POLITICAL LAW AND PUBLIC INTERNATIONAL LAW

XV. LAW ON LOCAL GOVERNMENTS

A. Public Corporations

3. Classifications

i. Elements

I. Introduction to Public Corporations

Public corporations are government entities created by law, primarily for the purpose of carrying out public services and exercising government functions in a specific territory. In the context of the Philippines, public corporations refer to local government units (LGUs), which are subdivisions of the state tasked with exercising political and administrative powers in their respective areas.

The legal framework governing public corporations in the Philippines is found primarily in the 1987 Philippine Constitution, Republic Act No. 7160 (the Local Government Code of 1991), and relevant jurisprudence.

II. Classifications of Public Corporations

Public corporations, especially local government units (LGUs), are classified based on various elements. These elements determine their creation, legal personality, powers, and responsibilities. The elements include:

1. Legal Personality

Local government units (LGUs) are created by law and possess a separate legal personality from the state. This legal personality grants them the authority to:

Enter into contracts
Sue and be sued
Acquire and own property
Govern local affairs within the scope of their delegated powers

This legal personality is essential in distinguishing LGUs from private entities, and it enables them to perform functions delegated by the national government.

Jurisprudence: The Supreme Court has consistently upheld that LGUs are "corporations" in the sense that they are public entities with distinct personalities, as exemplified in Pimentel Jr. v. Aguirre (G.R. No. 132988, July 19, 2000), where the Court emphasized the autonomy of LGUs in managing local affairs within the bounds of the law.

2. Creation

Public corporations in the Philippines are created by law or by the Constitution. The creation of LGUs is a legislative function. Under the 1987 Philippine Constitution, Congress has the power to create, divide, merge, abolish, or substantially alter LGUs, subject to certain conditions such as the approval of the affected constituents in a plebiscite.

The creation of an LGU must meet the criteria specified in the Local Government Code:

Income requirement
Population requirement
Land area requirement

Failure to meet these statutory requirements invalidates the creation or alteration of an LGU.

Example: The creation of the city of Navotas through Republic Act No. 9387 was upheld after a plebiscite ratified its cityhood. This follows the constitutional principle that any creation of an LGU must be affirmed by the people it will govern.

3. Territorial Jurisdiction

The territory of an LGU refers to the geographic area over which it exercises its governmental powers and authority. This includes land, water, and, to some extent, the airspace above the area.

Territorial jurisdiction is essential because it defines the scope of the public corporation's governmental functions, including the ability to:

Levy and collect taxes
Enforce local ordinances and laws
Provide public services such as education, health, and safety

Disputes over territorial boundaries between LGUs are resolved by the courts or appropriate administrative agencies, following provisions in the Local Government Code.

Jurisprudence: In Province of North Cotabato v. Government of the Republic of the Philippines Peace Panel on Ancestral Domain (G.R. No. 183591, October 14, 2008), the Supreme Court ruled that territorial jurisdiction and integrity must be preserved, reaffirming that LGUs cannot unilaterally alter their borders without going through legal processes.

4. Governmental Powers

LGUs, as public corporations, are vested with a set of governmental powers that they exercise over their respective jurisdictions. These powers are classified into:

Police Power: The power to enact ordinances to protect the health, safety, and welfare of the local inhabitants. This is the most essential local government power, enabling LGUs to regulate behavior within their territorial jurisdiction.

Example: Ordinances on curfews, sanitation standards, and anti-littering measures are expressions of the police power of LGUs.
Power of Eminent Domain: The authority to acquire private property for public use upon payment of just compensation. LGUs can exercise this power when necessary for public projects such as roads, schools, and public markets.

Jurisprudence: In Manapat v. Court of Appeals (G.R. No. 110478, May 23, 1995), the Supreme Court held that the power of eminent domain is not absolute and must comply with the requirements of due process and compensation.
Taxing Power: The ability to impose taxes, fees, and charges to raise revenue for public services and infrastructure. This power is subject to limitations set by the Constitution and the Local Government Code.

Jurisprudence: In City of Manila v. Coca-Cola Bottlers Philippines, Inc. (G.R. No. 181845, August 4, 2009), the Supreme Court clarified the limitations of LGUs in imposing taxes, emphasizing that they must adhere to the tax rates and bases set by law.
Corporate Powers: LGUs, as public corporations, also have corporate powers such as owning property, entering into contracts, and managing their own local economic enterprises. These corporate powers are exercised in a proprietary capacity, distinct from their governmental functions.

Example: An LGU may own and manage a public market or a public utility, such as a water system, to generate income.

5. Autonomy

Local autonomy refers to the ability of LGUs to govern themselves with minimal interference from the national government. This principle is enshrined in the 1987 Constitution, which provides for decentralization and the devolution of powers to LGUs.

The extent of local autonomy includes:

Administrative autonomy: LGUs have the authority to create their own policies, pass local ordinances, and implement local development programs.
Fiscal autonomy: LGUs can generate their own income through taxation, share in the national government’s revenues (Internal Revenue Allotment or IRA), and manage their finances independently.

Jurisprudence: The case of Pimentel Jr. v. Aguirre (supra) is seminal in explaining the balance between local autonomy and the supervisory powers of the President. The Supreme Court ruled that while the President can exercise general supervision over LGUs, this does not equate to control.

6. Relationship to the National Government

The relationship between public corporations (LGUs) and the national government is governed by the principle of decentralization. Decentralization takes two forms:

Devolution: The transfer of powers and responsibilities from the national government to LGUs. The Local Government Code formalizes devolution by specifying which functions should be undertaken by local authorities, such as health services, agriculture, and infrastructure.
Delegation: In some cases, the national government delegates certain functions to LGUs temporarily or under specific conditions. Unlike devolution, delegation does not imply the permanent transfer of powers.

Despite their autonomy, LGUs remain subject to the general supervision of the national government. The President can intervene in local affairs only to ensure that laws are faithfully executed and that local officials perform their duties according to the law.

III. Conclusion

Public corporations, particularly local government units, are essential components of the Philippine government structure. They are classified according to elements such as legal personality, creation, territorial jurisdiction, governmental powers, autonomy, and their relationship to the national government. These elements ensure that LGUs can effectively serve their constituents while maintaining a harmonious relationship with the national government. Understanding these classifications is crucial in grasping the role of LGUs in governance, development, and public administration in the Philippines.