Local Government Concepts

Political Law

The highest court of the land in People v. Perfecto (43 Phil. 887) defines political law as that branch of public law which deals with the organization and operation of the government organs of the state with the inhabitants of its territory. Political law covers such subdivisions as Constitutional Law, Administrative Law, Law of Public Officers, and Law of Public Corporations. The fourth subdivision, (Law of Public Corporations) is the concern and focus of this module.

Public and Private Corporations

The Corporation Code of the Philippines (Sec. 2) defines a corporation as an artificial being created by operation of law, having the right of succession and the powers, attributes and properties expressly authorized by law or incident to its creation. Corporations are generally classified as either public or private. Some experts include quasi-public corporation as a third classification. A public corporation is one that is created by the State either by general or special act for purposes of administration of local government or the rendering of service in the public interest. On the other hand, a corporation is private if it is formed for some private purpose, benefit, aim or end (Sec. 3, Act No. 1459). Public corporations and private corporations are distinguished from each other on three grounds, namely: purpose of creation, will under which it is created, and nature of act of creation. Public corporations are created for the administration of civil or local governments, while private corporations are established for private aim or benefit. On the basis of the will under which corporations are created, public corporations are created by the will of the State either by special or general act, whereas a private corporation is formed through the will of the incorporators. As regards the nature of the act of creation, public corporations are the involuntary consequence of legislation. On the other hand, private corporations result from the voluntary agreement or act by and among its members or incorporators.

Public corporations are classified either as quasi- or semi-public or municipal. Quasi-public corporations are those created as agencies of the State for limited or specific purposes devoid of the powers and liabilities of self-governing corporations. The definition of municipal corporation is supplied by the discussion below.

Municipal Corporations

and Local Governments

What is a municipal corporation? Citing Dillon (Mun. Corp., Vol. 1: 58-59), Martin (1970: 5) defined municipal corporation as a “body politic and corporate constituted by the incorporation of the inhabitants of a city or town for the purpose of local 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 and internal affairs of the city (or) town which is incorporated.” A municipal corporation is considered as a subordinate branch of the government of the State performing powers and functions which have been duly delegated. It is a political unit of the State and has been variedly regarded as its agent and instrumentality (Martin, citing McQuillin, Mun. Corp., Third Edition: 456).

           

A municipal corporation is a public corporation created by the government for political purposes or reasons and having powers of local legislation.

           

What are the requisites for the creation of municipal corporations? There are four requirements for the creation and existence of a municipal corporation as follows: (1) charter; (2) corporate name; (3) people; and (4) place or territory. Charter is the law creating, incorporating or legalizing the incorporation of a municipal corporation. Its corporate name is the title by which the legal personality of the municipal corporation is known and on the basis of which all corporate acts are performed. The people are the inhabitants constituting the population who are invested with the ultimate political and corporate powers and functions acting directly or through duly constituted delegates or representatives within their territorial limits.

What about local government? Local government is defined as a political unit or subdivision of a nation or State having substantial control over local affairs including, but not limited to, the power to impose and collect taxes (De Guzman and Tapales 1990 citing the United Nations). Humes and Martin (1973: 1) view local government as having a “defined area, a population, a continuing organization, and the authority to undertake and the power to carry out public activities” within its jurisdiction as defined or prescribed in its charter. The preceding definition is an attempt to prescribe the attributes of local government. Much earlier, Alderfer (1964: 2) proposed to draw the extent of the application of local government when he said that local government “consists of all units of government under national and state levels in federal systems.”

Supplementing and clarifying the extent of application of local government earlier drawn by Alderfer, De Guzman and Tapales (1990) proposed two schools of thought on local government, namely: the traditional-legal school of thought and the modern school of thought. Under the first, local governments are viewed as “political subdivisions of the national government, excluding the field offices of the line agencies geographically located within the jurisdiction of the local government units.” The second concept looks at local government as the “geographic area where all government units, including the field offices of the line agencies of the national government, are considered as part of the local government.” Under this model, the offices of the line agencies decentralized in various administrative regions, including the personnel thereof stationed or assigned in the field offices are part and parcel of local government, but which under the traditional-legal model are excluded. The traditional-legal view considers only the political subdivisions of the national government as constituting local government.

Under the 1987 Constitution, local government refers to provinces, cities, municipalities, and barangays and the autonomous regional government in Muslim Mindanao and Autonomous Region in the Cordilleras (Sec. 1, Art. X).

In political jurisprudence, local governments are also referred to as municipal corporations.

Local Autonomy and Decentralization

The subordinate nature of local governments in the Philippines is a result of the unitary nature of our system of government where local governments occupy a position of dependence on and inferiority to the central government. Unlike in a federal system, the state governments enjoy almost absolute, if not absolute, independence from the federal government. In a unitary state like ours, the powers to create subordinate political units of government, define their structure, powers, responsibilities, and to determine their very existence rest upon the national government.

           

From mere administrative conduits providing administrative support and backstop to the national government in the performance of its multifarious functions, local government units now command a great amount of control over local affairs from recruitment of personnel to budgetary outlay, resource allocation, and taxation, inter alia (among others). Many of the functions of the central government have already been devolved to the local governments courtesy of the Local Government Code of 1991. The Constitution directs that territorial and political subdivisions enjoy local autonomy (Sec. 2, Art. X and Limbona vs. Conte Mangelin, G.R. No. 80391, March 28, 1989).

           

What is local autonomy then? Autonomy is either decentralization of administration or decentralization of power. There is decentralization of administration when the central government delegates administrative powers to political subdivisions to broaden the base of governmental powers, and in the process, make local government “more responsive and accountable” thereby ensuring their fullest development as self-reliant communities. They also become effective partners in national development and social progress. On the other hand, decentralization of power involves the abdication of political power in favor of local government units declared to be autonomous. In the second case, the autonomous government is free to chart its own destiny and shape its future with only a modicum of supervision from the central government in the management of its activities.

           

What about decentralization, what does it mean? Through the process of decentralization, the basic powers of the national government are transferred to local governments to permit the citizens to actively participate in governmental and community affairs. The degree of autonomy granted to and enjoyed by local governments is largely dependent upon the expanse of powers and functions of the national government devolved to the local governments. Akin to decentralization are the concepts of devolution and deconcentration. Devolution is the act by which the national government confers power and authority upon its various local government units to perform specific functions and responsibilities (Sec. 12 (a), LGC). While devolution deals with the conferment of powers and responsibilities to the local government units, deconcentration is the distribution of requisite and necessary authority and power to the appropriate regional or field office whose major functions are not devolved to local government units (Sec. 528, LGC).

           

Is decentralization beneficial? Decentralization has been held to be advantageous for various reasons. One advantage is the sharing of responsibility which accords the people greater involvement in the decision making process. This, in turn, encourages and fosters self-reliance which entices the people to release their energies to undertake things commonly beneficial to them. Decentralization likewise shatters the capital city syndrome and weans the local units from their dependence on the central government. Subsequently, the local areas develop the initiative to be innovative and entrepreneurial.

           

The decentralization program under the Code involves the transfer of responsibility for the provision of basic services and facilities, transfer of regulatory functions, improved national government-local government relations, and institutionalization of local government–non-governmental organization/private sector relations. The responsibility for the provision of basic services and facilities shall be devolved to local government units within six (6) months after the effectivity of the Code on January 1992.

De Jure and De Facto Local Governments

Municipal corporations created by the operation of law are de jure while those which exercised their powers from time immemorial with a charter which by lapse of time is presumed as either lost or destroyed are de facto. Where the people have, for years, been imposing and collecting revenues and exercising governmental powers, a de facto municipal corporation has existed.

A municipal corporation is de facto if it possesses the following requisites, namely:

·        a valid law authorizing its incorporation;

·        an attempt in good faith to organize under that valid law;

·        a colorable compliance with that law;  and

·        an actual assumption of corporate powers.

Public and Proprietary Nature of Local Governments

Local governments and municipal corporations have dual nature: governmental or public and proprietary. In their public character, they serve as instrumentalities of the State in carrying out the functions of the government. In their private aspect, they act as agencies of the community in the administration of local affairs. It is in their private character that they act as business corporations and as separate entities for the furtherance of their own interests and not as subdivisions or units of the State (Lidasan vs. COMELEC, G.R. No. L-280890, October 25, 1967). As private corporate entities, local governments manage public utilities, like electric service and waterworks, public markets, cemeteries, canteens, etc.

But what is the ultimate test in determining whether a corporation is public or private? The ultimate and true test in determining whether a corporation is public or private lies in its relation with the State. If the corporation is created and acts as a State agency or instrumentality carrying out its governmental functions, then it is public. Otherwise, it is private (Martin citing Elliot, Municipal Corporation, Third Edition and Cooley, Municipal Corporation).