Political Law and Public International Law

XV. Law on Local Governments

A. Public Corporations

3. Classifications

b. Municipal Corporations

Municipal corporations are an essential part of the Philippine legal and administrative framework under the Law on Local Governments. They are a type of public corporation created by the State to assist in the decentralization of government functions and provide local governance. Their establishment, powers, and functions are mainly governed by Republic Act No. 7160, otherwise known as the Local Government Code of 1991, as well as relevant jurisprudence and principles of political law.

Municipal corporations are often referred to in local parlance as cities, municipalities, barangays, and similar political subdivisions. These entities are considered “municipal corporations” because they have a dual character: governmental and corporate. They exercise both sovereign functions (those involving governance) and proprietary functions (those involving commercial and business activities).

1. Nature of Municipal Corporations

Municipal corporations are organized by the State as agencies to assist in the local administration of governmental powers. They possess a legal personality separate from the individuals who compose them. Their creation, powers, and dissolution depend on statutes, particularly the Local Government Code.

Juridical Personality
As juridical entities, municipal corporations can sue and be sued, enter into contracts, own property, and perform other legal acts necessary to achieve their purposes.

Dual Functions

Governmental or Public Functions: These are duties performed in the exercise of the State’s sovereignty, such as maintaining peace and order, providing public health services, enacting ordinances, and regulating businesses within the locality.
Proprietary or Corporate Functions: These involve commercial or business-like activities for profit, such as owning and operating public markets, providing utilities like water and electricity, and managing other revenue-generating ventures.

2. Classifications of Municipal Corporations

Municipal corporations are classified under Philippine law based on their political and economic structure:

Barangays: The smallest political unit in the Philippines, considered a municipal corporation with limited powers. Barangays serve as the basic political unit for planning and implementing government policies, programs, and projects.
Municipalities: Municipalities are local government units (LGUs) that are distinct from barangays and cities. They provide governmental services to rural and less populated areas and have less autonomy and revenue than cities.
Cities: Cities are municipal corporations that have a higher degree of autonomy, income, and governmental responsibilities than municipalities. They may be classified as component cities or highly urbanized cities, with the latter being more independent from provincial governments.
Provinces: Provinces are administrative divisions consisting of municipalities and component cities. They function as regional entities responsible for governance at a broader level than cities or municipalities.

The Local Government Code specifies the requirements for the creation, conversion, and reclassification of municipal corporations based on population, land area, and revenue, among others.

3. Powers and Functions of Municipal Corporations

Under the Local Government Code of 1991, municipal corporations are vested with the following powers:

Corporate Powers:
- The power to acquire and own properties for public or private use, contract obligations, enter into joint ventures, and engage in other lawful business transactions.
- The power to sue and be sued in their corporate name.
Legislative Powers:
- Through their Sangguniang Bayan (municipal council) or Sangguniang Panlungsod (city council), they can enact ordinances, pass resolutions, and create local policies, provided these are consistent with national laws.
Police Powers:
- The authority to enact ordinances to ensure peace and order, protect public health and safety, regulate the establishment and operation of businesses, and address issues like pollution and zoning.
Taxing Powers:
- The power to impose local taxes, fees, and charges to generate revenue. This includes imposing real property taxes, business taxes, and other taxes authorized under the Local Government Code.
Eminent Domain:
- The power to expropriate private property for public use, with just compensation. This is subject to the limitations set forth by law and the requirement of public necessity.
Local Initiative and Referendum:
- Municipal corporations may provide mechanisms for the people to propose, adopt, or reject local policies through initiatives and referenda.

4. Autonomy of Municipal Corporations

The 1987 Philippine Constitution guarantees local autonomy to LGUs. This autonomy, however, is not absolute; it is still subject to national supervision, particularly by the Department of the Interior and Local Government (DILG), and control by Congress. LGUs are given sufficient leeway to manage their own affairs but must adhere to national policies, laws, and standards.

Fiscal Autonomy:
- LGUs, including municipal corporations, are entitled to a share in national taxes, commonly referred to as the Internal Revenue Allotment (IRA) or National Tax Allotment (NTA). This allocation is based on their population, land area, and revenue generation capacity.
Supervision vs. Control:
- The relationship between the national government and municipal corporations is one of supervision, not control. Supervision means that the national government, through agencies like the DILG, may oversee local governments to ensure that they comply with laws. However, it cannot interfere with local policy decisions unless these contravene national laws.

5. Limitations on the Powers of Municipal Corporations

Despite their autonomy and broad powers, municipal corporations are subject to certain limitations under the Constitution, the Local Government Code, and other applicable laws:

Legal Limitations:
- They cannot pass ordinances or exercise powers that are contrary to the Constitution, statutes, or judicial decisions.
- Their taxing powers are restricted to those specifically delegated by law. For instance, they cannot impose customs duties or income taxes, which are reserved to the national government.
Territorial Jurisdiction:
- Municipal corporations only have jurisdiction over persons, properties, and activities within their territorial boundaries.
Judicial Review:
- Acts of municipal corporations, especially local ordinances, may be reviewed by the courts, and may be declared void if they are found to be unconstitutional, arbitrary, or made in bad faith.

6. Dissolution and Reclassification of Municipal Corporations

Municipal corporations may be dissolved by law, typically through the process of municipal reorganization or amalgamation with other local government units. This is often done for efficiency in governance, addressing financial difficulties, or upon the initiative of the constituents via plebiscite.

Reclassification:

Municipalities can be converted into cities, or a barangay may be absorbed into a municipality or another barangay, based on criteria set by law, including population, land area, and income.

7. Municipal Corporations in Jurisprudence

Philippine jurisprudence has clarified several important principles regarding municipal corporations:

General Welfare Clause: Municipal corporations have broad authority to enact measures that promote the general welfare of their inhabitants. This is a plenary power subject to the limitations imposed by law.
Ultra Vires Acts: Any act of a municipal corporation that exceeds the powers granted by law (i.e., ultra vires) is void. This includes actions outside of its jurisdiction or beyond the scope of its delegated authority.
Delegation of Powers: Municipal corporations may not delegate their legislative powers to private entities or officials, except in cases authorized by law. However, they can enter into agreements with other LGUs or private organizations for the delivery of services.

Conclusion

Municipal corporations are vital agents of local governance in the Philippines. While enjoying significant autonomy, their powers and functions remain subject to constitutional and statutory limits. Their role in decentralization allows for localized policy-making and efficient administration, but they are also bound by the principles of national sovereignty, ensuring that local laws and actions conform to broader national objectives.