LAW ON LOCAL GOVERNMENTS

Topic: Public Corporations

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

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

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

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

II. Basis for the Creation and Existence of LGUs

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

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

A. Constitutional Basis

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

B. Local Government Code of 1991 (RA 7160)

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

III. Powers of Local Government Units

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

A. General Powers

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

B. Specific Powers

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

IV. Public Corporations and the Doctrine of Local Autonomy

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

General Supervision vs. Control

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

V. Types of LGUs and Their Powers as Public Corporations

A. Provinces

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

B. Cities

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

C. Municipalities

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

D. Barangays

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

VI. Relationship with the National Government

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

VII. Conclusion

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