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The strength of free nations resides in the local community.

Local institutions are to liberty, what primary schools are to science;
they bring it within people's reach, they teach people to use and enjoy
it. Without local institutions, a nation may establish a free govern
ment, but it cannot have the spirit of liberty. Transient passions, mo
mentary interests, a chance of circumstances, may create the exter
nal forms of independence; but the despotic tendency which has been
repressed into the interior of the social body will, sooner or later,
appear on the surface.

Alexis de Tocqueville,
Democracy in America

Before going into a full discussion on the Local Government

Code, it is essential that basic definitions and fundamental princi
ples on the subject be reviewed.

1. Political law, defined.

Political law is that branch of public law which deals with the
organization and operation of the government organs of the state
and defines the relations of the state with the inhabitants of its ter
ritory. (People v. Perfecto, 43 Phil. 887.)

2. Political law, its subdivisions.

Political law embraces:
(a) Constitutional law;
(b) Administrative law;
(c) Law of Public Officers; and
(d) Law of Public Corporations.


3. Corporation defined.
A corporation is an artificial being created by operation of law,
having the right of succession and the powers, attributes and prop
erties expressly authorized by law or incident to its existence. (Sec.
2, Corporation Code.)

4. Classes of Corporations.
Corporations are classified into public and private. Some au
thorities include quasi-public corporations in the classification.

5. Public Corporation, defined.

A public corporation is one created by the state either by gen
eral or special act for purposes of administration oflocal government
or rendering service in the public interest.
It is one formed or organized for the government of portion of
a state (Sec. 3, Act No. 1459); it is created by the state as its own
agency for the accomplishment of parts of its own public works.
(ELLIOT, MuN. CORP., p. 1.)

6. Private Corporation, defined.

Our old Corporation Law defines private corporations as "those
formed for some private purpose, benefit, aim or end." (Sec. 3, Act
No. 1459.)

7. Public and Private Corporations, distinguished.

Public corporations are established for purposes connected with
the administration of civil or local governments; while private cor
porations are created for private aim, gain or benefits of its mem
Public corporations are creations ofthe state either by general
or special act; while private corporations are created by the will of
the incorporators with the recognizance of the state.
Public corporations are involuntary consequence of the legis
lation; while private corporations constitute a voluntary agreement
by and among its members.

A. Decided Case
1. The Articles of Incorporation seeking to incorporate a
barrio is unlawful for being violative of the Municipal Code.

ASUNCION v. YRIARTE, 28 PHIL. 67, 9/24/14,

Moreland, J.

Facts: This is an action to obtain a writ of mandamus to compel the

chief of the division of archives of the Executive Bureau to file certain
articles of incorporation. Lower court found in favor of defendant.
Held: We are of the opinion that it is the duty of the chief division
when articles are presented for registration to determine whether the
objects of the corporation as expressed in the articles are lawful. We
do not believe that simply because the articles of incorporation are
perfect in form, he must accept and register a corporation which was
organized for some unlawful or immoral purposes.
The purpose as stated in the articles of incorporation is "that
the object of the corporation is: a) to organize and regulate the man
agement, disposition, administration and control which the barrio Pulo
or San Miguel or its inhabitants have over the common property of
said inhabitants belonging to the whole barrio as such; and b) to use
the natural products of said property for the advantage of the barrio."
The purpose as its appears is to make the barrio a corporation which
will become the owner of and have the right of control and adminis
ter any property belonging to the municipality of Pasig found within
the limits of the barrio. This is unlawful being contrary to the provi
sions of the Municipal Code which gives the municipality jurisdiction
over the barrios within their respective territories.
Judgment AFFIRMED.

8. Public Corporations, classes.

They are:
(a) Quasi-public corporations, which are created as agencies
of the state for narrow and limited purposes without the
powers and liabilities of self-governing corporations. They
render public service or supply public wants.
(b) Municipal corporations.

9. Municipal Corporation, defined.

A municipal corporation is a "body politic and corporate con
stituted by the incorporation of the inhabitants for purposes of lo-

cal government thereof; it is established by law partly as an agency

of the state to assist in the civil government of the country, but
chiefly to regulate and administer the local or internal affairs of the
city, town or district which is incorporated." (DILLON, MUN. CORP., VoL.
2, pp. 58-59.)
The term municipal corporation has gradually given way to the
more recent term, local government, which has a substantially iden
tical definition as that of the former. Municipal corporations and local
governments are therefore one and the same entity.

10. Municipal Corporation, elements.

a) A legal creation or incorporation;
b) A corporate name by which the artificial personality or
legal entity is known and in which all corporate acts are
c) Inhabitants constituting the population who are invested
with the political and corporate power which are executed
through duly constituted officers and agents;
d) A place or territory within which the Local Civil Govern
ment and corporate functions are exercised. (LAUREL,
CABES ON MuN. CoRP., p. 29, citing McQUILLIN, MuN. CORP.,
VoL. I, pp. 289-290.)

11. Local Government, defined.

The term Local Government refers to a "political subdivision
of a nation or state which is constituted by law and has substantial
control of local affairs." (UP Law Center Constitution Revision
Project, Part II, p. 712, citing SADY, IMPROVEMENT OF LOCAL GOVERN

12. Local Government, its dual personality.

Local government has a dual personality, namely: 1) public or
governmental; and 2) private or corporate.
In its public or governmental capacity, it is an agent of the state
for the government of the territory and the inhabitants within the
local government limits. In its private capacity, it acts in a similar
category as a business corporation, performing functions not strictly

governmental or political. In its governmental character, it exercises

by delegation a part of the sovereignty of the state.
Examples of the first class are: a) establishment and operation
of schools; b) adoption of regulations against fire and diseases; and
c) preservation of the public peace, etc.
Examples of the latter class are: a) establishment of markets
and slaughter houses; b) operation of telephone system; and c) op
eration of ferry service, etc.
Municipal corporations perform twin functions. Firstly, they
serve as an instrumentality of the State in carrying out the func
tions of government. Secondly, they act as an agency of the commu
nity in the administration of local affairs. It is in the latter charac
ter that they are a separate entity acting for their own purposes and
not a subdivision of the State. (Surigao Electric Co., Inc. v. Munici
pality of Surigao, 24 SCRA 898.)

13. Local Government, as an agency of the State.

A. Decided Cases
1. A municipal corporation (local government) is merely an
agency instituted by the State for the purpose of carrying out in
detail the objects of government. It is essentially a revocable agency.
It has no vested powers or franchises. It is subject to the control of
the legislative. (Coyle v. Gray, 30 Atlantic 728.)

COYLE v. GRAY, 30 Atlantic 728

Facts: An act was passed by the legislature establishing a board of

water commissioners for the city of Wilmington, Delaware, taking the
control of the waterworks of a municipal corporation from the mayor
and placing it under that of the special board. Its constitutionality was
questioned. Petitioners contend that the waterworks is a private prop
erty of the public corporation and guaranteed by the due process of
law clause; and this protection exempts it from regulation and con
trol of the State.
Held: The Act of the Legislature is constitutional. A municipal corpo
ration being merely an agency of the State, the legislature may change
its internal government at pleasure. A municipal corporation does not
hold property, like waterworks, as a private corporation, so as to pre
vent the legislature from modifying the management thereof at will.
There is no diversion of the property from its original use.

2. The present City of Manila is not liable under the con

tract entered into by its predecessor, the Old Ayuntamiento because
it is not its successor and such obligations are not incurred by the
present city.

AGUADO v. CITY OF MANILA, 9 Phil. 518, 1/9/08,

Johnson, J.

Facts: Plaintiff Aguado was the successor of Mufi.oz. Mufi.oz entered

into certain contract with Ayuntamiento de Manila for the sale of coal
amounting to P3,070.40, and deposited with Ayuntamiento, Pl,920 as
a guaranty for the fulfillment of the contract. It was admitted that
Mu:fi.oz had well and truly fulfilled all the terms and requirements of
the contract and faithfully discharged the obligation contained. After
fulfillment of such obligation, Mu:fi.oz made due demand in the man
ner required by law and by the terms of the contract for the payment
of coal and recovery of deposit totalling P5,621.40, which sums
Ayuntamiento did not pay.
In August 1898, Ayuntamiento was forcibly suspended and the
Military Government succeeded it, possessing all its properties. In
February 1899, Munoz transferred all his rights and interest to said
sum unto plaintiff Aguado, who at various times made due demand
for said sum upon Military Government and the present successor City
of Manila, which demand was not paid. Plaintiff thereafter commenced
this action in the Manila CFI against the City of Manila for the pur
pose of recovering from the city the sum of P5,621.40 with interest
and cost. Trial court rendered judgment against defendant for the sum
plus interest.
Held: The issue in this case is whether or not the present City of
Manila is liable under the contracts for the obligation created therein
by Ayuntamiento as its successor, and, if it is, whether the plaintiff is
entitled to a writ of execution against any of the property of the
present city for the purpose of satisfying the liability.
The old Ayuntamiento, as the contracts themselves show, in
making the contract did not act as trustee or agent; but in its corpo
rate capacity, subject to the limitations imposed by the law. So that
when its principal, the Spanish Government in the Philippines, ceased
to have control over this territory, all its agents including the
Ayuntamiento, also ceased to exist. Although the present city govern
ment exercise certain powers which were formerly exercised by the
Ayuntamiento, it is not in law, the successor of the same and cannot
be charged with the obligations of the latter. The City of Manila, there
fore, is not liable for the obligations created by contracts executed by

the Ayuntamiento for they were never incurred by the present city.
For the reason that the city is not liable upon the contract, no ques
tion as to the right to take out a writ of execution against the prop
erty of said city can arise in the present case. (N.B. This was over
ruled by US Supreme Court, see Vilas v. City of Manila, infra,)

3. The new City of Manila is liable to its creditors for obli

gations incurred by the old City of Manila. For the mere change of
the sovereign authority does not necessarily dissolve the municipal
corporation under the former sovereign.

VILAS v. CITY OF MANILA, 42 Phil. 935, 4/3/11

Lurton, J.

Facts: Before the cession of the Philippines to the United States by

the treaty of Paris, Vilas was creditor of the City of Manila. When
the City of Manila was incorporated under Act No. 183 of the Philip
pine Commission, he brought an action against the City of Manila to
recover the sum due to him. As a matter of defense, it was claimed
that the old city of Manila which incurred the indebtedness had been
dissolved by the change of sovereignty and that by the incorporation
of the new city under Act No. 183, the liability of the old city has al
ready been extinguished.

Held: The juristic identity of the corporation has in no wise been af

fected, and in law, the present city is in very legal sense the succes
sor of the old. As such it is entitled to the property and property rights
of the predecessor corporation, and is in law subject to all of its li
abilities. The mere change of the sovereign authority governing a coun
try does not necessarily dissolve the municipal corporation organized
under the sovereign. The argument that by the change of sov
ereignty the old city was extinguished in the same manner as the
agent dies upon the death of the principal, loses sight of the dual char
acter of municipal corporations, corporate and governmental. Only
such governmental functions as are incompatible with the present
sovereignty may be considered suspended. The juristic identity of the
corporation is not affected by the change of sovereignty. The City of
Manila stands liable to its creditors.

4. A municipality, the pueblo of Catbalogan, as a juridical

person, may acquire patrimonial property under its own inde
pendent personality and not as a mere agent of the Central Gov


OF LANDS, 17 Phil. 216, 10/17/10
Torres, J.

Facts: The Municipal President of the pueblo of Catbalogan applied

with the Court of Land Registration asking for the registration of a
parcel of land which the court-house occupies, with the said pueblo
as absolute owner. The Attorney-General opposed.

Held: The question in this case is whether the lot occupied by the
court-house of the Municipality of Catbalogan, Samar belongs to the
said municipality or is a state land under the control of the Insular
If a municipality, as a juridical person susceptible of rights and
duties, can acquire all kinds of property such as that termed propios
or patrimoniales, it undoubtedly merits the designation of owner with
respect to the property which may have been awarded to it as its own.
The exercise on the part of the municipality of a right of ownership
in land vested with the character of common (propio) or patrimonial
land is very distinct from the administration proceedings or acts ex
ecuted by it, and from the contracts made by the same, inasmuch as,
in the exercise of the right of ownership in the property of the exclu
sive ownership of the municipality, this entity has an independent
personality of its own, and does not act as a mere agent of the Cen
tral Government; wherefore, the decision rendered in Aguado u. City
of Manila is not applicable here.

14. Local Governments, powers and functions.

A. Sources of Power of Local Governments.
1. The 1987 Constitution; its provisions in local govern
2. The Local Government Code of 1991; and
3. All existing laws, acts, decrees, executive orders, procla
mations and administrative regulations not inconsistent
with the 1987 Constitution and the Local Government
Code of 1991.
B. Classification of Local Government Powers.
1. Express powers - those granted in express words.
2. Implied powers - those necessary or fairly implied in or
incident to the powers expressly granted.

3. Inherent powers - those essential to the declared objects

and purposes of the corporation not simply convenient but
indispensable such as:
a) to have perpetual succession;
b) to sue and be sued;
c) to purchase, hold and sell property for the benefit of
the municipal corporation;
d) to have a common seal;
e) to make by-laws and ordinances for the government
of the municipality.
4. Legislative and executive powers - a) ordinance to make
laws; b) ordinance to execute laws.
5. Intramural and extramural powers - a) those exercised
within the corporate limits of municipal corporation;
b) .those exercised without, like those given for the pro
tection of water supply, prevention of nuisance and also
for police forces.
6. Governmental and municipal powers - a) administer the
powers of the state and promoting the public welfare
within it; b) those for the special benefit and advantage
of the urban community. Among the governmental pow
ers are: the power of eminent domain; of taxation, to pro
mote public education, to maintain a fire department or
police force. Among the municipal powers are: erection of
waterworks, gas works, power electric plants, from which
profits may derived by the municipality.
7. Mandatory and discretionary powers - a) those the ex
ercise of which can be required of municipal corporations;
b) those which it may perform or not, depending upon its
judgment and discretion.
C. Execution of Municipal Powers.
When the charter or statute specifically prescribes the man
ner by which the certain corporate acts are to be executed and points
out the agency or officers who are to execute them, no other method
of procedure may be used in the premises. But if the law is silent
on the matter of exercise, the corporate authorities are necessarily
clothed with discretion in determining the same. All the methods of
executing such acts, as may be reasonably inferred, are deemed

granted, provided that the action taken is neither arbitrary nor ca

pricious and must be in good faith. Unless restrained by law, a
municipal corporation has the discretion to select the means and
methods of exercising its powers, provided that the means thus se
lected must be reasonable. In making the selection, the common
council may proceed either by way of ordinance or resolution.

D. Decided Case.
1. RA 3120 is constitutional and is a manifestation of the leg
islature's right to deal with the state property which includes those
held by municipal corporations in its public or governmental capa

RABUCO v. VILLEGAS, 55 SCRA 656, 2/28/74

Teehankee, J.

Facts: R.A. No. 3120 converted the Malate area, which are reserved
as communal property, into disposable or alienable lands of the state
to he placed under the administration and disposal of the LTA, for
subdivisions into small lots not exceeding 120 meters per lot for sale
in installments to the tenants or bona fide occupants thereof and ex
pressly prohibited ejectment and demolition of petitioner's homes
under Sec. 2 of the Act.
Respondent city officials contended that the Act must be stricken
down as unconstitutional for depriving the City of Manila of the lots
in question, and providing for their sale without payment ofjust com
pensation thus constituting deprivation of property without due proc
ess of law.
Held: The lots in question are manifestly owned by the city in its pub
lic and governmental capacity and not in its private or proprietary
capacity of which it could not be deprived without due process and
without just compensation. The Act was intended to implement the
social justice policy of the Constitution and the government's program
of land for the landless. It is a manifestation of the legislature's right
and power to deal with the state property which includes those held
by municipal corporation in its public and governmental capacity.
Therefore, R.A. 3120 is constitutional.

15. Local Governments, rules regarding their properties.

A. Introduction.
Art. 423 of the New Civil Code provides:

"The property of provinces, cities, and municipalities is divided

into property for public use and patrimonial property. (343)"
Art. 424 of the same Code provides:
"Property for public use, in the provinces, cities, and munici
palities, consist of the provincial roads, city streets, municipal
8treets, the squares, fountains, public waters, promenades, and pub
lic works for public service paid for by said provinces, cities or mu
All other property possessed by any of them is patrimonial and
shall be governed by this Code, without prejudice to the provisions
of special laws. (344a)"

B. Kinds of Properties of Local Government Units.

Provinces, cities, municipalities or barangays have two kinds
of properties, namely:
1. property for public use; and
2. patrimonial property.
Properties for public use consists of:
(1) Provincial, city, municipal or barangay roads or streets,
squares, fountains, public waters and promenades. These are open
for use by everybody; and
(2) Public works for public service paid for by said units.
Examples are provincial, city, municipal or barangay buildings or
water systems. These may not be freely used by everybody.
All other properties are patrimonial properties of the units.

C. Alienation of the Properties of Local Government Units.

1. Properties for public use cannot be alienated as such and
may not be acquired by prescription. (Mun. of Oas v. Roa,
7 Phil. 20.)
2. Patrimonial properties may be alienated and acquired by
prescription . (Mun. of Oas v. Roa, supra.)
In City of Manila v. Garcia, 19 SCRA 413, squatters entered a
piece of land belonging to the City of Manila and later secured per
mits or lease contracts from the city mayor. The land later on was
needed for the expansion of the elementary school adjacent to it.

The Supreme Court ruled that the squatters never became ten
ants of the land. The property being a public one, the Manila mayor
did not have authority to give permits or execute leases, written or
oral with defendants. Said permits or lease contracts are void.
In Muyot v. De la Fuente, G.R. No. L-6534, 48 O.G. 4860, it
was held that the City of Manila could not lease a portion of a pub
lic sidewalk on Plaza Sta. Cruz, being likewise beyond the commerce
of man.
In Espiritu v. Municipal Council of Pozzorubio, 102 Phil. 866,
the Supreme Court declared:
"There is absolutely no question that the town plaza cannot be
used for the construction of market stalls, specially of residences,
and that such structures constitute a nuisance subject to abatement
according to law. Town plazas are properties of public dominion, to
be devoted to public use and to be made available to the public in
general. They are outside the commerce of man and cannot be dis
posed of or even leased by the municipality to private parties."
In Villanueva v. Castaneda, Jr., 154 SCRA 142, the pronounce
ments in the above cases were cited when the Supreme Court ruled
that the place occupied by the stalls forming a talipapa of the ven
dors/petitioners is a public plaza and as such beyond the commerce
of man and cannot be the subject of lease or any other contractual
undertaking. The removal of the stalls was ordered.

D. Properties Intended for Public Use or Service.

In the case of Capitulo v. Aquino, 53 O.G. No. 5, 1477, the Su
preme Court ruled that under Art. 424 NCC, it does not matter that
the property is not actually devoted for public use or for some pub
lic services. If the property has been intended for such use or serv
ice, and the city has not devoted it to other uses, or adopted any
measure which amounted to withdrawal thereof from public use or
service, the same remains property for public use.
In this case, where the lot was donated to the City of Manila
by Sulucan Development exclusively for street purposes and plain
tiffs Capitulo, et al., occupied said lot and later secured lease con
tracts on said lot from the city mayor, the said occupation and lease
contract are illegal because, even if not yet developed and opened
for public use, it remains property for public use not subject to ap

E. Withdrawal of Roads or Plazas from Public Use.

See comments under Section 21 on Closure and Opening of

F. Decided Case.
1. The 24 lots owned by the Province of Zamboanga in its
public and governmental capacity is subject to the control of Con
gress. However, the 26 remaining lots which are patrimonial prop
erties must be paid just compensation.


3/28/68, Bengzon, J.P., J.

Facts: The municipality of Zamboanga used to be the provincial capi

tal of Zamboanga Province. In 1936, Commonwealth Act 39 converted
it into a city. Sec. 50 provided that properties which the province shall
abandon will be acquired and paid by the City of Zamboanga at a price
fixed by the Auditor-General. The properties consisted of 50 lots and
some buildings. The city paid P47,000 of the P704,000.
However, in 1961, R.A. 3039 amended Sec. 50 providing for the
acquisition of the properties "free of charge." Province filed a suit and
prayed for R.A. 3039 to be declared unconstitutional for depriving
plaintiff of property without due process of law and just compensa
tion. The CFI declared R.A. 3039 unconstitutional and held the 50
properties as private properties of the province of Zamboanga.
Issue: Whether the 50 properties are public property or private prop
erty of the province.

Held: 1. On control by State of Properties of Local Government Units.

The principle is:
a. If the property is owned by the municipality in its public
and governmental capacity, the property is public and
Congress has absolute control over it.
b. If the property is owned in its private or proprietary ca
pacity, then it is patrimonial and Congress has no abso
lute control. The municipality cannot be deprived of it
without due process and payment of just compensation.
2. Which of 'Iwo Norms May Be Used in Classifying the Properties
a. Classification Under the Civil Code.

Articles 423 and 424, NCC classify property of provinces, cities

and municipalities into property for public use and patrimonial prop
erty. Applying this norm, all the 50 lots and buildings thereon, except
the two lots used as High School playgrounds, could be considered as
patrimonial properties of the former Zamboanga province. Even the
capitol site, the hospital and leprosarium sites, and the school sites
will be considered patrimonial for they are not for public use.
They would fall under the phrase "public works for public serv
ice" for it has been held that under the ejusdem generis rule, such
public works must be for free and indiscriminate use by anyone, just
like the preceding enumerated properties in the first paragraph of Art.
424. (Cebu City v. NWSA, 107 Phil. 112.)
Unlike in the Civil Code classification regarding State proper
ties, properties for public service in the municipalities are not classi
fied as public.

b. Classification Under the Law of Municipal Corporations.

l,pplying the norm obtaining under the principles constituting
the law of Municipal Corporations, all those of the 50 properties in
question which are devoted to public service are deemed public. Un
der this norm, to be considered public it is enough that the property
be held and devoted for governmental purposes like local administra
tion, public education, public health, etc.
Following this classification, R.A. 3039, which provides that all
properties of the former province of Zamboanga and located within
the City of Zamboanga are hereby transferred, free of charge, in favor
of the said City of Zamboanga, is valid insofar as it affects the lots as
capitol sites and its grounds, hospital and leprosarium sites and the
high school playground sites totaling 24 lots, since they were held by
the former Zamboanga province in its governmental capacity and
therefore subject to the absolute control of Congress.
But R.A 3039 cannot be applied to deprive Zamboanga prov
ince of its share in the value of the 26 remaining lots which are
patrimonial properties since they are not being utilized for distinctly
governmental purposes.

3. Conclusion Reached by the Supreme Court.

The Supreme Court applied the latter norm or classification
"The controversy here is more along the domains of the law of
Municipal Corporations than along that of Civil Law."

(Note: The author agrees with the result reached by the deci
sion. However, he finds it unnecessary to distinguish between the
two norms discussed by the decision above.
It is quite clear from Article 424 that property for public use
in the province, cities and municipalities consist of:
1) provincial, city or municipal roads or streets, etc.; and 2)
public works for public service.
"Public works for public services," although not for free and
indiscriminate by everyone, are therefore considered as property for
public use. The phrase is placed together in the same paragraph on
properties for public use and distinct from the other paragraph deal
ing on patrimonial property.
And certainly the 24 properties above mentioned, e.g., Capitol
lot and building, hospital lot and building etc. are public works for
public service and, are therefore considered as for public use. Hence,
Congress has control over them.)

G. Decided Case.
1. Breach of a contractual obligation between the City of
Manila and plaintiff, involving property which is patrimonial in
character entitles the latter to damages.


179 SCRA 428, 11/15/89
Paras, J.

Facts: Vivencio Sto. Domingo, deceased husband of plaintiff Irene Sto.

Domingo was buried in a lot of the North Cemetery, which lot was
leased by the City of Manila to Irene from 1971 to 2021. Irene paid
the full rental thereof.
In January 1978, the cemetery authorities exhumed and re
moved the remains of Vivencio from the lot which were then placed
in a bag and kept in the bodega of the cemetery.
In November 1978 (All Souls Day), when Irene went to the cem
etery, she was shocked to learn that the remains of her husband were
not anymore in the lot, as the same had been rented out to another
Held: Under Philippine laws, the City of Manila is a political body
corporate and as such endowed with the faculties of municipal corpo
rations to be exercised by and through its city government in conform-

ity with law, and its proper corporate name. It may sue and be sued,
and contract and be contracted with. Its powers are twofold in char
acter; public, governmental or political on one hand, and corporate,
private and proprietary on the other.
In McQuillin on Municipal Corporation, the rule is stated thus:
"A municipal corporation proper has ... a public character as regards
the state at large insofar as it is its agent in government, and private
(so called) insofar as it is to promote local necessities and conveniences
for its own community." (Torio v. Fontanilla, 85 SCRA 599 [1978]).
In Torio v. Fontanilla, supra, the Court declared that with re
spect to proprietary functions the settled rule is that a municipal cor
poration can be held liable to third persons ex contractu. (Municipal
ity of Moncada v. Canjuigan, et al., 21 Phil. 184, 1912) or ex delicto.
(Mendoza v. de Leon, 33 Phil. 508, 1916.)
Under the foregoing considerations and the absence of a special
law, the North Cemetery is a patrimonial property of the City of Ma
nila which was created by resolution of the Municipal Board of Au
gust 27, 1903 and January 7, 1904. The administration and govern
ment of the cemetery are under the City of Health Officer (Ibid., Sec.
3189), the order and police of the cemetery (Ibid., Sec. 319), the open
ing of graves, niches, or tombs, the exhuming of remains, and the
purification of the same (Ibid., Sec. 327) are under the charge and
responsibility of the superintendent of the cemetery.
The City of Manila furthermore prescribes the procedure and
guidelines for the use and dispositions of burial lots and plots within
the North Cemetery through Administrative Order No. 5, s. 1975.With
the acts of dominion, there is, therefore no doubt that the North Cem
etery is within the class of property which the City of Manila owns in
its proprietary or private character.
Furthermore, there is no dispute that the burial lot was leased
in favor of the private respondents. Hence, obligation arising from
contracts have the force of law between the contracting parties.Thus
a lease contract executed by the lessor and lessee remains as the law
between them. (Henson v. Intermediate Appellate Court, 148 SCRA
11, 1987.) Therefore a breach of contractual provision entitles the other
party to damages even if no penalty for such breach is prescribed in
the contract. (Boysaw v. Interphil Promotions, Inc., 148 SCRA 636,
Under the doctrine of respondeat superior (Torio v. Fontanilla,
supra), petitioner City of Manila is liable for the tortious act commit
ted by its agents who failed to verify and check the duration of the
contract of lease.

H. Other Classification Based on Mode of Acquisition.

Properties of local government units may also be classified as:
1) those acquired by the units by their own funds in their
proprietary capacity. These may be disposed of by the units as they
2) those acquired by the units in its governmental capacity
such as those acquired by succession or by donation from the State
or National Government or from funds received from the State.
These are held in trust by these units for the State, for the benefit
of its inhabitants. These cannot be sold by the local government
A municipality cannot acquire a lot through prescription since
said lot has an owner and the owner can bring an action to recover
possession at any time because possession is one of the attributes
of ownership of the land. (Municipality [now city] of Legaspi v. AL.
Ammen Transportation Co., Inc., 26 SCRA 218.)
In the absence of title deed to any land claimed by the City of
Manila as its own, showing that it is acquired with its private or
corporate funds, the presumption is that such land came from the
State upon the creation of the municipality. (Salas v. Jarencio, 45
SCRA 743.)
Regardless of the source or classification of land in the posses
sion of a municipality, excepting those acquired with its own funds
in its private or corporate capacity, such property is held in trust
for the State for the benefit of its inhabitants, whether it be for gov
ernmental or proprietary purposes. (Ibid.)

I. Properties for Public Use Not Subject to Levy or Execution.

Properties of a municipality, whether real or personal, which
are necessary for public use cannot be attached and sold at execu
tion sale to satisfy a money judgment against the municipality. Pub
lic funds are not subject to levy and execution. (Municipality of
Makati v. Court of Appeals, 190 SCRA 206.)

16. Local Government, Types.

1. De jure municipal corporations - those created or recog-
nized by operation of law.
2. Municipal corporations by prescription - exercised their

powers from time immemorial with a charter, which is presumed to

have been lost or destroyed.
3 De facto municipal corporations - where the people have
organized themselves, under color of law, into ordinary municipal
bodies, and have gone on, year after year, raising taxes, making
improvements, and exercising their usual franchises, with their
rights dependent quite as much as on acquiescence as on the regu
larity of their origin.
The essential requisites of a de facto corporation are:
a) a valid law authorizing incorporation;
b) an attempt in good faith to organize under it;
c) a colorable compliance with law;
d) an assumption of corporate powers.
Where the mode of creating a municipal corporation and the
conditions under which it may exist are prescribed by a general law,
the legislature may properly leave to the courts or to a commission
or board the duty of ascertaining the facts and deciding whether the
prescribed conditions have been satisfied and proper steps have been
taken under the law to bring the municipal corporation into exist

17. Local Governments, Extent of Legislative Control.

1. Historical view - holds that the municipal corporations
have an inherent right to local self-government which cannot be
taken away by statute, having regard to the long history of local
autonomy enjoyed by towns and cities in the United States and the
United Kingdom, the local governments antedating state govern
ments; although it recognizes the fact that the state retains com
plete control of matters of general concern, such as health and sani
tation, and the maintenance of peace and order, in respect of which
the municipal corporation acts merely as the state agency or instru
mentality. It maintains that so long as such a corporation exists, it
has the right which the state cannot take away, to regulate its in
ternal or local affairs. In the absence of express constitutional pro
visions, the greater weight of authority repudiates the historical
2. Legal view This sanctions the possession by the State
of absolute control over local governments, local government being

mere creatures of the State. The right of municipal corporations to

govern themselves in their purely local affairs will not be held to be
abridged except upon clear expression of the legislative will.
The equal protection clause may be validly invoked by a mu
nicipal corporation to complain against a lesser grant of jurisdiction
and functions in its charter as against a larger grant of powers and
autonomy by Congress in the charters of other municipal corpora
tions. (Enriquez v. Secretary of Finance, 27 SCRA 1261.)

18. Local Governments, History.

The cities, municipalities, and provinces of today evolved from
the barangays of pre-Spanish times, the pueblos and cabildos of the
Spanish colonial days and the townships of the American regime.

A. The Barangays.
The pre-Spanish barangays were the first political and social
organizations of the Philippines. A barangay was a settlement of
some 30 to 100 families and a governmental unit in itself. Each was
independent from all the others. There was no central government
whatsoever, although confederations of barangays were formed for
mutual protection and support.
The chief of the barangay was called a datu "an absolute ruler
in whose hands were the legislative, executive, and judicial powers
of the government." Laws were unwritten, and derived largely from
customs and traditions. They were formulated by the datu who also
acted as judge in cases of disobedience to the law. The Chief exacted
tribute of harvest and labor from his subjects.

B. Spanish Conquest and Centralism.

The lack of unity in the warring barangays made conquest
easier for the Spaniards Gradually, the datus were shorn of their
powers. The barangays disintegrated as independent city states and
were transformed into "somewhat artificial subdivisions of the
greater, more complex form of government that the colonists super
imposed." The Spaniards established the encomienda system as the
nucleus of local government in the country. An encomienda was prac
tically a "grant of Indians" to favored Spaniards. The grantee, called
encomiendero, had the task of collecting the tribute from the natives.
The Spaniards organized pueblos (municipalities), cabildos (cit
ies), andprovincias (provinces). The provinces were established "for

the convenience of administration and constituted the immediate

agencies through which the central government could extend its
authority on numerous villages." In place of the barangay, barrios
were established, and the datus were made into cabezas de barangay
whose only remaining function was the collection of taxes for the
Spanish government.
The cabildo was usually organized in fairly urban areas like
Manila. It was a municipal corporation endowed with law-making
powers and had two ordinary alcaldes, eight regidores (alderman),
a registrar, and a constable.
The Gobernadorcillo headed the pueblo and exercised execu
tive and judicial functions in the locality. He was assisted by an
Assessor and a Notary.
The province constituted the larger local unit. It was headed
by an Alcalde Mayor who was assisted by a chief of police and one
lieutenant each for police, for the field, and for the large cattle.
Election of local officials was limited to a few by a few. The
Gobernadorcillo was elected by an electoral college while the ordi
nary alcaldes were elected by house-holders.
By virtues of the Laws of the Indies and royal decrees passed
from time to time, truces were collected by the local governments for
the national government. For their own revenue, they relied on re
sources coming from fisheries, urban property, rent or communal
property, billiard halls, theaters, cockfighting, and weights and
Spanish colonization, therefore, effected strong centralism and
tolled the death knell of indigenous political institutions. The sys
tem of local governments in the Philippines was partly responsible
for the many uprisings against the Spaniards. The local institutions
degenerated to "a point of decadence and confusion that local offi
cials who (had) not been corrupted (had) become atrophied or un
The need for reforms was recognized too late by the Spaniards.
It took three ministers of the colonies to map out a plan of local
government through the Maura Law of 1893 authored by Antonio
Maura y Montaner who was then Minister of the Colonies. The law
attempted to "confer upon the towns and provinces of Luzon and
Mindanao a greater measure of autonomy."

The Maura Law introduced many reforms affecting the pueblos.

Each town "contributing one thousand cedula each year to the state
was to have a Municipal Council of five members consisting of
capitan municipal (municipal captain), teniente mayor (chief lieu
tenant), and three lieutenants. Municipal officials were now elected
by plurality through secret ballot, and relative autonomy granted
to the pueblos in matters of local taxation. The Municipal Tribunal,
aside from preparing the municipal budget, determined the amount
of real property tax. In addition to this source of income, the pueblos
depended on fees from markets, tolls, and slaughterhouses.
The province remained the largest administrative division and
acted as the intermediary between the national government and its
subordinate local units. It was headed by a Governor. The Provin
cial Board was composed of a Prosecuting Attorney, an Administra
tor of Finance, Vicars of the Province, the parish priest of the capi
tal, and four prominent residents of the capital elected by the mu
nicipal captains in the province.
Even after the enactment of the Maura Law, the centralism
characteristic of the Spanish regime continued. Smaller political
subdivisions were wholly subordinated to the national government.
Cabeza de barangay became merely collectors of taxes who were each
rewarded fifty percent of the amount collected. The provincial gov
ernor had disciplinary power over members of the municipal coun
cils. This centralism was characterized in this wise:
The most striking character is undoubtedly the subordi
nation and even subserviency of the Municipal Tribunal to
other authorities . . . The Maura Law itself closely hedges
within a narrow circle of the activities of the Municipal Tribu
nal and subjects this body to constant and unnecessary inspec
tion and supervision by the provincial council. Indeed, the pro
vincial council was not charged with the direct administration
of the affairs of the province, but solely with the inspection and
supervision of the bodies which administered the affairs of the
pueblos ... (also) the captain, though a member and presiding
officer of the tribunal, might ignore its decisions, being in truth
a political representative of the general government, and, as
it were, an arbitrary governor of the province.

C. Local Governments During the First Philippine Republic.

The importance of local governments was recognized by Gen.
Emilio Aguinaldo and Apolinario Mabini in their program of gov-

ernment for the first Philippine Republic. Filipino leaders knew that
"if a strong enduring Filipino nation was to be established, it must
be able to maintain itself in all emergencies, and the whole politi
cal fabric must be well founded on an efficient system of local gov
In his Proclamation of June 18, 1898, General Aguinaldo stated
"the urgent necessity of establishing in each town a solid, robust or
ganization, the strongest bulwark of public security and that sole
means of serving the union and discipline which are indispensable
for the establishment of the Republic, that is, government of the
people, for the people, and warding off the internal conflict which
might arise."
Mabini saw that it was imperative for every government to
interpret the people's will, and recognized the need of surrounding
General Aguinaldo with the best minds from the towns "to the end
that, the true necessities of each town being known to them, meas
ures may be adopted to meet the necessities and apply the remedies
in accordance with the desire of all."
After the establishment of the dictatorial government, the de
cree of June 18 and 20, 1898, organized the municipalities. Special
commissioners were appointed to supervise the municipalities. Each
town had a President who was assisted by a delegate for police and
internal order, another for justice and civil registry, and a third for
taxes and property. These officers were elected in a meeting by in
habitants of the municipality known for "high character, social po
sition and honorable conduct."
The town President, with the headman of each village within
the town and the delegates constituted the Popular Assembly which
had the task of enforcing the law. Heads of all the towns in the prov
ince elected the chief and three councilors of the province. The of
ficers of the province supervised the enforcement of instruction from
the central government. Municipal and provincial officials were given
jurisdiction over criminal and civil case. Decisions of municipal of
ficials were appealable to the Provincial Board.
The Malolos Constitution provided a separate article on local
government. (Title XI, Article 82.) Local autonomy was made explicit
in the introductory portion which stipulated that "the organization
and powers of the provincial and municipal assemblies shall be gov
erned by their respective laws." Article 82 provided for "popular and
direct election being the basis of the organization of said corpora-

tions," "publicity of local sessions and budgets, accounts and ordi

nances," and "determination of their powers in matter of taxes, in
order that the provincial and municipal taxation may never be an
tagonistic to the system of local taxation."
Despite the autonomy given to the local government units,
however, central intervention in local affairs was retained. This as
sured "the intervention of the government and in a proper case by
the national assembly, in order to prevent the provincial and mu
nicipal corporations from exceeding their powers, to the prejudice
of general and individual interests." The government of the First
Philippine Republic encouraged greater participation by the local
units but the intervention of the central government was deemed
necessary because the existing conditions called for national unity.
It was pointed out that "the idea itself was just an instance of the
desire for a strong government; a government which needed great
powers to give the people benefits they never had before."

D. Local Governments During the American gime.

The Americans contribute very little, if at 1:tll, to the develop
ment oflocal autonomy. In fact, national-local relationship reverted
to the strong centralism that characterized the Spanish colonial
The first local government established during the American
regime was the municipality. General Order No. 43, series 1899,
provided for a municipal council in each town composed of a Presi
dent and the headmen of the barrios within the town. The council
was charged with the maintenance of peace arid order, the regula
tion of municipal affairs, and the adoption of ordinances for the
After the establishment ofthe towns, the Schurman Commis
sion was instructed to prepare a simple scheme of municipal gov
ernment, "so similar to the old system as to be readily comprehen
sible to the natives, but giving them liberties which they had never
enjoyed before." The Commission's blueprint for town organization
provided for a President to be elected viva voce by residents of the
town with the approval of the Commanding Officer. His duty con
sisted in the establishment of a police force, collection of taxes, en
forcement of regulations on market and sanitation, establishment
ofschools, and the provision for lighting facilities. He was assisted
by the village headmen.

The Council was given the function of the conducting prelimi

nary investigation in criminal cases and the determination of prop
erty cases not exceeding $500. Military authorities exercised abso
lute control over the local officials. Even Council ordinances were
subject to approval by the American Commanding Officer in the
town, who was responsible to the central government.
The establishment of civil government affected the pattern of
government of local units. President McKinley's "Instruction to the
Philippine Commission" of April 7, 1990 made specific mention of
local autonomy:

The establishment of municipal government in which the

natives of the islands, both in the cities and the rural commu
nities, shall be afforded the opportunity to manage their own
local affairs to the fullest extent of which they are capable, and
subject to the least degree of supervision and control . . . In
the distribution of power among the governments organized by
the commission, the presumption is always to be in favor of the
smaller subdivision, so that all the powers which can properly
be exercised by the municipal government shall be vested in
that government . . . so that ... that central government of
the Island . . . shall have no direct administration except in
matters of a purely general concern and shall have only such
supervision and control over the local government as may be
necessary to serve and enforce faithful and efficient adminis
tration by local officials.

Pursuant to the President's Instruction, the Philippine Com

mission enacted Act No. 82 providing for the organization and gov
ernment of municipalities and Act No. 83, for the organization of
Under Act No. 82, each town was headed by a President as chief
executive and presiding officer of the municipal council. The coun
cil was composed of one representative from each of the barrios. It
promulgated ordinances and was charged with the maintenance of
peace and order in the locality. The other officials of the town in
cluded a Secretary, a Treasurer, and a Chief of Police. The town re
lied on revenue from real property taxes, rents, profits, tools, mar
kets, slaughterhouses, and tuition fees for intermediate schools.
Provincial governments established by Act No. 83 had a Gov
ernor, a Treasurer and a Supervisor (later replaced by a Division

Superintendent of Schools). Until 1907, the Governor was elected

by the councilors of organized municipalities within the provinces.
Subsequently, he was elected by popular vote.
Special laws enacted by the Philippine Commission governed
the capital city of Manila and the summer capital of Baguio in the
Mountain Province.
While President McKinley's "Instructions" recognized local au
tonomy, the various laws passed and the rules for their implemen
tation only served to diminish local autonomy. Control over local
affairs were exercised by the national government through its many
agencies. The province, for instance, acted as a mere administrative
agent of the national govern meet. "In practice," commented Joseph
Hayden, "it turned out that the most important work of the provin
cial government was the supervision of the governments of munici
palities," through visitation, investigation, and supervision by pro
vincial officials.
The Provincial Board was also given a considerable amount of
control over the municipal councils, whose orders and ordinances it
scrutinized and might disallow on grounds of illegality.
The central government directly supervised local governments
through the Executive Bureau, whose task was to see "that provin
cial officials did not exceed or abuse their legal authority." Likewise,
it exercised control over local finance by controlling the budgets of
provinces and regulating loans made from the treasury of the cen
tral government to the localities. This arrangement is a sharp con
trast with the autonomy enjoyed by the states in the American un
ion. It was a virtual carryover of the Spanish system of local gov
ernment in the Philippines.

E. The Commonwealth and Centralism.

The forms and patterns of local government during the Ameri
can civil administration remained essentially the same during the
Commonwealth period. The only notable changes were the transfer
of central supervision from the Executive Bureau to the Department
of Interior and the creation of more chartered cities. The relation
ship between the national and local governments became increas
ingly parasitic in the sense that the local units became very depend
ent on the national government.

President Quezon, the central figure of the government dur

ing this period, even argued against autonomy in the cities, hinting
that "under the unitary system of government which exists in the
Philippines, the national chief executive does and should control all
local offices." Under the Commonwealth, "central supervision ...
not only rapidly increased, but, personally exercised by the chief ex
ecutive to a degree previously unheard of."

F. Local Governments under the Republic.

The structure of local governments as established in Act Nos.
82 and 83 remained essentially the same under the 1935 and 1973
Constitutions. The national government was supreme and local gov
ernments were merely its political and administrative subdivisions.
Most of the formal and real powers were vested and exercised by
the national government.Local units, however, possessed a certain
degree of autonomy.The basic law on local governments was con
tained in the various provisions of the Revised Administrative Code.
This Code has been amended by several laws, notably: Republic Act
No. 2259 (making the positions of mayors, vice-mayors, and coun
cilors in chartered cities elective :) Republic Act No.2370, as amended
by Republic Act No.3590 (The Revised Barrio Charter); Republic
Act No.5185 (The Decentralization Act of 1967.).Cities have sepa
rate charters for their own governance.

G. Local Governments at present.

On May 12, 1983, Batas Pambansa Blg.337, otherwise known
as the Local Government Code took effect.
On Feb.2, 1987, the 1987 Constitution was ratified and took
On October 10, 1991, The Local Government Code of 1991 (R.A.
7160) was signed into law.
This Code ordained an authentic and workable local autonomy
through the devolution of certain powers from the national govern
ment to the local governments.
In 1995 there were 75 provinces, 1 sub-province, 60 cities, 1,553
municipalities and 40,000 barangays in the country.
At present, there are 79 provinces, 113 cities, 1,496 municipali
ties and 41,933 barangays in the country.

19. Local Governments, 1987 Constitutional Provisions.

Sec. 25, Art. II, 1987 Constitution, provides;

"The State shall ensure the autonomy of local

Article X, 1987 Constitution provides:



Section 1. The territorial and political subdi

visions of the Republic of the Philippines are the
provinces, cities, municipalities, and barangays.
There shall be autonomous regions in Muslim Min
danao and the Cordilleras as hereinafter provided.
Sec. 2. The territorial and political subdivi
sions shall enjoy local autonomy.
Sec. 3. The Congress shall enact a local govern
ment code which shall provide for a more respon
sive and accountable local government structure
instituted through a system of decentralization
with effective mechanisms of recall, initiative, and
referendum, allocate among the different local gov
ernment units their powers, responsibilities, and
resources, and provide for the qualifications, elec
tions, appointment and removal, term, salaries,
powers and functions and duties of local officials,
and all other matters relating to the organization
and operation of the local units.
Sec. 4. The President of the Philippines shall
exercise general supervision over local govern
ments. Provinces with respect to component cities
and municipalities, and cities and municipalities
with respect to component barangays shall ensure
that the acts of their component units are within
the scope of their prescribed powers and functions.
Sec. 5. Each local government unit shall have
the power to create its own sources of revenues and
to levy taxes, fees, and charges subject to such

guidelines and limitations as the Congress may pro

vide, consistent with the basic policy of local au
tonomy. Such taxes, fees, and charges shall accrue
exclusively to the local governments.
Sec. 6. Local government units shall have a just
share, as determined by law, in the national taxes
which shall be automatically released to them.
Sec. 7. Local governments shall be entitled to
an equitable share in the proceeds of the utilization
and development of the national wealth within
their respective areas, in the manner provided by
law, including sharing the same with the inhabit
ants by way of direct benefits.
Sec. 8. The term of office of elective local offi
cials, except barangay officials, which shall be de
termined by law, shall be three years and no such
official shall serve for more than three consecutive
terms. Voluntary renunciation of the office for any
length of time shall not be considered as an inter
ruption in the continuity of his service for the full
term for which he was elected.
Sec. 9. Legislative bodies of local governments
shall have sectoral representation as may be pre
scribed by law.
Sec. 10. No province, city, municipality, or
barangay may be created, divided, merged, abol
ished, or its boundary substantially altered, except
in accordance with a criteria established in the lo
cal government code and subject to approval by a
majority of the votes cast in a plebiscite in the po
litical units directly affected.
Sec. 11. The Congress may, by law, create spe
cial metropolitan political subdivisions, subject to
a plebiscite as set forth in Section 10 hereof. The
component cities and municipalities shall retain
their basic autonomy and shall be entitled to their
own local executives and legislative assemblies. The
jurisdiction of the metropolitan authority that will
thereby be created shall be limited to basic services
requiring coordination.

Sec. 12. Cities that are highly urbanized, as

determined by law, and component cities whose
charters prohibit their voters from voting for pro
vincial elective officials, shall be independent of the
province. The voters of component cities within a
province, whose charters contain no such prohibi
tion, shall not be deprived of their right to vote for
elective provincial officials.
Sec. 13. Local government units may group
themselves, consolidate or coordinate their efforts,
services, and resources for purposes commonly ben
eficial to them in accordance with law.
Sec. 14. The President shall provide for re
gional development councils or other similar bod
ies composed of local government officials, regional
heads of departments and other government offices,
and representatives from non-governmental organi
zations within the regions for purposes of admin
istrative decentralization to strengthen the au
tonomy of the units therein and to accelerate the
economic and social growth and development of the
units in the region.

Sec. 15. There shall be created autonomous
regions in Muslim Mindanao and in the Cordilleras
consisting of provinces, cities, municipalities, and
geographical areas sharing common and distinctive
historical and cultural heritage, economic and so
cial structures, and other relevant characteristics
within the framework of this Constitution and the
national sovereignty as well as territorial integrity
of the Republic of the Philippines.
Sec. 16. The President shall exercise general
supervision over autonomous regions to ensure that
laws are faithfully executed.
Sec. 17. All powers, functions, and responsibili
ties not granted by this Constitution or by law to
the autonomous regions shall be vested in the Na
tional Government.

Sec. 18. The Congress shall enact an organic

act for each autonomous region with the assistance
and participation of the regional consultative com
mission composed of representatives appointed by
the President from a list of nominees from multi
sectoral bodies. The organic act shall define the
basic structure of government for the region con
sisting of the executive department and legislative
assembly, both of which shall be elective and rep
resentative of the constituent political units. The
organic acts shall likewise provide for specific
courts with personal, family, and property law ju
risdiction consistent with the provisions of this
Constitution and national laws.
The creation of the autonomous region shall be
effective when approved by majority of the votes
cast by the constituent units in a plebiscite called
for the purpose, provided that only provinces, cit
ies, and geographic areas voting favorably in such
plebiscite shall be included in the autonomous re
Sec. 19. The first Congress elected under this
Constitution shall, within eighteen months from the
time of organization of both Houses, pass the or
ganic acts for the autonomous regions in Muslim
Mindanao and the Cordilleras.
Sec. 20. Within its territorial jurisdiction and
subject to the provisions of this Constitution and
national laws, the organic act of autonomous re
gions shall provide for legislative powers over:

(1) Administrative organization;

(2) Creation of sources of revenues;

(3) Ancestral domain and natural resources;

(4) Personal, family, and property relations;

(5) Regional urban and rural planning develop-

(6) Economic, social, and tourism develop


(7) Educational policies;

(8) Preservation and development of the cul
tural heritage; and
(9) Such other matters as may be authorized
by law for the promotion of the general welfare of
the people of the region.
Sec. 21. The preservation of peace and order
within the regions shall be the responsibility of the
local police agencies which shall be organized,
maintained, supervised, and utilized in accordance
with applicable laws. The defense and security of
the regions shall be the responsibility of the Na
tional Government.

Salient Features of the Local Government

Code of 19911

The Local Government Code is the key to the development of

the countryside.
The Code will make possible the development of the far flung
areas of the country without the necessity of appropriating additional
funds. This it will make possible by allocating a substantial portion
of the public money to and sharing a broad range of the powers now
held by the national government with the local government units.
The Code mandates the devolution of certain national govern
ment powers to and the increase of (a) the share of national taxes
for the local government units, namely: provinces, cities, municipali
ties and barangays, and (b) their power to tax.

Powers devolved
Certain powers that used to be exercised by the national gov
ernment, to wit: (1) public works; (2) health; (3) agriculture; (4) so
cial welfare; (5) certain tourism functions; and (6) construction of
school buildings and facilities are now devolved to local government

1This was published in a national paper through the office of Senator Aquilino
Q. Pimentel, Jr., the principal author of the law.

Public works
In public works, responsibility will now be fixed. For example,
purely barangay roads will be the responsibility of the barangay; mu
nicipal roads will be that of the municipality and provincial roads,
that of the province.
Roads that lead from one barangay to another will be the re
sponsibility of the municipality. Roads that lead from one munici
pality to another will be the responsibility of the province, and the
roads that lead from one province to another will be the responsi
bility of the national government.
Pending clarification by the Oversight Committee which will
come up with the guidelines to ensure the faithful implementation
of the provisions of the Code, national roads in island provinces may
remain the responsibility of the national government.

Under the Code, barangays now have power of establishment
and maintenance of barangay health and day care centers.
Municipalities now have power over the delivery of primary
health care, maternal and child care, communicable and non-com
municable diseases control services.
Provinces may establish and run hospitals and other tertiary
health services.
Cities may exercise the powers vested in municipalities and
provinces on the matter of health services.
Now, the purchase of medicines, medical equipment and sup
plies is also lodged with local government units.

Agricultural support services such as distribution of planting
materials and operation of collecting and buying stations for farm
produce will now be placed under the authority of barangays.
Municipalities will now take charge of agriculture extension
and research services and delivery of services and facilities related
to fisheries and agriculture and the enforcement of fishery laws and
DENR laws relative to forestry conservation projects.
Provinces will do agricultural extension and on-site research
and on-site facilities. The organization of dairy farms, livestock

markets, and farmers and fishermen cooperatives is placed under

the jurisdiction of the provinces.
The cities will exercise the powers over agriculture and fish
ing that provinces and municipalities have.

Social Welfare
Municipalities will now have powers over the welfare of chil
dren and youth, family and community, women, elderly and disa
bled persons, vagrants, beggars, street children, scavengers, juve
nile delinquents, victims of drug abuse, nutrition and family plan
ning services and other pro-poor services.
Provinces will now handle rebel returnees and evacuees pro
grams, relief operations and population development services.
Cities will now exercise the powers of the provinces and the
municipalities over the social welfare.

School building
The power to build schools is now lodged with local government
units concerned.

Tax share increased

The share of taxes of the local government units has been in
creased from the present 11% to 40% under the following schedule:
(1) 30% upon the effectivity of the Code on January 1, 1992; (2) 35%
on January 1, 1993; and (3) 40% on January 1, 1994.

Tax power increased

Aside from being granted a huge increase in their share of the
taxes of the nation, the local government units are invested by the
Local Government Code with increased powers to tax, thereby em
powering them with a wider capacity to raise their own revenues
within their respective territorial jurisdictions.

Provincial taxes
As examples, the provinces may now impose a tax on (a) trans
fers of real property; (b) businesses of printing and publication [not
on newspapers]; (c) franchises; (d) sand and gravel; (e) professions;
(0 amusement enterprises; and (g) delivery vans of all kinds of prod

Municipal taxes
Municipalities may impose a tax on (a) manufacturers, proc
essors, brewers, distillers, rectifiers, and compounders of liquors and
distilled spirits; (b) wholesalers, distributors or dealers of any arti
cle of commerce; (c) exporters, manufacturers, millers, producers,
wholesalers, distributors, dealers or retailers of essential commodi
ties; (d) retailers; (e) banks and other financial institutions; and (f)
peddlers of merchandise.
Municipalities may also levy fees for sealing and licensing
weights and measures and impose fishery fees and for the use of
municipal waters.

City taxes
Cities may levy taxes, fees and charges which provinces and
municipalities may impose.
Like municipalities, the cities may also impose a community
tax, which is the new name for the residence tax, which has been
deleted from our statute books.

Barangay sales taxes

City barangays may tax stores and retails whose gross sales
do not exceed P50,000 per annum. Municipal barangays may tax
those whose sales do not exceed P30,000 per annum.

Barangay fees
Barangays may also impose fees for: (a) services rendered; (b)
barangay clearances; (c) commercial breeding of fighting cocks; (d)
cockfights; (e) cockpits; (f) places of recreation which charge admis
sion fees; (f) billboards; and (g) neon signs.

Common revenue powers

Provinces, cities and municipalities have common revenue rais
ing powers. They may impose (a) fees for services rendered by them;
and (b) toll fees.

Other sources of revenue

In addition, the local government units are entitled to definite
shares in (a) the proceeds from development and utilization of mines,

forests, and marine resources up to 40% of the gross collections

therefrom by the national government; (b) the proceeds of govern
ment owned or controlled corporations engaged in the utilization and
development of the national wealth up to 1% of the gross sales or
40% of the gross collections made by the national government
therefrom, whichever is higher.

Distribution of shares from natural resources

The distribution of shares of the local government derived from
the development and use of natural resources located in a province
are as follows: (1) 20% to the province; (2) 45% to the component
city or municipality where located; and (3) 35% to the barangay
where located.
If the natural resources is located in a highly urbanized city,
the distribution of shares are as follows: (1) 65% to the city; and (2)
35% to the barangay.

Real estate levy

A real estate levy may be imposed by the province or city as
follows: (1) by the province, not exceeding 1% of the assessed value
of the property; and (2) by the city, not exceeding 2% of the assessed
value of the property.

Special education fund

A special education fund may also be assessed in provinces,
cities or Metropolitan Manila municipalities up to a maximum of
1 % of the assessed value of a real property.

Idle land levy

Idle lands in provinces, cities or municipalities in Metro Ma
nila may be additionally taxed at not exceeding 5% of their assessed

Special levy
Lands benefited by public works projects or improvements in
provinces, cities and municipalities may be levied a special tax of
not exceeding 60% of the actual cost of the project.

Billions for Development

With 30% of national taxes going to local governments in 1992
(effectivity date: January 1), 35% by 1993 and 40% by 1994 we are
talking here of billions of pesos for the development of the country
For 1992, the share of local government units will be P24.441
billion, for 1993, P36.414 billion and for 1994, P46.270 billion.

Limits on Salary spending

The Code limits expenses for salaries to only 45% for highly
urbanized cities and for 1st to 3rd class provinces, cities and mu
nicipalities; 4th to 6th class cities and the barangays may go up to
55% of their budgets for salaries. The rest of the money must be
spent for development purposes.

Expected Results: Jobs and Peace

This means that there will be more money available for roads
and bridges, water, light, medical care, school needs and other ba
sic requirements for modern living for the people in the countryside.
Also with the infrastructure in place, industries and business
will be enticed to go to the countryside. Manila will be decongested
and work will be available to the people in places far from the Na
tional Capital Region.
Hopefully with development there will be peace.

LGU percentage shares

The amounts will be apportioned to the provinces, 23%; cities,
23%; municipalities, 34%; and the barangays, 20%.


CODE OF 1991

Be it enacted by the Senate and the House ofRepresentatives

of the Philippines in Congress assembled:


Title One

CHAPTER 1. - The Code: Policy and Application

SECTION 1. Title. - This Act shall be known

and cited as the "Local Government Code of 1991."

A. Comments
Originally, the laws on local governments were principally
found in the Revised Administrative Code.
In 1959, the Local Autonomy Act (R.A. 2264) was enacted. This
was an act amending the laws governing local governments by in
creasing their autonomy and reorganizing the provincial govern
In 1963, The Barrio Charter (R.A. 3590) was passed, which pro
vided for the organization of Barrios and provided for the powers,
rights and duties of the barrio council.
R.A. 5185 otherwise known as the Decentralization Act, an Act
granting further autonomous powers to local governments, was
passed in 1967.


Martial Law was declared in 1972 bringing with it the Inte

grated Reorganization Plan, Art. XVII of which dealt on Local Gov
ernment and Community Development.
From September 1972 up to January 1982, when Martial Law
was lifted, Presidential Decrees and Proclamations were issued af
fecting local governments.
The laws on local governments were so numerous, separate and
confusing that they were codified as mandated in the 1973 Consti
tution. Thus, Batas Pambansa Blg. 337, the Local Government Code
was finally approved and took effect on May 12, 1983.
To further assure decentralization and development in the
countryside, the 1987 Constitution mandated the enactment of an
other local government code. To implement this constitutional direc
tive, Republic Act No. 7160 was enacted by Congress and signed into
law on October 10, 1991 by the President. It took effect on January
1, 1992.

SEC. 2. Declaration ofPolicy. - (a) It is hereby

declared the policy of the State that the territorial
and political subdivisions of the State shall enjoy
genuine and meaningful local autonomy to enable
them to attain their fullest development as self-re
liant communities and make them more effective
partners in the attainment of national goals. To
ward this end, the State shall provide for a more
responsive and accountable local government struc
ture instituted through a system of decentralization
whereby local government units shall be given
more powers, authority, responsibilities, and re
sources. The process of decentralization shall pro
ceed from the National Government to the local
government units.
(b) It is also the policy of the State to ensure
the accountability o f local government units
through the institution of effective mechanisms of
recall, initiative and referendum.
(c) It is likewise the policy of the State to re
quire all national agencies and offices to conduct
periodic consultations with appropriate local gov
ernment units, non-governmental and people's or-
Basic Principles

ganizations, and other concerned sectors of the

community before any project or program is imple
mented in their respective jurisdictions.

This section is based on Sections 1, 2 and 3, Art. X of the 1987
The declared policy of this Code is the promotion of local au
tonomy, through a system of decentralization.
The history of this trend towards local autonomy is presented
1900. President McKinley's Instructions. - It laid down the
policy that municipal governments should be subject to the least
degree of supervision and control, and confined to the narrowest lim
1916. Philippine Autonomy Act of 1916. -The Governor-Gen
eral as the supreme executive power had general supervision and
control of all the executive departments and bureaus of the govern
ment, and all executive functions directly under him or within one
of the executive departments under his supervision and control. Ex
ecutive functions of local subdivisions come under this all-embrac
ing authority.
1935. Constitution. -It provided that the President shall only
have general supervision over all local governments.
1935. Lacson v. Roque. -This is the departure from the Planas
v. Gil and the Villena v. Secretary rulings.
1959. Local Autonomy Act (R.A. 2264). -This is an act amend
ing the laws, governing local governments by increasing their au
tonomy and reorganizing the provincial governments.
1967. Decentralization Act (R.A. 5185). This act granted fur
ther autonomous powers to local governments.
1972. Integrated Reorganization Plan. Part XVII, on Local
Government and Community Development.
1973. Constitution. Sec 10 declares that the State shall guar
antee and promote the autonomy of local government units.
Thrust of the 1973 Constitution is for fullest autonomy of lo-

cal government units. (Ceniza v. Commission on Elections, 95 SCRA

1983. The Local Government Code (B.P. 337). - It was enacted
codifying the numerous laws on local governments and granted more
autonomy to local governments.
1987. Constitution. Sec. 25, Art II declares that: the State
shall ensure the autonomy of local governments. The 1987 Consti
tution provides for an entire article (Art. X) on local governments.
(Secs. 1-14 on General Provisions and Secs. 15-21 on Autonomous
1991. The Local Government Code of 1991 (R.A. 7160) was
National officials should not only comply with the constitutional
provisions on local autonomy, but should also appreciate the spirit
of liberty upon which these provisions are based. (San Juan v. Civil
Service Commission, 196 SCRA 69.)
The principle of local autonomy does not make local govern
ments sovereign within the state, it simply means decentralization.
(Basco v. Philippine Amusements and Gaming Corporation, 197
SCRA 52.)

SEC. 3, Operative Principles of Decentraliza

tion. - The formulation and implementation of
policies and measures on local autonomy shall be
guided by the following operative principles:
(a) There shall be an effective allocation
among the different local government units of their
respective powers, functions, responsibilities, and
(b) There shall be established in every local
government unit an accountable, efficient, and dy
namic or ganizational structure and operating
mechanism that will meet the priority needs and
service requirements of its communities;
(c) Subject to civil ser vice law, rules and
regulations, local officials and employees paid
wholly or mainly from local funds shall be ap
pointed or removed, according to merit and fitness,
by the appropriate appointing authority;
Basic Principles

(d) The vesting of duty, responsibility, and ac

countability in local government units shall be ac
companied with provision for reasonably adequate
resources to discharge their powers and effectively
carry out their functions; hence, they shall have the
power to create and broaden their own sources of
revenue and the right to a just share in national
taxes and an equitable share in the proceeds of the
utilization and development of the national wealth
within their respective areas;

(e) Provinces with respect to component cit

ies and municipalities, and cities and municipali
ties with respect to component barangay's shall
ensure that the acts of their component units are
within the scope of their prescribed powers and

(f) Local government units may group them

selves, consolidate or coordinate their efforts, serv
ices, and resources for purposes commonly benefi
cial to them;

(g) The capabilities of local government units,

especially the municipalities and barangays shall
be enhanced by providing them with the opportu
nities to participate actively in the implementation
of national programs and projects;

(h) There shall be a continuing mechanism to

enhance local autonomy not only by legislative ena
bling acts but also by administrative and organiza
tional reforms;

(i) Local government units shall share with

the National Government the responsibility in the
management and maintenance of ecological balance
within their territorial jurisdiction, subject to the
provisions of this Code and national policies;

(j) Effective mechanisms for ensuring the ac

countability of local government units to their
respective constituents shall be strengthened in or
der to upgrade continually the quality of local lead

(k) The realization of local autonomy shall be

facilitated through improved coordination of na
tional government policies and programs and ex
tension of adequate technical and material assist
ance to less developed and deserving local govern
ment units;
(1) The participation of the private sector in
local governance, particularly in the delivery of
basic services, shall be encouraged to ensure the
viability of local autonomy as an alternative strat
egy for sustainable development; and
(m) The National Government shall ensure
that decentralization contributes to the continuing
improvement of the performance of local govern
ment units and the quality of community life.

A. Comments
This is a new section which lays down in detail and specific
terms the operative principles to effect decentralization and local

SEC. 4. Scope ofApplication. - This Code shall

apply to all provinces, cities, municipalities,
barangays, and other political subdivisions as may
be created by law, and, to the extent herein pro
vided, to officials, offices, or agencies of the Na
tional Government.

A. Comments
The Code also contains provisions which apply to national of
ficials, like the President as provided for in Section 25, and the Phil
ippine National Police under Section 28 in their inter-governmen
tal relations with the local government units.

SEC. 5. Rules of Interpretation. - In the inter

pretation of the provisions of this Code, the follow
ing rules shall apply:
(a) Any provision on a power of a local gov
ernment unit shall be liberally interpreted in its
Basic Principles

favor, and in case of doubt, any question thereon

shall be resolved in favor of devolution of powers
and of the lower local government unit. Any fair
and reasonable doubt as to the existence of the
power shall be interpreted in favor of the local gov
ernment unit concerned;

(b) In case of doubt, any tax ordinance or rev

enue measure shall be construed strictly against
the local government unit enacting it, and liberally
in favor of the taxpayer. Any tax exemption, incen
tive or relief granted by any local government unit
pursuant to the provisions of this Code shall be
construed strictly against the person claiming it;

(c) The general welfare provisions in this

Code shall be liberally interpreted to give more
powers to local government units in accelerating
economic development and upgrading the quality
of life for the people in the community;

(d) Rights and obligations existing on the

date of effectivity of this Code and arising out of
contracts or any other source of prestation involv
ing a local government unit shall be governed by
the original terms and conditions of said contracts
or the law in force at the time such rights were
vested; and

(e) In the resolution of controversies arising

under this Code where no legal provisions or juris
prudence applies, resort may be had to the customs
and traditions in the place where the controversies
take place.

A. Comments
This section provides that any doubt or question on a power of
a local government shall be resolved in favor of devolution of pow
ers and in favor of the lower local government unit.
However, for tax measures enacted by local governments, any
doubt shall be construed strictly against the local government and
liberally in favor of the taxpayer.

This section also strengthens the power of local governments,

to enact ordinances under the general welfare provisions by provid
ing for liberal interpretation in favor of local governments.

CHAPTER 2. - General Powers and Attributes

of Local Government Units

SEC. 6. Authority to Create Local Government

Units. - A local government unit may be created,
divided, merged, abolished, or its boundaries sub
stantially altered either by law, enacted by Con
gress in the case of a province, city, municipality,
or any other political subdivision, or by ordinance
passed by the sangguniang panlalawigan or
sangguniang panlungsod concerned in the case of
a barangay located within its territorial jurisdic
tion, subject to such limitations and requirements
prescribed in this Code.

A. Comments
Congress has the power to create or abolish a province, city,
municipality, or any other political subdivision.
The sangguniang panlalawigan or sangguniang panlungsod has
the power to create and abolish barangays located within its terri
torial jurisdiction.

SEC. 7. Creation and Conversion. -As a gen

eral rule, the creation of a local government unit
or its conversion from one level to another level
shall be based on verifiable indicators of viability
and projected capacity to provide services, to wit:

(a) Income. - It must be sufficient, based on

acceptable standards, to provide for all essential
government facilities and services and special func
tions commensurate with the size of its population,
as expected of the local government unit concerned;

(b) Population. - It shall be determined as

the total number of inhabitants, within the territo
rial jurisdiction of the local government unit con
cerned; and
Basic Principles

(c) Land Area. - It must be contiguous, un

less it comprises two (2) or more islands or is sepa
rated by a local government unit independent of the
others; properly identified by metes and bounds
with technical descriptions; and sufficient to pro
vide for such basic services and facilities to meet
the requirements of its populace.

Compliance with the foregoing indicators shall

be attested to by the Department of Finance (DOF),
the National Statistics Office (NSO), and the Lands
Management Bureau (LMB) of the Department of
Environment and Natural Resources (DENR).

A. Decided Cases
1. Petitioners have not demonstrated that the delineation of
the land area of the proposed City of Makati (without metes and
bounds) will cause confusion as to its boundaries. Congress has re
frained from using the metes and bounds description of land areas
of other local government units.

MARIANO v. COMELEC, 242 SCRA 211, 3/7/95


Facts: Petitioners assail section 2 of R.A. 7854 as unconstitutional

on the ground that it did not properly identify the land area or terri
torial jurisdiction of Makati by metes and bounds, in violation of Sec
tion 10 of the 1987 Constitution in relation to Sections 7 and 450 of
the Local Government Code.
Held: We find no merit in the petition. The delineated land area of
the proposed city of Makati provides that: SEC. 2. City of Makati. -
The Municipality of Makati shall be converted into a highly urban
ized city to be known as the City of Makati, hereinafter referred to as
the City, which shall comprise the present territory of the Municipal
ity of Makati in Metropolitan Manila Area over which it has jurisdic
tion bounded on the northeast by Pasig River and beyond by the City
of Mandaluyong and the Municipality of Pasig; on the southeast by
the municipalities of Pateros and Taguig; on the southwest by the City
of Pasay and the Municipality of Taguig; and, on the northwest, by
the City of Manila.
The importance of drawing the precise strokes of territorial
boundaries cannot be over emphasized. The boundaries must be clear
for they define the limits of the territorial jurisdiction of the local

government unit. Beyond these limits, its acts are ultra vires. Any
uncertainty in the boundaries will sow costly conflicts in the exercise
of governmental powers which ultimately will prejudice the peoples
welfare. This is the evil sought to be avoided by the Local Govern
ment Code in requiring that the land area be spelled out in metes and
bounds, with technical description.
Given the facts, we cannot perceive how this evil can be brought
about by the description made in section 2. Petitioners have not dem
onstrated that the delineation of the land area of the proposed City
of Makati will cause confusion as to its boundaries. The delineation
did not change even by an inch the land area previously covered. Sec
tion 2 did not add, subtract, divide or multiply the established land
area of Makati. In language that cannot be any clearer, the city's land
area shall comprise the present territory of the municipality? We take
judicial notice of the fact that Congress has also refrained from using
the metes and bounds description of land areas of other local govern
ment units with unsettled boundary disputes.

2. The technical description, containing the metes and

bounds of a municipality's territory stated in EO 258 creating the
Municipality of Sinacaban, Misamis Oriental, is binding.


265 SCRA 182, 12/2/96
Mendoza, J.

Facts: The Municipality of Sinacaban was created by Executive Or

der No. 258 of then President Elpidio Quirino. It provides: There is
hereby created, in the Province of Misamis Occidental, a municipal
ity to be known as the Municipality of Sinacaban, which shall consist
of the Southern portion of the Municipality of Jimenez, Misamis
Occidental, more particularly described as follows:

On the north by a line starting from point 1, the center of

the lighthouse on the Tabo-o point S. 84 30'W., 7,250 meters to
point 2 which is on the bank of Palilan River branch; thence fol
lowing Palilan River branch 2,400 meters southwesterly to point
3; thence a straight line S 87 OO'W, 22,550 meters to point 4,
where this intersects the Misamis Occidental-Zamboanga bound
ary; on the west by the present Misamis Occidental-Zamboanga
boundary; and on the south by the present Jimenez-Tudela
boundary; and on the east, by the limits of the municipal wa
ters which the municipality of Sinacaban shall have pursuant
to Section 2321 of the Revised Administrative Code. The Mu
nicipality of Jimenez shall have its present territory, minus the
portion thereof included in the Municipality of Sinacaban.
Basic Principles

Based on the technical description, Sinacaban laid claim to a

portion of Barrio Tabo-o and Barrios Macabayao, Adorable, Sinara
Baja, and Sinara Alto. The claim was filed with the Provincial Board
of Misamis Occidental against the Municipality of Jimenez. Jimenez
countered in its answer that while under EO 258, the disputed area
is part of Sinacaban, it nonetheless asserts jurisdiction on the basis
of an agreement entered with Sinacaban in 1950. The agreement
(Resolution No. 77), which was approved by the Provincial Board of
Misamis Occidental states that: "The barrio of Macabayao, Sitio Ador
able and site will be a part of Jimenez town."
The Provincial Board declared the disputed area to be part of
Sinacaban. Jimenez filed a petition for certiorari, prohibition and
mandamus in the RTC of Oroquieta City, against Sinacaban, et al.
The RTC denied the petition and the subsequent motion for reconsid
eration. Hence, this petition on whether it is the boundary provided
in EO 258 or in Resolution No. 77 which should be used as basis for
adjudicating Sinacaban's claim.

Held: Jimenez argues that the RTC erred in ordering a relocation sur
vey of the boundary of Sinacaban, because the barangays which
Sinacaban are claiming are not enumerated in EO 258 and that in
any event, the parties entered into an agreement whereby the
barangays in question were considered part of the territory of Jimenez.
EO 258 does not say that Sinacaban comprises only the barrios (now
called barangays) therein mentioned. What it says is that "Sinacaban
contains" those barrios without saying they are the only ones com
prising it. The reason for this is that technical description, contain
ing the metes and bounds of its territory, is controlling.
The trial court correctly ordered a relocation survey as the only
means of determining the boundaries of the municipality and conse
quently the question to which municipality the barangays questioned
belong. Therefore, if Resolution No. 77 is contrary to the technical de
scription of the territory of Sinacaban, it cannot be used by Jimenez
as basis for opposing the claim.

SEC. 8. Division and Merger. - Division and

merger of existing local government units shall
comply with the same requirements herein pre
scribed for their creation: Provided, however, That
such division shall not reduce the income, popula
tion, or land area of the local government unit or
units concerned to less than the minimum require
ments prescribed in this Code: Provided, further,

That the income classification of the original local

government unit or units shall not fall below its
current income classification prior to such division.

The income classification of local government

units shall be updated within six (6) months from
the effectivity of this Code to reflect the changes in
their financial position resulting from the increased
revenues as provided herein.

SEC. 9. Abolition ofLocal Government Units. -

A local government unit may be abolished when its
income, population, or land area has been irrevers
ibly reduced to less than the minimum standards
prescribed for its creation under Book III of this
Code, as certified by the national agencies men
tioned in Section 7 hereof to Congress or to the
sanggunian concerned, as the case may be.

The law or ordinance abolishing a local gov

ernment unit shall specify the province, city, mu
nicipality, or barangay with which the local govern
ment unit sought to be abolished will be incorpo
rated or merged.

A. Comments
The Code now lays down three important indicators of viabil
ity in the creation of local government units namely: income, popu
lation and land area.

SEC. 10. Plebiscite Requirement. - No creation,

division, merger, abolition, or substantial alteration
of boundaries of local government units shall take
effect unless approved by a majority of the votes
cast in a plebiscite called for the purpose in the
political unit or units directly affected. Said plebi
scite shall be conducted by the Commission on Elec
tions (COMELEC) within one hundred twenty (120)
days from the date of effectivity of the law or ordi
nance effecting such action, unless said law or or
dinance fixes another date.
Basic Principles

A. Decided Cases
1. The power to merge administrative regions is a power
which has traditionally been lodged with the President to facilitate
the exercise of the power of general supervision over local govern
ments. There is no conflict between the power of the President to
merge administrative regions with the constitutional provision, re
quiring plebiscite in the merger of local government units because
the requirement of the plebiscite in a merger expressly applies only
to provinces, cities, municipalities or barangays, not to administra
tive regions. (Abbas v. Commissions on Elections, 179 SCRA 287.)
2. A case involving a boundary dispute between local gov
ernment units presents a prejudicial question which must first be
decided before plebiscites for creation of proposed barangays may
be held.

CITY OF PASIG v. COMELEC, 314 SCRA 179, 9/10/99

Ynares-Santiago, J.

Facts: The residents of Karangalan Village petitioned that they be

segregated from its mother Barangays Manggahan and Dela Paz, City
of Pasig and to be known as Barangay Karangalan. Plebiscite on the
creation was set for June 22, 1996. Meanwhile, the City of Pasig also
created Barangay Napico in Pasig City. The plebiscite was set for
March 15, 1997. Upon learning of the ordinances creating the
barangays, the Municipality of Cainta moved to suspend or cancel the
respective plebiscite schedules by petitions filed with the COMELEC.
The municipality of Cainta called the attention of the
COMELEC to a pending case in the RTC of Antipolo, Rizal for settle
ment of boundary dispute, in which the proposed barangays involve
areas included in the boundary dispute subject of said pending case.
The COMELEC ordered the plebiscite for the creation of Barangay
Karangalan to be held in abeyance. However, the COMELEC ruled
differently with respect to the creation of Barangay Napico, saying
that the petition has become moot and academic by reason of the hold
ing of a plebiscite on March 15, 1997.

Held: We agree with the position of the COMELEC that the civil case
involving the boundary dispute between the Municipality of Cainta
and City of Pasig presents a prejudicial question which must first be
decided before plebiscites for the creation of the proposed barangays
may be held. While the general rule is that a prejudicial question con
templates a civil and a criminal action and does not come into play
when both cases are civil, in the interest of good order, the Supreme

Court can very well suspend action on one case pending the final out
come of another case closely interrelated or linked to the first.
When territorial jurisdiction is an issue raised in the pending
civil case, until and unless such issue is resolved with finality, to de
fine the territorial jurisdiction of the proposed barangay would be an
exercise in futility. For indeed, a requisite for the creation of a
barangay, is for its territorial jurisdiction to be properly identified by
metes and bounds or by more or less permanent natural boundaries.
However, we do not agree with the contention that merely be
cause a plebiscite had already been held in the case of the proposed
Barangay Napico, the petition of the Municipality of Cainta had al
ready been rendered moot and academic. The issues raised by the
Municipality of Cainta before the COMELEC against the holding of
a plebiscite for the creation of Barangay Napico are still pending de
termination before the Antipolo RTC.

SEC. 11. Selection and Transfer of Local Gov

ernment Site, Offices, and Facilities. - (a) The law
or ordinance creating or merging local government
units shall specify the seat of government from
where governmental and corporate services shall
be delivered. In selecting said site, factors relating
to geographical centrality, accessibility, availability
of transportation and communication facilities,
drainage and sanitation, development and eco
nomic progress , and other relevant considerations
shall be taken into account.

(b) When conditions and development in the

local government unit concerned have significantly
changed subsequent to the establishment of the
seat of government, its sanggunian may, after pub
lic hearing and by a vote of two-thirds (2/3) of all
its members, transfer the same to a site better
suited to its needs: Provided, however, That no such
transfer shall be made outside the territorial
boundaries of the local government unit concerned.

The old site, together with the improvements

thereon, may be disposed of by sale or lease or con
verted to such other use as the sanggunian con
cerned may deem beneficial to the local govern
ment unit concerned and its inhabitants.
Basic Principles

(c) Local government offices and facilities

shall not be transferred, relocated, or converted to
other uses unless public hearings are first con
ducted for the purpose and the concurrence of the
majority of all the members of the sanggunian con
cerned is obtained.

SEC. 12. Government Centers. - Provinces, cit

ies, and municipalities shall endeavor to establish
a government center where offices, agencies, or
branches of the National Government, local govern
ment units, or government-owned or controlled
corporations may, as far as practicable, be located.
In designating such a center, the local government
unit concerned shall take into account the existing
facilities of national and local agencies and offices
which may serve as the government center as con
templated under this Section. The National Govern
ment, local government unit or government-owned
or controlled-corporation concerned shall bear the
expenses for the construction of its buildings and
facilities in the government center.

SEC. 13. Naming of Local Government Units

and Public Places, Streets and Structures. - (a) The
sangguniang panlalawigan may, in consultation
with the Philippine Historical Commission (PHC),
change the name of the following within its terri
torial jurisdiction:

(1) Component cities and municipalities,

upon the recommendation of the sanggunian

(2) Provincial roads, avenues, boulev

ards, thoroughfares, and bridges;

(3) Public vocational or.technical schools

and other post-secondary and tertiary schools;

(4) Provincial hospitals, health centers

and other health facilities; and

(5) Any other public place or building

owned by the provincial government.

(b) The sanggunians of highly urbanized cit

ies and of component cities whose charters prohibit
their voters from voting for provincial elective of
ficials, hereinafter referred to in this Code as inde
pendent component cities, may, in consultation
with the Philippine Historical Commission, change
the name of the following within its territorial ju
(1) City barangays, upon the recommen
dation of the sangguniang barangay con
(2) City roads, avenues, boulevards, thor
oughfares, and bridges;
(3) Public elementary, secondary, and
vocational or technical schools, community col
leges, and non-chartered colleges;
(4) City hospitals, health centers and
other health facilities; and
(5) Any other public place or building
owned by the city government.
(c) The sanggunians of component cities and
municipalities may, in consultation with the Phil
ippine Historical Commission, change the name of
the following within its territorial jurisdiction.
(1) City and municipal barangays, upon
recommendation of the sangguniang barangay
(2) City, municipal and barangay roads,
avenues, boulevards, thoroughfares, and
(3) City and municipal public elemen
tary, secondary and vocational or technical
schools, post-secondary and other tertiary
(4) City and municipal hospitals, health
centers and other health facilities; and
(5) Any other public place or building
owned by the municipal government.
Basic Principles

(d) None of the foregoing local government

units, institutions, places, or buildings shall be
named after a living person, nor may a change of
name be made unless for a justifiable reason and,
in any case, not oftener than once every ten (10)
years. The name of a local government unit or a
public place, street or structure with historical,
cultural, or ethnic significance shall not be
changed, unless by a unanimous vote of the
sanggunian concerned and in consultation with the
(e) A change of name of a public school shall
be made only upon the recommendation of the lo
cal school board concerned.

(f) A change of name of public hospital,

health centers, and other health facilities shall be
made only upon the recommendation of the local
health board concerned.

(g) The change of name of any local govern

ment unit shall be effective only upon ratification
in a plebiscite conducted for the purpose in the
political unit directly affected.

(h) In any change of name, the Office of the

President, the representative of the legislative dis
trict concerned, and the Bureau of Posts shall be

SEC. 14. Beginning of Corporate Existence. -

When a new local government unit is created, its
corporate existence shall commence upon the elec
tion and qualification of its chief executive and a
majority of the members of its sanggunian, unless
some other time is fixed therefor by the law or or
dinance creating it.

A. Comments
This section settles the question of the beginning of the corpo
rate existence of a new local government unit which divided the
Supreme Court in the case of Mejia v. Balolong, infra.

The legal existence of a municipal corporation is to be deter

mined by the law creating it. Usually, the law fixes the beginning
of the corporate existence of a municipal corporation from the
effectivity of the law creating it or upon the organization of its gov
ernment or upon the qualification of its officers.
Where the law, however, is silent as to the beginning of its cor
porate existence, it shall commence upon the election and qualifica
tion of its chief executive and a majority of the members of its

B. Decided Cases
1. The City of Dagupan came into existence as a legal en
tity upon the approval of the law creating it. However, before the
City of Dagupan can act as a public corporation or juridical entity,
it is necessary that the officials thereof be appointed or elected in ;,,'

order that it may transact business as such public corporation or


MEJIA v. BALOLONG, 81 Phil. 486, 9/16/48

Feria, J.

Facts: This is an action for quo warranto. The four petitioners were
elected councilors of the city of Dagupan on Nov.11, 1947. The four
respondents were appointed by the President on Dec 30, 1947. Accord
ing to Section 88 of Act No. 170 "the city government provided for in
this chapter shall be organized on such a date as may be fixed by the
President and upon the qualification of the City Mayor and the ap
pointment or election of the members of the Municipal Board." Pend
ing the next general elections for provincial and municipal officials,
the officers of the members of the municipal board shall be filled by
appointment of the President of the Philippines with the consent of
the Commission on Appointment. The validity of the appointment of
the respondents as councilors of Dagupan by the President depends
upon whether the City of Dagupan was created and came into exist
ence on June 20, 1947, the date Act No. 170 became effective, or on
January 1, 1948, when the city government was organized by Execu
tive Order No. 96. If the first, the next general elections referred to
was that of Nov. 11, 1947 and the President had no power to appoint
herein respondents.

Held: It is evident that the City of Dagupan created by Act No. 170
came into existence as a legal entity or public corporation upon the
/ Basic Principles

approval of said act on June 20, 1947; because a statute which like
said Act is to take effect upon its approval is operative from the exact
instance upon its approval or becoming a law. But as a city is a pub
lic corporation or a juridical entity, and as such cannot operate or
transact business by itself but thru its agents or officers, it was nec
essary that the officials thereof be appointed or elected in order that
it may act or transact business as such public corporation or city. That
is, it was necessary that the government of the city be organized. It
is obvious that to create a public corporation or city is one thing and
to organize the government thereof is another.
The general elections referred to is that of Nov. 11, 1947 where
the petitioners were elected. Therefore, the appointments of the re
spondents by the President are null and void. Petition is granted.

Paras, J.: Dissenting

The City of Dagupan must be deemed to have been formally
organized only on Jan. 1, 1948, the date fixed in Executive Order No.
96. The general elections referred to is not the Nov. 11, 1947 elections
but the next general elections after the organization of the city.

SEC. 15. Political and Corporate Nature of Lo

cal Government Units. - Every local government
unit created or recognized under this Code is a
body politic and corporate endowed with powers to
be exercised by it in conformity with law. As such,
it shall exercise powers as a political subdivisions
of the National Government and as a corporate
entity representing the inhabitants of its territory.

A. Comments

This section defines a local government and embodies the dual

personality of a local government as a subdivision or agency of the
government, and as a corporate entity representing the inhabitants
of its territory as pronounced in Philippine Jurisprudence. (Read:
Aguado v. City of Manila; Villas v. City of Manila, all infra.)
Municipal corporations perform dual functions, one governmen
tal and another corporate. In the exercise of its governmental pow
ers and duties, municipal corporations are agencies of the national
government. When engaged in corporate activities, municipal cor-