PUBCORP – ATTY PASCASIO

GENERAL PRINCIPLES

1. LIBAN VS GORDON 2011 – A closer look at the nature of the PNRC would show
that there is none like it not just in terms of structure, but also in terms of history, public
service and official status accorded to it by the State and the international community.
It is neither a subdivision, agency, or instrumentality of the government, nor a
government-owned or controlled corporation or a subsidiary thereof. The sui
generis character of PNRC requires us to approach controversies involving the PNRC
on a case-to-case basis.

2. BSP VS COA 2011 – BSP is a public corporation subject to COA’s audit jurisdiction.
It is created by a special law to serve a public purpose in pursuit of a constitutional
mandate which comes within the class of “public corporations” defined by par. 2 of
Article 44 of the Civil Code. The BSP is a public corporation or a government agency
or instrumentality with juridical personality, which does not fall within the
constitutional prohibition in Article XII, Section 16, notwithstanding the amendments
to its charter. Not all corporations, which are not government owned or controlled, are
ipso facto to be considered private corporations as there exists another distinct class of
corporations or chartered institutions which are otherwise known as “public
corporations”. These corporations are treated by law as agencies or instrumentalities of
the government which are not subject to the tests of ownership or control and economic
viability but to different criteria relating to their public purposes/interests or
constitutional policies and objectives and their administrative relationship to the
government or any of its Departments or Offices.

3. PHILIPPINE SOCIETY FOR THE PREVENTION OF CRUELTY TO

ANIMALS V COA 2007 – PSPCA is a private corporation and not an agency of the
government as provided by the amendments introduced by C.A. No. 148. The fact that
a certain juridical entity is impressed with public interest does not, by that circumstance
alone, make the entity a public corporation, inasmuch as a corporation may be private
although its charter contains provisions of a public character, incorporated solely for
the public good. This class of corporations may be considered quasi-public
corporations, which are private corporations that render public service, supply public
 wants, or pursue other eleemosynary objectives. While purposely organized for the gain
or benefit of its members, they are required by law to discharge functions for the public
benefit. Examples of these corporations are utility, railroad, warehouse, telegraph,
telephone, water supply corporations and transportation companies. It must be stressed
that a quasi-public corporation is a species of private corporations, but the qualifying
factor is the type of service the former renders to the public: if it performs a public
service, then it becomes a quasi-public corporation. The true criterion, therefore, to
determine whether a corporation is public or private is found in the totality of the
relation of the corporation to the State. If the corporation is created by the State as the
latter’s own agency or instrumentality to help it in carrying out its governmental
functions, then that corporation is considered public; otherwise, it is private. Applying
the above test, provinces, chartered cities, and barangays can best exemplify public
corporations. They are created by the State as its own device and agency for the
accomplishment of parts of its own public works.

4. THE PROVINCE OF NORTH COTABATO V GRP PEACE PANEL 2008 –

PRINCIPLES OF LOCAL AUTONOMY

1. BASCO V. PAGCOR 1991 - The City of Manila, being a mere Municipal corporation
has no inherent right to impose taxes. Its “power to tax” therefore must always yield to
a legislative act which is superior having been passed upon by the state itself which has
the “inherent power to tax”. The Charter of the City of Manila is subject to control by
Congress. It should be stressed that “municipal corporations are mere creatures of
Congress” which has the power to “create and abolish municipal corporations” due to
its “general legislative powers”. Congress, therefore, has the power of control over local
governments. And if Congress can grant the City of Manila the power to tax certain
matters, it can also provide for exemptions or even take back the power. Local
governments have no power to tax instrumentalities of the National Government.
PAGCOR is a government owned or controlled corporation with an original charter,
PD 1869. All of its shares of stocks are owned by the National Government. PAGCOR
has a dual role, to operate and to regulate gambling casinos. The latter role is
governmental, which places it in the category of an agency or instrumentality of the
Government. Being an instrumentality of the Government, PAGCOR should be and
actually is exempt from local taxes. Otherwise, its operation might be burdened,
impeded or subjected to control by a mere Local government. “The states have no
power by taxation or otherwise, to retard, impede, burden or in any manner control the
operation of constitutional laws enacted by Congress to carry into execution the powers
vested in the federal government.” This doctrine emanates from the “supremacy” of the
National Government over local governments. The power to tax which was called by
Justice Marshall as the “power to destroy” cannot be allowed to defeat an
instrumentality or creation of the very entity which has the inherent power to wield it.
The principle of local autonomy under the 1987 Constitution simply means
“decentralization”. It does not make local governments sovereign within the state or an
“imperium in imperio.” Local Government has been described as a political subdivision
of a nation or state which is constituted by law and has substantial control of local
affairs. In a unitary system of government, such as the government under the Philippine
Constitution, local governments can only be an intra sovereign subdivision of
 one sovereign nation, it cannot be an imperium in imperio. Local government in such a
system can only mean a measure of decentralization of the function of government.

2. LINA V. PANO 2001 - As a policy statement expressing the local government’s

objection to the lotto, such resolution is valid. This is part of the local government’s
autonomy to air its views which may be contrary to that of the national government’s.
However, this freedom to exercise contrary views does not mean that local governments
may actually enact ordinances that go against laws duly enacted by Congress.In our
system of government, the power of local government units to legislate and enact
ordinances and resolutions is merely a delegated power coming from Congress.
Municipal governments are only agents of the national government. Local councils
exercise only delegated legislative powers conferred upon them by Congress as the
national lawmaking body. The delegate cannot be superior to the principal or exercise
powers higher than those of the latter. It is a heresy to suggest that the local government
units can undo the acts of Congress, from which they have derived their power in the
first place, and negate by mere ordinance the mandate of the statute. Municipal
corporations owe their origin to, and derive their powers and rights wholly from the
legislature. It breathes into them the breath of life, without which they cannot exist. As
it creates, so it may destroy. As it may destroy, it may abridge and control. Unless there
is some constitutional limitation on the right, the legislature might, by a single act, and
if we can suppose it capable of so great a folly and so great a wrong, sweep from
existence all of the municipal corporations in the state, and the corporation could not
prevent it. We know of no limitation on the right so far as the corporation themselves
are concerned. They are, so to phrase it, the mere tenants at will of the legislature. Ours
is still a unitary form of government, not a federal state. Being so, any form of autonomy
granted to local governments will necessarily be limited and confined within the extent
allowed by the central authority. Besides, the principle of local autonomy under the
1987 Constitution simply means “decentralization”. It does not make local
governments sovereign within the state or an “imperium in imperio.”

3. LIMBONA V. MANGELIN 1989 - Autonomy is either decentralization of

administration or decentralization of power. There is decentralization of administration
when the central government delegates administrative powers to political subdivision
in order to broaden the base of government power and in the process to make local
governments “more responsive and accountable,” and “ensure their fullest development
as self-reliant communities and make them more effective partners in the pursuit of
national development and social progress.” At the same time, it relieves the central
government of the burden of managing local affairs and enables it to concentrate on
national concerns. The President exercises “general supervision” over them, but only
to “ensure that local affairs are administered according to law.” He has no control over
their acts in the sense that he can substitute their judgments with his own.
Decentralization of power, on the other hand, involves an abdication of political power
in favor of local government units declared to be autonomous. In that case, the
autonomous government is free to chart its own destiny and shape its future with
minimum intervention from central authorities. According to a constitutional author,
decentralization of power amounts to “self-immolation,” since in that event, the
autonomous government becomes accountable not to the central authorities but to its
constituency.

Local autonomy is the degree of self-determination exercised by LGUs vis-à-vis the

central government. The system of achieving local autonomy is known as
decentralization and this system is realized through the process called devolution.

Decentralization – is a system whereby LGUs shall be given more powers,

authority and responsibilities and resources and a direction by which this is done
is from the national government to the local government

Devolution – refers to the act by which the national government confers power
and authority upon the various local government units to perform specific
functions and responsibilities.

This includes the transfer to local government units of the records, equipment, and other
assets and personnel of national agencies and offices corresponding to the devolved
powers, functions, and responsibilities.

Distinguish devolution from deconcentration: Deconcentration is different. If

devolution involves the transfer of resources, powers from national government to
LGUs, deconcentration is from national office to a local office. Deconcentration is the
 transfer of authority and power to the appropriate regional offices or field offices of
national agencies or offices whose major functions are not devolved to local
government units.

4. DISOMANGCOP V. DATUMANONG 2004 - Autonomy, as a national policy,

recognizes the wholeness of the Philippine society in its ethnolinguistic, cultural, and
even religious diversities. It strives to free Philippine society of the strain and wastage
caused by the assimilationist approach. Policies emanating from the legislature are
invariably assimilationist in character despite channels being open for minority
representation. As a result, democracy becomes an irony to the minority group. The
creation of autonomous regions does not signify the establishment of a sovereignty
distinct from that of the Republic, as it can be installed only “within the framework of
this Constitution and the national sovereignty as well as territorial integrity of the
Republic of the Philippines.” The objective of the autonomy system is to permit
determined groups, with a common tradition and shared social-cultural characteristics,
to develop freely their ways of life and heritage, exercise their rights, and be in charge
of their own business. This is achieved through the establishment of a special
governance regime for certain member communities who choose their own authorities
from within the community and exercise the jurisdictional authority legally accorded to
them to decide internal community affairs. In treading their chosen path of
development, the Muslims in Mindanao are to be given freedom and independence with
minimum interference from the National Government. This necessarily includes the
freedom to decide on, build, supervise and maintain the public works and infrastructure
projects within the autonomous region. The devolution of the powers and functions of
the DPWH in the ARMM and transfer of the administrative and fiscal management of
public works and funds to the ARG are meant to be true, meaningful and unfettered.
This unassailable conclusion is grounded on a clear consensus, reached at the
Constitutional Commission and ratified by the entire Filipino electorate, on the
centrality of decentralization of power as the appropriate vessel of deliverance for
Muslim Filipinos and the ultimate unity of Muslims and Christians in this country.

5. BATANGAS CATV INC V. CA 2004 - It is a fundamental principle that municipal

ordinances are inferior in status and subordinate to the laws of the state. An ordinance
in conflict with a state law of general character and statewide application is universally
 held to be invalid. The principle is frequently expressed in the declaration that
municipal authorities, under a general grant of power, cannot adopt ordinances which
infringe the spirit of a state law or repugnant to the general policy of the state. In every
power to pass ordinances given to a municipality, there is an implied restriction that the
ordinances shall be consistent with the general law. There is no law specifically
authorizing the LGUs to grant franchises to operate CATV system. It is clear that in the
absence of constitutional or legislative authorization, municipalities have no power to
grant franchises. Consequently, the protection of the constitutional provision as to
impairment of the obligation of a contract does not extend to privileges, franchises and
grants given by a municipality in excess of its powers, or ultra vires.

POWERS OF THE PRESIDENT OVER LGUs

1. JUDGE DADOLE V. COA 2002 - In administrative law, supervision means

overseeing or the power or authority of an officer to see that subordinate officers
perform their duties. If the latter fail or neglect to fulfill them, the former may take such
action or step as prescribed by law to make them perform their duties. Control, on the
other hand, means the power of an officer to alter or modify or nullify or set aside what
a subordinate officer has done in the performance of his duties and to substitute the
judgment of the former for that of the latter. In Taule v. Santos,we further stated that
the Chief Executive wielded no more authority than that of checking whether local
governments or their officials were performing their duties as provided by the
fundamental law and by statutes. He cannot interfere with local governments, so long
as they act within the scope of their authority. “Supervisory power, when contrasted
with control, is the power of mere oversight over an inferior body; it does not include
any restraining authority over such body,” we said. In a more recent case, Drilon v. Lim,
the difference between control and supervision was further delineated. Officers in
control lay down the rules in the performance or accomplishment of an act. If these
rules are not followed, they may, in their discretion, order the act undone or redone by
their subordinates or even decide to do it themselves. On the other hand, supervision
does not cover such authority. Supervising officials merely see to it that the rules are
followed, but they themselves do not lay down such rules, nor do they have the
discretion to modify or replace them. If the rules are not observed, they may order the
 work done or redone, but only to conform to such rules. They may not prescribe their
own manner of execution of the act. They have no discretion on this matter except to
see to it that the rules are followed. Under our present system of government, executive
power is vested in the President. The members of the Cabinet and other executive
officials are merely alter egos. As such, they are subject to the power of control of the
President, at whose will and behest they can be removed from office; or their actions
and decisions changed, suspended or reversed. In contrast, the heads of political
subdivisions are elected by the people. Their sovereign powers emanate from the
electorate, to whom they are directly accountable. By constitutional fiat, they are
subject to the President’s supervision only, not control, so long as their acts are
exercised within the sphere of their legitimate powers. By the same token, the President
may not withhold or alter any authority or power given them by the Constitution and
the law.

2. PIMENTEL V AGUIRRE, ET AL 2000 - Under our present system of government,

executive power is vested in the President. The members of the Cabinet and other
executive officials are merely alter egos. As such, they are subject to the power of
control of the President, at whose will and behest they can be removed from office; or
their actions and decisions changed, suspended or reversed. In contrast, the heads of
political subdivisions are elected by the people. Their sovereign powers emanate from
the electorate, to whom they are directly accountable. By constitutional fiat, they are
subject to the President’s supervision only, not control, so long as their acts are
exercised within the sphere of their legitimate powers. By the same token, the President
may not withhold or alter any authority or power given them by the Constitution and
the law. Under the Philippine concept of local autonomy, the national government has
not completely relinquished all its powers over local governments, including
autonomous regions. Only administrative powers over local affairs are delegated to
political subdivisions. The purpose of the delegation is to make governance more
directly responsive and effective at the local levels. In turn, economic, political and
social development at the smaller political units are expected to propel social and
economic growth and development. But to enable the country to develop as a whole,
the programs and policies effected locally must be integrated and coordinated towards
a common national goal. Thus, policy-setting for the entire country still lies in the
 President and Congress. As we stated in Magtajas v. Pryce Properties Corp., Inc.,
municipal governments are still agents of the national government.
Fiscal Autonomy - local governments have the power to create their
own sources of revenue in addition to their equitable share in the national taxes
released by the national government, as well as the power to allocate their
resources in accordance with their own priorities. It extends to the preparation
of their budgets, and local officials in turn have to work within the constraints
thereof. They are not formulated at the national level and imposed on local
governments, whether they are relevant to local needs and resources or not.
Hence, the necessity of a balancing of viewpoints and the harmonization of
proposals from both local and national officials, who in any case are partners in
the attainment of national goals.

3. MANDANAS V. OCHOA 2018 –

4. PROVINCE OF BATANGAS V ROMULO 2004 - Consistent with the principle of

local autonomy, the Constitution confines the President’s power over the LGUs to one
of general supervision. This provision has been interpreted to exclude the power of
control. The distinction between the two powers was enunciated in Drilon v. Lim: An
officer in control lays down the rules in the doing of an act. If they are not followed, he
may, in his discretion, order the act undone or redone by his subordinate or he may even
decide to do it himself. Supervision does not cover such authority. The supervisor or
superintendent merely sees to it that the rules are followed, but he himself does not lay
down such rules, nor does he have the discretion to modify or replace them. If the rules
are not observed, he may order the work done or re-done but only to conform to the
prescribed rules. He may not prescribe his own manner for doing the act. He has no
judgment on this matter except to see to it that the rules are followed.
5. ACORD V ZAMBORA 2005
6. KIDA V SENATE OF THE PHILIPPINES 2001
7. GOV VILLAFUERTE V ROBREDO 2014 - To safeguard the state policy on local
autonomy, the Constitution confines the power of the President over LGUs to mere
supervision. “The President exercises ‘general supervision’ over them, but only to
‘ensure that local affairs are administered according to law.’ He has no control over
their acts in the sense that he can substitute their judgments with his own.” Thus,
Section 4, Article X of the Constitution, states: Section 4. The President of the
Philippines shall exercise general supervision over local governments. Provinces with
respect to component cities and municipalities, and cities and municipalities with
respect to component barangays, shall ensure that the acts of their component units are
within the scope of their prescribed powers and functions. Notwithstanding the local
fiscal autonomy being enjoyed by LGUs, they are still under the supervision of the
President and maybe held accountable for malfeasance or violations of existing laws.
“Supervision is not incompatible with discipline. And the power to discipline and
ensure that the laws be faithfully executed must be construed to authorize the President
to order an investigation of the act or conduct of local officials when in his opinion the
good of the public service so requires.”