DILG memo on use of 20% dev’t fund for LGUs has legal basis

Press Release
By DILG Office of Public Affairs
June 6, 2011

A senior official of the Department of the Interior and Local Government (DILG) today said the agency’s memorandum on the local government’s use of their 20 percent development fund has legal basis and is part of its function of general supervision over local government units.

DILG Undersecretary for Local Government Austere A. Panadero said the department’s latest memo on said subject is just a reiteration of a similar directive issued jointly, with minor amendments, by the DILG and the Department of Budget and Management in 2005.

He cited Section 287 of the Local Government Code which provides that “each LGU should appropriate in its annual budget no less than 20 percent of its Internal Revenue Allotment (IRA) specifically for development projects. “

Panadero issued the clarification in response to published reports quoting Bacoor, Cavite Mayor Strike Revilla, president of the League of Municipalities of the Philippines, that the DILG has “dictatorial tendencies” in the issuance of memos and that town mayors are disappointed and offended by it.

“The joint DILG-DBM memo is meant to inform and enlighten the public and local officials on the proper use of their 20 percent development funds derived from their IRA. We issued the directive in response to reports we received from the Commission on Audit on the misuse of the 20 percent development funds for LGUs,” the DILG Undersecretary said

“We have no intention whatsoever to disappoint, offend, threaten or treat LGEs like children if they do not follow our memos. The memos are meant to implement good governance and proper use of the 20 percent development funds as prescribed by the DBM and COA,” he added.

The DBM, Panadero said, has the authority to prescribe items eligible for financing under the IRA while the COA can disallow improper use of the 20 percent development funds.

The latest DILG-DBM joint memo, Panadero explained, gave meaning to the phrase “development projects” in Section 28 of the LG Code which refer to projects related to social, economic, environmental development, and other related projects covered under it.

These development projects include the following: construction or rehabilitation of evacuation centers, portable water supply system, evacuation centers, local roads or bridges, sanitary landfills, material recovery facility and public facilities such as multi-purpose halls; purchase or repair of area-wide calamity-related alarm or warning system and appropriate alarming-related rescue operations equipment; and purchase and development of land for relocation of victims of calamities, among others.

The guidelines also provided items that are not related to or not connected with the implementation of development projects and should not be paid out of the 20% IRA such as, such as cash gifts, bonuses, medical assistance, food allowance, uniform meetings, supplies, communication, water and light, petroleum products, and the like, salaries, traveling expenses, seminar and conference fees, construction and repair of administrative offices, purchase of office furniture and equipment and maintenance and repair of motor vehicles.

“More than half or 55% of the IRA of the LGUs may be used to pay salaries and wages, and another 20% may be utilized for maintenance and other operating expenses such as gasoline expenses and the like,” Panadero pointed out.

On the LGEs claim that they were not consulted on the issue prior to the issuance of the DILG-DBM joint circular, the DILG undersecretary said it had been discussed in the two meetings of the Coordinating Committee on Decentralization on May 14, 2010 and August 13, 2010 where the LGU leagues had been represented by their Secretariat.