Public Corporation Notes (Atty.

Marquez) ZEK NOTES 

I. Public Corporation service or supply public want. They are

 Public Corporation: It is one created organized for the gain or benefit of their
by the State, either by general or members, but required by law to discharge
special act for purposes of functions for the public benefit.
administration of local government, or  Quasi-public corporations may be created
rendering service for the public by special charter or under the general law
interest. (e.g. utility, railroad, telephone,
 Public Corporation: One formed or transportation companies)
organized for the government of a
portion of the state. Its purpose is for III. Criterion to determine whether a
the general good and welfare [Sec. 3, corporation is a public corporation
Act No. 1459]. or not
 Corporation: An artificial being  The true criterion is the totality of the
created by operation of law, having the relation of the corporation to the State.
right of succession and the powers, If it was created by the State as its own
attributes and properties expressly agency to help it in carrying out its
authorized by law or incident to its governmental functions, it is public.
existence [Sec. 2, Corp. Code; Sec. 2, Otherwise, it is private.
Act No. 1459]  Hence, “provinces, chartered cities,
 Private Corporation: One formed for and barangays can best exemplify
some private purpose, benefit, aim, or public corporations.” On the other
end [Sec. 3, Act No. 1459]. hand, the Philippine Society for the
 LGU: A Local Government Unit is a Prevention of Cruelty to Animals,
political subdivision of the State which while created by Act No. 1285, is a
is constituted by law and possessed of private corporation as (1) it is not
substantial control over its own affairs. subject to state control, and (2) its
(Alvarez v. Guingona) powers to arrest offenders of animal
welfare laws and to serve processes
II. Public corporation vs. Private have been withdrawn by C.A. No. 148
Corporation [Philippine Society for the Prevention
PUBLIC PRIVATE of Cruelty to Animals v. COA, G.R.
No. 169752 (2007)].
Purpose Corporations Corporations
created by the
organized
state as its own
wholly for the IV. Dual characteristics of a public
device and
profit or corporation
agency for the
advantage of  The powers of a municipality are
accomplishment
their own twofold in character:
of parts of its
members, or 1. Public, government, or political:
own public
for some it acts as an agent of the State as the
works “private government of the territory it
purpose, occupies and its inhabitants within
benefit, aim, or the municipal limits. The
end.” municipal corporation exercises,
Creation By the state, By the will of
by delegation, a part of the
either by the
sovereignty of the state.
general or incorporators,
special act with the 2. Corporate, private, or
recognition of proprietary: it acts as an agent of
the state the community in the
 NOTE: Quasi-public corporations are administration of local affairs
private corporations that renders public which is wholly beyond the sphere

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Public Corporation Notes (Atty. Marquez) ZEK NOTES 

of public purposes, for which its administer the local or internal affairs of the
governmental powers are city, town or district which is incorporated.
conferred. It acts as separate entity 3. Quasi-municipal corporations: public
for its own purposes, and not as a corporations created by local governments.
subdivision of the State.
VI. Government Owned and Controlled
Political/Governmental Corporate/Private Corporations (GOCC)
Exercised in Exercised for the
 Any agency organized as a stock or
administering the special benefit and
powers of the state and advantage of the non-stock corporation, vested with
promoting the public community and functions relating to public needs,
welfare and they include include those which whether governmental or proprietary in
the legislative, judicial, are ministerial, nature, and owned by the Government
public, and political private, and corporate of the Republic of the Philippines
Concern health, safety, Seek to obtain special directly or through its instrumentalities
advancement of public corporate benefits or either wholly or, where applicable as in
good and welfare as earn pecuniary profit. the case of stock corporations, to the
affecting the public extent of at least a majority of its
generally outstanding capital stock.
LGU acts as an agent of LGU acts as agent of  NOTE: Provided that such agencies
the national government. the community in
are further categorized by the
administration of local
Department of Budget, CSC, and COA
affairs
for purposes of the exercise and
Examples: Regulations Examples: municipal
against fire and disease; waterworks, markets, discharge of their respective powers,
Preservation of public wharves, fisheries; functions, and responsibilities.
peace; establishment of maintenance of parks,
schools, public office, cemeteries, golf VII. Requisites of a GOCC
etc. courses, etc. 1. Any agency organized as a stock or
non-stock corporation
2. Vested with functions relating to public
V. Classes of public corporation needs whether governmental or
1. Quasi-public corporations: Private
proprietary in nature.
corporations that render public service,
3. Owned by the government directly or
supply public wants, or pursue other
through its instrumentalities either
eleemosynary objectives. While purposely
wholly, or, where applicable as in the
organized for the gain or benefit of its
case of stock corporations, to the extent
members, they are required by law to
of at least fifty-one (51) of its capital
discharge functions for the public benefit.
stock.
It must be stressed that a quasi-public
corporation is a specie of private
VIII. Public corporation vs. GOCC
corporation, but the qualifying factor is the
type of service the former renders to the Basis Public Corp GOCC
public: if it performs a public service, then Purpose Administration of Performance
it becomes a quasi-public corporation. local government or of functions
2. Municipal corporations: A political and rendering service for relating to
corporate body constituted by the the public interest. public needs,
incorporation of inhabitants for the purpose whether
of local government. It is established by Governmental
law, partly as an agency of the State to or Proprietary
assist in the civil government of the in nature.
country, but chiefly to regulate and

2
Public Corporation Notes (Atty. Marquez) ZEK NOTES 

Who Created by the state, Created by  Dual Nature: Every LGY created
Creates either by general act Congress or by under this Code is a body politic and
or special act. incorporators corporate. It shall exercise powers both
How By legislation By special as a political subdivision of the national
Created charters or government, and as a corporate
under the representing the inhabitants of its
Corporation
territory.
Code
Owners Formed and Owned by the  Dual Function:
hip organized by the state government 1. Public or governmental: it acts as
directly or thru an agent of the State or the
its government of the territory it
instrumentaliti occupies and its inhabitants.
es either 2. Private or proprietary: it acts as
wholly, or the an agent of the community in the
extent of at administration of local affairs. As
least 51% of such, it acts as a separate entity
its capital acting for its own purposes, and not
stock as a subdivision of the State.
Nature Constituted by law Organized as a
and and possessed of stock or non-
XI. Types of Municipal Corporations
Status substantial control stock
1. De jure municipal corporations:
over its own affairs; corporation
autonomous in the Independent created or recognized by operation of
sense that it is given agency of the law
powers, authority, government 2. Municipal corporations by
responsibilities, and for prescription: exercised their powers
resources administrative from time immemorial with a charter,
purposes. which is presumed to have been lost or
destroyed.
Has corporate 3. Municipal corporation by estoppel: a
powers to be corporation which is so defectively
exercised by formed as not to be a de facto
its board of corporation but is considered a
directors, and
corporation in relation to someone who
has its own
assets and dealt with it and acquiesced in its
liabilities exercise of its corporate functions or
entered into a contract with it.
4. De facto municipal corporations: one
IX. Essential Elements of Municipal existing under a color of authority
Corporation which may be a valid law enacted by
1. Legal creation or incorporation the legislature or an unconstitutional
2. Corporate name by which the entity is law, valid on its face, which has either
known and in which all corporate acts (a) been upheld for a time by the courts
are done or (b) not yet been declared void;
3. Inhabitants provided that a warrant for its creation
4. Territory within which the local can be found in some other valid law or
government exercises civil and in the recognition of its potential
corporate functions existence by the general laws or
constitution of the state.
X. Nature and functions of a Municipal
Corporation
Requisites of de facto corporation:

3
Public Corporation Notes (Atty. Marquez)
1. Valid law authorizing
incorporation
2. Attempt in good faith to organize
under it
3. Colorable compliance with law
4. Assumption of corporate powers
NOTE: Inquiries about the legal existence of a
de facto corporation is reserved to the State in a
proceeding for quo warranto or other direct
proceeding. Where it is neither a corporation de
jure nor de facto, but a nullity, the rule is that its
existence may be, questioned collaterally or
directly in any action or proceeding by anyone
whose rights or interests are affected thereby,
including the citizens of the territory
incorporated unless they are estopped by their
conduct from doing so (Mun. of Malabang,
Lanao del Sur v. Benito, G.R. No. L-28113,
March 28, 1969).
NOTE:
A. The color of authority required for the
organization of a de facto municipal
corporation may be:
1. A valid law enacted by the
legislature.
2. An unconstitutional law, valid on
its face, which has either:
a. Been upheld for a time by the
courts; or
b. Not yet been declared void;
provided that a warrant for its
creation can be found in some
other valid law or in the
recognition of its potential
existence by the general laws
or constitution of the state.
B. There can be no de facto municipal
corporation unless either directly or
potentially, such a de jure corporation
is authorized by some legislative fiat.
C. There can be no color of authority in an
unconstitutional statute alone, the
invalidity of which is apparent on its
face.
D. There can be no de facto corporation
created to take the place of an existing
de jure corporation, as such
organization would clearly be a usurper
(Municipality of Malabang v. Benito)
ZEK NOTES 
XII. Requisites Imposed on the Creation
or Conversion of a Municipal
Corporation
1. Plebiscite requirement – must be
approved by majority of the votes cast in a
plebiscite called for such purpose in the
political unit or units directly affected.
2. Income requirement – must be sufficient
and based on acceptable standards to
provide for all essential government
facilities and services and special functions,
commensurate with the size of its
population as expected by the LGU
concerned.
Average annual income for the last
consecutive year should be at least:
a. Province – 20M
b. Highly Urbanized City – 50M
c. City – 100M (RA 9009, amending
Sec 450 of LGC)
d. Municipality – 2.5M
NOTE: Income under the 1991 LGC
pertains to all funds of the LGU
including the Internal Revenue
Allotment. However, under RA 9009
which deals with the conversion of a
municipality into a component city, the
funds must be internally-generated.
3. Population requirement – determined as
the total number of inhabitants within the
territorial jurisdiction of the LGU
concerned. The required minimum
population shall be:
a. Barangay – 2000
XPN: Barangays located in
i. Metro Manila – 5,000
ii. Highly urbanized cities –
5, 000
b. Municipality – 25, 000
c. City – 150, 000
d. Highly urbanized cities – 200, 000
e. Province – 250, 000
4. Land Requirement – must be contiguous,
unless it is comprised of two or more
islands, or is separated by a LGU
independent to the others. It must be
properly identified by metes and bounds
4
 Public Corporation Notes (Atty. Marquez) ZEK NOTES 

with technical descriptions, and sufficient  Power of creation is legislative in

to provide for such basic services and nature.
facilities. Area requirements are:  A local government unit may be
a. Barangay –may be created out of a created, divided, merged,
contiguous territory (LGC, Sec. abolished, or its boundaries
386) substantially altered EITHER:
b. Municipality – 50 sq. km (LGC, a. By law enacted by Congress in
Sec. 442) the case of provinces, cities,
c. City – 100 sq. km (LGC, Sec. 450) municipalities, and any other
d. Province – 2,000 sq.km. (LGC, political subdivision; OR
Sec. 461) b. By ordinance passed by the
Sangguniang Panlalawigan or
NOTE: Compliance with the
Sangguniang Panlungsod in
following indicators shall be attested
the case of a barangay within
by:
its territorial jurisdiction [Sec.
a. The Department of Finance 6, LGC].
(Income requirement)
NOTE: In the case of creation of barangays
b. NSO (population requirement);
by the Sangguniang Panlalawigan, the
and
recommendation of the Sangguniang
c. The Lands Management Bureau of
Bayan concerned shall be necessary. (Sec.
DENR (Land requirement) [LGC,
385, LGC)
Sec. 7(c)
To whom and what power may be delegated:
Depending on the type of LGU created,
the presence of all the requirements of  To local legislative bodies: “Under its
Population, Land Area, and Income plenary legislative powers, Congress can
may vary (Sections 461, 450, 442, 386, delegate to local legislative bodies the
1991 LGC) power to create local government units,
subject to reasonable standards and
provided no conflict arises with any
Which requirements must be provision of the Constitution” [Sema v.
satisfied: COMELEC, G.R. No. 177597 (2008)].
Barangay Population and Note that it has done so by delegating the
Land Area power to create barangays.
Municipality Income,  Not to the President: The power is
Population, inherently legislative, and to grant the
and Land Area President the power to create or abolish
Province Income and, municipal corporations would allow him to
either
exercise over LGUs the power of control
population or
denied to him by the Constitution [Pelaez v.
LA
City Income and, Auditor General, supra].
either  Power to create provinces cannot be
population or delegated: Section 19, Article VI of RA
LA 9054 is unconstitutional insofar as it grants
Highly Urbanized Population and to the ARMM Regional Assembly the
City income power to create provinces and cities.
Congress’ delegation of the power to create
a province includes the creation of a
legislative district, which is
XIII. Who has the authority to create a
unconstitutional, since legislative districts
municipal corporation
may be created or reapportioned only by an

5
Public Corporation Notes (Atty. Marquez) ZEK NOTES 

Act of Congress [Sema v. COMELEC, Occurs when the Abdication of

supra]. central government political power in
delegates favor of LGUs
XIV. Principle of local autonomy in local administrative declared to be
government units (LGU) powers to political autonomous regions,
 Section 2, Art X, 1987 Constitution subdivisions in order making the latter no
to make it more longer accountable to
and Section 2, LGC.
responsive. the National
 Local autonomy means a more [Limbona v. government, but to
responsive and accountable local Mangellin, supra] its constituency.
government structure instituted [Ganzon v. CA, G.R.
through a system of decentralization. No. 93252 (1991)]
Autonomy does not contemplate
making mini-states out of local
government units, as in the federal Scope of Delegated Power
governments of the USA. Autonomy,  Under the Philippine concept of local
in the constitutional sense, is subject to autonomy, only administrative powers
the guiding star, though not control, of over local affairs are delegated to
the legislature, albeit the legislative political subdivisions. In turn,
responsibility under the Constitution economic, political, and social
and as the “supervision clause” itself developments at the smaller political
suggest, is to wean local government units are expected to propel social and
units from over-dependence on the economic growth and development.
central government. But to enable the country to develop as
 Autonomy, however, is not meant to a whole, the programs and policies
end the relation of partnership and effected locally must be integrated and
interdependence between the central coordinated towards a common
administration and local government national goal
units. Local governments, under the
Constitution, are subject to regulation, Forms of Decentralization
however limited, and for no other
Decentralization Devolution
purpose than precisely, albeit
It is administrative in It connotes political
paradoxically, to enhance self- nature and involves decentralization, or
government (Ganzon v. Court of the transfer of the transfer of
Appeals, G.R. No. 93252, August 5, functions or the powers,
1991). delegation of responsibilities, and
 Decentralization: a decision by the authority and resources for the
central government authorizing its responsibility from performance of
subordinates, whether geographically the national office to certain functions
or functionally defined, to exercise the regional and from the central
authority in certain areas. It involves local office. This is government to the
decision-making by sub-national units. also referred to as local government
administrative units. This is a more
It is typically delegated power, wherein
decentralization. liberal form of
a larger government chooses to
decentralization
delegate certain authority to more local since there is actual
governments. transfer of powers
and responsibilities.
Forms of Local Autonomy

Decentralization of Decentralization of
Administration Power  Devolution: the act by which the
national government confers power
and authority upon the various local

6
Public Corporation Notes (Atty. Marquez) ZEK NOTES 

government units to perform specific units are within the scope of their
functions and responsibilities [Sec. 17, prescribed powers and functions.
LGC]. It aims to grant greater  The Constitution confines the
autonomy to local government units in President's power over local
cognizance of their right to self- governments to one of general
government, to make them self-reliant, supervision.
and to improve their administrative and Power of Supervision Power of Control
technical capabilities
Overseeing; the power Power of an officer to
Consequences of Devolution
or authority of an alter or modify or
1. The devolution shall include the officer to see that nullify or set aside what
transfer to the LGU of the records, subordinate officers a subordinate officer
equipment, and other assets and perform their duties has done in the
personnel of national agencies and performance of his
duties
offices corresponding to the devolved
powers, functions, and responsibilities.
2. Personnel of said national agencies or
offices shall be absorbed by the LGUs
to which they belong or in whose areas If a subordinate fails, If a subordinate fails,
they are assigned to the extent that it is the superior may take the superior may
administratively viable. such action or step as substitute the judgment
prescribed by law to of the latter for that of
3. Regional directors who are career
make them perform the former
executive service officers and other
their duties.
officers of similar rank in the said Supervising officials Officers in control lay
regional offices who cannot be merely see to it that the down the rules in the
absorbed by the LGU shall be retained rules are followed, but performance or
by the national government, without they themselves do not accomplishment of an
any diminution of rank, salary or tenure lay down such rules, act. If these rules are not
[LGC, Sec. 17 (i)] nor do they have the followed, they may, in
discretion to modify or their discretion, order
XV. Dual Personality of LGU replace them. If the the act undone or
 Sec. 15, LGC. Every LGU created rules are not observed, redone by their
under this Code is a body politic and they may order the subordinates or even
work done or redone, decide to do it
corporate. It shall exercise powers
but only to conform to themselves.
both as a political subdivision of the
such rules. They may
National Government, and as a not prescribe their own
corporate entity representing the manner of execution of
inhabitants of its territory. the act.

XVI. Power of supervision by the XVII. Powers of LGU

President over LGU a. Police Power
 Sec. 4, Art. X, 1987 Constitution. - The b. Eminent Domain
President of the Philippines shall c. Taxation
exercise general supervision over local d. Legislative Power
governments. Provinces with respect to
component cities and municipalities, POLICE POWER
and cities and municipalities with  The police power of the LGU is not
respect to component barangays, shall inherent. LGUs exercise the police power
ensure that the acts of their component under the general welfare clause (LGC,
Sec. 16,)

7
Public Corporation Notes (Atty. Marquez)
 LGUs shall exercise powers that are
necessary, appropriate, or incidental for its
efficient and effective governance, and
those which are essential to the promotion
of general welfare. Within their respective
territorial jurisdiction, LGUs 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 its residents, maintain peace and
order, and preserve the comfort and
convenience of their inhabitance (R.A.
7160, Sec. 16)
 The police power of a municipal
corporation extends to all great public
needs, and includes all legislation and
functions of the municipal government.
The drift is towards social welfare
legislation geared towards state policies to
provide adequate social services, the
promotion of general welfare, and social
justice.
Two branches of the GWC
1. General Legislative Power:
Authorizes the municipal council
to enact ordinances and make
regulations not repugnant to law, as
may be necessary to carry into
effect and discharge the powers
and duties conferred upon the
municipal council by law.
2. Police Power Proper: Authorizes
the municipality to enact
ordinances as may be necessary
and proper for the health and
safety, prosperity, morals, peace,
good order, comfort, and
convenience of the municipality
and its inhabitants, and for the
protection of their proper
Requisites/Limitations of the proper exercise
of police power:
ZEK NOTES 
1. The interests of the public generally, as
distinguished from those of a particular
class, require the interference of the
state(Equal Protection Clause)
2. The means employed are reasonably
necessary for the attainment of the
object sought to be accomplished and
not duly oppressive(Due Process
Clause)
3. Exercisable only within the territorial
limits of the LGU, except for protection
of water supply (LGC, Sec. 16)
4. Must not be contrary to the
Constitution and the laws.
NOTE: There must be a concurrence of a
lawful subject and lawful method (Lucena
Grand Central v. JAC, G.R. No. 148339
February 23, 2005)
Two-Pronged Test for an Ordinance to
be Considered a Valid Police Power
Measure [Mosqueda v. Pilipino Banana
Growers & Exporters Association, Inc.,
G.R. No. 189185 (2016)]
a. Formal
i. Enacted within the corporate
powers of the local
government unit, and
ii. Passed according to procedure
prescribed by law
b. Substantive
i. It must not contravene the
Constitution or any statute;
ii. It must be fair, not oppressive;
iii. It must not be partial or
discriminatory;
iv. It must not prohibit but may
regulate trade;
v. It must be general and
consistent with public policy
vi. It must not be unreasonable
EMINENT DOMAIN
 Nature: It is the government's right to
appropriate, in the nature of a
compulsory sale to the State, private
property for public use or purpose.
Inherently possessed by the national
8
Public Corporation Notes (Atty. Marquez)
legislature, the power of eminent
domain may be validly delegated to
local governments, other public entities
and public utilities.
 The power of eminent domain is one of
the fundamental powers of the state.
Simply put, it is the power of the State
to take private property for public use,
purpose, or welfare upon payment of
just compensation.
 Local government units have no
inherent power of eminent domain.
Local governments can exercise such
power only when expressly authorized
by the Legislature. By virtue of the
Local Government Code, Congress
conferred upon local government units
the power to expropriate.
 NOTE: LGUs may, through its local
chief executive and acting pursuant to
an ordinance, exercise 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 (LGC,
Sec. 19)
Requisites for the valid exercise of the
power of eminent domain
1. An Ordinance is enacted by the local
legislative council authorizing the local
chief executive, in behalf of the LGU,
to exercise the power of eminent
domain or pursue expropriation
proceeding over a particular private
property.
2. It must be for Public use, purpose, or
welfare or for the benefit of the poor or
landless
3. There must be payment of just
Compensation.
4. A valid and definite Offer has been
previously made to the owner of the
property sought to be expropriated, but
said offer was not accepted.
Eminent Domain under the Constitution v.
LGC
 The right of expropriation is not
inherent in a municipal corporation.
ZEK NOTES 
When it attempts to expropriate private
property and the owner makes an
objection, the courts have the authority
to decide the question of genuine
necessity. Upon the other hand,
Congress may directly determine the
necessity for appropriating private
property, which is a political question
which the courts cannot resolve (City
of Manila v. Chinese Community, G.R.
No. L-14355, October 31, 1919).
 Private property already devoted to
public use can still be a subject of
expropriation by Congress but not by
LGUs.
TAXATION
 Nature: The power to tax is primarily
vested in the Congress; however, in our
jurisdiction, it may be exercised by
local legislative bodies, no longer
merely by virtue of a valid delegation
as before, but pursuant to direct
authority conferred by Section 5,
Article V of the 1987 Constitution. The
exercise of the power may be subject to
such guidelines and limitations as the
Congress may provide which,
however, must be consistent with the
basic policy of local autonomy.
 Sec. 5, Art. X, 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 shall accrue
exclusively to the local governments.
Requirements for a valid tax ordinance
1. The tax is for a public purpose;
2. The rule on uniformity of taxation is
observed;
3. Either the person or property taxed is
within the jurisdiction of the
government levying the tax; and
4. In the assessment and collection of
certain kinds of taxes, notice and
9
Public Corporation Notes (Atty. Marquez)
opportunity for hearing are provided
(Pepsi-Cola Bottling Co. v.
Municipality of Tanauan, G.R. No. L-
31156, February 27, 1976).
CASE DIGESTS:
1. Alvarez v. Guingona, G.R. No. 118303,
January 31, 1996
Facts: Petitioners assail the validity of
Republic Act No. 7720, entitled, "An Act
Converting the Municipality of Santiago,
Isabela into an Independent Component City to
be known as the City of Santiago," mainly
because the Act allegedly did not originate
exclusively in the House of Representatives as
mandated by Section 24, Article VI of the 1987
Constitution. Also, petitioners claim that the
Municipality of Santiago has not met the
minimum average annual income required
under Section 450 of the Local Government
Code of 1991 in order to be converted into a
component city.
Issues: (a) WON Internal Revenue Allotment is
to be included in the computation of the average
annual income for purposes of conversion, and
(b) WON RA 7720 is valid even when what is
passed is SB No. 1243, senate’s version of HB
8817?
HELD:
a. YES. It is true that for a municipality to be
converted into a component city, it must,
among others, have an average annual
income of at least Twenty Million Pesos for
the last two (2) consecutive years based on
1991 constant prices. Such income must be
duly certified by the Department of
Finance. The IRAs are items of income
because they form part of the gross
accretion of the funds of the local
government unit. The IRAs regularly and
automatically accrue to the local treasury
without need of any further action on the
part of the local government unit.
Furthermore, Section 450 (c) of the Local
Government Code provides that "the
average annual income shall include the
income accruing to the general fund,
ZEK NOTES 
exclusive of special funds, transfers, and
non-recurring income.’ Lastly, the DO of
DOF including IRA in the definition of
Annual Income constitutes
contemporaneous construction of a statute
by an administrative agency charged with
the task of interpreting and applying the
same, is entitled to full respect and should
be accorded great weight by the courts,
unless such construction is clearly shown to
be in sharp conflict with the Constitution,
the governing statute, or other laws.
b. YES. There was compliance with Section
24, Article VI of the 1987 Constitution.
What the Constitution simply means is that
the initiative for filing revenue, tariff, or tax
bills, bills authorizing an increase of the
public debt, private bills and bills of local
application must come from the HoR. The
Constitution does not prohibit the filing in
the Senate of a substitute bill in anticipation
of its receipt of the bill from the House, so
long as action by the Senate as a body is
withheld pending receipt of the House Bill.
As held in Tolentino v. Secretary of
Finance, it is not the law – but the bill –
which is required by the Consti to originate
exclusively from the HoR. It is important to
emphasize this, because a bill originating in
the House may undergo such extensive
changes in the Senate that the result may be
a rewriting of the whole. . . . as a result of
the Senate action, a distinct bill may be
produced.
2. PNCC v. Ernesto Pabion, G.R. No.
131715, December 8, 1999
Facts: Respondents, claiming to be
stockholders of the PNCC, filed with SEC a
petition alleging that for a period of 12 years,
there has been no stockholders meeting of the
PNCC to elect the corporation’s BOD, thus
enabling the incumbent directors to hold on to
their position beyond the 1-year term, in
violation of PNCCs By-Laws and the
Corporation Code. On the other hand, PNCC
claimed that it is a GOCC boverned by AO No.
59, issued by Pres Aquino, in which the latter
has the power to appoint the BOD.
10
Public Corporation Notes (Atty. Marquez)
SEC: PNCC, being incorporated under the
Corporation Code, is, therefore, subject to
Section 50 of the Corporation Code which
requires the holding of regular stockholders
meeting for the purpose of selecting PNCCs
Board of Directors. PNCC is an acquired asset
corporation (there was a debt-to-equity
conversion of PNCC’s obligations to several
GFIs; hence “acquired”) which, by express
provision of Section 2 of AO No. 59, is not
considered as a GOCC.
CA: Upheld SEC, and held that PNCC, though
majority-owned by government financial
institutions (GFIs), retained its character as a
private corporation. As such, PNCC was
required under the Corporation Code to hold
regular shareholders meetings to elect its board
of directors.
ISSUES: WON (a) SEC can determine the
corporate status of PNCC, (b) SEC has
jurisdiction over GOCCs, (c) PNCC is an
acquired asset corporation, and (d)
Inconsistency between AO 59 and RAC?
HELD:
a. YES. It is certainly absurd to say that SEC
is without jurisdiction to determine if
PNCC is a GOCC simply because the latter
claims to be one. The President does not
determine whether a corporation is a
GOCC or not. It is the law that does.
PNCCs status as a GOCC can be ruled upon
by SEC -- as well as by other competent
authorities for that matter -- based on law,
specifically the Revised Administrative
Code of 1987. The SEC has competence to
distinguish. Whether the finding of SEC is
correct would be an altogether different
matter.
b. IT DEPENDS. GOCCs may either be (1)
with original charter or created by special
law; or (2) incorporated under general law,
via either the Old Corporation Code or the
New Corporation Code. SEC has no
jurisdiction over the first type because they
are governed by their charters, but the
Corporation Code applies suppletorily. On
the other hand, SEC can exercise
jurisdiction over GOCCs established under
ZEK NOTES 
the Corporation Code. These GOCCs are
regarded as private corporations despite
common misconceptions. That the
government may own the controlling
shares in the corporation does not diminish
the fact that the latter owes its existence to
the Corporation Code. More pointedly,
Section 143 of the Corporation Code gives
SEC the authority/jurisdiction.
c. YES. PNCC is an AAC. there are two kinds
of acquired asset corporations: one, a
corporation which is under private
ownership, the voting or outstanding shares
of which were either conveyed to the
government or to a government agency,
instrumentality or corporation in
satisfaction of debts whether by foreclosure
or otherwise, or were duly acquired by the
government in a sequestration proceeding;
and two, a corporation which is a subsidiary
of a government entity organized
exclusively to own and manage or lease or
operate specific physical assets acquired by
a government financial institution in
satisfaction of debts incurred therewith.
Both are required by law to be privatized
within a specified period. Reading these
sections together, it becomes evident that
an acquired asset corporation is singled out
for eventual disposition to the private sector
or, failing in that, for dissolution.
d. NO. AO 59 does not purport to have
established a new kind of corporation that
supersedes EO 292. Neither does the
former seek to revise the definition of
"GOCC" given in the latter. What AO 59 in
fact does is to distinguish GOCCs in
general from those that are sought to be
privatized. In fact, the definition given in
EO 292 itself states that the GOCCs may be
further categorized. This caveat suggests
that the definition is broad enough to admit
distinctions as to the kinds of GOCCs
defined under AO 59. Thus, contrary to
respondents’ assertion that PNCC is not a
GOCC, we hold that it may be deemed so
under EO 292. However, FOR PURPOSES
of AO 59 (only), particularly in the
application of Section 16 thereof, PNCC is
an acquired asset corporation. It should be
emphasized that an acquired asset
11
Public Corporation Notes (Atty. Marquez)
corporation is a GOCC set to be privatized
pursuant to the government’s policy
3. Unson v. Hon. Arsenio Lacson, G.R. No.
L-7909, Jan. 18, 1957
FACTS: The Mayor of the City of Manila and
Genato Commercial Corp entered into a
contract of lease for a part of “Callejon del
Carmen” via a municipal ordinance. Petitioner
Unson, is an owner of a lot in the said area,
whose lot has been leased to the Nat Gov for
use by the Mapa HS. The Municipal Board of
Manila passed Ordinance No. 3470 leasing to
Genato the Norther part of CdC. Genato then
constructed a building on said portion, which
resulted to the closure of the 2 exits/streets
between the Northern CdC and Unson’s lot
which were utilized for public use as thorough
fare.
ISSUE: WON the City of Manila has the power
to close the streets?
HELD: NO. The power to construct an alley
does not confer the authority to close it.
Municipal corporations are mere creatures of
Congress, such that they may only exercise
such power as Congress may deem fit. By
specific provision of the New Charter of City of
Manila (Sec 18(x) of RA 409), the Municipal
Board of Manila only has the authority to
establish and maintain municipal roads, streets,
alleys, etc. [no mention authorizing to close it].
In contrast, Section 2246 of the RAC vested to
municipal councils of regular organized
municipalities the “power to close” subject to
the approval of Department Heads. The express
grant of such power to the aforementioned
municipalities and the absence of said grant to
the City of Manila lead to no other conclusion
than that the power was intended to be withheld
from the latter.
Furthermore, the authority of local
governments to enact municipal ordinances is
subject to the general limitation that the same
shall not be "repugnant to law." The ordinance
and the contract of lease under consideration
are inconsistent with Article 638 of the Civ
Code, which provides that banks of rivers and
streams, even in case of private ownership, are
ZEK NOTES 
subject throughout their entire length and
within a zone of 3 meters along their margins,
to the easement for public use in the general
interest of navigation, floatage, fishing, and
salvage.
Obviously, the building constructed by Genato
on the portion of Callejon del Carmen in
dispute renders it impossible for the public to
use the zone of three meters along the Northern
margin of the Estero de San Sebastian for the
purposes set forth in said Article 638.
Lastly, Properties devoted to public use, such as
public streets, alleys and parks are presumed to
belong to the State. Municipal corporations
may not acquire the same, as patrimonial
property, without a grant from the National
Government, the title of which may not be
divested by prescription
4. League of Cities of the Philippines (LCP)
v. COMELEC, G.R. No. 176951, April
13, 2011
FACTS: Petitioners anchor their Ad Cautelam
Motion for Reconsideration upon the
primordial ground that the Court could no
longer modify, alter, or amend its judgment
declaring the 16 Cityhood Laws
unconstitutional due to such judgment having
long become final and executory. They submit
that the Cityhood Laws violated Section 6 and
Section 10 of Article X of the Constitution, as
well as the Equal Protection Clause.
[BACKGROUND, Nov 2008 Case] During the
12th Congress, Congress enacted into law RA
9009 which took effect on June 30, 2001,
amending Section 450 of the LGC by
increasing the annual income requirement for
conversion of a municipality to city from 20M
to 100M. However, there were pending
cityhood bills before the enactment/effectivity
of RA 9009 , but were not timely acted upon by
their respective congress. After the effectivity
of RA 9009, or in 2007, Congress enacted 16
Cityhood Laws (which were part of those
pending cityhood bills) containing a common
provision exempting them from the 100M
income requirement in RA 9009. But, in 2008,
the SC declared the 16 Cityhood Laws as
12
Public Corporation Notes (Atty. Marquez)
unconstitutional for violating the Equal
Protection Clause and Sec 6 (fair distribution of
national taxes) and Sec. 10 (uniform criteria
established in the LGC), Art X, of the
Constitution.
ISSUE: WON the Cityhood Laws are
unconstitutional?
HELD: NO. The 16 Cityhood Laws are
constitutional. Their viabilities as component
cities also entitle them to their just share in the
IRA allocation for cities, which they previously
had to share the IRA with about 1,500
municipalities. With their conversion into
component cities, they will have to share with
only around 120 cities.
The previous income requirement of ₱20
million was definitely not insufficient to
provide the essential government facilities,
services, and special functions vis-à-vis the
population of a component city. We also
stressed that the increased income requirement
of ₱100 million was not the only conclusive
indicator for any municipality to survive and
remain viable as a component city. These
observations were unerringly reflected in the
respective incomes of the fifty-nine (59)
members of the League of Cities that have still
failed, remarkably enough, to be compliant
with the new requirement of the ₱100 million
threshold income five years after R.A. No. 9009
became law.
Undoubtedly, the imposition of the income
requirement of ₱100 million from local sources
under R.A. No. 9009 was arbitrary. When the
sponsor of the law chose the specific figure of
₱100 million, no research or empirical data
buttressed the figure. Nor was there proof that
the proposal took into account the after-effects
that were likely to arise. As already mentioned,
even the danger the passage of R.A. No. 9009
sought to prevent might soon become a reality.
While the Constitution mandates that the
creation of local government units must comply
with the criteria laid down in the LGC, it cannot
be justified to insist that the Constitution must
have to yield to every amendment to the LGC
despite such amendment imminently producing
effects contrary to the original thrusts of the
ZEK NOTES 
LGC to promote autonomy, decentralization,
countryside development, and the concomitant
national growth.
We should not ever lose sight of the fact that 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.
5. City of Manila v. IAC, G.R. No. 71159,
November 15, 1989
FACTS: The deceased husband of Irene Sto.
Domingo was buried in Lot No. 159 in North
Cementery, pursuant for a leased agreement
between Irene and City of Manila for the period
of 50 years (1971-2021) as evidenced by a
stamped receipt. However, the subject lot was
certified ready for exhumation by the City on
1978, and was thereafter rented to another
lessee. When respondents went to the said Lot
on All Souls Day, they were shocked and
dismayed when they found that her husband’s
remains were exhumed and the subject lot were
rented to another lessee without their
permission and in contravention of their
contract.
ISSUE: WON the City of Manila can be held
liable for damages?
HELD: YES. Under Philippine laws, the City
of Manila is a political body corporate and as
such endowed with the faculties of municipal
corporations to be exercised by and through its
city government in conformity with law, and in
its proper corporate name. It may sue and be
sued, and contract and be contracted with. Its
powers are twofold in character-public,
governmental or political on the one hand, and
corporate, private and proprietary on the other.
Governmental powers are those exercised in
administering the powers of the state and
promoting the public welfare and they include
the legislative, judicial, public and political.
Municipal powers on the one hand are
exercised for the special benefit and advantage
13
Public Corporation Notes (Atty. Marquez)
of the community and include those which are
ministerial, private and corporate.
It has been declared by the Court before that
with respect to the proprietary functions, the
settled rule is that a municipal corporation can
be held liable to third persons ex contractu.
Under the foregoing considerations and in the
absence of a special law, the North Cemetery is
a patrimonial property of the City of Manila.
The administration and government of the
cemetery are under the City Health Officer the
order and police of the cemetery, the opening of
graves, niches, or tombs, the exhuming of
remains, and the purification of the same are
under the charge and responsibility of the
superintendent of the cemetery. The City of
Manila furthermore prescribes the procedure
and guidelines for the use and dispositions of
burial lots and plots within the North Cemetery
through Administrative Order No. 5, s. 1975
With the acts of dominion, there is, therefore no
doubt that the North Cemetery is within the
class of property which the City of Manila owns
in its proprietary or private character.
Furthermore, there is no dispute that the burial
lot was leased in favor of the private
respondents. Hence, obligations arising from
contracts have the force of law between the
contracting parties. Thus a lease contract
executed by the lessor and lessee remains as the
law between them.
6. Kida v. Senate, G.R. No. 196271, Feb. 28,
2012
FACTS: On June 30, 2011, RA 10153 was
enacted. The law reset the ARMM elections
from the 8th of August 2011, to the 2nd Monday
of May 2013 and every 3 years thereafter, to
coincide with the country’s regular national and
local elections. Petitioners challenge the
constitutionality of the law alleging that it did
not comply with the plebiscite requirement and
the supermajority vote prescribed under Section
1 and 3, Art. XVII of RA RA 9054 (which
refined the original organic act of ARMM), and
the 3-reading requirement of Sec 26(2), Art. VI,
of the Constitution.
ZEK NOTES 
ISSUE: WON (a) the law is unconstitutional,
(b) the Synchronization mandate includes
ARMM elections, and (c) the appointment
power of the President exceed its supervisory
powers of the autonomous regions??
HELD:
a. NO. The supermajority vote and the
plebiscite requirements were only required
by RA 9054 when amending or revising the
Organic Act. However, RA 10151 (nor RA
9333) did not amend RA 9054 because it
did not change or revise any provision in
the previous law, but it merely filled in a
gap in RA 9054. RA 9054 provides only for
the first ARMM elections, but did not fix
the date of the regular elections thereafter.
Furthermore, even assuming that RA 9333
and RA 10153 did in fact amend RA 9054,
the supermajority (2/3) voting [separately]
requirement has to be struck down for
giving the latter the character of an
irrepealable law by requiring more than
what the Constitution demands. Sec 16(2),
Art VI only requires that a “majority of
each House shall constitute a quorum to do
business.” Within a quorum, a vote of
majority is generally sufficient to enact
laws or approve acts. Thus, hile a
supermajority is not a total ban against a
repeal, it is a limitation in excess of what
the Constitution requires on the passage of
bills and is constitutionally obnoxious
because it significantly constricts the future
legislators' room for action and flexibility.
Section 18, Article X of the Constitution
plainly states that "The creation of the
autonomous region shall be effective when
approved by the majority of the votes case
by the constituent units in a plebiscite
called for the purpose." With these
wordings as standard, we interpret the
requirement to mean that only amendments
to, or revisions of, the Organic Act
constitutionally-essential to the creation of
autonomous regions - i.e., those aspects
specifically mentioned in the Constitution
which Congress must provide for in the
Organic Act - require ratification through a
14
Public Corporation Notes (Atty. Marquez)
plebiscite. These amendments to the
Organic Act are those that relate to: (a) the
basic structure of the regional government;
(b) the region's judicial system, i.e., the
special courts with personal, family, and
property law jurisdiction; and, (c) the grant
and extent of the legislative powers
constitutionally conceded to the regional
government under Section 20, Article X of
the Constitution. The change of date of the
ARMM elections is not a substantial
amendment which would require
compliance with these requirements.
b. YES, the Constitution mandates the
synchronization of national and local
elections. While the Constitution does not
expressly instruct Congress to synchronize
the national and local elections, the
intention can be inferred from the following
provisions of the Transitory Provisions
(Article XVIII) of the Constitution.
The inclusion of autonomous regions in the
enumeration of political subdivisions of the
State under the heading "Local
Government" indicates quite clearly the
constitutional intent to consider
autonomous regions as one of the forms of
local governments.
That the Constitution mentions only the
"national government" and the "local
governments," and does not make a
distinction between the "local government"
and the "regional government," is
particularly revealing, betraying as it does
the intention of the framers of the
Constitution to consider the autonomous
regions not as separate forms of
government, but as political units which,
while having more powers and attributes
than other local government units, still
remain under the category of local
governments. Since autonomous regions
are classified as local governments, it
follows that elections held in autonomous
regions are also considered as local
elections.
ZEK NOTES 
To be sure, the fact that the ARMM
possesses more powers than other
provinces, cities, or municipalities is not
enough reason to treat the ARMM regional
elections differently from the other local
elections. Ubi lex non distinguit nec nos
distinguire debemus. When the law does
not distinguish, we must not distinguish.
c. NO. The second sentence of Section 16,
Art VII of the Constitution acts as the
"catch-all provision" for the President’s
appointment power, in recognition of the
fact that the power to appoint is essentially
executive in nature. The wide latitude given
to the President to appoint is further
demonstrated by the recognition of the
President’s power to appoint officials
whose appointments are not even provided
for by law. In other words, where there are
offices which have to be filled, but the law
does not provide the process for filling
them, the Constitution recognizes the
power of the President to fill the office by
appointment. There is no incompatibility
between the President’s power of
supervision over local governments and
autonomous regions, and the power granted
to the President, within the specific
confines of RA No. 10153, to appoint
OICs.
The power of supervision is defined as "the
power of a superior officer to see to it that
lower officers perform their functions in
accordance with law." This is distinguished
from the power of control or "the power of
an officer to alter or modify or set aside
what a subordinate officer had done in the
performance of his duties and to substitute
the judgment of the former for the latter."
The petitioners’ apprehension regarding
the President’s alleged power of control
over the OICs is rooted in their belief that
the President’s appointment power
includes the power to remove these
officials at will. In this way, the petitioners
foresee that the appointed OICs will be
beholden to the President, and act as
representatives of the President and not of
the people. However, this is contradicted by
15
Public Corporation Notes (Atty. Marquez)
Sec 3 of RA 10153, which provides that
once the President has appointed the OICs
for the offices of the Governor, Vice
Governor and members of the Regional
Legislative Assembly, these same officials
will remain in office until they are replaced
by the duly elected officials in the May
2013 elections. Nothing in this provision
even hints that the President has the power
to recall the appointments he already made.
Clearly, the petitioners’ fears in this regard
are more apparent than real.
7. Fernando v. St, Scholastica’s College,
G.R. No. 161107, March 12, 2013
FACTS: Respondent SSC is the owner of 4
parcels of land measuring a total of 56,306.80
square meters located in Marikina Heights. On
Sep 30, 1994, the SP of Marakina City enacted
Ordinance No. 192, Section 3.1 of which
provides for a standard height of fences on the
front yard of no more than 1 meter in height
(fences in excess shall be of an open type fence,
at least 80% see-thru) and Section 5 of which
requires that no fences shall be built within 5
meter parking area allowance between
commercial, industrial, educational, and
religious establishments. Thereafter, the City
Government sent a letter ordering respondents
to demolish and replace their fence in
compliance of the Ordinance. Respondents
argued that petitioners were acting in excess of
their jurisdiction, asserting that the demolishing
their fence and constructing it 6 meters back
would result in the loss of at least 1,808.34 sq
m along West Drive, and at least 1, 954.02 sq
m along the East Drive; and the destruction of
several structures within their compound. The
respondents, thus, asserted that the
implementation of the ordinance on their
property would be tantamount to an
appropriation of property without due process
of law, but petitioners argue that the ordinance
is a valid exercise of police power. [Reason for
enactment of ordinance: beautification and
deterrence of lawlessness activities like
burglary.
ISSUE: WON Sections 3.1 and 5 of Ordinance
No. 192 are valid exercises of police power?
ZEK NOTES 
HELD: NO. "Police power is the plenary
power vested in the legislature to make statutes
and ordinances to promote the health, morals,
peace, education, good order or safety and
general welfare of the people." The State,
through the legislature, has delegated the
exercise of police power to local government
units, as agencies of the State. This delegation
of police power is embodied in Section 16 of
the Local Government Code of 1991 (R.A. No.
7160), known as the General Welfare Clause,
which has two branches. "The first, known as
the general legislative power, authorizes the
municipal council to enact ordinances and
make regulations not repugnant to law, as may
be necessary to carry into effect and discharge
the powers and duties conferred upon the
municipal council by law. The second, known
as the police power proper, authorizes the
municipality to enact ordinances as may be
necessary and proper for the health and safety,
prosperity, morals, peace, good order, comfort,
and convenience of the municipality and its
inhabitants, and for the protection of their
property."
The test of valid ordinance is well-established.
For an ordinance to be valid, it must not only be
within the corporate powers of the local
government unit to enact and pass according to
the procedure prescribed by law, it must also
conform to the following substantive
requirements:
1. Must not contravene the Constitution
or any statute
2. Must not be unfair or oppressive
3. Must not be partial or discriminatory
4. Must not prohibit but may regulate
trade
5. Must be general and consistent with
public policy
6. Must not be unreasonable.
To successfully invoke the exercise of police
power as the rationale for the enactment of an
ordinance and to free it from the imputation of
constitutional infirmity, two tests have been
used by the Court – the rational relationship test
and the strict scrutiny test, as held: “We
ourselves have often applied the rational basis
test mainly in analysis of equal protection
16
Public Corporation Notes (Atty. Marquez)
challenges. Using the rational basis
examination, laws or ordinances are upheld if
they rationally further a legitimate
governmental interest. Under intermediate
review, governmental interest is extensively
examined and the availability of less restrictive
measures is considered. Applying strict
scrutiny, the focus is on the presence of
compelling, rather than substantial,
governmental interest and on the absence of
less restrictive means for achieving that
interest.”
Under the rational relationship test, an
ordinance must pass the following requisites:
(1) the interests of the public generally, as
distinguished from those of a particular class,
require its exercise, and (2) the means
employed are reasonably necessary for the
accomplishment of the purpose and not unduly
oppressive upon individuals. In short, there
must be a concurrence of a lawful subject and
lawful method.
Lacking a concurrence of these two requisites,
the police power measure shall be struck down
as an arbitrary intrusion into private rights and
a violation of the due process clause.
Furthermore, the Court joins the CA in finding
that the real intent of the setback requirement
was to make the parking space free for use by
the public, considering that it would no longer
be for the exclusive use of the respondents as it
would also be available for use by the general
public. Section 9 of Article III of the 1987
Constitution, a provision on eminent domain,
provides that private property shall not be taken
for public use without just compensation. The
petitioners cannot justify the setback by arguing
that the ownership of the property will continue
to remain with the respondents. It is a settled
rule that neither the acquisition of title nor the
total destruction of value is essential to taking.
In fact, it is usually in cases where the title
remains with the private owner that inquiry
should be made to determine whether the
impairment of a property is merely regulated or
amounts to a compensable taking. The Court is
of the view that the implementation of the
setback requirement would be tantamount to a
taking of a total of 3,762.36 square meters of
ZEK NOTES 
the respondents’ private property for public use
without just compensation, in contravention to
the Constitution.
As to the beautification purpose of the assailed
ordinance, as previously discussed, the State
may not, under the guise of police power,
infringe on private rights solely for the sake of
the aesthetic appearance of the community.
Similarly, the Court cannot perceive how a see-
thru fence will foster "neighborliness" between
members of a community.
8. Mosqueda v. Pilipio Banana Growers &
Exporters Assoc. G.R. No. 189185 &
189305, August 16, 2016
FACTS: After several committee hearings and
consultations with various stakeholders, the
Sangguniang Panlungsod of Davao City
enacted Ordinance No. 0309, Series of 2007, to
impose a ban against aerial spraying as an
agricultural practice by all agricultural entities
within Davao City. It also required for the
identification of a 30-meter Buffer Zone within
and around agricultural plantations to minimize
or avoid harm to the environment and
inhabitants, brought by aerial spraying. The
PBGEA alleged that the ordinance exemplified
the unreasonable exercise of police power,
violated the EPC, amounted to the confiscation
of property without due process of law, and
lacked publication pursuant to Sec 511 of the
LGC. Lastly, the effectivity of the ban within 3
months after publication is not adequate to shift
from aerial to truck-mounted boom spraying,
thereby depriving them of efficient means to
combat the Black Sigatoka Disease. [Reasons
for the enactment of ordinance: prevent the
exposure of residents to a higher degree of
health risk caused by aerial drift, and protection
of environment against the harmful effects of
aerial spraying]
ISSUES: WON (a) the City Gov has the
authority to enact the said ordinance, (b) the
ordinance is valid, and (c) the requirements of
the ordinance amounted to confiscation of
property,
HELD:
17
Public Corporation Notes (Atty. Marquez)
a. YES. The Local Government has the
authority to enact the ordinance pursuant to
its corporate powers provided in Sections
16 and 468 of the LGC.
To be considered as a valid police power
measure, an ordinance must pass a two-
pronged test: the formal (i.e., whether the
ordinance is enacted within the corporate
powers of the local government unit, and
whether it is passed in accordance with the
procedure prescribed by law); and the
substantive (i.e., involving inherent merit,
like the conformity of the ordinance with
the limitations under the Constitution and
the statutes, as well as with the
requirements of fairness and reason, and its
consistency with public policy).
The corporate powers of the local
government unit confer the basic authority
to enact legislation that may interfere with
personal liberty, property, lawful
businesses and occupations in order to
promote the general welfare (from Sec 16.
General Welfare Clause of the LGC).
Section 16 comprehends two branches of
delegated powers, namely: the general
legislative power and the police power
proper. General legislative power refers to
the power delegated by Congress to the
local legislative body, or the Sangguniang
Panlungsod in the case of Dayao City, to
enable the local legislative body to enact
ordinances and make regulations. This
power is limited in that the enacted
ordinances must not be repugnant to law,
and the power must be exercised to
effectuate and discharge the powers and
duties legally conferred to the local
legislative body. The police power proper,
on the other hand, authorizes the local
government unit to enact ordinances
necessary and proper for the health and
safety, prosperity, morals, peace, good
order, comfort, and convenience of the
local government unit and its constituents,
and for the protection of their property.
ZEK NOTES 
b. NO. Notwithstanding the authority of the
City Gov to enact the said ordinance, the
latter must still be struck down for being
invalid.
A valid ordinance must not only be enacted
within the corporate powers of the local
government and passed according to the
procedure prescribed by law. In order to
declare it as a valid piece of local
legislation, it must also comply with the
following substantive requirements,
namely: (1) it must not contravene the
Constitution or any statute; (2) it must be
fair, not oppressive; (3) it must not be
partial or discriminatory; (4) it must not
prohibit but may regulate trade; (5) it must
be general and consistent with public
policy; and (6) it must not be unreasonable.
In the State's exercise of police power, the
property rights of individuals may be
subjected to restraints and burdens in order
to fulfill the objectives of the Government.
A local government unit is considered to
have properly exercised its police powers
only if it satisfies the following requisites,
to wit: (1) the interests of the public
generally, as distinguished from those of a
particular class, require the interference of
the State; and (2) the means employed are
reasonably necessary for the attainment of
the object sought to be accomplished and
not unduly oppressive. The first
requirement refers to the Equal Protection
Clause of the Constitution; the second, to
the Due Process Clause of the Constitution.
Requiring the respondents and other
affected individuals to comply with the
consequences of the ban within the three-
month period under pain of penalty like
fine, imprisonment and even cancellation
of business permits would definitely be
oppressive as to constitute abuse of police
power. The impossibility of carrying out a
shift to another mode of pesticide
application within three months can readily
be appreciated given the vast area of the
affected plantations and the corresponding
resources required therefor. To recall, even
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Public Corporation Notes (Atty. Marquez)
the RTC recognized the impracticality of
attaining a full-shift to other modes of
spraying within three months in view of the
costly financial and civil works required for
the conversion.
c. NO. In City of Manila v. Laguio, Jr., we
have thoroughly explained that taking only
becomes confiscatory if it substantially
divests the owner of the beneficial use of its
property. The establishment of the buffer
zone is required for the purpose of
minimizing the effects of aerial spraying
within and near the plantations. Although
Section 3(e) of the ordinance requires the
planting of diversified trees within the
identified buffer zone, the requirement
cannot be construed and deemed as
confiscatory requiring payment of just
compensation. A landowner may only be
entitled to compensation if the taking
amounts to a permanent denial of all
economically beneficial or productive uses
of the land. The respondents cannot be said
to be permanently and completely deprived
of their landholdings because they can still
cultivate or make other productive uses of
the areas to be identified as the buffer
zones.
9. Tayaban v. People, G.R. No. 150194,
March 7, 2007
FACTS: Mayor Tayaban submitted a project
proposal to the provincial governor for the
construction of the Tinoc Public Market, which
was then funded by the Cordillera Executive
Board. In a public bidding, private complainant
Pugong won the contract for the construction of
the said public market. However, on August
1989, the SB of Tinoc adopted Resol No. 20
providing for the demolition of the construction
site because it was constructed on a site
different from that identified by the
municipality. On that same day the resol was
passed, Tayaban and his co-petitioners
proceeded to the construction site and
demolished the structures therein. Petitioners
were charged and convicted by the
Sandiganbayan for violating Section 3€ of RA
3019.
ZEK NOTES 
ISSUES: (a) WON the resol was subject to
review by the SP of the component city as
provided by the LGC of 1991, and (b) WON the
demolition was a valid exercise of police
power?
HELD:
a. NO. The Court agrees with the petitioners
and the OSG that Sections 56 and 59(a) of
the 1991 LGC (R.A. No. 7160) are not
applicable in the present case. The
Sangguniang Bayan of Tinoc enacted the
questioned resolution on August 15, 1989,
more than two years before the effectivity
of the said Code. The prevailing law at that
time was the Local Government Code of
1983 (B.P. Blg. 337). The Court agrees
with the OSG that Sections 56 and 59(a) of
the 1991 LGC have no similar or
counterpart provisions in the 1983 LGC. In
addition, the Court agrees with petitioners
that Sections 56 and 59(a) of the 1991 LGC
find no application in the present case
because these provisions refer, specifically,
to ordinances and resolutions approving the
local development plans and public
investment programs formulated by the
local development council. However, the
demolition was still not legally permissible
because there was no proof that respondent
did not secure a building permit. The
reliance on the National Building Code was
a mere afterthought.
b. NO, the Court is not persuaded by
petitioners' contention that the subject
demolition is a valid exercise of police
power. The exercise of police power by the
local government is valid unless it
contravenes the fundamental law of the
land, or an act of the legislature, or unless it
is against public policy, or is unreasonable,
oppressive, partial, discriminating, or in
derogation of a common right. In the
present case, the acts of petitioner have
been established as a violation of law,
particularly of the provisions of Section
3(e) of R.A. No. 3019.
Neither can petitioners seek cover under the
general welfare clause authorizing the
abatement of nuisances without judicial
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Public Corporation Notes (Atty. Marquez)
proceedings. This principle applies to
nuisances per se, or those which affect the
immediate safety of persons and property
and may be summarily abated under the
undefined law of necessity. Petitioners
claim that the public market would pose
danger to the safety and health of
schoolchildren if it were built on the place
being contested. However, petitioners
never made known their supposed concerns
either to the Governor or to the CEB.
Instead, they took the law into their own
hands and precipitately demolished the
subject structures that were built without
the benefit of any hearing or consultation
with the proper authority, which in this case
is the CEB.
10. Aquino v. Municipality of Malay, Aklan,
G.R. No. 211356, September 29, 2014
FACTS: Petitioner is the president of Boracay
West Cove. On 2010, the company applied for
a zoning compliance with the Municipality of
Malay, Aklan, which was denied by the
Municipal Zoning Administrator on the ground
that the proposed construction site was within
the “no build zone” demarcated by the
Municipal Ordinance 2000-131. Subsequently,
a Cease and Desist Order was issued by the
municipal government. On July 2011, the
Mayor issued EO 10, ordering for the closure
and demolition of Boracay West Cove’s hotel.
ISSUES: WON (a) the hotel was a nuisance,
(b) respondent mayor has the power to order the
demolition of illegal construction, and (c) it was
a valid exercise of the police power?
HELD:
a. YES. Article 694 of the Civil Code defines
“nuisance” as any act, omission,
establishment, business, condition or
property, or anything else that (1) injures or
endangers the health or safety of others; (2)
annoys or offends the senses; (3) shocks,
defies or disregards decency or morality;
(4) obstructs or interferes with the free
passage of any public highway or street, or
any body of water; or (5) hinders or impairs
the use of property.
ZEK NOTES 
In establishing a no build zone through local
legislation, the LGU effectively made a
determination that constructions therein,
without first securing exemptions from the
local council, qualify as nuisances for they pose
a threat to public safety. No build zones are
intended for the protection of the public
because the stability of the ground’s foundation
is adversely affected by the nearby body of
water.
As jurisprudence elucidates, nuisances are of
two kinds: nuisance per se and nuisance per
accidens. The first is recognized as a nuisance
under any and all circumstances, because it
constitutes a direct menace to public health or
safety, and, for that reason, may be abated
summarily under the undefined law of
necessity. The second is that which depends
upon certain conditions and circumstances, and
its existence being a question of fact, it cannot
be abated without due hearing thereon in a
tribunal authorized to decide whether such a
thing does in law constitute a nuisance.
In the case at bar, the hotel, in itself, cannot be
considered as a nuisance per se since this type
of nuisance is generally defined as an act,
occupation, or structure, which is a nuisance at
all times and under any circumstances,
regardless of location or surrounding. However,
it is a nuisance per accidens because it was
constructed in the no build zone.
b. YES. Generally, the LGU does not have the
power to find, as a fact, that a particular
thing is a nuisance when such thing is not a
nuisance per se; nor can it authorize the
extrajudicial condemnation and destruction
of that as a nuisance which in its nature,
situation or use is not such. Those things
must be determined and resolved in the
ordinary courts of law.
However, the LGU may nevertheless properly
order the hotel’s demolition. This is because, in
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Public Corporation Notes (Atty. Marquez) ZEK NOTES 

the exercise of police power and the general clearances, which is a ground for demolition
welfare clause, property rights of individuals under the LGC. Under the premises, a court
may be subjected to restraints and burdens in order that is required under normal
order to fulfill the objectives of the government. circumstances is hereby dispensed with.
Otherwise stated, the government may enact
legislation that may interfere with personal
liberty, property, lawful businesses and
occupations to promote the general welfare.

One such piece of legislation is the LGC, which

authorizes city and municipal governments,
acting through their local chief executives, to
issue demolition orders. Under existing laws,
the office of the mayor is given powers not only
relative to its function as the executive official
of the town; it has also been endowed with
authority to hear issues involving property
rights of individuals and to come out with an
effective order or resolution thereon. Pertinent
herein is Sec. 444 (b)(3)(vi) of the LGC, which
empowered the mayor to order the closure and
removal of illegally constructed establishments
for failing to secure the necessary permits

This twin violation of law (Sec 301 of PD 1096

or the National Building Code of the PH) and
ordinance warranted the LGU’s invocation of
Sec. 444 (b)(3)(vi) of the LGC, which power is
separate and distinct from the power to
summarily abate nuisances per se. Under the
law, insofar as illegal constructions are
concerned, the mayor can, after satisfying the
requirement of due notice and hearing, order
their closure and demolition.

Given the presence of the requirements under

Sec. 444 (b)(3)(vi) of the LGC, whether the
building constituted a nuisance per se or a
nuisance per accidens becomes immaterial. The
hotel was demolished not exactly because it is
a nuisance but because it failed to comply with
the legal requirements prior to construction. It
just so happened that, in the case at bar, the
hotel’s incident that qualified it as a nuisance
per accidens––its being constructed within the
no build zone––further resulted in the non-
issuance of the necessary permits and

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