Villafuerte vs. Robredo G.R. No. 195390 (Case Digest)

Villafuerte vs. Robredo G.R. No. 195390 (Case Digest)

 

Facts:

            Commission on Audit (COA) conducted an examination and audit on the manner the local government units (LGUs) utilized their Internal Revenue Allotment (IRA) for the calendar years 1993-1994. The examination yielded an official report,showing that a substantial portion of the 20% development fund of some LGUs was not actually utilized for development projects but was diverted to expenses properly chargeable against the Maintenance and Other Operating Expenses (MOOE), in stark violation of Section 287 of R.A. No. 7160.

            DILG issued MC No. 95-216, enumerating the policies and guidelines on the utilization of the development fund component of the IRA. It likewise carried a reminder to LGUs of the strict mandate to ensure that public funds, like the 20% development fund, "shall be spent judiciously and only for the very purpose or purposes for which such funds are intended."

            DILG Secretary, issued the assailed MC No. 2010-83, entitled "Full Disclosure of Local Budget and Finances, and Bids and Public Offerings," which aims to promote good governance through enhanced transparency and accountability of LGUs.

            The petitioners argue that the assailed issuances of the respondent interfere with the local and fiscal autonomy of LGUs embodied in the Constitution and the LGC. In particular, they claim that MC No. 2010-138 transgressed these constitutionally-protected liberties when it restricted the meaning of "development" and enumerated activities which the local government must finance from the 20% development fund component of the IRA and provided sanctions for local authorities who shall use the said component of the fund for the excluded purposes stated therein. They argue that the respondent cannot substitute his own discretion with that of the local legislative council in enacting its annual budget and specifying the development projects that the 20% component of its IRA should fund.

 

Issue:

            Whether or not the assailed memorandum circulars violate the principles of local and fiscal autonomy enshrined in the Constitution and the LGC.

 

Held:

            No; local autonomy means a more responsive and accountable local government structure instituted through a system of decentralization. In Limbona v. Mangelin, the Court elaborated on the concept of decentralization, thus: “autonomy is either decentralization of administration or decentralization of power. There is decentralization of administration when the central government delegates administrative powers to political subdivisions in order to broaden the base of government power and in the process to make local governments "more responsive and accountable," and "ensure their fullest development as self-reliant communities and make them more effective partners in the pursuit of national development and social progress." At the same time, it relieves the central government of the burden of managing local affairs and enables it to concentrate on national concerns. x x x. Decentralization of power, on the other hand, involves an abdication of political power in the favor of local governments [sic] units declared to be autonomous. In that case, the autonomous government is free to chart its own destiny and shape its future with minimum intervention from central authorities.

            To safeguard the state policy on local autonomy, the Constitution confines the power of the President over LGUs to mere supervision. "The President exercises ‘general supervision’ over them, but only to ‘ensure that local affairs are administered according to law.’ He has no control over their acts in the sense that he can substitute their judgments with his own."

            A reading of MC No. 2010-138 shows that it is a mere reiteration of an existing provision in the LGC. It was plainly intended to remind LGUs to faithfully observe the directive stated in Section 287 of the LGC to utilize the 20% portion of the IRA for development projects. It was, at best, an advisory to LGUs to examine themselves if they have been complying with the law. It must be recalled that the assailed circular was issued in response to the report of the COA that a substantial portion of the 20% development fund of some LGUs was not actually utilized for development projects but was diverted to expenses more properly categorized as MOOE, in violation of Section 287 of the LGC. This intention was highlighted in the very first paragraph of MC No. 2010-138, which reads: Section 287 of the Local Government Code mandates every local government to appropriate in its annual budget no less than 20% of its annual revenue allotment for development projects. In common understanding, development means the realization of desirable social, economic and environmental outcomes essential in the attainment of the constitutional objective of a desired quality of life for all.

            That the term development was characterized as the "realization of desirable social, economic and environmental outcome" does not operate as a restriction of the term so as to exclude some other activities that may bring about the same result. The definition was a plain characterization of the concept of development as it is commonly understood. The statement of a general definition was only necessary to illustrate among LGUs the nature of expenses that are properly chargeable against the development fund component of the IRA. It is expected to guide them and aid them in rethinking their ways so that they may be able to rectify lapses in judgment, should there be any, or it may simply stand as a reaffirmation of an already proper administration of expenses.

            Contrary to the petitioners’ posturing, however, the enumeration was not meant to restrict the discretion of the LGUs in the utilization of their funds. It was meant to enlighten LGUs as to the nature of the development fund by delineating it from other types of expenses. It was incorporated in the assailed circular in order to guide them in the proper disposition of the IRA and avert further misuse of the fund by citing current practices which seemed to be incompatible with the purpose of the fund. Even then, LGUs remain at liberty to map out their respective development plans solely on the basis of their own judgment and utilize their IRAs accordingly, with the only restriction that 20% thereof be expended for development projects. They may even spend their IRAs for some of the enumerated items should they partake of indirect costs of undertaking development projects. In such case, however, the concerned LGU must ascertain that applicable rules and regulations on budgetary allocation have been observed lest it be inviting an administrative probe.

            Autonomy, however, is not meant to end the relation of partnership and interdependence between the central administration and local government units, or otherwise, to usher in a regime of federalism. The Charter has not taken such a radical step. Local governments, under the Constitution, are subject to regulation, however limited, and for no other purpose than precisely, albeit paradoxically, to enhance self-government. Thus, notwithstanding the local fiscal autonomy being enjoyed by LGUs, they are still under the supervision of the President and maybe held accountable for malfeasance or violations of existing laws. "Supervision is not incompatible with discipline. And the power to discipline and ensure that the laws be faithfully executed must be construed to authorize the President to order an investigation of the act or conduct of local officials when in his opinion the good of the public service so requires."