"x x x.
The assailed memorandum circulars
do not transgress the local and fiscal
autonomy granted to LGUs.
The petitioners argue that the assailed issuances of the respondent interfere with the local and fiscal autonomy of LGUs embodied in the Constitution and the LGC. In particular, they claim that MC No. 2010-138 transgressed these constitutionally-protected liberties when it restricted the meaning of “development” and enumerated activities which the local government must finance from the 20% development fund component of the IRA and provided sanctions for local authorities who shall use the said component of the fund for the excluded purposes stated therein.33 They argue that the respondent cannot substitute his own discretion with that of the local legislative council in enacting its annual budget and specifying the development projects that the 20% component of its IRA should fund.34
The argument fails to persuade.
The Constitution has expressly adopted the policy of ensuring the autonomy of LGUs.35 To highlight its significance, the entire Article X of the Constitution was devoted to laying down the bedrock upon which this policy is anchored.
It is also pursuant to the mandate of the Constitution of enhancing local autonomy that the LGC was enacted. Section 2 thereof was a reiteration of the state policy. It reads, thus:
Sec. 2. Declaration of Policy. – (a) It is hereby declared the policy of the State that the territorial and political subdivisions of the State shall enjoy genuine and meaningful local autonomy to enable them to attain their fullest development as self-reliant communities and make them more effective partners in the attainment of national goals. Toward this end, the State shall provide for a more responsive and accountable local government structure instituted through a system of decentralization whereby local government units shall be given more powers, authority, responsibilities, and resources. The process of decentralization shall proceed from the national government to the local government units.
Verily, local autonomy means a more responsive and accountable local government structure instituted through a system of decentralization.36 In Limbona v. Mangelin,37 the Court elaborated on the concept of decentralization, thus:
[A]utonomy is either decentralization of administration or decentralization of power. There is decentralization of administration when the central government delegates administrative powers to political subdivisions in order to broaden the base of government power and in the process to make local governments “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.” At the same time, it relieves the central government of the burden of managing local affairs and enables it to concentrate on national concerns. x x x.
Decentralization of power, on the other hand, involves an abdication of political power in the favor of local governments [sic] units declared to be autonomous. In that case, the autonomous government is free to chart its own destiny and shape its future with minimum intervention from central authorities. x x x.38 (Citations omitted)
To safeguard the state policy on local autonomy, the Constitution confines the power of the President over LGUs to mere supervision.39 “The President exercises ‘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 judgments with his own.”40 Thus, Section 4, Article X of the Constitution, states:
Section 4. The President of the Philippines shall exercise general supervision over local governments. Provinces with respect to component cities and municipalities, and cities and municipalities with respect to component barangays, shall ensure that the acts of their component units are within the scope of their prescribed powers and functions.
In Province of Negros Occidental v. Commissioners, Commission on Audit,41 the Court distinguished general supervision from executive control in the following manner:
The President’s power of general supervision means the power of a superior officer to see to it that subordinates perform their functions according to law. This is distinguished from the President’s power of control which is the power to alter or modify or set aside what a subordinate officer had done in the performance of his duties and to substitute the judgment of the President over that of the subordinate officer. The power of control gives the President the power to revise or reverse the acts or decisions of a subordinate officer involving the exercise of discretion.42 (Citations omitted)
It is the petitioners’ contention that the respondent went beyond the confines of his supervisory powers, as alter ego of the President, when he issued MC No. 2010-138. They argue that the mandatory nature of the circular, with the threat of imposition of sanctions for non-compliance, evinces a clear desire to exercise control over LGUs.43
The Court, however, perceives otherwise.
A reading of MC No. 2010-138 shows that it is a mere reiteration of an existing provision in the LGC. It was plainly intended to remind LGUs to faithfully observe the directive stated in Section 287 of the LGC to utilize the 20% portion of the IRA for development projects. It was, at best, an advisory to LGUs to examine themselves if they have been complying with the law. It must be recalled that the assailed circular was issued in response to the report of the COA that a substantial portion of the 20% development fund of some LGUs was not actually utilized for development projects but was diverted to expenses more properly categorized as MOOE, in violation of Section 287 of the LGC. This intention was highlighted in the very first paragraph of MC No. 2010-138, which reads:
Section 287 of the Local Government Code mandates every local government to appropriate in its annual budget no less than 20% of its annual revenue allotment for development projects. In common understanding, development means the realization of desirable social, economic and environmental outcomes essential in the attainment of the constitutional objective of a desired quality of life for all.44 (Underscoring in the original)
That the term development was characterized as the “realization of desirable social, economic and environmental outcome” does not operate as a restriction of the term so as to exclude some other activities that may bring about the same result. The definition was a plain characterization of the concept of development as it is commonly understood. The statement of a general definition was only necessary to illustrate among LGUs the nature of expenses that are properly chargeable against the development fund component of the IRA. It is expected to guide them and aid them in rethinking their ways so that they may be able to rectify lapses in judgment, should there be any, or it may simply stand as a reaffirmation of an already proper administration of expenses.
The same clarification may be said of the enumeration of expenses in MC No. 2010-138. To begin with, it is erroneous to call them exclusions because such a term signifies compulsory disallowance of a particular item or activity. This is not the contemplation of the enumeration. Again, it is helpful to retrace the very reason for the issuance of the assailed circular for a better understanding. The petitioners should be reminded that the issuance of MC No. 2010-138 was brought about by the report of the COA that the development fund was not being utilized accordingly. To curb the alleged misuse of the development fund, the respondent deemed it proper to remind LGUs of the nature and purpose of the provision for the IRA through MC No. 2010-138. To illustrate his point, he included the contested enumeration of the items for which the development fund must generally not be used. The enumerated items comprised the expenses which the COA perceived to have been improperly earmarked or charged against the development fund based on the audit it conducted.
Contrary to the petitioners’ posturing, however, the enumeration was not meant to restrict the discretion of the LGUs in the utilization of their funds. It was meant to enlighten LGUs as to the nature of the development fund by delineating it from other types of expenses. It was incorporated in the assailed circular in order to guide them in the proper disposition of the IRA and avert further misuse of the fund by citing current practices which seemed to be incompatible with the purpose of the fund. Even then, LGUs remain at liberty to map out their respective development plans solely on the basis of their own judgment and utilize their IRAs accordingly, with the only restriction that 20% thereof be expended for development projects. They may even spend their IRAs for some of the enumerated items should they partake of indirect costs of undertaking development projects. In such case, however, the concerned LGU must ascertain that applicable rules and regulations on budgetary allocation have been observed lest it be inviting an administrative probe.
The petitioners likewise misread the issuance by claiming that the provision of sanctions therein is a clear indication of the President’s interference in the fiscal autonomy of LGUs. The relevant portion of the assailed issuance reads, thus:
All local authorities are further reminded that utilizing the 20% component of the Internal Revenue Allotment, whether willfully or through negligence, for any purpose beyond those expressly prescribed by law or public policy shall be subject to the sanctions provided under the Local Government Code and under such other applicable laws.45
Significantly, the issuance itself did not provide for sanctions. It did not particularly establish a new set of acts or omissions which are deemed violations and provide the corresponding penalties therefor. It simply stated a reminder to LGUs that there are existing rules to consider in the disbursement of the 20% development fund and that non-compliance therewith may render them liable to sanctions which are provided in the LGC and other applicable laws. Nonetheless, this warning for possible imposition of sanctions did not alter the advisory nature of the issuance.
At any rate, LGUs must be reminded that the local autonomy granted to them does not completely severe them from the national government or turn them into impenetrable states. Autonomy does not make local governments sovereign within the state.46 In Ganzon v. Court of Appeals,47 the Court reiterated:
Autonomy, however, is not meant to end the relation of partnership and interdependence between the central administration and local government units, or otherwise, to usher in a regime of federalism. The Charter has not taken such a radical step. Local governments, under the Constitution, are subject to regulation, however limited, and for no other purpose than precisely, albeit paradoxically, to enhance self-government.48
Thus, notwithstanding the local fiscal autonomy being enjoyed by LGUs, they are still under the supervision of the President and maybe held accountable for malfeasance or violations of existing laws. “Supervision is not incompatible with discipline. And the power to discipline and ensure that the laws be faithfully executed must be construed to authorize the President to order an investigation of the act or conduct of local officials when in his opinion the good of the public service so requires.”49
Clearly then, the President’s power of supervision is not antithetical to investigation and imposition of sanctions. In Hon. Joson v. Exec. Sec. Torres,50 the Court pointed out, thus:
“Independently of any statutory provision authorizing the President to conduct an investigation of the nature involved in this proceeding, and in view of the nature and character of the executive authority with which the President of the Philippines is invested, the constitutional grant to him of power to exercise general supervision over all local governments and to take care that the laws be faithfully executed must be construed to authorize him to order an investigation of the act or conduct of the petitioner herein. Supervision is not a meaningless thing. It is an active power. It is certainly not without limitation, but it at least implies authority to inquire into facts and conditions in order to render the power real and effective. x x x.”51 (Emphasis ours and italics in the original)
As in MC No. 2010-138, the Court finds nothing in two other questioned issuances of the respondent, i.e., MC Nos. 2010-83 and 2011-08, that can be construed as infringing on the fiscal autonomy of LGUs. The petitioners claim that the requirement to post other documents in the mentioned issuances went beyond the letter and spirit of Section 352 of the LGC and R.A. No. 9184, otherwise known as the Government Procurement Reform Act, by requiring that budgets, expenditures, contracts and loans, and procurement plans of LGUs be publicly posted as well.52
Pertinently, Section 352 of the LGC reads:
Section 352. Posting of the Summary of Income and Expenditures. – Local treasurers, accountants, budget officers, and other accountable officers shall, within thirty (30) days from the end of the fiscal year, post in at least three (3) publicly accessible and conspicuous places in the local government unit a summary of all revenues collected and funds received including the appropriations and disbursements of such funds during the preceding fiscal year.
R.A. No. 9184, on the other hand, requires the posting of the invitation to bid, notice of award, notice to proceed, and approved contract in the procuring entity’s premises, in newspapers of general circulation, and the website of the procuring entity.53
It is well to remember that fiscal autonomy does not leave LGUs with unbridled discretion in the disbursement of public funds. They remain accountable to their constituency. For, public office was created for the benefit of the people and not the person who holds office.
The Court strongly enunciated in ABAKADA GURO Party List (formerly AASJS), et al. v. Hon. Purisima, et al.,54 thus:
Public office is a public trust. It must be discharged by its holder not for his own personal gain but for the benefit of the public for whom he holds it in trust. By demanding accountability and service with responsibility, integrity, loyalty, efficiency, patriotism and justice, all government officials and employees have the duty to be responsive to the needs of the people they are called upon to serve.55
Thus, the Constitution strongly summoned the State to adopt and implement a policy of full disclosure of all transactions involving public interest and provide the people with the right to access public information.56 Section 352 of the LGC is a response to this call for transparency. It is a mechanism of transparency and accountability of local government officials and is in fact incorporated under Chapter IV of the LGC which deals with “Expenditures, Disbursements, Accounting and Accountability.”
In the same manner, R.A. No. 9184 established a system of transparency in the procurement process and in the implementation of procurement contracts in government agencies.57 It is the public monitoring of the procurement process and the implementation of awarded contracts with the end in view of guaranteeing that these contracts are awarded pursuant to the provisions of the law and its implementing rules and regulations, and that all these contracts are performed strictly according to specifications.58
The assailed issuances of the respondent, MC Nos. 2010-83 and 2011-08, are but implementation of this avowed policy of the State to make public officials accountable to the people. They are amalgamations of existing laws, rules and regulation designed to give teeth to the constitutional mandate of transparency and accountability.
A scrutiny of the contents of the mentioned issuances shows that they do not, in any manner, violate the fiscal autonomy of LGUs. To be clear, “[f]iscal 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.”59
It is inconceivable, however, how the publication of budgets, expenditures, contracts and loans and procurement plans of LGUs required in the assailed issuances could have infringed on the local fiscal autonomy of LGUs. Firstly, the issuances do not interfere with the discretion of the LGUs in the specification of their priority projects and the allocation of their budgets. The posting requirements are mere transparency measures which do not at all hurt the manner by which LGUs decide the utilization and allocation of their funds.
Secondly, it appears that even Section 352 of the LGC that is being invoked by the petitioners does not exclude the requirement for the posting of the additional documents stated in MC Nos. 2010-83 and 2011-08. Apparently, the mentioned provision requires the publication of “a summary of revenues collected and funds received, including the appropriations and disbursements of such funds.” The additional requirement for the posting of budgets, expenditures, contracts and loans, and procurement plans are well-within the contemplation of Section 352 of the LGC considering they are documents necessary for an accurate presentation of a summary of appropriations and disbursements that an LGU is required to publish.
Finally, the Court believes that the supervisory powers of the President are broad enough to embrace the power to require the publication of certain documents as a mechanism of transparency. In Pimentel, Jr. v. Hon. Aguirre,60 the Court reminded that local fiscal autonomy does not rule out any manner of national government intervention by way of supervision, in order to ensure that local programs, fiscal and otherwise, are consistent with national goals. The President, by constitutional fiat, is the head of the economic and planning agency of the government, primarily responsible for formulating and implementing continuing, coordinated and integrated social and economic policies, plans and programs for the entire country.61
Moreover, the Constitution, which was drafted after long years of dictatorship and abuse of power, is now replete with numerous provisions directing the adoption of measures to uphold transparency and accountability in government, with a view of protecting the nation from repeating its atrocious past. In particular, the Constitution commands the strict adherence to full disclosure of information on all matters relating to official transactions and those involving public interest. Pertinently, Section 28, Article II and Section 7, Article III of the Constitution, provide:
Article II
Declaration of Principles and State Policies Principles
Section 28. Subject to reasonable conditions prescribed by law, the State adopts and implements a policy of full public disclosure of all its transactions involving public interest.Article III
Bill of Rights
Section 7. The right of the people to information on matters of public concern shall be recognized. Access to official records, and to documents and papers pertaining to official acts, transactions, or decisions, as well as to government research data used as basis for policy development, shall be afforded the citizen, subject to such limitations as may be provided by law.
In the instant case, the assailed issuances were issued pursuant to the policy of promoting good governance through transparency, accountability and participation. The action of the respondent is certainly within the constitutional bounds of his power as alter ego of the President.
It is needless to say that the power to govern is a delegated authority from the people who hailed the public official to office through the democratic process of election. His stay in office remains a privilege which may be withdrawn by the people should he betray his oath of office. Thus, he must not frown upon accountability checks which aim to show how well he is performing his delegated power. For, it is through these mechanisms of transparency and accountability that he is able to prove to his constituency that he is worthy of the continued privilege.
x x x."
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