Public Corporations Midterm Reviewer
Case Briefs
I. General Principles
A. Corporation
1. Definition
A 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.” (Sec. 2, Corporation Code)
2. Classification
 Public - organized for the government of a
portion of the State
 Private - formed for some private purpose,
benefit,aim or end
 Quasi-public - private corporation that
renders public service or supplies public
wants
3. Criterion to Determine Public Corporation
See Philippine Society for the Prevention of
Cruelty to Animals v. Commission on Audit
4. Classes of Public Corporations
 Quasi-corporation - created by the State
for a narrow or limited purpose
 Municipal corporation - body politic and
corporate constituted by the incorporation
of the inhabitants for the purpose of local
government
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Liban v. Gordon - G.R. No. 175352, January
18, 2011
“The Philippine National Red Cross is neither a
public nor a private corporation x x x as to not
lost its character of neutrality as well as
independence, nor strictly as a private
corporation since it is regulated by
international humanitarian law and is treated
as an auxiliary of the state.”
Boy Scouts of the Philippines v. Commission
on Audit - G.R. No. 177131, June 7, 2011
“A public corporation is created to serve public
interest and purpose, and likewise,
constitutional mandate.”
Philippine Society for the Prevention of
Cruelty to Animals v. Commission on Audit -
G.R. No. 169752, September 25, 2007
“The true criterion to determine whether a
corporation is public or private is found in the
totality of the relation of the corporation to the
State.
If the corporation is created by the State as the
latter’s own agency or instrumentality to help
it in carrying out its governmental functions,
then that corporation is considered public;
otherwise, it is private.”
Province of North Cotabato v. Government of
the Republic of the Philippines - G.R. No.
183591, October 14, 2008
“No province, city, or municipality, or
autonomous region is recognized under the
Philippine laws as having an associative
 Public Corporations Midterm Reviewer
relationship (a state within a state) with the
national government.”
B. Principes of Local Autonomy
1. Principle of Local Autonomy
 The State shall ensure the autonomy of
local governments. (Sec. 25, Article II,
1987 Constitution)
 The territorial and political subdivisions
shall enjoy local autonomy. (Sec. 2, Article
X, 1987 Constitution)
Case Briefs
Basco v. PAGCOR - G.R. 91649, May 14, 1991
“Local autonomy simply means
decentralization. It does not make local
government sovereign within the state or an
imperium in imperio.”
Lina v. Paño - G.R. No. 129093, August 30,
2001
“Municipal governments are only agents of the
national government. Local councils exerise
only delegated legislative powers conerred
upon 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.”
Limbona v. Mangelin - G.R. No. 80391,
February 28, 1989
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“Autonomy is either decentralization of
administration or decentralization of power.
There is decentralization of administration
when the central government delegates
administrative powers to political subdivisions.
x x x The President exercises general
supervision over them, but only to ensure that
local affairs are administered according to law.
Decentralization of power involves an
abdication of political power in favor of local
government units declare to be autonomous. In
that case, the autonomous government is free
to chart its own destiny and shape its future
with minimum intervention from central
authorities.”
Disomangcop v. Datumanong - G.R. No.
149848, November 25, 2004
“A necessary prerequisite of autonomy is
decentralization.
Decentralization is a decision by the central
government authorizing its subordinates,
whether geographically or functionally defined,
to exercise authority in certain areas.
Decentralization comes in two forms -
deconcentration and devolution.
Deconcentration is administrative in nature,
involving the transfer of functions or the
delegation of authority and responsibility from
the national office to the regional and local
offices.
Devolution connotes political decentralization,
or the transfer of powers, responsibilities, and
resources for the performance of certain
functions from the central government to local
government units.”
 Public Corporations Midterm Reviewer
Batangas CATV, Inc. v. Court of Appeals - G.R.
No. 138810, September 29, 2004
“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.”
2. Power of the President over LGUs
 The President of the Philippines shall
exercise general supervision over local
governments. Provinces with respect to
component cities and municipalities, and
cities and municipalities with respect to
component barangays shall ensure that
the acts of their component units are
within the scope of their prescribed
powers and functions. (Sec. 4, Article X,
1987 Constitution)
Case Briefs
Hon. Dadole v. Commission on Audit - G.R. No.
125350, December 3, 2002
“Supervision means the overseeing or the
power or authority of an officer to see that
subordinate officers perform their duties.
If the latter fail or neglect to fulfill them, the
former may take such action or step as
prescribed by law to make them perform their
duties.
Control means the power of an officer to alter
or modify of nullify or set aside what a
subordinate officer has done in the
performance of his duties and to substitute the
judgment of the former for that of the latter.”
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Pimentel v. Aguirre - G.R. No. 132988, July 19,
2000
“In the case at bar, an Administrative Order
was released merely as an advisory to prevail
upon local executives to recognize the need for
fiscal restraint in a period of economic
difficulty. It is within the bounds of the
President’s supervisory power over local
government units, as it does not impose any
sanction upon LGUs who do not follow such
advice.”
Province of Batangas v. Romulo - G.R. No.
152774, May 27, 2004
“The President, as a ‘supervisor’, merely sees
to it that the rules are followed, but he himself
does not lay down such rules, nor does he have
the discretion to modify or replace them.
If the rules are not observed, he may order the
work done or re-done but only to conform to
the prescribed rules.”
ACORD v. Zamora - G.R. No. 144256, June 8,
2005
“In the case at bar, the President acted beyond
his supervisory power over LGUs by passing
into law a General Appropriations Act that is
violative of the automatic release of the just
share of LGUs in national taxes. (an example of
‘control’ as distinguished from ‘supervision’).”
 Public Corporations Midterm Reviewer
Kida v. Senate - G.R. No. 196271, October 18.
2011; February 28, 2012 (Resolution)
“There is no incompatibility between the
President’s power of supervision over LGUs
(autonomous region in the case at bar) and the
power granted to the President within the
specified confines of the law (R.A. 10153 in the
case at bar) to appoint officers-in-charge.”
Villafuerte v. Robredo - G.R. No. 195390,
December 10, 2014
“Supervision is not incompatible with
discipline. The power to discipline and ensure
that the laws be faithfully executed must be
construed to authorize the President (DILG
Secretary as his alter-ego, in the case at bar) to
order an investigation of the act or conduct of
local officials when his opinion the good of the
public service so requires.
Furthermore, the supervisory powers of the
President are broad enough to embrace the
power to require the publication of certain
documents as a mechanism for transparency.”
C. Municipal Corporations (Local
Government Units)
1. Elements
 Legal Creation/Incorporation
The law creating or authorizing the
creation or incorporation of a muicipal
corporation
 Corporate Name
The name of the municipal corporation
(e.g. Santiago City, Province of Dinagat
Islands)
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Exception
The Sangguniang Panlalawigan may, in
consultation with the Philippine Historical
Institute, change the name of component cities
and municipalities, upon the recommendation
of the Sanggunian concerned; provided that
the same shall be effective only upon
ratification in a plebiscite conducted for the
purpose in the political unit directly affected
(Sec. 13, Local Government Code of 1991 [R.A.
7160]).
 Inhabitants
The people residing in the territory of the
municipal corporation
 Territory
The land mass where the inhabitants
reside, together with the internal and
external waters, and the air space above
the land and waters
2. Dual Nature and Functions
 Public/Governmental
It acts as an agent of the State for the
government of the territory and the
inhabitants
 Private/Proprietary
It acts as an agent of the community in the
administration of local affairs. As such, it
acts as a separate entity, for its own
purposes, and not as a subdivision of the
State
3. Municipal Corporations/LGUs in the
Philipines
 Public Corporations Midterm Reviewer

The territorial and political subdivisions of the As the basic political unit, the barangay
Republic of the Philippines are the provinces, serves as the primary planning and
cities, municipalities, and barangays. There implementing unit of government policies,
shall be autonomous regions in Muslim plans, programs, projects and activities in
Mindanao and the Cordilleras as hereinafter the community, and as a forum wherein
provided (Sec. 1, Article X, 1987 Constitution). the collective views of the people may be
expressed, crystallized and considered,
and where disputes may be amicably
 Province settled (Sec. 384, Local Government Code
of 1991 [R.A. 7160]).
The province, composed of a cluster of
municipalities, or municipalities and
component cities, and as a political and
 Autonomous Regions (ARMM, CAR)
corporate unit of government, serves as a
dynamic mechanism for developmental
processes and effective governance of
 Special Metropolitan Political Subdivisions
local government units within its
Pursuant to Sec. 11, Art. X, Constitution,
territorial jurisdiction (Sec. 459, Local
Congress may, by law, create special
Government Code of 1991 [R.A. 7160]).
metropolitan political subdivisions subject
to a plebiscite set forth in Sec. 10, (but) the
component cities and municipalities shall
 City
retain their basic autonomy and shall be
The city, composed of more urbanized and entitled to their own local executives and
developed barangays, serves as legislative assemblies.
ageneral-purpose government for the
The jurisdiction of the metropolitan
coordination and delivery of basic, regular and
authority that will thereby be created shall
direct services and effective governance of
be limited to basic services requiring
the inhabitants within its
coordination.
territorialjurisdiction [Sec. 448, Local
Government Code of 1991 [R.A. 7160].
D. Creation and Alteration of Municipal
Corporations/LGUs
 Municipality
The municipality, consisting of a group of
barangays, serves primarily as a general 1. Authority to Create
purpose government for the coordination
A local government unit may be created,
and delivery of basic, regular and direct
divided, merged, abolished, or its boundaries
services and effective governance of the
substantially altered either by law enacted by
inhabitants within its jurisdiction (Sec.
Congress in the case of a province, city,
440, Local Government Code of 1991 [R.A.
municipality or any other political subdivision,
7160]).
or by ordinance passed by the Sangguniang
Panlalawigan or Sangguniang Panlungsod
concerned in the case of a barangay located
 Barangay

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 Public Corporations Midterm Reviewer

within its territorial jurisdiction, subject to consecutive years based on 1991

such limitations and requirements prescribed constant prices should be at least:
in the Local Government Code (Sec. 6, Local
Government Code of 1991 [R.A. 7160).
(a) Municipality: P2,500,000
(b) City: P100,000,000 (Year 2000
2. Criteria for the Creation/Conversion of
constant prices, amended by R.A.
LGUs
9009)
 Plebiscite Requirement
(c) Highly urbanized city: P50,000,000
No province, city, municipality or barangay
(d) Province : P20,000,000
may be created, divided, merged, abolished, or
its boundary substantially altered, except in
accordance with the criteria established in the
local government code and subject to approval  Population
by a majority of the votes cast in a plebiscite in It shall be determined as the total number
the political units directly affected. (Sec. 10. Art. of inhabitants within the territorial
X, 1987 Constitution) jurisdiction of the local government unit
No creation, division, merger, abolition or concerned.
substantial alteration of boundaries of local
government units shall take effect unless
approved by a majority of the votes cast in a Required Minimum Population for LGUs
plebiscite called for the purpose in the political
unit or units directly affected.
(a) Barangay : 2,000
Exception
Said plebiscite shall be conducted by the
Comelec within 120 days from the date of Metro Manila and other metropolitan
effectivity of the law or ordinance effecting political subdivisions or in highly
such action, unless said law or ordinance fixes urbanized cities, where the
another date (Sec. 10, Local Government requirement is 5,000
Code of 1991 [R.A. 7160]).
(b) Municipality: 25,000
(c) City : 150,000
 Income
(d) Highly urbanized city: 200,000
It must be sufficient and based on
(e) Province: 250,000
acceptable standards to provide for all
essential government facilities and
services and special functions
commensurate with the size of its  Land Area
population, as expected of the It must be contiguous, unless it comprises
localgovernment unit concerned. Average two or more islands or is separated by a
annual income for the last two local government unit independent of the

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 Public Corporations Midterm Reviewer
others; properly identified by metes and
bounds with technical descriptions and
sufficient to provide for such basic
services and facilities to meet the
requirements of its populace.
Area Requirements for LGUs
(a) Municipality: 50 sq. km.
(b) City : 100 sq. km.
(c) Province: 2,000 sq. km.
3. Beginning of Corporate Existence
A LGU’s corporate existence beings upon the
election and qualification of its chief executive
and a majority of the members of its
Sanggunian, unless some other time is fixed
therefor by the law or ordinance creating it
(Sec. 14, Local Government Code of 1991 [R.A.
7160])
4. Division and merger of LGUs
It shall comply with the same requirements,
provided that such division shall not reduce
the income, population or land area of the local
government unit or units concerned to less
than the minimum requirements prescribed;
provided further that the income classification
of the original local government unit or units
shall not fall below its current income
classification prior to the division (Sec. 8, Local
Government Code of 1991 [R.A. 7160]).
5. Abolition of LGUs
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A local government unit may be abolished
when its income, population or land area has
been irreversibly reduced to less than the
minimum standards prescribed for its creation,
as certified by the national agencies
mentioned.
The law or ordinance abolishing a local
government unit shall specify the province, city,
municipality or barangay with which the local
government unit sought to be abolished will be
incorporated or merged (Sec. 9, Local
Government Code of 1991 [R.A. 7160]).
E. The Local Government Code (as
amended)
1. Effectivity
January 1, 1992, unless otherwise provided
herein, after its complete publication in at least
one newspaper of general circulation (Sec. 536,
Local Government Code of 1991 [R.A. 7160]).
2. Rules of Interpretation
(a) Any provision on a power of a local
government unit shall be liberally interpreted
in its favor, and in case of doubt, any question
thereon shall be resolved in favor of devolution
of powers and of the lower local government
unit. Any fair and reasonable doubt as to the
existence of the power shall be interpreted in
favor of the local government unit concerned
(b) In case of doubt, any tax ordinance or
revenue measure shall be construed strictly
against the local government unit enacting it,
and liberally in favor of the taxpayer. Any tax
exemption, incentive or relief granted by any
local government unit pursuant to the
provisions of this Code shall be construed
strictly against the person claiming it
 Public Corporations Midterm Reviewer
(c) The general welfare provisions in this Code
shall be liberally interpreted to give more
powers to local government units in
accelerating economic development and
upgrading the quality of life for the people in
the community
(d) Rights and obligations existing on the date
of effectivity of this Code and arising out of
contracts or any other source of prestation
involving a local government unit shall be
governed by the original terms and conditions
of said contracts or the law in force at the time
such rights were vested
(e) In the resolution of controversies arising
under this Code where no legal provision or
jurisprudence applies, resort may be had to the
customs and traditions in the place where the
controversies take place (Sec. 5, Local
Government Code of 1991 [R.A. 7160]).
II. General Powers and Attributes of LGUs
A. Sources of Powers
 The State shall ensure the autonomy of
local governments (Sec. 25, Article II, 1987
Constitution).
 Each local government unit shall have the
power to create its own sources of
revenues and to levy taxes, fees, and
charges subject to such guidelines and
limitations as the Congress may provide,
consistent with the basic policy of local
autonomy. Such taxes, fees, and charges
8
shall accrue exclusively to the local
governments (Sec. 5, Article X, 1987
Constitution).
 Local government units shall have a just
share, as determined by law, in the
national taxes which shall be
automatically released to them (Sec. 6,
Article X, 1987 Constitution).
 Local governments shall be entitled to an
equitable share in the proceeds of the
utilization and development of the
national wealth within their respective
areas, in the manner provided by law,
including sharing the same with the
inhabitants by way of direct benefits (Sec.
7, Article X, 1987 Constitution).
 Statutes (e.g., R. A. 7160)
 Charter (particularly of cities)
 Doctrine of the Right of Self-Government
It applies only in States which adhere to
the doctrine.
B. Governmental Powers
1. Police Power (General Welfare
Clause)
Every local government unit shall exercise the
powers expressly granted, those necessarily
implied there from, as well as powers
necessary, appropriate, or incidental for its
efficient and effective governance, and those
 Public Corporations Midterm Reviewer
which are essential to the promotion of the
general welfare.
Within their respective territorial jurisdictions,
local government units shall ensure and
support, among other things, the preservation
and enrichment of culture, promote health and
safety, enhance the right of the people to a
balanced ecology, encourage and support the
development of appropriate and self-reliant
scientific and technological capabilities,
improve public morals, enhance economic
prosperity and social justice, promote full
employment among their residents, maintain
peace and order, and preserve the comfort and
convenience of their inhabitants (Sec. 16, Local
Government Code of 1991 [R.A. 7160]).
The general welfare clause is the statutory
grant of police power to local government
units.
Limitations on the exercise of Police Power
Under the General Welfare Clause
 It may only be exercised within territorial
limits of the local government unit (except
for protection of water supply).
 Equal Protection Clause
The interests of the public in general, as
distinguished from those of a particular
class, require the exercise of the power.
 Due Process Clause
The means employed are reasonably
necessary for the accomplishment of the
purpose and not unduly oppressive on
individuals
9
 It must not be contrary to the Constitution
and the laws. Prohibited activities may not
be legalized in the guise of regulation;
activities allowed by law cannot be
prohibited, only regulated
2. Local Taxation
 Secs. 5-7, Article X, 1987 Consitution, supra
Section 18, Local Government Code of 1991
 Local government units shall have the
power and authority to establish an
organization that shall be responsible for
the efficient and effective implementation
of their development plans, program
objectives and priorities
 To create their own sources of revenue
and to levy taxes, fees and charges which
shall accrue exclusively to their use and
disposition and which shall be retained by
them
 To have a just share in the national taxes
which shall be automatically and directly
released to them without need of any
further action
 To have an equitable share in the proceeds
from the utilization and development of
the national wealth and resources within
their respective territorial jurisdictions
including develop, lease, encumber,
alienate or otherwise dispose of real or
personal property held by them in their
proprietary capacity and to apply their
resources and assets for productive,
developmental or welfare purposes, in the
 Public Corporations Midterm Reviewer

exercise or furtherance of their

governmental or proprietary powers and
 No money shall be paid out of the local
functions and thereby ensure their
treasury except in pursuance of an
development into self-reliant communities
appropriation ordinance or law
and active participants in the attainment
of national goals.
 Local government funds and money shall
Fundamental Principles Governing the Exercise
be spent solely for public purposes
of the Taxing and Other Revenue-Raising
Powersof LGUs(Sec. 130, Local Government Code
of 1991)
 Local revenue is generated only from
 Taxation shall be uniform in each local sources expressly authorized by law,
government unit ordinance, and collection thereof shall at
all times be acknowledged properly

 Taxes, fees, charges and other impositions

shall be equitable and based as far as
practicable on the taxpayer’s ability to pay;
levied and collected only for public
purposes; not unjust, excessive,
oppressive or confiscatory; and not
contrary to law, public policy, national
economic policy, or in restraint of trade
 The collection of local taxes, fees, charges
and other impositions shall in no case be
let to any private person
 Ail money officially received by a local
government officer in any capacity or on
any occasion shall be accounted for as
local funds, unless otherwise provided by
law
 Trust funds in the local treasury shall not
be paid out except in fulfillment of the
purpose for which the trust was created or
the funds received

 Every officer of the local government unit

 The revenue collected shall inure solely to
the benefit of, and be subject to
disposition by, the local government unit,
unless specifically provided herein
 Each local government unit shall, as far as
practicable, evolve a progressive system of
taxation
Fundamental Principles Governing the Financial
Affairs, Transactions and Operations of Local
Government Units (Sec. 305, Local Government
Code of 1991)
whose duties permit or require the
possession or custody of local funds shall
be properly bonded, and such officer shall
be accountable and responsible for said
funds and for the safekeeping thereof in
conformity with the provisions of law
 Local governments shall formulate sound
financial plans, and the local budgets shall
be based on functions, activities, and
projects, in terms of expected results

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 Public Corporations Midterm Reviewer
 Local budget plans and goals shall, as far
as practicable, be harmonized with
national development plans, goals and
strategies in order to optimize the
utilization of resources and to avoid
duplication in the use of fiscal and physical
resources
 Local budgets shall operationalize
approved local development plans
 Local government units shall ensure that
their respective budgets incorporate the
requirements of their component units
and provide for equitable allocation of
resources among these component units
 National planning shall be based, on local
planning to ensure that the needs and
aspirations of the people as articulated by
the local government units in their
respective local development plans are
considered in the formulation of budgets
of national line agencies or offices
 Fiscal responsibility shall be shared by all
those exercising authority over the
financial affairs, transactions, and
operations of the local government units
 The local government unit shall endeavor
to have a balanced budget in each fiscal
year of operation
3. Eminent Domain
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A local government unit may, through its chief
executive and acting pursuant to an ordinance,
exercise the power of eminent domain for
public use, or purpose, or welfare for the
benefit of the poor and the landless, upon
payment of just compensation, pursuant to the
provisions of the Constitution and pertinent
laws:
Provided, however, That the power of eminent
domain may not be exercised unless a valid
and definite offer has been previously made to
the owner, and such offer was not accepted:
Provided, further, That the local government
unit may immediately take possession of the
property upon the filing of the expropriation
proceedings and upon making a deposit with
the proper court of at least fifteen percent
(15%) of the fair market value of the property
based on the current tax declaration of the
property to be expropriated:
Provided, finally, That, the amount to be paid
for the expropriated property shall be
determined by the proper court, based on the
fair market value at the time of the taking of
the property. (Sec. 19, Local Government Code
of 1991)
Limitations on the Exercise of the Power of
Eminent Domain by LGUs
 It may be exercised only by the local chief
executive, acting pursuant to a valid
ordinance
 It must be exercised for public use or
purpose or welfare, or for the benefit of
the poor and the landless
 Public Corporations Midterm Reviewer
 It will not take effect after a valid and
definite offer had been made to, and not
accepted by, the owner
4. Reclassification of Lands
(a) A city or municipality may, through an
ordinance passed by the Sanggunian after
conducting public hearings for the purpose,
authorize the reclassification of agricultural
lands and provide for the manner of their
utilization or disposition in the following cases:
(1) When the land ceases to be economically
feasible and sound for agricultural purposes as
determined by the Department of Agriculture
(2) Where the land shall have substantially
greater economic value for residential,
commercial, or industrial purposes, as
determined by the Sanggunian concerned:
Provided, That such reclassification shall be
limited to the following percentage of the total
agricultural land area at the time of the
passage of the ordinance:
(1) For highly urbanized and independent
component cities, fifteen percent (15%)
(2) For component cities and first to third
class municipalities, ten percent (10%)
(3) For fourth to sixth class
municipalities, five percent(5%):
Provided, further, That agricultural lands
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distributed to agrarian reform
beneficiaries pursuant to Republic Act
Numbered Sixty-six hundred fifty-seven
(R.A. No. 6657), otherwise known as "The
Comprehensive Agrarian Reform Law",
shall not be affected by the said
reclassification and the conversion of such
lands into other purposes shall be
governed by Section 65 of said Act.
(b) The President may, when public interest so
requires and upon recommendation of the
National Economic and Development
Authority, authorize a city or municipality to
reclassify lands in excess of the limits set in the
next preceding paragraph
(c) The local government units shall, in
conformity with existing laws, continue to
prepare their respective comprehensive land
use plans enacted through zoning ordinances
which shall be the primary and dominant bases
for the future use of land resources: Provided,
That the requirements for food production,
human settlements, and industrial expansion
shall be taken into consideration in the
preparation of such plans
(d) Where approval by a national agency is
required for reclassification, such approval
shall not be unreasonably withheld. Failure to
act on a proper and complete application for
reclassification within three (3) months from
receipt of the same shall be deemed as
approval thereof
(e) Nothing in this Section shall be construed
as repealing, amending, or modifying in any
manner the provisions of R.A. No. 6657. (Sec.
20, Local Government Code of 1991)
 Public Corporations Midterm Reviewer

Provided, however, That no national or local

5. Closure and Opening of Roads
(a) A local government unit may, pursuant to
an ordinance, permanently or temporarily
close or open any local road, alley, park, or
square falling within its jurisdiction:
road, alley, park, or square shall set
temporarily closed for athletic, cultural, or
civic activities not officially sponsored,
recognized, or approved by the local
government unit concerned.

(d) Any city, municipality, or Barangay may,

Provided, however, that in case of permanent by a duly enacted close and regulate the use of
closure, such ordinance must be approved by
any local ordinance, temporarily street, road,
at least two-thirds (2/3) of all the members of
thoroughfare, or any other public place where
the Sanggunian, and when necessary, an
shopping malls, Sunday, flea or night markets,
adequate substitute for the public facility that
or shopping areas may be established and
is subject to closure is provided
where goods, merchandise, foodstuffs,
commodities, or articles of commerce may be
sold and dispensed to the general public. (Sec.
(b) No such way or place or any part thereof 21, Local Government Code of 1991)
shall be permanently closed without making
provisions for the maintenance of public safety
therein. A property thus permanently
6. Local Legislative Power
withdrawn from public use may be used or
conveyed for any purpose for which other real  Province - Sangguniang Panlalawigan
property belonging to the local government
 City - Sangguniang Panlungsod
unit concerned may be lawfully used or
conveyed:  Municipality - Sangguniang Bayan
 Barangay - Sangguniang Barangay (See
Sec. 48, Local Government Code of 1991)
Provided, however, That no freedom park shall
be closed permanently without provision for
its transfer or relocation to a new site
(a) Requisites of a Valid Ordinance

(c) Any national or local road, alley, park, or

square may be temporarily closed during an
actual emergency, or fiesta celebrations, public
rallies, agricultural or industrial fairs, or an
undertaking of public works and highways,
telecommunications, and waterworks projects,
the duration of which shall be specified by the
local chief executive concerned in a written
order:
 It must not contravene the Constitution
and any statute
 It must not be unfair or oppressive
 It must not be partial or discriminatory
 It must not prohibit, but may regulate
trade
 It must not be unreasonable
 It must be general in application and

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 Public Corporations Midterm Reviewer
consistent with public policy
(b) Local Initiative and Referendum
 “Initiative” is the power of the people to
propose amendments to the Constitution
or to propose and enact legislations
through an election called for the purpose.
(Sec. 3[a], R.A. 6735)
 Initiative on local legislation refers to a
petition proposing to enact a regional,
provincial, city, municipal, or barangay
law, resolution or ordinance. (See Sec.
3[a.3], R.A. 6735)
 "Referendum" is the power of the
electorate to approve or reject a
legislation through an election called for
the purpose. (Sec. 3[c], R.A. 6735)
 Referendum on local law which refers to a
petition to approve or reject a law,
resolution or ordinance enacted by
regional assemblies and local legislative
bodies. (Sec. 3[c.2], R.A. 6735)
Who May Exercise (Sec. 4, R.A. 6735)
 The power of initiative and referendum
may be exercised by all registered voters
of the country, autonomous regions,
provinces, cities, municipalities and
barangays.
Requirements (Sec. 5, R.A. 6735)
 To exercise the power of initiative or
referendum, at least ten per centum
14
(10%) of the total number of the
registered voters, of which every
legislative district is represented by at
least three per centum (3%) of the
registered voters thereof, shall sign a
petition for the purpose and register the
same with the Commission (Sec. 5[d], R.A.
6735).
 A referendum or initiative on an ordinance
passed in a municipality shall be deemed
validly initiated if the petition therefor is
signed by at least ten per centum (10%) of
the registered voters in the municipality,
of which every barangay is represented by
at least three per centum (3%) of the
registered voters therein (Sec. 5[e], R.A.
6735).
 A referendum or initiative on a barangay
resolution or ordinance is deemed validly
initiated if signed by at least ten per
centum (10%) of the registered voters in
said barangay (Sec. 5[f], R.A. 6735).
Procedure in Local Initiative (Sec. 13, R.A. 6735)
 Not less than two thousand (2,000)
registered voters in case of autonomous
regions one thousand (1,000) in case of
provinces and cities, one hundred (100) in
case of municipalities, and fifty (50) in
case of barangays, may file a petition with
the Regional Assembly or local legislative
body, respectively, proposing the adoption,
enactment, repeal, or amendment, of any
law, ordinance or resolution
 If no favorable action thereon is made by
local legislative body within thirty (30)
days from its presentation, the proponents
 Public Corporations Midterm Reviewer
through their duly authorized and
registered representative may invoke
their power of initiative, giving notice
thereof to the local legislative body
concerned
 The proposition shall be numbered
serially starting from the Secretary of
Local Government or his designated
representative shall extend assistance in
the formulation of the proposition
 Two or more propositions may be
submitted in an initiative
 Proponents shall have one hundred
twenty (120) days in case of autonomous
regions, ninety (90) days in case of
provinces and cities, sixty (60) days in
case of municipalities, and thirty (30) days
in case of barangays, from notice
mentioned in subsection (b) hereof to
collect the required number of signatures
 The petition shall be signed before the
Election Registrar, or his designated
representatives, in the presence of a
representative of the proponent, and a
representative of the regional assemblies
and local legislative bodies concerned in a
public place in the autonomous region or
local government unit, as the case may be.
Signature stations may be established in
as many places as may be warranted
 Upon the lapse of the period herein
provided, the Commission on Elections,
through its office in the local government
unit concerned shall certify as to whether
15
or not the required number of signatures
has been obtained. Failure to obtain the
required number is a defeat of the
proposition
 If the required number of signatures is
obtained, the Commission shall then set a
date for the initiative at which the
proposition shall be submitted to the
registered voters in the local government
unit concerned for their approval within
ninety (90) days from the date of
certification by the Commission, as
provided in subsection (g) hereof, in case
of autonomous regions, sixty (60) days in
case of provinces and cities, forty-five (45)
days in case of municipalities, and thirty
(30) days in case of barangays.
The initiative shall then be held on the
date set, after which the results thereof
shall be certified and proclaimed by the
Commission on Elections.
Limitations Upon Local Legislative Bodies(Sec.
16, R.A. 6735)
 Any proposition or ordinance or
resolution approved through the system of
initiative and referendum as herein
provided shall not be repealed, modified
or amended, by the local legislative body
concerned within six (6) months from the
date therefrom, and may be amended,
modified or repealed by the local
legislative body within three (3) years
thereafter by a vote of three-fourths (3/4)
of all its members:
 Public Corporations Midterm Reviewer

 Provided, however, That in case of  The municipality cannot

barangays the period shall be one (1) year berepresented by a private
after the expiration of the first six (6) attorney
months.
 Only the Provincial Fiscal or the
Municipal Attorney can represent
a province ormunicipality in
Local Referendum
lawsuits
 The municipality’s authority
 Any local legislative body may submit to toemploya private lawyer
the registered voters of autonomous islimited to situations
region, provinces, cities, municipalities wheretheProvincial Fiscal is
and barangays for the approval or disqualifiedtorepresent it, and
rejection, any ordinance or resolution duly the fact ofdisqualificationmust
enacted or approved. appear onrecord
3. To have and use a corporate seal

 Said referendum shall be held under the 4. To acquire and convey real or
control and direction of the Commission personal property
within sixty (60) days in case of provinces
5. To enter into contracts
and cities, forty-five (45) days in case of
municipalities and thirty (30) days in case
of barangays. The Commission (COMELEC)
Requisites of a Valid Municipal Contract
shall certify and proclaim the results of the
said referendum.

 The local government unit has the express,

implied or inherentpower to enter into the
C. Corporate Powers (Sec. 22, Local
particular contract
Government Code of 1991)

 The contract is entered into by the proper

 Every local government unit, as a
department, board,committee, officer
corporation, shall have the following
oragent. Unless otherwise provided by
powers:
theCode, no contractmay be entered into
bythe local chief executive on behalf of
thelocal governmentunit without
1. To have continuous succession in its
priorauthorization by the
corporate name
Sanggunianconcerned

2. To sue and be sued

 The contract must comply with certain
substantive requirements (i.e., when
expenditure of public fund is to be made,

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 Public Corporations Midterm Reviewer

there must be an actualappropriation and  Unless otherwise provided in this Code,

a certificate of availability of funds) contract may be entered into by the local
chief executive in behalf of the local
government unit without prior
 The contract must comply with the formal authorization by the Sanggunian
requirements of writtencontracts (e.g., the concerned. A legible copy of such contract
Statute of Frauds) shall be posted at a conspicuous place in
the provincial capitol or the city, municipal
or Barangay hall
Ultra Vires Contracts

 Local government units shall enjoy full

When a contract is entered into autonomy in the exercise of their
withoutcompliance with the first and the third proprietary functions and in the
requisites (above), the same is ultra viresand is management of their economic
null and void. Such contract cannot be ratified enterprises, subject to the limitations
or validated. provided in this Code and other applicable
laws

Ratification ofdefective municipal contracts is

possible only when there is non-compliance III. Municipal Liability
withthe second and/or the fourth
requirements above.
A. Liability for Damages (Sec. 24, Local
Government Code of 1991)
Ratification may either beexpress or implied.
6. To exercise such other powers as are Local government units and their officials are
granted to corporations, subject to the not exempt from liability for death or injury to
limitations provided in this Code and persons or damage to property.
other law

B. Liability for Violation

 Local government units may continue
using, modify, or change their existing
corporate seals: Provided, That newly
1. Violation of Law
established local government units or
those without corporate seals may create
their own corporate seals which shall be
 Where the Municipalityclosed a part of a
registered with the Department of the
municipal street without indemnifying the
Interior and Local Government: Provided,
person prejudicedthereby, the
further, That any change of corporate seal
Municipality can be held liable for
shall also be registered as provided herein
damages

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 Public Corporations Midterm Reviewer

C. Doctrine of Implied Municipal Liability

 Lack of funds does notexcuse the
municipality from paying the statutory
 A municipality may becomeobligated upon
minimum wage to its employees. The
an implied contract to pay the reasonable
payment of the minimum wage is a
value of the benefitsaccepted or
mandatorystatutory obligation of the
appropriated by it as to which it has the
municipality
general power to contract

2. Violation of Contract
 The doctrineapplies to all cases where
money or other property of a party is
received undersuch circumstances that
 A municipal corporation, like an ordinary
the general law,independent of an express
person, is liable on acontract it enters
contract,implies an obligation to do justice
into,provided that the contract is intra
with respect to the same
vires

 A private individual who deals with a

municipal corporation is
imputedconstructive knowledge of the
extent of the power or authority of the
municipalcorporation to enter into
contracts

 Ordinarily, therefore, the doctrine

ofestoppel does not lie against
themunicipal corporation

3. Violation of Tort

 If the local government unit is engaged in

governmental functions, it isnot liable

 If engaged in proprietary functions, local

government unit is liable

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