Cabarets

3. Night or day clubs

4. Boxing exhibitions

5. Professional Basketball games

6. Jai-Alai

7. Racetracks

Note: There can be no imposition of

amusement taxes on the above-mentioned

amusement places since the NIRC already

imposes amusement taxes on them under

Section 125 thereof.

Q: May LGUs collect amusement taxes on

admission tickets to the Philippine Basketball

Association (PBA) games held in the LGU?

A: NO.

- Professional basketball games are

within the ambit of national taxation,

as it is presently being taxed under the

provisions of the NIRC.

- Furthermore, the income from cession

of streamers and advertising spaces is

subject to amusement taxes under the

NIRC because the definition under the

Tax Code is broad enough to include the

cession of streamers and advertising

spaces as the same includes all the

receipts of the proprietor, lessee or

operator of the amusement place.

(Philippine Basketball Association v. CA, GR

No. 119122 – August 8, 2000)

Q: What are the common revenue raising

powers of LGUs?

A:

1. Fees, service or user charges – LGUs

may impose and collect such

reasonable fees and charges for

services rendered. (Sec. 153, LGC)

2. Public Utility Charges – may fix the

rates for the operation of public utilities

owned, operated and maintained by

them within their jurisdiction. (Sec. 154,

LGC)

3. Toll fees or charges – The sanggunian

concerned may prescribe the terms and

conditions and fix the rates and fix the

rates for the imposition of toll fees or

charges for the use of any public road,

pier, or wharf, waterway, bridge, ferry,

or telecommunication system funded

and constructed by the LGU concerned.

(Sec. 155, LGC)

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Q: What are the common limitations on

the taxing powers of the LGUs?

A: The exercise of the taxing power of

provinces, cities, municipalities, and

barangays shall not extend to the levy of

the following:

1. Taxes which are levied under the NIRC,

unless otherwise provided by LGC.

2. Taxes, fees, and charges which are

imposed under the Tariffs and Customs

Code.

3. Taxes, fees, and charges where the

imposition of which contravenes

existing governmental policies or which

are violative of the fundamental

principles of taxation.

4. Taxes, fees and charges imposed under

special laws.

Q: What should be the basis of business tax –

gross receipt or gross revenue?

A: GROSS RECEIPTS, as the law is clear.

- Gross receipts include money or its

equivalent actually or constructively

received in consideration of services

rendered or articles, sold, exchanged or

leased, whether actual or constructive.

- To tax on gross revenue rather than

gross receipts will amount to double

taxation inasmuch as the revenue or

income for a taxable year includes gross

receipts already reported during the

previous year for which local business

taxes had already been paid.

(Ericsson Telecommunications, Inc. ,v. City of

Pasig, etc., et. Al., GR No. 176667 – November

22, 2007)

Q: Are condominium corporations liable to pay

business taxes under the Local Government

Code?

A: NO.

- As a rule, a city or municipality is

authorized to impose a tax on business,

which is defined under the LGC as

“trade or commercial activity regularly

engaged as a means of livelihood or

with view of profit.”

- By its very nature, a condominium

corporation is not engaged in business,

and any profit it derives is merely

incidental, hence, it may not be the

subject of business taxes.

(Yamane, etc., v. BA Lepanto Condominium

Corporation, GR No. 154993, October 25,

2005)

Q: What are the penalties for unpaid taxes,

fees or charges?

A:

1. Surcharge of 25% on taxes, fees or

charges not paid on time; and

2. Interest not exceeding 2% per month of

the unpaid taxes, fees or charges

including surcharges, until the amount

is fully paid. In no case shall the total

interest exceed 36 months. (Sec. 168,

LGC)

Q: What is the period of assessment of local

taxes?

A: GR – Local taxes, fees or charges shall be

assessed within five (5) years from the date

they became due. No action for the collection

of such taxes, fees or charges, whether

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administrative or judicial, shall be instituted

after the expiration of such period.

XPN: In case of fraud or intent to evade the

payment of taxes, fees or charges, the same

may be assessed within ten (10) years from

discovery of the fraud or intent to evade

payment. (Sec. 184 [a] and [b], LGC)

Q: What is the period of collection of local

taxes?

A: Local taxes, fees or charges may be collected

within five (5) years from the date of

assessment by administrative or judicial

action. (Sec. 194(c), LGC)

Q: When is the running of the prescriptive

period be suspended?

A: The running of the periods of prescription

for the collection of local taxes shall be

suspended for the time during which:

1. The treasurer is legally prevented from

making the assessment of collection;

2. The taxpayer requests for a

reinvestigation and executes a waiver in

writing before expiration of the period

within which to assess or collect; and

3. The taxpayer is out of the country or

otherwise cannot be located. (Sec. 195

[d],LGC)

Sessions and Quorum

First Day of Session

- On the first day of session following the

election of its members and within 90

days thereafter, the sangguian

concerned shall adopt or update its

existing rules of procedure; (Article 103,

IRR-LGC)

Internal Rules of Procedure

- The task of drafting the internal rules

may be delegated to a committee;

- The proposed IRP can then be adopted

by the sanggunian in a regular session;

(Article 103, IRR-LGC)

Sanggunian Committees

- The manner of selecting the Chairman

and Members of various committess is

through election. (Sec. 50, LGC)

- The majority can prepare a list and the

sanggunian can vote to approve it,

provided this is indicated in the IRP.

- DILG Opinion No. 1122-98 (09-07-1998)

Ex-Officio members and the selection of

committee chairs

- SK Chairmen and Punnong Barangay s

are non-partisan.

- Thus, they cannot participate in the

election of officers (minority and

majority leaders and deputies –

because this is mainly dependent on

the majority and minority party

affiliation in the sangguinian.

- However, these ex-officio members are

assured of the chairmanship of the

corresponding sectors that they are

representing in the sanggunian, that is,

the youth and barangay affairs,

respectively. They may also chair other

regular committees.

- An ex-officio member, president of the

liga ng mga barangay affairs and may

chair another committee.

- The creation of the committee on

barangay affairs is mandatory.

- The youth and sports development

committee is a mandatory committee

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similar to those other committee

enumerated in the LGC.

Q: Can the vice mayor chair a committee?

A: NO.

- The vice mayor may chair a special

committee created for a special

purpose (DILG Opinions, Nos 243-1992;

156-1994) but cannot head a regular

committee.( DILG Opinions, Nos 243-

1992; 156-1994)

Q: What is Quorum?

A: A majority of all the members of the

sanggunian who have been elected and

qualified shall constitute a quorum to transact

official business. (Section 5t3, LGC)

Q: What is meant by majority?

A: 50% plus one of the entire membership of

the sanggunian.

- The closest number to more than one-

half of the total membership of the

sanggunian;

(La Carlota City vs. Atty. Rex Rojo, G.R. No.

181367, April 24, 2012)

Q: Is the vice mayor include in the

determination of quorum?

A: YES.

- The Vice Mayor is a member of the

Sanggunian

- He will thus be include in the total

number of sanggunian members for

purposes of determining the quorum.

(DILG Opinion No. 28-2000, dated 17 April 2000;

La Carlota City vs. Atty. Rex Rojo, G.R. No.

181367, April 24, 2012)

Determining Quorum

- 19 members = 19/2 = 9.5 + 1 = 10.5

- The quorum for a sanggunian with 19

members is therefore “10”

- 11 members = 11/2 = 5.5 +1 = 6.5

- The quorum for a sanggunian with 11

members is therefore “6”

Vote required in Sessions

- Ordinary measures shall be decide by

simple majority of the members

presents at any meeting there being a

quorum.

(DILG Opinions Nos. 26-1996; 183-1994)

Two-thirds (2/3) Vote Required

- Extending Loans or entering into

contracts;

- Issuance of bonds or securities;

- Authorizing the lessee of public

property;

- Grant of franchise

- Creation of LGU liability or

indebtedness;

- Over-ride veto of the Mayor;

- Grant of Tax exemptions

- Levy of Taxes

- Discipline/suspend a member of the

sanggunian;

- Opening or closing of roads;

- Selection and transfer of government

site or offices

- Concurrence in the appointment of

personnel;

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(DILG Opinion No. 107-2003, dated 15

August 2003)

Vice Mayor as Presiding Officer

- Being the presiding officer of the

council, a vice mayor is considered a

regular member of the local legislative

council concerned. (DILG Opinion Nos.

138, 342 – 1992; 81-1995)

- But a vice mayor acting as mayor

cannot preside over the council until

the mayor reassumes his/her position

since this will violate the local

separation of powers. (Gamboa v.

Aguirre)

- In such situation, the senior councillor

may preside. (DILG Opinions Nos. 142,

174-1994)

Presiding Officer as member

- As presiding officer, he can only vote to

break a tie;

- As a member, he may participate in the

deliberations, vote, sponsor or co-

author a bill or chair a special

committee.

- He/She may temporarily relinquish

his/her chair –as presding officer—to

the majority floor leader or to any

sanggunian member. (DILG Opinion No.

65-1995)

- If he will participate in the session as a

member, he may choose the

temporary presiding officer. (DILG

Opinions Nos. 29, 132-1993)

Temporary Presiding Officer

- In case of temporary absence of the

presiding officer, the members present

and constituting a quorum shall elect

from among themselves a temporary

presiding officer.

- He shall certify within 10 days from the

passage of ordinances/resolutions

adopted by the sanggunian in the

session over which he temporary

presided. (Article 102 – IRR, LGC)

Permanent Vacancy: Presiding Officer

- In case of permanent vacancy in the

position of vice mayor, the highest

ranking sanggunian member will

succeed as vice mayor/presiding

officer.

- The vacancy shall be filled by the other

members of the sanggunian in

accordance to their ranking. (Section

44, LGC)

- In case the permanent vacancy was

caused by a member who belongs to a

political party, the party will appoint

the replacement;

- If he does not belong to any political

party, the other members of the

sangguian will nominate, and the

president will appoint the

replacement. (Section 45, LGC)

Sanggunian Secretary

- The secretary to the sanggunian is a

career public official with rank and

salary equal to a head of a department.

(DILG Opinions Nos. 91, 253, 286 –

1992; 78-1995)

- A sanggunian secretary shall

automatically continue in office despite

the lapse of 3-year terms of elective

officials unless otherwise removed for

cause. (DILG Opinion No. 176-1992)

Appointment of Sanggunian Secretary

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- It is the vice mayor, not the mayor,

who is authorized to appoint the

secretary to the sanggunian (CSC En

Banc Resolution Nos. 94-7153,

December 29, 1994, 92-111, August 20,

1992; DILG Opinions Nos. 348-1992; 7,

155, 236, 245-1993; 85-1995) with the

concurrence of the sanggunian

concerned. (DILG Opinion No. 8-1995)

Temporary Vacancy: Mayor

- A mayor may designate in writing an

officer-in-charge (e.g. councilor, any

appointive official or employee) to

assume the office but only for three (3)

days.

- On the 4th day, the vice mayor assumes

the post regardless of the nature of the

absence of the mayor. (DILG Opinions

Nos. 22, 30, 87-A – 1993; 52, 53-1994)

- Henceforth, the designation of the

officer-in-charge ceases. (DILG Opinion

No. 87-A- 1993)

Powers: Acting Mayor

- A vice mayor acting as mayor possesses

the powers incidental to the office,

including the authority to solemnize

marriages, during the period of

temporary incapacity. (DILG Opinion

No. 25-1994)

- An acting mayor can exercise the

power to appoint and to discipline only

after lapse of 30 working days from the

time the mayor is temporarily

incapacitated. (CSC En Banc Resolution

Nos. 94-0959, February 15, 1994; 94-

6892, December 20, 1994)

Acting Mayor CANNOT:

- Administer oaths (DILG Opinion No.

136-1994)

- The power to approve or disapprove

ordinances and resolutions enacted by

the council (DILG Opinion No. 149-

1993)

- Preside over council sessions (DILG

Opinions Nos. 270-1992; 142, 174-

1994)

- Appoint, suspend or dismiss employees

within 30 days except when the cause

of the temporary incapacity of the

mayor is suspension for more than 30

days.

Q: Is the signature of the vice mayor on an enacted ordinance necessary?

A: NO.

- Section 469 (c)(3) of the LGC provides

that enacted ordinances must be

certified by the presiding officer before

they are submitted to the mayor for his

approval.

- An acting mayor can exercise the

power to appoint and to discipline only

after lapse of 30 working days from the

time the mayor is temporarily

incapacitated. (CSC En Banc Resolution

Nos. 94-0959, February 15, 1994; 94-

6892, December 20, 1994)

Q: May an ordinance become valid even

without the signature of the mayor?

A: YES.

- If he fails to act on an ordinance

submitted to him for his review within

10 days from his receipt thereof;

- When the sanggunian overrides the

veto of the mayor by 2/3 vote.

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(DILG Opinion No. 22-2003, date February

27, 2003)

Legislative Oversight Sec. 56. Review of Ordinances by the Sangguniang Panlalawaigan – (a) Within three (3) days after approval the secretary to the sanggunian panlungsod or sangguniang bayan shall forward to the sangguniang panlalawigan for review, copies of approved ordinances and the resolutions approving the local development plans and public investment programs formulated by the local development council. (b) Within thirty (30) days after receipt of copies of such ordinances and resolutions, the sangguniang panlalawigan shall examine the documents or transmit them to the provincial attorney, or if there be none, to the provincial prosecutor for prompt examination. (c) If the sangguniang panlalawigan finds that such an ordinance or resolution is beyond the power conferred upon the sangguniang panlungsod or sangguniang bayan concerned, it shall declare such ordinance or resolution invalid in whole or in part. The sanggunian panlalawigan shall enter its action in the minutes and shall advise the corresponding city or municipal authorities of the action it has taken. (d) If no action has been taken by the sangguniang panlalawigan within thirty (30) days after submission of such an ordinance or resolution, the same shall be presumed consistent with law and therefore valid. Sec. 57. Review of Ordinances by the Sangguiang Panlungsod or Bayan. – (a) Within ten (10) days after its enactment, the sangguniang barangay shall furnish copies of all barangay ordinances to the sangguniang panlungsod or sangguniang bayan concerned for review as to whether the ordinance is

consistent with law and city or municipal ordinances. (b) If the sanghuniang panlungsod or sangguniang bayan, as the case may be, fails to take action on barangay ordinances within thirty (30) days from receipt thereof, the same shall be deemed approved. (c) I f the sangguniang panlungsod or sangguniang bayan, as the case may be, finds the barangay ordinances inconsistent with law or city or municipal ordinances, the sanggunian concerned shall, within thirty (30) days from receipt thereof, return the same with its comments and recommendations to the sangguniang barangay concerned for adjustment, amendment, or modification; in which case, the effectivity of the barangay ordinance is suspended until such time as the revision called for is effected. Q: May the Sanggunian declare a local ordinance under review as void and illegal? A: NO.

- The only ground upon which a provincial board may declare any municipal resolution, ordinance, or order invalid is when such resolution, ordinance, or order is “beyond” the powers conferred upon the sanggunian making the same.

- Absolutely no other ground is recognized by the law.

(Moday v. CA, Feb. 20, 1997; DILG Opinion NO. 3-2005 {January 21, 2005})

Q: May the Sanggunian exceed the 30-day period of review because of time spent in referral to its committee or legal office?

A: NO.

- The sanggunian is required to take action on the ordinance on review within thirty (30) days after its submission

19 jcsb

- The phrase “take action” should be construed as either approval or disapproval of the ordinance and not just any other action of the reviewing sanggunian, such as referral to a committee.

- After the lapse of such period, and no official and/or formal document, such as a resolution, was issued by the Sanggunian, it can be validly stated that the Sanggunian failed to act within thirty (30) days and the ordinance or resolution under review can be presumed consistent with law and therefore valid. (DILG Opinion No. 19-2009, April 28, 2009; DILG Opinion No. 62-2012, Nov. 7, 2012)

Review of Appropriation Ordinances

Sec. 327. Review of Appropriation Ordinances

of Competent Cities and Municipalities.

The sangguniang panlalawigan shall within the same 90-day period advise the … sangguniang bayan concerned through the local chief excecutive of any action on the ordinance under review. Upon receipt of such advise, the … municipal treasurer concerned shall not make further disbursements of funds from any of the items of appropriate declared inoperative, disallowed or reduced. Sec. 333. Review of the Barangay Budget - (a) Within ten (10) days from its approval, copies of the barangay budget shall be furnished the sangguniang panlungsod or the sangguniang bayan, as the case may be. If within sixty (60) days after the receipt of the ordinance, the sanggunian concerned takes no action thereon, the same shall continue to be in full force and effect.

(b) Within the 60-day period, the sangguniang panlungsod or the sangguniang bayan concerned shall return the barangay budget to the punong barangay with the advice of action thereon for proper adjustments, in which event, the barangay shall operate on the ordinance authorizing annual appropriations of the preceding fiscal year until such time that the new ordinance authorizing annual appropriations shall have met the objections raised. Upon receipt of such advice, the barangay treasurer or the city or municipal treasurer who has custody of the funds shall not make further disbursement from any item of appropriation declared inoperative, disallowed, or reduced. Q: Who prepares the budget? A:

- The Local Development Council (LDC) prepares the Local Development Plan (LDP) [Sec. 109, LGC]

- The sanggunian will then approve or

disapprove the LDP thru a Resolution [Sec. 114, LGC]

- The LDP will then be submitted to the mayor, who may approve or veto the same [Sec. 55, LGC]

- The approved LDP will then be submitted to the Local Finance Committee (LFC) for budget preparation [Art. 410, IRR, LGC]

- The proposed budget will be submitted by the local chief executive to the sanggunian for enactment into an ordinance. [Sec. 316, LGC; DILG Opinion No. 137-2003]

Q: Can the Sanggunian reduce the proposed budget? A:

- Article 415 of the IRR states that: “the local sanggunian may not increase the

20 jcsb

proposed amount in the executive budget nor include new items except to provide for statutory and contractual obligations but in no case shall it exceed the total appropriations in the executive budget.”

- Considering that the only prohibition is against any increase, the sanggunian may reduce the executive budget proposed by the LCE, provided, however, that the requirements as well as the general limitations in the use of government funds provided for under Sections 324 and 325 of the Code are complied with.

Q: Is there any penalty for an LCE who fails to prepare and submit the annual budget on time? A: YES. Pursuant to Sec. 318 of R.A. No. 7160, an LCE who fails to submit the budget on or before October 16 of the current year shall be subject to such criminal and administrative penalties as may be provided by the Local Government Code and other applicable laws. Q: What is the period for enactment of the annual budget (Re-enacted Budget)

- Under Section 323 of the LGC, if the sanggunian fails to enact the annual budget after ninety (90) days from the beginning of the fiscal year, the ordinance authorizing the appropriations of the preceding year shall be deemed re-enacted and shall remain in force and effect until the ordinance authorizing the proposed appropriations is passed by the sanggunian concerned.

- However, only the annual appropriations for salaries and wages of existing positions, statutory and contractual obligations, and essential operating expenses authorized in the annual and supplemental budgets for the preceding year shall be deemed re-

enacted and disbursement of funds shall be in accordance therewith.

Effectivity of Budget Section 320 of the LGC provides that:

- The ordinance enacting the annual budget shall take effect on the ensuing calendar year.

- An ordinance enacting a supplemental budget, however, shall take effect upon its approval or on the date fixed therein.

- The review of the budget by the sangguniang panlalawigan is not a requisite for validity or effectivity.

(DILG Opinion No. 90-2000, dated August 21, 2000)

Supplemental Budget

- No ordinance providing for a supplemental budget shall be enacted, except:

- (a) when supported by funds actually available as certified by the local treasurer, which shall refer to the amount of money actually collected during a given fiscal year that is over and above the realized estimated income of that year; or

- (b) in times of public calamity by way of budgetary realignment to set aside appropriations for the purchase of supplies and materials or the payment of services, which are exceptionally urgent or absolutely indispensible to prevent imminent danger to, or loss of life or property, in the jurisdiction of the LGU or in other areas declared in a state of calamity by the President. (Art. 417, IRR)

Intelligence Fund

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- Section 325 (h) of R.A. 7160 provides that: “…annual appropriations for discretionary purposes of the local chief executive shall not exceed two percent (2%) of the actual receipts derived from the basic real property tax in the next preceding calendar year. ”

- Pursuant to DILG Memorandum Circular No. 99-65 to determine the amount to be utilized for intelligence and confidential purposes, it shall be based on the: (a) 30% of the peace and order allocation, or (b) 3% of the annual appropriations, whichever is lower.

Q: May the Sanggunian modify or reduce a local budget ordinance under review? A: YES.

- Expressly included in the sanggunian’s power to review the local budget ordinance of a lower LGU is the clipping power to disallow or reduce accordingly and even declare the ordinance inoperative in part or in its entirety if the appropriations are found to be excess of the amounts prescribed or if it does not comply with budgetary requirements and limitations under the law.

(DILG Opinion No. 101-1995, dated August 31, 1995)

Q: What are the grounds or questions that the reviewing Sanggunian can use to assail a local budget under review? A: Sec. 325, LGC

- The total appropriations, whether annual or supplemental, for personal services of a local government unit for one (1) fiscal year shall not exceed forty-five percent (45%) in the case of first to third class provinces, cities, and municipalities, and fifty-five percent (55%) in the case of fourth class or lower, of the total annual income from

regular sources realized in the next preceding fiscal year.

- The appropriations for salaries, wages,

representation, and transportation allowances of officials and employees of the public utilities and economic enterprises owned, operated, and maintained by the local government unit concerned shall not be included in the annual budget or in the computation of the maximum amount of personal services.

Q: What are the grounds or questions that the reviewing Sanggunian can use to assail a local budget under review? A: Sec. 325, LGC

- No official or employee shall be entitled to a salary with higher than the maximum fixed for the position or other positions of equivalent rank by applicable laws or rules and regulations issued thereunder.

- The creation of new positions and salary increases or adjustments shall in no case be made retroactive and

- The annual appropriations for discretionary purposes of the local chief executive shall not exceed two percent (2%) of the actual receipts derived from the basic real property tax in the next preceding calendar year.

Q: What are the grounds or questions that the reviewing Sanggunian can use to assail a local budget under review? A: Sec. 324, LGC

- The aggregate amount appropriated shall not exceed the estimates of income.

- Full provision shall be made for all

statutory and contractual obligations of

22 jcsb

the local government unit concerned. Provided, however, that the amount of appropriations for debt servicing shall not exceed twenty percent (20%) of the regular income of the local government unit concerned.

- Five percent (5%) of the estimated

revenue from regular sources shall be set aside as an annual lump appropriation for unforeseen expenditures arising from the occurrence of calamities.

Q: What are the restrictions on disbursement of Funds? A: Sec. 344. Certification on, and Approval of Vouchers – No money shall be disbursed unless the local budget officer certifies to the existence of appropriation that has been legally made for the purpose, the local accountant has obliged said appropriation, and the local treasurer certifies to the availability of funds for the purpose.

- Vouchers and payrolls shall be certified to and approved by the head of the department or office who has administrative control of the fund concerned, as to validity, propriety, and legality of the claim involved.

Q: Can the local chief executive declare savings and transfer it to augment other expenses (DAP)? A: NO.

- Sec. 336. Use of Approriated Funds and Savings. Funds shall be available exclusively for the specific purpose for which they have been appropriated.

- No ordinance shall be passed

authorizing any transfer of

appropriations from one item to another.

- However, the local chief executive or

the presiding officer of the sanggunian concerned may, by ordinance, be authorized to augment any item in the approved annual budget for their respective offices from savings in other items within the same expense class of their respective appropriations.

Q: How can the Sanggunian monitor that the funds are properly disbursed? A: Sec. 346. Disbursement of the Local Funds and Statement of Accounts. – Disbursements shall be made in accordance with the ordinance authorizing the annual or supplemental appropriations without the prior approval of the sanggunian concerned.

- Within thirty (30) days after the close of each month, the local accountant shall furnish the sanggunian with such financial statements as may be prescribed by the Commission on Audit. In the case of the year-end statement of accounts, the period shall be sixty (60) days after the thirty-first (31st) of December.

Q: Who will be held liable for improper disbursement of funds? A: Sec. 340. Persons accountable for Local Government Funds. – Any officers of the local government unit whose duty permits or requires the possession or custody of the local government funds shall be accountable and responsible for the safekeeping thereof in conformity with the provisions of this Title.

- Other local officers who, though not accountable by the nature of their duties, may likewise be similarly held accountable and responsible for local

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government funds through their participation in the use or application thereof. “ (emphasis supplied)

Sec. 342. Liability for Acts Done Upon Direction of Superior Officer, or Upon Participation of Other Department Heads or Officers of Equivalent Rank. -

- Unless he registers his objection in writing, the local treasurer, accountant, budget officer, or other accountable officer shall not be relieved of liability for illegal or improper use or application or deposit of government funds or property by reason of his having acted upon the direction of a superior officer, elective or appointive, or upon participation of other department heads or officers of equivalent rank.

- The superior office directing, or the

department head participating in such illegal or improper use or application or deposit of government funds or property, shall be jointly and severally liable with the local treasurer, accountant, budget officer, or other accountable officer for the sum or property so illegally or improperly used, applied or deposited.

QUALIFICATIONS Q: What are the qualifications of elective government official? - Must be as resident therein for at least 1 year immediately preceding the day of the election; - Able to read and write Filipino/any other local language or dialect - Age requirement (Sec. 39, LGC): 23 y/o – governor, vice-governor, mayor, vice-mayor, councillor (Highly urbanized cities) 21 y/o – mayor, vice-mayor (component cities/municipalities) 18 y/o – sanggunian members and punong barangay Q: When should the citizenship requirement be possessed? A: The citizenship requirement in the LGC is to be possessed by the elective official, at the latest, as of the time he is proclaimed and at the start of the term of office to which he has been elected.

- The LGC does not specify any particular date or time when the candidate must possess citizenship, unlike the requirements for residence and age. Repatriation under P.D. 825 is valid and effective and retroacts to the date of the application.

(Frivaldo v. Comelec, G.R. No. 120295, June 28, 1996)

Q: X was a natural-born Filipino who went to the USA to work and subsequently became a naturalized American citizen. However, prior to the filing of his Certificate of Candidacy for the Office of Mayor of the Municipality of General McArthur, Eastern

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Samar, on 28 March 2007, he applied for reacquisition of his Philippine Citizenship. Such application was subsequently granted. Y filed a petition to disqualify X on the ground of failure to comply with the 1-year residency requirement. Y argues that reacquisition of Philippine citizenship, by itself, does not automatically result in making X a resident of the locality. Is Y correct? A: YES. X’s reacquisition of his Philippine citizenship under R.A. 9225 had no automatic impact or effect on his residence/domicile.

- He could still retain his domicile in the USA, and he did not necessarily regain his domicile in the Municipality of General McArthur, Eastern Samar, Philippines.

- X merely had the option to again establish his domicile in the Municipality of General McArthur, Eastern Samar, Philippines, said place to have become his new domicile of choice. The length of his residence therein shall be determined from the time he made it his domicile of choice, and it shall not retroact to the time of his birth. It is the fact of residence that is the decisive factor in determining whether or not an individual has satisfied the residency qualification requirement.

- However, even if Y’s argument is

correct, this does not mean that X should be automatically disqualified as well, since there is proof that aside from reacquisition of his Philippine Citizenship, there are other subsequent acts executed by X which shows his intent to make General McArthur, Eastern Samar his domicile. Thus, making him qualified to run for Mayor.

(Japzon v. COMELEC, G.R. No. 180088, Jan. 19, 2009)

Q: Imelda Marcos indicated in her COC that her residence in Leyte is 7months. The Constitution 1 year residence. Is he qualified to run? A: YES. The principle of animus revertendi was used to show that she has an “intention to return” to the place where she seeks to be elected.

- The SC held that the term “residence” is VAGUE. It ruled that “domicile” and “residence” are synonymous.

(Marcos v. COMELEC, G.R. No. 119976, September 18, 1995) Q: Butz Aquino was a Senator residing in Tarlac when he filed a COC for Congressman of Makati City. He bought a condo unit in Makati City 1 year before the election. Is he qualified? A: NO. The term “residence,” as used in the law, is CLEAR.

- It imports not only an intention to reside in a fixed place, but also a personal presence in that place, coupled with conduct indicative of such intention.

(Aquino v. COMELEC, 1995) *Comment of Atty. Buko: “Weird Supreme Court.” Q:What is RESIDENCE for election purposes? A: It implies the factual relationship of an individual to a certain place. It is the physical presence of a person in a given area, community, or country. For election purposes,

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the concepts of residence and domicile are dictated by the peculiar criteria of political laws.

- As these concepts have evolved in our election law, what has clearly and unequivocally emerged is the fact that residence for election purposes is used synonymously with domicile.

(Marcos v. COMELEC, G.R. No. 119976, September 18, 1995)

Q: What is the effect of transfer of residence? A: Any person who transfers residence solely by reason of his occupation, profession, or employment in private or public service, education, etc., shall not be deemed to have lost his original residence. (Astio v. Aguirre, G.R. No. 191124, April 27, 2010) Q: Dan Fernandez ran for congressman of the First District of Laguna. In his COC, he indicated that his complete/exact address is in Sta. Rosa City Laguna. Vicente sought the cancellation of the COC of Dan Fernandez and his disqualification as a candidate on the ground of an alleged material misrepresentation in his COC regarding his place of residence, because during past elections, he had declared Pagsanjan, Laguna as his address, and Pagsanjan was located in the Fourth District of Laguna, and that Dan Fernandez is merely leasing a property in his alleged residence in Sta. Rosa. Does the Constitution require that a candidate be a property owner in the district where he intends to run? A: NO. Although it is true that the latest acquired abode is not necessarily the domicile of choice of a candidate, there is nothing in the Constitution or our election laws which require a congressional candidate to sell a previously acquired home in one district and buy a new

one in the place where he seeks to run in order to qualify for a congressional seat in that other district.

- Neither do we see the fact that Fernandez was only leasing in Sta. Rosa at the time of his candidacy as a barrier for him to run in that district. Certainly, the Constitution does not require a congressional candidate to be a property owner in a district where he seeks to run but only that he resides in that district for at least one year prior to the Election Day.

- To use ownership of property in the

district as the determinative indicium of permanence of domicile or residence implies that only the landed can establish compliance with the residency requirement.

- This Court would be in effect imposing a

property requirement to the right to hold public office, which property requirement would be unconstitutional.

(Fernandez v. HRET, G.R. No. 187478, Dec. 29, 2009)