Political Law and Public International Law

XV. Law on Local Governments

D. Local Government Units (LGUs)

Local Government Units (LGUs) in the Philippines are constitutionally established political subdivisions vested with governmental powers to manage their local affairs. The framework for their creation, organization, powers, and responsibilities is provided primarily by the 1987 Constitution and the Local Government Code of 1991 (Republic Act No. 7160).

1. Constitutional Basis

The 1987 Philippine Constitution recognizes the existence of autonomous local governments and grants LGUs the power to govern their respective localities with significant autonomy. Article X of the Constitution outlines the principles of local autonomy, decentralization, and the right of LGUs to create their own sources of revenue and to have a just share in the national taxes.

Relevant Constitutional provisions include:

Article X, Section 1: The territorial and political subdivisions of the Philippines are the provinces, cities, municipalities, and barangays. There shall be autonomous regions in Muslim Mindanao and the Cordilleras as provided in this Constitution.
Article X, Section 2: Local autonomy is recognized and ensured.
Article X, Section 3: The Congress shall enact a Local Government Code providing for a more responsive and accountable local government structure.

2. Classification of LGUs

Local Government Units are classified into four main levels:

Provinces
Cities
Municipalities
Barangays

Additionally, Autonomous Regions (e.g., Bangsamoro Autonomous Region in Muslim Mindanao) have special laws and arrangements.

Each LGU has its own local government officials, revenue sources, and governing powers.

3. Creation, Division, Merger, and Abolition of LGUs

Creation: LGUs are created by law or by an ordinance passed by the local legislative body. However, for the creation of provinces, cities, municipalities, or barangays, the requirements set forth under Section 7 of the Local Government Code must be complied with. This includes:
- Income requirement
- Population requirement
- Land area requirement
Division and Merger: LGUs can be divided or merged with another LGU subject to certain conditions under the Local Government Code and with the approval of the people in the affected areas through a plebiscite.
Abolition: An LGU can only be abolished by law or ordinance and must likewise be subject to a plebiscite.

4. Autonomous Regions

Article X, Sections 15-21 of the Constitution provide for the establishment of autonomous regions.
The Bangsamoro Organic Law (RA 11054) governs the establishment of the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM), which replaced the former Autonomous Region in Muslim Mindanao (ARMM). The BARMM has its own parliament, more fiscal autonomy, and broader governance powers than regular LGUs.

5. Powers and Functions of LGUs

The Local Government Code grants LGUs decentralized powers, emphasizing their authority to make decisions regarding local affairs. These powers include:

Police Power: LGUs are granted the authority to enforce laws and ordinances to promote public welfare, public safety, and public morals within their jurisdictions.
Taxation Power: LGUs can levy taxes, fees, and charges as outlined in the Local Government Code. They are empowered to create their own sources of revenue, collect taxes, and receive a share of national taxes. This includes the authority to levy real property taxes, business taxes, community taxes, and other local taxes.
Eminent Domain: LGUs have the power to exercise eminent domain for public use, subject to the payment of just compensation.
Corporate Powers: LGUs can enter into contracts, acquire properties, and sue or be sued. They have the power to engage in partnerships with private entities, including Public-Private Partnerships (PPPs), in accordance with the provisions of the law.
Legislative Powers: LGUs exercise legislative powers through their respective local legislative bodies (i.e., Sangguniang Panlalawigan, Sangguniang Panlungsod, and Sangguniang Bayan). These bodies pass ordinances and resolutions, subject to the general welfare clause, provided they are not inconsistent with national law.

6. Officials of LGUs

Elective Officials: The main elective officials of LGUs include:
- Provincial Level: Governor, Vice-Governor, and members of the Sangguniang Panlalawigan.
- City and Municipal Level: Mayor, Vice-Mayor, and members of the Sangguniang Panlungsod (for cities) and Sangguniang Bayan (for municipalities).
- Barangay Level: Barangay Captain and members of the Sangguniang Barangay.
Appointive Officials: These include the local treasurer, assessor, budget officer, engineer, health officer, social welfare officer, and others necessary to carry out the functions of the LGU.

7. Fiscal Autonomy of LGUs

One of the hallmarks of local autonomy is fiscal independence. Under the Local Government Code, LGUs have the right to create their own sources of revenue and receive a just share from the national taxes in the form of Internal Revenue Allotment (IRA), which has been modified by the Mandanas-Garcia ruling of the Supreme Court.

Internal Revenue Allotment (IRA): IRA is the share of LGUs from the national internal revenue taxes collected by the government. It is based on the following distribution formula:
- 40% - Provincial government
- 23% - City government
- 34% - Municipal government
- 20% - Barangay government
The Supreme Court's Mandanas ruling (G.R. Nos. 199802 and 208488) significantly expanded the scope of the IRA to include all national taxes, not just internal revenue taxes, which has increased the funding for LGUs.

8. Supervision and Control

While LGUs enjoy local autonomy, they are still subject to supervision by the national government. This means that the national government can ensure that LGUs are operating within the scope of the law, but it cannot interfere with purely local matters. The President, through the Department of the Interior and Local Government (DILG), exercises general supervision over LGUs.

However, control is not vested in the national government, meaning that it cannot dictate the manner by which LGUs execute their powers, except in cases provided by law, such as administrative disciplinary actions or national policy requirements.

9. Local Legislation

Local legislative bodies are empowered to pass ordinances and resolutions on matters that directly affect the LGU. These laws must adhere to the Constitution, national laws, and public welfare.

Each legislative body corresponds to an LGU level:

Sangguniang Panlalawigan (Provincial)
Sangguniang Panlungsod (City)
Sangguniang Bayan (Municipal)
Sangguniang Barangay (Barangay)

10. Devolution of Services and Functions

A key component of the Local Government Code of 1991 is the devolution of certain powers and responsibilities from the national government to LGUs. This devolution includes areas such as:

Health services
Agriculture support services
Environmental protection
Infrastructure development
Social welfare services

The principle of devolution is intended to bring services closer to the people by transferring the responsibility of delivering basic services from the national government to the LGUs.

11. Challenges and Issues Facing LGUs

Despite the legal framework designed to promote local autonomy, LGUs in the Philippines face several challenges:

Fiscal Dependence: Many LGUs remain heavily dependent on IRA and other national government funds, with limited ability to generate their own revenue.
Administrative Capacity: Some LGUs lack the technical expertise and administrative capacity to effectively govern and deliver public services.
Corruption and Patronage Politics: Issues of graft, corruption, and patronage politics persist at the local level, affecting governance and service delivery.
Urban vs. Rural Divide: There is often a significant disparity in resources and services between urban and rural LGUs.

12. Recent Developments

Mandanas-Garcia Ruling: The Supreme Court ruling in Mandanas v. Ochoa expanded the scope of the revenue share of LGUs, significantly increasing their fiscal autonomy and resources starting in 2022.
Public-Private Partnerships: Increasing reliance on PPPs for infrastructure and service delivery, especially in cities, has been encouraged as a means for LGUs to engage private sector participation in local development projects.

In conclusion, LGUs in the Philippines play a crucial role in decentralizing governance, ensuring local autonomy, and bringing government services closer to the people. Their powers and functions are grounded in the Constitution and fleshed out by the Local Government Code, which provides a comprehensive legal framework for their operations. However, they continue to face fiscal, administrative, and governance challenges.