Course Description: LAW ON PUBLIC CORPORATION

A study of t h e L o c a l G o v e r n m e n t C o d e a n d general principles governing municipal

corporations: the laws affecting the creation, organization and government of
provinces, cities, municipalities, m u n i c i p a l d i s t r i c t s , a n d barangays; the scope
and application o f the powers of municipal c o r p o r a t i o n s , including municipal
ordinances, contracts, liabilities, and enterprises. (2 units)

Course Outline and Case Review

A. Public Corporation-

-G.R. No. 105746. December 2, 1996 Municipality of Jimenez vs. Executive Secretary

What is a Public Corporation? Difference from Government Owned and Controlled Corporation?

-Boy Scout of the Phil vs COA G.R. No. 177131 June 7, 2011

-Feliciano vs. COA G.R. No. 147402, January 14, 2004, 419 SCRA 363

Classes of Public Corporations

-Quasi Corporations

-Phil. Society for Prevention and Cruelty to Animals vs. COA Sept. 25, 2007 GR.169752

-Municipal Corporations

Elements of a Municipal Corporation- Nature and Function

-Pelaez vs. Auditor General(122 Phil. 965 (1965)

-Municipality of San Narciso vs. Mendez G.R. No. 103702, 6 December 1994, 239 SCRA 11

-Camid vs. Office of the President Gr. No.161414 January 17, 2005

Requisites for creation, conversion, division, merger or dissolution,

-League of Citys of the Phil vs. Comelec April 28, 2009Dec. 21, 2009, August 24, 2010,February 15,
2011, April 12, 2011

B. Local Government

Republic Act 7160( The Local Government Code)

Rationale: Article X Sec 3 Phil. Constitution

Principles of Local Autonomy-

-League of Prov. Vs. DENR Gr. No/ 175368 April 11, 2013
What are the Powers of LGUs

1. Police Power (general welfare clause)-

- Roble Arrastre vs CA, Gr. No. 128509 Aug. 22, 2006

-Fernando vs. St. Scholastica Gr. No. 161107 March 12, 2013

-City of Manila vs. Laquio Jr. 495 Phil 289

2. Eminent Domain-

-Municipality of Paranaque vs VM Realty Corp Gr. 127820 July 20, 1998

3. Taxing Power-

-MMSMC vs. Toledo Gr, no. 190818 June 05, 2013

-Pelizloy Corp vs, Prov. Of Benguet Gr. No. 183137 April 10, 2013(relate to Ultra vires acts)

-NAPOCOR versus Province of Quezon July 15, 2009 GR. No. 171586

4. Closure and Opening of Roads

-Figuracion vs. Cresenciano Nov, 28, 2007

-New Sun Valley Homeowners association vs. SBBSV Gr no. 156686 July 27, 2011

5. Legislative Power

-Requisites for a valid ordinance

-Light Corporation vs. City of Manila Gr no. 122846 Jan. 20, 2009

-Social Justice Society vs. Atienza Feb 3, 2008 545 Scra 92

What is local initiative /Referendum

-SBMA vs. COmelec Gr. No. 125416 Sept. 26, 1996

-Santiago vs. Comelec March 19, 1997

6. Corporate Powers

-Sue and be sued

-Municipality of Hagonoy Bulacan vs. Simeon Dumdum Gr. No.168289 March 22, 2010

Acquisition and sale of Property/enter into contracts

-Municipality of Camiling v. Lopez 99 Phil. 187. (1956)

-The Estate of Pedro Gonzales Vs Marcos Perez GR. No. 169681 Nov. 5, 200

Requisites, Ultra Vires Acts /Liability of LGUs

-Land Bank of the Phil. Vs. Cacayuran G.r No.191667 April 17 ,2013

Settlement of Boundary Disputes

-Municiplity of Kananga vs. Madrona GR No. 141375 April 30, 2003;

C. Succession and Elective Officials

-Borja Jr. vs. Comelec 295 Scra 115,

-Jose Capco G.r No. 133495 Sept.3, 1998,

-Montebon v. Comelec Gr, No.180444 (April) 551 Scra 50

D. Discipline of Elective Officials, grounds and Jurisdiction, Power of the

Ombudsman/Sandiganbayan Regular Courts

-Ambil Jr. vs. Sandiganbayan Gr. No 175457 July 6, 2011

-Alejandro vs. Office of the Ombudsman Gr.No.173121 April 3, 2013

-Arias vs. Sandiganbayan 180 Scra 309

-Constantino vs. Sandiganbayan Gr. No,140656 Sept. 13 2007

-Preventive Suspension

-Joson vs. Executive Secretary [G.R. No. 131255. May 20, 1998]

-MAYOR ALVIN B. GARCIA vs. HON. ARTURO C. MOJICA [G.R. No. 139043.
September 10, 1999]

-Aldovino vs. Comelec Dec. 23, 2009 609 Scra 234

-Removal from Office, Authority to remove

-Sangguniang Brgy of Don Mariano vs. Martinez Gr. No. 170626 March 3, 2008

-Lopez vs. Villanueva Gr. No.182701 July 23, 2008

Administrative Appeal, Exhaustion of Administrative Remedies

Doctrine of Condonation
-Pascual v. Hon. Provincial Board of Nueva Ecija106 Phil. 406 (1959)

-Aguinaldo v. Santos 212 SCRA 768 (1992)

-Salalima v. Guingona 257 SCRA 55 (1996).

-Trillanes IV vs Hon. Oscar Pimentel Sr. G.r No. 179817 June 27 ,2008;

Appointive Officials, Confidential, Nepotism, tenure

-CIVIL SERVICE COMMISSION, vs. PEDRO O. DACOYCOY. [G.R. No. 135805. April 29,
1999]

-Salumbides vs. Office of the Ombudsman G.R. No. 180917 April 23, 2010

-PROVINCIAL GOVT. OF CAMARINES NORTE VS.GONZALEZ GR. NO 185740 JULY 23,2013

E. Recall

-Socrates Vs. Comelec Gr. No. 154512 Nov. 12, 2002 391 Scra 231

F. Term Limits

-Appari vs. CA GR no. 127 Scra 231 Jan.31, 1984

-Adornero vs. Comelec Gr. 147927 Feb. 4, 2002

-Lonzanida vs. Comelec G.r No.135150 July 28, 1999

-Ong. Vs. Alegre Gr. No.163295-163353 Jan 23,2006

-Latasa vs. Comelec Gr. No.154829 Dec 10, 2003

-Abundo vs,Comelec Gr no.201716 Jan.08, 2013

-Suggested Book: Local Government Code Revisited 2011 by Sen. Aquilino Nene Pimentel Jr., or
any Public Corporation/Local Govt Code Book.

-Each student is required to pass a draft proposed ordinance on the first class meeting.

-Memorize the Ecumenical Prayer of the Court.

-Dress Code
Feliciano vs. COA (G.R. No. 147402, January 14, 2004

Facts: COA assessed Leyte Metropolitan Water District (LMWD) auditing fees. Petitioner Feliciano, as
General Manager of LMWD, contended that the water district could not pay the said fees onTHE BASIS
OF Sections 6 and 20 of P.D. No. 198 as well as Section 18 of R.A. No. 6758. He primarily claimed that
LMWD is a private corporation not covered by COA's jurisdiction. Petitioner also asked for refund of all
auditing fees LMWD previously paid to COA. COA Chairman denied petitioners requests. Petitioner
filed a motion for reconsideration which COA denied. Hence, this petition.

Issue: Whether a Local Water District (LWD) created under PD 198, as amended, is a government-
owned or controlled corporation subject to the audit jurisdiction of COA or a private corporation which is
outside of COAs audit jurisdiction.

Held: Petition lacks merit. The Constitution under Sec. 2(1), Article IX-D and existing laws mandate
COA to audit all government agencies, including government-owned and controlled corporations with
original charters. An LWD is a GOCC with an original charter.

The Constitution recognizes two classes of corporations. The first refers to private corporations created
under a general law. The second refers to government-owned or controlled corporations created by special
charters.Under existing laws, that general law is the Corporation Code.

Obviously, LWDs are not private corporations because they are not created under the Corporation Code.
LWDs are not registered with the Securities and Exchange Commission. Section 14 of the Corporation
Code states that all corporations organized under this code shall file with the SEC articles of
incorporation x x x. LWDs have no articles of incorporation, no incorporators and no stockholders or
members. There are no stockholders or members to elect the board directors of LWDs as in the case of all
corporations registered with the SEC. The local mayor or the provincial governor appoints the directors of
LWDs for a fixed term of office. The board directors of LWDs are not co-owners of the LWDs. The board
directors and other personnel of LWDs are government employees subject to civil service laws and anti-
graft laws. Clearly, an LWD is a public and not a private entity, hence, subject to COAs audit jurisdiction.
PSPCA vs Commission on Audit

Philippine Society for the Prevention of Cruelty to Animals vs Commission on Audit

G.R. No. 169752

September 25, 2007

Facts:

PSPCA was incorporated as a juridical entity by virtue of Act No. 1285 by the Philippine Commission in
order to enforce laws relating to the cruelty inflicted upon animals and for the protection of and to
perform all things which may tend to alleviate the suffering of animals and promote their welfare.

In order to enhance its powers, PSPCA was initially imbued with (1) power to apprehend violators of
animal welfare laws and (2) share 50% of the fines imposed and collected through its efforts pursuant to
the violations of related laws.

However, Commonwealth Act No. 148 recalled the said powers. President Quezon then issued Executive
Order No. 63 directing the Commission of Public Safety, Provost Marshal General as head of the
Constabulary Division of the Philippine Army, Mayors of chartered cities and every municipal president
to detail and organize special officers to watch, capture, and prosecute offenders of criminal-cruelty laws.

On December 1, 2003, an audit team from the Commission on Audit visited petitioners office to conduct
a survey. PSPCA demurred on the ground that it was a private entity and not under the CoAs jurisdiction,
citing Sec .2(1), Art. IX of the Constitution.

Issues:

WON the PSPCA is subject to CoAs Audit Authority.

Held:
No. The charter test cannot be applied. It is predicated on the legal regime established by the 1935
Constitution, Sec.7, Art. XIII. Since the underpinnings of the charter test had been introduced by the 1935
Constitution and not earlier, the test cannot be applied to PSPCA which was incorporated on January 19,
1905. Laws, generally, have no retroactive effect unless the contrary is provided. There are a few
exceptions: (1) when expressly provided; (2) remedial statutes; (3) curative statutes; and (4) laws
interpreting others.

None of the exceptions apply in the instant case.

The mere fact that a corporation has been created by a special law doesnt necessarily qualify it as a
public corporation. At the time PSPCA was formed, the Philippine Bill of 1902 was the applicable law
and no proscription similar to the charter test can be found therein. There was no restriction on the
legislature to create private corporations in 1903. The amendments introduced by CA 148 made it clear
that PSPCA was a private corporation, not a government agency. PSPCAs charter shows that it is not
subject to control or supervision by any agency of the State. Like all private corporations, the successors
of its members are determined voluntarily and solely by the petitioner, and may exercise powers generally
accorded to private corporations. PSPCAs employees are registered and covered by the SSS at the latters
initiative and not through the GSIS.

The fact that a private corporation is impressed with public interest does not make the entity a public
corporation. They may be considered quasi-public corporations which areprivate corporations that render
public service, supply public wants and pursue other exemplary objectives. The true criterion to
determine whether a corporation is public or private is found in the totality of the relation of the
corporate to the State. It is public if it is created by the latters own agency or instrumentality, otherwise,
it is private.

Sultan Osop Camid vs. The office of the President

G.R. No. 161414 January 14, 2005

Facts:
The municipality of Andong, Lanao del Sur, is a town that is not supposed to exist yet is actually insisted
by some as alive and thriving. The creation of the putative municipality was declared void ab initio by the
Supreme Court four decades ago, but the present petition insists that Andong thrives on and, hence, its
legal personality should be given judicial affirmation.

xxx

The factual antecedents derive from the ruling in Pelaez vs.Auditor General in 1965. Then President
Diosdado Macapagal issued several Executive Orders creating 33 municipalities in Mindanao.
President Macapagal justified the creation of these municipalities citing his powers underSec.68 of the
Revised Admin. Code. Then VP Emmanuel Pelaez filed a special civil action for a writ of prohibition
alleging that the EOs were null and void, Sec. 68 having been repealed by RA 2370, and said orders
constituting an undue delegation of legislative power.
After due deliberation, the SC ruled that the challenged EOs were null and void since Sec. 68 of the
Revised Admin. Code did not meet the well-settled requirements for a valid delegation of legislative
power to the executive branch.
Among the EOs annulled was EO 107 which created the Municipality of Andong.
Petitioner represents himself as a current resident of Andong and alleged that Andong has
metamorphosed into a full-blown municipality with a complete set of officials appointed to handle
essential services for the municipality and its constituents, despite the fact that no person has been
appointed, elected or qualified to serve any of the local government offices of Andong since 1968.
Camid imputed grave abuse of discretion on the part of DILG in not classifying [Andong] as a regular
existing municipality and in not including said municipality in its records and official database as [an]
existing regular municipality. He argues that Pelaez has already been modified by supervening events
consisting of subsequent laws and jurisprudence, particularly citing Municipality of San Narciso v. Hon.
Mendez wherein the court affirmed the unique status of the Municipality of San Andres as a de
facto municipal corporation. Camid also cites Sec. 442(d) of the Local Government Code of 1991 as
basis for the recognition of the impugned municipality.

Issue:
Whether the judicial annulment of the Municipality of Andong continues despite the petitioners
allegation that Andong has thrived into a full-blown municipality

Held:
Municipal corporations may exist by prescription where it is shown that the community has claimed and
exercised corporate functions with the knowledge and acquiescence of the legislature, and without
interruption or objection for period long enough to afford title by prescription. What is clearly essential is
a factual demonstration of the continuous exercise by the municipal corporation of its corporate powers,
as well as the acquiescence thereto by instrumentalities of the state. Camids plaint should have
undergone the usual administrative gauntlet and, once that was done, should have been filed first with the
Court of Appeals, which at least would have had the power to make the necessary factual
determinations. Petitioners seeming ignorance of the principles of exhaustion of administrative remedies
and hierarchy of courts, as well as the concomitant prematurity of the present petition, cannot be
countenanced.

The question as to whether a municipality previously annulled by the Supreme Court may attain
recognition in the absence of any curative/reimplementing statute has never been decided before. The
effect of Sec. 442(d) of the Local Government Code on municipalities such as Andong warrants
explanation.

EO 107 which established Andong was declared null and void ab initio in 1965 by the Supreme Court
in Pelaez vs. Auditor General, 15 SCRA 569 (1965), along with 33 other EOs. The phrase ab initio
means from the beginning. Pelaez was never reversed by the SC but was rather expressly affirmed in
the cases of Municipality of San Joaquin v. Siva, Municipality of Malabang v. Benito, and Municipality of
Kapalong v. Moya. No subsequent ruling declared Pelaez as overturned/inoperative. No subsequent
legislation has been passed since 1965 creating the Municipality of Andong. Given these facts, there is
hardly any reason to elaborate why Andong does not exist as a duly constituted municipality.
Pelaez and its offspring cases ruled that the President has no power to create municipalities yet limited
its nullificatory effects to the particular municipalities challenged in actual cases before this Court. With
the promulgation of the LGC in 1991, the legal cloud was lifted over the municipalities similarly created
by executive order but not judicially annulled Sec. 442(b) of the LGC deemed curative whatever legal
defects to title these municipalities had labored under.

There are eminent differences between Andong and municipalities such as San Andres, Alicia and
Sinacaban. Most prominent is the fact that the EO creating Andong was expressly annulled by the SC in
1965. Court decisions cannot lose their efficacy due to sheer defiance by the parties aggrieved.

Sec. 442(d) of the LGC does not serve to affirm/reconstitute the judicially dissolved municipalities which
had been previously created by presidential issuances/EOs. The provision only affirms the legal
personalities of those municipalities which may have been created using the same infirm legal basis, yet
were fortunate enough not to have been judicially annulled. On the other hand, the municipalities
judicially dissolved remain inexistent unless recreated through specific legislative enactments.

The legal effect of the nullification of a municipality in Pelaez was to revert the constituent barrios of the
voided town back to their original municipalities.

If there is only a strong impulse for the reconstitution of the municipality nullified in Pelaez, the solution
is through the legislature and not judicial confirmation of void title. The time has come for the light to
seep in and for the petitioner and like-minded persons to awaken to legal reality.

Borja, Jr. v. Comelec

Action:
Determination of the scope of constitutional provision barring elective officials, with the exception of
barangay officials, from serving more than three consecutive terms.

Facts:
Private respondent Jose T. Capco, Jr. was elected vice-mayor of Pateros on January 18, 1988 for a term
ending June 30, 1992. On September 2, 1989, he became mayor, by operation of law, upon the death of
the incumbent, Cesar Borja. For the next two succeeding elections in 1992 and 1995, he was again re-
elected as Mayor. On March 27, 1998, private respondent Capco filed a certificate of candidacy for mayor
of Pateros relative to the May 11, 1998 elections. Petitioner Benjamin U. Borja, Jr., who was also a
candidate for mayor, sought Capcos disqualification on the theory that the latter would have already
served as mayor for three consecutive terms by June 30, 1998 and would therefore be ineligible to serve
for another term after that.

The Second Division of the Commission on Elections ruled in favor of petitioner and declared private
respondent Capco disqualified from running for reelection as mayor of Pateros but in the motion for
reconsideration, majority overturned the original decision.

Issue:
1. w/n Capco has served for three consecutive terms as Mayor
2. w/n Capco can run again for Mayor in the next election
Held:
1. No. Capco was not elected to the office of mayor in the first term but simply found himself thrust into
it by operation of law. Neither had he served the full term because he only continued the service,
interrupted by the death, of the deceased mayor. A textual analysis supports the ruling of the COMELEC
that Art. X, Sec. 8 contemplates service by local officials for three consecutive full terms as a result of
election. It is not enough that an individual has served three consecutive terms in an elective local
officials, he must also have been elected to the same position for the same number of times before the
disqualification can apply.
2. Yes. Although he has already first served as mayor by succession, he has not actually served three full
terms in all for the purpose of applying the three-term limit. The three-term limit shall apply when these 2
conditions concur: (1) the local official concerned has been elected three consecutive times; and (2) he
has fully served three consecutive terms.

League of Cities v. Comelec

Action:
These are consolidated petitions for prohibition with prayer for the issuance of a writ of preliminary
injunction or temporary restraining order filed by the League of Cities of the Philippines, City of Iloilo,
City of Calbayog, and Jerry P. Treas assailing the constitutionality of the subject Cityhood Laws and
enjoining the Commission on Elections (COMELEC) and respondent municipalities from conducting
plebiscites pursuant to the Cityhood Laws.

Fact:
During the 11th Congress, Congress enacted into law 33 bills converting 33 municipalities into cities.
However, Congress did not act on bills converting 24 other municipalities into cities.
During the 12th Congress, Congress enacted into law Republic Act No. 9009 (RA 9009), which took
effect on 30 June 2001. RA 9009 amended Section 450 of the Local Government Code by increasing the
annual income requirement for conversion of a municipality into a city from P20 million to P100 million.
The rationale for the amendment was to restrain, in the words of Senator Aquilino Pimentel, the mad
rush of municipalities to convert into cities solely to secure a larger share in the Internal Revenue
Allotment despite the fact that they are incapable of fiscal independence.

After the effectivity of RA 9009, the House of Representatives of the 12th Congress adopted Joint
Resolution No. 29, which sought to exempt from the P100 million income requirement in RA 9009 the 24
municipalities whose cityhood bills were not approved in the 11th Congress. However, the 12th Congress
ended without the Senate approving Joint Resolution No. 29.

During the 13th Congress, the House of Representatives re-adopted Joint Resolution No. 29 as Joint
Resolution No. 1 and forwarded it to the Senate for approval. However, the Senate again failed to approve
the Joint Resolution. Following the advice of Senator Aquilino Pimentel, 16 municipalities filed, through
their respective sponsors, individual cityhood bills. The 16 cityhood bills contained a common provision
exempting all the 16 municipalities from the P100 million income requirement in RA 9009.

On 22 December 2006, the House of Representatives approved the cityhood bills. The Senate also
approved the cityhood bills in February 2007, except that of Naga, Cebu which was passed on 7 June
2007. The cityhood bills lapsed into law (Cityhood Laws) on various dates from March to July 2007
without the Presidents signature.

The Cityhood Laws direct the COMELEC to hold plebiscites to determine whether the voters in each
respondent municipality approve of the conversion of their municipality into a city.

Petitioners filed the present petitions to declare the Cityhood Laws unconstitutional for violation of
Section 10, Article X of the Constitution, as well as for violation of the equal protection clause.
Petitioners also lament that the wholesale conversion of municipalities into cities will reduce the share of
existing cities in the Internal Revenue Allotment because more cities will share the same amount of
internal revenue set aside for all cities under Section 285 of the Local Government Code.

Issue:
The petitions raise the following fundamental issues:
1. Whether the Cityhood Laws violate Section 10, Article X of the Constitution; and
2. Whether the Cityhood Laws violate the equal protection clause.

Held:
We grant the petitions.
The Cityhood Laws violate Sections 6 and 10, Article X of the Constitution, and are thus unconstitutional.

First, applying the P100 million income requirement in RA 9009 to the present case is a prospective, not a
retroactive application, because RA 9009 took effect in 2001 while the cityhood bills became law more
than five years later.

Second, the Constitution requires that Congress shall prescribe all the criteria for the creation of a city in
the Local Government Code and not in any other law, including the Cityhood Laws.

Third, the Cityhood Laws violate Section 6, Article X of the Constitution because they prevent a fair and
just distribution of the national taxes to local government units.

Fourth, the criteria prescribed in Section 450 of the Local Government Code, as amended by RA 9009,
for converting a municipality into a city are clear, plain and unambiguous, needing no resort to any
statutory construction.

Fifth, the intent of members of the 11th Congress to exempt certain municipalities from the coverage of
RA 9009 remained an intent and was never written into Section 450 of the Local Government Code.

Sixth, the deliberations of the 11th or 12th Congress on unapproved bills or resolutions are not extrinsic
aids in interpreting a law passed in the 13th Congress.

Seventh, even if the exemption in the Cityhood Laws were written in Section 450 of the Local
Government Code, the exemption would still be unconstitutional for violation of the equal protection
clause.