Municipal Corporations Concern health, Seek to obtain

safety, advancement special corporate

Elements of public good and benefits or earn
- Legal creation or incorporation welfare as affecting pecuniary profit
- Corporate name by which the entity the public generally [Republic v. City of
is known and in which all corporate acts are [Republic v. City of Davao (2002)]
done; Davao, G.R. No.
- Population which is invested with the
powers of the corporation through duly Legislative, judicial, Ministerial, private,
constituted officers and agents; and public, and political and corporate
- Territory within which the local
government exercises civil and corporate LGU acts as agent LGU acts as agent
functions. of of
the national the community in
Elements (DBL’s book) government administration of
[Republic v. City of local affairs.
1) Valid Law authorizing incorporation; Davao (2002)] [Republic v. City of
2) Attempt in good faith to recognize it; Davao (2002)]
3) Colorable compliance with the law; Examples: Examples:
4) Assumption of corporate powers. • Regulations • Municipal
against fire, waterworks,
Dual Nature and Functions disease; markets,
• Preservation of wharves,
Dual Nature: public peace; fisheries;
Section 15, of the Local Government Code: • Establishment of • Maintenance of

 schools, public parks,
Every local government unit created or offices, etc. cemeteries, golf
recognized under this Code is a body politic courses, etc.
and corporate endowed with powers to be
exercised by it in conformity with law. As * UP Political Law Reviewer 2016
such, it shall exercise powers as a political
subdivision of the national government and Bara Lidasan v. COMELEC
as a corporate entity representing the
inhabitants of its territory. Facts: RA 4790, a law which sought for the
creation of the municipality of Dianaton in
Dual Functions Lanao del Sur, was enacted into law. The
creation of the municipality involves the
inclusion of two barrios, Togaig and
Political/Governmental Corporate/ Proprietary Madalum, which were part of Cotabato
Province. Because of this, the territorial
Exercised in the Exercised for the
boundaries of Cotabato was to be altered in
administration of special benefit and
order to accommodate the creation of
powers of the state advantage of the
Dianaton. Initially, the Office of the President
and for promotion of community [Torio v.
sought for the suspension of RA 4790’s
public welfare [Torio Fontanilla (1978)]
implemetation until clarified by correcting
v. Fontanilla, G.R.
legislation. Despite this, COMELEC insisted
No.
to implement the law. Resultingly, petitioner
L-29993 (1978)]
filed a petition for certiorari and prohibition
seeking to declare the law as
unconstitutional.

Topic B. Municipal Corporations Page 1 of 9

Issue: Whether RA 4790 is unconstitutional?
Ruling:
The law failed to comply with the
constitutional requirement that the subject
should be reflected in the bill’s title.
Initially, the Court stressed the importance of
complying with the limitation of legislative
power. The Court highlighted that the title
should be in a language sufficient to notify
the legislators and the public and those
concerned of the import of the single subject.
In the present case, the title- An Act creating
the Municipality of Dianaton in the Province
of Lanao del Sur-rprojects the impression
that solely the province of Lanao del Sur is
affected by the creation of Dianaton. The title
fails to mention the law includes the
appropraition barrios in Cotabato. Transfer of
a sizeable portion of territory from one
province to another of necessity involves
reduction of area, population and income of
the first and the corresponding increase of
those of the other. This is as important as the
creation of a municipality.
The law is declared unconstitutional, it cannot
stand even if only the barrios in Lanao del
Sur would constitute the municipality of
Dianaton.
The Court noted the twin functions of a
municipal corporation, Firstly. They serve as
an instrumentality of the State in carrying out
the functions of government. Secondly. They
act as an agency of the community in the
administration of local affairs. It is in the latter
character that they are a separate entity
acting for their own purposes and not a
subdivision of the State. In the present case,
the creation of a municipality with just 9
barrios from Lanao del Sur cannot sustain
the second function of a municipal
corporation. This was bolster by the fact that
the Dianaton’s seat of power would had been
in barrios located in Cotabato.
Topic B. Municipal Corporations
Surigao Electric Co. v. Surigao
Facts: Congress amended the Public
Service Act which exempted GOCCs from
the requirement of a certificate of public
convenience and necessity but retained the
power of regulation over the rates imposed
by the GOCC.
Because of the amendment, the Municipality
of Surigao sought exemption from obtaining a
certificate of public convenience in its
operation of an electric plant. The
municipality alleged that being an
instrumentality of the government, it is
exempt from the required certificate of public
convenience.
Issue: Whether the municipality of Surigao is
exempt from the required certificate of public
convenience.
Ruling:
Principally, the Court noted the dual function
of a municipal corporation one as
governmental, being a branch of the general
administration of the state, and the other as
quasi-private and corporate.
A municipal corporation, by virtue of
Commonwealth Act No. 2677, may further
promote community welfare by itself
engaging in supplying public services,
without the need of a certificate of public
convenience. If at all then, the exercise of
this governmental prerogative comes within
the broad, well-nigh, undefined scope of the
police power. It is not here, of course, the
ordinary case of restraint on property or
liberty, by the imposition of a regulation. What
the amendatory act in effect accomplishes is
to lend encouragement and support for the
municipal corporation itself undertaking an
activity as a result of which, profits of a
competing private firm would be adversely
affected.
Page 2 of 9
Clearly, then, the relevancy of the statute
providing for the taking or operation of the
government of public utilities, appears, to put
it at its mildest, far from clear. Petitioners'
contention as to this alleged error being
committed, therefore, far from being
strengthened by such a reference, suffers
from a fate less auspicious.
Municipality of San Fernando v. Firme
Facts: On December 16, 1965, a collision
occurred involving a passenger jeepney
owned by the estate of Macario Nieveras, a
gravel and sand truck owned by Tanquilino
Velasquez and a dump truck owned by the
municipality of San Fernando. The accident
resulted in the death of several passengers.
Thereafter, private respondents instituted an
action against the vehicle owners involved in
the collision. Petitioner filed a motion to
dismiss on the ground that it is immune from
suit.
The lower court, presided by Judge
Firme ,denied the motion to dismiss and
ruled that petitioner was liable for the
accident.
Issue: Whether the municipality of San
Fernando was immune from suit.
Ruling:
The municipality of San Fernando is immune
from suit
Municipal corporations like provinces and
cities, are agencies of the State when they
are engaged in governmental functions and
therefore should enjoy the sovereign
immunity from suit. Nevertheless, they are
subject to suit even in the performance of
such functions because their charter provided
that they can sue and be sued. Corollary, the
test of liability of the municipality depends on
whether or not the driver, acting in behalf of
the municipality, is performing governmental
Topic B. Municipal Corporations
or proprietary functions. In the present case,
the truck driver involved in the accident was
on his way to pick up sand and gravel for the
municipal road. The Court noted that the
accident occurred when the driver was
performing governmental act hence,
concluded that the conduct was covered
under the guise of state action with the
protection of the state immunity doctrine.
Sources of Powers
- 1987 Constitution, Article 10
SECTION 3. 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
other matters relating to the organization and
operation of the local units.
- Local Government Code
- Charter
- Doctrine of the right of self-government,
but applies only in states which adhere to
the doctrine
Classification of Powers
1. . express, implied, inherent (powers
necessary and proper for governance, e.g. to
promote health and safety, enhance
prosperity,
improve morals of inhabitants)
o ii. public or governmental, private or
proprietary
o iii. intramural, extramural
o iv. mandatory, directory; ministerial,
discretionary
Types of Municipal Corporations
Page 3 of 9

o i. De jure – created with all the elements of
a municipal corporation being present
o ii. De facto – where there is colorable
compliance (not full or complete, but simply
colorable, meaning almost or seems like)
with the requisites of a de jure municipal
corporation
De Facto Corporations
- Formed when there is defect in the
creation of a municipal corporation but its
legal existence has been recognized and
acquiesced publicly and officially.
Requisites:
a) Apparently valid law under which
the corporation may be formed;
 warranto or any other direct proceeding.
b) Attempt in good faith to organize
the corporation;
c) Colorable compliance with law; and
d) Assumption of corporate powers.


Example of colorable compliance: There’s a
law creating the municipal corporation but it 

is defective


Which municipal corporation acts with legal
affects?
• BOTH
Philosophy behind accepting de facto
municipal corporation:
 issued Executive Order that created thirty-
• Where there is authority in law for a
municipal corporation, the organization of
the people of a given territory as such a
corporation under the color of delegated
authority followed by a user in good faith of
the governmental powers will be
recognized by law as municipal corporation
de facto
Topic B. Municipal Corporations
• Where through the failure to comply with
constitutional or statutory requirements, the
corporation cannot be considered de jure
§ What are the bases or reasons for de facto
municipal corporation?
• Security
• Prescription
o Meaning, lgus can exist via prescription.
• The basis for this doctrine is the very strong
public policy supporting:
Effect of Being Classified as a De Facto
Corporation
Collateral attacks are not allowed
The action to attack its personality is
reserved to the state in a proceeding for quo
Section 442 (d), Local Government Code:
Municipal Districts which were organized
pursuant to presidential issuances or
executive orders and which have their
respective set of elective municipal officials
holding office at the time of the effectivity of
the LGC are considered as regular
municipalities.
De facto Municipal Corporation Doctrine;
Elements
Pelaez v. Auditor-General
Facts: The President of the Philippines
three (33) municipalities. Thereafter,
petitioner filed a writ of prohibition with
preliminary injunction against respondent to
restrain the latter from passing in audit any
expenditure of public funds. Petitioner further
alleged that the Executive Order was
unconstitutional as it was amounts to undue
delegation of legislative power. More so, the
Executive Order is also seen to be in
violation of RA 2370, which prohibited the
creation and reapportion of barrios except
through Congressional act. It was believed
Page 4 of 9
that since the prohibition strongly applies to
barrios, it equally applies to a municipality.
As a rebuttal, respondent alleged that the
Executive Order will not violate RA 2370 as it
will merely be placing old barrios under the
jurisdiction of the new municipality.
Issue: Whether the Executive Orders are
constitutional
Ruling:
The executive orders are unconstitutional
The creation of municipalities, is not an
administrative function, but one which is
essentially and eminently legislative in
character. The question of whether or not
"public interest" demands the exercise of
such power is not one of fact. it is "purely a
legislative question. The President’s power
over municipal government is only limited to
checking whether said local governments or
the officers thereof perform their duties as
provided by statutory enactments.
The power of control of the President over
executive departments, bureaus or offices
implies no more than the authority to assume
directly the functions thereof or to interfere in
the exercise of discretion by its officials.
Manifestly, such control does not include the
authority either to abolish an executive
department or bureau, or to create a new
one.
Thus, the executive orders are
unconstitutional for being enacted beyond the
scope f the President’s power.
Municipality of Jimenez v. Baz, Jr.
Facts: President Quirino enacted Executive
Order No. 258 that created the municipality of
Sinacaban pursuant to Section 68 of the
Administrative Code. Thereafter, Sinacaban
laid claim to several barrios located within the
municipality of Jimenez to carry out the
Topic B. Municipal Corporations
executive order. The claim was filed with the
provincial board of Misamis Occidental. 

In its answer, the municipality of Jimenez
conceded that the claimed areas were part of
the newly formed Sinacaban pursuant to an
agreement it had with the latter. Nonetheless,
the Provincial Board declared the disputed
area to be part of Sinacaban but noted the
previous resolution approving the agreement
between the municipalities was void as it
amounted to altering the boundaries of
Sinacaban.
Thereafter, the municipality of Jimenez filed a
petition for certiorari, prohibition and
mandamus with the RTC of Oroquieta
alleging that the creation of Sinacaban
through an executive order was
unconstitutional pursuant to the Surpeme
Court’s ruling in Pelaez v. Auditor-General
that classified the creation of a municipality
as a legislative function.
The RTC ruled for the validity of Sinacaban’s
creation noting that is a de facto corporation
since it had completely organized itself even
prior to the Pelaez case and exercised
corporate powers for forty years before the
existence was questioned.
The adverse RTC ruling prompted petitioner
to appeal before the Supreme Court
Issue: Whether Sinacaban’s creation is valid.
Ruling:
The municipality of Sinacaban is a de facto
corporation.
Principally, the Supreme Court ruled that the
case of Pelaez v. Auditor-General has
effectively concluded that the creation of
municipal corporations is essentially a
legislative matter and therefore the President
was without power to create by executive
order the Municipality of Sinacaban.
Page 5 of 9
However, in consonance with the ruling in
San Narciso v. Mendez, the Court classified
the municipality of Sinacaban as a de facto
corporation as its legal existence has been
recognized and acquiesced publicly and
officially. Sinacaban had been in existence
for sixteen years when Pelaez v. Auditor
General was decided on December 24, 1965.
Yet the validity of E.O. No. 258 creating it had
never been questioned. More so, Sinacaban
has attained de jure status by virtue of the
Ordinance appended to the 1987
Constitution, apportioning legislative districts
throughout the country, which considered
Sinacaban part of the Second District of
Misamis Occidental. Finally, Section 442 (d)
of the Local Government Code considers
municipalities existing at the time of the
LGC’s effectivity, like that of Sinacaban, as
regular municipalities.
The 1950s agreement cannot bind
Sinacaban
The power of provincial boards to settle
boundary dispute is administrative in nature,
the adoption of means and ways to carry out
a law. Thus, is obvious that any alteration of
boundaries that is not in accordance with the
law creating a municipality is not the carrying
into effect of that law. Because of this, the
alteration of boundary resulting from 1950
agreement and Resolution 77 approving the
agreement cannot bind Sinacaban.
Municipality of San Narciso v. Mendez
Facts: On August 20, 1959, President Garcia
issued Executive Order No. 353 creating the
municipal district of San Andres, Quezon by
segregating some barrios of San Narciso,
Quezon. Subsequently, San Andres was
recognized as a municipality through EO 174.
Thus, petitioner filed a petition for quo
warranto before the RTC of Quezon seeking
to declare EO 174 as unconstitutional
invoking the seminal case of Pelaez v.
Auditor-General. Respondents on the other
Topic B. Municipal Corporations
hand alleged that petitioner is estopped from
assailing the creation of San Andres as the
initiative came from the latter.
Later on, San Andres moved for the dismissal
of the quo warranto suit on the ground that
the enactment of the LGC essentially
acknowledged the legality of the
municipality’s creation. The lower court
eventually denied the quo warranto suit.
Issue: Whether the creation of the
municipality of San Andres is valid
Ruling:
San Andres is a de jure corporation and its
creation is valid
Notwithstanding the Supreme Court’s ruling
in Pelaez v. Auditor-General, the Supreme
Court ruled that San Andres is a de facto
corporation. Together with this finding, the
Court also noted the facts that: a) the
Executive Order was only challenged thirty
years after its enactment; b) the municipality
has continued to exercise the powers and
authority of a duly created local government
unit; c) the creation of a municipal court in
San Andres; and d) The Ordinance (in 1987
Constitution) considered the municipality of
San Andres as one of the twelve (12)
municipalities composing the Third District of
the province of Quezon.
Because of these, developments the Court
considered valid the creation of San Andres.
Municipality of Candijay v. CA
Facts: The case started with a RTC ruling
that ordered that barrio Pagahat forms part
and parcel of Candijay’s territory and
required the municipality of Alicia to respect
the same.
On appeal, the Court of Appeals reversed the
RTC’s decision noting that Pagahat forms
part of the municipality of Alicia. If Candijay
Page 6 of 9
were allowed to appropriate the disputed
territories, it would far exceeding her
territorial jurisdiction under the law creating
her. Aggrieved, petitioner appealed before
the Supreme Court
Issue: Whether the Court erred in reversing
the RTC’s decision.
Ruling:
Principally, the Court found no need to
reverse the CA’s ruling as it is well-supported
by the evidence on record.
Municipality of Candijay had the capacity to
present evidence
Respondent municipality of Candijay argued
that Alicia had no capacity to present
evidence being created by a mere executive
order, in consonance with the Supreme
Court’s ruling in Pelaez v. Auditor-General.
However, the Supreme Court held that the
municipality of Alicia is a de jure municipality
notwithstanding the Pelaez ruling.
In justifying the status of Alicia, the Supreme
Court cited the San Narciso ruling that
considered a municipality as a de jure
corporation. In the case of Alicia, it has been
in existence for 16 years after the Pelaez
ruling, more so it has been exercising
government function in the same number of
years. Alicia has within its jurisdiction a
municipal court and the Constitution
recognizes it as part of the third district of
Bohol.
Sultan Osop Camid v. Office of the
President
Facts: Petitioner filed a petition assailing a
certification issued by the DILG that
recognized certain municipalities. The
municipalities subject of the certification were
created by virtue of the Executive Orders
declared unconstitutional by the Supreme
Court under the Pelaez ruling. Petitioner
Topic B. Municipal Corporations
challenged the certification as it failed to
include the municipality of Andong, which
was also created by a void Executive Order.
Petitioner alleged that Andong should be
recognized as it stands to have benefited
from the San Narciso ruling, which
recognized a de facto corporation as valid. To
bolster its claim, petitioner alleged that the
municipality had been exercising government
functions through various offices established
in the municipality such as its own high
school, Bureau of Posts, a Department of
Education, Culture and Sports office, and at
least seventeen (17) barangay units with their
own respective chairmen.
Issue: Whether declaring the certification as
a nullity is valid.
Ruling:
Andong cannot benefit from the San Narciso
ruling
Municipal corporations may exist by
prescription where it is shown that the
community has claimed and exercised
corporate functions, with the knowledge and
acquiescence of the legislature, and without
interruption or objection for period long
enough to afford title by prescription.
In the present case, petitioner failed to make
an initial factual demonstration of those
circumstances before this Court. The Court
also ruled that if the certification is declared
invalid, it will not satisfy the petitioner’s
prayer, which is for the Court to recognize the
municipality of Andong.
Thereafter, the Court examined the history of
jurisprudence related to the San Narciso
ruling. The Court noted that it has previously
considered de facto corporation with the
promulgation of the Local Government Code
in 1991, the legal cloud was lifted over the
municipalities similarly created by executive
order but not judicially annulled.
Page 7 of 9

The Court finally decreed that Andong canot
benefit from the San Narciso ruling primarily
since the Executive Order creating it was
declared void by the Supreme Court. More
so, it does not meet the requirements setforth
under the Section 442(d) of the Local
Government Code.
The legal effect of the nullification of Andong
in Pelaez was to revert the constituent
barrios of the voided town back into their
original municipalities, namely the
municipalities of Lumbatan, Butig and
Tubaran. These three municipalities subsist
to this day as part of Lanao del Sur, and
presumably continue to exercise corporate
powers over the barrios which once belonged
to Andong.
DBL’s book: Municipal corporations may exist
by prescription where it is shown that the
community has claimed and exercised
corporate functions, with knowledge and
acquiescence of the legislature, and without
interruption or objection for a period long
enough to afford title by prescription.
 some of them unreservedly, that a de facto
Method of challenging the existence of
municipal corporation
De Facto Corporation
The action to attack its personality is
reserved to the state in a proceeding for
quo warranto or any other direct
proceeding.
Malabang v. Benito
Facts: Petitioner Amer Balindong instituted
an action for prohibition to nullify Executive
Order 386 and to refrain respondents from
performing the functions of their respective
office in lieu of the Court ruling in Pelaez v,
Auditor-General.
Topic B. Municipal Corporations
Respondents on the other hand alleged that
Pelaez can have no application in the present
case as the municipality of Balabagan is a de
facto corporation having been organized
under color of a statute before this was
declared unconstitutional, its officers having
been either elected or appointed, and the
municipality itself having discharged its
corporate functions for the past five years
preceding the institution of this action.
Issue: Whether the municipality of
Balabagan is a de facto corporation
Ruling:
Primarily, the Court held that an inquiry into
the legal existence of a municipality is
reserved to the State in a proceeding for
quo warranto or other direct proceeding,
and that only in a few exceptions may a
private person exercise this function of
government.
The Court made reference to a Yale Law
Journal article that said:
“An examination of the cases holding,
office or municipal corporation can exist
under color of an unconstitutional statute will
reveal that in no instance did the invalid act
give life to the corporation, but that either in
other valid acts or in the constitution itself the
office or the corporation was potentially
created”
As a result of the analysis, a de facto
corporation exists when:
I. The color of authority requisite to the
organization of a de facto municipal
corporation may be:
1. A valid law enacted by the
legislature.
2. An unconstitutional law, valid on its
face, which has either (a) been
upheld for a time by the courts or (b)
not yet been declared void; provided
that a warrant for its creation can be
Page 8 of 9
 found in some other valid law or in the
recognition of its potential existence
by the general laws or constitution of
the state.

II. There can be no de facto municipal

corporation unless either directly or
potentially, such a de jure corporation is
authorized by some legislative fiat.

III. There can be no color of authority in an

unconstitutional statute alone, the invalidity of
which is apparent on its face.

  IV. There can be no de facto corporation

created to take the place of an existing de
jure corporation, as such organization would
clearly be a usurper.

Hence, in the case at bar, the mere fact that

Balabagan was organized at a time when the
statute had not been invalidated cannot
conceivably make it a de facto corporation,
as there is no other valid statute to give color
of authority to its creation.

There is then no basis for the respondents'

apprehension that the invalidation of the
executive order creating Balabagan would
have the effect of unsettling many an act
done in reliance upon the validity of the
creation of that municipality.

Topic B. Municipal Corporations Page 9 of 9