SENT OF Tay, SOFE ICIAL %; SRELEASED? REPUBLIC OF THE PHILIPPINES & sora DEPARTMENT OF THE INTERIOR AND LOCAL GOVERIMEKD a= DILO-NAPOLCOM Center, EDSA corer Quezon Avenue “Zi ‘West Triangle, Quezon City ‘ypacoros secon es 409 woO* BUREAU OF LOCAL GOVERNMENT SUPERVISION February 11, 2019 ADVISORY FOR : ALL DILG REGIONAL DIRECTORS DILG REGIONS I-XIII, CAR and NCR REGIONAL SECRETARY, DILG ARMM SUBJECT : DEPARTMENT OF JUSTICE (DOJ) OPINION DATED JANUARY 14, 2019 RELATIVE TO THE STATUS OF THE LEAGUES AS GOVERNMENT ORGANIZATIONS During the consultative meeting with representatives from local government leagues and federations of local elective officials on May 17, 2018 at the DILG NAPOLCOM Center, a point of discussion was COA Resolution No. 2011-04 dated December 13, 2011 which league representatives believe do not apply to them, as they consider their leagues as non-government organizations, having been registered with the Securities and Exchange Commission. In response to our letter to DOJ dated June 4, 2018 seeking clarifications on the matter, the DOJ issued their opinion through a letter dated January 14, 2019. Attached is a copy of the said opinion for your information and guidance. ‘aly ATTY. ven Pi CESO V “Matino, Mahusay at Maaasahan” DILG-NAPOLCOM Center, EDSA corner Quezon Avenue, Quezon City (02) 925-1153 / (02) 876-3454 locals 4207 and 4212BLOG PREC EV 18 JAN 2019 Republika ng Pilipinas KAGAWARAN NG KATARUNGAN Department of Justice Manila Director ODILON L. PASARABA Bureau of Local Govemment Supervision Department of the Interior and Local Government DILG-NAPOLCOM Center, EDSA cor. Quezon Avenue Quezon City Dear Director Pasaraba: This refers to your letter requesting clarification as to the status of the leagues of local government units (LGUs) and leagues and federations of local elective officials; i.e., whether they are government organizations or non-government organizations. In your letter, you referred to this Department’s Opinion No. 41 dated § May 1995, which held that the Liga ng mga Barangay is not merely a private association but a government organization, It appears that the herein request stemmed from the issuance by the Commission on Audit (COA) of Resolution No. 2011-014 dated 13 December 2011, which, referring to the said DOJ Opinion, resolved that the leagues of LGUs, and leagues and federations of local elective officials are subject to its audit jurisdiction. However, you stated that the aforesaid organizations are of the position that the said COA Resolution is not applicable to their organizations as they consider themselves as non-govemment organizations (NGOs), having been registered with the Securities and Exchange Commission. Thus, this request, Republic Act (RA) No. 7160 or the Local Government Code of 1991 has provided for the creation of leagues of LGUs, such as the Liga ng mga Barangay, League of Municipalities, League of Cities, and League of Provinces. The creation of these leagues is mandatory considering that the law employs the word ‘shall’. As such, the purpose of their organization, nature of representation, their powers, functions and duties, and sources of funding are all specifically provided under RA No. 7160. In DOJ Opinion No. 41, s. 1995, we stated that the Liga ng mga Barangay is a government organization and not merely a private association, citing that the Liga is imbued with a governmental purpose and endowed with govemmental powers, 1 Sections 491-504 of R.A. No. 7160. GILG -BLGS REGEIVED BY: pare: 18 JAN 2019 Time ant Fuad FGF RIOR ND LOCA GERENfunctions and duties. As such, it could not be a mere private association but a goverment organization because a private association exists primarily for the promotion of the private benefit or interests of its members. It was also noted therein that the primary purpose of the Liga ng mga Barangay is to promote the development of barangays and secure the general welfare of their inhabitants. All other duties and powers vested upon the Liga are ancillary to this main purpose. While said DOJ Opinion only discussed the status of the Liga ng mga Barangay, the laws cited therein, which were the basis for the DO\'s findings that the Liga is a government organization, are likewise applicable to the subject leagues. These provisions of law are found in a chapter entitled “Provisions Common To All Leagues”, referring to the Liga ng mga Barangay, Leagues of Municipalities, Leagues of Cities and Leagues of Provinces. Sections 505, 506 and 507 of R.A. No. 7160 read as follows: ARTICLE V Provisions Common to All Leagues Section 505. Funding. (@) All leagues shall derive its funds from contributions of member local govemment units and from fund-raising projects and activities without the necessity of securing permits therefor: Provided, That the proceeds from said fund-raising projects and activities shall be used primarily to fund the projects for which the said proceeds have been raised, subject to the pertinent provision of this Code and the pertinent provisions of the Omnibus Election Code, (b) All funds of leagues shall be deposited as trust funds with its treasurer and shall be disbursed in accordance with the board of director's resolutions, subject to pertinent accounting and auditing rules and regulations: Provided, That the treasurer shall be bonded in an amount to be determined by the board of directors. The funds of a chapter shall be deposited as chapter funds and funds of the national league shall be deposited as national funds. Section 506. Organizational Structure. - To ensure the effective and efficient administration, the leagues for municipalities, cities and provinces shall elect chapter-level and national-level boards of directors and a set of officers headed by the president. A secretary-general shall be chosen from among the national league members to manage the day to day operation and activities of the national league. The board of directors on the chapter or national level may create such other positions as may be deemed necessary for the management of the chapters and of the national league The national board of directors of the leagues for municipalities, cities or provinces shall coordinate programs, projects and activities of chapter and the national-level league. Section 507. Constitution and By-laws of the Liga and the Leagues. - All other matters not herein otherwise provided for affecting the intemal 2organization of the leagues of local government units shall be governed by their respective constitution and by-laws which are hereby made suppletory to the provision of this Chapter: Provided, That said Constitution and By-laws shall always conform to the provisions of the Constitution and existing laws. 20K 200K The pertinent provisions governing their creation under RA No. 7160 would show that they are created to perform governmental functions and deliver public services to their respective constituents o1 territories. As expressly stated in RA No. 7160, these leagues are directed to give priority to projects that are consistent with the policies and programs of the National Government and to assist the latter in the formulation and implementation of these policies and programs affecting their respective jurisdictions, That these leagues are mandated to perform governmental functions cannot be any clearer than this. ‘Accordingly, as government institutions or organizations their funds are in the nature of goveinment funds, the disbursement of which is subject to the audit Jurisdiction of the Commission on Audit (COA). Sections 2 (1) and 3, Article IX-D of the 1987 Philippine Constitution read as: “Section 2 (1). The Commission on Audit shall have the power, authority, and duty to examine, audit, and settle all accounts pertaining to the revenue and receipts of, and expenditures or uses of funds and property, ‘owned or held in trust by, or pertaining to, the Government, or any of its subdivisions, agencies, or instrumentalities, including government-owned or controlled corporations with original charters, x90 100 0K 20K 00K 300K, “Section 3. No law shall be passed exempting any entity of the Government or its subsidiary in any guise whatsoever, or any investment of public funds, from the jurisdiction of the Commission on Audit. 20K 00K 300K In addition to the all-encompassing authority of the COA over public funds, Section 3 clearly states above that ‘no law shall be passed exempting any entity of the Government or its subsidiary in any guise whatsoever from the jurisdiction of the COA." Consequently, Batas Pambansa Big. 68, otherwise known as The Corporation Code, cannot exempt any entity of the goverment by a mere expedient of registering itself as a non-government organization with the Securities and Exchange Commission, from the COA's jurisdiction. It may be worth noting that the opinion of the DOJ anent the category of Liga ng mga Barangay es a goverment organization was recognized by the SupremeCourt in @ number of cases? when it resolved in the affirmative the issue of ‘whether the Liga ng mga Barangay is a government organization that is subject to DILG Secretary's power of supervision over local governments as the alter ego of the President’. Likewise, the Supreme Court, in the more recent case of National Liga ng mga Barangay v. Paredes, et al. (439 SCRA 130), ruling on the extent of the power of the DILG over the Liga, said: The rationale for making the Liga subject to DILG supervision is quite evident, whether from the perspectives of logic or of practicality The Lira is an aggroupment of barangays which are in turn represented therein by their respective punong barangays. The representatives of the Liga sit in an ex officio capacity at the municipal, city and provincial sanggunians. As such, they enjoy all the powers and discharge all the functions of regular municipal councilors, city councilors or provincial board members, as the case may be. Thus, the Liga is the vehicle through which the barangay participates in the enactment of ordinances and formulation of policies at all the legislative local levels higher than the sangguniang barangay, at the same time serving as the mechanism for the bottomn-to-top approach of development. (at p. 153). 2K OK 200, As to the Leagues and Federation of Local Elective Officials, particulaily, the leagues and federation of vice-governors, vice-mayors, and sanggunian members of barangays, municipalities, component cities, highly-urbanized cities and provinces, and other elective local officials of local government unit: as envisioned in Section 508 (a)*, their classification as government or non-government organization will not affect the jurisdiction cf ihe COA as long as public funds are involved. In addition to the Constitutional provision as stated above, Section 29 of Presidential Decree No. 1445, otherwise known as The State Audit Code of the Philippines, provides that: Section 29. Visitorial authority. (1) The Commission shall have visitorial authority over non-government entities subsidized by the government, those required to pay levies or government share, those which have received counterpart funds from the government or are partly funded by donations through the government, the said authority however pertaining 2 The Nationa! Liga ng mga Barangay, represented by Alex L. David vs. Hon. Victoria Isabel A, Paredes, Presiding Judge, Regional Trial Court (RTC), Branch 124, Caloocan City, and Department of Interior and Local Government (DILG), G.R. No. 130775, September 27, 2004 and Leandro Yangot, etal. vs. DILG Secretary Robert Z. Barbers and Undersecretary Manuel Sanchez, 439 SCRA 130, GR. No. 131999, September 27, 2004; and Joe! Bito-Onon, etal. vs. Hon. Judge Nelia Yap Femandez, RTC, Branch 50, Puerto Princesa City and Palawan 350 SCRA 732, G.R. No. 139813, January 31, 2001, 3 Section 508. Organization, {@) Vice-governors, vice-mayors, sanggunian members of barangays, municipalities, component Cities, highly-urbanized cities and provinces, and other elective local officials of local government units, including those of the Metropolitan Manila Area and any metropolitan political subdivisions, may form their respective leagues or federation, subject to applicable provisions of this Title and Pertinent provisions of this Code.only to the audit of those funds or subsidies coming from or through the government, OK OK OK, It is clear that the core issue in which the COA asserts its audit jurisdiction is when public funds and resources are involved. This is to ensure that public funds, which are the property of the people, must be used prudently at all times to prevent dissipation and waste. Lastly, we take cognizance of Resolution No. 2011-014 dated December 13, 2011 of the COA which covers the Leagues of LGUs and Federation of Local Elective Officials under its audit jurisdiction. The COA, as an independent constitutional body, should be accorded highest consideration on matters within its jurisdiction. The recommendation is not only for practical considerations, but also out of due respect for the competence and expertise of the office having primary jurisdiction to resolve these matters because of its familiarity with the policy repercussions of the question, as well as from a recognition of the lawful exercise of an authority conferred by law.# Please be guided accorcingly. Wave MENARDOT-GUEYARRA Secretary, Department of stice CN: o2nas01035 VN * Secretary of Justice Op. No. 1, s. 1983.