Municipal Corporations | Classifications | Public Corporations | LAW ON LOCAL GOVERNMENTS

LAW ON LOCAL GOVERNMENTS

Public Corporations > Classifications > Municipal Corporations

I. Definition and Nature of Municipal Corporations

A municipal corporation is a body politic and corporate, created under national law, for the purpose of governing a local area, usually defined by territorial boundaries. It is primarily tasked with administering local governance within its jurisdiction. Municipal corporations are a subset of public corporations, specifically organized to manage local public affairs and provide services such as public safety, infrastructure maintenance, and community development.

They possess dual characteristics:

1. Governmental or Public Functions: Exercising sovereign functions, such as implementing laws and ensuring peace and order.
2. Corporate or Private Functions: Engaging in activities for the economic or commercial benefit of the local community, such as operating public utilities.

Municipal corporations in the Philippines are created through legislative enactments or by the Constitution itself, and they exist to enable the decentralization of powers from the national government to local government units (LGUs).

II. Constitutional and Legal Basis

The creation, organization, powers, and functions of municipal corporations are primarily governed by:

1. 1987 Philippine Constitution: Article X provides for the creation, structure, and autonomy of local government units.
2. Republic Act No. 7160 (Local Government Code of 1991): The Local Government Code (LGC) is the fundamental statute that organizes and regulates the structure and powers of local government units, including municipal corporations.
3. Jurisprudence: Various decisions of the Supreme Court help clarify the application of laws governing municipal corporations.

III. Classifications of Municipal Corporations

Municipal corporations can be classified into several types according to their powers, jurisdiction, and other criteria.

A. Types of Municipal Corporations in the Philippines

The Local Government Code defines several types of LGUs as municipal corporations, including:

1. Provinces: These are composed of component cities and municipalities. The province is headed by a governor and serves as an intermediary between national government and municipalities/cities.

2. Cities: There are two types of cities:

   • Highly Urbanized Cities (HUCs): Cities with a minimum population of 200,000 and an annual income of at least P50 million. They are independent of the province in which they are geographically located.
   • Component Cities: These cities are part of a province unless they have been explicitly declared independent. Component cities share revenue and administrative links with the province.

3. Municipalities: These are local government units typically found within provinces and governed by a mayor. They are autonomous in performing certain administrative functions but are under the general supervision of the province.

4. Barangays: The smallest political unit, often described as the grassroots level of governance. Every municipality and city is composed of barangays.

B. Nature of Powers

Municipal corporations possess three primary powers under the Local Government Code:

1. Police Power: This refers to the authority of the municipal corporation to enact and enforce local ordinances and regulations to protect public health, safety, morals, and general welfare. For instance, they may impose curfews, regulate businesses, or implement zoning laws.

2. Power of Eminent Domain: This is the power to appropriate private property for public use, with just compensation. Municipal corporations can use this power to acquire land for public purposes like roads, schools, or public utilities.

3. Taxation Power: The power to impose and collect local taxes, fees, and charges necessary to generate revenue for the delivery of local services. Municipalities and cities can impose taxes such as real property taxes, business taxes, and fees for permits and licenses.

C. Autonomy and Supervision

Local autonomy is the foundation of the powers and operations of municipal corporations. The 1987 Constitution guarantees local autonomy to ensure that LGUs can govern their affairs independently, without undue interference from the national government. However, local autonomy is not absolute. The President exercises general supervision over local governments to ensure that they perform their functions in accordance with the law.

IV. Corporate Functions and Liabilities

Municipal corporations perform both governmental (public) and proprietary (corporate) functions:

1. Governmental Functions: These are sovereign powers conferred upon them by law, such as enforcing laws, protecting public order, and maintaining infrastructure. Actions under this capacity enjoy immunity from lawsuits unless specifically waived by law.

2. Proprietary Functions: These involve activities conducted by municipal corporations in their capacity as a corporate entity, akin to private enterprises. Examples include operating markets, waterworks, or transportation systems. Municipal corporations may be held liable for contracts or torts arising from their proprietary functions.

V. Creation, Alteration, and Dissolution

1. Creation: Municipal corporations are created through laws passed by Congress, ordinances from the Sangguniang Panlalawigan (provincial board), or via a plebiscite approved by a majority of the voting population in the affected area. The Local Government Code sets out the requirements for creating new LGUs, including population size, income level, and land area.

2. Alteration of Boundaries: The alteration of boundaries or the conversion of a municipality into a city requires a legislative act, often accompanied by a plebiscite where the affected constituents vote on the proposed change.

3. Dissolution: Municipal corporations can be dissolved if they fail to meet statutory requirements or upon the declaration of the national government through an act of Congress. Dissolution results in the termination of the legal existence of the municipal corporation, and its powers and assets revert to the national government or the relevant provincial or city government.

VI. Key Doctrines and Jurisprudence

The Supreme Court has clarified several key issues regarding municipal corporations, including:

1. Doctrine of Qualified Political Agency: Local officials are representatives of the State, and their acts are the acts of the State itself, but only within the limits of their powers.

2. Doctrine of Local Autonomy: Local governments must have sufficient latitude in deciding on local matters without undue interference from the national government. However, national laws remain supreme over local ordinances.

3. Vicarious Liability: Municipal corporations are liable for the acts of their employees only when acting within their proprietary capacity. They are generally immune from liability for governmental functions unless a law provides otherwise.

4. Power to Sue and Be Sued: As legal persons, municipal corporations may enter into contracts and sue or be sued in their corporate name, especially in relation to their proprietary functions.

VII. Conclusion

Municipal corporations play a crucial role in decentralizing the functions of the national government to promote local development and self-governance. Governed by the 1987 Constitution, the Local Government Code, and judicial pronouncements, these entities ensure that local areas are governed efficiently, addressing the needs and interests of their constituents while remaining subject to the laws of the Republic of the Philippines. The balance between local autonomy and national supervision is vital in maintaining the integrity of the political and legal structure of the country.

Requisites for Creation, Conversion, Division, Merger or Dissolution | Municipal Corporations | Classifications | Public Corporations | LAW ON LOCAL GOVERNMENTS

LAW ON LOCAL GOVERNMENTS > A. Public Corporations > 3. Classifications > b. Municipal Corporations > iii. Requisites for Creation, Conversion, Division, Merger or Dissolution

In Philippine law, the creation, conversion, division, merger, or dissolution of municipal corporations, such as provinces, cities, municipalities, and barangays, is governed primarily by the 1987 Constitution, the Local Government Code of 1991 (Republic Act No. 7160), and pertinent laws and jurisprudence. Below are the key requirements and legal considerations:

1. Creation of Local Government Units (LGUs)

The creation of a municipal corporation, such as a province, city, municipality, or barangay, requires the fulfillment of several substantive and procedural requisites.

a. Substantive Requisites

1. Income Requirement:

   • The creation of provinces, cities, and municipalities is contingent on the generation of a minimum annual income derived from local sources, as certified by the Department of Finance. This ensures the financial viability of the new LGU. The minimum income requirements are as follows:
     • Provinces: PHP 20 million
     • Cities: PHP 100 million
     • Municipalities: PHP 2.5 million
     • Barangays: No specific income requirement; however, it must be capable of supporting itself.

2. Population Requirement:

   • A minimum population threshold must be met as certified by the Philippine Statistics Authority (PSA). These thresholds are:
     • Provinces: Not less than 250,000 inhabitants
     • Cities: Not less than 150,000 inhabitants
     • Municipalities: Not less than 25,000 inhabitants
     • Barangays: Not less than 2,000 inhabitants (or 5,000 in Metro Manila and other highly urbanized cities)

3. Land Area Requirement:

   • The new LGU must have a minimum land area, unless it is composed of islands or is a metropolitan area. These are:
     • Provinces: At least 2,000 square kilometers
     • Cities: At least 100 square kilometers
     • Municipalities: At least 50 square kilometers
     • Barangays: No specific land area requirement.

4. Compliance with General Welfare:

   • The creation must be in accordance with the principles of general welfare. It must promote a more efficient and effective delivery of services and public administration.

b. Procedural Requisites

1. Petition or Initiative:

   • The creation of a new LGU can be initiated by an act of Congress or a local initiative by a majority of the local legislative body concerned, subject to the approval of the President, and must follow the necessary administrative processes.

2. Plebiscite Requirement:

   • No creation of a new province, city, municipality, or barangay shall take effect unless approved by a majority of the votes cast in a plebiscite. The plebiscite must be conducted by the Commission on Elections (COMELEC) within 120 days from the effectivity of the law or ordinance creating the new LGU. The plebiscite must be held in the affected area(s), which include not only the proposed new LGU but also the areas affected by the separation.

2. Conversion of Local Government Units

Conversion pertains to changing the status or classification of an LGU (e.g., from a municipality to a city).

a. Substantive Requisites

1. Compliance with Income, Population, and Land Area Requirements:
   • The LGU seeking conversion must meet the income, population, and land area requirements applicable to the higher category of LGU it seeks to become. For instance, for a municipality to be converted into a city, it must meet the income, population, and land area requirements for cities.

b. Procedural Requisites

1. Plebiscite:

   • Similar to the creation of new LGUs, no conversion shall take effect unless approved by a majority vote in a plebiscite conducted by the COMELEC within the political unit or units affected.

2. Congressional Action:

   • The conversion of an LGU requires an act of Congress (a law) for its conversion to be valid and effective.

3. Division of Local Government Units

An LGU can be divided into two or more LGUs, subject to specific legal requisites.

a. Substantive Requisites

1. Compliance with Income, Population, and Land Area Requirements:

   • Each of the resulting LGUs from the division must independently meet the income, population, and land area requirements under the Local Government Code.

2. General Welfare:

   • The division must serve the general welfare and promote the more efficient delivery of services.

b. Procedural Requisites

1. Plebiscite:

   • The division of an LGU must be approved by a majority of the votes cast in a plebiscite conducted in the political units affected.

2. Legislative or Executive Initiative:

   • The division can be initiated through a law passed by Congress or through a local legislative ordinance, subject to the approval of the President.

4. Merger of Local Government Units

LGUs can be merged into a single unit.

a. Substantive Requisites

1. Income, Population, and Land Area Requirements:

   • The merged LGU must meet the income, population, and land area requirements applicable to the merged entity’s classification.

2. General Welfare:

   • The merger must promote efficiency and effectiveness in governance and public service delivery.

b. Procedural Requisites

1. Plebiscite:

   • The merger must be ratified through a plebiscite conducted by the COMELEC within the affected political units.

2. Legislative or Executive Initiative:

   • A merger can be accomplished through an act of Congress or a local ordinance ratified by a plebiscite, subject to presidential approval.

5. Dissolution of Local Government Units

Dissolution occurs when an LGU ceases to exist due to annexation, incorporation into another LGU, or its inability to sustain itself.

a. Substantive Requisites

1. General Welfare and Public Interest:
   • The dissolution must be in the interest of public welfare and must be justified by reasons such as the LGU's inability to maintain itself financially or provide services effectively.

b. Procedural Requisites

1. Plebiscite:

   • Similar to the creation, division, and merger of LGUs, dissolution must be ratified by a majority vote in a plebiscite held in the LGU to be dissolved and the affected political units.

2. Act of Congress:

   • The dissolution of an LGU requires an act of Congress or a local ordinance subject to the approval of the President.

6. Jurisdictional Challenges and Limitations

a. Constitutional Limitations:

• The 1987 Constitution provides for certain restrictions, such as limiting the powers of local legislative bodies and Congress to reorganize political subdivisions without proper observance of the people’s right to vote on changes.

b. Judicial Review:

• Any legal dispute regarding the creation, conversion, division, merger, or dissolution of LGUs is subject to judicial review. Courts may nullify actions that fail to comply with constitutional or statutory requirements, particularly in cases where the plebiscite is not conducted or the substantive requirements (income, population, land area) are not met.

7. Relevant Jurisprudence

Several Supreme Court rulings interpret and clarify the application of these provisions:

• Comelec v. Nemenzo (G.R. No. 127325, September 25, 2000): This case emphasized the necessity of plebiscites in the creation of barangays.
• Pimentel v. Aguirre (G.R. No. 132988, July 19, 2000): This case dealt with the power of the President in altering or creating LGUs and underscored the role of Congress in legislative processes involving LGUs.

Conclusion

The creation, conversion, division, merger, or dissolution of local government units in the Philippines is a process that must follow strict legal and procedural guidelines laid out in the Local Government Code and the 1987 Constitution. The essential principles of financial viability, population, territorial integrity, and public welfare govern these processes. Furthermore, the participation of the affected constituents through a plebiscite ensures that changes to municipal corporations reflect the will of the people.

Nature and Functions | Municipal Corporations | Classifications | Public Corporations | LAW ON LOCAL GOVERNMENTS

Political Law and Public International Law: Municipal Corporations (Nature and Functions)

Overview

Municipal corporations are a specific type of public corporation in the Philippines, created to perform public or governmental functions within a defined local area. They are essential units of local government, vested with legal personality and the authority to manage their own affairs within the framework set by law.

The relevant provisions regarding the nature, functions, and powers of municipal corporations can be found in the 1987 Philippine Constitution, particularly in Article X (Local Government), and the Local Government Code of 1991 (Republic Act No. 7160), which provides the legal framework for the organization, powers, and functions of local government units (LGUs).

Nature of Municipal Corporations

Municipal corporations are public entities established for local self-government. They are created by law and endowed with powers necessary to carry out public and governmental functions in a particular locality. Their existence and powers derive from both constitutional provisions and statutory enactments, particularly the Local Government Code of 1991.

The nature of municipal corporations can be classified as follows:

1. Political and Corporate Nature: Municipal corporations are recognized as both political and corporate entities. This means that they function not only as agents of the national government for administrative purposes but also as corporate bodies with legal personality capable of contracting, suing, and being sued.

   • As political entities: They perform governmental functions, such as implementing national laws and regulations within their territorial jurisdiction, maintaining peace and order, and providing basic services to their constituents.
   • As corporate entities: They are empowered to enter into contracts, acquire and hold properties, and manage their own local affairs independently within the bounds of law.

2. Creature of the State: A municipal corporation is created by the legislature, and as such, its powers are derived directly from the sovereignty of the State. Their powers are not inherent but are delegated to them by law, primarily through the Local Government Code. Thus, the principle of local autonomy underpins the operation of these corporations, granting them powers to govern local matters without undue interference from the national government.

3. Legal Personality: Municipal corporations possess a distinct legal personality, separate from the individuals who compose them. This grants them the ability to:

   • Sue and be sued;
   • Own and manage property;
   • Contract obligations;
   • Enter into agreements with private entities or other local governments;
   • Exercise powers vested upon them by the Constitution and law.

4. Inviolability of Municipal Charters: The charter of a municipal corporation, once granted by the legislature, cannot be altered or revoked arbitrarily. However, it remains subject to legislative control, and any changes to the powers or organization of the corporation must be done in accordance with the law.

Functions of Municipal Corporations

Municipal corporations, as local government units, are empowered to carry out a variety of governmental and corporate functions to serve the public welfare. The distinction between these two types of functions is crucial:

1. Governmental Functions: These are functions performed by municipal corporations as agents of the state, for the general welfare of the public. They are primarily regulatory and administrative in nature and include:

   • Law enforcement: Ensuring peace and order within their jurisdictions by enforcing national laws and local ordinances.
   • Public safety: Providing basic public safety services, such as fire protection, disaster response, and emergency services.
   • Health services: Administering health services, including managing hospitals, clinics, and other healthcare facilities within their jurisdiction.
   • Public infrastructure and utilities: Managing and maintaining public infrastructure such as roads, bridges, water supply, and drainage systems.
   • Taxation and revenue generation: Imposing and collecting local taxes, fees, and charges, subject to the limits prescribed by law.

   Key Principle: Municipal corporations do not have inherent power to tax. Their power to levy taxes must be expressly granted by law, and they must follow strict statutory guidelines in doing so.

2. Corporate (Proprietary) Functions: Municipal corporations also engage in corporate or proprietary functions, which are activities that are not inherently governmental but are undertaken to benefit the community and raise local revenues. These include:

   • Public markets and slaughterhouses: Operating and maintaining public markets, slaughterhouses, and similar enterprises.
   • Public utilities: Managing local utilities like water and electricity services, as well as public transportation systems.
   • Commercial ventures: Engaging in activities or ventures that may generate income, such as leasing public property or running enterprises for local benefit.

   Key Principle: When performing proprietary functions, municipal corporations act more like private entities, and they can be held liable in civil cases involving contracts, torts, or property disputes in the same way that private corporations can.

Powers of Municipal Corporations

The powers of municipal corporations can be divided into three general categories:

1. Express Powers: These are powers explicitly granted to municipal corporations by law, especially under the Local Government Code. Examples include the power to legislate local ordinances, impose taxes, and regulate land use.

2. Implied Powers: These are powers not explicitly stated but are considered necessary for the municipal corporation to effectively exercise its express powers. For instance, if a municipal corporation is given the power to maintain public roads, it is implied that it has the power to hire personnel to carry out road maintenance.

3. Inherent Powers: These are powers that are naturally vested in municipal corporations by virtue of their existence. One key inherent power is the police power, which allows the municipality to enact ordinances and regulations for the protection of public health, safety, and welfare.

   Under the Local Government Code, specific powers include:

   • Police Power: Municipalities can enact ordinances to regulate behavior and ensure the general welfare of their residents. This power is broad but must meet three tests: (1) the ordinance must not violate the Constitution, (2) it must be reasonable, and (3) it must serve the public welfare.
   • Power of Eminent Domain: Municipalities can exercise the power of eminent domain, or the right to expropriate private property for public use, subject to the payment of just compensation.
   • Power of Taxation: Municipalities have the authority to levy taxes, fees, and charges on businesses, properties, and services within their jurisdiction, as provided by the Local Government Code.

Supervision and Control

Although municipal corporations are granted a degree of autonomy, they remain subject to the general supervision of the national government, specifically the Department of the Interior and Local Government (DILG). The national government does not exercise control, which means it cannot substitute its judgment for that of the local government unit; instead, it ensures that local laws and policies conform to national laws.

The principle of local autonomy, enshrined in the 1987 Constitution, grants local government units the right to govern their local affairs, but this is subject to limitations set by law, especially when matters of national interest are involved.

Conclusion

Municipal corporations in the Philippines play a critical role in local governance. Their nature as both political and corporate entities allows them to balance governmental and proprietary functions for the welfare of their constituents. Although they enjoy local autonomy, their powers remain delegated by the national government, and they must operate within the bounds of the Constitution and statutory laws. Understanding the nature, functions, and limitations of municipal corporations is essential to ensuring they serve their purpose effectively within the Philippine legal framework.

Elements | Municipal Corporations | Classifications | Public Corporations | LAW ON LOCAL GOVERNMENTS

POLITICAL LAW AND PUBLIC INTERNATIONAL LAW

LAW ON LOCAL GOVERNMENTS

A. Public Corporations

3. Classifications

b. Municipal Corporations

Municipal corporations are essential elements in the structure of local governance, being political subdivisions created by law for the efficient administration of local affairs. Under Philippine law, municipal corporations fall within the broader concept of public corporations, which can either be public corporations for government purposes (like provinces, cities, municipalities, and barangays) or private corporations for proprietary or business purposes. The focus of this discussion is on municipal corporations as public entities.

i. Elements of Municipal Corporations

Municipal corporations possess certain essential elements that define their nature, authority, and functions under Philippine law. These elements are as follows:

1. Creation by Law or Legislative Grant

The first and foremost element of a municipal corporation is that it must be created by law or through legislative action. Municipal corporations do not arise through the voluntary association of individuals, but rather, they are created by the national legislature through a law or statute. In the Philippines, this is usually done through a Republic Act passed by Congress or through ordinances created by the legislative branch.

• The Local Government Code of 1991 (Republic Act No. 7160) governs the creation, organization, and functions of local government units (LGUs) in the Philippines, including provinces, cities, municipalities, and barangays. This Code provides the legal basis for the existence and operation of municipal corporations.
• Congress has the authority to create, divide, merge, abolish, or substantially alter the boundaries of municipalities and other local government units. However, such legislative action must be subject to the criteria established under the Local Government Code, including factors such as population, income, and land area.

2. Corporate Existence

A municipal corporation possesses dual personalities—it acts as both:

• A public or governmental entity, performing political and governmental functions such as enforcing laws, maintaining peace and order, and providing basic services.
• A corporate entity, with its own legal personality separate from its constituents, possessing corporate powers to enter into contracts, own property, sue and be sued, and manage its assets and liabilities.

This dual nature is what distinguishes municipal corporations from purely private entities. The powers and functions exercised by the municipal corporation vary according to whether it is acting in a governmental or proprietary capacity.

3. Defined Territory

A municipal corporation must have a definite and identifiable territorial jurisdiction. The boundaries of a municipality or city are defined by law or legislative action and serve as the geographical limits within which the corporation exercises its powers and performs its functions.

• The determination of territorial boundaries is critical, as it determines the extent of the municipal corporation’s jurisdiction over its residents and the area where it can collect taxes, enforce regulations, and provide services.
• Any alteration to the territorial limits of a municipal corporation must follow the procedures outlined in the Local Government Code, including the holding of a plebiscite among the affected constituents.

4. Population or Community

A municipal corporation is created for the benefit of a community of people residing within a defined territory. The population must meet certain minimum requirements, as stipulated in the Local Government Code. Municipalities and cities must have a minimum number of residents to ensure that they are viable and can sustain their operations, services, and governance responsibilities.

• For instance, the Local Government Code sets a minimum population requirement for the creation of municipalities (at least 25,000 inhabitants for municipalities and 150,000 for cities). These population thresholds help ensure that the local government unit can operate effectively and have sufficient resources to provide essential services to its constituents.

5. Corporate Powers

Municipal corporations possess certain corporate powers necessary for them to function effectively. These powers are granted by law and may be classified into express, implied, and inherent powers:

• Express powers are those specifically granted by the Constitution, laws, or the charter of the municipal corporation. Examples include the power to levy taxes, create ordinances, enter into contracts, and acquire property.
• Implied powers are those that are reasonably necessary to carry out the express powers. For instance, the power to hire personnel is implied from the power to operate offices and provide services.
• Inherent powers refer to those powers that are inherent in municipal corporations, such as the power of eminent domain, police power, and the power to tax.

These powers must be exercised within the framework of the Constitution, national laws, and the charter creating the municipal corporation. Municipalities, being creatures of the State, cannot act outside of the powers granted to them by law (the doctrine of ultra vires applies).

6. Governmental and Proprietary Functions

Municipal corporations exercise governmental and proprietary functions:

• Governmental functions are those related to the exercise of sovereign power and include functions such as law enforcement, public safety, health services, education, and infrastructure development. These are typically considered public in nature and are not subject to taxation or legal liability in the same way private actions might be.

• Proprietary functions refer to activities that the municipal corporation undertakes in a business or commercial capacity, such as operating markets, water supply systems, or transportation services. When engaging in proprietary activities, a municipal corporation acts like a private entity and may be held liable for its commercial dealings.

7. Local Autonomy

Municipal corporations are granted a certain degree of local autonomy under the 1987 Philippine Constitution and the Local Government Code. Local autonomy refers to the ability of LGUs, including municipal corporations, to govern themselves and make decisions concerning their internal affairs without undue interference from the national government.

• The principle of decentralization is embodied in the Constitution, which encourages the devolution of powers to LGUs. This allows local governments to address local needs and concerns more effectively by giving them the authority to craft policies, pass ordinances, manage budgets, and deliver basic services such as health, education, and infrastructure.

• However, local autonomy is not absolute. Municipal corporations remain subject to the Constitution, national laws, and the supervisory authority of the national government, primarily through the Department of the Interior and Local Government (DILG). The President of the Philippines also exercises general supervision over LGUs to ensure that local officials perform their duties in accordance with the law.

Conclusion

Municipal corporations in the Philippines are public entities created by law with specific governmental and corporate powers. Their essential elements include creation by legislative grant, defined territorial boundaries, a resident population, a corporate personality, the ability to exercise both governmental and proprietary functions, and a certain degree of local autonomy. Their operation and functions are primarily governed by the Local Government Code of 1991, and their powers are subject to the Constitution and national laws. The creation and functioning of municipal corporations are designed to foster local governance and decentralization while ensuring that the State retains oversight and control for matters of national importance.