15.1 Section 2 of PD No. 1445 states that it is the declared policy of the State that all
government resources shall be managed, expended, or utilized in accordance with
law and regulations, and safeguarded against loss or wastage through illegal or
improper disposition, with a view to ensuring efficiency, economy, and
effectiveness in government operations. The responsibility to ensure that this
policy is faithfully adhered to rests directly with the chief or head of the
government agency concerned.
15.2 The LGSEF was part of the Local Government Unit’s (LGU’s) Internal Revenue
Allotment (IRA), which was withheld by the national government pursuant to the
provisions in the General Appropriations Act (GAA) of 1999, 2000, and 2001. Its
release to LGUs was subject to guidelines issued by the Oversight Committee on
Devolution (OCD) created under Executive Order No. 48 issued by then-President
Joseph Estrada in 1998.
15.3 Following the guidelines set by the OCD, LGUs are required to submit project
proposals and necessary documentation to the Department of Interior and Local
Government (DILG) for review prior to sending them to the OCD for approval
and fund release by the Department of Budget and Management (DBM).
15.4 The review of the Subsidiary Ledgers (SL) of the Due to NGAs account showed
that as of December 31, 2024, a total of ₱121,164.61 under the LGSEF remained
outstanding for more than 10 years, as shown on the next page:
Subsidiary Ledgers Balance
Concreting of Maningcao Road (Dako) ₱ 17,303.97
Concreting of Maningcao Road (Gamay) 9,409.90
Concreting of Bolocboloc Road 34,391.30
Drainage Canal of Cangmating 20,014.10
Drainage Canal of Bolocboloc 11,759.62
Balance Retained Earnings 28,286.72
Total ₱ 121,164.61
15.5 An interview with the Municipal Accountant revealed that the amounts had
remained idle for over 10 years because they could no longer locate the documents
and records associated with the fund.
15.6 It is also important to note that the Supreme Court, in G.R. No. 152774 dated May
27, 2004, declared the release of the LGSEF unconstitutional. The Court ruled that
the LGSEF, being part of the IRA, should have been automatically released to
LGUs, and that subjecting it to additional guidelines from the OCD was in
violation of the Constitution. The decision stated:
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