Atty. Sonny Pulgar’s Blog & personal website.

Sins of Local Government Units (LGUs)

Jan 4, 2005Articles0 comments

In the early 60s,  the clamor then was the emasculation of the Executive branch insofar as fund support for local governments is concerned.  It was then the heyday of Imperial Manila where one saw the spectacle of local officials making beelines to the Office of the President,  practically panhandling for local projects.  Diputados then were very useful as padrinos of the governors,  mayors and others.  Local officials kowtowed to the legislators because of their proximity to Malacañang with opportunes of brushing shoulders with the President.  With this experience,  Tip O’Neill’s observation is validated that “all politics is local.”

In the US,  local assistance was termed revenue sharing.  This idea germinated in the early 1950s.  Its fruition however was realized during the time of President Nixon.  In his nationwide address in August, 1969,  he announced his domestic program and the principle of revenue sharing:

For a third of a century,  power and responsibility have flowed toward Washington-—and Washington has taken for its own the best sources of revenue.

We intend to reverse this tide, and to turn back to the states a greater measure of responsibility—not as a way of avoiding problems, but as a better way of solving problems.

Along with this would go a share of federal revenues.

I shall propose to the Congress next week that a set portion of the revenues from federal income taxes be remitted directly to the states—with a minimum of federal restrictions on how those dollars are to be used,  and with a requirement that a percentage of them be channeled through for the use of local government.

The funds provided under this program will not be great in the first year.  But the principle will have been established, and the amounts will increase as our budgetary situation improves.

This start on revenue sharing is a step toward what I call the New Federalism.  It is a gesture of faith in America’s state and local governments and in the principle of democratic self-government.  [Robert L. Peabody, Editor,  Cases in American Politics (Harper Publishing), 1976,  pp. 21-25]

In fine, the following points were recommended as pillars of local autonomy.

1.       Automatic distribution each year of a designated portion of the federal income tax base based on objective legal criteria;

2.       Equitable sharing of the money among state and local governments based on specific formulas to be spelled out in federal legislation;

3.       No strings or restrictions on use of the money; and

4.       Inclusion of all general-purpose local governments, regardless of size or location.  (Ibid.,  at pp. 21-22)

With the new era of local autonomy being ushered in, the late Ninoy Aquino, then a neophyte Senator, sponsored the much-vaunted Decentralization Act of 1967.  While that law broke into the well-entrenched hold of the Presidency in local finances given its supervisory power over municipal corporations, it nonetheless left much to be desired.

When Martial Law was declared, President Marcos had his hand in decentralization by issuing his own version of Local Government Code (LGC) of 1983 (Batas Pambansa Blg. 337). Still and all, this strong-man law was a decentralization big joke as all local executives have to beg to the dictator for money for some local projects that dovetail with the vision of Marcos’ New Society.

The LGC of 1991 (RA 7160) gave the LGUs the needed arsenal of power and prerogatives much broader than their US counterparts.  Take the power on local taxation.  Not only are LGUs assured of shared revenue, their power to tax is fortified and clearly delineated.  The power to tax has been considerably delegated to the local sanggunians.  The power to initiate collection of local taxes is devolved unto the local chief executive, among other powers.

Ideally, the blueprint of combating poverty is all outlined in the Code.  Yet, nobody, unbelievably, seems to mind.

1st  Sin

The focus of attention of the local chiefs is still towards the national government.  Legislators have their Priority Development Assistance Fund.  These are in reality national funds forwarded to local need. (or it is the lawmakers greed?)  But this can be avoided, as we shall see later, thus, the government saves on funds while the solons concentrate on their god-given talent – legislation.

2nd  Sin

LGUs lack imagination in revenue generation.  With the exception of some enlightened LGUs, majority of LGUs are like automatons.  Their programs and projects emanate from above.  The executive departments like DOH, DILG, and DECS, formulate policies and programs for the LGUs’ implementation.  Hence, local counterparts like the Provincial Engineer, Provincial Health Officer, Provincial Health Officer, Superintendents, etc., implement national projects credited to local chief executives.  You see proliferation of billboards/streamers announcing the implementation of such and such programs, only to be aggrandized by the governor, mayor or barangay captain.

3rd  Sin

Because of the delegated power to tax, and the executive power to collect, this is a favorite source of graft by unscrupulous local chief executives.  As in the case of the experience of Quezon Province, there are two power plants located in Cagsiay,  Mauban,  Quezon and Brgy.  Sto. Niño,  Pagbilao,  Quezon.  Quezon Power Ltd. was constructed at a cost of US$850M while the Pagbilao Power Plant now operated by Mirant Phils. Corp. was touted to be worth US$1B.  Now what have we got here?

The Mauban Assessor made an assessment of P29B of the QPL assets.  Under the LGC, the real property tax being 2% of the assessed value is P540M per year.  Normally, it is the ministerial duty of the governor being the local chief executive to effect the collection of the tax by directing the provincial treasurer to do the job.  In Quezon experience,  QPL jumped the gun by filing a civil suit for damages and consignation against the Mauban Assessor claiming the latter erred in his assessment and thrown in some unfair graft motives.

The remedies of a protesting taxpayer are laid down in the LGC.  The Civil Code (on damages and consignation) has nothing to do with it such that the courts have no jurisdiction.  The principle is pay first before you complain.  Rightly so because were we to allow a faultfinding taxpayer to select his remedy, we put at naught local sources of funds, in this case, the real property tax.  But given the bigness of QPL and its coterie of legal experts, it went to court claiming legal novelty.  The local judge was simply awed by the theory and because of the amount of money deposited (P260M so far) he entertained the suit.  Unbelievably, the lawyer for Quezon Province filed an Answer outright without any counterclaim and devoid of any veritable defenses.  QPL seizing the lapse (?) filed a Motion for Judgment based on the pleadings (not contested anyway, so we might as well proceed to the point).  To date, QPL owes the Province of Quezon P2.5B in realty tax, exclusive of interest at two (2%) percent per month.  What about Mirant Pagbilao Power Plant?  Curiously, Mirant is under BOT for 25 years which it conveniently skirted by the expedience of going to court.  Yet, Quezon officials failed to collect realty tax amounting to another P3.5B in arrears.   Napocor resists the payment of real property tax claiming Mirant Pagbilao is government property.  The BOT Law however is clear that prior to the turn-over of the assets subject to BOT, it is deemed private, thus, liable to realty tax.  One test is who reaps the profits of P8B a year. Certainly not Napocor. In fine, local officers engaged in foot dragging in the collection of tax and in the process its programs for development are snagged.

It has been bruited about that money changed hands just to have this state of affairs.  Nobody doubts that however, because the situation speaks for itself.

(On second thought, we beg to digress, the Ombudsman should resort to the doctrine of res  ipso  loquitor  in  its  investigation  of local officials.  If the Supreme Court handily relies on this doctrine of dismissing corrupt judges why not the Ombudsman?  But we see the spectacle of the Ombudsman doing a plasticman in exonerating government officials by the simple expedient of “allegations are not evidence”, despite overwhelming contemporaneous proof of self-gain by respondent officials.  Still and all, the Ombudsman looks for the receipt signed by the accused.  No receipt, no deceit.  It’s only Erap who’s stupid enough to sign his name, or is he? As an aside, one Quezon Mayor confided to this writer his experience with the Ombudsman. The people in that office don’t look at the thick complaint filed by complainants as pleadings; they are viewed as thick wads of money. The mayor laments that if only the complainants know that their complaint would be used as leverage for extortion in that office and spend millions of pesos in representation and gifts, he would rather have compromised with the complainant. Just think about this. Where in the world can one find hotshot respondents with oozing millions of pesos from SOPs and jueteng sources? Only in the Ombudsman! Millionaire mayors, congressmen, governors, directors, district engineers, police and DepEd superintendents, etc. One innocent call to these respondents by an investigator merits a furlough in Pegasus or in an expensive 5-star hotel. The sitting governor’s liaison or consultant in flagship projects can only be seen in stratospheric Makati hotels or in Ayala Alabang where the governor resides and spends six days a week there. One feels envious of US jurisprudence in the enforcement of the RICO law where prosecutors outline the series of transactions virtually even without the fingers of the accused caught in the pie, and yet obtain convictions on the basis of common sense.  Here we’re witnesses to a phenomenon when the investigator contracts himself silly and agonizes into acquitting the respondent from any wrongdoing.  Either the investigator is a genius by not running out of reasons to exculpate,  or we’re just plain stupid.)

4th  Sin

The security of the IRA has encouraged cult or personality worship.  We see local personalities with their own logos embossed on buildings, waiting sheds, basketball courts, physical structures without any relevance to the economic destiny of their people.  The vogue nowadays is a structure designed as some kind of signature by the local officials like E-type overpriced school buildings mushrooming all over the place.  This practice is simply scandalous no different from the Marcos,  Idi Amin and Saddam cults.  What is pernicious is the fact that landmarks named after these loonies have pockmarked the country.

5th  Sin

There is a slew of cityhoods these past few years.  Naturally because an independent city or a new province sliced from the old promises another fixed IRA.  And what do you know?  A new kingdom since the 3-term limit has made the incumbent disqualified for reelection.  There is no better solution than a new LGU.  Sooner or later, the Philippines makes it again to Guinness Book of Record with the most number of cities/provinces in the world.

6th  Sin

What LGUs faced half a century ago are the same problems being paid lip services by the new autonomous LGUs.  Autonomy has emboldened local chief executives to take over operations of illegal gambling.  Prior to RA 7160, it was unthinkable for an LCE to be the owner of a jueteng franchise or granting his town “by management” from the local gambling lord who holds the exclusive franchise. Thus, nagkabistuhan na.   It is not public service these LCEs are after, but the largesse of illegal numbers game.  If it can be done in gambling, the drug connection is not far behind.

7th  Sin

Autonomy to some means absolute power, and as some wise guy said, “absolute power corrupts absolutely.”  LCEs treat their LGUs as independent kingdoms insulated from other LGUs.  Regional Development or Peace and Order Councils are nothing but exercise of fund wastage in the form of junkets and seminars usually bankrolled by a national office.  The participants do not input any meaningful programs.  At the end of the excursion it was the sponsor who after all drafts the position papers.  How many workshops there were, one has lost count already.  Does anybody have a diskette on these workshops and merrily change some data and the dates?  Who reads these workshops anyway?  One anecdotal evidence goes that in the meetings of CALABARZON governors, this one governor is never present in any of them.  Whereas when the group goes on a trade mission abroad, this absentee governor is the first at the airport to ensure his favorite seat on the plane.

8th  Sin

The policy on decentralization has spawned local strongmen.  Whereas during martial law, we have only Marcos and his family to contend with, now because of this stranglehold in local politics, local leaders are virtually the kings who would do no wrong.  Crossing these local leaders is lese majeste.  While we have multiple parties at national levels, we also have myriad local groupings clearly the bane in political unity (hence a casus in our quest for attaining economic stability).  At local levels we have the Magdalos in Cavite, the Balane in Nueva Ecija,  the Pandoks and Alayon in Cebu,  the Pusyon Bisaya,  the Bicol Saro,  Quezon Alliance in Quezon,  and so on and so forth.  In the name of autonomy, these local Osamas dictate their price should a presidential wannabe seek political alliance with them in their territory.  “All politics is ‘local'”.  In fine this situation contributes more in political instability.  Too many power centers strengthen the dynasties.

9th Sin

LGUs build expensive monuments meant to immortalize those men of destinies. In Cebu, its governor announced the erection of a convention center budgeted at P300M. where its design was the subject of a province-wide contest. The winning plan expressive of the aspirations of the Cebuanos, was won by a resident architect. At least, that province economized on the design. Not only that, the design was open to the eyes of the public who has the knowing glance whether the bill of materials is over priced or not.

In Quezon Province, however, it was never reported (as this matter was in fact bidded secretly) that its provincial government was already in the process of constructing not the biggest and the mostest convention center, but one touted to be the most expensive to boot. The Quezon Convention Center, which remains in completion to date has already cost the Province of Quezon, P500 million, and counting. Its painting alone has cost the province P15M! It has not been fitted yet with an air-conditioning system that makes it all the more qualified for the Guinness category of being the “largest oven” in the world. Many spectators have complained about its defective ventilation and whenever a spectacular event is held in that venue, many are shying away from it. A lot of barangay captains and municipal councilors have openly complained about the physical inconvenience the edifice has given them. Given a choice of venues for their events, they vote down the convention center and opt for other convenient places like the bishop’s theatre in Isabang or the Alcala Sports Center in Iyam, (Lucena City) which they consider more spacious and freshening than the expensive Quezon Convention Center. Now hear this. The QCC has a total sitting capacity of 10,000. Yet, the contractor-cum-designer failed to provide for a parking space at all!

Consider that the road network in the capitol site, including those immediately enclosing the QCC, was designed in the 1920s, when Manuel L. Quezon was the governor. Its roads were designed not for the modern vehicles that we know of today, but the caretelas and caruajes which were the mode of transport 80 years ago! Not only that. The Center’s restrooms (and sewers for human refuse) are inadequate to hold the bladders of 10,000 persons such that the nooks and crannies of the structure stinks of urine this early. How did the Department of Environment and Natural Resources allow the construction of a mammoth edifice absent an Environmental Clearance Certificate? Notwithstanding constructor’s admission of the missing ECC the Ombudsman unbelievably ignored such and even went on to dismiss the administrative complaint against the sitting governor and his treasurer who eventually retired.

It has been bruited about that the air-conditioning system shall cost the province another P70M. The provincial official’s money bag has been scouting who among the local suppliers fits the bill for negotiation, whatever that means.

Curiously, the construction of the convention center has been broken down in several phases, with each bidded phase costing about P20M per. Again curiously, only one contractor has consistently bagged the project! To think that the mobilization and scaffolding sections were never deleted from the bid papers despite completion of those phases and yet, were being included in the succeeding bid price to the tune of P2M per. The Provincial Engineer or the Chairman of the Provincial Bidding and Accreditation Committee should have ordered the deletion of the 10% mobilization in each bid price at each stage that would dramatically reduce the cost by P2M meaning more savings for the province. Imagine a savings of P2M per phase or a total of P30M as the project has been stretched to 15 phases. Where has all the money gone?

Scrutiny however of the biddings of each phase reveal that the announced bids of the three active bidders never exceeded substantial differences, as the variation in costing was merely a few thousand pesos, hence, no savings for the province to speak of. That was the initial fabulous zarzuela shown even before the construction of the convention centre. Countless contractors and accountants in the know are incredulous as to how such a blatant system was allowed and abetted by the sitting governor that practically rendered the bidding and accreditation system enshrined in the Local Government Code a mockery. Using the statistical improbability principle, it is highly unlikely for three bidders to have consistently differed for the last 15 biddings in merely a few pesos and centavos.

Moreover, under Presidential Decree 1544, the provincial government or the local government unit for that matter is responsible for the bidding invitation process. Thus the expense thereof should be booked in the province for after all; publications of biddings are likewise bidded to minimize expenses. But not in Quezon Province, where the publication is taken care of by the anointed bidder. If one is really to trace this stage in the bidding process, the publication requirement is missing. They short-circuited the process.

One concerned citizen asked the Provincial Treasurer of the bidding documents, but the latter refused claiming that all requests must first be approved by the governor. The Provincial Auditor likewise denied the request for being voluminous and unwieldy allegedly. The concerned citizen brought a corruption case before the Ombudsman as early as July, 2001. The case was acted upon by former Ombudsman Aniano Desierto as worthy of fact finding investigation. To date however, the present Ombudsman failed to act on the complaint. The sitting governor and the contractor have been gloating that they have fixed the case already.

There was another expose by a disgruntled Board Member where he let into the open the bidding irregularities in the PBAC and sanctioned by the local provincial executive. P51M worth of projects was submitted to the Sangguniang Panlalawigan with an attached authority for the governor to sign the contracts. Yet, it would appear that the biddings were rigged and the bidding documents were prepared by only one person. This one is for the books. Where can you find bid documents where the disparity in quotations is only P50.00 or even approaching a few measly centavos or less than one per cent! And the total amount of the various projects is P51M in local funds. The favored contractors went on to construct buildings even before they were bidded, and only after completion did they worry about the supporting papers as exemplified by the DepEd buildings in Gumaca and Sariaya, Quezon.

Contractors can proceed with any given project without the Notice of Award or Notice to Proceed and yet the local chief executive ignores these wrongdoings treating such custom as the way it was and should always be, amen. Only in Quezon Province. We talk about deficits and shortfalls in tax collections but these local government units run their affairs as if the local funds are theirs for the taking. Corruption in that province has been too shameless. The governor’s handlers brag that they can’t be beaten in May, 2004 elections as nobody has the wherewithal to square off with the wheelchair bound executive.

In the case of Muntinlupa City, a police officer has grown accustomed to the pelf and privilege as a close in security of the City Mayor for the last seven years. The Mayor rewarded the policeman of a coterminous position thru an administrative fiat. He no longer acts as a police officer but some kind of a bureaucrat approximating a gofer. Because of the newfound position, his boss gave him an additional salary under the Office of the Mayor. When the PNP Directorate learned of this deal, the policeman was told to explain. Running under the skirt of his Mayor-chief, he defied his superiors. Failing to submit an explanation, the cop was axed and was relieved from Muntinlupa City and transferred to another station. The Mayor retaliated by grounding all mobile cars and other transportation facilities of the local PNP practically paralyzing the operation of the Muntinlupa police. When asked why he grounded all the police cars, the lame excuse given by the local chief was these vehicles need repairs. Never mind if the peace and order situation go nuts, as long as the local monarch has said his piece. Unbelievably, all NCR mayors passed a unanimous resolution of support to their despotic colleague. The reason given was if the PNP top brass could unceremoniously do what was done to the Mayor that can happen to them too.


LGUs coddle squatters.

Squatters mean votes. In Pasay City, a former Mayor parlayed public services to these pockets of autonomous spots in exchange for solid support. The late Mayor provided generators for electric power, water pumps, and businesses to his avid leaders in the area.

Local officials have the obsession of completing their three-successive terms. They are not only obsessed with personal victory in the polls, but they lay the foundation of the perpetuation of their local dynasties. This means organization from the grass roots. Knowing that we have the biggest unemployment rate in Asia, these local pols exploit poverty within their jurisdiction. This exploitation is encouraged by the items in the budget backstopped by the IRA. Even without exerting any efforts, money flows from above.

11th SIN

Privatized Intelligence and Discretionary Funds.

Annually, the local chief has the calamity fund, the gender fund, the intelligence fund, and the fun funds (the 20% development fund parlayed at the unfettered discretion of the LCE).

The Intelligence Fund can be spent without any control whatsoever and the COA looks the other way. If there has been any intelligent study made on how the intelligence fund was spent by LGUs from 1988 up to the present, the amount would be staggering. And yet we are still in the middle of a pestering insurgency. Illegal gambling has kicked out a President, and raids and arrests on Illegal Drugs go undiminished. If the intent of the Intelligence fund is to minimize if not eradicate these menace, the government is a failure. And this mindless expense is one cause of our hemorrhaging public coffers, catching us into fiscal crisis. Awashed with funds, the LCEs lavish the poor with palliative programs like medical missions, fiesta celebrations, free movie admissions to the senior citizens (with cheap cakes on their birthdays), seminars to lower echelon local offcials, lakbay-aral, etc.

In Quezon experience, the sitting governor has enjoyed unliquidated Intelligence Fund since 1998. While the fund has been disbursed, nothing was given as to where it went after all these years. Quezon is still a repository of vast yet fast dwindling forest. Northern Quezon is one place plagued by illegal loggers. At one time in 2000 DENR discovered an estimated one million board feet logs floating along Agos River in the town of General Nakar. Magandang Gabi Bayan even made a documentary of the incident. When the President and the DENR Secretary visited Quezon soon after and asked the sitting governor for some explanations, the latter resented the inquiry and drifted to the opposition. Finally, some figures leaked from the office of the provincial chief that the logs are in the vicinity of 300,000 board feet and not one million. Eventually the timbers disappeared. The logs were seen spirited away carted off by province-owned dump trucks in the dead of night.

After the “Wennie” & “Yoyong” rampage recently, logs were seen drifting along the coasts of Infanta and Real estimated at 3 million board feet. If indeed the LGU particularly the province is after environment protection, the timber felling would have been reduced. And the brunt of the typhoons minimized.

In Quezon, anything that has the term “intelligence” on it is pocketed by the sitting provincial official. Intelligence Fund and the Intelegencia from jueteng, such that even the Intelligence in the IQ of school children is being coveted by the wheel-chair bound official.


We hope our people will say “SCRAM” finally to those dregs masquerading as our local leaders.



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