REVIEWER ON LOCAL GOVERNMENT LAW Alberto C. Agra working draft as of April 26, 2017 Table of Contents Part 1 Local Governments Nature of Local Government Units Types of Local Government Units Creation of Local Government Units Part 2 Local Autonomy Unitary, not Federal, Form Local Autonomy Devolution and Deconcentration Executive Supervision Legislative Control Part 3 Powers of Local Governments Delegation and Interpretation of Powers Police Power Eminent Domain Public Land vs. Patrimonial Property Reclassification of Land Local Legislation Other Governmental and Corporate Powers Part 4 Fiscal Autonomy and Local Sources of Funds Sources of Funds Fiscal Autonomy Internal Revenue Allotment Share in National Wealth Proceeds Power of Taxation Participation in Public Auction/ Biddings Reviewer on Local Government Law 1 Alberto C. Agra, Ateneo Law School Part 5 Local Government Officials Legislative Control over Structure Term of Office Powers of Local Officials Power to Appoint Ban on Holding Dual Positions Vacancies Part 6 Accountability of Local Government Units and Officials Suability and Liability Liability of Local Government Units Liability of Local Officials Administrative Proceedings Penalties Preventive Suspension Effect of Re-Election Part 7 People’s Participation Venues for Popular Participation Prior Mandatory Consultation Initiative and Referendum Local Special Bodies Partnerships and Assistance Recall Sectoral Representatives Part 1. LOCAL GOVERNMENTS Nature of Local Government Units 1. Under the 1987 Constitution, local governments or local government units (LGUs) or municipal corporations proper are referred to as “territorial and political subdivisions” (Section 1, Article X, 1987 Constitution). 1.1 An LGU is a public office, a public corporation, and is classified as a municipal corporation proper. Reviewer on Local Government Law 2 Alberto C. Agra, Ateneo Law School a. The four elements of an LGU are: (1) legal creation; (2) corporate name; (3) inhabitants; and (4) place or territory (Public Corporations, Ruperto G. Martin, 1985). b. They are established for the government of a portion of the State (Public Corporations, Ruperto G. Martin, 1985). c. An LGU can only exercise its powers within its territorial boundary or jurisdiction. Its powers are intramural. As exceptions, an LGU can exercise its powers outside the subdivision (extramural) on three occasions; namely, (1) protection of water supply; (2) prevention of nuisance; and (3) police purposes. (Public Corporations, Ruperto G. Martin, 1985). Forest lands, although under the management of the DENR, are not exempt from the territorial application of municipal laws, for local government units legitimately exercise their powers of government over their defined territorial jurisdiction (Aquino v. Municipality of Malay, Aklan, G.R. No. 211356, September 29, 2014). d. “Municipal waters” includes “not only streams, lakes, and tidal waters within the municipality, not being the subject of private ownership and not comprised within the national parks, public forest, timber lands, forest reserves or fishery reserves, but also marine waters included between two lines drawn perpendicularly to the general coastline from points where the boundary lines of the municipality or city touch the sea at low tide and a third line parallel with the general coastline and fifteen (15) kilometers from it.” Although the term “municipal waters” appears in the 1991 LGC in the context of the grant of quarrying and fisheries privileges for a fee by LGs, its inclusion in Book II which covers local taxation means that it may also apply as guide in determining the territorial extent of the local authorities' power to levy real property taxation (Capitol Wireless Inc. v. Provincial Government of Batangas, G.R. No. 180110, May 30, 2016). 1.2 Local governments are administrative agencies and agencies of Government distinguished from the National Government, which refers to the entire machinery of the central government (Sections 2 [4] and [2], 1987 Administrative Code). Under the 1987 Administrative Code, an “Agency of the Government" refers to any of the various units of the Government, including a department, Reviewer on Local Government Law 3 Alberto C. Agra, Ateneo Law School bureau, office, instrumentality, or government-owned or controlled corporations, or a local government or a distinct unit therein. 1.3 Public corporations created by local governments are referred to as quasi-municipal corporations (Public Corporations, Ruperto G. Martin, 1985). 1.4 Local governments are distinguished from quasi-corporations. Quasi-corporations are created by the State, either by law or by authority of law, for a specific governmental purpose (Public Corporations, Ruperto G. Martin, 1985). a. A government-owned and -controlled corporation (GOCC) must be organized either as a stock or non-stock corporation. (MIAA vs. CA, G.R. No. 155650, July 20, 2006). i. A GOCC is vested by law with a legal personality separate and distinct from those acting for and in its behalf and, in general, from the people comprising it (MIAA vs. CA, G.R. No. 155650, July 20, 2006). ii. A GOCC created through special charter must meet two conditions, namely: (a) it must be established for the common good; and (b) it must meet the test of economic viability (Section 16, Article XII, 1987 Constitution). Congress shall not, except by general law, provide for the formation, organization, or regulation of private corporations. Government-owned or controlled corporations may be created or established by special charters in the interest of the common good and subject to the test of economic viability. iii. By definition, three attributes make an entity a GOCC: first, its organization as stock or non-stock corporation; second, the public character of its function; and third, government ownership over the same. Possession of all three attributes is necessary to deem an entity a GOCC. (Funa vs. MECO, G.R. No. 193462, February 4, 2014). iv. In order to qualify as a GOCC, a corporation must also, if not more importantly, be owned by the government (Funa vs. MECO, G.R. No. 193462, February 4, 2014). Reviewer on Local Government Law 4 Alberto C. Agra, Ateneo Law School v. Examples of GOCCs are: GOCCs incorporated under the Corporation Code, subsidiaries of GOCCs, Government Financial Institutions (GFIs), Water Districts, and government-acquired asset corporations (MIAA vs. CA, G.R. No. 155650, July 20, 2006). b. A government instrumentality (GI) is neither a stock nor a non- stock corporation (MIAA vs. CA, G.R. No. 155650, July 20, 2006). i. A GI, which is operationally autonomous, remains part of the National Government machinery although not integrated with the department framework (MIAA vs. v. CA, G.R. No. 155650, July 20, 2006). ii. Examples of GIs are: Bangko Sentral ng Pilipinas, Philippine Rice Research Institute, Laguna Lake Development Authority, Fisheries Development Authority, Bases Conversion Development Authority, Philippine Ports Authority, Cagayan de Oro Port Authority, San Fernando Port Authority, Cebu Port Authority, and Philippine National Railways (MIAA vs. v. CA, G.R. No. 155650, July 20, 2006). c. Exception: The Manila Economic and Cultural Office (MECO) was organized as a non-stock, non-profit corporation under the Corporation Code, not owned or controlled by the Republic of the Philippines. The “desire letters” that the President transmits is merely recommendatory and not binding on the corporation. In order to qualify as a GOCC, a corporation must also, if not more importantly, be owned by the government. Mere performance of functions with a public aspect are not by themselves sufficient to consider the MECO a GOCC. From its over-reaching corporate objectives, its special duty and authority to exercise certain consular functions, up to the oversight by the executive department over its operations—all the while maintaining its legal status as a non-governmental entity—the Manila Economic and Cultural Office is, for all intents and purposes, sui generis (Funa vs. MECO, G.R. No. 193462, February 4, 2014). 2. The character of LGs is two-fold; i.e., governmental or public, and proprietary or private (City of Manila vs. Intermediate Appellate Court, G.R. No. 71159, November 15, 1989). Reviewer on Local Government Law 5 Alberto C. Agra, Ateneo Law School 2.1 Governmental powers are those exercised in administering the powers of the state and promoting the public welfare and they include the legislative, judicial, public and political powers of government. Examples are: delivery of sand for a municipal road (Municipality of San Fernando, La Union vs. Firme, G.R. No. L-52179, April 8, 1991), local legislation, control over police and abatement of nuisance. 2.2 Proprietary powers, on the other hand, are exercised for the special benefit and advantage of the community and include those powers which are ministerial, private and corporate (Municipality of San Fernando, La Union vs. Firme, G.R. No. L-52179, April 8, 1991). Examples are: public cemeteries, markets, ferries and waterworks. 2.3 Therefore, the purpose of LGs is also two-fold, i.e., LGs are agents of the State in the exercise of government or public powers, and are agents of the community and people in the exercise of proprietary or private powers (Lina, Jr. vs. Paňo, G.R. No. 129093, August 30, 2001; Magtajas vs. Pryce Properties and Philippine Amusements and Gaming Corporation, G.R. No. 111097, July 20, 1994; Basco vs. Philippine Amusements and Gaming Corporation, G.R. No. 91649, May 14, 1991). 3. The rule on corporate succession applies to local governments. 3.1 They have the power of continuous succession under their corporate name. (Section 22, Local Government Code of 1991 or 1991 LGC). 3.2 When there is a perfected contract executed by the former Governor, the succeeding Governor cannot revoke or renounce the same without the consent of the other party (Government Service Insurance System vs. Province of Tarlac, G.R. No. 157860, December 1, 2003). Chapter X, Section 3, 1987 Constitution: “The Congress shall enact a local government code which shall provide for a more responsive and accountable local government structure instituted through a system of decentralization with effective mechanisms of recall, initiative, and referendum, allocate among the different local government units their powers, responsibilities, and resources, and provide for the qualifications, election, appointment and removal, term, salaries, powers and functions and duties of local officials, and all Reviewer on Local Government Law 6 Alberto C. Agra, Ateneo Law School other matters relating to the organization and operation of the local units.” 4. Congress in enacting the 1991 LGC and charters of particular LGs allocates among the different LGs their powers, responsibilities, and resources and provides for the qualifications, election, 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 (Section 3, Article X, 1987 Constitution). Congress shall enact a local government code which shall provide for a more responsive and accountable local government structure instituted through a system of decentralization with effective mechanisms of recall, initiative, and referendum, allocate among the different local government units their powers, responsibilities, and resources, and provide for the qualifications, election, 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. 4.1 One such power is the power to appoint officials. While the Governor has the authority to appoint officials and employees whose salaries are paid out of the provincial funds, this does not extend to the officials and employees of the sangguniang panlalawigan because such authority is lodged with the Vice- Governor (Atienza vs. Villarosa, G.R. No. 161081, May 10, 2005). 4.2 The authority to appoint casual and job order employees of the sangguniang panlalawigan belongs to the Vice-Governor. The authority of the Vice-Governor to appoint the officials and employees of the sangguniang panlalawigan is anchored on the fact that the salaries of these employees are derived from the appropriation specifically for said local legislative body. Accordingly, the appointing power of the Vice-Governor is limited to those employees of the sangguniang panlalawigan, as well as those of the Office of the Vice-Governor, whose salaries are paid out of the funds appropriated for the sangguniang panlalawigan (Atienza vs. Villarosa, G.R. No. 161081, May 10, 2005). 4.3 In allocating local powers, Congress may provide for a system of checks and balances. a. The system of checks and balances under the current system is statutorily, not constitutionally (unlike the three branches of National Government), prescribed. Reviewer on Local Government Law 7 Alberto C. Agra, Ateneo Law School b. Under the 1983 Local Government Code, the local chief executive performed dual functions – executive and legislative, he/she being the presiding officer of the sanggunian. Under the 1991 LGC, the union of legislative and executive powers in the office of the local chief executive has been disbanded, so that either department now comprises different and non- intermingling official personalities with the end in view of ensuring better delivery of public service and providing a system of check and balance between the two (Atienza vs. Villarosa, G.R. No. 161081, May 10, 2005). 4.4 With the twin criteria of standard and plebiscite satisfied, the delegation to LGUs of the power to create, divide, merge, abolish or substantially alter boundaries has become a recognized exception to the doctrine of non-delegation of legislative powers. The source of the delegation of power to the LGUs under Sec. 6 of the LGC and to the President under Sec. 453 of the same code is none other than Sec. 10, Art. X of the Constitution. Conversion to a highly-urbanized city is substantial alteration of boundaries governed by Sec. 10, Art. X and resultantly, said provision applies, governs and prevails over Sec. 453 of the LGC (Umali vs. COMELEC, G.R. No. 203974, April 22, 2014). Types of Local Government Units 1. There are five levels/ kinds of political and territorial subdivisions, namely: (1) Autonomous Regions; (2) Provinces; (3) Cities; (4) Municipalities; and (5) Barangays (Section 1, Article X, 1987 Constitution). Chapter X, Section 15, 1987 Constitution: “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 social 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.” Chapter X, Section 16, 1987 Constitution: “The President shall exercise general supervision over autonomous regions to ensure that the laws are faithfully executed.” Reviewer on Local Government Law 8 Alberto C. Agra, Ateneo Law School Chapter X, Section 17, 1987 Constitution: “All powers, functions, and responsibilities not granted by this Constitution or by law to the autonomous regions shall be vested in the National Government.” Chapter X, Section 18, 1987 Constitution: “The Congress shall enact an organic act for each autonomous region with the assistance and participation of the regional consultative commission composed of representatives appointed by the President from a list of nominees from multisectoral bodies. The organic act shall define the basic structure of government for the region consisting of the executive department and legislative assembly, both of which shall be elective and representative of the constituent political units. The organic acts shall likewise provide for special courts with personal, family, and property law jurisdiction 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, cities, and geographic areas voting favorably in such plebiscite shall be included in the autonomous region.” Chapter X, Section 19, 1987 Constitution: “The first Congress elected under this Constitution shall, within eighteen months from the time of organization of both Houses, pass the organic acts for the autonomous regions in Muslim Mindanao and the Cordilleras.” Chapter X, Section 20, 1987 Constitution: “Within its territorial jurisdiction and subject to the provisions of this Constitution and national laws, the organic act of autonomous regions 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 development; (6) Economic, social, and tourism development; (7) Educational policies; (8) Preservation and development of the cultural 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.” Chapter X, Section 21, 1987 Constitution: “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 National Government.” Reviewer on Local Government Law 9 Alberto C. Agra, Ateneo Law School 1.1 The Constitution identifies two Autonomous Regions, i.e., Muslim Mindanao and Cordilleras that Congress may incorporate. a. Autonomous Regions consist of provinces, cities, municipalities, and geographical areas which share common and distinctive historical and cultural heritage, economic and social structures, and other relevant characteristics (Section 15, Article X, 1987 Constitution). b. Autonomous Regions are under the general supervision of the President (Section 16, Article X, 1987 Constitution). c. Section 20, Article X of the 1987 Constitution enumerates the irreducible legislative powers of autonomous regions. d. Regional peace and order, and defense and security shall be the responsibility of the local police agencies and the National Government respectively (Section 21, Article X, 1987 Constitution). e. Whatever power or authority is not vested on the autonomous regions remains with the National Government (Section 17, Article X, 1987 Constitution). Residual regional powers lie with the National Government. f. Republic Act No. 6734 or the Organic Act of the Autonomous Region of Muslim Mindanao (ARMM) is constitutional and is not violative of the Tripoli Agreement since the former is a later enactment. Further, the Tripoli Agreement must conform with national laws such as the Organic Act. (Abbas vs. Commission on Elections, G.R. No. 89651, November 10, 1989). g. The single plebiscite contemplated by the Constitution and R.A. No. 6734 will be determinative of: (1) whether there shall be an autonomous region in Muslim Mindanao; and (2) which provinces and cities, among those enumerated in R.A. No. 6734, shall comprise it (Abbas vs. Commission on Elections, G.R. No. 89651, November 10, 1989). h. While they are classified as statutes, the Organic Acts are more than ordinary statutes because they enjoy affirmation by a plebiscite. Hence, the provisions thereof cannot be amended Reviewer on Local Government Law 10 Alberto C. Agra, Ateneo Law School