Public Corporations | LAW ON LOCAL GOVERNMENTS

LAW ON LOCAL GOVERNMENTS

Topic: Public Corporations

Public corporations refer to entities created by law as agencies of the State to perform certain functions and to govern particular areas within the State. In the context of Philippine local government law, public corporations include local government units (LGUs) such as provinces, cities, municipalities, and barangays. These public corporations are established under the 1987 Constitution and the Local Government Code of 1991 (Republic Act No. 7160), and they have a special legal standing in relation to both the national government and their constituents.

I. Nature of Local Government Units (LGUs) as Public Corporations

LGUs are categorized as political subdivisions of the State, endowed with the following characteristics:

1. Corporation by Law: Local governments are corporate bodies created by law, endowed with legal personality separate from the State. They can sue and be sued, enter into contracts, acquire and dispose of properties, and perform activities within the powers delegated to them.
2. Dual Nature: LGUs have a dual nature: as governmental agencies tasked with public administration and as corporate entities with proprietary powers. Their governmental functions pertain to the administration of laws and the promotion of general welfare, while proprietary functions are similar to those of private corporations (e.g., engaging in business or commerce).
3. Autonomy: LGUs enjoy local autonomy as provided by the Constitution and the Local Government Code. This autonomy refers to the capacity to govern their own affairs, especially with respect to administrative functions and fiscal autonomy. However, this is subject to the oversight of the national government.

II. Basis for the Creation and Existence of LGUs

The creation, powers, and functions of LGUs are provided by:

1. 1987 Philippine Constitution: It mandates the existence of autonomous territorial and political subdivisions (Article X). It guarantees the establishment of LGUs and provides the framework for decentralization, local autonomy, and the relationship between the national and local governments.
2. Local Government Code of 1991 (RA 7160): This law operationalizes the constitutional mandate on local autonomy, providing for the structure, powers, and responsibilities of LGUs.

A. Constitutional Basis

1. Article X, Section 1: The Constitution explicitly states that territorial and political subdivisions of the Philippines are the provinces, cities, municipalities, and barangays. Each is provided with autonomy to govern its affairs.
2. Section 2: It ensures the territorial and political subdivisions shall enjoy local autonomy.
3. Section 3: The creation, division, merger, abolition, or substantial alteration of LGU boundaries shall be determined by law, subject to approval by a majority of the votes cast in a plebiscite.
4. Section 4: The President exercises general supervision over LGUs to ensure that their acts are within the law. However, the President does not have direct control over LGUs, respecting their autonomy.

B. Local Government Code of 1991 (RA 7160)

1. Section 15: It provides that every LGU is a body corporate, enjoying both government powers and corporate powers.
2. Section 16: Known as the General Welfare Clause, it allows LGUs to promote health, safety, and the well-being of their inhabitants, giving them broad discretion to create policies and ordinances that are deemed beneficial to the public.
3. Section 17: Outlines the basic services and facilities that LGUs are required to provide to their constituents, ranging from health and education to environmental services and infrastructure.

III. Powers of Local Government Units

The Local Government Code grants LGUs a wide range of powers, which are grouped into several key categories:

A. General Powers

1. Corporate Powers: As a public corporation, each LGU has the power to:
   • Acquire and dispose of real or personal property.
   • Enter into contracts in line with their governmental and proprietary functions.
   • Sue and be sued.
2. Police Power: LGUs are granted limited police power to enact ordinances to promote general welfare, protect public health, safety, morals, and ensure the economic and social well-being of its people.
3. Power of Eminent Domain: LGUs may expropriate private property for public use, with just compensation, provided that the taking is for a legitimate purpose.
4. Power of Taxation: LGUs have the authority to levy taxes, fees, and charges, subject to the limitations provided in the Local Government Code and other special laws. This power is essential for the fiscal autonomy of LGUs.

B. Specific Powers

1. Legislative Power: LGUs have legislative bodies (Sangguniang Panlalawigan, Sangguniang Panlungsod, Sangguniang Bayan, and Sangguniang Barangay) that enact ordinances, pass resolutions, and appropriate funds for the local government.
2. Executive Power: The Local Chief Executive (Governor, Mayor, Barangay Chairman) has the duty to execute laws and ordinances passed by the legislative body. They are responsible for local governance and administration.
3. Judicial Power: LGUs, through local courts (e.g., barangay justice system), have a limited quasi-judicial role, primarily in the amicable settlement of disputes under the Katarungang Pambarangay Law.

IV. Public Corporations and the Doctrine of Local Autonomy

The doctrine of local autonomy is central to the role of LGUs as public corporations. The principle of autonomy ensures that LGUs can manage their local affairs without undue interference from the national government. However, this autonomy is not absolute, as the national government still exercises general supervision over LGUs to ensure that their acts conform to law.

General Supervision vs. Control

1. General Supervision: The national government, through the President and the Department of the Interior and Local Government (DILG), can only ensure that LGUs perform their duties as mandated by law. This means that the national government cannot interfere with the discretion of local officials in matters within their jurisdiction, except to ensure legality.
2. Control: The power of control would allow the national government to substitute its judgment for that of the LGUs. However, the Constitution limits the national government to supervision, not control.

V. Types of LGUs and Their Powers as Public Corporations

A. Provinces

• The largest political unit in the country.
• Governed by a governor and the Sangguniang Panlalawigan.
• Powers include the creation of provincial development plans, collection of real property taxes, and oversight of municipalities and component cities.

B. Cities

• Classified into Highly Urbanized Cities, Independent Component Cities, and Component Cities.
• Governed by a mayor and the Sangguniang Panlungsod.
• Cities have more extensive powers, especially in taxation, due to their larger population and greater economic activity.

C. Municipalities

• Political units smaller than cities and provinces but larger than barangays.
• Governed by a mayor and the Sangguniang Bayan.
• Municipalities are responsible for delivering basic services and coordinating development efforts in the rural areas.

D. Barangays

• The smallest political unit.
• Governed by a Barangay Captain and the Sangguniang Barangay.
• Barangays handle the most basic services and facilities, including maintaining peace and order through the barangay justice system.

VI. Relationship with the National Government

1. Intergovernmental Relations: The relationship between the national government and LGUs is based on the principles of decentralization and autonomy. While LGUs enjoy substantial powers, the national government provides oversight and sets national standards.
2. Decentralization: The transfer of powers, responsibilities, and resources from the national government to LGUs is a hallmark of the Local Government Code, which aims to empower local governments to become self-reliant and responsive to local needs.

VII. Conclusion

Public corporations, as embodied by LGUs, play a vital role in Philippine governance, promoting local autonomy while maintaining alignment with national laws and policies. The system of local government in the Philippines ensures that each political subdivision can address the needs and concerns of its constituents while contributing to national development.

Classifications | Public Corporations | LAW ON LOCAL GOVERNMENTS

Topic: Classifications of Public Corporations under Political Law and Public International Law

I. Introduction to Public Corporations

Public corporations are legal entities created by law, vested with certain public powers to manage local affairs and administer governmental functions. These entities operate for public purposes and benefit, differing from private corporations that pursue commercial objectives. The most common form of public corporation in the Philippines is the local government unit (LGU).

The Philippine Constitution, the Local Government Code of 1991 (Republic Act No. 7160), and various special laws govern the formation, classification, powers, and functions of public corporations. Understanding the classifications of public corporations is crucial in political law and public international law, as these classifications determine the extent of powers, fiscal autonomy, and responsibilities of such entities.

II. Classifications of Public Corporations

Public corporations in the Philippines are primarily classified based on their nature and functions, as well as the scope of authority they exercise. The following are the classifications:

---

A. Local Government Units (LGUs)

Local Government Units (LGUs) are political subdivisions of the state that are autonomous to a certain extent, granted certain rights and powers under the Constitution and the Local Government Code. LGUs in the Philippines are classified into different levels, with each level having varying degrees of political, fiscal, and administrative autonomy.

1. Provinces

   • Definition: A province is the largest political unit in the country and is comprised of component cities and municipalities. It acts as an intermediate level between the national government and the municipal or city government.
   • Powers and Functions: Provinces exercise both executive and legislative functions. The executive power is vested in the Provincial Governor, while the legislative power is vested in the Sangguniang Panlalawigan (Provincial Board).
   • Examples: Cebu, Laguna, Bulacan.

2. Cities

   • Definition: A city is a political unit that is often more autonomous than a municipality, with a larger population and more economic activity. Cities are classified into highly urbanized cities (HUCs), independent component cities (ICCs), and component cities (CCs).
     • Highly Urbanized Cities (HUCs): Cities with a population of at least 200,000 inhabitants and an annual income of at least PHP 50 million. These cities are independent of the province and do not vote for provincial officials.
     • Independent Component Cities (ICCs): Cities that are not under the administrative supervision of the province but are not HUCs. ICCs are independent in terms of their operations.
     • Component Cities (CCs): Cities that are part of the province and subject to provincial supervision.
   • Powers and Functions: Cities are empowered with more autonomy than municipalities, with extensive fiscal powers and broader jurisdiction over services.
   • Examples: Quezon City (HUC), Iloilo City (ICC), Baguio City (CC).

3. Municipalities

   • Definition: A municipality is a political unit that is generally smaller in size and scope compared to cities. It serves as the local government entity for more rural or less densely populated areas.
   • Powers and Functions: Municipalities are governed by a Mayor (executive) and the Sangguniang Bayan (legislative). They are responsible for delivering basic services to their constituents.
   • Examples: Pagsanjan, Taal, Kalibo.

4. Barangays

   • Definition: The barangay is the smallest political unit in the Philippines, functioning as a grassroots government unit.
   • Powers and Functions: Barangays are responsible for delivering basic local services, including public safety, sanitation, and community-level dispute resolution through the Lupong Tagapamayapa. The barangay is headed by a Punong Barangay (Barangay Captain), with the Sangguniang Barangay as its legislative body.
   • Examples: Barangay San Antonio (Makati City), Barangay Poblacion (Mandaluyong).

---

B. Special Metropolitan Political Subdivisions

1. Metropolitan Manila Development Authority (MMDA)

   • Definition: The MMDA is a special public corporation created by Republic Act No. 7924, tasked with the management of Metro Manila, an area comprised of multiple highly urbanized cities and municipalities.
   • Nature: It is not an LGU but a government agency with both administrative and regulatory functions over Metro Manila.
   • Powers and Functions: The MMDA handles urban planning, transportation management, waste management, flood control, and other regional concerns across the National Capital Region (NCR).
   • Example: Metro Manila.

2. Autonomous Regions

   • Definition: Autonomous regions are political subdivisions that have been granted administrative and fiscal autonomy due to historical, cultural, and geographical considerations. Currently, the only autonomous region in the Philippines is the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM).
   • Legal Basis: Autonomous regions are established under the Constitution, and the details of their powers and functions are specified in organic laws (Republic Act No. 11054 for BARMM).
   • Powers and Functions: Autonomous regions have legislative power through their regional assemblies and executive power through a regional governor. They enjoy broader fiscal autonomy than other LGUs, with control over natural resources, taxation, and revenue-sharing schemes.
   • Example: Bangsamoro Autonomous Region in Muslim Mindanao (BARMM).

---

C. Quasi-Public Corporations

Quasi-public corporations are entities that perform certain public functions, but they are either privately controlled or semi-governmental. These corporations may not be directly classified as LGUs but are still involved in the management of public services or public infrastructure.

1. Government-Owned and Controlled Corporations (GOCCs)
   • Definition: GOCCs are entities created by law, owned by the government, and organized to conduct both commercial and public service functions.
   • Powers and Functions: GOCCs have varying degrees of autonomy and operate with a certain degree of financial independence. They are subject to rules on transparency, accountability, and governance provided in the GOCC Governance Act of 2011 (Republic Act No. 10149).
   • Examples: Philippine National Oil Company (PNOC), Philippine Amusement and Gaming Corporation (PAGCOR), Land Bank of the Philippines (LBP).

---

D. Other Special Districts and Authorities

1. Local Special Bodies

   • These are bodies created within LGUs for special purposes, such as the Local School Board, Local Health Board, and Local Development Council. They function to assist in specific aspects of local governance and are composed of both government officials and private sector representatives.

2. Economic Zones and Development Authorities

   • Special economic zones are created under Republic Act No. 7916 (Special Economic Zone Act) to attract investment and provide employment in specific areas. These zones are governed by development authorities or corporations, such as the Subic Bay Metropolitan Authority (SBMA) or the Philippine Economic Zone Authority (PEZA), which regulate business operations within these zones.

---

III. Conclusion

Public corporations in the Philippines are categorized into various classifications, each designed to serve distinct governmental functions or specific territorial jurisdictions. From local government units to special metropolitan authorities, autonomous regions, and quasi-public corporations, these entities play a critical role in decentralized governance, public service delivery, and regional development. Each classification of public corporations possesses varying degrees of political, fiscal, and administrative autonomy, as specified by law, contributing to the overall structure of governance in the Philippines.

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.

Quasi-Corporations | Classifications | Public Corporations | LAW ON LOCAL GOVERNMENTS

Political Law and Public International Law: Local Government Law – Quasi-Corporations

I. Introduction to Public Corporations

Public corporations are entities created by law to govern and manage local affairs, vested with corporate powers necessary to carry out their functions. These corporations may exercise powers either through their corporate character (proprietary functions) or by virtue of their governmental character (governmental functions).

Under the law, public corporations are typically divided into two classifications: municipal corporations and quasi-corporations. This outline will focus specifically on quasi-corporations, their characteristics, and their role within the local government framework.

---

II. Quasi-Corporations: Definition and Legal Basis

Quasi-corporations are legal entities created by statute for a limited and special public purpose. Unlike regular municipal corporations, which have broad powers and duties over a defined territory, quasi-corporations possess more specialized functions and exist primarily to achieve specific governmental objectives.

Quasi-corporations do not enjoy the full corporate personality that municipalities or other local government units (LGUs) possess. They are considered "quasi" because, while they have certain legal powers similar to corporations (such as the ability to sue and be sued), their primary function is governmental, and their powers are limited and specialized.

These entities are created either by special legislative acts or general laws and are typically charged with the administration of special tasks that benefit a larger area or perform functions that would be inefficient for municipalities or provinces to carry out individually.

Examples of Quasi-Corporations in Philippine Law:

1. Barangay Waterworks Associations (BWAs) - Created for the administration and maintenance of local water systems in rural areas.
2. Special Economic Zones – These may be formed with special powers to promote economic development in specific geographic areas, often involving tax incentives and regulatory autonomy.
3. Barangay Councils of Local Government Units – While a barangay is a municipal corporation, certain specific functions (such as water supply or electricity distribution) may be delegated to quasi-corporate entities within barangays.
4. School Boards or Special Districts – Sometimes quasi-corporations are tasked with administering local education or health care services, typically in coordination with the national government but with operational independence in certain areas.

Legal Basis in the Philippine Constitution and Laws:

• 1987 Constitution: While the Constitution provides for the creation and governance of local governments (Art. X), quasi-corporations are typically governed by specific statutes or laws that grant them the limited legal capacity to perform specific roles.
• Local Government Code of 1991 (RA 7160): This comprehensive code covers municipal corporations but also contemplates the creation of special purpose entities which can have a quasi-corporate character.

---

III. Characteristics of Quasi-Corporations

Quasi-corporations in the Philippines are characterized by the following features:

1. Limited Powers:

   • Quasi-corporations are granted limited powers that are strictly defined by their enabling law. These powers generally pertain to a specific function or objective (e.g., managing a water district or a local economic zone).
   • Unlike fully-fledged LGUs, they do not have police powers, taxing powers (except when explicitly granted by law), or broad legislative powers.

2. Special Purpose Entities:

   • Their purpose is often tied to providing a specific public service, such as water distribution, health care, education, or regional economic development.
   • They are created when it is more efficient to delegate a specific governmental task to a specialized entity rather than a regular LGU.

3. Public Character:

   • While they have some elements of corporate personality, quasi-corporations are fundamentally public entities that serve governmental functions rather than proprietary interests.
   • The primary goal of a quasi-corporation is to fulfill a public need, making them governmental rather than purely corporate in character.

4. Creation by Statute:

   • Quasi-corporations are not organic entities but are created by legislative acts or executive orders. They are not created by local initiative but through national-level action that determines their scope and powers.

5. Limited Jurisdiction:

   • These entities often have jurisdiction over a particular area or class of individuals or properties and do not exercise broad territorial jurisdiction like a city or municipality. Their jurisdiction is tied to their specific function.

6. Funding:

   • Funding for quasi-corporations often comes from national government appropriations, grants, or specific fees collected for services rendered. They generally lack independent taxing power unless specifically conferred by law.

7. Limited Autonomy:

   • Quasi-corporations may exercise a degree of operational independence but are often subject to oversight by national government agencies or departments, such as the Department of the Interior and Local Government (DILG) or specialized national agencies related to their specific function (e.g., water districts under the Local Water Utilities Administration).

---

IV. Differences Between Municipal Corporations and Quasi-Corporations

Aspect	Municipal Corporations	Quasi-Corporations
Powers	Broad powers, including police power and taxation	Limited powers, tied to specific statutory objectives
Scope	Governs an entire city, municipality, or province	Often limited to a special function or purpose in a specific area
Creation	Created by the Local Government Code or special law	Created by specific legislative acts or executive orders
Funding	Can generate revenue through taxation and fees	Limited revenue-raising powers; often reliant on government funding
Autonomy	High degree of autonomy from the national government	Limited autonomy, often subject to supervision or control by national agencies
Primary Purpose	Governing the general welfare of the local constituency	Fulfilling a special or technical governmental function

---

V. Functions and Powers of Quasi-Corporations

Quasi-corporations typically carry out specialized governmental functions such as:

1. Infrastructure Development:

   • Some quasi-corporations are tasked with managing and maintaining infrastructure, such as water districts or local electric cooperatives, where direct municipal administration might not be feasible.

2. Service Provision:

   • Entities like barangay water districts or health boards provide essential services to areas where local governments may lack the technical expertise or resources.

3. Regulation and Administration:

   • In cases where specialized regulation or administration is required (e.g., in Special Economic Zones), quasi-corporations are empowered to act with limited authority, sometimes with delegated regulatory powers.

4. Collaboration with National Agencies:

   • Quasi-corporations often collaborate with national agencies to implement specific policies or programs, such as environmental management, public health campaigns, or regional economic development initiatives.

---

VI. Conclusion

Quasi-corporations play a vital role in the decentralized structure of the Philippines by carrying out specialized functions that complement the broader mandates of local government units. Their creation reflects the need for targeted, efficient governance solutions in areas where full municipal or provincial oversight may be either inefficient or impractical. These entities, while limited in scope and powers, fulfill critical public functions and are essential components of the Philippine local government framework.

Their special-purpose nature distinguishes them from fully-fledged LGUs, highlighting their role in addressing specific public needs through a flexible, albeit controlled, corporate structure.

Corporate Powers of LGUs | Public Corporations | LAW ON LOCAL GOVERNMENTS

Corporate Powers of Local Government Units (LGUs)

The Local Government Code of 1991 (Republic Act No. 7160) governs the corporate powers of Local Government Units (LGUs) in the Philippines. These powers enable LGUs to act as legal entities, manage local affairs, and enter into legal contracts. The purpose of conferring corporate powers is to ensure that LGUs, as public corporations, can act autonomously to perform their local functions effectively and efficiently. Below is a detailed discussion on the corporate powers of LGUs under the Local Government Code:

1. Nature of LGUs as Public Corporations

LGUs are considered public corporations, which are legal entities created by law to perform governmental and proprietary functions. As such, they possess a dual character:

• Governmental Functions: These pertain to the exercise of the State's sovereign powers delegated to the LGUs, such as police power, eminent domain, and taxation.
• Proprietary Functions: These refer to functions that relate to activities traditionally considered commercial, similar to those performed by private corporations.

2. Corporate Powers of LGUs

Under Section 22 of the Local Government Code, LGUs have three specific corporate powers:

A. To Have Continuous Succession in Its Corporate Name

An LGU, as a public corporation, exists perpetually in law and continues to operate in its corporate name regardless of changes in leadership. This continuity is necessary to ensure that the LGU can perform its duties and obligations uninterrupted, including entering into contracts and acquiring assets.

B. To Sue and Be Sued

This corporate power allows LGUs to initiate legal actions and defend themselves in court. LGUs can sue any party in their corporate capacity, and they can be sued for obligations they incur. This ensures accountability and the legal capacity to enforce rights and obligations.

• Scope of Liability: LGUs may be held liable for damages arising from their proprietary functions, but they generally enjoy immunity from suit concerning their governmental functions unless there is a waiver or legislative approval.
• Restrictions: The power to sue and be sued is limited by statutory provisions, including compliance with procedural requirements such as obtaining prior approval from the Sangguniang Bayan, Panlungsod, or Panlalawigan before entering into or settling disputes.

C. To Enter into Contracts

LGUs, through their executive officials (i.e., mayor or governor), may enter into contracts necessary for the proper exercise of their functions. This includes contracts for the provision of services, acquisition of property, or establishment of partnerships.

• Limitations: Contracts must be in line with the LGU’s powers and functions under the law, and they must comply with procedural requirements such as:

  • Authorization by the Sangguniang (council) concerned;
  • Compliance with public bidding requirements for procurement and disposal of property, as provided under Republic Act No. 9184 (Government Procurement Reform Act);
  • Adherence to budgetary limits and funding availability.

• Ultra Vires Acts: Any contract entered into by an LGU that is outside its lawful powers or without the requisite authorization is considered ultra vires and unenforceable.

3. Exercise of Corporate Powers by the Local Chief Executive

The local chief executive, such as the governor, city mayor, or municipal mayor, represents the LGU in its corporate dealings. However, the Local Government Code provides that certain acts by the local chief executive require prior authorization from the Sangguniang or legislative council, such as:

• Entering into long-term contracts;
• Loan agreements;
• Sale or lease of LGU properties.

The local chief executive is also responsible for the proper execution of contracts and ensuring that obligations are fulfilled.

4. Limitations on the Exercise of Corporate Powers

The exercise of corporate powers by LGUs is not absolute and is subject to several limitations and controls, including:

• Fiscal Autonomy: While LGUs enjoy a degree of fiscal autonomy, they must ensure that expenditures do not exceed available resources. Contractual obligations must comply with the approved local budget.
• Public Accountability: As public entities, LGUs are subject to laws on transparency, accountability, and good governance. This includes the prohibition on contracts manifesting conflict of interest, such as those involving relatives of public officials.
• Compliance with National Laws: LGUs must operate within the bounds of national laws and policies. For example, their taxing and regulatory powers cannot contravene national statutes or infringe upon the powers of national agencies.

5. LGUs as Proprietary Entities

In their capacity as public corporations, LGUs may engage in proprietary activities. These activities are undertaken primarily for profit and do not directly relate to the exercise of governmental functions. For example:

• Establishment of Economic Enterprises: LGUs can establish local economic enterprises (e.g., public markets, slaughterhouses, and transportation systems) to generate revenue for the local government.
• Public-Private Partnerships (PPPs): LGUs are allowed to enter into joint ventures or partnerships with private entities for the development of public infrastructure projects or other economic endeavors. These partnerships are governed by Republic Act No. 6957 (as amended by Republic Act No. 7718), also known as the Build-Operate-Transfer (BOT) Law.

6. Corporate Powers of Barangays

Even the smallest political subdivisions, such as barangays, have corporate powers. However, due to their size and limited resources, barangays have more restricted powers compared to cities, municipalities, and provinces. Their corporate powers are usually limited to:

• Providing basic services and facilities;
• Constructing and maintaining barangay infrastructure projects;
• Collecting minimal fees for certain services.

Barangays also have the power to enter into contracts and sue and be sued, though these contracts are typically limited in scope and value due to budgetary constraints.

7. Key Jurisprudence on LGU Corporate Powers

Several landmark Supreme Court rulings have shaped the understanding and application of LGU corporate powers:

• Pimentel v. Aguirre (2000): The Court ruled that LGUs enjoy a measure of fiscal autonomy and that any executive act that unduly interferes with such autonomy, such as the imposition of restrictions on their corporate powers without legal basis, is unconstitutional.
• Municipality of San Narciso v. Mendez (1995): The Supreme Court held that an LGU cannot disavow its contracts or obligations by simply claiming it was acting in its governmental capacity. LGUs are liable for obligations that arise from proprietary functions.
• Municipality of Bacoor v. IAC (1985): This case highlights the distinction between governmental and proprietary functions, holding that LGUs may be held liable for damages arising from their proprietary acts but may enjoy immunity for governmental acts, unless waived by law.

8. Conclusion

The corporate powers of LGUs are essential in enabling them to function autonomously in managing local affairs. These powers are exercised within the framework of the Local Government Code and are subject to certain limitations, such as fiscal responsibility, transparency, and accountability. LGUs must balance their dual roles as public corporations performing governmental functions and as entities engaging in proprietary activities to promote the welfare and development of their local communities.

Concept; Distinguished from Government-Owned or Controlled Corporations | Public Corporations | LAW ON LOCAL GOVERNMENTS

Political Law and Public International Law > XV. Law on Local Governments > A. Public Corporations > 1. Concept; Distinguished from Government-Owned or Controlled Corporations

I. Concept of Public Corporations

A public corporation refers to an entity created by law to perform a governmental function, typically within a specific local jurisdiction. The primary purpose of public corporations is to administer local affairs in a specific territory. They are vested with a measure of self-government, allowing them to handle local matters more efficiently than the national government.

In the Philippine setting, public corporations include local government units (LGUs) such as provinces, cities, municipalities, and barangays. These entities are established under the 1987 Constitution and the Local Government Code of 1991 (Republic Act No. 7160). They are considered public corporate bodies or municipal corporations as they carry out public functions, exercising delegated governmental powers.

Key characteristics of public corporations include:

1. Creation by Statute: Public corporations, especially LGUs, are created by legislative enactments, such as national laws or ordinances issued by competent legislative bodies (e.g., Congress or Sanggunians). Their existence depends on law, and their powers are clearly defined by law.

2. Territoriality: Public corporations have a clearly defined geographical territory where they exercise jurisdiction. LGUs, for example, have the authority to regulate, manage, and administer services within their respective territorial limits.

3. Autonomy: While still subject to national oversight, public corporations are granted local autonomy under Article X of the 1987 Constitution. They enjoy legislative, executive, and fiscal powers over their local affairs.

4. Public Service Orientation: Public corporations exist to serve public interests, particularly in the delivery of basic services such as education, health, infrastructure, and public safety. Unlike private corporations, their purpose is not profit generation.

II. Distinction from Government-Owned or Controlled Corporations (GOCCs)

A Government-Owned or Controlled Corporation (GOCC) refers to a corporation created by special law or organized under the general corporation law in which the government has either full or partial ownership. The primary purpose of GOCCs is typically commercial or business-oriented, although some may also perform public service functions.

While both public corporations and GOCCs are governmental entities, there are significant differences between the two:

1. Creation and Basis of Existence

• Public Corporations (LGUs) are created directly by law (Constitution, Local Government Code, or special legislation). They are created as territorial subdivisions of the State to provide localized governmental services.
• GOCCs may be created by a special charter (e.g., Philippine Amusement and Gaming Corporation [PAGCOR] or the Government Service Insurance System [GSIS]) or incorporated under general corporate law (e.g., Philippine National Oil Company [PNOC]). Their establishment is primarily driven by economic or business needs.

2. Nature of Functions

• Public Corporations primarily perform governmental or public functions, such as the regulation of land use, provision of local services, and enforcement of local laws. Their focus is the public welfare within their territorial jurisdiction.
• GOCCs, on the other hand, are often created to engage in commercial or business activities, such as providing utilities (e.g., National Power Corporation [NPC]), conducting insurance services (e.g., GSIS), or engaging in strategic industries (e.g., PNOC). Some GOCCs also perform proprietary functions, where profit-making is a primary goal, although they may be subject to certain public service mandates.

3. Autonomy and Supervision

• Public Corporations are granted local autonomy under the Constitution and the Local Government Code. This means they have the power to legislate local laws (ordinances), levy taxes, and control their local affairs with minimal interference from the national government, subject to general supervision. For instance, the Department of the Interior and Local Government (DILG) exercises general oversight but cannot intervene in purely local matters unless there is a violation of law.

• GOCCs are subject to the direct control or supervision of the national government. Many GOCCs report to a line department (e.g., National Electrification Administration [NEA] under the Department of Energy) or to a regulatory body (e.g., Governance Commission for GOCCs or GCG). The national government exerts greater control over the operations of GOCCs than it does over LGUs.

4. Revenue and Funding

• Public Corporations generally derive their revenues from local taxes, fees, and charges (e.g., real property taxes, business taxes), as well as their share of the Internal Revenue Allotment (IRA) from the national government. Public corporations do not operate to generate profit but to provide essential public services.

• GOCCs generate revenue through the sale of goods and services or by engaging in business activities. GOCCs are expected to be self-sustaining or profit-oriented, and many of them remit a portion of their earnings to the national treasury, depending on their profitability.

5. Legal Personality

• Public Corporations (LGUs) possess a dual character as governmental and corporate entities. In their governmental capacity, they enact ordinances, impose taxes, and maintain public order. In their corporate capacity, they may engage in proprietary functions, such as operating markets or water utilities, but these are incidental to their primary role as local governments.

• GOCCs have a purely corporate identity, even though they may serve public interests. They are governed by corporate laws (e.g., Corporation Code or their own charters) and can enter into contracts, acquire properties, sue, and be sued, much like private corporations.

6. Examples of Public Corporations vs. GOCCs

• Public Corporations: Province of Cebu, City of Manila, Municipality of Kalibo, Barangay Ayala Alabang.
• GOCCs: Philippine National Railways (PNR), Social Security System (SSS), Land Bank of the Philippines, Philippine Postal Corporation (PHLPost).

III. Summary of Key Differences

Aspect	Public Corporations (LGUs)	GOCCs
Creation	Created by law (Constitution, Local Government Code)	Created by special law or under general corporate law
Purpose	Perform governmental functions in a defined territory	Engage in business activities for profit or public service
Function	Primarily public service-oriented (local governance)	Primarily proprietary or commercial functions
Autonomy	Granted local autonomy, subject to general supervision	Under direct control or supervision of the national government
Revenue Source	Local taxes, fees, Internal Revenue Allotment (IRA)	Income from commercial activities
Examples	Provinces, Cities, Municipalities, Barangays	PAGCOR, GSIS, NPC, Landbank, SSS

IV. Constitutional and Legal Framework

1. Constitutional Provisions: The 1987 Philippine Constitution provides the basis for the existence and governance of both public corporations and GOCCs. Notably, Article X of the Constitution grants local autonomy to public corporations, emphasizing the decentralization of governance. Article XII discusses the regulation of GOCCs, particularly in areas of economic activity and public service.

2. Local Government Code of 1991 (Republic Act No. 7160): This law is the primary legal framework governing public corporations (LGUs). It outlines the powers, functions, and responsibilities of LGUs, including their ability to legislate ordinances, levy taxes, and manage local resources.

3. Governing Laws for GOCCs: GOCCs are regulated by various statutes, including their individual charters and Republic Act No. 10149, the GOCC Governance Act of 2011, which establishes the Governance Commission for GOCCs (GCG) as the central oversight body for all GOCCs. This ensures that GOCCs adhere to good governance practices, are efficient in delivering services, and contribute to national development goals.

V. Conclusion

The distinction between public corporations and GOCCs is rooted in their creation, function, and the degree of autonomy they enjoy. Public corporations are primarily tasked with providing public services within a defined territory, while GOCCs operate under a business model, often serving proprietary functions. Understanding these differences is crucial for navigating the complexities of public administration and governance in the Philippines.