Public-Corporation-Online-Notes.pdf - LOCAL GOVERNMENT LAW PART I \u2013 GENERAL PRINCIPLES A Corporation 1 Definition o An artificial being created by

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Unformatted text preview: LOCAL GOVERNMENT LAW PART I – GENERAL PRINCIPLES A. Corporation - 1. Definition o 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 - 2. Classification o Classification of corporations according to purpose: a. Public – is a corporation that is created by the state, either by general or special act, for purposes of administration of local government or rendering of service in the public interest. b. Private – formed for some private purpose, benefit, aim or end - 3. Public and Private Corporations, distinguished o Public – organized for the government of a portion of the state o Private – formed for some private purpose, benefit, aim or end - 4. Public Corporation, classified o Classes of public corporations: i. Quasi-public corporation – created by the state for a narrow or limited purpose; a private corporation created pursuant to the Corporation Code that renders public service or supplies public wants Examples: Public utility companies, electric companies, water districts, telecommunication companies ii. Real public corporation/Municipal corporation – a body politic and corporate constituted by the incorporation of the inhabitants for the purpose of local government - 5. Municipal corporation, defined o Perception of local governments: A local government is not only a municipal corporation, meaning we don’t look at it as an entity or a corporation that is clothed with a personality. It’s also perceived as either political subdivision or a territorial subdivision. If we talk about political subdivision, then we look at local governments as agents of the national governments and therefore, tasked to perform certain government functions. If we talk about territorial subdivision, we look at it as a place. Basis: Sec. 1 Art. 10 Consti - The territorial and political subdivisions of the Republic of the Philippines are the provinces, cities, municipalities, and barangays. There shall be autonomous regions in Muslim Mindanao and the Cordilleras as hereinafter provided. But not only that, we have to deal with local governments as something that has life, something that performs acts with legal effects. B. Municipal Corporations - 1. Elements o a. Legal creation or incorporation – the law creating or authorizing the creation or incorporation of a municipal corporation; the law that established the lgu, either by statute or ordinance in the case of barangays. o b. Corporate name – the name by which the corporation shall be known Example: City of Cebu (Basis – the charter) Sec. 13 – 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. o c. Inhabitants – the people residing in the territory of the corporation o d. 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 o It has dual functions, namely: a. Public or governmental or political – It acts as an agent of the state for the government of the territory and the inhabitants; this involves the administration of powers of the state and the promotion of public welfare; in this regard, we call a lgu as a political subdivision, that’s why being a political subdivision, it is an agent of the national government and being an agent of the national government, the principal is giving the agent the task of administering its power, that’s why we have local taxation, local police power and local eminent domain Examples: Local police power, local taxation, local eminent domain, public works b. Private or 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. A kind of power that is exercised for the special benefit and advantage of the community, thus, it’s not a necessary benefit, it’s something that the lgu can do without. Examples: Maintenance of parks, cemeteries, establishment of markets, fiestas and recreation o Basis: Section 15. Political and Corporate Nature of Local Government Units. - Every local government unit created or recognized under this Code is a body politic and corporate endowed with powers to be exercised by it in conformity with law. As such, it shall exercise powers as a political subdivision of the national government and as a corporate entity representing the inhabitants of its territory. So, the framework therefore is accountability: If the lgu is exercising a governmental function, then it becomes accountable to the national government, but if the lgu is exercising corporation functions, then it is not accountable to the national government but it is accountable to the people. o Bar Question: Johnny was employed as a driver by the Municipality of Calumpit. While driving recklessly a municipal dump truck with its load of sand for the repair of municipal streets, Johnny hit a jeepney and 2 passengers of the jeepney died. Is the municipality liable for the negligence of Johnny? YES, under Sec. 24: Section 24. Liability for Damages. - Local government units and their officials are not exempt from liability for death or injury to persons or damage to property. Whether the act is governmental or proprietary Alternative answer: NO. If it is governmental act, then, as a rule, there is no liability except only when it is performed by a special agent, such that conversely, if it is proprietary, then the agent of the state cannot enjoy that privilege because it is proprietary and therefore, not related to the national government, then it should be held liable. o BARA LIDASAN VS COMELEC In a municipality in Mindanao, it was created by a statute. The problem was when such law was passed, it enumerated barangays or barrios belonging to a different province. Could we indulge in the assumption that Congress still intended, by the Act, to create the restricted area of nine barrios in the towns of Butig and Balabagan in Lanao del Sur into the town of Dianaton, if the twelve barrios in the towns of Buldon and Parang, Cotabato were to be excluded therefrom? The answer must be in the negative. Municipal corporations perform twin functions. Firstly. They serve as an instrumentality of the State in carrying out the functions of government. Secondly. They act as an agency of the community in the administration of local affairs. It is in the latter character that they are a separate entity acting for their own purposes and not a subdivision of the State. Consequently, several factors come to the fore in the consideration of whether a group of barrios is capable of maintaining itself as an independent municipality. Amongst these are population, territory, and income. When the foregoing bill was presented in Congress, unquestionably, the totality of the twenty-one barrios — not nine barrios — was in the mind of the proponent thereof. That this is so, is plainly evident by the fact that the bill itself, thereafter enacted into law, states that the seat of the government is in Togaig, which is a barrio in the municipality of Buldon in Cotabato. And then the reduced area poses a number of questions, thus: Could the observations as to progressive community, large aggregate population, collective income sufficient to maintain an independent municipality, still apply to a motley group of only nine barrios out of the twenty-one? Is it fair to assume that the inhabitants of the said remaining barrios would have agreed that they be formed into a municipality, what with the consequent duties and liabilities of an independent municipal corporation? Could they stand on their own feet with the income to be derived in their community? How about the peace and order, sanitation, and other corporate obligations? This Court may not supply the answer to any of these disturbing questions. And yet, to remain deaf to these problems, or to answer them in the negative and still cling to the rule on separability, we are afraid, is to impute to Congress an undeclared will. With the known premise that Dianaton was created upon the basic considerations of progressive community, large aggregate population and sufficient income, we may not now say that Congress intended to create Dianaton with only nine — of the original twenty-one — barrios, with a seat of government still left to be conjectured. For, this unduly stretches judicial interpretation of congressional intent beyond credibility point. To do so, indeed, is to pass the line which circumscribes the judiciary and tread on legislative premises. Paying due respect to the traditional separation of powers, we may not now melt and recast Republic Act 4790 to read a Dianaton town of nine instead of the originally intended twenty-one barrios. Really, if these nine barrios are to constitute a town at all, it is the function of Congress, not of this Court, to spell out that congressional will. Republic Act 4790 is thus indivisible, and it is accordingly null and void in its totality. The idea that it must be self-sufficient therefore is relevant to the second function that it must be a corporate entity representing the inhabitants of the community. o SURIGAO ELECTRIC CO. INC. VS MUNICIPALITY OF SURIGAO When Municipality of surigao wanted to operate an electric company of its own, it did so without a CPC, pursuant to the Public Service Act which says that “government instrumentalities or entities are exempt from getting CPC if they decide to operate public utility companies”. The private electric company argued that a lgu is not a government instrumentality or entity. There has been a recognition by this Court of the dual character of a municipal corporation, one as governmental, being a branch of the general administration of the state, and the other as quasi-private and corporate…………… It would, therefore, be to erode the term "government entities" of its meaning if we are to reverse the Public Service Commission and to hold that a municipality is to be considered outside its scope. So, the SC said that as a lgu possessing the first function of being an agent of the state and that is being a political subdivision, it is a government instrumentality or entity, therefore, it is exempt from obtaining the CPC as provided for in the Public Service Act. - 3. Sources of Powers o 1987 consti Art. 10 o RA 7160 – LGC of 1991 which took effect on January 1, 1992 o Statutes or acts that are not inconsistent with the Consti and the LGC o Charter – the law that creates the LGU o Doctrine of the right of self-government, but applies only in states which adhere to the doctrine - 4. Classification of Powers o i. express, implied, inherent (powers necessary and proper for governance, e.g. to promote health and safety, enhance prosperity, improve morals of inhabitants) o ii. public or governmental, private or proprietary o iii. intramural, extramural o iv. mandatory, directory; ministerial, discretionary - 5. Types of Municipal Corporations o i. De jure – created with all the elements of a municipal corporation being present o ii. De facto – where there is colorable compliance (not full or complete, but simply colorable, meaning almost or seems like) with the requisites of a de jure municipal corporation Example of colorable compliance: There’s a law creating the municipal corporation but it is defective Which municipal corporation acts with legal affects? BOTH Philosophy behind accepting de facto municipal corporation: Where there is authority in law for a municipal corporation, the organization of the people of a given territory as such a corporation under the color of delegated authority followed by a user in good faith of the governmental powers will be recognized by law as municipal corporation de facto Where through the failure to comply with constitutional or statutory requirements, the corporation cannot be considered de jure What are the bases or reasons for de facto municipal corporation? Security Prescription o Meaning, lgus can exist via prescription. The basis for this doctrine is the very strong public policy supporting: o i. Security of lgus; and o ii. Conduct of their business against attack grounded upon collateral inquiry into the legality of their organization What is the operative fact doctrine? Certain legal effects of the statute prior to its declaration of unconstitutionality may be recognized. This is the modern view regarding the effects of declaration of unconstitutionality of a law, meaning if a law for example that creates a lgu will be declared as unconstitutional, the court is mindful that during the interim, that lgu must have already performed acts pursuant to its being a lgu. o How do we treat these acts? Should we consider them as void acts, with no effects? o The operative fact doctrine means that insofar as local government law is concerned, before a law creating a lgu is declared unconstitutional, the acts of the lgu concerned shall be respected and shall be given legal effects. o The acts of such entity will be respected and will be recognized as valid and binding by the state as if it is a de jure municipal corporation. o But long use of corporate powers does not silenced the state, that’s why even if there is long use of corporate powers, the state is not in estoppel as it can never be in estoppel except in few special cases, but as a rule, it should not be considered in estoppel, so it can still question the existence of a lgu in a quo warranto proceeding. o A defective incorporation may however be obviated and the de facto unit can actually become de jure by subsequent legislative recognition or subsequent validation. - 6. De Facto Municipal Corporation Doctrine; Elements o i. valid law authorizing incorporation o ii. attempt in good faith to organize it o iii. colorable compliance with law o iv. assumption of corporate powers MUNICIPALITY OF JIMENEZ VS BAS, JR. In this case, the Municipality of Sinacaban was created via EO 258 (this is an executive act, not a legislative act), and since then, it had been exercising the powers of a lgu. PELAEZ VS AUDITOR GENERAL – The SC declared as unconstitutional Sec. 68 of the RAC which authorized the President to create municipalities through EO because the creation of municipalities is a legislative function and not an executive function. With this declaration, municipalities created by EO could not claim to be de facto municipal corporations, because there was not valid authorizing incorporation. However, later on, the case of Pelaez rendered invalid the creation of certain municipalities pursuant to an executive order, but under the petition of Pelaez, EO 258 creating Sinacaban was not included, so it continued to exist as such municipality until its existence was questioned. The SC said that Sinacaban attained a status of a de facto municipal corporation because its existence had not been questioned for more than 40 years. [long use of corporate powers; this is an example of prescription] MUNICIPALITY OF SAN NARCISO VS MENDEZ, SR. – Sec. 442(d) of the LGC to the effect that municipal districts “organized pursuant to presidential issuances or executive orders and which have their respective sets of elective municipal officials holding office at the time of the effectivity of the Code shall henceforth be considered as regular municipalities” converted municipal districts organized pursuant to presidential issuances or executive orders into regular municipalities. Curative laws, which in essence are retrospective, and aimed at giving “validity to acts done that would have been invalid under existing laws, as if existing laws have been complied with,” are validly accepted in this jurisdiction. This involves the municipality of San Andres also created via executive act. Then came the Pelaez ruling. SC said that San Andres became de jure by subsequent recognition because it was included in the Ordinance to the 1987 consti apportioning the seats of the HR (as one of the 12 municipalities composing the 3rd district of Quezon). This is an example of subsequent recognition or validation, whether it was intentional or not. MUNICIPALITY OF CANDIJAY VS CA Sec. 442 (d) of LGC: “Municipalities existing as of the date of the effectivity of this Code shall continue to exist and operate as such. Existing municipal districts organized pursuant to presidential issuances or EOs and which have their respective set of elective municipal officials holding office at the time of the effectivity of this Code shall henceforth be considered as regular municipalities.” [curative legislation] SULTAN OSOP CAMID VS OFFICE OF THE PRESIDENT Sec. 442 (d) of the LGC does not sanction recognition of just any municipality; Only those that can prove continued exercise of corporate powers can be covered; Incidentally, the SC, being not a trier of facts, cannot ascertain the truthfulness of petitioner’s allegation of continued exercise of corporate powers. (there should have been a trial court that ascertained it) - 7. Method of challenging existence of municipal corporation o Quo warranto proceeding (under what authority) – this is a direct challenge. If you question or challenge a lgu, you need to institute a proceeding for that purpose. You cannot make it as a defense. It should be a direct attack and the method is quo warranto to be initiated by the state. o MALABANG VS BENITO – No collateral attack shall lie; an inquiry into the legal existence of a municipal corporation is reserved to the state in a proceeding for quo warranto which is a direct proceeding. But this rule applies only when the municipal corporation is, at least, a de facto municipal corporation. Proper party and nature of challenge: If the LGU is at least a de facto municipal corporation, only the STATE in a DIRECT ACTION. But if the LGU is not even de facto but a nullity, ANY PERSON in either DIRECT OR COLLATERAL ATTACK. o Bar question: Suppose that 1 year after Masigla was constituted as a municipality, the law creating it is voided because of defects. Would that invalidate the acts of the municipality and/or its municipal officers? Answer: NO, Doctrine of Operative Fact C. Overview of Philippines Local Government System - 1. The Unitary vs. the Federal Forms of Government o Ours is a unitary form of government, not federal. o Generally, powers of government may be distributed either horizontally or vertically: It is horizontal if the distribution is among the 3 branches of the government in the national government. It is in this kind of distribution that we distinguish between presidential (separation of powers) and parliamentary (fusion of powers of the legislative and executive). It is vertical if the distribution is between the national government and the local government. It is in here that we distinguish unitary from federal. o Distinction of unitary and federal: A unitary government is a single, centralized government, exercising powers over both the internal and external affairs of the state, the powers are shared by the national government and the local government; while a federal government consists of autonomous state (local) government units merged into a single state, with the national government exercising a limited degree of power over the domestic affairs but generally full direction of the external affairs of the state, the powers are divided by the national government and the local government. o In a unitary government, we have national government creating local governments. Thus in our jurisdiction, our principle is that lgus derive both existence and powers from the nation...
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