Public Corporation, Atty. Anicia Marquez 2D, 1st Sem., A.Y.

2020-2021
Local Government Code Revisited, Aquilino Q. Pimentel, Jr., 2011

Section 15. Political and Corporate Nature of Local Government Units. Every local government unit created or recognized
under this Code is a body politic and corporate endowed with powers to be exercised by it in conformity with law. As such,
it shall exercise powers as a political subdivision of the national government and as a corporate entity representing the
inhabitants of its territory.
1. LGU Dual Personality. LGUs have a dual personality: political and corporate. Being political units of government and as agents of
the national government, LGUs exercise governmental powers. On the other hand, as a corporate entity, they exercise powers which
are proprietary in nature but which they can perform for the benefit of their constituencies. In City of Manila v. Intermediate Appellate
Court39 it was held that “(u)nder Philippine laws, the City of Manila is a political body corporate and as such (is) endowed with the
faculties of municipal corporations to be exercised by and through its city government in conformity with law, and in its proper corporate
name. It may sue and be sued, and contract and be contracted with. Its powers are two-fold in character public, governmental or
political on the one hand, and corporate, private and proprietary on the other. 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.
Municipal (that is, corporate) powers on the other hand are exercised for the special benefit and advantage of the community and
include those which are ministerial, private and corporate.

Section 25.
Presidential Power over LGUs: Supervision Only. The President only exercises general supervision over LGUs for the purpose of
ensuring that their acts are within their powers and functions and are properly exercised.219 In sum, the presidential power of
supervision may be done either: (a) directly over provinces, highly urbanized cities and independent component cities or (b) indirectly
over component cities, municipalities and barangays. Insofar as the latter LGUs are concerned the presidential power of supervision
is done through the province with respect to component cities and municipalities, and through the city and the municipality with respect
to the barangays.

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Public Corporation, Atty. Anicia Marquez 2D, 1st Sem., A.Y. 2020-2021
Local Government Code Revisited, Aquilino Q. Pimentel, Jr., 2011

Section 16. General Welfare. Every local government unit shall exercise the powers expressly granted, those necessarily implied
therefrom, as well as powers necessary, appropriate or incidental for its efficient and effective governance, and those which are
essential to the promotion of the general welfare. Within their respective territorial jurisdictions, local government units shall ensure
and support, among other things, the preservation and enrichment of culture, promote health and safety, enhance the right of the
people to a balanced ecology, encourage and support the development of appropriate and self-reliant scientific and technological
capabilities, improve public morals, enhance economic prosperity and social justice, promote full employment among their residents,
maintain peace and order, and preserve the comfort and convenience of their inhabitants.
1. All-Purpose Clause. Section 16 is known as the General Welfare Clause. Pursuant to this rule, LGUs have the power to exercise
just about any act that will benefit their constituencies that are: (1) expressly granted; (2) necessarily implied from the power that is
expressly granted; (3) necessary, appropriate or incidental for its efficient and effective governance; and (4) essential to the promotion
of the general welfare of their inhabitants. The general welfare clause has two branches. The first, known as the general legislative
power, authorizes the municipal council to enact ordinances and make regulations not repugnant to law, as may be necessary to carry
into effect and discharge the powers and duties conferred upon the municipal council by law. The second, known as the police power
proper, authorizes the municipality to enact ordinances as may be necessary and proper for the health and safety, prosperity, morals,
peace, good order, comfort, and convenience of the municipality and its inhabitants, and for the protection of their property.
2. Police Power. The State, through the legislature, has delegated the exercise of police power to local government units, as agencies
of the State, in order to effectively accomplish and carry out the declared objects of their creation. This delegation of police power is
embodied in the general welfare clause of the Code.46 “Police power is "the power to prescribe regulations to promote the hea lth,
morals, peace, education, good order or safety and general welfare of the people. It is the most essential, insistent and illimitable of
powers.” xxx On it depends the security of social order, the life and health of the citizen, the comfort of an existence in the life and
health of the citizen, the comfort of an existence in a thickly populated community, the enjoyment of private and social life, and the
beneficial use of property, and it has been said to be the very foundation on which our social system rests.”

In Binay v. Domingo, 48 the Supreme Court stressed that “not only does the State effectuate its purposes through the exercise of the
police power but the municipality does also.” Municipal governments exercise police power through the general welfare clause:
pursuant thereto they are clothed with authority to enact such ordinances and issue such regulations as conferred upon it by law, and
such as shall be necessary and proper to provide for the health, safety, comfort and convenience, maintain peace and order, improve
public morals, promote the prosperity and general welfare of the municipality and the inhabitants thereof, and insure the protection of
property therein.

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Public Corporation, Atty. Anicia Marquez 2D, 1st Sem., A.Y. 2020-2021
Local Government Code Revisited, Aquilino Q. Pimentel, Jr., 2011

The police power of a municipal corporation is broad, and has been said to be commensurate with, but not to exceed, the duty to
provide for the real needs of the people in their health, safety, comfort and convenience as consistently as may be with private rights.
It extends to all the great public needs, and in a broad sense includes all legislation and almost every function of the municipal
government. It covers a wide scope of subjects, and, while it is especially occupied with whatever affects the peace, security, health,
morals and the general welfare of the community, it is not limited thereto, but is broadened to deal with conditions which exist so as to
bring out of them the greatest welfare of the people by promoting public convenience or general prosperity, and to everything worthwhile
for the preservation of comfort of the inhabitants of the corporation. Thus, it is deemed inadvisable to attempt to frame any definition
which shall absolutely indicate the limits of police power.
The exercise of police power, however, is subject to the due process clause of the Constitution. That means that LGUs exercising
police power must conform to the requirements of due process. For example, an ordinance that required the destruction of all buildings
that destroy or block the view of the town plaza without any standard was struck down for being arbitrary and for being an unlimited
delegation of power.
Likewise, an ordinance enacted with the objective of relieving traffic congestion in the City of Lucena by prohibiting the operation of all
bus and jeepney terminals within Lucena, including those already existing, and allowing the operation of only one common terminal
located outside the city proper was struck down as oppressive and characterized by overbreadth. The Court held that the ordinance
went beyond what was reasonably necessary to solve the traffic problem because the scope of the proscription against the maintenance
of terminals is so broad that even entities which might be able to provide facilities better than the franchised terminal are barred from
operating at all.

In People v. Fajardo, the Supreme Court ruled that although “property may be regulated in the interest of general welfare and in its
pursuit the State may prohibit structures offensive to sight, the State may not under the guise of police power, permanently divest
owners of the beneficial use of their property and practically confiscate them solely to preserve or assure compensation and an
opportunity (on the part of those whose properties sought to be destroyed) to be heard.”54 are Otherwise put, “[a] local government is
considered to have properly exercised its police powers only when the following requisites are met: (1) the interests of the public
generally, as distinguished from those of a particular class, require the interference of the State and (2) the means employed are
reasonably necessary for the attainment of the object sought to be accomplished and not unduly oppressive. The first requirement
refers to the equal protection clause and the second, to the due process clause of the Constitution.955 In sum, the valid use of police
power by LGUs are as follows: (a) promotion of the general welfare and public interest;56 (b) promotion of public health, public morals,
public safety and the general welfare of each inhabitant;57 (c) preservation of the public order and prevention of offenses against the
State and establishment of rules of good manners and prevention of conflict of rights among neighbors;58 (d) prohibition of all things
hurtful to the comfort, safety and welfare of society;59 and (e) abatement of a nuisance.

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Public Corporation, Atty. Anicia Marquez 2D, 1st Sem., A.Y. 2020-2021
Local Government Code Revisited, Aquilino Q. Pimentel, Jr., 2011

Section 22. Corporate Powers.

(a) Every local government unit, as a corporation, shall have the following powers: (1) To have continuous succession in its
corporate name; (2) To sue and be sued; (3) To have and use a corporate seal; (4) To acquire and convey real or personal
property; (5) To enter into contracts; and (6) To exercise such other powers as are granted to corporations, subject to the
limitations provided in this Code and other laws.
(b) Local government units may continue using, modify, or change their existing corporate seals: Provided, That newly
established local government units or those without corporate seals may create their own corporate seals which shall be
registered with the Department of the Interior and Local Government: Provided, further, That any change of corporate seal
shall also be registered as provided herein.
(c) Unless otherwise provided in this Code, no contract may be entered into by the local chief executive in behalf of the local
government unit without prior authorization by the sanggunian concerned. A legible copy of such contract shall be posted
at a conspicuous place in the provincial capitol or the city, municipal or barangay hall.
(d) Local government units shall enjoy full autonomy in the exercise of their proprietary functions and in the management of
their economic enterprises, subject to the limitations provided in this Code and other applicable laws.

1. Governmental and Proprietary Powers. Local governments enjoy not only governmental but also proprietary functions. This
section enumerates the powers that local governments possess as corporate entities. But even as corporate entities, they “enjoy full
autonomy in the exercise of their proprietary functions and in the management of their economic enterprises” subject to the limitations
imposed by the Code itself, and other pertinent laws.

2. Example of Proprietary Function. Local governments may operate a ferry service. In Municipality of Echague v. Abellera, 195 it
was held that “where a ferry operation lies entirely within a municipality, prior approval of the municipal government is necessary. But
once approved, the operator must thereafter apply (with the Bureau of Transportation) for a certificate of public convenience and he
shall be subject also to BOT supervision”196 The Court added that “(b)oth Sangguniang Bayan and the Board of Transportation, in
effect, (must) act with each other. They do not usurp nor appropriate functions particularly given to the other.” 197

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Public Corporation, Atty. Anicia Marquez 2D, 1st Sem., A.Y. 2020-2021
Local Government Code Revisited, Aquilino Q. Pimentel, Jr., 2011

3. Local Governments Can Be Sued. The general rule spelled out in Section 3, Article XVI of the Constitution is that “the State may
not be sued without its consent.” Put in another way, the State can be sued only with its consent which may be embodied in a general
law or a special law. Consent is implied when the government enters into business contracts, as it thereby descends into the level of
the other contracting party. 198 Under this section, it is clear that the State allows LGUs to sue and be sued.
The rule is that “(m)unicipal corporations, for example, 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” 199
As laid down established in Section 15, municipal corporations exist in a dual capacity and their functions are two-fold. In one they
exercise the right springing from sovereignty and, while in the performance of the duties pertaining thereto, their acts are political and
governmental. In the other capacity the municipalities exercise a private, proprietary or corporate right, arising from their existence as
legal persons and not as public agencies. This distinction of powers becomes important for purposes of determining the liability of the
municipality for the acts of its agents which result in an injury to third persons. If the injury is caused in the course of the performance
of a governmental function or duty, no recovery, as a rule, can be had from the municipality unless there is an existing statute on the
matter, nor from its officers, so long as they performed their duties honestly and in good faith or that they did not act wantonly and
maliciously. With respect to proprietary functions, the settled rule is that a municipal corporation can be held liable to third persons ex
contractu or ex delicto.200
There can be no hard and fast rule for purposes of determining the true nature of an undertaking or function of a municipality; the
surrounding circumstances of a particular case are to be considered and will be decisive. The basic element, however beneficial to the
public the undertaking may be, is that it is governmental in essence. Otherwise, the function becomes private or proprietary in character.
201

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Public Corporation, Atty. Anicia Marquez 2D, 1st Sem., A.Y. 2020-2021
Local Government Code Revisited, Aquilino Q. Pimentel, Jr., 2011

In Municipality of San Fernando, La Union v. Firme,202 a dump truck of San Fernando figured in a three-vehicle smashup where
injuries fatal and curable were caused. On the issue whether or not the municipality is liable for damages, the Court held that it depends
on whether or not the driver, acting in behalf of the municipality, is performing government or proprietary functions. The government
truck driver in this case was involved in a collision with another truck and a jeepney which resulted in the death of at least one passenger
and injuries to other passengers thereof. The government truck driver testified that he was on his way to the Naguillan river to get a
load of sand and gravel for the repair of San Fernando's municipal streets.
The Court ruled that “the municipality cannot be held liable for torts committed by its regular employee who was then engaged in the
discharge of government functions. Hence, the death of the passenger, tragic and deplorable it may be, imposed on the municipality
no duty to pay monetary compensation.” »203

However, in another case, City of Manila v. Intermediate Court of Appeals,204 the Supreme Court, applying the doctrine of
respondent superior (literally, let the superior give answer), held the City of Manila liable for the tortious act committed by its agents
who failed to verify and check the duration of the contract of lease (over a cemetery lot between the City and the family of Irene Sto.
Domingo) which still had 43 years to go when the city cemetery authorities exhumed the remains of the husband of Irene and leased
the lot to another person. The Court agreed that the contract of lease entered into by the City of Manila involved the exercise of
proprietary functions for which the city and its officers can be sued for any violation thereof.
“Municipal corporations,” the Court further declared, “are subject to be sued upon contracts and in tort.... The rule of law is a general
one, that the superior or employer must answer civilly for the negligence or want of skill of its agent or servant in the course or line of
his employment, by which another, who is free from contributory fault is injured. Municipal corporations under the conditions herein
stated, fall within the operation of this rule of law and are liable accordingly, to civil actions for damages when the requisite elements
of liability coexist. 205

In Guilatco v. City of Dagupan,206 the Supreme Court ordered the city to pay damages to Guilatco who fell into an open manhole
located on a national road within the city. The Court rejected the defense put up by the city that the road following Article 2189 of the
Civil Code which provides that “(p)rovinces, cities and municipalities shall be liable for damages for the death of, or injuries suffered
by, any person by reason of the defective condition of roads, streets, bridges, public buildings and other public works under their control
or supervision." The Court added that “(i)t is not even necessary for the defective road or street to belong to the province, city or
municipality for liability to attach. The article only requires that either control or supervision is exercised over the defective road or
street. In the case at bar, the Court found that this control or supervision is provided for in the charter of Dagupan and is exercised
through the City Engineer.

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