PUBLIC CORPORATION REVIEWER
may exercise state powers such as police power, taxation
Prepared by: Mary Ann M. Tumbaga
Corporation – 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 existence
Classes of corporation according to purpose
1. Public corporation – one created by the state
either by general or special act for purposes of
administration of local government or rendering
service in the public interest. It may either be:
a. Quasi-public corporation- created by the
State for a narrow or limited purpose
b. Municipal corporation – a body politic and
corporate constituted by the incorporation for
the purpose of local government
2. Private corporation – one established for private
purpose, benefit, aim or end
The Philippine National Red Cross can neither be
classified as an instrumentality of the State, so as not to
lose its character of neutrality as well as its independence,
nor strictly as a private corporation since it is regulated by
international humanitarian law and is treated as an
auxiliary of the State
Public vs Private corporation
As to purpose – Public corporation is established for
purposes of administration of civil and local governments
while private corporation is created for private aim, gain
or benefit of members
As to manner of creation – public corporation is a creation
of the State either by special or general act while private
corporation is created by will of the incorporators with
recognizance of State
As to source of right – Public corporation is an involuntary
consequence of legislation while private corporation is a
voluntary agreement by and among members
Public corporation vs GOCC
As to purpose – public corporations are those created for
political purposes connected with the public good in the
administration of the civil government while a GOCC
refers to any agency organized as a stock or non-stock
corporation, vested with functions relating to public needs
whether governmental or proprietary in nature
As to ownership – public corporation are formed and
organized by the State for the government while private
corporation is owned by the government directly or
through its instrumentalities either wholly or where
applicable as in the case of the stock corporation to the
extent of at least 51% of its capital stock
As to powers that may be exercised – public corporation
and eminent domain while private corporation may
exercise only those provided in the special law or general
corporation law which creates them, as the case may be
As to manner of creation – public corporation may be
created by law and are governed by the laws creating or
recognizing them while GOCCs may be created or
established by special charters in the interest of the
common good and subject to the test of economic viability
Tests to determine whether a corporation is GOCC or
private in nature
1. Charter test- if the corporation is created by its
own charter for the exercise of a public function,
it is a GOCC. if it is incorporated under the
Corporation Code, it is a private corporation
XPN: when the corporation is incorporated prior
to the enactment of the Corporation Code
2. Purpose test – if the corporation is created by the
State as the latter’s own agency or instrumentality
to help it in carrying out its governmental
functions, then the corporation is considered
public, otherwise it is private; and
3. Totality test – the true criterion to determine
whether a corporation is public or private is found
in the totality of the relation of the corporation to
the State
Classifications of Public corporation
1. Quasi-public corporation – are created as
agencies of the State for narrow and limited
purposes without the powers and liabilities of self-
governing corporations. They render public
service or supply public wants
Note: a quasi-public corporation is a specie of
private corporations but the qualifying factor is the
type of service the former renders to the public. If
it performs a public service, then it becomes a
quasi-public corporation
2. Municipal corporations of LGUs – are body politic
and corporate constituted by the incorporation of
inhabitants for purposes of local government. 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 or internal affairs of the city, town or district
which it is incorporated
Elements of municipal corporation
1. Legal creation or incorporation
2. A corporate name
3. Inhabitants constituting the population and
 4. Territory
Dual nature of municipal corporations
Basis: Every LU created under LGC is a body politic and
corporate endowed with the 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. Public/governmental – it acts as an agent of the
State for the government of the territory and the
inhabitants within the municipal limits. It includes
the use of legislative, executive and judicial
powers (establishment and operation of schools)
2. Private/proprietary – it acts in a similar category
as a business corporation, performing functions
not strictly governmental or political; those
exercised for the special benefit and advantage
of the community (establishment of markets,
operation of telephone system
Types of Municipal corporation
1. Municipal corporation by prescription – those that
exercised their powers from time immemorial
without objection from the government, that
although no charter exists, it is presumed to have
been duly incorporated and had been lost or
destroyed
Its existence is presumed if:
a. The community has claimed and exercise
corporate functions;
b. With legislature’s knowledge and
acquiescence
c. Without objection and interruption for a period
long enough to afford title by prescription
2. De Jure Municipal corporation – those created or
recognized by operation of law
3. De Facto Municipal corporation – those where the
people have organized themselves, under color
of law, into ordinary municipal bodies exercising
their powers with their rights dependent quite as
much as on acquiescence as on the regularity of
their origin
Requisites of De Facto Municipal corporation
1. An attempt in good faith to organize under it
2. A valid law authorizing incorporation
3. A colorable compliance with law
4. There is an assumption of corporate powers
LOCAL GOVERNMENT CODE
Local autonomy – this means that local governments
have certain powers given by the Constitution which may
not be curtailed by the national government, beyond
these, local governments may not enact ordinances
contrary to statute
The principle of local autonomy under the 1987
Constitution simply means decentralization, it does not
make the local governments sovereign within a State of
an imperium in imperio
Limitation on the Local autonomy of LGUs
1. General supervision of the president – The
President of the Philippines shall exercise
general supervision over local governments
2. Control of Congress – even as the Constitution
guarantees autonomy to LGUs, the exercise of
local autonomy is still subject to the power of
control by Congress and the power of general
supervision by the President
Kinds of autonomy
1. Decentralization of administration – exists when
the central government delegates administrative
powers to political subdivisions in order to
broaden the base of government power and in the
process make LGUs more responsive and
accountable and ensure their fullest development
as self-reliant communities and make them more
effective partners in the pursuit of national
development and social progress. The President
exercise general supervision over them but only
to ensure that local affairs are administered
according to law. He has no control over their acts
in the sense that he can substitute their judgment
with his own
2. Decentralization of power – involves abdication of
political power in favor of LGUs declared
autonomous. In that case, the autonomous
government is free to chart its own destiny and
shape its future with minimum intervention from
central authorities. This amounts to self-
immolation because the autonomous government
becomes accountable not to the central
authorities but to its constituency
Three Forms of Decentralization
 1. Devolution – it is the transfer of power and
authority from the national government to the
LGUs as the territorial and political subdivisions
of the State. The nature of power transfer is
political and the approach is territorial or areal
The only instance when the LGU may choose not
to absorb national government agency personnel
is when absorption is not administratively viable,
meaning, it would result in duplication of
functions, in which case the national agency
personnel shall be retained by the national
government
Devolution connotes political decentralization or
the transfer of power, responsibilities and
resources for the performance of certain
functions from the central government to the LGU
2. Deconcentration – it is the transfer of power,
authority or responsibility or the discretion to plan,
decide and manage from central point or local
levels, but within the central or national
government itself. The nature of the transfer is
administrative and the approach is sectoral
Deconcentration is administrative in nature. It
involves the transfer of functiosn or the delegation
of authority and responsibility from the national
office to the regional and local offices
3. Debureaucratization – it is the transfer of some
public functions and responsibilities which the
government may perform, to private entities or
non-governmental organizations; it is people’s
empowerment or participation in local
governance
Salient Features of the LGC
1. There is devolution of certain national
government powers to LGU
Devolved powers are:
a. Public works
b. Social welfare
c. Construction of school buildings and facilities
d. Health
e. Agriculture; and
f. Tourism functions
2. Increase in national tax share for LGUs – from
11% to 40%
3. Increase in tax power
Territorial and political subdivisions enjoying local
autonomy
1. Province – cluster of municipalities or
municipalities and component cities; serves as
dynamic mechanism for developmental
processes and effective governance of LGUs
within its jurisdictions
2. City – composed of more urbanized and
developed barangays; serves as a general
purpose government for coordination and
delivery of basic, regular and direct services and
effective governance of inhabitants within its
territorial jurisdiction
3. Municipality – consists of a group of barangays
and serves primarily as a general purpose
government for coordination and delivery of
basic, regular and direct services and effective
governance of inhabitants within its territorial
jurisdiction
4. Barangay 0 the basic political unit which serves
as primary planning and implementing unit of
government policies, plans, programs, projects
and activities in the community
5. Autonomous region – it consists of provinces,
cities, municipalities sand geographical areas
sharing common and distinctive historical and
cultural heritage, economic and social structures,
and other relevant characteristic within the
framework of the Constitution
6. Special Metropolitan Political Subdivisions –
Congress may by law create special metropolitan
and political subdivisions subject to a plebiscite
Local fiscal autonomy – means that the LGUs 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 week as the power to allocate
their resources in accordance with their own priorities
Requisites for the exercise of President’s power over
LGUs
1. An unmanaged public sector deficit of the
national government
2. Consultations with the presiding officers of the
Senate and the House of Representatives and
the presidents of the various local leagues; and
3. Corresponding recommendation of the
secretaries of the Department of Finance, Interior
and Local Government and Budget and
Management
CREATION, CONVERSION, DIVISION, MERGER AND
CONSOLIDATION AND ABOLITION OF LGUs
Authority to create local government
An LGU may be created, divided, merged, abolished or its
boundaries substantially altered
1. By a law enacted by Congress in case of
provinces, cities, municipalities or any other
political subdivisions; or
2. By ordinance passed by the Sangguniang
Panlalawigan or Sangguniang Panlungsod
concerned in the case of any barangay within its
territorial jurisdiction
Congress cannot validly delegate to the ARMM The
power to create legislative districts for the House of
Representatives since such power is vested exclusively
in Congress
General Limitation
1. Plebiscite requirement – to 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
A plebiscite for creating a new province should
include the participation of the residents of the
mother province in order to conform to the
constitutional requirement
Cityhood laws – SC sustained the validity of the Cityhood
Laws stating that the enactment of such is an exercise by
Congress of its legislative power
Congress enacted RA No. 9009 imposing an amount of
100M computed only from locally-generated sources.
However, Congress deemed it wiser to exempt the
respondent municipalities from such belatedly imposed
modified income requirement in order to uphold its higher
calling of putting flesh and blood to the very intent and
thrust of the LC, which is the countryside development
and autonomy
Since the Cityhood Laws explicitly exempted the
concerned municipalities from RA No. 9009, such laws
are therefore also amendments to the LGC itself. In effect,
the Cityhood laws amended RA no. 9009 thru the
exemption clauses
Amendments to organic act which requires approval thru
plebiscite:
1. Those which relate to the basic structure of the
regional government;
2. Those which relate to the region’s judicial system;
3. Those which relate to the grant and extent of the
legislative powers constitutionally conceded to
the regional government
Amendments which do not require approval by
plebiscites:
1. Date of elections
2. Legislative apportionment – a legislative district is
not a corporate unit and merely delineates the
areas occupied by the people who will choose a
representative in their national affairs
3. Power to merge administrative regions –
plebiscite require expressly applies only to
provinces, cities, municipalities or barangay not
to administrative regions
Note: A case involving boundary dispute between LGUs
presents a prejudicial question which must be decided
first before plebiscites for the creation of proposed
barangays may be held
Creation and conversion of LGUs
1. Verifiable indicators of viability; and
2. Projected capacity to provide services
Essential requisites for the creation and conversion of
Municipal corporation
1. Enacting law or ordinance
2. Income
3. Population
4. Land area or territory
5. Attestation by the DOF, NSO and LMB of the
indicators; and
6. Plebiscite
Verifiable Indicators for the creation or conversion of the
LGUs
1. Population – is based on the total number of
inhabitants within the territorial jurisdiction of the
LGU
2. Income – must be sufficient based on acceptable
standards, to provide for all essential facilitates
and services commensurate with the size of its
population
3. Land area – must be contiguous unless it
comprises two or more islands or is separated by
a LGU; properly identified by metes and bounds
and sufficient to provide for such basic services
and facilities
The technical description, containing metes and bounds
of a municipality’s territory is stated in its creating or
enacting laws is controlling
Manner of creation of a LGU
1. Creation of barangay
 Role: serves as the primary planning and
implementing unit of government planning and
implementing policies, plans, projects and
activities in the community
Who may create: by law or ordinance of the
Sannguniang Panlalawigan or Sangguniang
Panglungsod. Where a barangay is created by an
ordinance of the Sangguniang Panlalawigan, the
recommendation of the Sangguniang Bayan shall
be necessary
Requisites:
a. Population – at least 2000
Except in cities and municipalities within MM
or in HUC – must be at least 5000
b. Income – no minimum requirement
c. Land Area – no minimum requirement but it
must be contiguous except when the
barangay is comprised by 2 or more island
2. Creation of Municipalities
Role: it 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
Who may create: only by an act of Congress
subject to the approval by a majority of the votes
case in the plebiscite
Requisites:
a. Population – at least 25,000
b. Income – average annual income of at least
2.5 M for the last two consecutive years
c. Land area – a contiguous territory of 50 sq km
except if composed by one or more islands
as certified by the LMB
3. Creation of component cities
Role: serves as a general purpose government
for the coordination and delivery of basic, regular
and direct service and effective governance of the
inhabitants within its territorial jurisdiction
Who may create: by an act of the Congress
Requisites:
a. Income (indispensable requirement) – at
least 100M for the last two consecutive years
b. Land Area- contiguous territory of at least
100sq km as certified by LMB
c. Population – at least 150 000 inhabitants
Internal Revenue Allotments – are regular and recurring
item of income, It forms part of gross accretion of funds of
the LGU hence included in computing the average annual
income required to become a city
Independent Component Cities- these are component
cities whose charters prohibit their voters from voting for
provincial elective officials
4. Conversion of a component city into a HUC - if a
component city shall have met the minimum
requirements for a HUC, it shall be the duty of the
President to declare the city as HUC upon:
1. Proper application;
2. Upon ratification in a plebiscite by the
majority of registered voters therein
Requisites:
a. Population – at least 200,000
b. Income – at least 50M certified by the city
treasurer
5. Creation of Provinces
Role: serves as a dynamic mechanism for
development processes and effective
governance of LGUs
Section 19 of RA 9054 which delegated to the
ARMM the power to create provinces, cities and
municipalities and barangays within the ARMM
was declared unconstitutional because the
creation of provinces and cities necessarily
includes the creation of legislative districts, a
power only Congress can exercise
Who may create: only by an act of Congress
Requisites:
a. Income (indispensable requirement) –
average annual income of at least 20M
certified by the Department of Finance and
either of the ffg:
b. Land area – a contiguous territory of at least
2000 sq km
c. Population – not less than 250,000
The use of the word territory refers only to the physical
mass of land area, not to water comprising the political
entity
6. Conversion of Sub-provinces to provinces-
existing sub provinces are converted to regular
provinces upon approval by a majority votes cast
in a plebiscite to be held in the said sub province
and the original province directly affected
7. Autonomous regions
8. Special Metropolitan Political Subdivisions- the
Congress may by law create special metropolitan
political subdivisions but the component cities
and municipalities shall retain their basic
autonomy and shall be entitled to their own local
executives and legislative assemblies
MMDA declared as a special development and existence of a municipal corporation is reserved to the
administrative region and the administration of metro- State in a proceeding for quo warranto or other direct
wide basic services affecting the region. It has no police proceeding. This rule applies to de facto corporation.
or legislative powers. It is not a political unit

Income Population Land area

Barangay Naming of LGUs and Public places, streets and structures
No req 2000 but 5000 No req 1. Sannguniang Panlalawigan, may in concultation
for MM and HUC with the Philippine Historical Commission change
Municipality
the name of the following within its territorial
2.5M 25,000 50 sq km
jurisdiction:
Component City
a. Component cities and municipalities
100M 150,000 100 sq km
b. Provincial roads, avenues, boulevards,
HUC
thoroughfares and bridges
50M 200,000 100 sq km
Province c. Public vocational or technical schools and
20M 200,000 100 sq km other post-secondary and tertiary schools;
d. Provincial hospitals, health centers and
health facilities; and
Division and Merger of LGUs e. Other public place owned by the public
government
1. It shall not reduce the income, population or land 2. By the Sanggunians of HUCs and ICCs same
area of the LGU concerned less than the with CC
minimum requirement a. City barangays
2. Income classification of the original LGU shall not b. City roads etc
fall below its current income classification prior to c. Public elementary, secondary and vocational
the division or technical schools, community colleages
3. Plebiscite to be held in the LGUs affected and non-chartered colleges;
4. Assets and liabilities of creation shall be equitably d. City hospitals, health centers and health
distributed between the LGUs affected and the facilities; and
new LGU e. Other public place or building owned by the
Abolition of LGUs city government

LGUs are deemed abolished when the income, Limitatios:

population or land area of an LGU has been irreversibly
reduced to less than the minimum standards prescribed
for its creation
Congress has absolute power to alter and dissolve a
municipal corporation by:
1. Dividing a municipal corporation into two or more
separate municipalities;
2. Fixing, altering or changing the boundaries of
municipal corporations;
3. Annexing one municipal corporation to another;
4. Repealing its charter; or
5. Merging or consolidating two or more separate
municipal corporations into one
Beginning of Corporate existence
It starts upon election and qualification of its Chief
executive and majority of the members of its Sanggunian,
unless some other time is fixed therefore by the law or
GENERAL ATTRIBUTES AND POWERS OF LGUs
ordinance creating it
Sources of Power of Municipal Corporation
Mode of inquiry to legal existence of an LGU
A collateral attack questioning the legal existence of an
LGU is not available as a remedy. An inquiry into the legal
1. Naming the foregoing after a living person is
prohibited
2. Change of name must be for a justifiable reason
3. Change of name must not be oftener than once
every 10 years
4. Name of an LGU, public place, street or structure
with historical, cultural, or ethnical significance
shall not be changed unless by unanimous vote
of the Sanggunian
5. Change of name of a public school or public
hospital shall only be made upon
recommendation of the local school board or local
health board concerned
6. Change of name of any LGU must be ratified in a
plebiscite in the political units affected
7. In any change of name, the Office of the
President, the representative of the district and
the Bureau of Posts shall be notified
1. 1987 Constitution
2. Statutes
 3. Charter creating municipal corporation
4. All existing laws, acts, decrees, Eos,
proclamations and administrative regulations
5. Doctrine of inherent right to self government
POWERS OF LGUs
1. Police power – exercised under the General
Welfare clause
Valid delegation of Police power
1. Express delegation
2. Implied delegation from the mere fact of
creation
General Welfare clause:
a. Evey LGU shal exercise the following powers:
1. Express
2. Implied
3. Necessary, appropriate and incidental for its
effective governance and
4. Essential to the promotion of general welfare
The general welfare clause empowers LGus to enact and
implement measures for the general well-being of their
inhabitants
Limitations:
a. Express grant by law
b. Must not be contrary to law
Since Congress has allowed the PCSO to operate
lotteries which PCSO seeks to conduct in Laguna,
pursuant to its legislative grant of authority, the province
SP cannot nullify the exercise of said authority by
preventing something already allowed by Congress
c. Territoriality –
It is he ancient obligation of the individual to assist
in the protection of peance and order in the
community, residents may be compelled to
render civil service
d. Equal protection clause – the interests of the
public in general, as distinguished from those of
a particular class require the exercise of the
power and
e. Due process clause – the means employed are
reasonably necessary for the accomplishment of
the purpose and not unduly oppressive on
individuals
Municipal corporations cannot prohibit the
operation of night clubs. They may be regulated
but not prevented from carrying on their business
Tests to determine the validity of police power
1. The subject matter of the law must be lawful,
which means the public interest as distinguished
from those of a particular interest, requires the
interference of the State
2. The means employed to attain the purpose of the
law must be reasonably necessary
3. It must not be unduly oppressive upon individuals
2. Power to provide basic services and facilities
3. Power of eminent domain
Requisites:
a. Exercised by the LGU thru its chief executive
b. The chief executive must act thru an ordinance
c. For public use, purpose or welfare for the benefit
of the poor and the landless
d. Payment of just compensation
e. A valid and definite offer previously made to the
owner and was not accepted
The power of eminent domain by LGUs may be effected
only by an ordinance and not by a mere resolution. The
absence of an ordinance authorizing a complaint for
expropriation is equivalent to lack of cause of action
The promulgation of the ordinance authorizing the local
chief executive to exercise the power must be
promulgated prior to the filing of the complaint and not
after the court shall have determined the amount of just
compensation
However, the decision does not preclude the respendent
city from enacting the necessary ordinance and thereafter
reinstituting expropriation proceedings
Limitations:
a. Necessity must be of public character
b. Property to be expropriated is private
c. There is just compensation
d. Taking must be with due process
Right of expropriation is not inherent in a municipal
corporation. When it attemps to expropriate private
property and the owner makes an objection, the courts
have authority to decide the question of genuine necessity
On the other hand, the Congress may directly determine
the necessity for appropriating private property which is a
political question that the courts cannot resolve
Private property already devoted to public use can still be
subject of expropriation by Congress but not by LGUs
Certiorari and prohibition do not lie against the
Sangguniang Panglungsod, a legislative and policy
making body, merely expressing its sentiment or opinion
thru resolution and not exercising judicial or quasi-judicial
functions
Determination of Just compensation – to be determined
as of the time of actual taking and not as of the date of the
filing of the complaint
Just compensation – sum equivalent to the market value
of the property broadly described to be the price fixed by
the seller in an open market in the usual and ordinary
course of legal action
If the property is taken for public use before compensation
is deposited with the court having jurisdiction over the
case, the final compensation must include interests on its
just value to be computed from the time the property is
taken to the time when the compensation is actually paid
or deposited with the court
Immediate possession of property by the LGU upon:
1. The filing of the expropriation proceedings
2. Making a deposit with the proper court of at least
15% of the FMV of the property based on the
current tax declaration of the property
expropriated
Private lands rank last in the order of priority for purposes
of socialized housing. This rule applies only to urban and
urbanizable areas
Urban area- refers to all cities regardless of their
population density and to municipalities with a population
density of at least 500 persons per sq km
Urbanizable area – refers to sites and lands which
considering present characteristics and prevailing
conditions display marked and great potential of
becoming urban areas within a period of 5 years
LGU does not need to secure approval of the DAR as a
condition precedent to institute the necessary
expropriation proceedings
The proper party to appeal the dismissal of expropriation
proceedings is the municipality which filed the
expropriation case
4.Power of taxation
Fundamental Principles:
a. Taxation shall be uniform in each LGU
b. Each LGU shall as far as practicable evolve a
progressive system of taxation
c. Revenue shall inure solely to the benefit and be
subject to disposition by the LGU unless
otherwise specifically provided herein
d. Collection shall in no case be let to any private
person
e. Taxation shall be:
1. Not unjust, excessive, oppressive or
confiscatory
2. Only for public purpose
3. Equitable and based as far as practivable on
the taxpayer’s ability to pay; and
4. Not contrary to law, public policy, national
economic policy or in restraint of trade
Local governments, being mere agents of the State, have
no power to tax instrumentalities of the National
Government. This is in consonance with the doctrine of
State supremacy over LGUs
Instrumentality – refers to agency of the national
government not integrated with the department
framework, vested with special function by law, endowed
with some if not all corporate powers
MIAA is a government instrumentality vested with
corporate powers to perform governmental functions.
Hence, all real properties of MIAA is owned by the
Republic
Share of LGUs in the internal revenues – 40%
1. Provinces and cities – 23%
2. Municipalities – 34%
3. Barangays – 20%
4. No less than 20% is allotted for development
project by the local unit from the IRA
Secretary of jUstice is aonly allowed to review the
constitutionalty of tax ordinances, and if warranted to
revoke it. When he alters of modifies or set aside a tax
ordinance, he is not permitted to substitute his own
judgment of the local government that enacted the
ordinance
5. Corporate Powers
a. To enter into contracts
b. To have and use a corporate seal
c. To borrow money
d. Appropriate money, only for public purpose
e. To acquire, hold and convey real or personal
property
f. To have continuous succession in its
corporate name
g. To issue municipal bonds
h. To sue and be sued
Properties of LGUs
Those properties available for public use and made
available to the public in general are outside the
commerce of man and cannot be disposed of or leased
by the LGU to private persons
In the administration of its patrimonial property, a
municipal corporation can be regarded as a private
corporation or individual insofar as its liability to third
persons on contract or in tort is concerned
Town plazas are properties of public dominion, they may
be occupied temporarily, but only for the duration of an
emergency
A public plaza is beyond the commerce of man and
cannot be the subject of lease or other contractual
undertaking
Requisite of a valid municipal contracts

a. LGU has the express, implied or inherent power

to enter into a particular contract
b. Entered into by the proper department, board,
committee or agent. In case it is entered into by
the local chief executive on behalf of the LGU,
prior authorization by the Sangguinian concerned
is needed
c. Must comply with substantive requirements
d. Must comply with the formal requirements of
written contracts

Ultra vires contracts – when a contract is entered into

without compliance with the first and third requisities, the
same is ultra vires and is null and void. Such cannot be
ratified or validated

Ratification of defective municipal contracts is possibly

only when there is non compliance with the second and/or
fourth requisites

Breach of contractual obligations by LGU – renders the

city liable in damages. The principle of respondeat
superior applies

The doctrine of estoppel cannot be applied as against a

municipal corporation to validate a contract which it has
no power to make, or which it is authorized to make only
under a prescribed mode or manner, although the
corporation has accepted the benefits thereof and the
other party has fully performed his part of the agreement

Power to sue and be sued

GR: Private lawyers may not represent municipalities on

their own. Only the provincial fiscal, provincial attorney
and municipal attorney should represent a municipality in
lawsuits

XPNs:

a. Municipality may expressly adopt the work

already performed in good faith by such private
lawyer, which work is beneficial to it provided:
1. That no injustice is thereby heaped on the
adverse party; and
2. That no compensation in any guise is paid for
by the municipality to the private lawyer
b. When the provincial fiscal is disqualified to
represent the municipality. The fact that the
provincial fiscal was disqualified to handle the
municipality’s case must appear on the record

The rule is that a suit is commenced by the local chief

executive upon authority if the Sanggunian except
when the City Councilors by themselves and as
representative of or on behalf of the city bring the
action to prevent unlawful disbursement of city funds