Bureau of Local Government Finance Opinion

June 15, 2011 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Mr. Rodrigo E. Cabrera General Manager Laguna de Bay Institutional Strengthening and Community Participation (LISCOP) Laguna Lake Development Authority Km. 24, Manila East Road Don Hilario Cruz Avenue Club Manila East Compound Barangay San Juan, Taytay Rizal Sir : This refers to your letter dated March 1, 2011, addressed to the Honorable Secretary Jesse M. Robredo of the Department of the Interior and Local Government (DILG) which was indorsed to this Bureau for appropriate action. Subject letter seeks clarification on the utilization of LGU revenues derived from the operation of slaughterhouse to finance the installation of waste water treatment facilities (WWTF) for LGU-operated slaughterhouses along the Laguna de Bay area as directed by His Excellency President Benigno Simeon C. Aquino III to DILG, as they are significantly the contributors of organic pollutants in the lake and river systems. Based on the statistics provided in your letter, there are twenty three (23) LGU-operated slaughterhouses along the Laguna de Bay area. Out of these 23 LGUs, only 7 have existing WWTF which were financed through the LISCOP project. The remaining 16 LGUs which are within the 5th and 6th income class levels have not installed their WWTF for lack of capacity to avail of loan financing from LISCOP. Firstly, may we invite your attention to the following pertinent provisions of R.A. No. 7160 otherwise known as the Local Government Code of 1991: AECacS "SEC. 17. Basic Services and Facilities. (a) Local government units shall endeavor to be self-reliant and shall continue exercising the powers and discharging the duties and functions currently vested upon them. They shall also discharge the functions and responsibilities of national agencies and offices devolved to them pursuant to this Code. Local government units shall likewise exercise such other powers and discharge such other functions and responsibilities as are necessary, appropriate, or incidental to efficient and effective provision of the basic services and facilities enumerated herein. xxx xxx xxx "(2) For a Municipality: xxx xxx xxx "(vi) Solid waste disposal system or environmental management system and services or facilities related to general hygiene and sanitation; xxx xxx xxx "(ix) . . ., slaughterhouses and other municipal enterprises;" To meet these responsibilities, the same Code empowers LGUs to generate and apply resources, viz. : "SEC. 18. Power to Generate and Apply Resources. Local government units shall have the power and authority to establish an organization that shall be responsible for the efficient and effective implementation of their development plans, program objectives and priorities; to create their own sources of revenue and to levy taxes, fees, and charges which shall accrue exclusively for their use and disposition and which shall be retained by them; . . . and to apply their resources and assets for productive, developmental, or welfare purposes, in the exercise or furtherance of their governmental or proprietary powers and functions and thereby ensure their development into self-reliant communities and active participants in the attainment of national goals." One of the sources of local revenues is the income derived from the operation of local economic enterprise such as slaughterhouse. Such income is accounted for in the local government General Fund pursuant to and in accordance with the provisions of Sections 308 and 313 of the Local Government Code, as follows: aDCIHE "SEC. 308. Local Funds. Every local government unit shall maintain a General Fund which shall be used to account for each monies and resources as may be received by and disbursed from the local treasury. The General Fund shall consist of monies and resources of the local government which are available for the payment of expenditures, obligations or purposes not specifically declared by law as accruing and chargeable to, or payable from, any other fund. "SEC. 313. Special Accounts to be maintained in the General Fund. Local government units shall maintain special accounts in the general fund for the following: "(a) Public utilities and other economic enterprises; xxx xxx xxx "Receipts, transfers, and expenditures involving the foregoing special accounts shall be properly taken up thereunder. "Profits or income derived from the operation of public utilities and other economic enterprises, after deduction for the cost of improvement, repair and other related expenses of the public utility or economic enterprise concerned, shall first be applied for the return of the advances or loans made therefor. Any excess shall form part of the general fund of the local government unit concerned." The organic pollution caused by the LGU-operated slaughterhouses demands priority attention taking into account the adverse and serious effects on the environment, general hygiene and sanitation. Thus, by the aforecited provisions of the Local Government Code of 1991, the locally sourced revenues of LGUs, such as income derived from the operation of a slaughterhouse sufficient and available in the General Fund may be used to finance the installation of WWTF through an appropriation ordinance duly enacted by the sanggunian. aETASc Trusting that we have responded sufficiently to your query. Very truly yours, (SGD.) MA. PRESENTACION R. MONTESA, CESO III Executive Director ATTACHMENT DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT 1st Indorsement April 25, 2011 Respectfully referred to Ma. Presentacion R. Montesa, Executive Director, BLGF, B/F EDFPC Bldg., BSP Complex, Roxas Blvd., Manila, for appropriate action, inviting attention to the attached letter dated March 1, 2011 from Rodrigo E. Cabrera, General Manager of Laguna de Bay Institutional Strengthening and Community Participation (LISCOP), other details of which are stated therein. Advice on action taken on this matter direct to the concerned party, copy furnished this office, will be appreciated. (SGD.) ROLYN Q. ZAMBALES Acting Director III, OPDS March 1, 2011 HON. JESSE M. ROBREDO Secretary Department of the Interior and Local Government EDSA, Quezon City Subject: Installation of Wastewater Treatment Facilities in LGU-Run Slaughterhouses in the Laguna de Bay Region Dear Secretary Robredo: During the January 28, 2011 presentation to President Benigno S. Aquino III of our Laguna de Bay Institutional Strengthening and Community Participation (LISCOP) Project Additional Financing, the President directed the LLDA to coordinate with your Department to determine the possibility of financing slaughterhouses wastewater treatment facilities through the revenues of Local Government Units from such operation. EAIaHD In this regard, hereunder are some statistics on LGU-operated slaughterhouses in the Laguna de Bay Region (details in Table 1): No. of LGU-operated slaughterhouses without WWTF prior to LISCOP Project 23 No. of WWTF installed/to be installed in LGU-operated slaughterhouses under LISCOP Project Original financing 3 Additional financing 4 Remaining no. of LGU slaughterhouses 16 without WWTF In view of the limited financing under LISCOP Project and the fact that sub-project proposals are LGU-demand driven and most 5th and 6th income class LGUs lack the necessary borrowing to avail of the loan financing from LISCOP, may we be apprised if the revenues of LGUs from operation of slaughterhouses may be used to partly or wholly finance the establishment of WWTFs. Needless to say, slaughterhouses are significant contributors of organic pollutants into the lake and river systems. Therefore, helping LGUs to cope with the need for treatment facilities in their slaughterhouses will make a difference in our common desire to address the decline in the water quality of the lake. We look forward to your response on this matter. Thank you and best regards. HSIDTE Very truly yours, (SGD.) RODRIGO E. CABRERA General Manager