Pamantasan ng Lungsod ng Maynila

School of Government
SY. 2023-2024

Local & Regional Governance:

Decentralization and Local Government

Submitted by Group 1 of BPA 303-1:

Ancot, Nicole Maxine
Bernabe, Jolisha Mae
Celerio, Rafaela Sofia
Dayuta, Zheirry
Manglo, Chelcy
Mariano, Gabriela
Pantoni, Angeleen
Salac, Lana Gabriel Micaela

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 TABLE OF CONTENTS

I. NATURE AND STATE OF LGU 3

Local Government 3
Nature of Local Government Units 4
Local Governance must include the concept of: 6
II. DECENTRALIZATION TOWARDS DEMOCRATIZATION AND
DEVELOPMENT IN ASIA PACIFIC REGION 7
Decentralization 7
Decentralization Towards Democratization 8
Decentralization Towards Development in the Asia Pacific Region 10
III. GOVERNANCE IN LOCAL COMMUNITIES 12
The Concept of Local Governance 12
The Conceptual Perspectives on Local Governance 12
Local Community Governance 14
Levels of Local Government 14
Evolution of Local Government in the Philippines 16
IV. DECENTRALIZATION AND LOCAL AUTONOMY 18
Decentralization 18
Local autonomy 19
Decentralization and Local Autonomy 19
V. REFERENCES 21

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 I. NATURE AND STATE OF LGU

The Philippine Government have visibly shown a dramatic transition of being a

highly-centralized government to a decentralized local autonomy. This transition is made
possible because the Philippines supported a program for radical decentralization in
South-East Asia, from having the “People Power Revolution” that contributed to the
overthrow of Marcos, this was then followed by the call for democracy.

Local Government

According to De Guzman & Reforma (1992), Local Government is a political

subdivision of the state by an enabling law. It is considered as the extension of the national
government by being its sub-national government comprising of barangays, municipalities,
cities, and provinces that provides the delivery of basic services to the citizens such as basic
education, proper waste collection, health services, etc. In addition, Local Government has
the same definition as that of state for they are both composed of population, territory, and an
organization that will serve the interest of the citizens as well as the purposes of the national.
The substantial authority that is granted to Local Governments allows them to have control
over local affairs, imposed taxes, and etc. This is supported by the constitution through the
creation of Republic Act No. 7160, an act known as “Local Government Code of 1991”.
Republic Act No. 7160 known as “Local Government Code of 1991”, an act that is
authored by former Senate President Aquilino “Nene” Pimentel, Jr. and is signed into law by
the late President Mrs. Corazon “Cory” Aquino. The code is considered as a political
development in the Philippines because it clearly paved the way for democracy and a more
participative government in the country. This strengthens the local autonomy of local
governments while still not being totally independent from the national. It is more like they
are given independence to make decisions over local affairs but still considering the
judgments of the national.

Nature of Local Government Units

1. Dual Agency - Local Government Units are considered as “dual agency” because
they are considered as the agents of both the state and the people. LGU’s are
considered as Agents of the State in terms of transacting to the people on behalf of the
state, while Agents of the People simply because they are the type of government that
people usually get in touch with in terms of their everyday transactions with the
government. In fact, LGU’s serve as the bridge between the people and the national
government.

For example, it is part of the Filipino culture to sing at the top of their lungs whenever
there is karaoke, however, the loud noises stay until dawn that disturbs the people
nearby. Hence, this issue in the local community has been raised to LGU, and LGU
has brought this up to the national, and now, there is House Bill No. 1035 that address
the noise disturbance of karaoke, this allows the karaoke to operate from 8am to 10pm

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 only, and if the sound can still be heard 50 feet away from its source, there is a
violation that merits from Php 1,000 or imprisonment for 6 months at most, or both.

2. Degree of autonomy - It also have certain degree of autonomy in their areas

because they are given the authority to plan and decide on what is best for their area,
they can also impose taxes to businesses, and can certainly select and appoint
personnel that they think can help them accomplish their goals.

For example, according to Department of Budget and Management, barangays can

have additional sources of income by imposing tax to the public roads, pier, bridge,
telecommunications, etc. that is funded and constructed by the barangay itself.
However, under section 187 of the code, a public hearing must be held first before the
barangay can enforce their new revenue measure.

3. Policy-making in Local Government - All the government officials that are elected
and appointed has the power to decide on political manners that concerns the public.
Concerns such as health, social welfare, public works and highways, education, and
environmental protection.

This political decisions are generally taken in the form of ordinances. Policy-making
in the local government usually starts by the arising of a particular problem. The
sanggunian proposes a policy and this proposed policy is pushed by the councillors
for approval. It is known as resolution if it is still subject for deliberation and debate.
While if the proposed policy is approved, it now becomes an ordinance. This will be
pass through the three readings - the first reading is for title reading and will then be
referred to the concerned committee. Second reading is done when the proposed
policy is further studied by the committee. After this, the third reading is done for the
final consideration of the proposed policy. This will then be pass through the local
chief executive who has the power to either approve or reject the proposed policy.
Nevertheless, after thirty days, the proposed policy will now be implemented as an
ordinance.

4. Territorial Jurisdiction - Each Local Government Units also have their own
territorial jurisdiction that allows them to be totally independent from one another.
Such independence triggers a healthy competition among government units that often
resulted to the discovery of best practices, these best practices are usually learned and
adapted by different LGU’s especially when they think that a particular practice works
best in that particular government.

For example, the City Government of Marikina established its innovative river-bank
park in 1993, aside from it being a tourist attraction, it also serves as a sport and
recreation facility, helps recrafting the rivers and plant more trees in the surroundings,
and eco-tourism friendly, hence, beneficial for the environment. In 2019, Dasmariñas,
Cavite also adapted this initiative of Marikina and established their very own
riverbank park.

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 5. Corporate Powers – LGU’s under the Local Government Code of 1991 is given
independence from the national government by granting corporate powers.
Government units can partner with private institutions to further expand the benefits
that it can give to the general public. This can be in the form of profitable enterprises
such as the maintenance of local markets, slaughterhouses, and etc.

For example, the city government of Imus, Cavite handles the wet and dry market of
the city. They help in stabilizing the economy through the means of continuous
provision of goods and services, can create more jobs and means for living, can
enforce rules and regulations, can maintain competition, can set the price for
international tariffs, can impose taxes and business permits and the like. All are
beneficial in maintaining the stability in the economy.

6. Own Fiscal Administration – LGU’s has the capability to manage its own limited
financial resources. Aside from the fundings of the Local Government Code of 1991,
the national government have given LGU’s their primary source of revenue through
the Internal Revenue Allotment (IRA) wherein each unit have their own fair share
of budget that ranges from 20-40%.

Also, the revenue are classified into internal and external sources wherein internal
sources are those revenues coming from taxes and charges imposed by LGU. While,
external sources are from domestic loans, grants and donations, and etc.

Local Governance must include the concept of:

1. Transparency and Accountability

Transparency measures its effectiveness by providing accountability to government

personnel, promoting public scrutiny, and encouraging greater citizen participation in
government and governance.

Example of transparency and accountability in local governance in the Philippines is

the use of the Seal of Good Local Governance (SGLG) by the Department of the
Interior and Local Government (DILG). The SGLG is an assessment and recognition
system that evaluates the performance of LGUs in various areas such as financial
administration, disaster preparedness, social protection, business-friendliness and
competitiveness, and environmental management.

2. Community Participation

Participation is crucial for government to effectively address community needs and

foster informed, responsible citizens who feel ownership over government
developments and projects.

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 Example, Participatory Budgeting is a method that promotes community involvement
in local governance, enhancing transparency, accountability, and democratic
decision-making by involving citizens in shaping development priorities.

3. Political Participation

Political participation involves various activities where individuals express their

opinions on the world and its governance, and attempt to influence decisions affecting
their lives.
Example, Voter participation in elections positively impacts their nation's democracy
by actively and frequently participating in the political process.

4. Equitable Access to Service

Equitable access to services ensures equal access to essential services by all

individuals, regardless of income, gender, age, disability, ethnicity, or geographical
location.

One example of equitable access to services ,such as healthcare, is crucial for all
individuals, regardless of their socio-economic status or background, to ensure
affordable and quality care.

5. Regulation of the Private Sector

The regulation of the private sector involves laws, regulations, policies, and standards
controlling the actions of privately held companies, aiming to protect public interest,
ensure fair competition, advance consumer welfare, and minimize harm.

One of the Example Governments regulate the private sector, such as the financial
industry, to ensure fair and ethical operations of financial institutions like banks,
investment firms, insurance companies, and credit rating agencies.

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 II. DECENTRALIZATION TOWARDS
DEMOCRATIZATION AND DEVELOPMENT IN ASIA
PACIFIC REGION
Decentralization

Decentralization is a kind of organizational structure in which upper

management transfers decision-making and day-to-day operations to lower levels of
management. As a result, top management may spend more time making major choices.
Organizations typically feel the need for decentralization in order to preserve operational
efficiency. This may be defined as the systematic distribution of authority throughout an
organization's management levels. It shows how decision-making authority is distributed
across the organizational hierarchy. It refers to the distribution of authority, positions, and
responsibilities.

Decentralization is important due to 5 reasons: First, Quick Decision Making.

The delegation of decision-making authority to the operational level closest to the situation
speeds up and increases decision-making quality. Second, Develop management skills.
Subordinates are given opportunities to demonstrate their talents. Third, it reduces the
pressure on top management. It lowers the supervisor's direct supervision of subordinates
since they are given the flexibility to decide and act within the constraints specified by the
superior. Fourth, Improved control. Each level's performance may be reviewed, and
departments are held individually accountable for their outcomes. The extent to which
organizational goals are met, as well as the contribution of each department. Lastly, it
promotes growth. It gives lower management levels more autonomy by allowing them to
conduct responsibilities in the most appropriate manner for their department or division. It
instills a spirit of competitiveness among diverse departments, encouraging them to exceed
one another. This eventually leads to better production and a higher return on investment for
the firm.

There are four types of Decentralization. First, Political Decentralization.

Political decentralization aims to give citizens and their elected representatives more
influence in making public decisions. It is typically associated with pluralistic politics and
representative government, but it may also contribute to democratization by giving
individuals, or their representatives, more influence in policy design and implementation.
Second, Administrative Decentralization. It strives to distribute power, responsibility, and
financial resources for the delivery of public services among many levels of government.
Third, Fiscal Decentralization. Financial accountability is a necessary part of
decentralization. To properly carry out decentralized obligations, local governments and
private groups must have adequate revenue, either generated locally or transferred from the
central government, as well as the authority to make expenditure decisions. Lastly,
Economic or Market Decentralization. Privatization and deregulation are the most
profound types of government decentralization since they shift responsibility for services

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from the public to the private sector. Privatization and deregulation are commonly, but not
always, followed by economic liberalization and market expansion policies.

Decentralized organizations include hotels, supermarkets, and fashion shops. For

instance, Marriot Hotel. It is hard for one person to focus on more than 100 branches spread
around the globe. When a single person controls a hotel chain, he focuses on implementing
decentralized structures that allow local hotel managers and assistants to make on-the-spot
decisions to handle customer problems, complaints, and requests.

Decentralization Towards Democratization

Decentralization gives the local governance system the opportunity to become

increasingly democratic. It helps position local officials to work for the benefit of the
community at-large. Without decentralization, the development of democratic local
governance is much more difficult.

As decentralization opens avenues for the development of democratic local

governance, local governments gain the authority, resources, and skills; make responsive
choices with citizen input; and operate effectively and accountably.

Democratic Local Governance

Democratic local governance is autonomous levels of local government, vested with

authority and resources, that function in a democratic manner. That is, they are accountable
and transparent, and involve citizens and the institutions of civil society in the
decision-making process. Democratic local governance looks beyond local government
administration and service delivery to institutions and structures that enable people to decide
things and do things for themselves. It emphasises the presence of mechanisms for fair
political competition, transparency, and accountability, government processes that are open to
the public, responsible to the public, and governed by the rule of law.

Motivating Forces for Democratic Decentralization

Forces that motivate policy change toward

democratic decentralization exist on a variety of levels
and in a variety of forms. Environmental conditions
are broad trends, such as the globalization of the
economy or urbanization, that elicit a decentralization
policy response. Institutional forces are crises or
changes in national institutions or systems, such as
national economic, fiscal, or political crises, for which
decentralization is an appropriate policy response. For
certain institutional forces, such as a national economic
or political crisis, decentralization can be an appropriate policy response at the institutional

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level. An individual behaves in a way that supports (or obstructs) democratic decentralization
when his/her individual interest is affected and he/she is rewarded for that behavior.
Individual interests are the interests of those that control the governmental structures and
other societal institutions. Depending on the level of the decision maker, institutional forces
might be the same as individual interest.

Characteristics of Democratic Decentralization

Central — Sub-national/Local (Decentralization)

1. Instituting Constitutional and Legal Reforms to Devolve Power

This includes passing of constitutional provisions and laws which devolve

authority to democratically elected agencies of government, and the subsequent
central government’s implementation of and support for those laws. It also
includes respect for human and civil rights and respect for the rule of law.

2. Increasing Local Governments’ Ability to Act

This includes revenue mobilization, competent budgeting and financial

management of those revenues, effective policymaking, enhanced skills and
professionalism, and merit-based recruitment and promotion. Local governments
also gain capacity for self restructuring and for initiating novel arrangements and
partnerships with the private and nongovernmental sector in order to respond to
new challenges.

Local/Sub-national —Citizens (Democratic Local Governance)

3. Increasing Local Government Accountability, Transparency, and Responsiveness

This characteristics include ethical standards and codes, performance measures,

open information, auditing, transparency, information systems, citizen oversight,
and responsiveness to citizen needs, opinions, and requests.

4. Enhancing the Role of Civil Society

Includes peaceful competition for political power and free and fair contested
elections of all key local government councilors, access of the public to
information and to all meetings, town meetings, citizen boards, and other
mechanisms for joint decisionmaking. It includes an environment that encourages
participation by all sectors of the population. Of particular concern is the
opportunity of the poor and of women to participate, individually or organized.

5. Improving the Quality of Life

Includes citizen empowerment, improved public service delivery, equity of

service access, improvements in economic status (especially for weak and

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 vulnerable groups), and sensitivity to gender roles and relations in planning and
implementing public policy.

Decentralization Towards Development in the Asia Pacific Region

Asian developments have specific similarities with the rest of the world, but they also
have some differences. The move from autocratic/dictatorial to democratic governments is
frequently preceded by decentralization (Cambodia, Indonesia, the Philippines, Thailand, and
Vietnam, among others). However, the reactions have been rather diverse, ranging from
almost total decentralization to direct regional development.

There are three salient characteristics of recent decentralization processes in

Asia Pacific Region. First, the formation of a regional system distinguishes the most
significant decentralization transformations (Indonesia, Japan, and the Philippines).
This is in line with most worldwide observations and provides a clear rationale: typical local
responsibilities are already assigned to local governments in almost all institutions. When
governments want to decentralize more, they must delegate so-called big area functions, such
as the majority of operations in education and health. These functions have a geographical
impact on somewhat large jurisdictions, such as regional administrations.

The second characteristic is expansion trends in a location, which are likewise

connected with high population increase. Asian countries are rapidly urbanizing, with large
megacities devouring a sizable share of the national population. The interaction between
urbanization and megacities—urban corridors and city-regions—has a number of
implications for decentralization. It demands the establishment of new governance structures,
such as metropolitan governments, or the amalgamation of municipal and regional
administrations. Urbanization needs major infrastructure investment to supply basic services,
as well as severe environmental externalities that must be managed locally. Finally, cities
must be given substantial tax bases to be financially self-sufficient, allowing
intergovernmental transfers to play a larger equalization role in the poorest rural areas.

Another distinctive feature of Asia is its minimal taxation demand. Low GDP
taxes are caused by structural reasons such as Asia's comparatively little role in personal
income taxation. A low tax burden is both a liability and an asset in the context of
decentralization. It is a source of fear since it shifts the current shortage of finances to local
government while also creating competition among levels of government. It is also beneficial
because many economic assets remain underutilized creating more room for tax increases as
long as governments and/or voters are ready to accept that decentralization may result in a
bigger public sector and a heavier economic obligation.

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 There positive impacts of decentralization on Asia Pacific Region’s public
services can be seen in terms of access, quality, efficiency, and administrative
innovation. First, Impact on Access. First, Impact on Access. Education, health, and
housing have all improved. Local governments began to invest more money on new schools
and health care facilities in places where these services were lacking. Childhood vaccination
coverage, prenatal care for women, and professional healthcare provider-assisted childbirths
have all increased significantly, resulting in an increase in the Infant Mortality Rate (IMR).
Female literacy has increased as educational institutions become more prevalent. There were
additional initiatives that aided the underprivileged, such as low-income housing.

Second, Impact on Quality. There is an improved health delivery service, increased

high quality education and poverty eradication programs. Local governments began to ensure
greater attendance of health personnel, establishing moral pressures for improved
performance, and prompt reporting of medicine shortages and other problems. The quality of
education has improved due to the monitoring of the school facilities, monitoring of the
attendance of the teachers and the students; and the local control over the management of
schools. Poverty eradication programs improved as a byproduct of increasing transparency
and engagement, which covered financing gaps and allowed for more accurate identification
of beneficiaries for various programs.

Third, Impact on Efficiency. There is an improved allocative efficiency of local units.

For instance, Local governments were more efficient than the national government in terms
of service delivery, particularly poverty reduction initiatives. Another instance, the cost of
building schools were reduced when the local government undertook on constructing it.

Fourth, Impact on Administrative Innovation. Decentralization also seeks to create

distinctive structures to meet the various local demands. In political terms, to combat
corruption and elite control of services, new structures and processes were put in place. In
terms of health services, The establishment of satellite clinics, the selective employment of
health staff, and the involvement of the private sector and volunteers all improved access to
health care. Rewarding accomplishments in the health and education sectors for social
recognition prompted local government units to take further innovative steps.

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 III. GOVERNANCE IN LOCAL COMMUNITIES

The Concept of Local Governance

In 1998, Dr. Ledevina Carino defined Local Governance as the way power and
resources are distributed within a specific territory, ranging from centralization to
decentralization. This concept focuses on the systems and methods operating at sub-national
levels, particularly at the local government level. Dr. Carino highlights the significance of the
structures and processes within local government units, all of which are shaped by how
power and resources are allocated among these various offices.

The Conceptual Perspectives on Local Governance

Today, numerous experts in the field of public administration consider local

governance as a crucial process that occurs at the community level. Essentially, local
governance justifies decentralized decision-making and emphasizes the active involvement of
the national government at the grassroots level. In 2006, Anwar Shah and Sana Shah
presented the five principles to describe the conceptual perspectives of local governance.

● Principle of Jurisdictional Design

- This principle emphasizes that when a government is more closely
aligned with its citizens, it tends to function more effectively. It
suggests that decisions should be made at the most local level of
government possible. In other words, concerns pertaining to a specific
local community should always be resolved by the residents of that
community, rather than by the national government, which may not
fully understand or cater to the needs and desires of the local
population.

● Principle of Fiscal Equivalency

- Argues that a political jurisdiction and area must be exact. In this way,
the free rider problem is overcome and the marginal benefit equals the
marginal cost of production, thereby, ensuring optimal provision of
public services. Essentially, it means that the size and population of a
local government should align with the benefits it can offer. Striking
the right balance between these factors will maximize the public
services that can be efficiently provided by the government.

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 ● Principle of Correspondence
- This concept aligns with the Principle of Fiscal Equivalency and
emphasizes the significance of matching jurisdiction with the
recipients of benefits. In simpler terms, it suggests that the group of
people who use a public good should also be the ones determining
how much of that good is provided.

● Principle of Decentralization
- The principle asserts that public services should be administered by
the governing body responsible for the smallest geographical area
that can fully grasp the advantages and disadvantages of offering
those services. This is because local governments are better equipped
to comprehend the needs and preferences of their residents. The
concept of making critical decisions at the most relevant local level is
expected to bring benefits to the entire community.

● Principle of Subsidiarity
- This idea suggests that when it comes to things like taxes, spending,
and regulations, it's generally better for smaller levels of government to
handle them, unless there's a strong reason for the higher levels of
government to step in. This principle emphasizes that local
governments have more control and power in making decisions.
However, it's important to note that this doesn't mean that local
governments are more important than the national government. The
principle of subsidiarity highlights the importance of local
governments having some independence while still acknowledging
that they ultimately answer to the national government.

Local Community Governance

Governance in local communities refers to the processes and structures in place to

manage and make decisions about local affairs. This can include elected representatives,
community meetings, and other forms of participation. Effective governance in local
communities is important for ensuring that the needs and priorities of residents are addressed
and that decisions are made in a transparent and accountable manner.

Local government in the Philippines is structured into three levels: provinces and
independent cities, component cities and municipalities, and barangays, which are all referred
to collectively as local government units (LGUs).

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Levels of Local Government

Autonomous Region

Autonomous regions are given more authority than other local governments. The
constitution restricts the establishment of autonomous territories to Muslim Mindanao and the
Cordilleras, although there is only one: the Bangsamoro, which superseded the Autonomous
Region in Muslim Mindanao (ARMM). A referendum in 1989 founded the ARMM. A vote
in the ARMM in 2001 reaffirmed the previous autonomous region's makeup and added
Basilan (save for the city of Isabela) and Marawi in Lanao del Sur. Despite its refusal to join
the ARMM, Isabela City remains a part of the province of Basilan. Another plebiscite in
2019 validated the ARMM's replacement with the Bangsamoro, as well as the addition of
Cotabato City and 63 barangays in Cotabato.

Each autonomous area has its own government. The ARMM had a regional governor
and a regional legislative assembly, similar to the national government's presidential system.
In a parliamentary system, the Bangsamoro will have a chief minister who reports to
parliament, with parliament appointing a wa'l, or ceremonial governor.

Provinces

The provinces are the highest level of local administration outside of the lone
autonomous region. Provinces are divided into cities and municipalities. The governor and
the Sangguniang Panlalawigan, or legislature, control a province.

Currently, there are 82 provinces, which are further organized into component cities
and municipalities. The National Capital Region's local government units, as well as
independent cities, are independent of any provincial authority. Each province is controlled
by an elected legislature known as the Sangguniang Panlalawigan and a governor who is also
elected.

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Cities and Municipalities

In the Philippines, municipal government is organized into three types: independent

cities, component cities, and municipalities (also known as towns). Mayors and legislatures,
known as the Sangguniang Panlungsod in cities and the Sangguniang Bayan in
municipalities, control cities and municipalities. As of July 8, 2023, there are 149 cities (33
highly urbanized, 5 independent component, 111 component) and 1,485 municipalities
encompassing the country.

Barangays

Every city and municipality is divided into barangays, the smallest of the local
government divisions. Barangays can be further subdivided into sitios and puroks, although
leaders in such divisions are not elected in official elections overseen by the national
government. The executive of a barangay is the Punong Barangay or barangay captain, and
the legislature is the Sangguniang Barangay, which is made up of the barangay captain, the
Barangay Kagawads (barangay councilors), and the SK chairman. The SK Chairman is the
head of the Sangguniang Kabataan, which is made up of one SK Chairperson and seven SK
Kagawads, and also leads the youth assembly, the Katipunan ng Kabataan.

The election shall elect the barangay captain or the chief executive of the barangay,
and seven of eight members of the Sangguniang Barangay, or barangay council, in 42,027
barangays throughout the country.

Evolution of Local Government in the Philippines

The cities, municipalities, and provinces of today evolved from the barangays of
pre-Spanish times, the pueblos and cabildos of the Spanish colonial days and the townships
of the American regime.

The Barangays

The pre-Spanish barangays were the first political and social organizations of the
Philippines. A barangay was a settlement of some 30 to 100 families and a governmental unit
in itself.

Spanish Conquest and Centralism

The absence of cohesiveness among the warring barangays aided the Spaniards in
their conquest. The Datus gradually lost their abilities. Pueblos (municipalities), cabildos
(cities), and provincias (provinces) were established by the Spaniards. The provinces were

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established "for the convenience of administration and constituted the immediate agencies
through which the central government could extend its authority on numerous villages."
Barrios were established in place of barangays, and the Datus were transformed into cabezas
de barangay, with the only remaining function being tax collection for the Spanish
government.

Local Governments during the First Philippine Republic

The necessity of local governments was acknowledged by Gen. Emilio Aguinaldo and
Apolinario Mabini in their First Philippine Republic government program. Filipino founders
understood that "if a strong and enduring Filipino nation was to be established, it must be
able to maintain itself in all emergencies, and the whole political fabric must be well founded
on an efficient system of local governments."

Title XI, Article 82 of the Malolos Constitution included a distinct article on local
government. The beginning section stated explicitly that "the organization and powers of the
provincial and municipal assemblies shall be governed by their respective laws."

Local Government during American Regime

The Americans made very little, if any, contribution to the establishment of local
autonomy. Indeed, the national-local connection reverted to the strong centralism of the
Spanish colonial administration.

The Commission's blueprint for town organization called for a President to be elected
viva voce by town citizens with the Commanding Officer's permission. His responsibilities
included the construction of a police force, the collecting of taxes, the enforcement of market
and sanitary standards, the establishment of schools, and the provision of lighting facilities.

The Commonwealth and Centralism

During the Commonwealth period, the forms and patterns of local governance in the United
States remained largely unchanged. The only significant changes were the transfer of central
control from the Executive Bureau to the Department of Interior and the establishment of new
chartered cities.

President Manuel L. Quezon, the key figure of government during this time, even fought
against city autonomy, implying that "under the unitary system of government which exists in
the Philippines, the national chief executive does and should control all local offices.”

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Local Governments under the Republic

Local governments were just political and administrative subdivisions of the central
government. The national government holds and exercises the majority of nominal and real
powers. Local units, on the other hand, had some autonomy.

During Marcos' dictatorship (1972-1986), a Ministry of Local Government was

established to revitalize provincial, municipal, and barangay governments. However, Marcos'
true goal was to construct lines of authority that bypassed provincial administrations and led
directly to Malacaang. All municipal politicians were subject to Marcos, who had the
authority to appoint or remove any provincial governor or town mayor.

Local Governments at present

Following the People's Power Revolution, the Aquino administration intended to

replace all municipal officials who had served Marcos. Corazon Aquino handed this
responsibility to Aquilino Pimentel, a political friend. Pimentel appointed individuals to lead
local governments across the country. Under the new constitution's transitory articles, local
authorities elected in 1988 were to serve until June 1992. Following that, periods of office
would be three years with a three-term restriction.

The Local Government Code 1991 (R.A. 7160) was signed into law on October 10,
1991. This code established genuine and workable local autonomy by devolving some
authorities from the national government to local governments.

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 IV. DECENTRALIZATION AND LOCAL AUTONOMY

Decentralization

Before deciding whether projects or programs should promote restructuring of

financial, administrative, or service delivery systems, it is important to thoroughly assess the
many notions that the word "decentralization" encompasses in every given country. It is a
complicated, comprehensive notion that refers to the transfer of power and responsibility for
public duties from the central government to subsidiary or essentially autonomous
governmental institutions and/or the private sector.

There are 4 forms of decentralization. One of these is Political decentralization which

tries to increase the power of citizens or their elected representatives in influencing societal
decisions. The second type of decentralization is Administrative, which aims to re-allocate power,
responsibility, and funding for delivering public services among various levels of government.
Then Fiscal decentralization, which is its fundamental principle. Finally, Economic
Decentralization which is the most complete forms of decentralization from a government's
perspective are privatization and deregulation because they shift responsibility for functions from
the public to the private sectorEffective decentralized operations require local governments and
private groups to have a sufficient amount of funds, whether generated locally or transferred from
the federal government, as well as the power to decide how much money to spend.

Decentralized administration training for both national and local authorities is usually
crucial to the success of decentralization. In order to plan, finance, and manage decentralized
operations, local governments, private businesses, and non-governmental organizations
frequently need technical support.

Local autonomy

On the other hand, Local autonomy refers to the degree of self-governance and
decision-making authority granted to local government units within a country, such as
provinces, cities, municipalities, and barangays in the Philippines. It allows these entities to
manage their affairs independently to some extent.

Local autonomy is vital as it decentralizes power, allowing local communities to

address their unique needs and priorities. It promotes participatory democracy, better public
service delivery, and local economic development. In decision-making, local government
units in the Philippines have the authority to make decisions related to local policies, budget
allocation, and development projects within their respective jurisdictions, provided they
adhere to national laws. While in governance, local autonomy in the Philippines is governed
by the Local Government Code of 1991, which outlines the powers and responsibilities of
local government units. There are different levels of autonomy granted to provinces, cities,
municipalities, and barangays.

18
 An example of this is the Philippines. Its provinces have substantial autonomy in
areas like health, education, agriculture, and infrastructure. Cities are granted greater
autonomy and can make decisions on a wider range of issues. While municipalities handle
local governance at a smaller scale, focusing on community development. Finally, barangays,
which are the smallest units, are responsible for grassroots governance. Local autonomy is a
crucial aspect of governance in the Philippines, contributing to the country's diverse and
decentralized political landscape.

Decentralization and Local Autonomy

The journey through the intricacies of decentralization and local autonomy in the
Philippines has been one marked by both successes and challenges. As we conclude this
reflection on the topic, it is evident that decentralization holds immense potential for
empowering local communities and fostering a more inclusive and responsive governance
structure. However, it is equally apparent that realizing these ideals is not without its hurdles.

One key takeaway from our exploration is the crucial role of public participation in
decentralization and local autonomy. It is the active involvement of citizens and civil society
organizations that can safeguard against corruption, hold local officials accountable, and
ensure that policies and decisions align with the needs and aspirations of the people.
Encouraging public participation, however, requires a concerted effort to build civic
awareness and engage communities in the decision-making process. It necessitates
transparency in government actions and the establishment of mechanisms for citizens to voice
their concerns and suggestions effectively.

As we look to the future, it is clear that decentralization remains a fundamental aspect

of Philippine governance. To harness its full potential and address the challenges at hand,
several recommendations come to the fore. Firstly, there must be a continued effort to
strengthen the capacity of local governments, especially in resource-poor regions. Capacity
building programs, technical assistance, and knowledge sharing can go a long way in
ensuring that all local authorities can exercise their autonomy effectively. Secondly, robust
mechanisms for transparency and accountability must be put in place. Anti-corruption
measures, financial audits, and citizen watchdog groups can help curb corruption and
mismanagement, restoring public trust in the decentralization process. Thirdly, the
government should reevaluate resource allocation mechanisms to address regional disparities.
A more equitable distribution of resources can bridge the development gap between affluent
and disadvantaged areas. Lastly, a comprehensive public education campaign should be
launched to raise awareness of the importance of decentralization and local autonomy. When
citizens understand the benefits and responsibilities associated with these principles, they
become active participants in their own governance.

19
 Decentralization and local autonomy are integral components of Philippine
governance that hold the promise of empowering local communities and fostering inclusive
development. While challenges persist, they are not insurmountable. By addressing issues of
corruption, capacity building, resource distribution, and by promoting active public
participation, the Philippines can navigate the path towards stronger local autonomy.
Decentralization is not a destination but an ongoing journey. It requires dedication,
adaptability, and a shared commitment to the principles of subsidiarity and participatory
governance. As the Philippines moves forward, it can draw inspiration from its successes and
learn from its challenges to create a more responsive, equitable, and empowered nation that
truly reflects the aspirations of its diverse communities.

20
 V. REFERENCES
● Caraga, A. C. (2015, November 8). Reviewer on Local Government Law. Alberto
Caraga.Retrieved from
https://www.albertocagra.com/wp-content/uploads/2016/04/Local%20Government%2
0Reviewer.pdf
● Labitad, M. (2016, April 25). Nature and State of Local Government. Prezi.Retrieved
from https://prezi.com/ecvddfr6okcl/nature-amp-state-of-local-government/
● Department of Budget and Management. (2018).Sources of Income of the Barangay.
Department of Budget and Management. Retrieved from
https://www.dbm.gov.ph/wp-content/uploads/2012/03/BB-2.pdf
● Romero, S. (2022, December 27). How to deal with neighborhood karaoke.
Inquirer.Net.Retrieved from
https://opinion.inquirer.net/159837/how-to-deal-with-neighborhood-karaoke
● Bihasa, C.R.(2022).Introduction to Public Administration(2nd ed.).Books Atbp,
Publishing Corp.
● PeopleHum (2023) What is Decentralization? Retrieved from
https://www.peoplehum.com/glossary/decentralisation
● Admin. (2020, October 5). What is decentralisation: Meaning, definition, example.
BYJUS.Retrieved from
https://byjus.com/commerce/what-is-decentralisation/#:~:text=Example%20of%20De
centralisation,an%20example%20of%20a%20hotel.
● Ciesin (n.d) Different Forms of Decentralization. Retrieved from
http://www.ciesin.org/decentralization/English/General/Different_forms.html
● ADB (n.d) DECENTRALIZATION AND PUBLIC SERVICE DELIVERY IN ASIA.
Retrieved from
https://www.adb.org/sites/default/files/publication/31237/ewp-389_2.pdf
● OUP (2013) Decentralization and delivery of public services in Asia. Retrieved from
https://academic.oup.com/policyandsociety/article/32/1/7/6420742#334461370
● Decentralization Thematic Team (n.d) Different Forms of Decentralization. Retrieved
from http://www.ciesin.org/decentralization/English/General/Different_forms.html
● Barnett, C. C. (n.d.). Democratic decentralization - united states agency for
international ... https://pdf.usaid.gov/pdf_docs/pnada635.pdf
● Technical Publication Series. (n.d.). Center for Democracy and Governance - United
States Agency for ... https://pdf.usaid.gov/pdf_docs/pnach301.pdf
● The Constitution of the Republic of the Philippines | GOVPH. (n.d.). Official Gazette
of the Republic of the Philippines.
https://www.officialgazette.gov.ph/constitutions/1987-constitution/
● Joselito Guianan Chan, Managing Partner, Chan Robles and Associates Law Firm.
(n.d.). THE LOCAL GOVERNMENT CODE OF THE PHILIPPINES - CHAN
ROBLES VIRTUAL LAW LIBRARY. https://chanrobles.com/localgov3.htm
● Commission on Elections (August 18, 2015). "COMELEC Resolution No. 9982".
Republic of the Philippines – Commission on Elections. Retrieved May 23, 2017.

21
● Philippine Social Science Council. (1991). Decentralization and Local Autonomy.
Philippine Journal of Public Administration, 3(7). Retrieved from
https://www.pssc.org.ph/wp-content/pssc-archives/Philippine%20Journal%20of%20P
ublic%20Administration/1991/Num%203/07_Decentralization%20and%20Local%20
Autonomy.pdf
● Local governments in the Philippines. (n.d.).
https://www.slideshare.net/NeilDagohoy/local-governments-in-the-philippines

22
 Pamantasan ng Lungsod ng Maynila

School of Government

SY. 2023-2024

Local & Regional Governance:

Organization, Structures, Powers, and Personnel system

Submitted by: Group 2

APOLO, Francesca Mae

CARUBIO, Reginah Joi

CELERIO, Reginald

GUARDA, NJ Nicole

MACAVINTA, Julianna Marie

MARIANO, Rafael

MARTINEZ, Kyla Veronica

Submitted to: Prof. Malanum

Date: Sept. 23, 2023

1
 TABLE OF CONTENTS

I. Local Government Reorganization for greater Administrative Efficiency.................... 3

a. Local Government Efficiency

b. Capacity and Efficiency of Local Government

c. Philippines form of Reorganization

II. Managing Change in Local Government ...................................................................... 5

a. Overview

b. Importance of LGUs transformation

c. Examples of the transformation of LGUs

d. Outcome of the transformation of LGUs

III. Human Resource Development and Management in Local Governments.................... 9

a. House Bill 2973

b. Importance & Objectives of Human Resources in LGUs

c. Key Persons

d. Recruitment Process

e. Types & Kinds of Appointments

f. Compensation System for LGU Officials and Employees

g. Performance Management System for LGU

h. Accountability of Local Officials and Employees in LGU

IV. Revitalizing the Local Civil Service .................................................................................24

a. Introduction

b. History of Reforms of Local Civil Service

c. Recommendations

d. Conclusion

IV. Sources......................................................................................................................... 33

2
 I. Local Government Reorganization for Greater Administrative Efficiency

The rearranging or restructuring of administrative organizations within a government

is referred to as public reorganization. It entails eliminating redundant and overlapped

governmental tasks as well as abolishing, merging, or creating new governmental agencies. It

is a bureaucratic response to the convergence of administrative objectives established by an

administration in relation to the political currents and reforms having an effect on the

government. The phrase has been linked to ideas like rightsizing, reengineering, and

rationalization.

a. Local Government Efficiency

The local government's primary goal is to guarantee the populace's use of and access

to public amenities. Social services, public safety, waste collection, infrastructure, and

administrative services are some of these public services. Local governments are

required to provide essential services in order to ensure that each individual has a

3
 better life. This is because of decentralization, restrictions on public spending and

debt, and rising public service demand.

b. Capacity Of Local Government

Local government resource diversity is referred to as local government capacity. The

primary resources of the government are people, money, knowledge, and actual

technical assets. Factors relating to the capability of the government, such as the

people capacity, public service experience, and local governments' financial and

technical support, may have an impact on the tendency to provide public service

efficiently and effectively. According to this viewpoint, establishing a separate service

agency or unit with a professional staff and funding designated for particular tasks

may promote service specialization and provide managers more freedom to improve

the service's effectiveness and efficiency. Better outcomes and more individualized

and accessible services will follow from this.

c. Philippines form of Reorganization

Any government must first overhaul the bureaucracy and civil service. Each

government has unique aims and objectives, which are often detailed in speeches like

the State of the Nation Address (SONA), which the president of the Philippines

delivers every year. The president must inform the public about the government's

objectives, other policies, such as reform suggestions, and the state of the economy,

politics, and society as required by the constitution. Administrative reform is a

strategy used by the government to enhance interaction and communication among

agencies, social groups, and the government and this is part of the reorganization of

the Philippines .

4
II. Managing Change in Local Government

Overview

The transformation of local government units (LGUs) in the Philippines is highlighted

as a critical endeavor with far-reaching implications. These LGUs faced a myriad of

challenges, from poverty and social issues to environmental threats and bureaucracy. LGUs

are the frontline agencies responsible for delivering public services and driving development

in their respective areas. Therefore, their transformation directly impacts the well-being and

quality of life of citizens.

Importance of LGU transformation and managing the changes.

Sense of pride
- Building a strong culture is important for managing and maintaining change,

according to leaders in almost all LGUs. As a result, leaders work to promote a

culture of pride, hard work, professionalism, and continual progress among LGU

personnel. There is a need for cultural transformation outside of the LGU as well. It is

crucial to influence their inhabitants' attitudes and behaviors.

Examples:

● The Department of Social Welfare and Development (DSWD) and the

The Driving Force of Change: Vision, Leadership, and Citizen Engagement:

The transformation of LGUs was catalyzed by three key elements: vision, leadership,

and citizen engagement. These components worked in synergy to bring about

positive change.

5
 ○ Vision: LGUs articulated a clear vision for change, typically initiated by local

chief executives (LCEs) like mayors or governors. This vision served as a

guiding force, motivating and directing transformation efforts.

○ Leadership: Leadership emerged as a pivotal force, responsible for both

initiating and sustaining transformation. Effective leaders exhibited qualities

such as vision, competence, ethical behavior, and political will. They were

also risk-takers, willing to uphold the common good.

○ Citizen Engagement: LGUs actively engaged citizens through various

strategies, including consultative planning, public hearings, feedback

mechanisms, volunteer involvement, and the formation of sectoral

organizations and alliances. These strategies aimed to counter apathy and

promote active participation among the community.

Examples of the transformation of LGUs

● Infrastructure Development - The construction of farm-to-market roads in rural

LGUs, facilitated by local leaders and community volunteers, improved transportation

access for farmers. This led to increased agricultural productivity and economic

growth in these areas.

● Transparency and Accountability - LGUs implemented systems for results-based

performance management, ensuring that government services were delivered

efficiently and transparently. Citizens could track the progress of projects and hold

their local governments accountable for results.

6
 ● Community-driven projects- LGUs engage neighboring barangays (villages) in

infrastructure projects, such as public housing, social services, transportation services,

enrichment programs, community work, volunteer programs etc…

Poverty Reduction Programs - targeting poverty reduction programs, such as livelihood

projects for marginalized communities.

Examples: 4P's, social pensions, educational assistance.

Continuity Through Ordinances and Policies - LGUs ensured the sustainability of

transformation initiatives by enacting ordinances and executive orders

Examples: The Seal of Good Local Governance (SGLG) Program is an annual recognition

program in the Philippines initiated by the Department of the Interior and Local Government

(DILG). It aims to assess and incentivize LGUs to improve their performance in various

governance areas.

SGLG is like a "good job" award for LGUs, such as cities or towns, in the Philippines. It's

given to LGUs that are really good at running their local governments and providing services

to their communities. LGUs have to meet certain criteria or standards in areas like

transparency, accountability, and public service. If they meet these criteria, they get the

SGLG award as recognition for their excellent work.

Outcomes of Transformation in LGU

The changes indicated by the various LGU suggested shared outcomes relating to

local governance (transparency and democracy), quality of life (social equity), and

citizenship (sense of pride), even though the LGUs' contexts and priorities varied.

7
Transparency

- Government services were provided successfully and honestly thanks to the

implementation of systems for results-based performance management by LGUs. One

of these is integrity, the endeavor of LGU’s employees to grow and keep a firm

economically improving.

Democracy

- By maintaining the community's unity, LGU leaders were able to guarantee the

success and longevity of their reform programs. To counteract apathy and encourage

citizen engagement, local governments have implemented various strategies.

Social Equity

- The LGU has shown fairness to all who need peace and order in the community.

● ir Social Welfare Programs.

The Department of Social Welfare and Development (DSWD) is the primary government

agency mandated to develop, implement and coordinate social protection and

poverty-reduction solutions for and with the poor, vulnerable and disadvantaged.

● Pantawid Pamilyang Pilipino Program (4Ps)

Pantawid Pamilyang Pilipino Program or 4Ps is the national poverty reduction strategy and

human capital investment program that provides conditional cash transfer to poor households

for a maximum period of seven (7) years, to improve the health, nutrition and education

aspect of their lives.

8
III. HUMAN RESOURCE DEVELOPMENT IN LOCAL GOVERNMENT UNITS

9
10
Importance of Human Resources

● Human Resources Management is an essential component of organizational

management because it is responsible for coordinating an organization's human

resources with its overall goals and business strategy. It ensures that the organization

has the appropriate personnel with the requisite training and expertise to satisfy its

demands, a well-managed HR department may aid in the achievement of

organizational objectives.

a. Productive recruitment - productive recruiting means you get to recruit qualified and

skilled candidates for an open position. When scanning applicants, recruiters look for the

skills, talent, and experience an applicant has that is relevant to the position they are applying

for.

b. Employee training - training is important for it enhances the skills and talents of each

employee which will lead to the improvement of the overall organization. Not all employees

and supervisors are skilled at the start, they still need regular training so that they won’t be

stagnant.

c. Compensation and benefits - creating and overseeing competitive and

employee-welcoming compensation and benefits plans. This covers pay, incentives, health

coverage, retirement programs, and additional perks.

d. Compliance - Making sure the LGU complies with all applicable employment rules and

regulations. This includes keeping track of personnel information, guaranteeing workplace

security, and fostering an environment devoid of discrimination.

11
Objectives of Human Resource in LGUs

● Productive Recruitment & Employee Development

- In order to better serve the constituents, LGUs are in need of highly skilled and

capable people to contribute to the community. Without these, public services won’t

be delivered and resources (funding) would be wasted.

Productive Recruitment: To ensure that vacant positions are filled by qualified

applicants, LGUs adopt a merit-based system and the Civil Service Commission

(CSC) oversees the appointment of officials to their positions.

Employee Development: Each employee starts from the beginning, therefore

are in need of continuous training to better serve the public. Times are always

a-changing and processes and systems should regularly be updated in order to catch

up with trends and pressing issues.

● Effective Governance & Public Service Delivery

- The role of LGUs itself is to serve the public better and provide basic necessities

ranging from healthcare, basic education to safety and security. For the well-being of

local communities to thrive, effective governance and service delivery is of utmost

importance.

Effective Governance: To ensure that the elected officials know what their

community needs and be able to deliver it.

Quality Public Service: ensures that public services are delivered in a timely

and effective manner, meeting the needs of the constituents.

12
 ● Transparency & Accountability

- Transparency and Accountability are a must in public institutions to maintain public

trust, most especially the government.

Transparency: The government should always be transparent with their

activities, especially where the funds are allocated to, since government activities are

funded by the people’s taxes.

Accountability in Preventing Corruption: All officials are subject to public

scrutiny and should face the corresponding repercussions. This is to deter corruption

and transparency & accountability are served to the table.

● Compliance with Laws & Regulations

- LGUs are subject to various laws, regulations, and mandates that govern their

operations. Compliance with these legal requirements is essential for ensuring that

LGUs operate within the bounds of the law. These are regulated by the Civil Service

Commission (CSC)

Integrity: LGUs should comply with the rules and regulations mandated to

maintain their legal integrity.

Ethical Governance: To ensure that their governance is still within the ethical

bounds.

Key Players

1. Presiding Officers - Appoints staff and officials in the Office of the Sanggunian

2. Local Chief Executive (LCEs) - Responsible for overseeing the overall activities of

the LGUs, its projects, funding, resources, etc.

13
 3. Human Resource Management Office (HRMO) - Assists the LCE in ensuring that

Civil Service rules and regulations are properly implemented and followed.

4. Civil Service Commission (CSC) - provides comprehensive guidelines and

regulations on recruitment, selection, and appointment processes in LGUs.

Implements rules, monitors if the LGUs comply, conducts the Civil Service Exams,

and Auditing.

5. Local Sanggunian Members - legislates policies and ordinances of the LGU and

their respective territories.

6. National Agencies and Stakeholders - Stakeholders include the CSC, DILG, etc.

They provide guidance and support for the undertakings of the LGU.

Recruitment Process

1. Recruitment: The first step of the employment procedure. Covers staffing needs, job

vacancy requirements, publication/posting of job vacancies, and lastly, screening and

interview.

a. Identification of Job vacancies

b. Posting of vacancy

c. Submission of Applications

d. Screening & Shortlisting

e. Interview

2. Selection: The screening of applicants is done by the Personnel Selection Board

(PSB). They evaluate if the candidates are fit for the job. The HRMOs are also present

in this step.

a. Shortlisting

b. Evaluation & Ranking

14
 c. Publication of Eligibility List

d. Selection Board

3. Appointment: The final step of the employment process. This is the transition period

from the application period to actually assuming office.

a. Issuance of Acceptance letter

b. Oath of Office

c. Probation Period

d. Termination or Regularization

Types and Kinds of Appointment of Public Officials in LGUs

Type of Appointment Definition

1. Temporary/Probationary An individual is hired on a trial basis for a

specified period, typically to assess their
performance, suitability, and ability to meet
the requirements of the position.

2. Permanent Granted to individuals who have

successfully completed the probationary
period, passed the civil service examination,
and met all the qualifications for a particular
position. Permanent employees have
security of tenure and enjoy civil service
benefits and protection.

3. Substitute Made to fill a vacant position on a

short-term basis, typically for a limited
duration or until a regular or permanent
appointee can be hired or appointed.

4. Provisional Given to individuals who do not meet the

minimum qualifications required for a
permanent appointment but are considered
temporarily fit to perform the duties of the
position

15
Kinds of Appointment Definition

1. Casual Typically made for emergency or short-term

employment needs within LGUs.
Individuals appointed on a casual basis are
often hired to address temporary or
immediate requirements.

2. Job Order Refers to the hiring of a worker for piece

work or intermittent job of short duration
not exceeding six months

3. Contractual Typically given for specialized positions or

projects that require specific expertise.
Individuals under contractual appointments
work under a contract and are not
considered regular government employees.
Their employment is based on the terms and
conditions specified in the contract.

4. Elective Positions that are filled through the electoral

process. Constituents, the public elect their
desired candidate. This position usually has
a fixed term or tenure.

Competency-Based Recruitment and Qualifications Standards

- The CSC aims to integrate competencies in human resource systems of government

agencies, starting with recruitment.

- A competency is often defined as a set of observable, measurable, and vital skills,

knowledge, and attitudes that are translations of capabilities deemed essential for

organizational success.

1. Competencies serve as objective guides in the assessment of candidates; hence it

improve accuracy in assessing a candidate’s fitness for a particular job.

16
 2. Competency-based recruitment minimizes hiring errors as it helps prevent

interviewers and selectors from assessing interviewees on the basis of characteristics

that are not relevant to the job or from making hasty decisions.

3. Competency-based recruitment leads to a standardized or structured selection process

since the same metrics are used to assess all applicants to the same position.

4. Competency-based recruitment provides clarity for the recruiters and candidates as

well about the requirements for the vacant position to be filled.

(https://www.csc.gov.ph/)

(https://www.csc.gov.ph/)

Management in Local Governments

- Management in local governments refers to the processes, strategies, and activities

involved in running and overseeing the affairs of a municipality, city, or local

17
 administrative body. It encompasses various functions and responsibilities aimed at

efficiently providing public services, maintaining infrastructure, and addressing the

needs of the local community.

The Compensation System for Local Officials and Employees

● The Local Government Code of 1991, also known as Republic Act No. 7160, is a

Philippine law that governs the organization and operation of local governments in the

Philippines. The Code requires that the salary rates, allowances, benefits, and

incentives of local government officials and employees should be comparable to those

in the national government service, taking into account the financial capability of the

local government unit (LGU).

In the Philippines, the compensation system for local government officials and employees is

governed by various laws, rules, and regulations. Here is the key components of the LGU

compensation system:

1. Salary Grades- Local government employees are categorized into different salary grades

based on their position, responsibilities, and qualifications. The salary grade determines their

basic pay. For example, a Barangay Captain (village chief) may fall under Salary Grade 14,

while a Municipal Mayor may fall under Salary Grade 27.

2. Basic Salary- The basic salary is the fixed amount an employee receives monthly. It varies

depending on the position and salary grade.

18
For instance, as of my last knowledge update in September 2021, a teacher with Salary

Grade 11 might have a basic monthly salary of around PHP 22,000.

3. Allowances- Local government employees often receive various allowances, which can

include hazard pay, subsistence allowance, and cost of living allowance. For instance,

teachers in remote areas may receive a hardship allowance to compensate for the challenging

work conditions.

4. Performance-Based Bonuses- Bonuses can be awarded based on performance. For

instance, the Performance-Based Bonus (PBB) is given to government agencies and their

employees for achieving performance targets. This bonus can vary from year to year and is

subject to specific criteria.

5. Salary Standardization- The Salary Standardization Law (SSL) aims to standardize and

upgrade the compensation of government employees, including those in local government

units. It provides for periodic increases in salaries and benefits.

Performance Management System in a Local Government Unit

is a vital component of governance, particularly for Local Government Units (LGUs) in the

Philippines. It serves as a structured framework that enables LGUs to plan, monitor, evaluate,

and improve their performance in delivering public services and promoting development.

19
1. Performance Planning- This involves setting clear objectives and targets for the

LGU. It includes defining key performance indicators (KPIs) and aligning them with

the LGU's goals and priorities.

a. Example:The LGU aims to improve the quality of education in local public

schools. The LGU develops a performance plan that includes increasing the

budget for textbooks, hiring more qualified teachers, and implementing

teacher training programs to enhance the quality of education and raise

academic standards.

2. Performance Monitoring- Regularly tracking and monitoring progress toward the

established KPIs and goals. This can involve collecting and analyzing data related to

service delivery, finances, and other relevant areas.

a. Example: A municipality in the Philippines has several public schools. The

LGU can monitor the performance of these schools by tracking metrics such

as student enrollment, dropout rates, and standardized test scores.The LGU

notices a significant increase in the dropout rate in a particular school. To

address this issue, they allocate additional resources for after-school tutoring

programs and track improvements in dropout rates over time.

3. Performance Evaluation- Assessing the performance of individual employees,

departments, and the LGU as a whole. This can be done through periodic evaluations,

self-assessments, and peer reviews.

a. Examples: A province aims to improve the quality of education in its public

schools. The LGU can evaluate the performance of schools by analyzing

student performance data, such as standardized test scores. They can also

20
 assess teacher qualifications, classroom conditions, and the availability of

learning materials. Performance evaluation can help identify schools that need

additional support and resources.

4. Feedback and Reporting– Providing feedback to employees and departments based

on their performance evaluations. Creating reports to communicate the LGU's overall

performance to stakeholders and the public.

a. Example: LGUs often oversee public schools in their jurisdictions. They can

establish a system for schools to report their performance regularly. For

instance, a school principal might submit monthly reports on student

attendance, academic achievements, and infrastructure needs to the LGU. The

LGU can provide feedback and support to help the school address any issues

and improve overall performance.

5. Employee Development- Investing in the skills and capabilities of LGU employees

to enhance their ability to meet performance goals. This can include training and

professional development programs.

a. Example: LGUs can organize training workshops for teachers in public

schools within their jurisdiction. These workshops can focus on modern

teaching methodologies, integrating technology into classrooms, or addressing

specific subject areas such as STEM (Science, Technology, Engineering, and

Mathematics) education. For instance, an LGU could partner with the

Department of Education to conduct a series of workshops on using

educational apps for interactive learning.

21
Accountability of Local Officials and Employees in Local Government Units

It is essential for the proper functioning of these government entities and the delivery of

public services. Accountability mechanisms are in place to ensure that local officials and

employees fulfill their duties and responsibilities effectively and transparently.

1. Election and Appointment- Local officials, such as mayors, vice mayors,

councilors, and barangay captains, are elected by the people, while some LGU

employees are appointed. The electoral process allows residents to hold these officials

accountable through their votes.

a. Example: In a municipality, the incumbent mayor is up for re-election. During

the campaign, the residents evaluate the mayor's performance in terms of

infrastructure development, health services, and disaster preparedness. They

decide to either re-elect the mayor or choose a new candidate based on their

assessment of the incumbent's performance.

2. Local Government Code- The Local Government Code of 1991 (Republic Act 7160)

outlines the powers, functions, and responsibilities of LGU officials and employees. It

also establishes accountability mechanisms and procedures for local governance.

a. Example: A city council in the Philippines drafts and approves a

Comprehensive Land Use Plan (CLUP) in accordance with the Local

Government Code. The CLUP outlines land zoning regulations, ensuring

accountable and transparent land use decisions within the city.

22
3. Ombudsman- The Office of the Ombudsman has jurisdiction over local officials and

employees. It can investigate complaints of misconduct, graft and corruption, and

other offenses committed by LGU officials and employees. The Ombudsman plays a

crucial role in ensuring accountability and transparency at the local level.

a. Example: A concerned citizen files a complaint with the Office of the

Ombudsman alleging corruption by a barangay captain who has been

misappropriating barangay funds. The Ombudsman launches an investigation,

and if found guilty, the barangay captain may face penalties or even removal

from office.

4. Civil Service Commission (CSC)- The CSC oversees the recruitment, selection, and

promotion of LGU employees. It also establishes rules and regulations for the conduct

and discipline of civil servants, including those in LGUs.

a. Example: The Civil Service Commission conducts a competitive examination

to fill a vacant position for a local government accountant. Candidates are

evaluated based on their qualifications, skills, and experience, ensuring a

transparent and merit-based hiring process.

5. Local Legislative Oversight- Local legislative bodies, such as city or municipal

councils, exercise oversight over LGU officials and employees. They can conduct

inquiries, hearings, and investigations into the actions and decisions of local officials

and employees.

a. Example: A municipal council becomes aware of complaints from residents

about a local government employee who has been neglecting their duties. The

23
 council conducts a series of hearings and investigations to determine the

veracity of these claims and can recommend disciplinary action if necessary.

6. People's Participation- LGUs are encouraged to engage their constituents in

decision-making processes through mechanisms like participatory budgeting and

consultation. This encourages citizen involvement and holds officials accountable to

the people they serve.

a. Example:A barangay in a coastal town wants to allocate funds for a new

fishing cooperative project. The barangay council organizes a participatory

budgeting process where residents can propose, discuss, and vote on various

projects. This ensures that community members have a say in how their funds

are allocated and holds the barangay council accountable for transparent

decision-making.

IV. REVITALIZING THE LOCAL CIVIL SERVICE

I. INTRODUCTION

Civil Service Reform in the Philippines is a key initiative aimed at enhancing the

governance of the country. The Philippines' Civil Service System is a legacy of its colonial

history under Spain and the United States of America. The Spanish period they established a

centralized form of governance, while the American period introduced democratic ideals and

practices into the bureaucracy. These influences are still evident in today’s civil service

system in the Philippines.

On January 20, 1899, the Schurman Commission or the First Philippines

Commission built the foundation for the Philippines' civil service. The goal was to develop

24
criteria for hiring Filipinos in the government. As the commission took its first step, what

they did was to ensure the employment of the native Filipinos in April 1899. The Civil

Service has continuously developed and flourished over the years in a variety of ways

continuously strengthening the governance of the country.

II. HISTORY OF REFORMS

On September 19, 1900, Act No. 5 formed the foundation for the merit-based civil

service system. This was released by the Second Philippine Commission and is called "An

Act for the Establishment and Maintenance of an Efficient and Honest Civil Service in the

Philippines Island." By this, the appointment and promotion of the government positions

would proceed over merit and examination.

The Bureau of Civil Service was established in the Philippines on November 31,

1900, marking a significant shift in civil service management. The Philippine Commission,

under American influence, preferred to appoint American civilians or honorably discharged

military personnel to lead various agencies. This emphasized the importance of careful

selection in civil administration.

On June 19, 1959, the Philippines entered a new era of civil service with the approval

of Republic Act No. 2260 by President Carlos P. Garcia. This progressive law provided

benefits such as career development, incentive awards, performance rating and promotion

plans, and a mechanism for complaints and grievances. It aimed to enhance the efficiency and

morale of the civil service system, marking a significant step in its evolution.

The civil service system still has several flaws despite these attempts. Up until the

1970s, the civil service had several flaws, including slow recruitment, examination, and

25
placement times, poor employee discipline, an inability to recruit people of high caliber,

widespread use of the spoil system, and rampant graft and corruption.

Presidential Decree No. 1, implemented by President Ferdinand E. Marcos on

September 24, 1972, introduced the Integrated Reorganization Plan (IRP). This marked a

significant administrative reform in the Philippines, aiming to decentralize and reduce

bureaucracy, standardize departmental organization, and strengthen the merit system. The

IRP transformed the Civil Service Commission into a three-member body and established the

Career Executive Service. Two purges in 1973 and 1975 removed thousands of government

employees, signaling intolerance for misconduct. This period saw the bureaucracy becoming

more subservient than ever in Philippine history.

The bureaucracy in the Philippines is generally perceived as inadequate and

ill-equipped to address development needs or implement successful reform efforts. Over the

past fifty years, the country has been trapped in a cycle of reform initiatives that have largely

failed to yield substantial and enduring outcomes. The lack of administrative capacity has

made it exceedingly challenging to institutionalize necessary reforms. A survey conducted by

the Social Weather Stations (SWS), a respected polling organization in the Philippines, in

February 1992 revealed that high-ranking government officials were viewed as ill-suited for

their roles.

III. RECOMMENDATION ON REVITALIZING THE LOCAL CIVIL SERVICE

1. Strengthening Recruitment and Selection

Merit-Based Hiring: Merit-based hiring is fundamental to ensuring that the most qualified

individuals are selected for civil service positions. This approach prioritizes skills,

26
qualifications, and experience over political affiliations or personal connections [1]. The Civil

Service Commission (CSC) must actively enforce and oversee the adherence to meritocratic

principles [1].

Civil Service Eligibility: The civil service examination system serves as a critical tool for

assessing and certifying the qualifications of individuals seeking public service roles. It

ensures a standardized and fair assessment process, promoting equal opportunities for all

applicants [14].

2. Training and Development:

Continuous Learning: Regular training and development programs are crucial for civil

servants to stay updated with evolving best practices and to enhance their competencies [2].

These programs should encompass various aspects of public administration, management,

and service delivery.

Leadership Development: Leadership training programs are essential to nurture a culture of

leadership within the civil service. These programs prepare civil servants for higher

responsibilities and equip them with the necessary skills to lead effectively [15].

3. Performance Evaluation and Accountability:

Performance Metrics: Well-defined and measurable performance indicators are vital for

assessing the effectiveness of civil servants. These metrics should be established at the local

level and regularly evaluated, with rewards and sanctions linked to performance [3].

27
Public Accountability: Civil servants should be encouraged to be transparent and

accountable to the public. This can be achieved through mechanisms that promote open

reporting and engagement in decision-making processes [16].

4. Streamlining Bureaucracy:

Reduce Red Tape: Simplifying administrative procedures and minimizing bureaucratic

obstacles is crucial for efficient service delivery. The Ease of Doing Business Act focuses on

streamlining processes to create a more business-friendly environment [4].

LGU Coordination: In metropolitan areas, promoting coordination among Local

Government Units (LGUs) can eliminate duplication of services and enhance efficiency in

the provision of public services [17].

5. Technology Integration:

E-Government Initiatives: Investing in technology infrastructure and promoting

e-government solutions enhances transparency and accessibility of public services [5]. These

initiatives should include online service portals, digital payments, and data analytics.

Digital Literacy: Civil servants should be provided with training to ensure they can

effectively utilize technology tools and platforms in their daily work [18].

28
 6. Anti-Corruption Measures:

Whistleblower Protection: Whistleblower protection mechanisms should be fortified to

encourage individuals to report corrupt practices without fear of retaliation [6].

Asset Declaration: Implementing strict asset declaration requirements for civil servants can

serve as a deterrent to corruption, ensuring transparency in wealth accumulation [19].

7. Community Engagement:

Citizen Feedback Mechanisms: Establishing channels for citizens to provide feedback on

public services and participate in local decision-making processes fosters a sense of

ownership and accountability [8].

Community-Based Monitoring: Involving local communities in monitoring and evaluating

the performance of civil servants and LGUs can lead to more responsive governance [20].

8. Legal Reforms:

Amend the Local Government Code: A review and update of the Local Government Code

should be undertaken to clarify the roles, responsibilities, and accountability of local

government officials and civil servants [9].

29
Citizen's Charter: A Citizen's Charter, outlining the services provided by LGUs, service

standards, and complaint mechanisms, should be mandated and made easily accessible to the

public [21].

9. Ethics and Values:

Ethical Training: To promote ethical values and integrity among civil servants, ethics

training programs should be designed and conducted regularly [10].

Code of Conduct: Strict adherence to the Code of Conduct and Ethical Standards for Public

Officials and Employees is essential to maintain high ethical standards [22].

10. Adequate Compensation:

Competitive Salaries: Ensuring civil servants receive competitive salaries and benefits is

crucial to attract and retain talent in the public sector [11]

Performance-Based Incentives: Introducing performance-based bonuses and incentives can

motivate and reward outstanding civil servants, driving improved performance [23].

11. Public Awareness

Information Campaigns: Public awareness campaigns should be conducted to educate

citizens about their rights and responsibilities in the civil service system [12].

30
Citizen's Education: Including civic education in school curricula enhances citizens'

understanding of the role and importance of the civil service, fostering a sense of civic

responsibility [24].

12. Collaboration with Academia and NGOs

Partnerships: Collaborating with academic institutions and non-governmental organizations

(NGOs) can help promote research, advocacy, and best practices in local civil service

revitalization [13].

Research and Innovation: Encouraging research on local governance and civil service

issues provides evidence-based insights to guide policy-making and reforms [25].

IV. CONCLUSION

In summary, revitalizing the local civil service in the Philippines requires a

multi-pronged approach:

1. Prioritize merit-based hiring and use civil service exams to ensure qualified personnel.

2. Invest in continuous training and leadership development for civil servants.

3. Implement performance metrics and enhance public accountability.

4. Streamline bureaucracy, leverage technology, and tackle corruption.

5. Promote citizen engagement through feedback mechanisms.

6. Enact legal reforms and mandate Citizen's Charters.

7. Focus on ethics, competitive compensation, and performance incentives.

8. Raise public awareness and integrate civic education.

31
9. Foster collaboration with academia and NGOs.

These recommendations encompass a comprehensive approach to revitalizing the

local civil service in the Philippines. It requires a concerted effort from multiple stakeholders,

including the national government, LGUs, civil society organizations, and the civil servants

themselves. Regular monitoring, evaluation, and adaptation of these reforms are necessary to

ensure their effectiveness and sustainability in the long term.

By following these steps, the Philippines can build a more efficient, accountable, and

citizen-centric civil service, fostering national progress and development.

32
References:

Civil Service Commission (CSC) Philippines. (n.d.). Civil Service Examination. csc.gov.ph.
Azevedo, J. P., Inchauste, G., & Sanfelice, V. (2016). Decentralization and Governance in the
Philippines: Lessons and Implications. World Bank.
Philippine Constitution. (1987). Article XI, Accountability of Public Officers.
World Bank. (2019). Philippines Urbanization Review: Fostering Competitive, Sustainable
and Inclusive Cities. worldbank.org.
Asia Foundation. (2018). Philippine ICT Ecosystem 2017. asiafoundation.org.
Republic Act No. 6713, Code of Conduct and Ethical Standards for Public Officials and
Employees.
Schuftan, C. (2003). Community-Based Monitoring of Health Services: Organizing Women
as Watchdogs. International Journal of Health Services, 33(1), 129-145.
Department of the Interior and Local Government (DILG) Philippines. (n.d.). Citizen's
Charter. dilg.gov.ph.
Republic Act No. 6713, Code of Conduct and Ethical Standards for Public Officials and
Employees.
Department of Budget and Management (DBM) Philippines. (n.d.). Performance-Based
Bonus. dbm.gov.ph.
Department of Education (DepEd) Philippines. (n.d.). Civics and Citizenship Education.
deped.gov.ph.
United Nations Development Programme (UNDP). (2019). Partnerships for SDGs: A Guide
to Engaging with Academia and Civil Society Organizations. Undp.org.

MC No. 1, S. 2023 memorandum circular to - civil service commission (CSC). (n.d.). Civil
Service Commission

Commission on audit | the official website of the Commission on Audit. (n.d.-a).

https://www.coa.gov.ph/

News. (2023, August 17). PIA.

https://pia.gov.ph/news/2023/08/17/lgu-employees-avail-of-ec-benefits-ecc.

E. (2023, June 11). 2023 Salary Grade in the Philippines. Escape Manila.
https://www.escapemanila.com/2023/01/salary-grade-in-the-philippines.html

33
 LGU Government Information System (GIS). (n.d.). PPT.
https://www.slideshare.net/jobitonio/lgu-government-information-system-gis

Presidential Communications Office. (2023, June 1).

https://pco.gov.ph/news_releases/pbbm-enjoins-all-govt-offices-lgus-to-adopt-financial-mana
gement-info-system-in-transactions/

34
 PAMANTASAN NG LUNGSOD NG MAYNILA
(University of the City of Manila)
Gen. Luna cor, Muralla Street, Intramuros, Manila, Philippines

School of Government
Bachelor of Public Administration

LOCAL AND REGIONAL GOVERNANCE:

Fiscal Administration and Local Economic Development

Submitted by Group 3:
BORJA, Mharianne Claire R.

CABUBAS, Judylyn F.

CUSTODIO, Janel Ericka

DECINO, Prince Cedie M.

MAZO, Salvie D.

PELLO, Janelle Marie J.

PLACIO, Janella May C.

Submitted to:
Prof. Christopher J. Malanum

October 2023
 TABLE OF CONTENTS

I. Scope and Pattern of Local Fiscal Administration

II. Local and other Special Funds

III. Budgeting

IV. Expenditures, Disbursements, Accounting and Accountability

V. Local Governance and the New Community: Economic Development as

a Function

VI. The Work of Local Authorities in Economic Promotion under the Local

Government Code of 1991

VII. Procurement Law

VIII. Mandanas Ruling

I. Nature and Scope of Local Fiscal Administration

Fiscal Administration

- is the act of managing incoming and outgoing monetary transactions and budgets

for the governments, educational institutions, non-profit organizations, and other

public service entities.

Public Fiscal Administration

- refers to the systems, structures, processes, officials, and personnel and the policy

environment governing internal governmental, and inter-local fiscal relations,

affecting among others:

❖ the giving and receipt of allotments and grants from the National Government

(NG) to local government units (LGUs);

❖ allotment sharing between LGUs;

❖ sharing of taxing powers between the national government (NG) and LGUs

and among LGUs;

❖ policy on tax rates and structures;

❖ revenue and expenditure planning;

❖ revenue utilization and expenditure allocation; monitoring and approval

budgets, tax ordinances and other fiscal measures;

❖ policy on borrowing and borrowing instruments; and

❖ Appointment and supervision of local fiscal officers.

Five (5) Major Elements as the scope of Local Fiscal Administration

Internal Environment

● Systems
 - refers to the organized and interconnected methods and procedures used for

managing finances.

● Structures

- pertains to the organizational framework and hierarchy within the local

government responsible for fiscal matters.

● Processes

- encompasses the specific steps and workflows involved in fiscal

administration.

● Officials/Personnel

- Local fiscal administration relies on trained and skilled individuals who are

responsible for implementing financial policies and managing funds.

External Environment

● Policy environment governing internal governmental, and inter-local fiscal

relations

- This element highlights the importance of the legal and regulatory framework

that governs fiscal matters at the local level. It encompasses policies, laws, and

regulations that dictate how funds are collected, allocated, and spent within the

local government and how fiscal relations are managed between different local

government units.

Fundamental Principles of Local Fiscal Administration

● No money shall be paid out of the local treasury except in pursuance of an

appropriations ordinance or law.

● Local government funds and monies shall be spent solely for public purposes.
● Local Revenue is generated only from sources expressly authorized by law or

ordinance, and collection thereof shall at all times be acknowledged properly.

● All monies officially received by a local government officer in any capacity or on any

occasion shall be accounted for as local funds, unless otherwise provided by law.

● Trust funds of the local government unit whose duties permit or require the possession

or custody of local funds shall be properly bonded, and such officer shall be

accountable and responsible for said funds and for the safekeeping thereof in

conformity with the provisions of law.

● Local governments shall formulate sound financial plans, and the local budgets shall

be based on functions, activities, and projects, in terms of expected results.

● Local budget plans and goals shall, as far as practicable, be harmonized with national

development plans, goals, and strategies in order to optimize the utilization of

resources and to avoid duplication in the use of fiscal and physical resources.

● Local budgets shall operationalize approved local development plans.

● Local governmental units shall ensure that their respective budgets incorporate the

requirements of their component units and provide the equitable allocation of

resources among these component units.

● National planning shall be based on local planning to ensure that the needs and

aspirations of the people, as articulated by the local governmental units in their

respective local development plans, are considered in the formulation of budgets of

national line agencies of offices.

● Fiscal responsibility shall be shared by all those exercising authority over the financial

affairs, transactions, and operations of the local government units.

● The local government unit shall endeavor to have a balanced budget in each fscal year

of operation.
II. Local and other Special Funds

Receipts, Safekeeping and Disposition of Local Funds

● Remittance of Government Monies to the Local Treasury

- Officers of the local government authorized to receive and collect monies

arising from taxes, revenues, or receipts of any kind shall remit the full

amount received and collected to the treasury of such local government units

which shall be credited to the particular account or accounts to which the

monies in question properly belong.

● Local Funds

- Every local government unit shall maintain a General Fund which shall be

used to account for such monies and resources as may be received by and

disbursed from the local treasury. The General Fund shall consist of monies

and resources of the local government which are available for the payment of

expenditures, obligations or purposes not specifically declared by law as

accruing and chargeable to, or payable from, any other fund.

● Special Funds

- There shall be maintained in every provincial, city, or municipal treasury the

following special funds:

- (a) Special Education Fund (SEF) which shall consist of the

respective shares of provinces, cities, municipalities and barangays in

the proceeds of the additional tax on real property to be appropriated

for purposes prescribed in Application of Proceeds of the Additional

One Percent SEF Tax.

 - (b) Trust funds shall consist of private and public monies which have

officially come into the possession of the local government or of a

local government official as trustee, agent or administrator, or which

have been received as a guarantee for the fulfillment of some

obligation. A trust fund shall only be used for the specific purpose for

which it was created or for which it came into the possession of the

local government unit.

● Separation of Books and Depository Accounts

- Local accountants and treasurers shall maintain separate books and depository

accounts, respectively, for each fund in their custody or administration under

such rules and regulations as the Commission on Audit may prescribe.

● Depository Accounts

- Local treasurers shall maintain depository accounts in the name of their

respective local government units with banks, preferably government-owned,

located in or nearest to their respective areas of jurisdiction. Earnings of each

depository account shall accrue exclusively thereto.

● Separation of Personal Money to Public Funds

- Local treasurers and other accountable officers shall keep personal monies

separate and distinct from local public funds in their custody and shall not

make profit out of public money or otherwise apply the same to any use not

authorized by law or ordinance.

Special Accounts

● Special Accounts to be Maintained in the General Fund

- Local government units shall maintain special accounts in the general fund for

the following:
 (a) Public utilities and other economic enterprises;

(b) Loans, interests, bond issues, and other contributions for specific

purposes

(c) Development projects funded from the share of the local

government unit concerned in the internal revenue allotment and

such other special accounts which may be created by law or

ordinance.

III. Budgeting

Budgeting: At the most basic level it is a legal document that gives local government

officials the authority to incur obligations and pay expenses. It allocates resources among

departments, reflecting the legislative body's priorities and policies, and controls how much

each department may spend.

Article One- Local Government Budgets

SEC.314 Form and Content- (a)Local government budgets shall primarily consist of two

(2) parts:

1.The estimates of income

2.The total appropriations covering the current operating expenditure and capital outlays.

(b) The budget documents shall contain:

1. A budget message of the local chief executive with brief significance of the executive

budget in relation to the approved plan.

2. A brief summary of the functions projects, and activities to be accomplished for the

ensuing fiscal year and the delivery of basic services or facilities enumerated under Section

17 of this Code;
3. Summary of financial statements setting forth:

(i)The actual income and expenditures during the immediately preceding year;

(ii) The actual income and expenditures of the first two (2) quarters and the estimates of

Income and expenditure for the last 2 quarters of the current fiscal

(iii) The estimates of income for the ensuing fiscal year together with other revenue raising

proposes.

(iv) Estimated expenditures to carry out the functions, projects, and activities of the local

government unit for the ensuing fiscal year.

(v) All the essential facts regarding the bonded and other long-term obligations and

indebtedness of the local government unit, if any;

(vi) Summary statement of all the statutory and contractual obligations due

(vii) Other financial statements end date as are deemed necessary or desirable in order to

disclose in all practicable detail the financial condition of the local government unit.

Parts of Local Government:

Estimated Income of Local Governments:

It shall be based on revenues for a fiscal year that can be based from tax laws and other

revenue-raising ordinances "existing at the time the proposed budget is transmitted together

with other revenue raising proposals."

Estimated expenditures of Local Governments:

Those "estimated expenditures necessary to carry out the functions, projects and activities of

the local government unit for the ensuing fiscal year.

Guide to Planning and linkage of local government budget:

The local government but certainly formulated for the attainment of local development goals

In preparation of the "form and content" of the local government budget, Section 354 of the

Local Government Code of 1991 lays down the rules. But Section 4 of the Administrative

Code of 1987 on "planning and budgeting linkage" has to be considered by the local

government units.

SEC.315 Submission of Detailed Statements of Income and Expenditures.— The local

treasurer shall submit to their local chief executive on or before the 15th day of July a

certified statement covering the income and expenditures of the preceding fiscal year, the

actual income and expenditure of the first two (2) quarters of the current year, and the

estimated income and expenditures for the last two (2) quarter of the current year.

SEC.316 Local Finance Committee.— There is a hereby created in every province, city, or

municipality a local finance committee to be composed of the local planning and

development officer, the local budget officer, and the local treasurer. It shall exercise the

following executions;

a. Determine the income reasonably projected as a collectible for the ensuing fiscal year;

b. Recommend the appropriate tax and other revenue measures or borrowing which may

be appropriate to support a budget;

c. Recommend the local chief executive concerned the level of the annual expenditure

and the ceilings of spending for economic, social, and general services base on the

approved local development plans;

 d. Recommend to the local chief executive concerned the proper allocation of

expenditures for each development activity between current operating expenditures

and capital outlays;

e. Recommend to the local chief executive

SEC.317 Submission of Budget Proposals by Heads of department Offices–

a. Each head of departments shall submit a budget proposal for his department or office

to the local chief executive on or before fifteenth (15th) of July each year. Provided,

That the budget proposal of each department or office shall be categorized under

either economic, social, or general services; Provided, further, That each service shall

be covered by the budget of at least one (1) department or office of the local

government unit concerned.

b. Budget proposals of departments or offices shall be divided into two (2) primary

categories, namely; the current operating expenditures and the capital outlays.

SEC.318 Preparation of the Budget by the Local Chief Executive— Upon receipt of the

statements of income and expenditures from the treasurer, the budget proposals and the

estimated income and budgetary ceilings shall prepare the executive budget for the ensuing

fiscal year in accordance with the provision of this title. The local chief executive shall

submit the said executive budget to the sanggunian concerned not later than the 16th of

October of the current fiscal year. failure to submit shall be subject to such criminal and

administrative penalties as provided for under this code and other applicable laws.
SEC.319 Legislative authorization of the Budget— On or before the end of the current

fiscal year, the sanggunian concerned shall enact, through an ordinance, the annual budget of

the local government unit for the ensuing fiscal year on the basis of the estimates income and

expenditures submitted by the local chief executive.

SEC.320 Effectivity of the Budgets— The ordinance enacting the annual budget shall take

effect at the beginning of the ensuing calendar year. An ordinance for supplemental budget ,

however, shall take effect upon its approval or on the date fixed therein.

SEC.321 Changes in the Annual Budget— All budgetary proposals shall be included and

considered in the budget preparation process. After the local chief executive concerned shall

have submitted the executive budget to the sanggunian, no ordinance providing for a

supplemental budget shall be enacted, except when supported by funds annually available as

certified by the local treasurer or by new revenue sources.

SEC.322 Revisions of the Unexpected Balances Appropriations— It shall be reverted to

the unappropriated surplus of the general fund at the end of the fiscal year and shall not

thereafter be available for expenditure except by subsequent enactment. However,

appropriations for capital outlays shall continue and remain valid until fully spent, reverted or

the project is completed. Reversions of completing appropriations shall not be allowed unless

obligations therefore have been fully paid or otherwise settled.

Annual Budget and Annual Local Budget;

It is an estimate of receipts and expenditures for a one year period. The annual budget of the

local government unit for the ensuing year on the basis of income and expenditures submitted

by the local chief executive., on or before the end of the current fiscal year, to the sanggunian
concerned which shall enact the same by ordinance. It shall take effect at the beginning of the

calendar year or from January 1 to the succeeding year.

Supplemental Budget of local government units:

It is enacted in times of public calamity, by the way of budgetary realignment, to set aside

appropriations for the purchase of supplies and materials or the payment of services which

are exceptionally urgent or absolutely indispensable to prevent imminent danger or loss of

life or property, the jurisdiction of the local government unit in or in other areas declared in a

state of calamity by the President.

SEC.323 Failure to Enact the Annual Appropriations—

SEC.324 Budgetary Requirements— The budgets of Local government units for any fiscal

year shall comply with the following requirements:

SEC.325 General Limitations— The use of the provincial city, and municipal funds shall be

subject to the following limitations:

Reenacted Local Budget:

It is an annual budget for the preceding fiscal year which, because of the failure of the local

sanggunian “to pass the annual appropriations ordinance after ninety (90) days from the

beginning of the ensuing fiscal year, is deemed reenacted and shall remain in force and effect

until the ordinance authorizing the proposed appropriations is passed by the sanggunian

concerned.”
Exclusions from reenacted budget of income from non-recurring sources:

Income realized by the local government units from non-recurring like aides,proceeds from

loans, sale of assets, prior year adjustments, and other analogous sources of income, shall be

excluded by the local treasurer from the estimates of incoming for the preceding fiscal year.

SEC.326 Review of Appropriation Ordinance of Provinces, Highly Urbanized Cities,

Independent Component Cities, and Municipalities within the Metropolitan Manila

Area— The Department of Budget and Management shall review ordinances authorizing the

annual or supplemental appropriations of provinces, highly urbanized cities, independent

component cities, and municipalities within the Metropolitan Manila Area in accordance with

the immediately succeeding section.

SEC 327 Review of Appropriation Ordinances of Component Cities and

Municipalities— The sangguniang panlalawigan shall review the ordinance authorizing

annual supplemental appropriations of component cities and municipalities in the same

manner within the same period prescribed for the review of other ordinances. If within 90

days from receipt of copies of such ordinance, the sangguniang panlalawigan takes no action

thereon, the same shall be deemed to have been reviewed in accordance with the law and

shall continue to be in full force and effect.

SEC.328 Duration of Appropriation— Appropriations for ordinary administrative purposes

not duly obligated shall terminate with the fiscal year and all unexpected balances thereof

shall be automatically reverted on the 31st day of December of each year to the general fund

of the local government unit.

 Article Two– Barangay Budgets

SEC.329 Barangay Funds— Unless otherwise provided in this title, all income of the

Barangay from whatever source shall accrue to its general fund and shall, at the option of the

barangay concerned, be kept as trust fund in the custody of the city or municipal treasure or

be deposited in or nearest to is area of jurisdiction.

SEC.330 Submission of Detailed statements of Income and Expenditures for the

barangay Budgets— On or before the 15th day of September of each year, the barangay

treasurer shall submit to the punong baragay a statement fiscal year, based on a certified

statement issued by the city or municipal treasurer covering the estimates of income from

local sources for the barangay concerned.

SEC.331 Preparation of the Barangay Budget

SEC.332 Effectivity of Barangay Budgets— The ordinance enacting the annual budget

shall take effect at the beginning of the ensuing calendar year. An ordinance enacting a

supplemental budget, however, shall take effect upon its approval or on the date fixed therein.

SEC.333 Review Of the Barangay Budget—

a. Within 10 days of its approval, copies of the barangay ordinance authorizing the

annual appropriations shall be furnished the sangguniang palunsod or the sangguniang

bayan, as the case maybe, through the city or municipal budget officer.

b. Within the period of hereinabove fixed, the sangguniang panlungsod or sangguniang

bayan concerned shall return the barangay ordinance, through the city or municipal
 budget officer, to the punong barangay with the advice of action thereon for proper

adjustments, In which event the barangay shall operate on the ordinance authorizing

annual appropriations of the preceding fiscal year.

SEC.334 Barangay Financial Procedure—

a. The barangay treasurer shall coiled all taxes, tees, and other charges due and

contributions accruing to the barangay for which he shall issue official receipts, and

shall deposits all collections with the city or municipal treasury or in the depository

account maintained in the name of the barangay within 5 days after receipt thereot.

b. The barangay treasurer maybe authorized by the sangguniang barangay to make direct

purchases amounting to not more P1,000.00 at anytime for the ordinary and essential

needs of the barangay

c. The financial records of the barangay shall be kept in the office of the city or

municipal accountant in simplified manner as prescribed by the Commision on Audit

(COA).

IV. Expenditures, Disbursements, Accounting and Accountability

Expenditure - Governments spend money on things like defense, education, and health care,
as well as redistributive programs like pensions and unemployment insurance.

Disbursement - Disbursement refers to the actual withdrawal of funds from the Office of cash
Flow as a result of the agency's checks being paid and budget requirements being met.

Accounting - The recording and control of financial activities of governments at the

Commonwealth, state, and municipal levels is known as government accounting.

Accountability - Accountants must use caution and expertise since they can be held legally
liable for negligence. Even if others in the organization made an error or misstatement, the
accountant is responsible for the integrity and correctness of the company's financial
statements.

Section 335. Prohibitions Against Expenditures for Religious or Private Purposes. - Public
funds should not be used for the benefit of any religious sect, church, denomination, or
religious teacher, except when assigned to the armed forces or penal institutions.

Section 336. Use of Appropriated Funds and Savings. - Funds are reserved for their intended
purpose and no ordinance permits appropriation transfers. However, local chief executive or
sanggunian officers may augment budget items from savings within the same expense class.

Section 337. Restriction Upon Limit of Disbursements. - Disbursements made in accordance

with appropriations in the approved annual budget may be made from any local fund under
the Treasurer's control, but the total amount disbursed from any local fund shall in no event
exceed fifty percent (50%) of the estimated uncollected revenue that will be transferred to the
annual budget. This local fund supplements the following collections: However, no cash
overdraft in the local fund occurs at the end of the fiscal year.

In the event of an emergency caused by a storm, earthquake, or other natural disaster, the
sanggunian/ :Local Chief Executive in concern may authorize the local treasurer to continue
disbursements from any local funds in his or her possession in excess of the limit herein
provided for, but only for the purposes and quantity specified in the approved annual budget.

Any overdraft that may occur in a local fund at the conclusion of the fiscal year as stated
herein shall be reimbursed by the first revenue of the following fiscal year accruing to such
local fund.

Section 338. Prohibitions Against Advance Payments. - A contract cannot be paid by the
local government if no services are provided or goods are delivered.

Section 339. Cash Advances. - No money shall be advanced to any local, elected or
appointed official or employee unless made in compliance with the COA's rules and
regulations.

Section 340. Persons Accountable for Local Government Funds. - Any official of a local
government unit whose position enables or requires ownership or supervision of local
government funds is accountable for their management in line with the provisions of this title.
Other municipal authorities, while not liable by nature of their duties, may be held liable for
local government funds due to their involvement in their use or application.

Section 341. Prohibitions Against Pecuniary Interest. - Any treasurer, accountant, budget
officer, or other responsible local official with a direct or indirect pecuniary interest in any
contract, business, or other matter of a local government entity of which no one is a member,
without prejudice to criminal punishment under the applicable law.

Section 342. Liability for Acts Done Upon Direction of Superior Officer, or Upon
Participation of Other Department Heads or Officers of Equivalent Rank. - The local
treasurer, accountant, budget officer, or other responsible official shall not be exempt from
liability for the illegal use, filing, or deposit of money, or the improper use of government
funds or property. An executive officer or agency head who engages in any such illegal or
improper use, application for, or deposit of government money or property is personally
liable with the treasurer, accountant, local budget officer, or other responsible official for
amounts of money or property illegally or improperly used, applied for, or deposited.

Section 343. Prohibition Against Expenses for Reception and Entertainment. - Entertainment
or reception may not be appropriated, used, or paid for unless approved by law, or for the
reception of visiting government officials or foreign missions, or when expressly authorized
by the President under particular situations.

Section 344. Certification, and Approval of, Vouchers. - The local budget officer, accountant,
and treasurer must confirm the existence of a legally formed appropriation before disbursing
money. The head of the department or office must approve documents and pay slips. Local
funds are disbursed for regular administrative expenses, government creditor agencies, and
special funds or trusts. In case of temporary absence or incapacity, the nearest officer assumes
full responsibility.

Section 345. Officials Authorized to Draw Checks in Settlement of Obligations. - The local
treasurer will draw bond checks, which will be endorsed by the local trustee.

In the event of the above-mentioned authorities' temporary absence or disability, these tasks
are delegated to their immediate deputies.
Section 346. Disbursements of Local Funds and Statement of Accounts. - Disbursement is
made pursuant to an order authorizing annual or supplementary appropriations without the
prior approval of the sanggunian concerned. Within thirty (30) days after the end of each
month, the local accountant shall provide the sanggunian with financial reports as prescribed
by the Commission on Audit For year-end settlement reports, the submission deadline is
sixty (60) days after December 31.

Section 347. Rendition of Accounts. - The local treasurer, accountant, and other local officials
must produce accounts on time, in proper form, style, and content, and in compliance with
any requirements imposed by the Commission on Audit.

Provincial, city, and municipal auditors are responsible for certifying balances deriving from
accounts settled by them to the Audit Committee Chairman and Treasurer, as well as local
accountants and other responsible personnel. Copies of the certificate must be made and
distributed to other local officials who may be held equally and severally accountable for any
loss or inappropriate, illegal, or unlawful use of the certificate, permit, or appropriate
municipal funds or assets.

Section 348. Auditorial Visitation. - The Audit Committee or its lawfully authorized
representative must always approve the books, accounts, papers, and cash of treasurers,
accountants, local budget officers, or other accountable officers. The Audit Committee
conducts a review.

If an inspection of the local treasurer's accounts finds a lack of cash that should have been
there, it is the comptroller's responsibility to seize the office and its contents and notify the
Audit Committee, the local director is concerned. as well as local accounting. The examining
officer shall then immediately give over the treasurer's office and its contents to the nearest
responsible officer of the local treasury, unless such officer is also under investigation, and
shut and surrender his account on turnover day. If the nearest official is being investigated,
the Auditor shall take full possession of the office and its contents, close it and report the date
of possession, and temporarily restart the public operation of this office until the local
treasurer or his successor is reinstated. has been specified. Local treasurers or responsible
officials who face such shortages will be removed from office.

Section 349. Accounting for Revenues. - Unearned revenue cannot be recorded or credited to
unallocated surplus or any other account at the last day of the fiscal year.
Section 350. Accounting for Obligations. - All expenses and liabilities incurred during a
fiscal year are recorded in the accounts for the fiscal year in which they occurred.

Section 351. General Liability for Unlawful Expenditures. - The responsible officer or
employee is personally liable for any expenditure of funds or use of property in violation of
this title and other laws.

Section 352. Posting of the Summary of Income and Expenditures. -Treasurers, accountants,
budget officers, and other responsible local officials shall post a summary of all revenues in
at least three (3) public places in the local government unit within thirty (30) days after the
end of the fiscal year. Revenues and quantities received, including allocations and
disbursements of these funds over the previous fiscal year.

Section 353. The Official Fiscal Year. - The official fiscal year of a local government is the
period starting on January 1 and ending on December 31 of the same year.

Section 354. Administrative Issuances; Budget Operations Manual. - Within one (1) year of
the effective date of this Code, the Secretary of Budget and Management, in collaboration
with the Chairman of the Commission on Audit, shall issue a budget operations handbook for
local government entities to develop and systematize processes and techniques and the budget
preparation, delegation, implementation, and accountability procedures.

V. Local Governance and the New Community: Economic Development as

a Function

Objectively, Local government is critical in promoting economic growth within

communities. Local governments must modify their strategies and roles to enable sustainable

economic growth as communities change and adapt to shifting economic landscapes. With

this being in mind, factors that generate for Economic Development through Local

Governance are;
1. Infrastructure Improvement which is catered to creating physical investments such

as roadways, bridges, utilities, and public transportation. Example: Manila Metro Rail

Transit (MRT) System.

2. Zoning and Regulation Zoning rules and regulations are enacted by local

governments to manage land use, building codes, and environmental requirements.

Example: Boracay Rehabilitation.

3. Economic Incentives which are incentives can encourage businesses to invest in the

community, create jobs, and contribute to the local economy. Examples: Bohol

Investment Promotion Center:

4. Workforce Development is done by Local governments that can partner with

educational institutions and local businesses to develop a skilled workforce. Example:

Philippine Business for Education program called #BidaHiredforOne

5. Entrepreneurial Assistance is catered for business startups that are either being

supported through financial or educational understanding to start a business.

Example:The Philippine Center for Entrepreneurship (PCE): Known for its

"Entrepreneurship 101" program, the PCE provides entrepreneurship education and

training to aspiring and established businesses. In addition, they host the annual

Filipina Entrepreneurship Summit.

6. Life Quality that can enhance the quality of life in their communities by investing in

amenities such as parks, cultural institutions, and recreational facilities.

7. Community Development in order to attain sustainability practices to provide long

term plans such as transportation, affordable housing initiative and technology,

8. Partnerships between the public and private sectors that can increase the value of

investment and technology for business.

 9. Environmental Longevity which promotes environmentally conscious business and

investment may be accomplished through promoting sustainable practices and green

technologies. Example: Practicing Organic Farming and Agroforestry that helps

preserve soil quality and biodiversity.

10. Marketing and Advertising Local Places for tourism, branding or attracting

investors. Example: Busculan advertising and promoting the practice of traditional

tattoo artist Whang-Od.

VI. The Work of Local Authorities in Economic Promotion under the Local

Government Code of 1991

Local governments play critical roles in economic growth. They are more familiar
with the local economy than any other level of government, have close contact with local
stakeholders, and can ensure that policies correspond to the local needs, specific advantages,
and can address major challenges. Furthermore, the significance of local governments in
economic development does not exclude the national government from performing a role.
Rather, they provide complimentary functions.

Local Government Code of 1991

Republic Act No. 7160, otherwise known as the Local Government Code of
1991 (LGC), mandates as a primary operative principle of decentralization, the establishment
of an accountable, efficient, and dynamic organizational structure and operating mechanism
in the local government units (LGUs) that will meet the priority needs and service
requirements of its communities.

Local Economic Enterprises

Local Economic Enterprises (LEEs) are ventures wholly or partially owned by

LGUs that generate revenue/income through the sale of services and goods to meet a
perceived specific public demand. They are expected to earn profits or at least recover costs.

Common Examples of LEEs in the Philippines:

- Slaughterhouses

- Public Hospitals

- Public City Colleges

 - Public Cemeteries

- Public Markets

- Recreational and Cultural Facilities

- Public Buildings/Jails

- Transportation Facilities, Transport Terminals, Fire Services

- Public Libraries

- Commercial Retail and Office Spaces

Role of Local Economic Enterprises in LGU Development

a. Provide an accessible goods and services with pricing that is affordable to a larger
segment of the LGU population;
b. Be a means to augment LGU revenues; and
c. Attract investors by providing key services not provided by the private sector

*LEEs are means of delivery used by local governments to enhance public welfare. When
such goods and services are currently effectively offered by the private sector, the LGU in
concern must consider scaling down the LEE operations. The LGU shall not compete with,
but rather complement the private sector in the development of its communities.

Defining an Effective Local Economic Enterprise

a. Has a clear vision, mission, goals, and objectives that fully respond to a particular
constituency need

b. Makes a revenue and does not compete with goods and services provided by the private
sector

c. Must be able to operate through financial self-sufficiency via cost recovery

d. Publishes annual performance reports that will provide accountability and

transparency in general.

Evaluate Whether the LGU Should Engage in LEE

1. Marketable/Good Service

2. Feasibility Study-Based

3. Criteria must be met for the Appropriateness of an LEE

 i. satisfy both the economic and social objectives of LGU

ii. fill gaps and services not adequately provided by the private sector

iii. have own business plan and budget

iv. operate with appropriate staffing complement to satisfy objectives

Potential LEE Financing Sources

1. Current Available LGU Revenues

2. Borrowings

3. Foreign and Local Grants

4. Capital Income

5. Cost Recovery Elements

6. Cost Sharing

7. Public-Private Partnerships

8. Donations

Problems on Local Economic Enterprises

- Most of them operate at a loss and require heavy subsidies from LGUs

- Cultural resistance and changing consumer demands

- Inefficiently managed

- Offer substandard and poor quality products/services

- No financial feasibility and poor promotion

Alternatives to LEE Problems

I. Primary Policy Options

o LGU as a Corporation

o Privatization/Public-Private Partnership

II. Institutional Options

o Detach from mainstream bureaucracy

 o Strengthen the policy framework

III. Local Options

o Deregulate fees and user chargers

o Restructuring

o Supply driven to demand driven

VII. Procurement Law

Republic Act No. 9184: Government Procurement Reform Act

This act is promulgated for the purpose of prescribing the necessary rules and regulations for
the modernization, standardization, and regulation of the procurement activities of the
Government of the Philippines.

Governing Principles on Government Procurement

a) Transparency in the procurement process and in the implementation of procurement

contracts through wide dissemination of bid opportunities and participation of pertinent
non-government organizations.

b) Competitiveness by extending equal opportunity to enable private contracting parties

who are eligible and qualified to participate in competitive bidding.

c) Streamlined procurement process that will uniformly apply to all government

procurement. The procurement process shall be simple and made adaptable to advances in
modern technology in order to ensure an effective and efficient method.

d) System of accountability where both the public officials directly or indirectly involved in
the procurement process as well as in the implementation of procurement contracts and the
private parties that deal with GoP are, when warranted by circumstances, investigated and
held liable for their actions relative thereto.

e) 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 Act and this IRR, and that all these contracts are performed strictly
according to specifications.
Procurement Process:

1. Procurement Planning

- All procurement shall be within the approved budget of the Procuring Entity and should be
meticulously and judiciously planned by the Procuring Entity. Consistent with government
fiscal discipline measures, only those considered crucial to the efficient discharge of
governmental functions shall be included in the Annual Procurement Plan (APP). For
purposes of this IRR, a procurement project shall be considered crucial to the efficient
discharge of governmental functions if it is required for the day-to-day operations or is in
pursuit of the principal mandate of the Procuring Entity concerned. No procurement shall be
undertaken unless it is in accordance with the approved APP, including approved changes
thereto.

2. Preparation of Bidding Documents

- The Bidding Documents shall be prepared by the Procuring Entity following the standard
forms and manuals prescribed by the GPPB. The Bidding Documents refers to documents
issued by the Procuring Entity as the basis for Bids, furnishing all information necessary for a
prospective bidder to prepare a bid for the Goods, Infrastructure Projects, and Consulting
Services to be provided.

3. Pre-Procurement Conference

- Assess the readiness of the procurement in terms of confirming the certification of

availability of funds, as well as reviewing all relevant documents and the draft invitation to
bid, as well as consultants hired by the agency concerned and the representative of the end
user.

4. Advertising and Contents of the Invitation to Bid-Posting

- Except as otherwise provided in Section 54.2 of this IRR and for the procurement of
common-use goods and supplies, the Invitation to Bid/Request for Expression of Interest
shall be: Posted at any conspicuous place reserved for this purpose in the premises of the
Procuring Entity. Posted continuously in the PhilGEPS website, the website of the Procuring
Entity concerned, if available, and the website prescribed by the foreign government/foreign
or international financing institution, if applicable, for seven (7) calendar days starting on
date of advertisement; and Advertised at least once in one (1) newspaper of general
nationwide circulation.
5. Pre-Bid Conference

- The pre-bid conference shall discuss, clarify and explain, among other things, the eligibility
requirements and the technical and financial components of the contract to be bid including
questions and clarifications raised by the prospective bidders before and during the Pre-Bid
Conference.

6. Receipt and Opening of Bids

- Bids shall be received by the BAC on the date, time, and place specified in the invitation to
Bid/Request for Expression of Interest. The following periods from the last day of posting the
Invitation to Bid/Request for Expression of Interest up to the submission and receipt of bids
shall be observed. Eligibility requirements includes Legal, Technical and Financial
documents.

7. Bid Evaluation

- The BAC shall open the first bid envelopes in public to determine each bidder’s compliance
with the documents required to be submitted for eligibility and for the technical requirements,
as prescribed in this IRR. For this purpose, the BAC shall check the submitted documents of
each bidder against a checklist of required documents to ascertain if they are all present,
using a non-discretionary “pass/fail” criterion, as stated in the Instructions to Bidders. If a
bidder submits the required document, it shall be rated “passed” for that particular
requirement. In this regard, bids that fail to include any requirement or are incomplete or
patently insufficient shall be considered as “failed.” Otherwise, the BAC shall rate the said
first bid envelope as “passed.”

8. Post-Qualification

- The Lowest Calculated Bid/Highest Rated Bid shall undergo post-qualification in order to
determine whether the bidder concerned complies with and is responsive to all the
requirements and conditions as specified in the Bidding Documents. Within five (5) calendar
days from receipt by the bidder of the notice from the BAC that the bidder has the Lowest
Calculated Bid or Highest Rated Bid, the bidder shall submit to the BAC its latest income and
business tax returns, and other appropriate licenses and permits required by law and stated in
the Bidding Documents.
9. Award, Implementation and Termination of the Contract

- The BAC shall recommend to the HoPE the award of contract to the bidder with the LCRB,
HRRB, SCRB, or SRRB after the post-qualification process has been completed. Within a
period not exceeding fifteen (15) calendar days from the determination by the BAC of the
bidder with the LCRB, HRRB, SCRB, or SRRB, and the recommendation to award the
contract, the HoPE or his duly authorized representative shall approve or disapprove the said
recommendation. In case of approval, the HoPE shall immediately issue the Notice of Award
to the bidder with the LCRB, HRRB, SCRB or SRRB. In the event of disapproval, which
shall be based only on valid, reasonable, and justifiable grounds as provided for under
Section 41 of this IRR, the HoPE shall notify the BAC and the bidder in writing of such
decision and the grounds for it.

VIII. Mandanas Ruling

What is the Mandanas-Garcia Supreme Court Ruling?

● The Mandanas ruling is a Supreme Court decision that grants local government

units (LGUs) a larger share of the national taxes.

● The ruling is based on two petitions filed by Batangas Governor Hermilando

Mandanas and former Bataan Governor Enrique Garcia Jr. who argued that the

Internal Revenue Allotment (IRA) of LGUs should include not only the taxes

collected by the Bureau of Internal Revenue but also the taxes collected by the Bureau

of Customs and other agencies. The ruling is seen as a preview of federalism in the

Philippines.

● With the expected increase in the just shares of LGUs, they will be better equipped to

assume responsibility for the delivery of devolved services as prescribed under

Section 17 of the Local Government Code of 1991 (Republic Act [RA] No. 7160) and

other pertinent laws.

What is EO No. 138, s. 2021?

 ● EO No.138, s.2021 was issued to support the efficient implementation of the

Supreme Court Ruling on the Mandanas-Garcia case and strengthen the

autonomy and empowerment of local government units (LGUs). It directs the full

devolution of certain functions of the Executive Branch to the LGUs. It also provides

for the creation of a Committee on Devolution to monitor the implementation of said

EO.

Which government entities are covered by this EO?

● All LGUs

● Departments/Agencies/Instrumentalities of the Executive Branch whose functions are

in line with the devolved functions of the LGUs under Section 17 of RA No. 7160 and

other pertinent laws

Is the BARMM covered by this EO?

● The LGUs within the BARMM shall not be required to implement EO No. 138 since

they are governed by RA No. 11054 or the Organic Law for the BARMM However,

the BARMM Government is not prohibited from adopting the provisions of the EO

that it deems applicable to the LGUs within its jurisdiction.

What are the functions and services that will be devolved?

● The functions, services and facilities to be fully devolved are those indicated under

Section 17 of the Local Government Code of 1991 and other existing laws which

subsequently devolved functions of the NG to the LGUs Some of these

functions/services include, but are not limited to, the following:

Advantages

● LGUs have administrative autonomy to identify the priority programs – they are

empowered to determine their own economic development.

Under the Mandanas-Garcia Ruling, local government units (LGUs) have gained

greater fiscal autonomy, enabling them to have more say in identifying and funding

their priority development programs. This allows LGUs to tailor their initiatives to

address the specific needs of their communities.

● Reduced Dependency on National Government

The ruling has reduced LGUs' reliance on the national government for financial

resources. LGUs now have a more predictable and substantial share of national

revenue, reducing the need for them to constantly seek funding approvals or

allocations from the central government.

 ● Enhanced Fiscal Capacity

LGUs have seen an increase in their financial capacity due to the ruling. This

enhanced fiscal capacity enables them to better finance local programs and services,

ultimately improving the delivery of essential services to their constituents.

● Potential for Regional Development

With increased resources at their disposal, LGUs have the potential to invest in

regional development projects, which could help reduce regional disparities and

promote more balanced growth across different areas of the country.

Disadvantages

● Unclear division of responsibilities between LGUs and the national government

The ruling may have introduced some confusion or challenges in defining the exact

responsibilities of LGUs and the national government in certain areas, potentially

leading to overlapping or conflicting roles.

● Fiscal Discipline

While the ruling empowers LGUs with more resources, it also places a greater

responsibility on them to exercise fiscal discipline. Some LGUs may struggle with

managing their finances responsibly, potentially leading to overspending or

misallocation of resources.

● The total expenses of LGUs are high, but their tax and other revenues from their

jurisdiction will remain small.

 Despite having more financial autonomy, some LGUs may still face challenges in

generating sufficient revenue from their local jurisdictions, especially if their tax base

is limited or their economic activities are not as robust.

● Potential for Political Patronage

There is a risk that some local politicians could misuse the increased funds for

political patronage, using them to gain political support rather than for genuine

community development.

● Inequitable Distribution

While the ruling aims for a more equitable distribution of resources among LGUs,

there may still be disparities in revenue generation and utilization among different

regions or municipalities, potentially leading to inequalities in development outcomes.

References:

● https://www.rappler.com/voices/thought-leaders/analysis-mandanas-ruling-comfort-or

-headache/?fbclid=IwAR1IpZhoSiSJTMooCKCgED6VbW9aiIndQ5xXMgnDne2dz1

798u_320odPdI

● BRIEFER-EO138-OCT8-2.pdf (dbm.gov.ph)

● https://www.dbm.gov.ph/wp-content/uploads/Mandanas-Garcia-Case/IEC-Materials/F

AQs-Mandanas-Garcia-Ruling.pdf

● https://pco.gov.ph/news_releases/pbbm-new-eo-on-mandanas-ruling-to-strengthen-co

ordination-partnership-between-national-local-government-will-be-out-by-year-end/?f

bclid=IwAR39BO46p7YMvrcQWWOS3-lwjuEWJtqm6DYW0gSZ9ZWr7CGEB-oM

IugddbQ