LAW ON PUBLIC CORPORATIONS – TAMPICO, E.L.

Tampico, Eldene L.
Law on Public Corporations
Atty. Karlo Krisanto B. Inocencio

Asynchronous Activity #4
Answer the following questions from the syllabus:

1. What is deconcentration? (Disomangcop v. Datumanong, supra)

2. What is debureaucratization?
3. What is local fiscal autonomy? (Pimentel v. Aguirre, G.R. No. 132988, July 19, 2000)
4. What is Internal Revenue Allotment (IRA)? (Alvarez v. Guingona, G.R. No. 118303, January
31, 1996)
5. Can the President of the Philippines exercise power over LGU on fiscal matters? (Pimentel
v. Aguirre, supra)
6. What are the requisites for the exercise of the president’s power of fiscal interference
over LGUs? (Pimentel v. Aguirre, supra)
7. What are the territorial and political subdivisions enjoying local autonomy? (LGC, Secs.
384, 440, 448 and 459; 1987 PH Constitution Art. X Secs. 11 and 15)
8. What are the roles of local government units? (LGC, Secs. 384, 440, 448, and 459)
9. How may an LGU be created, divided, merged, and abolished, or its boundaries otherwise
substantially altered? (LGC, Sec. 6)
10. Can Congress validly delegate to an LGU the power to create legislative districts? (Sema
v. COMELEC, G.R. No. 177597, July 16, 2008)
11. Is plebiscite a requirement for the creation, conversion, division, merger, abolition, and
substantial alteration of a local government unit? (1987 PH Constitution, Art X, Sec. 10;
LGC, Sec. 10; Tan v. COMELEC, G.R. No. 73155, July 11, 1986)
12. What is the effect of a boundary dispute in relation to creation, conversion, division,
merger, abolition, and substantial alteration of a local government unit? (City of Pasig v.
COMELEC, G.R. No. 125646, September 10, 1999)
13. What should be the basis in the creation and conversion of LGUs? (LGC, Sec. 7)
14. What are the essential requisites for the creation and conversion of municipal
corporations? (LGC, Secs. 6,7, and 10)
15. What are the verifiable indicators for the creation or conversion of an LGU? (LGC, Sec. 7;
Mariano v. COMELEC, G.R. No. 118577, March 7, 1995)

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ANSWERS:

1. In the case of Disomangcop v. Datumanong, the Supreme Court ruled that

deconcentration is a kind of decentralization that is administrative in nature, involving the
transfer of functions or the delegation of authority and responsibility from the national
office to the regional and local offices. This mode of decentralization is also referred to as
administrative decentralization.

2. Debureaucratization is a form of decentralization which involves the transfer of powers

and functions from the government to nongovernment organizations (NGO’s) and
people’s organization (PO’s), including the private sector, all of which are sometimes
referred to collectively as the “civil society”.

3. In the case of Pimentel vs. Aguirre, it was held that fiscal autonomy means that local
governments have the power to create their own sources of revenue in addition to their
equitable share in the national taxes released by the national government, as well as the
power to allocate their resources in accordance with their own priorities. It extends to
the preparation of their budgets, and local officials in turn have to work within the
constraints thereof. They are not formulated at the national level and imposed on local
governments, whether they are relevant to local needs and resources or not. Hence, the
necessity of a balancing of viewpoints and the harmonization of proposals from both local
and national officials, who in any case are partners in the attainment of national goals.

4. In the case of Alvarez vs. Guingona, it was held that the IRAs or Internal Revenue
Allotment are items of income because they form part of the gross accretion of the funds
of the local government unit. The IRAs regularly and automatically accrue to the local
treasury without need of any further action on the part of the local government unit. They
thus constitute income which the local government can invariably rely upon as the source
of much needed funds.

5. Yes, the President of the Philippines can exercise power over LGU on fiscal matters.

6. The case of Pimentel vs. Aguirre laid down the requisites before the President may
interfere in local fiscal matters, to wit:
a. an unmanaged public sector deficit of the national government
b. consultations with the presiding officers of the Senate and the House of
Representatives and the presidents of the various local leagues

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c. the corresponding recommendation of the secretaries of the Department of

Finance, Interior and Local Government, and Budget and Management.
Furthermore, any adjustment in the allotment shall in no case be less than thirty
percent (30%) of the collection of national internal revenue taxes of the third fiscal
year preceding the current one.

7. According to Local Government Code, the territorial and political subdivisions are
barangay, municipality, city, and province. Also, Art. X Secs. 11 and 15 of the 1987
Philippine Constitution provides for the creation of special metropolitan political
subdivisions, subject to a plebiscite as set forth in Section 10, whereby the component
cities and municipalities shall retain their basic autonomy and shall be entitled to their
own local executives and legislative assemblies; and that 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.

8. As provided in the Local Government Code, the following are the roles of the local
government units:
Barangay - As the basic political unit, the barangay serves as the primary planning and
implementing unit of government policies, plans, programs, projects, and
activities in the community, and as a forum wherein the collective views of
the people may be expressed, crystallized and considered, and where
disputes may be amicably settled. (Section 384)
Municipality - The municipality, consisting of a group of barangays, serves primarily as
a general purpose government for the coordination and delivery of basic,
regular and direct services and effective governance of the inhabitants
within its territorial jurisdiction. (Section 440)
City - The city, consisting of more urbanized and developed barangays. serves as a
general purpose government for the coordination and delivery of basic,
regular, and direct services and effective governance of the inhabitants
within its territorial jurisdiction. (Section 448)
Province - The province, composed of cluster of municipalities, or municipalities and
component cities, and as a political and corporate unit of government,
serves as dynamic mechanism for developmental processes and effective
governance of local government units within its territorial jurisdiction.
(Section 459)

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9. According to Sec. 6 of the Local Government Code, a local government unit may be
created, divided, merged, abolished, or its boundaries substantially altered either by law
enacted by Congress in the case of a province, city, municipality, or any other political
subdivision, or by ordinance passed by the sangguniang panlalawigan or sangguniang
panlungsod concerned in the case of a barangay located within its territorial jurisdiction,
subject to such limitations and requirements prescribed by the Code.

10. No. In the case of Sema vs. COMELEC, the Supreme Court held that Section 19 of RA 9054,
granting the Regional Assembly the power to create provinces and cities, is void. Only the
Congress can create provinces and cities because the creation of provinces and cities
necessarily includes the creation of legislative districts, a power only Congress can
exercise under Section 5, Article VI of the Constitution.

11. Yes. It is none other than the Constitution itself which provides that no province, city,
municipality, or barangay may be created, divided, merged, abolished, or its boundary
substantially altered, except in accordance with the criteria established in the local
government code and subject to approval by a majority of the votes cast in a plebiscite in
the political units directly affected.

12. It was reiterated in the case of City of Pasig vs. COMELEC that the importance of drawing,
with precise strokes the territorial boundaries of a local unit of government cannot be
overemphasized. The boundaries must be clear for they define the limits of the territorial
jurisdiction of a local government unit. It can legitimately exercise powers of government
only within the limits of its territorial jurisdiction. Beyond these limits, its acts are ultra
vires. Needless to state, any uncertainty in the boundaries of local government units will
sow costly conflicts in the exercise of governmental powers which ultimately will
prejudice the people's welfare.

13. In Section 7 of the Local Government Code, it is stated that as a general rule, the creation
of a local government unit or its conversion from one level to another level shall be based
on verifiable indicators of viability and projected capacity to provide services.

14. Pursuant to Sections 6, 7, and 10 of the Local Government Code, the following are the
essential requisites for the creation and conversion of municipal corporations:
a. Income (It must be sufficient, based on acceptable standards, to provide for all
essential government facilities and services and special functions commensurate

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with the size of its population, as expected of the local government unit
concerned.)
b. Population (It shall be determined as the total number of inhabitants within the
territorial jurisdiction of the local government unit concerned.)
c. Land area (It must be contiguous, unless it comprises two or more islands or is
separated by a local government unit independent of the others; properly
identified by metes and bounds with technical descriptions; and sufficient to
provide for such basic services and facilities to meet the requirements of its
populace.)
d. Plebiscite (No creation, division, merger, abolition, or substantial alteration of
boundaries of local government units shall take effect unless approved by a
majority of the votes cast in a plebiscite called for the purpose in the political unit
or units directly affected. Said plebiscite shall be conducted by the COMELEC
within 120 days from the date of effectivity of the law or ordinance effecting such
action, unless said law or ordinance fixes another date.)

15. Section 7 of the Local Government Code provides that as a general rule, the creation of a
local government unit or its conversion from one level to another level shall be based on
verifiable indicators of viability and projected capacity to provide services, to wit:
a. Income. - It must be sufficient, based on acceptable standards, to provide for all
essential government facilities and services and special functions commensurate
with the size of its population, as expected of the local government unit concerned
b. Population. - It shall be determined as the total number of inhabitants within the
territorial jurisdiction of the local government unit concerned
c. Land Area. - It must be contiguous, unless it comprises two or more islands or is
separated by a local government unit independent of the others; properly
identified by metes and bounds with technical descriptions; and sufficient to
provide for such basic services and facilities to meet the requirements of its
populace

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